global financial crash yay!

[Clinamenic]

what are you able to do with crypto finance that youre not able to do with normal finance? what's the use case for this stuff, atm? leveraged crypto trades? something else?

One straightforward example, to my knowledge, is that its easier to make near instant global payments for negligible fees with certain blockchains, than by using the existing interbank system.

Also, just the general fact that financial data can be stored on a public and almost immutable ledger really changes the dynamics of trust. Thats what I think the central innovation of bitcoin is, that we now have the technical means, despite Bitcoin's other incidental inadequacies as a system of commerce, to engage in a trustless economy. Or rather, just to trust the code itself, which is open source.

But beyond that, as Bitcoin itself doesn't natively support smart contracts, the fact that you can enshrine financial commitments in code, and again in a publicly visible database, also shifts the status quo of financial trust.

 

[Clinamenic]

This stuff will certainly introduce new problems and exacerbate some existing ones, which arguably any paradigm shift would, but it also introduces significant innovations which are, again, largely pure at this stage.

Then again, we'll see how well this tech holds up as big VCs continue to buy up governance power. But the point is that blockchain renders possible, or at least feasible, things that were either considered infeasible or not considered at all because they weren't in the realm of possibility.

 

[Clinamenic]

Also, just the general fact that financial data can be stored on a public and almost immutable ledger really changes the dynamics of trust. Thats what I think the central innovation of bitcoin is, that we now have the technical means, despite Bitcoin's other incidental inadequacies as a system of commerce, to engage in a trustless economy. Or rather, just to trust the code itself, which is open source.

Although even here, people with larger enough market power can manipulate markets perhaps with greater ease than ever. I'm not sure, but I'd be surprised if this wasn't true.

 

[Clinamenic]

But yeah, most of the investors in this space don't care about, or even care enough to understand, the technical stuff. Most of them want to get extremely wealthy by next week, and that sets an awful tone for crypto, in my opinion.

 

[Clinamenic]

But among those who do care about the technical stuff, there is a rampant case of analysis paralysis, wherein the sheer scope of the speculations and possibilities can be blinding, and it can be difficult to actually steer it toward concrete use cases.

One example is BAT, where Brave Browser facilitates precision advertising by paying users trace amounts of BAT to click on curated ads, which presumably insures greater visibility for the advertisers while also creating an economy for content producers whereby users can donate BAT to verified sites.

But this function is still ultimately dependent on the liquidity of the asset facilitating it, namely BAT. In this case, BAT is liquid enough to enable those funds to end up as dollars in a bank account, but not every such utility token is.

I would roughly wager that most of the value in the crypto ecosystem isn't liquid, but I would also naively wager the same thing for traditional finance. I.e. that the prices of many existing assets only hold so long as it's not all cashed out at once. I actually don't see this inherently as a problem, but I could be overlooking something.

Another major driving force in all of this is just how additive these systems and assets can be. There is no limit to the amount of programatic utilities for a given token, provided its architecture is sound and the demand is substantiated by reliable uses and applications.

 

[Clinamenic]

There does seem to be (what in my opinion is) a problem across DeFi, where developers and investors alike are too swept up into this mindset of expanding the ecosystem in the manner of "money legos" without being insistent enough on grounding it all in clear, concrete use value.

I think the money lego metaphor actually has legs, but it also seems obvious that the more widespread this tendency of predicating your asset's value on the value of other assets which have their value predicated on other assets, etc, does lead to a lot more toppling and volatility than I would prefer. That said, I don't exactly expect otherwise.

 

[IdleRich]

One straightforward example, to my knowledge, is that its easier to make near instant global payments for negligible fees with certain blockchains, than by using the existing interbank system.

I think we already talked about how hawala can do this didn't we? Depends what counts as negligible though.

 

[Clinamenic]

I'm much less blindly optimistic than I was a few months ago, due to slightly better understandings of finance and a broadened awareness of crypto's underbelly, but I'm still quite optimistic about blockchain's long term impact.

My optimism here is largely grounded in my understanding of the internet as a stack of protocols whose utility increases as more protocols get added to the stack. Blockchain is another type of protocol, with various derivative technologies, that I think will help unlock a whole new paradigm in terms of how we understand and facilitate value.

Growing pains, learning curves, volatility, loads of scams, perhaps some harsh regulation as a result - all to be expected.

