A lot of people still haven't figured out that crypto is a psychological hack, not a technological or a financial one.

It's just virtual tulip bulbs and South Sea Company shares. And that's all it's ever been.

The fraud is the point. It's not an unfortunate, isolated, and regrettable accident. Crypto literally raises the cost of borrowing by making it trivially easy for fraudsters to steal it, under the cover of running a "secure exchange" or a global high profile pump and dump, or worthless NFTs, or whatever the next scam du jour is.

Well, sort of. Crypto-- done well-- is supposed to represent banking as a SaaS. The existence of these electronic exchanges demonstrated the failure of that function. It just wasn't practical or even possible to transfer value without the involvement of these shady characters.

After removing "banking as SaaS" from the value proposition, what was left was a bunch of hustlers running cleverly incentivized Ponzi schema. It's not even tulip bulbs. We're finding its black boxes, creative financing and yield farming as far as the eye can see.

Ultimately none of these things produce anything of value and all they do is trade money in circle. Ultimately the money has to leave system. Right now there is less money in the system than it did before. I guess soon enough we will find many people cannot leave the system. This is the reason why Binance CZ announced the 1 billion crypto recovery fund to stop spreading contagion.

> even the most financially illiterate people know that interest rates should be vaguely proportional to risk.

I estimate that approximately 80% of people would not even understand the claim you're making, let alone be able to evaluate how true it is.

> interest rates should be vaguely proportional to risk.

Not really. If we take nominal interest rate = real rates + inflation expectation + credit spread, then only the (counter party dependent) credit spread reflects riskiness. Real rates reflect an equilibrium of time preferences.

The 500 years thing is pretty tough for me. No love for the steam engine? mass production? Computers? The internet? Surely the internet has revolutionized the world more than blockchain will.

> mass production? Computers? The internet?

None of these would have been possible without the invention of double entry accounting, because before double entry accounting you couldn't even really run anything larger than a family business because there was no way to know whether or not you were making or losing money. So it stands to reason that because blockchain is a breakthrough in accounting of a similar magnitude, in the sense that it will enable all sorts of new economic relationships that aren't possible today by radically driving down the transaction costs of doing business, that these new relationships will similarly enable all sorts of new technologies that we can't even imagine today.

To understand blockchain, you need to go back and read all the books on the history of double entry accounting in order to understand the changes that it enabled within society. But these changes aren't going to happen over night, they'll take a couple hundred years to play out, in the same way that it was a couple hundred years between the invention of double entry accounting and the height of the Dutch East India company or whatever.

>None of these would have been possible without the invention of double entry accounting, because before double entry accounting you couldn't even really run anything larger than a family business because there was no way to know whether or not you were making or losing money.

What? I thought the benefit of double-entry was that it make fraud and inconsistencies easier to catch, not detection of profit per se (which single-entry can surface).

> I thought the benefit of double-entry was that it make fraud and inconsistencies easier to catch, not detection of profit per se

One of the key principles of double entry accounting is denominating profit and loss in a fungible currency, rather than just recording the number of goats you own or whatever. Double entry is actually the codification of several different best practices, it’s more than just having two sides of the ledger. But even with just the fraud part, you are very limited on the number of employees you can have if you don’t have any way to know if they’re stealing from you. That’s why even though e.g. Ancient Rome had thousands of fast food restaurants, they didn’t have franchises like McDonalds.

Poppycock. Ancient Rome and Ancient Greece both had plenty of sophisticated bookkeeping and accounting methods — I don’t think you can even point to a single moment in time when double entry was “invented” (just standardized or popularized).

There are many reasons that they didn’t have McDonalds-like franchises, and none of them have to do with accounting. Those kinds of franchises didn’t exist in the modern world until the 20th century; they are product of many elements of modern culture (and modern approaches to business). What the heck would a franchise even do for someone in Ancient Rome? It’s not like there are massive chicken suppliers or industrial-scale bakeries that produce standardized food products to sell. Every restaurant needs to source local suppliers directly anyways. Fast food chains make no sense without industrialization, among many other things (bookkeeping being the least of them).

You could (somewhat weakly) argue that Roman publicani were a form of franchise.

Bonds were invented in the 500 year timespan you’ve given. It’s a pretty hyperbolic claim lol

> should radically drive down the cost of borrowing money

I got my mortgage for less than 2%. I can't see how crypto is going to enable negative rates.

(Historical factoid: the world's oldest bank in the modern form is up to 550 years old https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Sien... )