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Winds of Change: The Case for New Digital Currency

73 points by T-A 8y ago

chroem- 8y ago
If cryptocurrency is like bittorrent for finance, then this proposal is like downloading DRM-encumbered music from a walled garden marketplace. I think I'll pass.
hanniabu 8y ago
> cryptocurrencies seek to anchor trust in technology. So long as they are transparent.....Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust. I don't think they understand that the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker. AKA the economy should be built off the monetary system rather than the monetary system being built off the economy.
- PeterisP 8y ago
  You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maintain liquidity in the long term. Math alone can't provide that, that trust is inherently social. I also need reasonable trust that the money isn't likely to get stolen - math isn't sufficient for that, and our current experience shows that crypto assets are more vulnerable in practice than e.g. bank deposits, maintaining appropriate "opsec" is tricky and people fail in that too frequently. And for your other point, the economy existed before a monetary system and currently works off of many monetary systems - however, for a monetary system the only criteria that matters is if it's good for what the economy needs; if some system does not fit these needs, then it won't get used much and is not particularly relevant.
  - SuddsMcDuff 8y ago
    This is the elephant in the room, and the key component of cryptocurrencies which is yet to be solved. Cryptocurrencies can trustlessly manage intangible tokens which were themselves issued on the blockchain. But when you want to interact with real world, tangible assets, blockchains can only manage proxies of the real asset. There has not yet been a trustless way to ensure the link between the tangible asset and the blockchain proxy.
  - walterbell 8y ago
    Yes, just as internet messaging and videoconferencing have made travel for F2F meetings more important, "trustless" cryptocurrency increases the value of "mathless" trust mechanisms.
  - randaouser 8y ago
    >If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. No need for extras, you can do this today on Ethereum with Hashed Time Lock Contracts
    - emiliobumachar 8y ago
      Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?
      - hkt 8y ago
        Of course he can't.
      - AnthonyMouse 8y ago
        > Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the seller gets $200 ($100 from the buyer and their original $100). If the buyer doesn't release the money, nobody gets anything. It gives the buyer a way to punish the seller for non-delivery, but without receiving any personal benefit (and in fact at a personal cost) for using it.
- _nalply 8y ago
  There is still the need for trust... in the implementation of software! Even if you read the source code carefully and ocmpile the software yourself, you trust the compiler and the operating system to do the right thing.
  - randaouser 8y ago
    No, you dont need to trust the software per say; there is a need to understand how software works in order to participate. That knowledge gap for most people will result in them trusting a 3rd party auditing of the software. You do much the same when you allowed your bank to share information with equifax... what happened there? One of many issues with trusting corps to do the right thing [EDIT: spelling]
- TeMPOraL 8y ago
  > the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker By exchanging trust for energy. Cryptocurrencies are the best example of trust being a tangible thing - it can be quite literally converted to Kilowatt hours. This shows how incredible trust is as an energy use optimization device. We should be finding ways to be able to safely depend more on trust, not less.
larrysalibra 8y ago
> This currency could satisfy public policy goals, such as (i) financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments. If financial inclusion and privacy in payments were actual public policy goals, cryptocurrencies would be a lot less attractive. In reality, the real public policy goals are: 1) Financial exclusion: using denial of access to the state run financial system as a political, law enforcement, social control and tax collection tool. 3) "Know your customer" and "anti-money laundering" (AML/KYC) rules that remove privacy in payments to make it easier to use the state run financial system as described in 1). These regulations in practice exclude the the poorer people in society - the people Lagarde like means when she says "financial inclusion" - that can't meet requirements like "proof of address" and can't meet the minimal balance / month fee requirements that have come about from these AML/KYC regs.
- fro0116 8y ago
