Why crypto-currencies matter. One more Reason.
Few days ago, I transferred Rs. 20000 to my uncle. I sent the money via IMPS transfer which does not verify the account details. A week later, we recognise that he did a mistake while writing his account number. I immediately contacted branch and filed a reversal request. Since, there was dependency from other bank and consent of other person is also required according to regulation, the request is in process since 1 month.
Crypto-currencies handles, intentionally or unintentionally, this situation in very different smart way. The account numbers are usually some sort of hashes which helps in avoiding mistakes in following way:
- Only very few percentage of all possible hashes actually exist. So when you type a wrong account number, the transaction will probably(>99.98%) will be declined.
- Since account numbers are not assigned in order, changing one number will have same affect as typing a random number. Contrast this with banks approach where account number are assigned in order and it is a fact that people will probably make mistake in one or two digits.
- Account number are so long that people will not recite from memory or tell over tele-phone where the possibility of making mistake is higher.
Even if the money is transferred to wrong account after the validation, in both modes you need the consent of beneficiary for reversal. So, I won't give any positive point to traditional banks for this scenario.