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> Compared to wire transfers, one is required to trust the intermediary in that case. You're totally right. But let me flip the question around a little bit. W

by darawk 8y ago

> Compared to wire transfers, one is required to trust the intermediary in that case. You're totally right. But let me flip the question around a little bit. What would our financial system look like if we didn't have to place so much trust in our intermediaries? It's not that banks aren't trustworthy. They are. They're extremely good stewards of the public trust, for the most part. But the fact that we place so much trust in them has systemic effects that are stifling to innovation. And I think that's what blockchains may allow us to overcome.

kvakva 8y ago
How exactly blockchains helps with that? It's open protocol which helps but most of the people interact with it through centralized points wallets providers, exchanges etc and we already see classic centralization. It seems to me similar as it is with Facebook which interacts with open protocols but is many people have to go through it and solutions seem to be legislatively rather than technological(although I hope projects like blockstack can help with this)
- darawk 8y ago
  I think the main point is having an open protocol built on top of decentralized, trusted infrastructure. In that way, anyone can start a bank, and get to 'trust scale' immediately.
jonhendry18 8y ago
"But the fact that we place so much trust in them has systemic effects that are stifling to innovation" Large banks have a lot of money to buy influence; that's the source of their systemic risk. But you can do wire transfers at small banks and credit unions.
- darawk 8y ago
  Yes, but even those small institutions are enormously careful with what they do, and are regulated heavily.
pwinnski 8y ago
I hear what you're saying about banks stifling innovation. I think current blockchain alternatives highlight the tradeoffs, though. I think risk is associated with stores of value. "I rob banks because that's where the money is." So we move the stores of value from banks to blockchain exchanges and hot wallets, and the risk moves accordingly. Now, instead of the risk being borne by organizations with decades or centuries of experience mitigating it, backed by the Fed, it's borne by people who barely understand the wallet software they downloaded, and Magic: The Gathering card traders who aren't as smart as they thought they were, and people who are absolutely definitely sure that smart contra--oops, let's just "fix" that. So what you describe as centralized stores of trust stifling innovation can also be described as centralized stores of risk mitigating loss. And I think that's pretty much what we've seen so far.
- darawk 8y ago
  I agree. Fundamentally, what we have here is the potential for an alternative model. It remains to be seen whether this model can evolve to be better - I absolutely agree that it is not better right now. I think that it has the potential to be though.

by darawk 8y ago

kvakva 8y ago

How exactly blockchains helps with that? It's open protocol which helps but most of the people interact with it through centralized points wallets providers, exchanges etc and we already see classic centralization. It seems to me similar as it is with Facebook which interacts with open protocols but is many people have to go through it and solutions seem to be legislatively rather than technological(although I hope projects like blockstack can help with this)

darawk 8y ago
I think the main point is having an open protocol built on top of decentralized, trusted infrastructure. In that way, anyone can start a bank, and get to 'trust scale' immediately.

jonhendry18 8y ago

"But the fact that we place so much trust in them has systemic effects that are stifling to innovation" Large banks have a lot of money to buy influence; that's the source of their systemic risk. But you can do wire transfers at small banks and credit unions.

darawk 8y ago
Yes, but even those small institutions are enormously careful with what they do, and are regulated heavily.

pwinnski 8y ago

I hear what you're saying about banks stifling innovation. I think current blockchain alternatives highlight the tradeoffs, though. I think risk is associated with stores of value. "I rob banks because that's where the money is." So we move the stores of value from banks to blockchain exchanges and hot wallets, and the risk moves accordingly. Now, instead of the risk being borne by organizations with decades or centuries of experience mitigating it, backed by the Fed, it's borne by people who barely understand the wallet software they downloaded, and Magic: The Gathering card traders who aren't as smart as they thought they were, and people who are absolutely definitely sure that smart contra--oops, let's just "fix" that. So what you describe as centralized stores of trust stifling innovation can also be described as centralized stores of risk mitigating loss. And I think that's pretty much what we've seen so far.

darawk 8y ago
I agree. Fundamentally, what we have here is the potential for an alternative model. It remains to be seen whether this model can evolve to be better - I absolutely agree that it is not better right now. I think that it has the potential to be though.