Friend in Debt vs. Venmo: Round 3 — KO
This is the third and final round in an epic, winner-takes-all bout between BlockMason’s revolutionary new application, Friend in Debt, and its plain, old, smelly, unattractive cousin, Venmo. Round one, examining flexibility, went handily to FiD, as did round two: scalability. Now, it’s time for…
Round Three: Security
TL; DR: While FiD transactions are protected by the security of the blockchain, Venmo is about as safe as a banana at a monkey convention.
Friend in Debt offers an improvement to existing payment applications not only through user interface and functionality, but also through greater security. Venmo in particular is notorious for exploitation by scammers and poor customer support.
Free Ride in a Scam-borghini
If you’ve done much research on Venmo, you’ve read about the many scams that plague the mobile payment platform. Some have to do with account hacks and poor customer support. Others have to do with receiving payments from stolen debit and credit cards. Still more involve Venmo users getting scammed while employing the app to facilitate casual sales on Craigslist. Clearly, Venmo is far from secure.
Many Venmo scams exploit misassumptions about how money moves through Venmo. Contrary to popular belief, transactions on Venmo are not instantaneous, and payments may be canceled or rescinded even after money has been marked as delivered to another Venmo user’s account. While Venmo offers various protections for users sending payments, Venmo offers little protection for users receiving funds, including those who were paid using stolen credit or debit cards, as in the above articles. This can lead to frozen accounts, even denying victims access to their pre-existing balance. Even worse, if you already spent the money that was fraudulently sent (and appeared in your Venmo balance!), too bad — you’ll need to replace it yourself. This is the key reason behind Venmo’s otherwise arbitrary $3,000 spending limit — the application isn’t secure enough to allow users to send more money.
FiD, by contrast, offers near instantaneous payment that makes it resistant to scammers. You never have to worry that funds transferred to your wallet still need to clear. As soon as a transaction is completed, it’s yours.
Of course, Blockmason is well aware that writing code for Ethereum is a new and complex endeavor. Because of its novelty, and the general difficulty of keeping untested code 100% secure, the Ethereum community has recently witnessed multiple large scale hacks. BlockMason is fully committed to avoiding the mistakes of these compromised endeavors, and are taking a number of steps to keep FiD secure, including professional auditing of our code and ‘bug bounties’ to encourage white hat hackers to identify and eradicate coding errors. Since FiD’s code is open source, it will actually be even more secure because of the ease of code auditing by the community. Additionally, because FiD allows users to easily choose to which wallet an account links, it’s easy to cap the downside of a hack by only employing an account set up for daily transactions instead of a user’s main Eth wallet. Finally, it’s worth noting that FiD will never directly hold a user’s funds, and the only way to hack an FiD user to is to hack their actual address.
In Soviet Russia, Joke Laugh You!
Venmo has generated further headlines by locking users out of accounts for joke descriptions of their payments. If you’re caught joking about sex, drugs, or ISIS, you may face frozen funds, or even total account deletion.
With FiD, no user will have to worry about their account being locked for purposes of humor or otherwise. Because FiD uses Ethereum to settle payments, and those payments are protected by the security of the blockchain, the uncaring bureaucratic mess of big banks and Paypal bear no threat to the user — no matter how funny that user is. FiD has no ability to lock users out of their accounts, and never actually has access to users’ funds, which are controlled by their ethereum public private keys. Therefore, customers will always have access to their funds, be able to settle debts with the Ethereum they own, and be able to draw from agreed upon credit lines, mitigating any risk that comes from non-cash transactions.
Time is a Flat Circle
Fact: the blockchain is forever. Venmo is not. This distinction matters for the security of your funds. When moving money or debt across the blockchain, users need not worry about network collapse or companies going out of business — even if BlockMason went under, all the transactions recorded on FiD would live on in a network maintained by millions of computers across the globe. If Venmo collapses, there goes all your money with it.
And Venmo collapsing is a possibility. While Paypal, Venmo’s parent company, is still going strong, Venmo itself has reported zero revenue. Yes, Venmo suddenly going out of business is unlikely, but it’s important to realize that a user’s funds are still subject to the whims and fortune of the company. That’s not the ideal situation for your money.
THE VERDICT: FiD: 3 — Venmo: 0
And that’s a knockout!
After three lopsided rounds, Friend in Debt is the clear victor, leaving a slavering, brain-dead Venmo to limp from the ring. For anyone who watched that contest, the conclusion is clear — Venmo has exactly one pro: it’s already in use.
At BlockMason, we believe in progress. Better to visit Venmo in the museum, with the other fossils.