  I don't disagree with your points around the public policy goals of currency, but suggesting that minimal balance / monthly fee requirements come from AML/KYC regulations is quite the stretch. I'd wager those come from greed, pure and simple. The banks charge those fees because they can. If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass the savings onto customers or pocket the difference? I know where I'm putting my bet.
  - AnthonyMouse 8y ago
    > If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass the savings onto customers or pocket the difference? The existing banks, on their own? Surely not. But complicated and expensive regulations like that are the main reason we don't have more, smaller banks, and they would be happy to gain customers by charging lower fees. Then the existing banks would have to compete and do the same.
- erikpukinskis 8y ago
  We need two things to operate productively without the State: Cryptocurrency is one. It does the job of the mint. The second piece, is we need a set of contracts that allow us to never take ownership of assets anymore. Instead of "here's a dollar, please may I have a taco", we'll say "please may I have a taco, here are my contracts" and the chef will ask the computer, "are this one's contracts aligned enough that I give them a taco?" There will be times you need to create revenue, which will be taxable, but it won't be the default. I'm not talking about tax evasion here. I'm talking about operating in a way that human activity can't be modeled as a transfer of assets. Essentially widening your friends and family circle to temporarily include arbitrary individuals.
divan 8y ago
This is suprisingly good and even refreshing speech after reading tons of very opinionated pro- and contra-crypto articles. Financial system design still have this chicken or the egg problem – we need to design fintech systems aligned with offline social interaction patterns as much as possible, but their (current) design changes our social interaction patterns in return as well. It's still fascinating to see how the world reimagines and reconsiders the nature of money. And not only in cryptopunks community, but in such a huge powerhouses as IMF as well.
RanInt1111 8y ago
There's not even a way to have a frank and open discussion about this topic because censorship is running rampant in the western world after communists, liberals, socialists, and other savages introduced it to self-retrain and to subjugate the civilized world for the parasites to take over. It's odd realizing that the future dystopian worlds depicted in things like the Maze Runner (as odd as that may seem if you don't know the full story) are actually going to be quite accurate as the gullible masses self-censor and self-harm themselves into self-subjugation. I keep trying to explain the very clear plans the elite have, but the rabble mobs are quite consistent in their rejection of "heresy".
hkt 8y ago
I feel like one day, central banks are going to be attacked by private banks and the means of attack will be cryptocurrency. The aim will be to get rid of central bank deposits and seize control of the payments system - once the central bank deposits are gone and we're cashless, this will become easy. They could even base it offshore to avoid consumer protections. If we're lucky when this happens, it will be a test of the remaining power of nation states. If we're unlucky, they'll roll over as the most basic means of exchange is privatized.
- RanInt1111 8y ago
  Pardon the displeasure, but that sounds utterly naive. Sure, the elite that control ever more with every passing day are just going to accept a distributed financial system that threatens their ultimate goal, world domination by a neo-aristocratic master class that lords over the mixed master race of peasants they created through "diversity" and "equity"? The far more likely scenario of the "cashless" society, aka, slavery, is that "laws" will be "passed" that make unapproved, aka, uncontrolled "currency" illegal. Your life and your worth will be nothing but a number on a screen, if you are worth anything at all once automation and robotics and AI make humans lose inherent value. There is no point in humans in a de-industrialized, post-human future of the master class served by robots and a few flesh servants.
netcan 8y ago
Because of bitcoin, cryptocurrency has a strong association with "free money," which is basically a dissent theory of macroeconomics that doesn't want central banks to have control. This was written by a central banker, so obviously there's a belligerence here... In any case... Idk what I think about free money. Macroeconomics is hard. OTOH, I think cryptocurrencies have other disruptive potential even if we want to keep our current macroeconomics, central bank control over interest rates. It's the kind of technology that turns a £100bn industry into a £1bn one. There are several clunky inefficient financial services sub-industries that could potentiall be digitised by good implementation of blockchain tech. The problem is too-big-to-fail. Besides actual central banking, does Christine Lagarde see her job as protector of the financial services industry? If so, she's going to build bureaucracy that maintains the status quo.

