In finance, bad actors outcompete good ones absent regulation. The game is one of confidence and compounding. Until the music stops, venues promising higher returns bleed well-run ones dry. Add to that crypto’s Gresham’s law-esque nature, which selects for gamblers against financial markets, and you wind up with little market space for well-run exchanges. (Which have never been actual exchanges, but instead quasi broker-banker-money market funds.)
Not just in finance. Everywhere.
With crypto we just see all this happening real fast, in real time.
It seems more prevalent in finance. In the real economy, consumers show scepticism. They’re trading money for a good or service they get at or shortly after the point of sale. Financial and insurance products are more difficult to diligence; you don’t know what you’re getting (or not) until long after purchase.
The appearance of ethics/morals might be a benefit, but true ethics/morals are often a cost.
Amazon.com shows how the goods market is as bad it can be when transaction costs decrease.
... and Microsoft and Apple incorporating ads into their paid products
... and Google updating Google TV with ads where there were none before
... and laptop companies filling their laptops with bloatware
... and plenty of others
For medical bills, that's a false and yet correct analogy. The hospital did, in theory, create money out of thin air (at least from an accounting perspective). In this case, it is the hospital (ie: The investor) who will go under if the patient does not pay her bill.
And that's fine. Investors are in it for yield which carries risk. This is different from putting money on an exchange or a bank. You are looking here for a store, unless you willingly signed up for some yield thing.
The hospital patient cannot settle debts with his medical care that he received or deposit it in a bank.
crypto is supposed to be one bank for every person. don't know how we get there, but we are learning that traditional bank/exchanges should not exist
“Impermanent loss” is just losing to arbitrage. It’s a necessary feature of being an LP.
People just don’t notice how much they are losing b/c the prices are so volatile.
The ruse won’t last forever.
For that matter, though, a lot of people who buy the top lose.
Crypto needs to have more UTILITY. The financial sector in general is just overleveraging the normal economy, this isn't just crypto. Ironically, Bitcoin was started in response to the 2008 financial crisis, where the govt repealed Glass-Steagall and then bailed out the banks. At least here, the government isn't bailing anyone out with taxpayer dollars.
And look... in China it's not much better. Their real estate bubble is very reminiscent of 2006 USA ... Evergrande is just the most well known poster boy.
One could argue that there are plenty of downsides to over-centralization (i.e. 'Too big to fail'), but the solution is not to start from scratch, it's to logically think about the kind of financial system we want (given the one we already have) and build that.
Conversely, the answer is not be techno-cowboys who know people with cryptography degrees who re-discover what bank runs are.
Besides, which ones really are decentralized? Can you name one that doesn't have a central control point? Most have an update system, allowing one person to either completely modify the smart contract code or to enable/disable trading.
Uniswap v1 volume: $144k, v2: $111,784k
Seems silly buy is there no exchange that is happy to just make a transaction fee?