The purpose has been obvious for a while.. something to do with parting low income, technically illiterate men with their money while confusing them with technobabble.
The concept of programmable open source money should be enticing for what has historically been a crowd of people who are into open source, development and technology. I guess we draw the line at money.
I'm sad that we lost that crowd over the years and gained what seems to be angry old man yelling at tv screen.
Same, it's quite sad reading these threads now. Even worse, they call it nothing but scams and speculation and give reasons that apply equally to traditional finance. I guess they aren't aware where the term ponzi scheme came from.
In tech circles there are a lot of folks who knew of the technology years ago when it was worth just a few dollars and now see it selling for 60k and are no doubt kicking themselves now. If I am honest, I know I am. I don't lose sleep over it, but I could be sitting on a lot of money right now if I had of acted back then.
Programmable money is just not that interesting, despite that you think it should be. That's before accounting for the loud portion crowd that hangs around the space, that over hype and are annoying.
There are more interesting and world benefiting things to work on. Less about hate, more about opportunity cost. Everyone who pitches me on working in crypto talks about how rich you'll get. Is that a major selling point in any other job interview? Does it seem off when that is the main selling point for working in a field?
"In my opinion" and you seem jaded. I keep a more open mind to things, especially when people are so against them.
It sounds like you should talk to better people cause I don't think I've ever encountered someone pitching me like that and I've been deep into this business for many years now.
I've interviewed with crypto and worked in the space.
Not jaded, disappointed in how things have progressed. It was better in the beginning. To jump to that conclusion just shows you are part of the attitude problem in the crypto space
> There are more interesting and world benefiting things to work on.
Like providing people across the world with access to a financial system thet can't be denied from?
> Less about hate, more about opportunity cost.
As in you want to know the opportunity cost of not being involved in blockchain/crypto?
> Does it seem off when that is the main selling point for working in a field?
It's only the main selling point for those that aren't tech savvy enough to understand the rest, and I think that's fine. It being a new and growing sector that's quickly appreciating and making people money doesn't take away from what's creating that value and all the innovation happening.
With the birth of the internet people were excited about all the information they were able to access. With the birth of programmable money it makes sense that the same theme would follow with money.
Like developing AI for hospitals that is saving lives. Like working on an interesting language like Cuelang.
The selling point is made by every tech recruiter I have spoken with who is trying to get me to work for them.
Blockchain is incremental tech, not world changing. The same power structures remain and shall. You Gail to understand that social structures are more important than tech
No, they won't, our existing patterns will be mapped onto them. These structures exist already and the variations DAOs espouse are less information and resource efficient. The tech will not change this, there are no new structures.
Also, you can have a DAO without a blockchain. But when all you have is a hammer, everything looks like a nail.
> Like providing people across the world with access to a financial system thet can't be denied from?
And what a lot of people seem to realize is that there are reasons for this, the controls exist for a reason. Allowing everyone access is not necessarily a good thing across the board. That realization will at some point be forced though, which leads into regulation in some form, which will takes us full circle again...
> Allowing everyone access is not necessarily a good thing across the board.
Why not? Spare us the hard realization and explain to us why it is a good idea to deny access to complex financial arrangements to people.
And let's not get moralistic about it. I didn't ask "why should Mitumba in Nairobi be denied access to lending?" because I don't want to be moralistic, so I expect a response aside from "do you want to enable Osama Bin Laden to launder money?" We all know the obvious examples to support both arguments, so let's stick to more run of the mill, less extreme examples. Why should the average Joe be artificially restricted from access to financial services of his choosing?
> Is that a major selling point in any other job interview?
Isn't that the main selling point in any job interview?
I'm not arguing whether programmable money is interesting or not, but this is a space unfortunately that talks about doing interesting things and then goes to work for Facebook. The vast majority of us here are working on significantly less interesting things. Software development and programming is a world full of hype and "change the world" rhetoric and people doing things for the money. Why does cryptocurrency get an outsized amount of criticism for being a part of it?
Because it is where all the Snake Oil Salesmen are currently hanging out. The industry which dominates their employment usually gets the bad rap.
There is certainly a difference between offering salary and literally telling someone that they will get rich working for you. I've only encountered the latter while talking with the crypto crowd. The first and primary talking point is always about how much money you will make. The change the world attitude has waned as the realization has set in that there are many issues when bridging with meat space and all that is really left is finance applications.
Wouldn't people into these things be aware how fragile, clunky, or incomplete they are as solutions, and want to not always suggest them for every problem? Or be more critical than the average user, not less?
It feels like that people develop technology, and become totally surprised when 5-10 years down the road severe or significant issues happen that no one thought much about in the rush to get wealthy over it. You all on this site hate Facebook, but the potential for its abuses was always there and very few people seemed to think about it during a time when it might be possible to mitigate it.
Would you really want to risk this with finance? I think it's a fair question to be angry old men when you see what technology can do over long enough of a timeframe. Like even now people are sanguine about how the internet massively increased the attack vectors people could use on others to a national or world level, and empowered scams, malware, and more.
If you are serious about DeFi or other technologies, you HAVE to look beyond brrr money go up and le Fed bad. There's too much at stake.
Organized crime is using it to launder money. People who got in early are using it as a pyramid scheme. Roommates and kids living at home are using it to rob their household via the utility bill.
And last but not least, coal power plants that were not financially viable supply electricity to the grid are discovering they're financially viable turning coal into cryptocoin...because cryptocoins weren't environmentally horrific enough as-is.
Please don't post this sort of low-quality flamebait to HN, regardless of how you feel about decentralized finance.
Perhaps you don't feel you owe low-income, technically illiterate men or technobabble better, but you owe this community better if you're participating in it. Comments like this tend to get upvoted because snark and indignation are like flypaper for upvotes, and that leads to lower-quality threads.
To buy big houses, fancy cars and big yachts for people who are paid to make you fear money by telling you everything is risky and you should only keep your money with them.
A chain of responsibility.
If someone tries to scam me, I can call the bank and get the transfer reversed.
If someone robs me and steals my wallet, they can't empty my bank account.
Convenience and simplicity (from the user's perspective) is a big factor too. Crypto exchanges solve this problem, but then we're back to square one in terms of trusting an institution, rent seeking etc.
- Your government can freeze your assets on a whim, because you criticised the wrong people or exposed some of their institution's crimes ( whistleblowers ).
- Destroy your business in an instant, by cutting you off from funding and other services for whatever reason they deem appropriate.
Every system has its pros and cons, but I totally understand why people are excited about defi.
To your first point how many people in rich countries have that problem. Seems like reversibility that conventional banks offer is way more useful to most people.
On first point. Hasn't blacklistings of wallets already happened? So I don't see any reason why wouldn't governments be able to enforce such as well? Or even major exchanges... Give a good reason and steal the money...
I am by no means an expert on blockchain protocols, but the whole point of Bitcoin or Defi is that a central authority is unable enforce their will on a whole network. You should consult actual experts on the matter tho
Blockchain might not, but users of it such as very centralized exchanges certainly have. Outside things like Monero, enforcement where it matters is entirely possible.
The primary purpose of finance is to move money through time. Finance can turn streams of income into lumps of capital, and vice versa, so you can do fantastical things like buy a house — without working out a 30 year installment plan with its current owner.
Finance can IPO a startup so that it can hire people to write code and use that code to make money.
Finance can let a farmer enter a contract to sell his future crop today, when he’s buying seed and fertilizer, without worrying that the grain price will plummet.
Insurance — finance’s cousin — moves risks using money, so your life won’t be ruined forever if your crop dies or your house burns down.
I'm glad to see this response here, this distils it to it's basic utility exactly.
I'd only add that assessing risk, that is, assigning a numeric and subsequently monetary value to the likelihood that a prediction will not happen in the future, enables this to occur. Without being able to move risk around you cannot move money through time.
I don't think there is a separation between finance and insurance like that. Risk is part of finance as well. For example by bundling loans financial entities can pool risk similarly to insurance - but it's not insurance.
In fact I'd go so far as to say all of finance is about managing risk because assets (all loans are assets)/financial positions generally fall on a line from <not risky, low-yield> to <risky, high-yield>. This is true for both aggressive speculative hedge fund managers and conservative banks. Everybody (who knows their shit) is following the Kelly Criterion in some way as a result, even if they may not know it. And your competitive advantage as a financial entity is generally to price risk better than other market participants.
