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Cryptocurrency in the 2020s

blog.coinbase.com

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Re: Cryptocurrency in the 2020s

#81

Post by asdfasgasdgasdg »

v64 wrote: post #59
iamaelephant wrote: post #58

Earlier quoted context omitted.

> A holder of Dai can earn 4% APY through a Dai Savings Account, and a vote is currently in place to raise the rate to 6%. Why not just vote to make it a million percent?

Because then you'd have to change the interest rate charged to loan holders to a million percent, and those people would close their loans rather than pay that interest rate.

But why are the lenders even paying 6% when they could go get a SoFi loan for four percent and on top of that have the balance in a more convenient form?

Re: Cryptocurrency in the 2020s

#82

Post by v64 »

TylerE wrote: post #80
RcouF1uZ4gsC wrote: post #26

Earlier quoted context omitted.

> If you look at what MakerDAO is doing with the Dai stablecoin, they've proven that it's possible to create a synthetic asset closely pegged to the dollar purely through financial incentives, and they did it all just using Ethereum v1. A holder of Dai can earn 4% APY through a Dai Savings Account, and a vote is currently in place to raise the rate to 6%. >I personally find it incredible that an asset exists on the b…

Paying 6%, or even 4%, on a savings account is a MASSIVE red flag to anyone with a bit of financial sense.

Those with loans in the system will have to pay a 6% interest rate. Since not all holders of Dai have savings accounts, this allows for the system to use the interest charged to loan holders to pay out the savings rate while accumulating a surplus.

A 6% interest rate on USD would be a red flag, but Dai isn't USD. As far as I know, no banks allow you to use Ether as collateral for a USD loan, so the comparison isn't apples to apples.

Re: Cryptocurrency in the 2020s

#83

Post by v64 »

asdfasgasdgasdg wrote: post #81
v64 wrote: post #59

Earlier quoted context omitted.

Because then you'd have to change the interest rate charged to loan holders to a million percent, and those people would close their loans rather than pay that interest rate.

But why are the lenders even paying 6% when they could go get a SoFi loan for four percent and on top of that have the balance in a more convenient form?

Because SoFi doesn't allow you to use Ether as collateral for a loan. Many holders of Ether may not necessarily have the credit required to get a loan on more favorable terms.

Re: Cryptocurrency in the 2020s

#84

Post by asdfasgasdgasdg »

v64 wrote: post #83
asdfasgasdgasdg wrote: post #81

Earlier quoted context omitted.

But why are the lenders even paying 6% when they could go get a SoFi loan for four percent and on top of that have the balance in a more convenient form?

Because SoFi doesn't allow you to use Ether as collateral for a loan. Many holders of Ether may not necessarily have the credit required to get a loan on more favorable terms.

I don't understand. Cash and other liquid assets are not typically used as collateral for a loan. Etherium is a crypto-currency, right? I.e. it's liquid? Collateral is almost always something like a house, or shares in a business. If you already have liquid assets in the amount you're borrowing, why are you taking a loan and paying interest as opposed to just using those liquid assets?

Re: Cryptocurrency in the 2020s

#85

Post by humanfromearth »

xorcist wrote: post #70
waynecochran wrote: post #48

How do you fix their No. 1 problem: scalability? The blockchain updating, and certainly mining, are inherently slow.

Those are two different problems: scalability and finality. Obviously every transaction can not be processed and stored by everyone. That much is clear even to casual observers. There has been two or three main ways people have tried to achieve this during the past decade. The obvious thing to try would be to shard the blockchain like you would a database. This turns out to be hard to do in a trustless way since shar…

Thanks for this. I was wondering about this exact thing. Any idea about the the current transactions/second with finality of the BTC or ETH? What is expected from the new methods?

Re: Cryptocurrency in the 2020s

#86

Post by v64 »

99052882514569 wrote: post #79
v64 wrote: post #49

Earlier quoted context omitted.

There are definitely cases where transactions need to be reversed, and this functionality can be built into a clearinghouse system. Immutability is a plus here because you have an unalterable audit log showing the original transaction and then the subsequent transaction that reverses the first. The cost savings comes from the fact that instead of having to hire independent auditors to verify the paper trail, the bloc…

>The cost savings comes from the fact that instead of having to hire independent auditors to verify the paper trail, the blockchain serves as an immutable audit log and can be verified programmatically. I don't know enough about the financial industry to know if a real actual problem is being solved here. I do assume that any bank in this industry is already required by law to keep a record of all transactions, and t…

> I do assume that any bank in this industry is already required by law to keep a record of all transactions, and that it's all digitally processed and stored.