73 points by T-A 8y ago

If cryptocurrency is like bittorrent for finance, then this proposal is like downloading DRM-encumbered music from a walled garden marketplace. I think I'll pass.

hanniabu 8y ago

> cryptocurrencies seek to anchor trust in technology. So long as they are transparent.....Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust. I don't think they understand that the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker. AKA the economy should be built off the monetary system rather than the monetary system being built off the economy.

PeterisP 8y ago
You can't remove the need for trust - that need is inherently beyond the reach of math. If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. If I want to use money as a store of value, I need trust that the value is going to stay stable and maintain liquidity in the long term. Math alone can't provide that, that trust is inherently social. I also need reasonable trust that the money isn't likely to get stolen - math isn't sufficient for that, and our current experience shows that crypto assets are more vulnerable in practice than e.g. bank deposits, maintaining appropriate "opsec" is tricky and people fail in that too frequently. And for your other point, the economy existed before a monetary system and currently works off of many monetary systems - however, for a monetary system the only criteria that matters is if it's good for what the economy needs; if some system does not fit these needs, then it won't get used much and is not particularly relevant.
- SuddsMcDuff 8y ago
  This is the elephant in the room, and the key component of cryptocurrencies which is yet to be solved. Cryptocurrencies can trustlessly manage intangible tokens which were themselves issued on the blockchain. But when you want to interact with real world, tangible assets, blockchains can only manage proxies of the real asset. There has not yet been a trustless way to ensure the link between the tangible asset and the blockchain proxy.
- walterbell 8y ago
  Yes, just as internet messaging and videoconferencing have made travel for F2F meetings more important, "trustless" cryptocurrency increases the value of "mathless" trust mechanisms.
- randaouser 8y ago
  >If I want to use money to pay for some goods, I need trust that I can get that money back if the goods won't arrive. Math alone can't provide that, it needs something extra, e.g. a trusted escrow service in the case of crypto. No need for extras, you can do this today on Ethereum with Hashed Time Lock Contracts
  - emiliobumachar 8y ago
    Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved?
    - hkt 8y ago
      Of course he can't.
    - AnthonyMouse 8y ago
      > Could you please expand on how does the Ethereum blockchain get to know whether the goods arrived if the buyer and seller are saying conflicting things and no third parties are involved? It's possible to have some mutually assured destruction here, e.g. the contract is for $100 so the buyer puts in $150 and the seller puts in $100. Then when the buyer releases the money, they get $50 of their money back and the seller gets $200 ($100 from the buyer and their original $100). If the buyer doesn't release the money, nobody gets anything. It gives the buyer a way to punish the seller for non-delivery, but without receiving any personal benefit (and in fact at a personal cost) for using it.
_nalply 8y ago
There is still the need for trust... in the implementation of software! Even if you read the source code carefully and ocmpile the software yourself, you trust the compiler and the operating system to do the right thing.
- randaouser 8y ago
  No, you dont need to trust the software per say; there is a need to understand how software works in order to participate. That knowledge gap for most people will result in them trusting a 3rd party auditing of the software. You do much the same when you allowed your bank to share information with equifax... what happened there? One of many issues with trusting corps to do the right thing [EDIT: spelling]
TeMPOraL 8y ago
> the purpose of cryptocurrencies is to remove the need for trust. Trust in the math, not the banker By exchanging trust for energy. Cryptocurrencies are the best example of trust being a tangible thing - it can be quite literally converted to Kilowatt hours. This shows how incredible trust is as an energy use optimization device. We should be finding ways to be able to safely depend more on trust, not less.

larrysalibra 8y ago

> This currency could satisfy public policy goals, such as (i) financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments. If financial inclusion and privacy in payments were actual public policy goals, cryptocurrencies would be a lot less attractive. In reality, the real public policy goals are: 1) Financial exclusion: using denial of access to the state run financial system as a political, law enforcement, social control and tax collection tool. 3) "Know your customer" and "anti-money laundering" (AML/KYC) rules that remove privacy in payments to make it easier to use the state run financial system as described in 1). These regulations in practice exclude the the poorer people in society - the people Lagarde like means when she says "financial inclusion" - that can't meet requirements like "proof of address" and can't meet the minimal balance / month fee requirements that have come about from these AML/KYC regs.

