I wouldn't declare it "failed technology" just yet.
They may be having some success on their original purpose, having just passed 2.5 billion GB on the network, i.e., 2.5 exabytes, and 1300 miners, 200+ projects and 5900+ GitHub contributors [3].
[0] https://www.coindesk.com/filecoin-mainnet-now-live [1] https://news.bitcoin.com/filecoin-miners-start-a-strike-fil-... [2] https://coinmarketcap.com/currencies/filecoin/ [3] https://siliconangle.com/2021/02/16/filecoins-decentralized-...
It's obvious that people who own Bitcoin would want to use the system in order to show usefulness, demand, however I'm wondering if there's any use of people who aren't financially incentivized (like early adopters who have the most to gain).
AML seems a non issue too, as the loan only moves the question.
KYC remains one big problem but there are many startups providing those services and they are slowly gaining acceptance in courts.
Don't be impressed if a few years (and maybe even months) from now you start to see classical banks trading mortgages onchain.
It doesn't.
AML seems a non issue too, as the loan only moves the question.
No, anti-money-laundering laws are at the heart of why the financial system can't do this. KYC laws apply at the customer level, so you only need to handle KYC once per customer. AML laws apply at the transaction level, so you need to apply them to each loan.
Cryptocurrency solves absolutely none of the existing legal reasons that banks can't issue large loans in minutes or seconds to existing (or new, well collateralized) clients.
Yes, this is definitely correct in that crypto does nothing to solve the legal requirements of the banks and does not help the banks.
But it's worth mentioning that this sort of fully collateralized and anonymous borrowing does not (and would not) happen through banks, but through platforms like AAVE and Compound. It's a financial tool separate from banks. And these tools cannot be shutdown, as long as ethereum exists, these tools exist.
As for anonymous loans, those exist solely to service criminal customers, so that is not an advantage of cryptocurrency.
And overall, it's a demonstration of a financial product which can only be built in the space of decentralized finance. I do not know of another tool which allows anyone around the world to borrow significant amounts of money anonymously and without an account. Whether it's a net good for the world I don't know, but I do believe it's a powerful technology and space.
Other freely operating entities across the globe are not in the same position.
The anonymity part is cool, but if I want to borrow to get a mortgage how exactly does this help me? I do not have $500,000 in crypto laying around and a traditional lender will give me a 2% interest rate instead of 15%
Eventually, some companies are working on tokenizing homes, so once that happens, you could potentially deposit that as collateral just as easily, but that's still far out.
The fees I am seeing on Uniswap/Aave are much much higher than 4.5%. Even at 4.5% that equates to six figures of additional interest payments over my 30 year mortgage.
> and you didn't have to pay a capital gains tax.
This isn't true. Any conversion between crypto assets is technically a taxable event...even if we both can agree that the rules are silly.
> Eventually, some companies are working on tokenizing homes, so once that happens, you could potentially deposit that as collateral just as easily, but that's still far out.
Okay great, but how does this promised future development help me secure a loan for the home I want to buy? Or the business I want to start? Again, I do not have 500k in bitcoin laying around nor a "tokenized home."
It was super easy to get approved for a 500k mortgage just based on my income.
But to my amateur mind, treating it as property doesn't seem like a problem for this view. If you get a loan from a pawn shop, you're not selling them your property, you're just putting it up for collateral while you pay back the loan.
What happens when it stops appreciating? Or is the premise that bitcoin will alway outpace interest rates?
It's a scarce/deflationary/limited supply asset which is compared against an endless money printer.
You can either withdraw a portion of it back to your normal wallet or you can just borrow more against the same collateral. So it's like a credit line that's always appreciating in value.
If one day, you need the whole collateral for whatever reason, then you'd pay the loan to unlock it fully and withdraw it.
You're never going to get an amazing loan deal from a trustless system.
I think that ethereum might have great applications, but a loan backed by more collateral than it is worth doesn't seem like one of them, unless Dao starts allowing for the use of collateral that is less liquid than eth.
The issue is that contracts don't have any way of "calling in" to the legal API, so you can't put up your house as collateral.
For house mortgages, there are companies that are "tokenizing" houses on the blockchain, so putting it up collateral would be as simple as depositing that token. That said, I think this is far from becoming reality anytime soon, just because there's lots of legal issues, etc. Nonetheless, the future is pretty exciting!
