Algorithmic stablecoins are provably impossible without continuous funding

Re:Algorithmic stablecoins are provably impossible without c... by doctor_eval on Monday May 30, 2022 @08:38AM (#31558330)

I'm not an expert in this, but I think that it basically starts with the political concept of legitimacy [0] - government, with the consent of the governed - which leads to the monopolisation of force (police, army etc), which provides a concrete means of enforcement for the collective belief of "property".

That is, the reason that you can call the cops when strangers take over your kitchen is because we have a very real police force, whose are permitted (even required) to use force in order to protect your property. Property may have started out as a collective belief, but the processes put in place over the last few centuries - especially the concept of Rule of Law [3] - have made it very real.

But ISTM that crypto works outside of these norms. From what I can see, it has no effective rule of law; no possibility for the creation of an effective enforcement body. There appear to be no consistently applied consequences of cheating, either intentional (eg, rug-pulls) or not. People seem to steal money using crypto scams all the time [1]; from what I've seen of it, the world of crypto seems to pretty much embody my personal, nightmare interpretation of anarcho-capitalism [2].

So while I agree that property is a collective belief in theory, in practice it has the rule of law, the legitimacy of the state, and the monopolisation of force supporting it. Crypto seems to have none of these things supporting it; I'm yet to be convinced that it is even, actually, property.

[0] https://en.wikipedia.org/wiki/Legitimacy_(political)

[1] https://web3isgoinggreat.com

[2] https://en.wikipedia.org/wiki/Anarcho-capitalism

[3] https://en.wikipedia.org/wiki/Rule_of_law

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Re:Algorithmic stablecoins are provably impossible without c... by pfraze on Monday May 30, 2022 @09:03AM (#31558544)

Ethereum has intentional soft and hard forks; whatever that process is, that’s it’s government. Whether that government chooses to address problems which challenge Ethereum‘s legitimacy is up to them.

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Re:Algorithmic stablecoins are provably impossible without c... by doctor_eval on Monday May 30, 2022 @05:24PM (#31563772)

But that government is not legitimate, in the political sense. There is no mechanism for the population of users, as a whole, to vote.

In a sense, it sounds like a political party that splits in two. It’s not democratic; maybe it’s technocratic.

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Re:Algorithmic stablecoins are provably impossible without c... by pfraze on Monday May 30, 2022 @10:20PM (#31565523)

I think that’s the right follow up question to explore - what establishes political legitimacy. Or perhaps more accurately, what best establishes political legitimacy. There’s arguably a vote in the sense that users of the network choose which fork to adhere to. This isn’t a perfectly distributed vote; you depend on the miners, the validators, the client developers, and the exchanges to establish a concept of the “current fork.” (God help us if all the exchanges ever decided differently than Vitalik what “ethereum” is.) Regular users have a minimal voice in that decision, but it’s theoretically possible for anyone to start a new fork and campaign for its adoption.

Personally I think the question of political legitimacy doesn’t make the notion of blockchain governance wrong; it just highlights that the system as constructed may have problems.

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Re:Algorithmic stablecoins are provably impossible without c... by foobarian on Monday May 30, 2022 @08:49AM (#31558436)

> From what I can see, it has no effective rule of law; no possibility for the creation of an effective enforcement body.

In early crypto days there was a general feeling that the "power of math" (i.e. how hard it would be to break various hash/public key algorithms) is the enforcement body and the reason you don't need a government and a police force. Maybe smart people saw through that, or maybe the experiment just had to be done to see how this actually turns out in practice.

Your points are why I thought an official US crypto coin could work. But there is not that much net added value compared to what credit cards offer.

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