 

[Clinamenic]

I think we already talked about how hawala can do this didn't we? Depends what counts as negligible though.

Yeah I shouldn't assume such easy solutions don't exist at all in the current system, but they are the status quo in crypto, anything short of which is laughed out of the room. Except Ethereum, which is designed to become more expensive as it gets more use, which I think is ultimately a downfall despite whatever problems it solves. Transaction fees on Ethereum have been exorbitant the last few months.

 

[Clinamenic]

And also a major distinction in the points I'm making: it's one thing for blockchain to render feasible new economic paradigms, and its another thing entirely for things to actually unfold that way, at least in the short term.

That is, Bitcoin right now is virtually uncensorable and and unmonopolizable, which has its wild west drawbacks such as ease of laundering, but ultimately it's yet to be seen if algorithmic economic trustlessness can scale to accommodate global commerce.

 

[Clinamenic]

Much of this is also just a new way of thinking about value and finance, in a language that is native to the information age.

I agree that the burden of proof should be on the newly proposed solution in general, but I find it difficult to humor arguments that don't acknowledge the sheer dexterity and potential of computation. We are currently experiencing unprecedented technological change, to my knowledge, and it's driven by computers.

As I've pointed out here before, "robot" etymological means slave.

 

[Clinamenic]

I agree that the burden of proof should be on the newly proposed solution in general, but I find it difficult to humor arguments that don't acknowledge the sheer dexterity and potential of computation.

Didn't mean to assert that these arguments are in effect here, but I do sense that they underpin almost all criticism of crypto. That said, there are numerous valid and important criticisms of crypto which I think ought to pressure developers to create solutions, which is thankfully happening in some cases.

 

[Clinamenic]

By "arguments that don't acknowledge the sheer dexterity and potential of computation" I mean how can you look at the internet qua stack of code, and how this stack of code has already revolutionized human existence in the multiplicative fashion of the network effect, and then just consider blockchain some isolated thing which wouldn't inherit greatly from such a stack?

 

[Clinamenic]

That I think is the real foundation of the promise of blockchain, underneath the hype.

 

[Clinamenic]

That said, there is a lot of naive hype and ill-informed assumptions driving it, many of which I myself am surely still making.

 

[Clinamenic]

In my mind, the internet is still at an early stage, in terms of how far it will go in changing how humans go about the affairs of existence, and blockchain will likely be an integral part of this development, just like how HTTP is an integral part of what the internet is today.

 

[Mr. Tea]

useful for money laundering, drug deals and paying hitmen, apparently. and it uses tons of electricity.

Funny you should say that, as I bought some BTC for the first time the other day, for one of these three purposes.

 

[shakahislop]

Bought some crypto a couple of weeks ago, and if I cashed out now I'd have made about $1000. Which is dumb luck of course, getting into the pyramid at the right time. The unfairness of something like this, that (provisionally, I mean its still numbers on a screen until I take it out) I can make paper like this with no effort at all, is really obvious to me. That's a lot of hours work to make that for most people. One thing about crypto in general is the unfairness of it, the casino of capitalism, the way it upends all sense of justice when it comes to effort involved vs reward. Obviously that goes beyond crypto but its one example of it.

It's a weird experience. A kind of new experience actually. I find myself logging in to check a few times a day. And the interface I'm using is quite beautiful, quite addictive, watching the numbers go up and down in real time. I can't help but think that this is part of what's going on with crypto - the excitement of it, probably a similar feeling to what people on trading floors have had for a while, but spread out to the masses, where it is easy peasy to set up and get into.

 

[Clinamenic]

Yeah the interfaces and the aesthetics are a big part of it, like candy, The candification of finance. I suppose the same goes for marketing in general, making appealing logos and whatnot.

 

[Clinamenic]

Re unfairness, its even more glaring come taxes, where unearned wealth can go with less taxation than earned wealth if you finagle things the right way, maybe even untaxed entirely.

On the other hand, the barriers to entry with crypto and online retail investing seem significantly lower than those for investing way back when. Now instead of a opportunity for the rich, its an opportunity for the rich down through the middle class.

As I've mentioned beforehand, you can have a passive income portfolio with just a few hundred dollars invested, whereas in order to achieve this before crypto, you would seem to need multiple orders of magnitude more money in order to generate passive income.