Once you include your exchanges fees in your cost basis, you actually lost like 30-40$, so it's a taxable event with capital gains loss.
For what it's worth, if you use AAVE or Compound, you also have to declare interest income on what you've earned.
With maker, you'd be responsible for capital gains if it was liquidated because you fell below the 150% minimum ratio.
I guess the difference between me and someone who would use these DeFi apps, is that they are using crypto as a speculative investment (which is fine, I speculate with other assets all the time). But most people do not have a significant portion of their net worth in crypto tokens. For me, it is much cheaper/easier/safer to just get a traditional loan.
Flash loans are an example of that innovation, where if you see an arbitrage opportunity in the market, you can profit from it even if you don't own huge capital, so it levels the playing field for all these financial actors.
See Chesterton's Fence: https://fs.blog/2020/03/chestertons-fence/
That's just a slogan. The devil is in the details. To use an extreme example: Murder laws removes my freedom to kill random people; how is that good?
It is always a tradeoff. In the case of the particular tech discussed, it's a tradeoff between being able to somewhat control crime (e.g, making payment for human trafficking harder, making it possible to reverse theft) and financial privacy. It's freedom from having things stolen and freedom from being regulated.
Well it's great in theory until you hit a problem nobody was incentivized to guard against the resulting failure cascades.
The mafia probably doesn't need your name for a loan, too. They'll find you anyway.
But maybe I'm all alone in finding this somewhat shady.
What? They'll know your name, address and your whole family history usually.
It's just a smart contract execution on the global computer that is Ethereum, how is that shady?
Once you actually try it, you're going to be like "this is the future", every single one of my friends that tried came to the same conclusion.
Everything is denominated in Bitcoin, which is always going up in price. Everyone borrows some lame legacy asset X and collateralixes with Bitcoin.
Do weird things happen? for example of Bitcoin is ubiquitous then the price of Bitcoin essentially gets factored out of the equation, so this magical leverage goes away. There are other effects but this idea that this is the future (or rather that this is a superior future ) seems a bit naive to me. Gravity will catch up to you no matter what.
Contrary to general perception it’s not a new data transfer cure all that will actually solve problems of sharing data between organizations. It also doesn’t replace hard work required to make a new industry standard. It’s barely useful in either of those but that’s the common misconception I usually hear from nontechnical people who seem to be excited about blockchain.
Are we just trapped in a hype cycle that will inevitably end or does Bitcoin growth spell forever renewing waves of hype?
To put it in other words - crypto trading is different kind of hobby than programming. Many people are interested in what kind of systems can be built and don't give much crap about monetizing it or worry about how many people are using it.
It's a bit like getting upset at Fabrice Bellard because he created quickjs that "nobody is using" - it's completely missing the point.
It is also very common for suppliers and various intermediaries to have bad document management practices that get further muddled by digital file issues (e.g. people just generating documents from their software that may be different from the real invoice).
The issue with that is that not everyone involved wants transparency or wants to know, because you can get discounts from illegal or merely hinky behavior such as through gray market imports. There are good reasons as to why a lot of people involved in bringing products to customers want to see no evil / hear no evil / speak no evil. There's room here for the law to push people into adopting better technology than what is currently used.
This is another case in which the paper tech is better for fraud, negligence, and crime than the blockchain tech. It is also more forgiving because it prevents participants in the supply chain from becoming aware of fraud further up the chain, so it prevents them from taking on liability. Transparency sounds great until you learn it means that you have to pay more for the same units because the crime / lax practices that lubed the system up is now infeasible.
The idea is that everytime sweat shop X finishes sewing sequins on a dress, they can scan the RFID tag on the dress with their smartphone, and the ledger gets updated, and then Walmart can prepare for that dress, the shipping company can print out labels etc.
Its a good idea.
Industries are supposed to work this out, create their own cheaper blockchains that just need some sort of simple KYC to get started, then its as cheap as email to add your little bit to the supply chain.
I dont know of any successful implementations
Edit: no blockchain will solve the grey market problems. Everything will have to be made genuninely on the chain. Which starts to lead to probelsm with if you cannot get permission to write to the chain ... etc etc
1. If the central database is proprietary then it is enforced (usually by a major retailer ie Walmart drives all sorts of RFID supply chain requirements for its suppliers. If blockchains come in this is likely how)
1.a. But which other retailer will sign up to walmart's versions ? So it is hard for all suppliers to sign up to the same standards
2. Open standards make it easier for anyone to write apps to join the chain.
3. it's not at all clear how this is better I will admit beyond "decentralised" and "open". But those are excellent places to start.