This still benefits the public because by pooling, commodification of financial instruments, and accurately assessing risk financial entities are able to compete against each other in a mostly-open market leading to competitive and fair pricing.
I think a lasting application for blockchain tech has already come. Land registration on blockchain is not exciting enough to keep making the news but it's being slowly implemented around the world since before the pandemic cryptocurrency bubble. Rollout is slow so I personally don't know if it will reach the same kind of fame NFT has.
But I imagine a government's point of view on a cryptographically verifiable way to associate a property with an individual owner and a transparent history of ownership and built in fraud protection is very positive.
Less glibly, can you explain or point to references explaining how to solve this problem without relying on external identity verification services to confirm that a registrant is in fact that property owner? It seems like, if you have to do that, your records are more efficiently stored as a database with whatever authority is doing that verification.
I think the joke is that a decentralized database doesn’t really solve any of the hard parts of knowing who owns what more that a sql database at the county records office. Establishing the real world legal realities of what those db records represent, centralized or decentralized, is still just as messy and difficult.
Registered with who? This joke makes me think of the weird world of registering star names, from an organization that's not the International Astronomical Union. You might have potentially gotten scammed.
Humans are the weakest link in any realistic security model.
Even when they don't have such a ledger, it's not clear that blockchains do much to solve that problem either. The hard part is not the ledger, but the agreement on who owns what, with detailed surveys that are agreed to demarcate "ownership" and therefore enforced by law.
For example: Greece is still in the process of trying to centrally account for ownership of land [1]. There are certain regions where that was accomplished many years ago (e.g. some of the former Italian possessions in the Ionian, where the Italian-era surveys were accepted by the modern Greek state). But in many regions, property boundaries are still informally demarcated and based on oral tradition, which not everyone agrees on. The difficult part is that aspect of it: agreeing on who owns what, and precisely where the boundaries are. Once everyone agrees on the results of surveys and demarcations, actually tracking the result in a ledger is comparatively easy, as evidenced by the fact that nobody has trouble retrieving 19th-century Italian property ledgers.
At some point in the future, legal contracts and deeds will have to become digitized and more than just a pdf scanned version of a paper document. Decentralized allow transfers to be much faster and much more easily verified and most importantly allows redundancy of the database. Transparency and redundancy are the benefits of a decentralized ledger.
There have been pilot projects in countries like Sweden and India and even the US. Wyoming has been a test area for the US since 2018 and looks promising.
You don’t need a decentralized blockchain for transparency or redundancy.
Also, is transparency is a problem that needs to be solved for land records? That is, what are we missing now?
For redundancy, decentralized is either inefficient or insufficient. There has to be something motivating various someones to maintain the infrastructure. That is, money. Since the resources can’t be planned or organized, you can’t have the right amount — there has to be a wide, general incentive or you risk having too little, redundancy. That means either a bunch of money spread all over or a significant risk the decentralized data will simply stop existing.
And then there are the issues with a decentralized ledger. E.g., what so you do when it is out-of-sync with the legal authorities? Say I swindle you out of your keys and transfer the blockchain deed to your house to myself. I end up going to jail and am ordered to return the property. Or maybe you sue in civil court and obtain a legal order to recover your property. Only I refuse to transfer it back, or loose my keys and can’t transfer it back, or die without transferring it back. Now there’s a decentralized blockchain that is wrong and can’t be corrected. After all, if it could be reliably corrected at the order of a central authority it’s not actually decentralized.
I don’t know how this can be considered promising without a solid plan to address the various issues.
> Land registration on blockchain is not exciting enough to keep making the news but it's being slowly implemented around the world since before the pandemic cryptocurrency bubble.
I've been able to find references to pilot programs in Sweden, Ukraine, and Georgia (the country), but is there anywhere that's actually adopted it such that a blockchain-based registry has the same force of law that a traditional registry has?
I'm particularly curious how a registry would handle an “I lost my private key” scenario. As I see it, either the blockchain is absolute and losing keys would mean losing the land, or there's another authority who can override the blockchain's version of the truth. In the latter case, it kind of obliterates the advantages of a blockchain.
Years ago I read an article in The Economist about problems with land registries in some third-world countries. It was easy for rich people to bribe the registrar to alter records. Poor people who owned land suddenly wouldn't own it anymore, and couldn't prove otherwise.
A blockchain-based registry would prevent such forgery. A master key holder could change ownership, but not without a visible record of the change.
Blockchains are also perfect for hacking: use someone like NGO’s spyware package or bribe their maid, and the blockchain community will line up to say it was the victim’s fault and there’s no way the community can do anything but recognize the thief as the legitimate owner.
The idea is not that people have their own keys to transfer ownership. The idea is for the registrar have the keys, but not be able to change ownership without public documentation. And there's a big gap between corrupt officials and roving militias.
Here are two more recent articles from The Economist, the first on the general problem (not all of which can be solved with a blockchain) and the second specifically on applying blockchains to the problem.
And if you don't mind a link from Reason, here's one with a specific example of the issue I'm talking about:
> Currently, Honduras stores its title records in a room at the bottom of "dusty stairs" in a "nasty old government building," Factom CEO Peter Kirby said in an interview last year with Reason. Until recently, the room had no door.
> "Anybody could go in, pull down a book, open up the spine, and replace a title record with a new title record," Kirby said. Some government bureaucrats have altered the records to assign themselves beachfront property.
The difference is that it can't be done in secret. And it's possible that the highest level of government would like to fix the problem, but has trouble with corruption at lower levels. Making corrupt transfers obvious would make them much easier to clean up.
In other words, you might as well ask "what difference do notarized documents make?" Anything we can do to establish reliable documentation helps the enforcers of property rights do their job. Blockchains provide reliable records even when you can't trust a critical mass of low-level human record keepers.
(And I'm not making this stuff up, see the links I posted in a cousin comment.)
> The difference is that it can't be done in secret.
Who cares? The record is entered by a government official. That's it. The land bow belongs to whoever is written the record. Blockchain doesn't help here at all.
There are also multiple other cases around land ownership that blockchain proponents don't consider because blockchain proponents en masse have no idea how reality works.
Ah yes. As always with blockchains, everything depends on some nebulous "possibly someone somewhere will perhaps do something, and the only reason they are not already doing it now is because they don't have blockchain"
It's actually not uncommon for high-level government officials to attempt to crack down on corruption at lower levels, and to have great difficulty succeeding. Blockchains are a reliable record-keeping tool that can help, much like double-entry bookkeeping helps authorities prevent other types of shenanigans. Unlike the skeptics here, I've provided reference supporting these claims.
But I suppose when double-entry bookkeeping was first introduced, it faced a lot of dismissive snark as well.
No, the snark is that you're talking about things as is good recordkeeping is some marvelous solution to problems.
Where I live the tax agency has no problem having transparent records of everything that happens. And yet tax evasion is an enormous problem. Recordkeeping is not the reason why people evade taxes and why they won't stop. Same thing with a violent police force or corrupt border police.
> Blockchains are a reliable record-keeping tool that can help
It's a computer system where you enter records. That's it. These poor high-level government officials that can't do anything could already have implemented/procured such a system without blockchain. They haven't.
But sure, they are only lacking blockchain to make this magically happen.
Edit:
> Unlike the skeptics here, I've provided reference supporting these claims.
If you refer to pilot projects using blockchain in some countries, these are nothing but scams looking for easy grant money, don't solve the actual problems (especially not in countries with bad record keeping), and can be implemented faster and more efficiently with any other tech.
I wouldn't expect a comment containing any substance form anyone shilling for crypto.
Those comments have real problems that none of the blockchain "magic" can solve. And, of course, the moment actual real problems are discussed all the crypto shills just disappear into the thin air.
By putting registry data on the blockchain and allowing anyone to independently verify state of an immutable distributed database makes it much harder to get away with the corruption.
People here keep saying I don't understand "how things work" but so far nobody has provided references, while I've provided three links in support of my claims. Could you do the same?
In corrupt countries the laws don't matter two shits. What matters is what gets enforced. What matters is that the right cases go to the right courts. What matters is that people who press on these things get calls told to drop it, and if they don't drop it, they find themselves in accidents that no journalist is willing to touch with a ten-foot pole.
