Top all-time · #183
Patrick McKenzie
Personal blog · bitsaboutmoney.comstartupseconomics
Patrick McKenzie writes Bits about Money, a personal blog at bitsaboutmoney.com about startups and economics. Since 2022, 236 different Hacker News readers have linked it 307 times, most often “The optimal amount of fraud is non-zero (2022)”. It is still writing: the last post was on 2026-05-01, and you can follow it by feed.
Sometimes recommended · 13 of 40 sampled comments recommend it?
Why HN links it
HN readers link Patrick McKenzie's posts on fraud, banking, payments and financial systems, often to back up points about the optimal amount of fraud being non-zero. Valued as a good read on how money systems work.
- Recommended for · 13 comments
- Called a great blog, amazing, insightful and very nice; a good read; one says to really read the KYC article.
Summarised by Claude from a sample of 40 HN comments that link here. Each comment is marked recommending, critical or neutral (citing without judging); how this works.
Biweekly newsletter about intersection of tech and finance. Deep dives into the plumbing that moves money and the businesses that build those pipes.
Most-linked posts?
- The optimal amount of fraud is non-zero (2022)59 people · 76 mentions · first linked 2022-12-30
- Seeing Like a Bank21 people · 23 mentions · first linked 2023-11-07
- Debanking (and Debunking?)18 people · 20 mentions · first linked 2024-12-09
- KYC and AML: Beyond the Acronyms11 people · 12 mentions · first linked 2023-01-23
- Anatomy of a credit card rewards program11 people · 11 mentions · first linked 2024-04-03
- /10 people · 11 mentions · first linked 2023-05-06
- BNPLs: Businesses Needing Provided Legibility (2022)10 people · 10 mentions · first linked 2023-01-03
- Credit Card Debt Collection9 people · 9 mentions · first linked 2023-08-11
- Money Laundering and AML Compliance9 people · 9 mentions · first linked 2023-02-10
- Payroll providers, Power, Respect (patio11)7 people · 7 mentions · first linked 2023-12-21
What Hacker News says?
No CO2 emissions is not the terminal value of the human race. It is a means , not an ends. The damage of that extra ton of CO2 is not infinite. If releasing a marginal megaton of CO2 caused climate issues that cost a thousand lives over the next 200 years but we want to release that marginal megaton because it let's us save ten thousand orphans than we should release that CO2. It might be that in the world we live i…
Comment linking /archive/optimal-amount-of-fraud/
on “What's that touchscreen in my room?”Submitted Anatomy of a credit card rewards program as a story · 1271 points
HN discussion> a private company shouldn’t have to decide what counts as “illegal” content under threat of legal action. Immediately reminded me of patio11's amazing write up[1] of debanking, featuring banks being deputized as law enforcement for financial crimes (which is completely non controversial), and even used as a convenient tool to regulate other industries that the white house didn't like (kinda controversial). [1]: ht…
Comment linking /archive/debanking-and-debunking/
on “Our investigation into the suspicious pressure on Archive.today”Submitted Debanking (and Debunking?) as a story · 258 points
HN discussion> The laws against that are very strict, incentivizing companies to overshoot and block false positives. On that note[1] is a good read (Cmd+F: "suspicious activity report"), although this specific case is about gift cards, but the AML/T&S etc. space is remarkably similar. [1] https://www.bitsaboutmoney.com/archive/debanking-and-debunki...
Comment linking /archive/debanking-and-debunking/
on “Apple has locked my Apple ID, and I have no recourse. A plea for help”Submitted Financial systems take a holiday as a story · 228 points
HN discussionpatio11 wrote a bit about that here: https://www.bitsaboutmoney.com/archive/the-long-shadow-of-ch...
