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The crypto world is rife with scams and thieves, but so too are the traditional financial systems. There are two key differences, however: 1. The scale of wro

by blunte 6y ago

The crypto world is rife with scams and thieves, but so too are the traditional financial systems. There are two key differences, however: 1. The scale of wrongdoing in the crypto world is insignificant compared to in traditional systems. 2. Some of what is deemed "criminal" in crypto systems is only criminal because it bypasses traditional controls. In the first case, small investors and taxpayers have been on the losing end of many financial disasters which were not of their own making. But as evidenced by the multiple bailouts in the US, those negligent or intentionally malfeasant rarely suffer the consequences of their actions; on the contrary, they often profit from it. To be sure, there are plenty of really lame scams in the crypto world - either outright frauds or ponzi schemes. And the losses to customers and clients is significant. However, if the losses in traditional system failures and thefts were calculated, we would be much better served by focusing on the traditional system problems. In the second case, some of the criminal crypto activities (such as the transparent lotteries and ponzis operating in the Ethereum network) are arguably less risky than legal gambling or equities and futures trading. Small investors in traditional markets get cheated in invisible ways that would not be possible on a system with blockchain-published smart contracts. (That's not to imply that many people can truly grasp exactly how a given smart contract works, edge cases and all - but at least it is visible.) I personally dislike the crypto world. In the very early days, it was a place of hope and possibility. But that was quickly buried by the waves of unethical people who were fixated on quick riches. And unfortunately, little of the potential or promises of cryptocurrencies have panned out. Meanwhile, at least in some places (Europe for example), financial transaction speed and associated costs have been reduced to well below what even crypto can offer. For example, I can move money from a Dutch account to a German account in one second, at no cost. There is no room for improvement there - ignoring the concept of anonymity of course... but that isn't really something crypto actually offers. In the places where the banks themselves have not improved, new players have stepped in. Transferwise has saved me thousands per year for several years compared to international bank wires. Crypto can do that as well, but both endpoints then have to manage the fiat to crypto exchange. To be fair to cryptocurrency in this regard, there has been intentional pressure from traditional financial systems to create laws that make it more difficult to exchange fiat and crypto, and that has greatly hindered some of the potential uses. Even that is evidence of how much more corrupt traditional systems are compared to cryptocurrencies.

louwrentius 6y ago
The we-are-bad-but-so-are-they-defence doesn't work. Traditional financial systems can be abused[0] but they do bring us tremendous value for our societies. I can see how people can make snide and cynical remarks about that, but you know it is true and making such remarks in this context are frankly dishonest in my view. Because they distract from the fact that Bitcoin or any other crypto currency doesn't provide any tangible benefit to our societies. It benefits a few (lambo money) to the detriment of the many. And let's not forget Bitcoin made the Silk Road and its successors possible. And meanwhile, so many smart people are wasting their life on crypto currencies. And meanwhile, so much energy is wasted on this. [0] I still don't understand why HFT is not illegal and there are many more things that are terrible, but this is not about Traditional financial systems right now.
- alentist 6y ago
  > Because they distract from the fact that Bitcoin or any other crypto currency doesn't provide any tangible benefit to our societies. I recommend expanding your understanding of the world beyond your coddled first-world perspective. https://news.ycombinator.com/item?id=25797143 https://news.ycombinator.com/item?id=25797143 > I still don't understand why HFT is not illegal Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general.
  - FabHK 6y ago
    > I recommend expanding your understanding of the world beyond your coddled first-world perspective. That comment doesn't enumerate or even alludes to any tangible benefits of crypto currencies. (It's about the benefit of mesh networks during HK protests when internet was shut down, and the supposed resiliency of the "Bitcoin network"). > Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general. I'm pretty sure GP has heard of those. Whether HFT provides any benefit in terms of liquidity and smaller spreads is by no means clear. HFT is certainly neither necessary nor even contributing to price discovery. I submit that the economy would work just fine with a price auction every minute (maybe with stochastic cut-off) for, say, 3 hours a day; and maybe even a bit better, because all the HFT guys would have to do something else, which would most likely be more productive.

by blunte 6y ago

louwrentius 6y ago

The we-are-bad-but-so-are-they-defence doesn't work. Traditional financial systems can be abused[0] but they do bring us tremendous value for our societies. I can see how people can make snide and cynical remarks about that, but you know it is true and making such remarks in this context are frankly dishonest in my view. Because they distract from the fact that Bitcoin or any other crypto currency doesn't provide any tangible benefit to our societies. It benefits a few (lambo money) to the detriment of the many. And let's not forget Bitcoin made the Silk Road and its successors possible. And meanwhile, so many smart people are wasting their life on crypto currencies. And meanwhile, so much energy is wasted on this. [0] I still don't understand why HFT is not illegal and there are many more things that are terrible, but this is not about Traditional financial systems right now.

alentist 6y ago
> Because they distract from the fact that Bitcoin or any other crypto currency doesn't provide any tangible benefit to our societies. I recommend expanding your understanding of the world beyond your coddled first-world perspective. https://news.ycombinator.com/item?id=25797143 https://news.ycombinator.com/item?id=25797143 > I still don't understand why HFT is not illegal Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general.
- FabHK 6y ago
  > I recommend expanding your understanding of the world beyond your coddled first-world perspective. That comment doesn't enumerate or even alludes to any tangible benefits of crypto currencies. (It's about the benefit of mesh networks during HK protests when internet was shut down, and the supposed resiliency of the "Bitcoin network"). > Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general. I'm pretty sure GP has heard of those. Whether HFT provides any benefit in terms of liquidity and smaller spreads is by no means clear. HFT is certainly neither necessary nor even contributing to price discovery. I submit that the economy would work just fine with a price auction every minute (maybe with stochastic cut-off) for, say, 3 hours a day; and maybe even a bit better, because all the HFT guys would have to do something else, which would most likely be more productive.