You're not going to find experiments quantifying this corruption; you'll find lived experiences and anecdotes coming from the same countries with the similar MOs.
Blockchains don't solve the problem of a police captain knocking at your door telling you that if don't go through with a shitty deal your son isn't coming back from school the next day.
Still no references then. I didn't ask for experiments; any decent journalism would suffice.
You're assuming the government is a monolithic entity, either corrupt or not. The truth is that often corruption is widespread but there are people at the top trying to fix it. That's not an easy task, and it's where keeping good, unforgeable records can help. That's why several governments are in fact running pilot blockchain programs.
> Still no references then. I didn't ask for experiments; any decent journalism would suffice.
Of course no references! Do you think even local journalists cover these things? Are you wrapped in a first-world bubble where you've never heard of local land rights being fought over? You've never met people from third-world countries willing to tell you about their fights with getting basic property rights enforces?
> You're assuming the government is a monolithic entity, either corrupt or not. The truth is that often corruption is widespread but there are people at the top trying to fix it.
I know enough governments officials in sufficiently high-enough places to know that there's people at the top who want to do the right thing.
> That's not an easy task, and it's where keeping good, unforgeable records can help.
This is where things are wrong. Where I live there's tons of illegal construction, disputed properties, and illegal sales. Recordkeeping has never been the issue; the issue is that legal disputes can take decades to settle with no particular recourse even for egregious lawbreaking.
The non-fungibleness of land requires a central authority to agree to ownership. It may live on chain but if the state does not consider the chain to be the source of record, it's useless. This is why armies exist.
> I'm particularly curious how a registry would handle an “I lost my private key” scenario
You can probably solve this with multiple signature wallets. So you have some relationship with custodians where none of them independently can transfer ownership but a certain number of them would be required to do so. These custodians could be contractually obligated to act on your behalf. They can have their own policies for verifying ownership. It's more decentralized than our current system and courts could still play a role in disputes.
You have the issue today where ownership is difficult to determine ownership. You can tell how broken the system is when you have to pay title insurance regardless of the strength of your claim today in all (?) states. And the fee is 0.5% to 1% which is considerable. Some states even impose a minimum fee for title insurance and only allow a handful of politically connected insurance providers to offer this product.
Of course politicians wouldn't like this solution because the companies already in the system don't want efficiencies and lower costs and they contribute to campaigns. While homeowners don't feel that strongly since although considerable when buying or selling a home, it not top of mind or a frequent occurrence.
Just FYI you don't actually have to purchase title insurance. Your lender will require you to purchase it on their behalf, but if you are buying property without a lender there is no requirement to have a policy.
Your title/escrow representative will definitely throw a bunch of FUD at you if you decline to purchase though, cause it's a very profitable product for them.
Governments neither understand nor care about cryptographically verifiable. They have databases that, not that long ago, replaced giant books with stamps and seals. These dbs works well enough for their purposes.
Great. You've invented an expensive, badly performing database. Not only does the government have a verifiable way of associating a property with an owner and a history of ownership already, now you're either exposing owners to have their names revealed publicly for eveyrone (People are willing to pay a lot to know who to threaten to steal/occupy a plot of land), or to just keep a shitty database.
And then, the owner gets no benefit from it either. In the case of sales, you're still going to go through the state to certify the sale (with an actual, physical person). In the case of terrain where ownership is still blurry (which is already the case in lots of places in Europe, so the absolute fucking mess in the rest of the world is just a nice wrench in your plans), you still need a physical person to look around and figure out who it belongs to for months, before making a decision. Your blockchain doesn't help.
Blockchains are shit, expensive databases, part 342
>now you're either exposing owners to have their names revealed publicly for eveyrone (People are willing to pay a lot to know who to threaten to steal/occupy a plot of land)
Land ownership is already public record in many jurisdictions including I'm guessing all of those now using blockchains.
That's still only one of many, but those that want to remain ignorant will continue to handwave, find some excuse to dismiss it, and go on reading articles from other ignorant people about how there's no purpose so they feel good about themselves.
Don't be so bitter. The more people in the pool, the more diluted all that fat interest gets. While it needs to grow, it is also a bit of fight club.
Let it grow organically. The more that people throw shit against it, the stronger it gets. I wouldn't expect bitcoin to replace something as large as gold, without a huge fight. It has to win on its own merits.
Really, it is the story of bitcoin from day one. Those who got in early got all the rewards. Those who didn't... well... will pay nearly any price for it.
Yes, trades on Ethereum and Bitcoin can be expensive, but there are other chains with subsecond finality and fees in cents. On a TradFi brokerage it is not possible to take part of in their market making. As your collateral is used for investing and not liquidity in the market making.
Free? I only know of Robinhood and that's only for US, and you get frontrun anyway. If you are interested in holding equities only for value appreciation then I can understand DeFi not sounding that interesting. But if you are into saving, lending, leverage or market making then it should at least tickle curiosity.
Charles Schwab started offering free trades two years ago and the other major brokerages matched it. Free trades are just expected now. (I don’t know about outside the US.)
> but there are other chains with subsecond finality and fees in cents.
We should be careful with these claims in this context.
The layer 1s that have sub-second finality tend to be heavily centralized either relying on a very small pool of DPoS-backed and I slash able validators, or a completely centralized protocol component (relay) that is a trusted component of the system.
They get low fees and speed by keeping central control, but unlike the large brokers we’d traditionally use. The difference is that they don’t protect their users or have any consumer protections while still having the same ability to censor you or extract value from you.
Layer 2s can solve this, but they currently have training wheels on which give operators a high level of control (in some cases, they can freeze assets). Once training wheels are off, layer 2s will give us low fees and fast finality while users are still protected from having their assets frozen or stolen.
How competitive are the fees/spreads on difi? On gemini, the maker/taker fees are 0.25%/0.35% respectively, and the spread is less than $5 (bid: 58486.47, ask: 58490.85).
>Free? I only know of Robinhood and that's only for US, and you get frontrun anyway
any sources for this? AFAIK they make money off the bid-ask spread, but you're guaranteed at least the NBBO.
Defi fees can be cheaper than the very worst cex fees such as the ones you quoted, but only if you are trading huge size or not trading on Ethereum mainnet. Trading on Ethereum mainnet means the fixed fee of $100+ will probably dominate the exchange fee.
Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.
>Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.
Yeah sorry, I was pattern matching on "robinhood frontrunning" and didn't take the fact we're talking about crypto trading into account. With that in mind, they're not front running you, they're just providing worse rates and making money off the spread. It's basically how the "no commission" currency exchange places you see at airports works. They sell EUR to you at 1.15 EUR/USD, but they buy EUR from you at 1.10 EUR/USD.
I think it ends up being more complicated than that, because they don't operate their own clearing for crypto and they don't charge any fees, so some other party acts as a wholesaler, quotes huge spreads, and returns a lot of that money to RH as PFOF. But your post is directionally correct, and the differences are mostly marketing.
Uniswap v3 recently added support for 1bps (0.01%) pools. You can see here [1] that the usdt/usdc 1bps pool is their 3rd most popular tool if you sort by 24hr volume. And their popular pools are generally 5 bps.
Due to the nature of x*y=k pools, the spread would just be 2x the fee (but increases based on how much you transact vs how much liquidity there is). Or you can think of it as 0 spread with 1bps fees on both sides for the usdt/usdc pools.
> Meanwhile, trades on blockchains are often expensive.
This is quickly being solved with modular blockchain architectures. If you haven't read about zkrollups yet I suggest looking into that. While still in early stages transaction throughput on Ethereum has scaled from ~13 tx/s to ~2500 tx/s with rollups.
The "hundreds to bridge" is a worst case figure that most folks would only do if they had to bridge in the midst of a crash and needed to add capital to avoid liquidation on an L2 position.
If you time it right it's more like $40-50. Not great, obviously, but it isn't "hundreds".
And ultimately, the problem goes away when centralized exchanges provide direct on-ramps to L2's -- which is already happening with some smaller exchanges.
It's a one time bridge. Bridge once, and then the transactions with the funds you have on l2 can be traded or borrowed against for vastly cheaper then mainnet.
If you want or have a need to add more funds to trade with, then it's an additional bridging fee, but not every tx is $40-50.