Comment linking /archive/the-long-shadow-of-checks/
on “Fast”Submitted The business of check cashing as a story · 215 points
HN discussion"Community banks mostly don’t have programmers on staff, and are reliant on the so-called “core processors” ... This is the largest reason why in-place upgrades to the U.S. financial system are slow. Coordinating the Faster ACH rollout took years, and the community bank lobby was loudly in favor of delaying it, to avoid disadvantaging themselves competitively versus banks with more capability to write software (and…
Comment linking /archive/community-banking-and-fintech/
on “Fast”Submitted A very Chicago gamble as a story · 178 points
HN discussionA paragraph from the previous essay by the OP comes to mind: > Less sardonically, there is a lesson here: systems which intermediate between cultures are useful. Intermediating between cultures is a thing the world urgently needs and is extremely prepared to pay for. https://www.bitsaboutmoney.com/archive/financial-systems-tak... I don't think decentralized currency will actually solve the issues travelers have with…
Comment linking /archive/financial-systems-take-a-holiday/
on “Anatomy of a credit card rewards program”Submitted Working Title (Insurance) as a story · 167 points
HN discussion> if you're offering <$10 food items at a mom & pop shop the credit card fees are non-trivial so there probably is a very legitimate incentive to take cash. Yeah, but not a 10% incentive, especially given that depositing cash isn't free either, for commercial accounts. > There's also benefits to getting immediate cash that you can put in the bank for expenses at the end of the day vs waiting a day or two for credit…
Comment linking /archive/the-infrastructure-behind-atms/
on “Anatomy of a credit card rewards program”Submitted Why the CrowdStrike bug hit banks hard as a story · 164 points
HN discussionNot to be pessimistic, but consider the applicant pool MrBruh targets here. One wonders how widely people with the sort of research skills and communication habits you describe are represented in the population applying for a fry cook position at a Checkers franchise. Or even amongst the franchisees themselves... And for that matter, how that kind of initiative would be received by your potential future manager at t…
Comment linking /archive/seeing-like-a-bank/
on “I pwned half of America's fast food chains simultaneously”Submitted Open Banking and Payments Competition as a story · 155 points
HN discussion> I don't think we'll ever have a zero-crime society, neither should we aim to be one. This reminded me of https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
Comment linking /archive/optimal-amount-of-fraud/
on “Stargate Project: SoftBank, OpenAI, Oracle, MGX to build data centers”Submitted The optimal amount of fraud is non-zero (2022) as a story · 143 points
HN discussionThere's a neat blog write up by @patio11 - https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra... . It applies to this as well, but in a larger scale.
Comment linking /archive/optimal-amount-of-fraud/
on “Today's PHP security release, and how we're strengthening security”Submitted Perpetual futures, explained as a story · 136 points
HN discussion> Explain how a privacy that protects you and me will somehow not protect a pedophile. I think that it will, and that's okay. The US Bill of Rights necessarily protects criminals as well as innocents. "The optimal amount of [crime] is non-zero." ( https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra... )
Comment linking /archive/optimal-amount-of-fraud/
on “California lawmakers unanimously pass Linux exemption from age-verification law”Submitted Guys what is wrong with ACATS as a story · 128 points
HN discussionSee this very nice blog-post: https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-th... It explains how KYC and AML law function as a stochastic control on crime. How that is difficult to do through actual laws, and what the downsides of this system are.
Comment linking /archive/kyc-and-aml-beyond-the-acronyms/
on “The treasury is expanding the Patriot Act to attack Bitcoin self custody”Submitted Mortgages are a manufactured product (2022) as a story · 127 points
HN discussionNah. I'm definitely going to blame the people who built a trivially exploitable system and got rich off it while everyone else has to deal with the consequences. By the way, you didn't commit theft. It's more like credit card fraud. User just disputes the charge and it kind of disappears. The banking system just absorbs it, because the optimal amount of fraud is non-zero. https://www.bitsaboutmoney.com/archive/optim…
Comment linking /archive/optimal-amount-of-fraud/
on “We must pace the frontier”Submitted The business of wallets as a story · 106 points
HN discussionFor anyone interested in why the system looks the way it does, I recommend patio11's insightful recent blog post, which is nominally about payroll systems but ends up discussing the history of taxation in the US because that's the origination of many of these systems: https://www.bitsaboutmoney.com/archive/payroll-providers-pow... A relevant quotation for much of the discussion here: > And, relevant to the question…
Comment linking /archive/payroll-providers-power-respect/
on “IRS to begin trial of its own free tax-filing system”Submitted The gift card accountability sink as a story · 90 points
HN discussion> To transfer money to a broker, I need to pay around $5 in transfer fees via ACH or wire I suggest switching to a better bank. This is unreasonable, my ACH transfers are free. > I want to change the custody of my stock market assets from one broker to another $75 sounds like a bargain, given the complexity it involves: https://www.bitsaboutmoney.com/archive/how-acats-transfers-w... But anyway, I recently transferre…
Comment linking /archive/how-acats-transfers-work/
on “Brazil's government-run payments system has become dominant”Submitted Two Americas, one bank branch, and $50k cash as a story · 78 points
HN discussion
