974
None. Suffer. (lemmy.world)
submitted 2 years ago by to c/whitepeopletwitter@sh.itjust.works
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[–] 152 points 2 years ago* (last edited 2 years ago) (54 children)

Blockchain is a solution in search of a problem. A way to establish trust while not trusting any party is a cool concept, but in the real world it's far easier to establish a source of trust.

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  • [–] 29 points 2 years ago* (5 children)

    Congratulations, now your trust relies on your subject never becoming important enough that someone bothers to run 50%+1 of the nodes in your network which means only very, very large subjects (or ones where trust wasn't very important in the first place) ever even have a chance of that not happening. What do you say? Your technology doesn't scale to very, very large subjects because of abysmal transaction rates?

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  • [–] 7 points 2 years ago (4 children)

    now your trust relies on your subject never becoming important enough that someone bothers to run 50%+1 of the nodes in your network

    Yup. Very well said. People don't realize the extent of wealth inequality (and how ridiculously resource intensive blockchain tech is). If anything important were to be decide by a blockchain, the top 1% would control the network.

    More on wealth inequality here.

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  • [–] 6 points 2 years ago (3 children)

    Today's inequality was created by the Cantillon effect.

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  • [–] 4 points 2 years ago* (22 children)

    solution in search of a problem

    Idk I think centralised trust is a problem in and of itself but you can just look to history and world events that created bank runs and financial crashes like y'know - 2008, a year later the bitcoin ledger began.

    it's far easier to establish a source of trust.

    Yes but it also comes with problems as mentioned above. Blockchain tech being used for scams if anything is evidence of it being a mature and functional technology for finance because under capitalism it's all inherently a scam of some sort.

    That said we shouldn't let perfect be the enemy of good, I'm glad the technology exists even if I don't think it achieved what it set out to do quite as well as one would've hoped, if for no other reason than the fact we can all just buy any drugs online now with one day delivery instead of being stabbed on the street after calling some number like barbarians in the olden days.

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  • [–] 28 points 2 years ago (14 children)

    Blockchain wouldn't have mattered for 2008, at least not the crash parts. Blockchain would help with who owned which loans which was also an issue. It wouldn't do anything for the crash parts as that was bad lending fundamentals of no verified income or unrealistic appraisal.

    Blockchain scams are evidence of it's unreadiness and naivety. Crypto has speed ran the last 200-300 years of financial fraud. Pump and dumps, ponzi schemes, front running, market manipulation, rug pulls, and more.the fact the only viable use case is crime is also pretty telling, anyone that can safely involve a government entity would rather do that.

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  • [–] 20 points 2 years ago (6 children)

    The blockchain doesn't prevent a run on the "banks." If everyone decides to cash out at the same time out of fear of a crash then the currency crashes and there isn't enough money to liquidate everything (until it has no value). It isn't an improvement for that. If anything, it's a negative. Banks can implement policies to prevent it, but you can't really do so with crypto.

    It would be useful for things like deeds and contracts. Instead of having a bank hold it and provide proof you could store it on the blockchain. There are a handful of good uses for it, but it's generally not useful for the stuff most people think it would be.

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  • [–] 6 points 2 years ago

    Well, you can't do fractional-reserve banking with bitcoin (or any other coin I know of), so in that way, a "run" on a bitcoin can only ever exhaust the supply. lending out more than you have requires trust, and that's not available in a blockchain structure.

    On the other hand, fractional reserve banking is the foundation of all modern financial systems, so it's not really a thing we're going to scrap.

    It would be useful for things like deeds and contracts. Instead of having a bank hold it and provide proof you could store it on the blockchain. There are a handful of good uses for it, but it’s generally not useful for the stuff most people think it would be.

    Well, yes but no.

    There's a lot of problems with blockchain deeds, and one of the big ones is confirming the first owner. What's to prevent me from minting a smart-contract that says I own your house? Or that I own a house that doesn't even exist? In the real world, we've solved those problems (and MANY more) with notaries and central registration systems. At the interchange of digital-ownership and real-world, physical assets, you're always going to need a trusted party to verify that the two match. And at that point, you don't need the blockchain at all.

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  • [–] -1 points 2 years ago (4 children)

    Sure the currency itself isn't resistant to a run on itself but having some wealth in the currency will cushion a run on the real IRL banks for fiat currency.

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  • [–] 6 points 2 years ago* (last edited 2 years ago)

    Except that it's so incredibly volatile that from one months to the next you literally don't know if your crypto wealth will be worth twice as much or half as much.

    If what you're trying to protect yourself from is runs on banks, you'de be better of with gold, works of art, even stocks (which are less volatile than crypto) or, even simpler, spread your money over several banks, ideally in more than one country.

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  • [–] 0 points 2 years ago* (2 children)

    Sure. Diversifying is good. There's no need for crypto for that. Gold or other assets would protect you equally as well.

    If the advantage of crypto is something provided by many other things, without the disadvantages of crypto, then crypto shouldn't be desired.

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  • [–] 2 points 2 years ago (1 child)

    Gold or other assets don't necessarily protect you when you own them through government and more broadly not-wholly-independent-from the-government-financial-institutions, unless you have gold bars at your house, and even then, it's not something you can transfer for payments easily.

    On the other hand cryptocurrencies are wholly independent from any institution whatsoever - truly for people by the people - and ones like XMR are actively resistant to them altogether. I don't think Trump is going to be like Hitler, but if he were, I'd bet on something the government can't really easily seize like a distributed decentralised ledger rather than a house or gold that can't be liquidated quickly or transferred for another currency if I was e.g. a targeted minority.

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  • [–] 1 point 2 years ago

    Yeah, that's obviously what I meant; having them in your possession. Yeah, crypto has the advantage of being easy to transfer. That's the one advantage, with a ton of negatives.

    I don't know if I'd say they're independent from other institutions. Sure, they technically aren't required, but the way they're liquidated is largely through a small handful of institutions, which is essentially the same as a bank. If those run out of money then you're largely fucked, just as with a fiat currency. There's also the issue these are for-profit companies with no regulations requiring them to pay you if you want to cash out. If they see the price crashing, they're just going to close their doors and keep their money.

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  • [–] 3 points 2 years ago* (last edited 2 years ago) (4 children)

    I have a friend who works at a major bank and they use Blockchain technology to keep track of something or other internally, though I don't remember exactly what. In this case at keast we can bet that it has found a problem worth using it to solve. Banks are nothing if not efficient.

    I find it funny that it was touted as an alternative to the current banking system and ended up being absorbed into it though

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  • [–] 4 points 2 years ago (1 child)

    Banks are nothing if not efficient.

    Banks are businesses made up of people. If a manager thought he could get a promotion by supporting a blockchain project at the height of blockchain mania, that's what he would do. Whether if fails or not is of no consequence, the manager is already on another project.

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  • [–] 2 points 2 years ago

    My experience working in banking is that they're extremely conservative. They don't take big risks on new technologies or processes and don't modernize their technology too quickly to be certain that everything works as expected and doesn't surprise anyone

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