It seems like there’s an underlying assumption that you’re going to trade often. Paying a one-time fee and making it up in volume doesn’t seem very appealing for people who don’t trade that much anyway? Is this just for day traders?
If you are coming from fiat then you can often withdraw to l2 directly from there if you research first. Liquidity is still an issue but alternatively you can use cheaper yet active chains like Sol, Avax or Polygon.
> Considering that trades are now free at major brokerages
Those "free" trades may be costing people more than having a 'traditional' fee, and claiming otherwise will get you fined for false advertising as Robinhood found out:
> The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges.
Further, I'm not sure 'free' trades may not be a good thing: it's long been observed that the more active a person is in trading, the less they tend to generally make compared to market averages. Some friction in trading seems to be a good idea as it forces one to actually consider the action you're about to take and whether it's actually a good move.
PFOF is one of those things that sounds obviously sketchy, but in reality it's just a simple consequence of "information is worth money". You're not losing money from payment for order flow—Robinhood can provide both price improvement over the national exchanges and get paid for it. PFOF isn't "coming out of" the bid/ask spread, it's a reflection of the fact that getting more retail users onto the stock market is valuable for those who want to bid against them.
PFOF is valuable, and warehouses collect market maker fees. Just this alone gives them a huge advantage against retail investors, but combined with equipment, infra, and hiring capability it's basically no contest. The thing retail is supposed to get out of the deal is NBBO, but Robinhood was fined millions for not even providing that.
The dynamic here is to pull in tons more retail investors, all of whom are at a disadvantage compared to firms. Robinhood is a gambling app marketed as an investment app, and we should start regulating it as such.
This “disadvantage” is overrated. If I sell some stock today because I need the money, that means I’m a “noise trader.” Whether my timing is good or bad based on short-term considerations is essentially random.
Random is not actually all that bad! I got what I wanted. Professional traders will prefer to trade against random traders because trading against someone who actually knows what’s going to happen is bad for them. This means trades by random traders get sufficiently subsidized that trades are free for us.
When buying or selling we often pay for convenience, and when the cost is very low, it’s not worth worrying about. In just about every other business, the prices we pay for convenience are a lot higher.
> The thing retail is supposed to get out of the deal is NBBO, but Robinhood was fined millions for not even providing that
Is this true? My understanding is that Robinhood was fined millions for taking more PFOF (vs price improvement) than they disclosed. At no time were they below NBBO for the vast majority of their trades—the difference was just that they were only giving consumers 20% of the better then NBBO prices they were getting, which was lower then many other broker-dealers, and taking the other 80% of the spread for themselves. From the SEC order:
For most orders of more than 100 shares, the analysis concluded that Robinhood
customers would be better off trading at another broker-dealer because the additional price
improvement that such orders would receive at other broker-dealers would likely exceed the
approximately $5 per-order commission costs that those broker-dealers were then charging. The
analysis further determined that the larger the order, the more significant the price improvement
losses for Robinhood customers—for orders over 500 shares, the average Robinhood customer
order lost over $15 in price improvement compared to Robinhood’s competitors, with that
comparative loss rising to more than $23 per order for orders over 2,000 shares.
However, the broker-dealers that analysis was comparing Robinhood to charged around $5 for per-order commissions. Whether $15 of price improvement for trades of tens of thousands of dollars is worth $5 of commission fees for small trades is not, to me, an obvious call for Robinhood to make. In total, the SEC determined that Robinhood traders lost $34MM over 2.67 years (or $13 million per year) vs using another brokerage firm, but that that loss was almost certainly concentrated in those doing big trades, and customers trading under 100 shares of stock per transaction were benefitted by Robinhood's policy.
Say robinhood gives me a price that’s 10 cents worse than the brokerage that charges 10$ per trade. I’d need to be buying and selling over 100 shares per transaction for it the $10 fee to be the better option.
99% of people are coming out ahead with robinhood.
> Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us.
Why does one of the brokerages not pay us then? Did they all sit at a meeting and discuss with each other that they should compete until it is free, but to cease competing after that?
How does decentralised finance achieve that? Surely a decentralised market has just as much need for Market Makers, speculation, prop trading and liquidity providers as a centralised one? Those are exactly the jobs banks (and hedge funds etc) currently do right?
I'm not trying to be difficult, I'm honestly asking, has someone changed market structures in a way to eliminate those functions? Things like timed, incremental markets and filling all orders at vwap have been suggested and sometimes tried in the non-crypto space, but I don't think it's ever worked...
Anyone can be a liquidity provider in an automated market maker, AMM. So that is what has changed. It has not completely eliminated needs for arbiters to balance the pools, but a great deal, and HFT is not really possible.
It has plenty of purpose in facilitating organized crime. Regardless of what the technology is capable of at some point in the future, this is overwhelmingly the use case today.
Cryptocurrency-related crime fell sharply in 2020 to just under $10 billion worth of total transaction volume. With non-illicit transactions also rising, just 0.34% of all cryptocurrency activity in 2020 was related to crime. [1]
Defi protocols are incredibly powerful tools; the only thing preventing me from never using a bank again is not being able to pay for goods directly with stable coins. It's obvious the vast majority of people maligning them have never used them.
The on- and off-ramps into the cryptoverse are still really clunky.
But I think we left the point of no return so it will only be a question of time until that is solved as well.
Consider this; other countries are more advanced than yours.
While China offered a centralized solution to p2p payments, the concept of paying for everything digitally is already ingrained into their culture. Stable coins are not far off from that.
Instead of getting a "cash rebate" by giving up all of our information to credit card companies (they are making a whole lot more than they are giving back), we should be collecting interest on our holdings and spending it more anonymously. Most people won't need credit when they have collateral. That seems like a more entertaining future.
It has nothing to do with digital. We could pay with credit cards and that's digital enough. The issue is the government seizing your assets, banks deciding to freeze your bank accounts, all the gatekeeping, all the rent seeking fees, all the institutional red tape, etc.
For example if I wanted to take out a loan, it'd take me days to weeks, high interest rates, and may not even get approved. With defi I can take out a loan in just a few minutes, no permission needed.
Also put aside your privilege and realize not everyone is in a first world country privy to the banking many take for granted.
Liquidation. Most (all?) crypto loans are collateralized for the concerns you mention. If asset value drops to debt value plus a buffer, it’s liquidated. Someone else pays your debt and gets your assets. To pay back, you simply repay the same amount of the coin you borrow, lowering liabilities.
You get to keep what you borrowed in the case of liquidation but your assets are gone.
No, you pay for it with your assets. Someone else pays to settle your debt and get your assets.
Example. You have $1000 btc deposited in a lending platform, you can borrow up to 80%. You borrow $800 usd. You keep the usd no matter what. If btc drops to $850 then someone pays $800 (usd debt) and gets btc worth $850. The buffer is so assets never drop below debt value.
.... so you can... never borrow more than you already have? that seems like the exact opposite of a loan. Why not just keep the $1000 yourself and spend $800 of it? If you can't pay yourself back, then you're only out $800 instead of the $1000 in your example.
Most threads about wealthy complain they don’t have to sell for capital gains but average person does. This is exactly that vehicle for anyone.
You could spend $800 but your total capital is $1000 vs $1800.
In my example, you would only be out $200 because you have $800 usd and the btc was $1000 when you put it in.
Even if you go get a loan from a bank, you need 20% equity and either collateral (this case) or co sign or proof of income. All collateral just the same. It’s just risked out to be possible to borrow many multiples due to the stability of real estate collateral.
In business loans, you have to put in 20% and the assets of the purchase are collateral.
It’s the same but crypto doesn’t have debt collectors since it’s not an org. Instead the collateral has to be in the system directly so they can automate liquidation.
This is similar to a securities line of credit(SLOC). Brokerages already have this. Am not getting how this is so different from todays system. M1 finance and E*Trade, IB all have SLOC. If you own a house you can get an equity line of credit. Either way you a borrowing against an asset that has some value. It just so happens in this case it’s Bitcoin. Is that the only difference?
Yeah the idea is the same except for bitcoin as the asset. Additionally no minimum asset amount. SLOC allow borrowing up to 35-50% of asset vs 80% or more. The interest rates are comparable tho.
