5 ms·

You just recreated consumer banking.

gjulianm 6y ago
I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies.
- rorykoehler 6y ago
  Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto.
  - logifail 6y ago
    > Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto. So in the brave new post-Fiat world we're thinking of, how does getting a mortgage work, exactly? The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. In the all-cryptocurrency world, who creates the crypto in the getting-a-mortgage process?
    - Melting_Harps 6y ago
      > The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. This begs the obvious question: contract law is all about enforcement. Clearly no one would be right to dispute you own this land and home, you have the deeds and the tax history, which could all be hashed on to the blockchain right now for a nominal fee. But the fact is that the State is what upholds the court system and the need to prove this and they hold the threat of theft and violence if you don't comply and arbitration in their 'legal system' is expensive, slow, and arcane. People being thrown out of their own homes they paid for in full in 2008 was real because the banks created all these complex derivatives and no one knew who owned what in the those CDO and MBS. So when things got messy, and the banks claimed the home the sheriff's showed up and did what they always do: rendered unto Caeser. You may pay your taxes that directly pays their salaries but they work for the State, not you the resident and home owner. This is why we don't need technologists in Bitcoin as much as we need other professionals like legal people to help create an automated arbitration system, divorced entirely from the whims of Mankind: you can clearly prove you've owned this land and home and when you made the purchase(s) for it and the tax history in a timestamped and verified way on the the ONLY immutable ledger, amazing... but we cannot and do not have an enforcement system to ensure you are entitled to keep this land and home should an adversary come and take it other than violence. And this needs to be solved, which is why I would hope HN would be a good breeding ground for such thought instead of this endless non-sense about Bitcoin is just for speculation, as if hedgefunds and FOREX markets aren't a hotbed for illicit, corrupt and even more complex legalized forms of gambling in the fiat Word. And have caused the collapse of the economy countless times in just the 20th and 21st Century that always ends up in hotwars in the end, fought mainly by the people who ironically just wanted to protect their homes from 'foreign adversaries' when it's most often the domestic threat they should have been most vigilant about. Hell, most people don't even realize that the FOREX is the biggest Industry in the entire World, and yet people just forget about things like LIBOR interest rate rigging when it's convenient and time to bash Bitcoin on here. We get it, you missed out on making billions in fiat by ignoring it, get over you not going to be Chamath or Elon and help build the future we all want and maybe have a chance of creating a post-scarce World.
      - tsimionescu 6y ago
        > help create an automated arbitration system, divorced entirely from the whims of Mankind No. That is simply not possible with anything resembling today's technology. We'll have flying cars on a Mars city before automated arbitration on real world matters. > help build the future we all want and maybe have a chance of creating a post-scarce World. Except fixed supply currency is going back in the other direction. And the hard parts about eliminating scarcity have nothing to do with the monetary system. Besides, you still haven't explained how lending works with bitcoin but without banks making up extra bitcoin. Note: using bitcoin to refer to any fixed supply currency, whether it's bitcoin, Eth, gold or anything else.
