11–20 of 42 posts
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Crypto may, one day, find utility as part of the financial system (outside of drug deals, sanctions evasion, money laundering, tax minimisation, greater-fool scams, and Ponzi schemes), but its recent volatility has been in no way related to that.
I know people that have bought houses with MakerDAO loans. Its utility is here. To say otherwise is just sticking heads in sand.
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"one day" ?
It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
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I know people that have bought houses with MakerDAO loans. Its utility is here. To say otherwise is just sticking heads in sand.
I did the same with TradFi. There's no additional utility.
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It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
Earlier quoted context omitted.
It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
As if being able to transact with anyone else on the planet sans middlemen isn't enough utility on its own. I would instead ask people who make comments like the one that started this thread to substantiate their affirmative claims about how crypto is only used for these shady things. For some reason, no such evidence is ever forthcoming.
Earlier quoted context omitted.
I know people that have bought houses with MakerDAO loans. Its utility is here. To say otherwise is just sticking heads in sand.
I did the same with TradFi. There's no additional utility.
I agree with the beanie baby analogy when it comes to the various tokens that people "invest" in. But I wouldn't be so quick to say there was no utility, at least conceptually. It didn't really "click" for me until I implemented a smart contract. I realized that I could implement the entire financial system relatively easily, e.g. I could create an analog for stocks, options, margin lending, etc. Building a similar system without the blockchain would be much more difficult. I certainly couldn't do it alone. And even if I did do it with the blockchain, there would be an additional step of convincing people to trust that my system would stay up. Smart contracts run "forever" (in a sense).
"... same risks that are all too familiar from traditional finance, such as leverage, settlement, opacity, and maturity and liquidity transformation."
Yes. I've been making this point for years. It's mostly problems that are well known. It's just that the crypto crowd doesn't study financial history, so they get to repeat it. Although crypto has its own unique risks - it's really hard to secure crypto assets and still use them, and fast anonymous remote irrevocable transfers make it hard to catch crooks.
"... there is a risk that a single dominant stablecoin might emerge, given the winner-takes-all dynamics in such activities. Indeed, the market is currently highly concentrated among three dominant stablecoins, and it risks becoming even more concentrated in the future. The top three stablecoins account for almost 90 percent of transactions, and the top two of these account for 80 percent of market capitalization."
Network effects tend to concentrate stablecoins. The Fed points out that they're already very concentrated. It's a single point of failure. If USDT crashes, a lot of people will be hurting. Many of them had no idea they had a big exposure to risk.
*"...decentralized lending, which relies on overcollateralization to substitute for intermediation, can serve as a stress amplifier by creating waves of liquidations as prices fall."
Right. This is the concept that if you bundle enough high risk investments together, you get a low risk investment. The trouble is that the risks are usually correlated; multiple investments of the same class crash together. Add in leverage, and the crash speeds up.
Can’t understand why the fed wants to regulate tulip bulbs. What’s next a paper on beanie babies?
If tulips bulbs were of a limited supply, (relatively) infinitely divisible, (relatively) impossible to forge, and could be transferred anywhere in the world, in any amount, (relatively) instantaneously… Would it really be that crazy to imagine that they may have kept significantly more value? Or be used as a kind of currency?
It seems like anything with those properties could be a good basis for a currency, whether it’s Beanie Babies or Pokémon cards (neither of which actually do have those properties), or cryptographically secure blocks of teleporting cheese.
Earlier quoted context omitted.
It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
1. International settlements of any sum of money (small to large) in 10-20 minutes instead of days
2. Markedly lower money transfer fees compared wire transfer or ACH
3. Ability to be one’s own bank if so desired, avoiding government bank account pillaging (Cyprus, Argentina, many more)
4. Ability to send money anywhere (try paying your staff in Russia with USD these days… we have two; they both get paid in Bitcoin since following Russia’s removal from SWIFT cryptocurrency is now the only way)
5. When comparing Layer 2 transactions, orders of magnitude more transactions processed (global credit card network: 19,000 transactions per second; Bitcoin’s Lightning network: several million transactions per second), for significantly lower fees (very appealing if you are a merchant); payment settlement in hours instead of days
6. Deflationary savings account over medium- and long-term timescales
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I did the same with TradFi. There's no additional utility.
Why can’t there be more than one financial system? Isn’t diversification valuable?
As long as people can interact with both easily, they will, and a lot of the risk/rewards will get tied together. Things move up together and down together.