I'm honestly trying to understand the benefit of going this route vs just using 800 of the 1000. It just seems obtuse. Coins can't possibly be trading at the insane prices because of the fundamental you are getting a crappy deal with defi
Well, it’s a kind of debt. Think of it like this. You have a car. Your car is worth $10k. You have no money. But if you had $1k today you could have $2k next month. One way you could do this is sell your car. Now you have $10k and you can spend $1k and next month have $11k. But you’d much rather end next month with a car and $1k rather than $11k.
This is a tool that lets you keep the car and get the $1k by mortgaging the car for the $10k. If car prices drop precipitously next month, you won’t get it back. But if they go up, then you have your car (now worth more than $10k) and you pay back the loan and keep the extra $1k you made too.
Perhaps you are familiar with house mortgages, etc. The closest thing a normal person would come to this is probably a HELOC.
I see your confusion but you don’t have more. After borrow, you have your deposit plus your borrow.
As to why, there are any number of reasons.
- you can avoid capital gains in deposit since a loan is not capital gains. Pay for an expense or start a biz. Anything.
- you can keep your btc while borrowing usd and put it into a yield. 5-20% isn’t uncommon to earn.
- you can buy other coins with the usd to extend your exposure although risky.
- you can borrow any coin, not just usd, as an effective short. Borrow a meme coin and pay back same amount of meme coin later but it’s worth less usd now.
Compare this to say credit card borrowing rates of 20+%. Borrow rates are based on the coin but can be effectively zero.
The why is up to you. It’s just not something that is possible with the regular system because of lock out.
When you use defi for a while, it becomes clear how much the traditional system locks us all out.
I personally deposit usd to get 5+% apy and then borrow for investing or expenses.
How do DeFi protocols handle loan defaults and repayment? shane_b describes in a sibling comment a scheme where your loan is over collateralized, but that doesn't make any sense—why take out a loan if you already have the money and could just "loan it to yourself" at 0% interest? How do DeFi loaning protocols handle Sybil attacks?
Real World Asset Financing as being explored by Centrifuge and MakerDAO is pretty interesting. Tapping into the yields and capital availability of DeFi to provide rates for trade financing (Harbor Trade), Revenue Based Financing (Fortunafi), etc.
SocGen, the 3rd oldest French bank recently put up a loan request on the Maker forums for 20 mil backed by bonds iirc.
Not a very good example: The reason for this is most likely because of regulators (US and CH) which create such a huge compliance headache for US-associated customers that in most cases it isn't worth keeping the customer.
Well, they can make the same argument for crypto. They don't want customers who are trading a lot of crypto, because it might lead to regulatory headaches for them down the road.
Are you sure it's not regulatory? Banks don't typically cut off an industry unless they're either told to, or they're seeing extremely high fraud rates for a particular type of transaction (e.g. calling their credit card company claiming they didn't authorize that payment to Only fans)
Saying DeFi is a bubble at this point is like calling Amazon a bubble in 2001. Yes the space is in a bubble but wake up - this has real users spending real money.
“Show me real decentralised apps with users?” A. DeFi Q.”that’s just moving crypto around, what else?” A. NFTs Q. “That doesn’t count”
You’ll keep doing this until X is on crypto making money. What’s the data point that would convince you ? Tell me honestly ? What is X where this sort of question stops making sense?
As wealth disparity rises, people increasingly seem to demonize “the man”…the embodiment of what they feel is holding them down. As such, companies, technologies and products that “stick it to the man” or reduce the influence of the institution are in a position to thrive. The surge in popularity of crypto is because it’s an outlet for this psychological phenomenon.
People who gravitate towards bitcoin are the Liberatian types, they are extremely scared of inflation, money printing, government overreach, they hate taxes, IRS, Customer due diligence laws, KYC etc.
They think Bitcoin is the way towards techno-utopia and that the single, most impactful thing you can do to reach techno-utopia is to base the entire global financial system of on Bitcoin, so that its inherent scarcity, deflation, no-taxation and freedom would enable countless of positive externalities and effects downhill.
People who gravitate towards Ethereum on the other hand are the Silicon Valley types: they don't have strong belief with regards to government , they don't spend too much time worrying about government at all. They spend time worrying about themselves and their surroundings.
They are concerned with 2 things:
1) Escaping personal irrelevancy by creating products/services that people will use , but always within the framework of the government
2) Productively channel their inner hatred towards existing products/services, and I'd also add their personal hatred towards the successful creators/administrators (eg. Zuckerberg, Jamie Dimon, Vlad, Ken Griffin..). All that in order to convince themselves, their co-workers and most importantly the public that such old institutions not only can be disrupted, but need to be disrupted ASAP because they are evil, and their creators/administrators are evil, and if they are not disrupted they'd cause harm and spread evil.
I've definitely seen these sentiments in the crypto space, it's really obvious if you even dip your toes into it that you will see these kinds of opinions and groupings. I also share some of the opinions that you're laying out here.
However, please keep in mind that they are generalizations. There are a ton of people in the space that are simply fascinated by the technology and looking to build something cool, and also people that are simply using crypto as a portion of their portfolio as it's been the highest performing emerging asset of our lifetime. There are also people that are just using cryptos as currency. There's countless reasons for being in the crypto space, and generalizing them to two simple groups is not quite accurate.
I partly agree with both of those sentiments. I think DAOs have the potential to replace nations and cryptocurrency's most revolutionary use case at the moment is being a playground for innovation in governance.
States have people with guns that enforce laws and officials who willingly leave office when they lose elections or are fired. That’s the hard part, not the voting. How does a DAO do this?
They attract investment from younger people (especially after a year where millions of wealthy elderly prematurely died of Covid, triggering a massive wealth transfer), but that doesn’t mean they’ve discovered sustainable business purpose.
This psychology is totally understandable. My bank wouldn't even help with notarizing documents, even though I have been their customer for more than a decade now. Meanwhile banks launder drug money happily in the billions, and nothing happens to them (other than some tiny fines, which are a joke). They act as they please. My dad worked for a bank all his life - he did a lot of good things through his job, because he was allowed to. The landscape is a lot different today.
The sad part is that much of crypto is owned by a very small number of whales, who can and do manipulate the market at will.
I really, really hope DeFi or something similar comes up to at minimum challenge the traditional finance institutions. This is very early stage, a decade or two from now, things might look different, hopefully better. There are lots of super smart people working in the space, even if 5% of them succeed, it might bring out some meaningful change
The biggest issue is that people underestimate how incredibly niche cryptocurrencies actually are. They solve one single issue, the double spending problem on truly anonymous transactions. For the vast majority of people, this isn't a problem they have. Smart contracts extend this functionality in novel ways, but the problem is still that the applications are incredibly niche. It's why people still use VISA or AliPay, it's why no Fortune 500 company relies on blockchains for its critical infrastructure, and why all major smart contract usage is related to either crypto exchanges, gambling, or more cryptocurrencies (such as ERC-20 based ones on the Ethereum blockchain).
Blockchains solve the trusted intermediary problem which is far more general concept than double spending. It's also a common misconception that blockchains are anonymous; they are pseudoanonymous and there are companies devoted to de-anonymising and tying real world users to transactions. They do this quite successfully. There are ongoing efforts to completely anonymise computation and transactions on the blockchain using ZK snarks but most today are not using this. Also those use-cases you mention are the low hanging fruit, but as more time passes and the technology matures I expect to see a much broader range of uses for trust-less computation.
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[ 3.4 ms ] story [ 238 ms ] threadI'm sad that we lost that crowd over the years and gained what seems to be angry old man yelling at tv screen.
There are more interesting and world benefiting things to work on. Less about hate, more about opportunity cost. Everyone who pitches me on working in crypto talks about how rich you'll get. Is that a major selling point in any other job interview? Does it seem off when that is the main selling point for working in a field?
It sounds like you should talk to better people cause I don't think I've ever encountered someone pitching me like that and I've been deep into this business for many years now.
I've interviewed with crypto and worked in the space.
Not jaded, disappointed in how things have progressed. It was better in the beginning. To jump to that conclusion just shows you are part of the attitude problem in the crypto space
Like providing people across the world with access to a financial system thet can't be denied from?
> Less about hate, more about opportunity cost.
As in you want to know the opportunity cost of not being involved in blockchain/crypto?
> Does it seem off when that is the main selling point for working in a field?
