That is literally just a symptom of not having a land value tax. Any reduction of the interest rate, for whatever reason (justified or not), makes the speculators go wild. The big difference between housing and stocks is that housing is a basic need and excluding people from being able to meet their basic needs has been a common source of unrest.
People already figured this crap out centuries ago. They always demand the same things. "Free the land, forgive the debts"
Freicoin was an interesting experiment but it also showed that there is nothing of substance in the cryptocurrency space. Almost nobody wants to actually run an economy on cryptocurrencies if they have a good enough fiat currency offered by their government. Everyone is in it for the speculation but I personally don't care as long as it doesn't become legal tender in my country.
The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system.
The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.
The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin.
Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal.
> The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.
Tell me what would a fractionally reserved loan offer me that the actual amount that I could possess would not?
If I don't own the actual amount, then how do I send it to other people's wallets?
And if the actual amount can never technically get into other people's wallets, why would anyone even accept them over the real thing?
And if it does enter other people's wallets, mathematically how does the system fractionally reserve?
And if people start accepting the loans themselves, would the loans be priced equally the same, or would it be traded at a different value?
And if the loans and actual thing work in different valuations, then aren't they different currencies?
So then what does one being fractionally reserved have anything to do with the original which is not?
There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
You can even claim litecoin, dogecoin, ethereum, tether, buttcoin, and all the other coins are its alternative forms, and they exist just fine.
And exactly as you have said, fractional reserve btc banking will exist just fine as well, just like every last one of them.
The question is: will it have anything at all to do with the original thing?
Slack in the motion of finances. It prevents the entire system from seizing up when there are problems.
Yes, people who want to bank themselves won't have access to any of these systems. But I personally think that people are fools for thinking that even if BTC takes over the planet that everybody will operate their wallets themselves, especially if lighting is what is needed to scale.
> There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
I have no idea how this is related to the discussion at hand.
That's not my problem. Why would I, a greedy actor, ever care about the system at large? Just give me my BTC. Why would I ever take frBTC (fractionally reserved BTC) over BTC?
> I have no idea how this is related to the discussion at hand.
What I'm saying is the frBTC (fractionally reserved BTC) is just another altcoin, no different than puppyCoin, BitcoinSV, or buttCoin. The thing you talk of about a fractionally reserved BTC already exists, has been happening, and will continue to happen for as long as people can fork code. The trick is convincing anyone at all that they are the same thing.
Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete."
Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.
Do you have any links for this?
Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises.
> Cryptocurrencies, especially NFTs, have a very important use case in these areas.
Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies.
> Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution.
There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
Many people also trust large companies/their government not to freeze/confiscate their assets and think this is a silly use case. Those same people have likely never had their account closed and lost thousands of dollars of digital assets, and have never had to flee their homes for safety from their own governments.
Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
I suppose I should have said economists, and yes like the other examples, there's always the 10th dentist syndrome. However, the consensus is clear among economists. Folks in finance are just out to make money, for themselves, not you. See 2008.
> There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
There are people that believe the earth is flat and that the COVID vaccine improves your 5G reception and makes you magnetic. These are things we can measure.
An NFT does not constitute ownership, of anything. You have to trust the author of the NFT is who they say they are, that they have the 'right' to mint an NFT, and that they'll never mint another one. Because they at their sole discretion can. It's nonsense. No legal right is conveyed with an NFT. It's just a signed URL. I can `ln -s ssh-keygen nft-keygen` and do the same thing at home.
> Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
100% of the value of an NFT is created, derived and enforced by the government, the judicial system and contract law. Pretending otherwise is a great way to overpay for jars of air.
I personally don’t understand the appeal of NFT art, but I’m interested in NFTs as in-game assets that can be shared across games without any central entity being able to take them from me. I can also keep these assets after a game shuts down and other games can be built using them. It’s certainly a better experience than I get on Magic Arena or Magic the Gathering Online right now.
For Bitcoin, the owner might not be super obvious as Satoshi is gone but all the small coins are clearly run by their development team. Apparently, the people who play that game are smart enough to not run "crypto schemes" and use their currencies as a medium of exchange.
Well let's skip past money transfer as it's too obvious
1. Collateralised loans: The ability to take out loans on crypto-assets without any gate-keeper or credit checks
2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker. Traditional financial markets require multiple millions in investment and advanced software to market make, but this could be opened to anyone. Imagine for example being able to invest not in SPY, but in market making a SPY order book
3. Quick and final settlement. For example stock transfers still take 2 business days to clear, a tokenised stock on a blockchain could settle in minutes and irreversibly
NFTs have all sorts of uses for ownership tracking. An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
Margin loans have existed for as long as time - long before the SEC and Reg T. In fact, I do believe they contributed to the Great Depression. You can grab one from Robinhood for a tax deductible 5% or IBKR for a tax deductible 1.x%. No credit checks or gate-keepers. It's literally the least risky loan anyone can make to a counter-party. You just hit the "withdraw cash" button.
> 2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker.
Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
> 3. Quick and final settlement.
Yeah this isn't a technical problem, it's regulatory arbitrage. Settlement takes seconds in a classical system except when regulatory processes introduce delay. You can by definition "settle" faster in a MySQL store than in a blockchain right?
> An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
Yeah that's something Ticketmaster can do today.
> Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
Buying shares in a market maker is absolutely worse than directly market making yourself - you can't pick and choose your markets, you are paying for staffing overhead of the company, you are paying a stock exchange and broker fees.
Therefore automated market-making is something crypto does better than a classical solution.