You can sign entries but unless you have each subsequent entry build on what came before like in a blockchain, entries can be removed entirely and no one will know. There is a reason companies like DHL are interested in such things.
https://www.dhl.com/au-en/home/insights-and-innovation/insig...
Example: Our product is sourced from a company and this providence is on the blockchain. It comes to light they employ slave labour and we'd rather cover it up. How do we alter these original transactions without the evidence being in plain sight?
Thank you
Brave (the browser) uses blockchain in their privacy protecting ad technology.
Skynet uses a blockchain to allow users to share their extra computer storage space for a CDN.
And I'm sure there are a few others. It's just that the amount of use cases send legitimate applications using them are... limited. Most of the ones I'd consider valid uses have a substance-full technical goal, like the two I mentioned above.
uBlock Origin works fine based on txt-files. Not sure how blockchain could improve this.
$localNewspaper not go through the hassle of dealing with payments through blockchain technology.
It's also not terribly hard to get verified so you get paid. As long as someone is reasonably familiar with technology, I think it'd be pretty easy for them. Haven't tried it for myself though (but the guide is up there so you can see it for yourself if your curious).
Why are uniswap/none of these DeFi/DEx'es "not useful"?
In first world countries, yes. In third world countries, no.
So, they now use blockchain where sending documents as a PDF would have been sufficient...
I'm so proud!
edit: Read the article! That's truely their main selling point. Formerly it was done on/with paper, now it's "on the blockchain". This is another great example why we don't need blockchain.
As far as I can tell:
1. There's a pretty big issue with containers having the wrong contents (eg, counterfeit items loaded initially, or contraband added during transit). Current solutions are focused around physical security, seals, locks, etc., but it's fairly easy to bypass and forge these physical measures.
2. There's no real issue with tracking containers. We don't always know what's actually in them, but we know really well where they are and what's meant to be in them.
3. There's some efforts to try and replace the electronic systems for tracking where they are and what should be in them with blockchains. But as above, that's the bit that's currently working fine.
Not needing to trust middlemen is a good goal, I just don't see how tracking containers on blockchains reduces my need to trust middlemen. When Customs seizes the container at the border and finds someone has added 100kg of cocaine to the container, how does the blockchain prove who jimmied the lock open and then replaced the tamper seals?
I've worked in shipping for decades. There is no problem with BOLs magically changing with no traceability (which blockchain could solve, I guess, if that problem existed?). There is no problem with checking that the seal on a box at arrival is the same seal that was on the box when it departed.
The only viable purpose I've heard for blockchain is quasi-anonymous decentralized trust negotiation. This purpose doesn't match any real-world use case in shipping. A shipper doesn't want to ship product from an anonymous untrusted producer and no carrier wants to carry goods from an anonymous untrusted shipper.
Blockchain won't stop companies from misdeclaring hazardous (but otherwise legal) goods[1], it won't stop traffickers from misdeclaring illegal goods (or smuggling illegal goods among legal goods)[2], it won't stop trucks from running overweight[3], it won't stop ships from being misloaded[4]...
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[1] https://en.wikipedia.org/wiki/MV_Hyundai_Fortune
[2] https://www.freshplaza.com/article/9295962/cork-cocaine-valu...
[3] this sort of thing doesn't usually make the news so I don't have a link
[4] https://www.shippingandfreightresource.com/one-apus-containe...
Any society that adopts trust will be able to compete very well against a society of no trust.
Thst is my conjecture at any rate.
Can you explain this in greater detail? I don't wish to be a naysayer, but I don't understand how those concepts are blockchain-specific. Goods being re-sold/diverted while in transit was a regular occurrence prior to the existence of blockchain technologies. What is being brought to the table that is new?
These days I see lots companies telling me, they put their "supply chain on blockchain" and while I understand what they probably want to tell me ("you can't tamper with where our stuff comes from") I don't see the point in that. If you've got trust issues with your subcontractors you should fix those and not "seal" the willingly wrong information in a blockchain.
Maybe we should just declare blockchain a "failed technology".