It's only the main selling point for those that aren't tech savvy enough to understand the rest, and I think that's fine. It being a new and growing sector that's quickly appreciating and making people money doesn't take away from what's creating that value and all the innovation happening.
With the birth of the internet people were excited about all the information they were able to access. With the birth of programmable money it makes sense that the same theme would follow with money.
The selling point is made by every tech recruiter I have spoken with who is trying to get me to work for them.
Blockchain is incremental tech, not world changing. The same power structures remain and shall. You Gail to understand that social structures are more important than tech
Also, you can have a DAO without a blockchain. But when all you have is a hammer, everything looks like a nail.
And what a lot of people seem to realize is that there are reasons for this, the controls exist for a reason. Allowing everyone access is not necessarily a good thing across the board. That realization will at some point be forced though, which leads into regulation in some form, which will takes us full circle again...
Why not? Spare us the hard realization and explain to us why it is a good idea to deny access to complex financial arrangements to people.
And let's not get moralistic about it. I didn't ask "why should Mitumba in Nairobi be denied access to lending?" because I don't want to be moralistic, so I expect a response aside from "do you want to enable Osama Bin Laden to launder money?" We all know the obvious examples to support both arguments, so let's stick to more run of the mill, less extreme examples. Why should the average Joe be artificially restricted from access to financial services of his choosing?
Isn't that the main selling point in any job interview?
I'm not arguing whether programmable money is interesting or not, but this is a space unfortunately that talks about doing interesting things and then goes to work for Facebook. The vast majority of us here are working on significantly less interesting things. Software development and programming is a world full of hype and "change the world" rhetoric and people doing things for the money. Why does cryptocurrency get an outsized amount of criticism for being a part of it?
There is certainly a difference between offering salary and literally telling someone that they will get rich working for you. I've only encountered the latter while talking with the crypto crowd. The first and primary talking point is always about how much money you will make. The change the world attitude has waned as the realization has set in that there are many issues when bridging with meat space and all that is really left is finance applications.
It feels like that people develop technology, and become totally surprised when 5-10 years down the road severe or significant issues happen that no one thought much about in the rush to get wealthy over it. You all on this site hate Facebook, but the potential for its abuses was always there and very few people seemed to think about it during a time when it might be possible to mitigate it.
Would you really want to risk this with finance? I think it's a fair question to be angry old men when you see what technology can do over long enough of a timeframe. Like even now people are sanguine about how the internet massively increased the attack vectors people could use on others to a national or world level, and empowered scams, malware, and more.
If you are serious about DeFi or other technologies, you HAVE to look beyond brrr money go up and le Fed bad. There's too much at stake.
https://archive.md/tEUlC
Organized crime is using it to launder money. People who got in early are using it as a pyramid scheme. Roommates and kids living at home are using it to rob their household via the utility bill.
And last but not least, coal power plants that were not financially viable supply electricity to the grid are discovering they're financially viable turning coal into cryptocoin...because cryptocoins weren't environmentally horrific enough as-is.
Perhaps you don't feel you owe low-income, technically illiterate men or technobabble better, but you owe this community better if you're participating in it. Comments like this tend to get upvoted because snark and indignation are like flypaper for upvotes, and that leads to lower-quality threads.
https://news.ycombinator.com/newsguidelines.html
We've been believing that story for years.
Convenience and simplicity (from the user's perspective) is a big factor too. Crypto exchanges solve this problem, but then we're back to square one in terms of trusting an institution, rent seeking etc.
- Your government can freeze your assets on a whim, because you criticised the wrong people or exposed some of their institution's crimes ( whistleblowers ).
- Destroy your business in an instant, by cutting you off from funding and other services for whatever reason they deem appropriate.
Every system has its pros and cons, but I totally understand why people are excited about defi.
Finance can IPO a startup so that it can hire people to write code and use that code to make money.
Finance can let a farmer enter a contract to sell his future crop today, when he’s buying seed and fertilizer, without worrying that the grain price will plummet.
Insurance — finance’s cousin — moves risks using money, so your life won’t be ruined forever if your crop dies or your house burns down.
I'd only add that assessing risk, that is, assigning a numeric and subsequently monetary value to the likelihood that a prediction will not happen in the future, enables this to occur. Without being able to move risk around you cannot move money through time.
In fact I'd go so far as to say all of finance is about managing risk because assets (all loans are assets)/financial positions generally fall on a line from <not risky, low-yield> to <risky, high-yield>. This is true for both aggressive speculative hedge fund managers and conservative banks. Everybody (who knows their shit) is following the Kelly Criterion in some way as a result, even if they may not know it. And your competitive advantage as a financial entity is generally to price risk better than other market participants.
This still benefits the public because by pooling, commodification of financial instruments, and accurately assessing risk financial entities are able to compete against each other in a mostly-open market leading to competitive and fair pricing.
But I imagine a government's point of view on a cryptographically verifiable way to associate a property with an individual owner and a transparent history of ownership and built in fraud protection is very positive.
Humans are the weakest link in any realistic security model.
That's the point, a blockchain doesn't solve this.
So what do you think it brings in this case?
For example: Greece is still in the process of trying to centrally account for ownership of land [1]. There are certain regions where that was accomplished many years ago (e.g. some of the former Italian possessions in the Ionian, where the Italian-era surveys were accepted by the modern Greek state). But in many regions, property boundaries are still informally demarcated and based on oral tradition, which not everyone agrees on. The difficult part is that aspect of it: agreeing on who owns what, and precisely where the boundaries are. Once everyone agrees on the results of surveys and demarcations, actually tracking the result in a ledger is comparatively easy, as evidenced by the fact that nobody has trouble retrieving 19th-century Italian property ledgers.
[1] https://int.ert.gr/greek-land-cadastre-will-be-complete-by-f...
There have been pilot projects in countries like Sweden and India and even the US. Wyoming has been a test area for the US since 2018 and looks promising.
https://www.yahoo.com/now/overstock-subsidiary-put-wyoming-c...
Also, is transparency is a problem that needs to be solved for land records? That is, what are we missing now?
For redundancy, decentralized is either inefficient or insufficient. There has to be something motivating various someones to maintain the infrastructure. That is, money. Since the resources can’t be planned or organized, you can’t have the right amount — there has to be a wide, general incentive or you risk having too little, redundancy. That means either a bunch of money spread all over or a significant risk the decentralized data will simply stop existing.
And then there are the issues with a decentralized ledger. E.g., what so you do when it is out-of-sync with the legal authorities? Say I swindle you out of your keys and transfer the blockchain deed to your house to myself. I end up going to jail and am ordered to return the property. Or maybe you sue in civil court and obtain a legal order to recover your property. Only I refuse to transfer it back, or loose my keys and can’t transfer it back, or die without transferring it back. Now there’s a decentralized blockchain that is wrong and can’t be corrected. After all, if it could be reliably corrected at the order of a central authority it’s not actually decentralized.
I don’t know how this can be considered promising without a solid plan to address the various issues.
I've been able to find references to pilot programs in Sweden, Ukraine, and Georgia (the country), but is there anywhere that's actually adopted it such that a blockchain-based registry has the same force of law that a traditional registry has?
I'm particularly curious how a registry would handle an “I lost my private key” scenario. As I see it, either the blockchain is absolute and losing keys would mean losing the land, or there's another authority who can override the blockchain's version of the truth. In the latter case, it kind of obliterates the advantages of a blockchain.
A blockchain-based registry would prevent such forgery. A master key holder could change ownership, but not without a visible record of the change.
And if land ownership was actually enforced based on cryptographic proof, then this attack would work even better: https://xkcd.com/538/
Here are two more recent articles from The Economist, the first on the general problem (not all of which can be solved with a blockchain) and the second specifically on applying blockchains to the problem.
https://archive.md/9afqO
https://archive.md/yetMv
And if you don't mind a link from Reason, here's one with a specific example of the issue I'm talking about:
> Currently, Honduras stores its title records in a room at the bottom of "dusty stairs" in a "nasty old government building," Factom CEO Peter Kirby said in an interview last year with Reason. Until recently, the room had no door.
> "Anybody could go in, pull down a book, open up the spine, and replace a title record with a new title record," Kirby said. Some government bureaucrats have altered the records to assign themselves beachfront property.
https://reason.com/2016/04/30/bitfury-desoto-blockchain-land...
