Did I just lose half a million dollars?

The half million was a fair and just transfer. Whoever is the recipient is fully deserving both morally and ethically of their new-found wealth.

If I was on the receiving end of this transaction, I’d thank the sender for the money and move on with my life. Of course I’d never be in the position to receive the funds because I’m not stupid enough to play this game—odds are very good I would be the one who sent half a million dollars by mistake!

I mean, I think I’m joking but not really. If you want to practice “code is law” and really mean it, this is the kinds of stuff that will happen.

Like, if the contract for the ERC-20 token would, when handling a send instruction, would check whether the recipient address was a contract address or an address controlled by a keypair, and if the former, would check if the recipient had been marked (not sure if this marking would be stored as data on the recipient contract or as data on the ERC-20 contract) as being able to handle the token in question, and if not, cancel the transaction (other than gas costs).

This seems like it would prevent this kind of error (or at least, reduce the problems resulting from this kind of error to just paying the gas fees), but it would also maybe increase the gas cost of sending transactions with the ERC-20 tokens and I’m not sure whether this increased cost would be negligible or not.

Correct. If you want to send someone money unconditionally, you can just send it without a smart contract.

> What was the person who lost half a million trying to accomplish?

Why/when to use WETH? From the beginning:

Like Bitcoin, ETH is a crypto currency that has it's own token called ETH (or Ether), you can hold it, send it from one address to another address and earn it by mining. Providing a basic finance and value excahnge platform.

In addition to ETH, Ethereum supports (via Smart Contracts) things called tokens, that are effectively alternative cryptocurrencies. Pre-Ethereum, people needed to create a new chain for each new token, for example you have "NameCoin" and "LiteCoin" and "DogeCoin" and so on. Each has it's own network, initial block, wallet client, mining pools, etc. It's a copy and paste and edit of Bitcoin each time.

With Ethereum, you can create a new token with it's own separate initial supply, precision, allocations etc. on the same blockchain (Ethereum) using a Smart Contract. People can use these tokens on the same network, using the same tools. However there are limits on how different they can be - you can only do what the Ethereum tech allows.

Now as time went on, there were a lot of tokens, and so they developed a standard, ERC20, which is like a C# or Java interface that defines a standard token. With this in place people can write code that interacts with "any token".

I could create a stock exchange contract where people list, place orders etc. to swap tokens. Even once this stock exchange is written and deployed, people can create brand new ERC20 tokens, and because those new tokens meet the interface, the stock exchange will work with it.

This all hots up and of course people naturally want to use these stock exchange, and other contracts (be it gambling, lending, escrow or whatever...) with the original ETH token, since everyone playing has ETH (you need ETH to pay network fees), and it's value is going up and wotnot.

But ETH is not a smart contract. It's hard coded into Ethereum. It was written before ERC20 was standardized. So you can't use Ethereum as one of the tokens in your stock exchange.

WETH offers a way to wrap Ethereum in an ERC20 token and solve that problem!

Since smart contracts can define rules about deposits, withdrawals, etc, and smart contracts can own their own Ethereum. This wrapping can be done purely in code. No need to trust "WETH Inc"*.

WETH is basically an "adaptor" from the gang of 4 design patterns.

* Other wrapped coins usually require trust. For example "Tether" wraps USD, but it requires a company to manage the bank accounts. People may decide they don't believe that company really has the funds, or the parent company could be put out of business by a government. WETH on the other hand is wrapping something on the blockchain in a code-automated way.

You can make mistakes (like the OP) but unless there is a big security hole no one has discovered, you can't have the money stolen or confiscated unless your private keys are compromised.*

Of course using the intuitive systems setup for the means that one has to trust some random people or companies, instead of going directly to the blockchain. What happened to trustless?

That user could have used it how other people use it.

There are a lot of things here that have nothing to do with “crypto needs to be simpler” copypasta. This particular thing was not simple and never will be unless everyone stops using it. Focus on that one thing: How to design a better smart contract? How to design a better UI for the end user? Thats a great discussion for a programming forum actually.