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Nothing works if the payoff for defection outweighs the costs of enforcement, that's why we have wars, crime, and all of the other things that the old fashion l
by etherael 10y ago
Nothing works if the payoff for defection outweighs the costs of enforcement, that's why we have wars, crime, and all of the other things that the old fashion legal and diplomatic systems of the nations of the world have to deal with. However, conflicts of this type are rare compared to the very standard ones that are quite capable of being handled by reputation systems, escrow, etc. They solve these ordinary problems more efficiently, quickly, and at a lower cost.
That should be embraced and noted, and where appropriate migrated to, not pushed aside because there is a rapidly decreasing class of problems not suited to resolution with this model.
- wslh 10y agoYour loan is not paid, how do you enforce the payment? This is the difficult issue that companies such as BTCJam have.
- etherael 10y agoYou don't make loans to people unless you have evidence that they can and will pay it back. BTCJam for example has reputation scores, and people actually say what they intend to use the money for. The default rate on BTCJam, which was one of the first loan services is 10%, this doesn't compare well with mainstream rates however, Bitlendingclub is supposedly one third of that, which compares favourably to mainstream rates https://fred.stlouisfed.org/series/DRCLACBS https://fred.stlouisfed.org/series/DRCLACBS