In other words, you might as well ask "what difference do notarized documents make?" Anything we can do to establish reliable documentation helps the enforcers of property rights do their job. Blockchains provide reliable records even when you can't trust a critical mass of low-level human record keepers.
(And I'm not making this stuff up, see the links I posted in a cousin comment.)
Who cares? The record is entered by a government official. That's it. The land bow belongs to whoever is written the record. Blockchain doesn't help here at all.
There are also multiple other cases around land ownership that blockchain proponents don't consider because blockchain proponents en masse have no idea how reality works.
But I suppose when double-entry bookkeeping was first introduced, it faced a lot of dismissive snark as well.
Where I live the tax agency has no problem having transparent records of everything that happens. And yet tax evasion is an enormous problem. Recordkeeping is not the reason why people evade taxes and why they won't stop. Same thing with a violent police force or corrupt border police.
It's a computer system where you enter records. That's it. These poor high-level government officials that can't do anything could already have implemented/procured such a system without blockchain. They haven't.
But sure, they are only lacking blockchain to make this magically happen.
Edit:
> Unlike the skeptics here, I've provided reference supporting these claims.
If you refer to pilot projects using blockchain in some countries, these are nothing but scams looking for easy grant money, don't solve the actual problems (especially not in countries with bad record keeping), and can be implemented faster and more efficiently with any other tech.
As an example, this mini-thread on land registries in Afghanistan: https://twitter.com/dmitriid/status/1386994745218584580?s=20
Also this discussion: https://news.ycombinator.com/item?id=27212564
And this lower down: https://news.ycombinator.com/item?id=27217681
How's that for references?
Those comments have real problems that none of the blockchain "magic" can solve. And, of course, the moment actual real problems are discussed all the crypto shills just disappear into the thin air.
By putting registry data on the blockchain and allowing anyone to independently verify state of an immutable distributed database makes it much harder to get away with the corruption.
You're not going to find experiments quantifying this corruption; you'll find lived experiences and anecdotes coming from the same countries with the similar MOs.
Blockchains don't solve the problem of a police captain knocking at your door telling you that if don't go through with a shitty deal your son isn't coming back from school the next day.
You're assuming the government is a monolithic entity, either corrupt or not. The truth is that often corruption is widespread but there are people at the top trying to fix it. That's not an easy task, and it's where keeping good, unforgeable records can help. That's why several governments are in fact running pilot blockchain programs.
Of course no references! Do you think even local journalists cover these things? Are you wrapped in a first-world bubble where you've never heard of local land rights being fought over? You've never met people from third-world countries willing to tell you about their fights with getting basic property rights enforces?
> You're assuming the government is a monolithic entity, either corrupt or not. The truth is that often corruption is widespread but there are people at the top trying to fix it.
I know enough governments officials in sufficiently high-enough places to know that there's people at the top who want to do the right thing.
> That's not an easy task, and it's where keeping good, unforgeable records can help.
This is where things are wrong. Where I live there's tons of illegal construction, disputed properties, and illegal sales. Recordkeeping has never been the issue; the issue is that legal disputes can take decades to settle with no particular recourse even for egregious lawbreaking.
You can probably solve this with multiple signature wallets. So you have some relationship with custodians where none of them independently can transfer ownership but a certain number of them would be required to do so. These custodians could be contractually obligated to act on your behalf. They can have their own policies for verifying ownership. It's more decentralized than our current system and courts could still play a role in disputes.
You have the issue today where ownership is difficult to determine ownership. You can tell how broken the system is when you have to pay title insurance regardless of the strength of your claim today in all (?) states. And the fee is 0.5% to 1% which is considerable. Some states even impose a minimum fee for title insurance and only allow a handful of politically connected insurance providers to offer this product.
Of course politicians wouldn't like this solution because the companies already in the system don't want efficiencies and lower costs and they contribute to campaigns. While homeowners don't feel that strongly since although considerable when buying or selling a home, it not top of mind or a frequent occurrence.
Your title/escrow representative will definitely throw a bunch of FUD at you if you decline to purchase though, cause it's a very profitable product for them.
And then, the owner gets no benefit from it either. In the case of sales, you're still going to go through the state to certify the sale (with an actual, physical person). In the case of terrain where ownership is still blurry (which is already the case in lots of places in Europe, so the absolute fucking mess in the rest of the world is just a nice wrench in your plans), you still need a physical person to look around and figure out who it belongs to for months, before making a decision. Your blockchain doesn't help.
Blockchains are shit, expensive databases, part 342
Land ownership is already public record in many jurisdictions including I'm guessing all of those now using blockchains.
Let it grow organically. The more that people throw shit against it, the stronger it gets. I wouldn't expect bitcoin to replace something as large as gold, without a huge fight. It has to win on its own merits.
Really, it is the story of bitcoin from day one. Those who got in early got all the rewards. Those who didn't... well... will pay nearly any price for it.
Free? I only know of Robinhood and that's only for US, and you get frontrun anyway. If you are interested in holding equities only for value appreciation then I can understand DeFi not sounding that interesting. But if you are into saving, lending, leverage or market making then it should at least tickle curiosity.
More: https://www.nerdwallet.com/best/investing/free-stock-trading
Also I recommend subscribing to Matt Levine’s email newsletter. He covers stuff like this and is also very funny.
We should be careful with these claims in this context.
The layer 1s that have sub-second finality tend to be heavily centralized either relying on a very small pool of DPoS-backed and I slash able validators, or a completely centralized protocol component (relay) that is a trusted component of the system.
They get low fees and speed by keeping central control, but unlike the large brokers we’d traditionally use. The difference is that they don’t protect their users or have any consumer protections while still having the same ability to censor you or extract value from you.
Layer 2s can solve this, but they currently have training wheels on which give operators a high level of control (in some cases, they can freeze assets). Once training wheels are off, layer 2s will give us low fees and fast finality while users are still protected from having their assets frozen or stolen.
>Free? I only know of Robinhood and that's only for US, and you get frontrun anyway
any sources for this? AFAIK they make money off the bid-ask spread, but you're guaranteed at least the NBBO.
Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.
Yeah sorry, I was pattern matching on "robinhood frontrunning" and didn't take the fact we're talking about crypto trading into account. With that in mind, they're not front running you, they're just providing worse rates and making money off the spread. It's basically how the "no commission" currency exchange places you see at airports works. They sell EUR to you at 1.15 EUR/USD, but they buy EUR from you at 1.10 EUR/USD.
Due to the nature of x*y=k pools, the spread would just be 2x the fee (but increases based on how much you transact vs how much liquidity there is). Or you can think of it as 0 spread with 1bps fees on both sides for the usdt/usdc pools.
[1] https://info.uniswap.org/#/pools
This is quickly being solved with modular blockchain architectures. If you haven't read about zkrollups yet I suggest looking into that. While still in early stages transaction throughput on Ethereum has scaled from ~13 tx/s to ~2500 tx/s with rollups.
If you time it right it's more like $40-50. Not great, obviously, but it isn't "hundreds".
And ultimately, the problem goes away when centralized exchanges provide direct on-ramps to L2's -- which is already happening with some smaller exchanges.
If you want or have a need to add more funds to trade with, then it's an additional bridging fee, but not every tx is $40-50.
Those "free" trades may be costing people more than having a 'traditional' fee, and claiming otherwise will get you fined for false advertising as Robinhood found out:
> The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges.
* https://www.sec.gov/news/press-release/2020-321
Further, I'm not sure 'free' trades may not be a good thing: it's long been observed that the more active a person is in trading, the less they tend to generally make compared to market averages. Some friction in trading seems to be a good idea as it forces one to actually consider the action you're about to take and whether it's actually a good move.
The dynamic here is to pull in tons more retail investors, all of whom are at a disadvantage compared to firms. Robinhood is a gambling app marketed as an investment app, and we should start regulating it as such.
Random is not actually all that bad! I got what I wanted. Professional traders will prefer to trade against random traders because trading against someone who actually knows what’s going to happen is bad for them. This means trades by random traders get sufficiently subsidized that trades are free for us.
When buying or selling we often pay for convenience, and when the cost is very low, it’s not worth worrying about. In just about every other business, the prices we pay for convenience are a lot higher.