This is true, but it's not necessarily organized in a straightforward way, and standards can differ from organization to organization despite everyone attempting to follow GAAP. This is why entire firms exist to audit large corporations.

> You'd have to hire an auditor to verify the blockchain software too, and even on the ongoing basis, to audit the infrastructure to make sure it hasn't been improperly modified.

Not necessarily. Each transaction on the blockchain is cryptographically signed, so all you would need to audit for each transaction is that the claimed signatures verify. It's not possible, even through a bug, to forge a signature if you don't hold the private key.

Re: Cryptocurrency in the 2020s

#87

Post by laurus »

Geee wrote: post #77
iamaelephant wrote: post #64

Earlier quoted context omitted.

> blockchain is most likely a far more interesting technology. Why? Really, I would like to know why you think this. Append-only data structures have existed almost since the dawn of computing. Making it distributed and trustless doesn't seem to solve any real problems, which is why over a decade since they entered the public consciousness they are used for almost nothing interesting, and nothing that couldn't be don…

> doesn't seem to solve any real problems If you don't see the current monetary systems as a problem, then I guess you don't really have a way to understand Bitcoin. I think it's one of the most important innovations of our civilization; a 'next step', if you will. Personally, it solves my problem of storing value of my work indefinitely.

Are you against private banks being able to create money when they make loans? If so, why?

Re: Cryptocurrency in the 2020s

#88

Post by v64 »

asdfasgasdgasdg wrote: post #84
v64 wrote: post #83

Earlier quoted context omitted.

Because SoFi doesn't allow you to use Ether as collateral for a loan. Many holders of Ether may not necessarily have the credit required to get a loan on more favorable terms.

I don't understand. Cash and other liquid assets are not typically used as collateral for a loan. Etherium is a crypto- currency , right? I.e. it's liquid? Collateral is almost always something like a house, or shares in a business. If you already have liquid assets in the amount you're borrowing, why are you taking a loan and paying interest as opposed to just using those liquid assets?

If you sell the Ether, you no longer have the Ether. If while you're holding the loan the price of Ether goes up, you benefit from that. Of course, if the price of Ether goes down, you're at risk of having your loan liquidated, but that's a requirement imposed by the system to maintain the Dai peg.

Re: Cryptocurrency in the 2020s

#89

Post by paulpauper »

induetimesir wrote: post #68
wpietri wrote: post #27

Earlier quoted context omitted.

Exactly. It has been 10+ years since the Bitcoin paper. No cryptocurrency has significant consumer adoption. [1], [2] Except for light financial crime (ransomware, money laundering, gambling, theft, etc), it has no demonstrated advantage over alternative technologies. I don't think it will go away, any more than Ponzi and Make Money Fast schemes have gone away. But like you, I expect it will fade into the background…

"no demonstrated advantage" - said by someone who doesn't remember what it's like to wait for a large check to clear. or hasn't tried to fund their IRA via an ACH transfer but their bank won't allow it bcs rules.. or hasn't wanted to wire money (or receive a wire) for a fraction of the price (and hassle) of a wire transfer. I have sent hundreds of bitcoin transactions. And I admit that it's not perfect. There's lots…

how long do you think it takes to turn fiat into bitcoin and bitcoin back into fiat for the recipient? Hint: its longer than clearing a check

Re: Cryptocurrency in the 2020s

#90

Post by paulpauper »

chii wrote: post #65
Lerc wrote: post #34

>Olaf Carlson-Wee and Balaji Srinivasan estimate that at a price of $200,000 per Bitcoin, more than half the world’s billionaires will be from cryptocurrency This misses a key piece of information. They take the price as an an assumption for their argument, but that is insufficient to draw this conclusion. When Bitcoin reaches $200,000 is also a factor. The worlds existing billionaires will not sit still. If it takes…

there are people who also believe gold will reach $100k an ounce. I don't think that will happen, or if it did, society would've transformed so much that there bears little resemblance to today's world.

it will take so long to happen that such time frames are irrelevant to anyone alive today
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