You're just describing an opportunity that exists in classical markets. No reason someone couldn't build it, faster, and more efficiently.
Blockchain is an inefficiency and a liability.
You're welcome to start a competitor today on AWS. It will be cheaper, faster and more effective than a crypto solution, and have all the same features. And it will still fail because the act of issuing and redeeming tickets from a technological perspective is not how Ticketmaster creates value. They're not a $24B business because they figured out how to print QR codes and scan them later.
This is another one of the so-called killer apps that folks hold out to enthuse crypto audiences but it doesn't stand up to the slightest bit of scrutiny.
The three core axioms of crypto hold that (1) if you think crypto is a solution to any given problem, you either don't know enough about crypto or about the problem - and (2) if you develop a real honest to goodness business around crypto you can immediately make it cheaper, faster and more efficient by removing the crypto. Lastly (3) you should do it before your competitors do to maximize your edge. But crypto isn't about solving problems or creating value, it's about selling blue sky securities [1].
I don’t have the time to do your research for you. If you want to ignore the paradigm disruption that is happening. That’s on you.
Accounting 101…
Eliminating the need for a centralized party, one must trust, in the middle of transactions. Enabling triple entry accounting.
Eliminating fraud between counter parties. Eliminating the middle man.
So many industries rely on a trusted central party/authority. What happens when they get disrupted. Peer to peer is happening.
Defi is currently paying 19.5% interest on stable coins. And loans are at 1% interest. Financial services are being turned into software contracts.
Eliminating physical infrastructure, employees, overhead. With costs so low, rates are better.
A classical solution, not an extant classical solution. Check out ISO 20022.
Obviously a SWIFT message takes a few milliseconds to make its way to a correspondent bank. The extra time is AML/KYC. Avoiding that is what we call regulatory arbitrage. Yes, if you pretend regulations don't exist you can do things faster - sometimes cheaper! For instance, you can just dump carcinogens in the local river.
> I don’t have the time to do your research for you.
Ah yes the classic refrain of the coiner in a corner.
> Eliminating fraud between counter parties.
Yes crypto is a famously fraud-free space. [1]
> So many industries rely on a trusted central party/authority. What happens when they get disrupted. Peer to peer is happening.
Yeah bud middle men exist because they create value. If they didn't people would, and this is true, disintermediate them. Say what you will about capitalism, it's famously good at removing waste.
> Defi is currently paying 19.5% interest on stable coins. And loans are at 1% interest.
Yes we call this a failure to price in risk. Again, see [1]. This sounds like the refrain of those advocating for mortgage-backed securities in 2007.
> With costs so low, rates are better.
Again, no, this is a failure to price risk. This is "FrEe TenDies" a-la the legend of 1r0nyman and his box spreads. To quote the legend himself, "literally can't go tits up." [2]
[2] https://www.reddit.com/r/wallstreetbets/comments/ahy7dy/the_...
The reason behind the financial crisis was that no one trusted the collateral was unencumbered. No one would send their collateral expecting their counterpart was insolvent.
Market Making
It's trivial to add liquidity without a dedicated market maker. Multiple platforms do this quite effectively now with thousands of instruments.
International Transfers
Worth mentioning this works almost instantly and costs almost nothing. Transfers can take days and have significant fees today.
Okay it cost hundreds of dollars to send money to my family as part of an estate close. It also took a week to get all the transactions completed. This would have been a few minutes and a few dollars with crypto.
Nope. but nice try associating us with anti-vaxxers and climate change deniers so that you can ignore it and make us seem evil and corrupt. gg.
>Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
first off is a shared ledger, imo thats enough right away.
a film about Stuart Brand gated by an NFT https://weareasgods.structurefilms.com/ i can watch it, then share/sell/rent my access token to others. These tokens also used for gating discord groups/chatrooms/physical access to buildings e.g. Mila kunis and Ashton kutchers new animation stonercats.com
sybil resistance + ubi: proofofhumanity.id brightid.org joincircles.net
borrowing and lending assets: aave.com
savings accounts: yearn.finance
self repaying loans: alchemix.fi
community groups / clubs / memberships: web3baddies.com fwb.help songaday.world creators.mirror.xyz dune.foundation daohaus.club citydao.io
publishing/crowdfunding: mirror.xyz
voting: snapshot.org
auction houses: docs.zora.co
proofs+attestations for privacy layer: sismo.io
games: zkga.me
public goods + foss funding: clr.fund gitcoin.co
.... just a small sample of the thousands of things being built, accessed with the same api, and you dont have to give over email addresses and passwords. people experimenting with ideas for money and government and ip and coordination/communication systems. pretty neat.
also the inevitable response is to pick one of these things out and say "you can do this with firebase", yes. but we are doing ALL of this on e.g. ethereum. all open and composable. one person builds a lending platform, someone else builds a management contract on top of it, another builds loans ontop of that, etc
You have a severe case of 'groupthink'.
My observations of the space have led me to draw parallels between anti-vaxxers and crypto advocates. I firmly believe crypto advocates are the anti-vaxxers of finance. Their positions similarly stem from a misunderstanding of the system and a strong distrust of authority.
Per your link:
> Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.
If you do not think I've adequately addressed your position I'd love you to explain why you think my opinions are based on that of a broader group - and how that has led to an irrational or dysfunctional decision-making outcome.
If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement. Why did the financial system seize up so quickly? How are settlements handled between financial institutions? How does the flow of assets actually work in practice? Who owns the settlement systems and where are financial assets kept and why? Not the digital accounting, but the actual custodial functions.
Cryptocurrencies, especially NFTs, have a very important use case in these areas.