Is this true? My understanding is that Robinhood was fined millions for taking more PFOF (vs price improvement) than they disclosed. At no time were they below NBBO for the vast majority of their trades—the difference was just that they were only giving consumers 20% of the better then NBBO prices they were getting, which was lower then many other broker-dealers, and taking the other 80% of the spread for themselves. From the SEC order:
However, the broker-dealers that analysis was comparing Robinhood to charged around $5 for per-order commissions. Whether $15 of price improvement for trades of tens of thousands of dollars is worth $5 of commission fees for small trades is not, to me, an obvious call for Robinhood to make. In total, the SEC determined that Robinhood traders lost $34MM over 2.67 years (or $13 million per year) vs using another brokerage firm, but that that loss was almost certainly concentrated in those doing big trades, and customers trading under 100 shares of stock per transaction were benefitted by Robinhood's policy.99% of people are coming out ahead with robinhood.
Free might be too expensive. We don’t need to stop there. They might be making enough money to pay us.
Just like Facebook and google are free, they could pay us to use them with the profit they make from us.
I deal with a credit union and they pay me $5/yr for having an account (well, I did buy a $5 share to become a member).
Why does one of the brokerages not pay us then? Did they all sit at a meeting and discuss with each other that they should compete until it is free, but to cease competing after that?
I'm not trying to be difficult, I'm honestly asking, has someone changed market structures in a way to eliminate those functions? Things like timed, incremental markets and filling all orders at vwap have been suggested and sometimes tried in the non-crypto space, but I don't think it's ever worked...
The purpose of trading is to get money, not to share it.
Cryptocurrency-related crime fell sharply in 2020 to just under $10 billion worth of total transaction volume. With non-illicit transactions also rising, just 0.34% of all cryptocurrency activity in 2020 was related to crime. [1]
[1]https://go.chainalysis.com/2021-crypto-crime-part-1.html
While China offered a centralized solution to p2p payments, the concept of paying for everything digitally is already ingrained into their culture. Stable coins are not far off from that.
Instead of getting a "cash rebate" by giving up all of our information to credit card companies (they are making a whole lot more than they are giving back), we should be collecting interest on our holdings and spending it more anonymously. Most people won't need credit when they have collateral. That seems like a more entertaining future.
For example if I wanted to take out a loan, it'd take me days to weeks, high interest rates, and may not even get approved. With defi I can take out a loan in just a few minutes, no permission needed.
Also put aside your privilege and realize not everyone is in a first world country privy to the banking many take for granted.
You get to keep what you borrowed in the case of liquidation but your assets are gone.
Example. You have $1000 btc deposited in a lending platform, you can borrow up to 80%. You borrow $800 usd. You keep the usd no matter what. If btc drops to $850 then someone pays $800 (usd debt) and gets btc worth $850. The buffer is so assets never drop below debt value.
You could spend $800 but your total capital is $1000 vs $1800.
In my example, you would only be out $200 because you have $800 usd and the btc was $1000 when you put it in.
Even if you go get a loan from a bank, you need 20% equity and either collateral (this case) or co sign or proof of income. All collateral just the same. It’s just risked out to be possible to borrow many multiples due to the stability of real estate collateral.
In business loans, you have to put in 20% and the assets of the purchase are collateral.
It’s the same but crypto doesn’t have debt collectors since it’s not an org. Instead the collateral has to be in the system directly so they can automate liquidation.
This is a tool that lets you keep the car and get the $1k by mortgaging the car for the $10k. If car prices drop precipitously next month, you won’t get it back. But if they go up, then you have your car (now worth more than $10k) and you pay back the loan and keep the extra $1k you made too.
Perhaps you are familiar with house mortgages, etc. The closest thing a normal person would come to this is probably a HELOC.
As to why, there are any number of reasons.
- you can avoid capital gains in deposit since a loan is not capital gains. Pay for an expense or start a biz. Anything.
- you can keep your btc while borrowing usd and put it into a yield. 5-20% isn’t uncommon to earn.
- you can buy other coins with the usd to extend your exposure although risky.
- you can borrow any coin, not just usd, as an effective short. Borrow a meme coin and pay back same amount of meme coin later but it’s worth less usd now.
Compare this to say credit card borrowing rates of 20+%. Borrow rates are based on the coin but can be effectively zero.
The why is up to you. It’s just not something that is possible with the regular system because of lock out.
When you use defi for a while, it becomes clear how much the traditional system locks us all out.
I personally deposit usd to get 5+% apy and then borrow for investing or expenses.
No, it's only obvious that people haven't thought through their supposed solutions.
If all we had was Defi, someone would have this glorious notion of inventing a regular centralized system and we'd all be the richer for it.
Our monetary system works pretty well. Some things are a bit tricky, but otherwise it's fine.
SocGen, the 3rd oldest French bank recently put up a loan request on the Maker forums for 20 mil backed by bonds iirc.
exciting times!
Or can anyone post job posts? [0]
[0] https://news.ycombinator.com/from?site=curve.fi
Banks telling us what we may or may not do with OUR hard earned cash is not OK.
For example, I had to close my Swiss bank account (I'm Swiss) when I spent a lot of time in the US (no green card or residency there).
I'm not out to defend traditional banks here, just saying that this is not something specific to crypto.
For what reason? How did they know you were there?
Your bank knows an awful lot about you.
Credit card transactions for starters.
The huge problem is that they are subject to these things called laws and fines and government pressure.
Until there are none left. Reports on reddit suggest most are affected.
Remember UK doesn't have a bunch of small regional banks like the US
“Show me real decentralised apps with users?” A. DeFi Q.”that’s just moving crypto around, what else?” A. NFTs Q. “That doesn’t count”
You’ll keep doing this until X is on crypto making money. What’s the data point that would convince you ? Tell me honestly ? What is X where this sort of question stops making sense?
The purpose of all finance is getting rich(er).
Bitcoin is for those who blame and antagonize the government and the Fed, as well as the IRS.
Ethereum is for those who blame and antagonize big platforms such as Facebook, Google, Youtube, but also JPMorgan, RobinHood, Bank of America.
People who gravitate towards bitcoin are the Liberatian types, they are extremely scared of inflation, money printing, government overreach, they hate taxes, IRS, Customer due diligence laws, KYC etc.
They think Bitcoin is the way towards techno-utopia and that the single, most impactful thing you can do to reach techno-utopia is to base the entire global financial system of on Bitcoin, so that its inherent scarcity, deflation, no-taxation and freedom would enable countless of positive externalities and effects downhill.
People who gravitate towards Ethereum on the other hand are the Silicon Valley types: they don't have strong belief with regards to government , they don't spend too much time worrying about government at all. They spend time worrying about themselves and their surroundings.
They are concerned with 2 things:
1) Escaping personal irrelevancy by creating products/services that people will use , but always within the framework of the government
2) Productively channel their inner hatred towards existing products/services, and I'd also add their personal hatred towards the successful creators/administrators (eg. Zuckerberg, Jamie Dimon, Vlad, Ken Griffin..). All that in order to convince themselves, their co-workers and most importantly the public that such old institutions not only can be disrupted, but need to be disrupted ASAP because they are evil, and their creators/administrators are evil, and if they are not disrupted they'd cause harm and spread evil.
However, please keep in mind that they are generalizations. There are a ton of people in the space that are simply fascinated by the technology and looking to build something cool, and also people that are simply using crypto as a portion of their portfolio as it's been the highest performing emerging asset of our lifetime. There are also people that are just using cryptos as currency. There's countless reasons for being in the crypto space, and generalizing them to two simple groups is not quite accurate.
(Of course generalizations are never 100% accurate, but they can highlight a theme which is interesting to observe)
The same way the state does it: Paying them money.
> officials who willingly leave office when they lose elections or are fired
I don't think that will be hard in a DAO since the real power is with the DAO, not with any official acting on its behalf.
Anyway these kinds of questions and many more are why we need this playground, to discover all the edges and gotchas and find solutions.
Not so decentralized in the technical sense, but the motives are very similar.
The sad part is that much of crypto is owned by a very small number of whales, who can and do manipulate the market at will.
I really, really hope DeFi or something similar comes up to at minimum challenge the traditional finance institutions. This is very early stage, a decade or two from now, things might look different, hopefully better. There are lots of super smart people working in the space, even if 5% of them succeed, it might bring out some meaningful change
These are the building blocks of more interesting stuff that will come later.