What does that have to do with what we're talking about?
I think at that point it becomes fair to ask: what is the likelihood that I am going to lose money unexpectedly to my credit union, or my recipient to her bank? And then by comparison, what is the likelihood that I or my recipient are going to lose money to coin theft, exchange failures, fluctuation in valuation, or other things inherent to dealing with blockchain transfers?
Rightly or wrongly, I think many people would rate potential losses higher with blockchain solutions than with USD wire transfers. I know I would.
You're totally right. But let me flip the question around a little bit. What would our financial system look like if we didn't have to place so much trust in our intermediaries?
It's not that banks aren't trustworthy. They are. They're extremely good stewards of the public trust, for the most part. But the fact that we place so much trust in them has systemic effects that are stifling to innovation. And I think that's what blockchains may allow us to overcome.
I think risk is associated with stores of value. "I rob banks because that's where the money is." So we move the stores of value from banks to blockchain exchanges and hot wallets, and the risk moves accordingly. Now, instead of the risk being borne by organizations with decades or centuries of experience mitigating it, backed by the Fed, it's borne by people who barely understand the wallet software they downloaded, and Magic: The Gathering card traders who aren't as smart as they thought they were, and people who are absolutely definitely sure that smart contra--oops, let's just "fix" that.
So what you describe as centralized stores of trust stifling innovation can also be described as centralized stores of risk mitigating loss. And I think that's pretty much what we've seen so far.
Large banks have a lot of money to buy influence; that's the source of their systemic risk.
But you can do wire transfers at small banks and credit unions.
Generally speaking, if my things get stolen, "it was stolen by X and not Y" is not a value-adding rebuttal. It is actually counterproductive if X (e.g., a cryptocurrency thief) is harder to gain recourse against than Y (e.g. an FDIC-insured bank).
That's certainly true. But the issues around people losing their coins and having their keys stolen can be solved by better UX and application security. Essentially crypto transmutes the problem domain, from a people problem to an application design problem. It's still a problem. It still needs to be solved, but the domain-transfer allows it to be solved cheaply at scale in a way that the human one can't be.
In other words, i'm making the claim that the issues you cited are not essential properties of blockchains, merely transient properties of their present implementations and UX. If you want to make the case that they are in fact central, i'd be happy to listen to that though.
The fact that nobody understands how human institutions work is an advantage, because it prevents malicious actors from subverting them. Whenever someone figures out how institutions work, they destroy them and civilizations fall, so they evolve to be incomprehensible. So "transmuting the problem domain" seems like a bad move to me.
End financial services users repeatedly choose convenience and risk guarantees over self-management. This isn't something which can be papered over with a saucy UI, particularly when the tangible benefit is difficult to describe. ("Decentralization" isn't a benefit, it's an attribute.)
Totally agree. In a hypothetical crypto dominated world, most people would still use centralized services to store their money. But they'd have the ability to opt out if and when they choose.
The problem with this vision is those people using centralized services see no benefit. They are better off sticking with the status quo.
Cryptocurrencies make sense for people who wish, for philosophically reasons, to control their own money. That vision doesn't require a "crypto dominated world." It does, however, require shrinking the vision from "re-imaginging the financial system" to "solving a need for a small group of devoted people." That's okay, and if that's how crypto were marketed it would (a) be more honest but (b) come with a lower value.
1) cheaper financial services 2) broader financial services 3) real-time financial services 4) access to financial services regardless of location (or nation) 5) decentralized applications fully integrated with financial services
The average Joe doesn't need to control their own private keys in order to gain these benefits.
But think of it this way. What would be more difficult, for an organization or company, today?
A) start your own bank B) start your own key management service
A) make an application that accepts payments as low as $0.01 B) make an application that accepts payments as low as .001 ETH
A) create a new protocol layer on top of the banking system B) create a new protocol layer on top of Ethereum
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Today, we rely on perhaps at most a few dozen companies (PayPal, Stripe, VISA, MC, etc) to build interfaces with our banking system.
There is no "app store" for banking system financial services. It's hard, hard work to build anything on top of that archaic system.
Blockchain makes currency an internet-native construct. Which has profound implications that we are just beginning to see the very earliest examples of.
Existing solutions also evolve and has become cheaper, faster and more accessible. Sure there are exceptions like political dissidents but that's relatively small group. If you would like to solve this issues on large scales like Venezuela than solutions would be mostly political rather than technical.
If a million people want to deal with each other without any trusted party to intermediate, then they have to keep a million ledgers and agree on a protocol for reconciliation. Once you've conceded over a million-fold factor of inefficiency, being cheaper doesn't seem plausibly within reach. I don't see the details as mattering much; it's the big picture that doesn't make sense.
Narrowly, yes, that's true. But I think there's a broader context to consider than that. Our current financial system is architected around these financial centers of gravity. Blockchains represent an alternative to that structure. Yes, there will still be intermediary institutions, but they will not have the same fundamental centrality that the current ones do. I think this is an important change, and one that is likely to lead to other changes that will be more directly appreciated by consumers and the broader economy than the philosophical self-sovereign money issues.
Unless it's an Mt.Gox situation.
The frequency of each of coins being stolen from wallets, being lost by exchanges or pilfered by ICO frauds is far, far higher than anything happening at proper banks. Blockchains are a neat technology which should have never been marketed as a currency.