fro0116 8y ago
I don't disagree with your points around the public policy goals of currency, but suggesting that minimal balance / monthly fee requirements come from AML/KYC regulations is quite the stretch. I'd wager those come from greed, pure and simple. The banks charge those fees because they can. If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass the savings onto customers or pocket the difference? I know where I'm putting my bet.
- AnthonyMouse 8y ago
  > If we got rid of AML/KYC regulations and reduced the banks' costs around regulatory compliance, do you think the banks will pass the savings onto customers or pocket the difference? The existing banks, on their own? Surely not. But complicated and expensive regulations like that are the main reason we don't have more, smaller banks, and they would be happy to gain customers by charging lower fees. Then the existing banks would have to compete and do the same.
erikpukinskis 8y ago
We need two things to operate productively without the State: Cryptocurrency is one. It does the job of the mint. The second piece, is we need a set of contracts that allow us to never take ownership of assets anymore. Instead of "here's a dollar, please may I have a taco", we'll say "please may I have a taco, here are my contracts" and the chef will ask the computer, "are this one's contracts aligned enough that I give them a taco?" There will be times you need to create revenue, which will be taxable, but it won't be the default. I'm not talking about tax evasion here. I'm talking about operating in a way that human activity can't be modeled as a transfer of assets. Essentially widening your friends and family circle to temporarily include arbitrary individuals.

divan 8y ago

This is suprisingly good and even refreshing speech after reading tons of very opinionated pro- and contra-crypto articles. Financial system design still have this chicken or the egg problem – we need to design fintech systems aligned with offline social interaction patterns as much as possible, but their (current) design changes our social interaction patterns in return as well. It's still fascinating to see how the world reimagines and reconsiders the nature of money. And not only in cryptopunks community, but in such a huge powerhouses as IMF as well.

RanInt1111 8y ago

There's not even a way to have a frank and open discussion about this topic because censorship is running rampant in the western world after communists, liberals, socialists, and other savages introduced it to self-retrain and to subjugate the civilized world for the parasites to take over. It's odd realizing that the future dystopian worlds depicted in things like the Maze Runner (as odd as that may seem if you don't know the full story) are actually going to be quite accurate as the gullible masses self-censor and self-harm themselves into self-subjugation. I keep trying to explain the very clear plans the elite have, but the rabble mobs are quite consistent in their rejection of "heresy".

hkt 8y ago

I feel like one day, central banks are going to be attacked by private banks and the means of attack will be cryptocurrency. The aim will be to get rid of central bank deposits and seize control of the payments system - once the central bank deposits are gone and we're cashless, this will become easy. They could even base it offshore to avoid consumer protections. If we're lucky when this happens, it will be a test of the remaining power of nation states. If we're unlucky, they'll roll over as the most basic means of exchange is privatized.

RanInt1111 8y ago
Pardon the displeasure, but that sounds utterly naive. Sure, the elite that control ever more with every passing day are just going to accept a distributed financial system that threatens their ultimate goal, world domination by a neo-aristocratic master class that lords over the mixed master race of peasants they created through "diversity" and "equity"? The far more likely scenario of the "cashless" society, aka, slavery, is that "laws" will be "passed" that make unapproved, aka, uncontrolled "currency" illegal. Your life and your worth will be nothing but a number on a screen, if you are worth anything at all once automation and robotics and AI make humans lose inherent value. There is no point in humans in a de-industrialized, post-human future of the master class served by robots and a few flesh servants.

netcan 8y ago

Because of bitcoin, cryptocurrency has a strong association with "free money," which is basically a dissent theory of macroeconomics that doesn't want central banks to have control. This was written by a central banker, so obviously there's a belligerence here... In any case... Idk what I think about free money. Macroeconomics is hard. OTOH, I think cryptocurrencies have other disruptive potential even if we want to keep our current macroeconomics, central bank control over interest rates. It's the kind of technology that turns a £100bn industry into a £1bn one. There are several clunky inefficient financial services sub-industries that could potentiall be digitised by good implementation of blockchain tech. The problem is too-big-to-fail. Besides actual central banking, does Christine Lagarde see her job as protector of the financial services industry? If so, she's going to build bureaucracy that maintains the status quo.