In order to prevent fraud and obscure details from spies, the pentagon is setup to hand out money via multiple archaic systems rather than a single computer system. This limits the possible damages, but means audits are really slow and will report massive discrepancies before their complete.
https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
https://www.defense.gov/News/News-Stories/Article/Article/20...
Also, I don't know any law that exempts crypto companies from being taken to court.
Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public.
> Also, I don't know any law that exempts crypto companies from being taken to court.
...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach.
On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
https://news.bitcoin.com/doj-launches-network-of-over-150-fe...
Bank of America can do very little for your Russian payment disputes.
Pardon the ignorance, but, how, exactly?
Didn't know crypto had a contract enforcement apparatus in Russia. How does that work?
It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.
I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it.
By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about.
> I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig.
Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete.
For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely.
https://www.coindesk.com/tech/2020/11/10/multisignature-wall...
The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.
Crypto is unique in that transactions are immutable and do not scale in difficulty with the amount being transferred. Ransomware gangs do not choose to accept cryptocurrency payments because it aligns with their politics; they do so because it is the only way to move millions of dollars across international borders in an undoable fashion.
With crypto, you must have the help of the criminal, because only they can unlock the wallet.
There are also others: https://www.coindesk.com/tech/2022/09/28/stanford-proposal-f...
The "sorts of people who take these seriously" will never be happy, so that's fine.
One still does not exist for cryptocurrency.
It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.
(Granted, you can't deposit a house or car as collateral, if that's what you're getting at?)
I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance.
> Funds are simply swapped.
If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it.
Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing".
Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing.
Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.
If I wanted to finance an NFT, first I would negotiate with a lender and get a pre-approved loan. The NFT marketplace wouldn't even need to know about the lending mechanism. In a single transaction, I could take a flash loan, purchase the NFT from the marketplace, take the pre-approved loan, and use that to repay the flash loan. I now own an NFT with a lien, which I can enjoy in the usual ways, e.g. I could integrate it with my Twitter profile.
How is this not financing?
If Person B repays the loan within T days, the lien is removed, so Person B owns it free and clear. Otherwise, the NFT is transferred to Person C.
The pre-approved loan would just be a message signed by Person C, granting anyone permission to transfer a certain amount out of Person C's account if (in the same transaction) they also grant Person C a lien on that particular NFT.
No, that was invented in the late 70s, with the Merkle tree.
The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers.
> It's literally perfect for finance
People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain.
> Also, I don't know any law that exempts crypto companies from being taken to court.
Who said that? No one. No one at all.
> No, that was invented in the late 70s, with the Merkle tree.
Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world.
My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.
> Who said that? No one. No one at all.
jedberg: "[crypto] ... prevents a lot of funny business because people are afraid of getting caught and being put in jail" https://news.ycombinator.com/item?id=33110400
As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.
And in fact that was spun too, because (as you read farther down the linked debunking) the original quote was "$2.3 trillion were unsupported by reliable explanatory information and audit trails or were made to invalid general ledger accounts", which doesn't even support "cannot track". In fact, per that statement, we can track it, we know where it went, we just don't know why or in some cases to precise recipients.
Those are accounting failings. They're bad. A system with failings like that is certainly going to be subject to exploitation and fraud. For sure they should fix it (and to some extend did). But to claim that all of that $2.3T was fraudulent is just a plain lie.
> But to claim that all of that $2.3T was fraudulent is just a plain lie.
I didn't. But I am replying to people who may think that all of crypto is fraud.
I lost money on companies which marketed themselves as using crypto, but were in fact not.
Accounting failings happen to all of us. The only people with perfect bank accounts are either (1) accountants themselves or (2) never really bothered to look.
Man, was I grateful for the human considerations built into traditional banking!
With my crypto transactions I never send the private key with it, unlike with credit card payments where I transmit the private information (CC numbers). Going off anecdotes, I've found crypto to be vastly safer for my transactions than the banking system.
The number is greater than two.
Lack of legal system is allowing for all of the problems
The idea that the traditional legal system prevents funny business with money is naive.
9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon https://www.youtube.com/watch?v=xU4GdHLUHwU
The Pentagon’s $35 Trillion Accounting Black Hole https://www.yahoo.com/video/pentagon-35-trillion-accounting-... https://www.bloomberg.com/news/articles/2020-01-22/pentagon-...
Pentagon's Defense Logistics Agency loses track of $800m https://www.bbc.com/news/world-us-canada-42954050