        Melting_Harps 6y ago
        > No. That is simply not possible with anything resembling today's technology. We'll have flying cars on a Mars city before automated arbitration on real world matters. I don't disagree about its current feasibility, but I think that's mainly so because of a distortion of incentives and that so many are invested in this model (the few) despite how horrible it is (to the detriment of the many) as so many people are incapable of doing anything else at this point. They would sooner die than consider opting for something that they know will end their way of life if successful and this terrifies them rather than excites them about starting something new in life; the sad reality is the legal system is already getting disrupted as we speak all over the World and it's innovating at the edges, but also manifests as distrust and disillusionment and lost of confidence in even basic things like anti-masker, vaccine conspiracy, and refusing to follow curfew and business closures and can lead to having the National Gaurd in Washington DC due to the storming of the Capital by imbeciles fomented by Trump. All of these are legal matters that are complicated and messy, without a doubt, but the current legal system is to blame for why so many loss confidence as it cannot solve them either, and we can easily be overrun with a 'burning of Alexandria' situation if we don't attempt to solve these problems. And I mean in the next decade given how fast things are escalating not just in the West but in Asia: Thailand, Hong Kong and Mynmar are all in revolt right now for obvious break down in trust with thier systems and legal systems. The CCP is the benefactor from these disolving in the region as they can expand their influence in the turmoil and they simply don't care how corrupt their legal systems are or how they appear to the outside World and will disappear you if you resist which is where I think this is all heading. > Except fixed supply currency is going back in the other direction. And the hard parts about eliminating scarcity have nothing to do with the monetary system. WHAT?!!! This smacks of outright detached privilege only HNers can conjure up from its ivory tower, go to countries that suffer from hyperinflation and still suffer from severe capital controls after that period all of which prevent wealth creation before you make such a claim. Otherwise I cannot take you seriously as your ignorance is almost palpably painful to me... I've lived and worked in Eastern Europe in the last decade and I went to baja before the revaluation of the peso in the 90s quite often as tourists, and the amount of poverty is incredibly sad... it was crazy to see how my single dollar bill bought 1000s worth of X in pesos down there. I honestly would buy absurd stuff like 10kg of packaged laundry detergent because it cost something absurd like 96 cents and I had a story to tell when I got back to school. Ill still remember to this day how upset I felt as a kid using quarters on the arcade machines outside the store instead of going to the counter and exchanging my USD to credits for 'free play' tokens, and then suddenly realizing how spoiled I was and how the $10 I spent in that store after a few hours probably helped feed the owners entire family for a week. It's funny how much those experiences make you grow up, and I fear you cannot relate. What you have just said is just beyond belief and I cannot seriously take what you say serious. I can address lending as that is already a thing, BTC is the collateral and fiat is the lent out. But the short is we just revert to a satoshi standard rather than whole Bitcoin (satoshi is 100 millionth of a Bitcoin)... But I seriously don't feel like I can muster the energy to go into depth as to how that would look like because of how struck I am by that statement. I'm not trying to be a SJW trigger queen, but that is just so painfully ignorant that my head literately hurts now and I have to get offline for a while.
  - littlestymaar 6y ago
    Coinbase and al. also do exactly this though: when you buy bitcoin on an exchange, Coinbase gives you an IOU for bitcoin, with zero transaction recorded in the blockchain it's only when you want to actually take these bitcoins out of your Coinbase wallet, to move them to your own bitcoin wallet, that a real bitcoin transaction exist. In the meantime, there can be more bitcoins owned on Coinbase than real bitcoin in existence, exactly like a bank. (And commercial banks have existed is the US long before the Fed, which was relatively late invention (1913) designed to avoid /limit the scope of financial crisis).
    - uhhhhhhhhhhhhhh 6y ago
      so what would happen in a "bitcoin bankrun", where, for whatever reason, 100% of coinbase customers say "i'll take my coins into my own physical wallet please"
Melting_Harps 6y ago
> I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies. > You just recreated consumer banking. While I personally detest the notion of such a model, and things like GME show why that is: I realized that after 10 years we really are going to have to simplify this tech to that level in a way that it's indistinguishable to the old model if we are onboard them at all. Which is why Kraken taking the lead in this is happening [0]. We collectively opposed this system so much that once we on boarded all the nerds we had a massive blindspot and didn't take pause and realize that the immense complexity to work and use Bitcoin on an everyday basis would be near impossible for the average person who struggled with HS math. And that's often who needs this tech the most, as they often the first to fall victim to the pernicious and illegal actions of banks with things like compounding overdraft fees, mortgage scams etc... I was used to having to use run a full node on QT with no smart phone for the first 4-5 years so it's all simple to me now, but that is all relative to where you start and when I started I couldn't even code enough to do more than a simple 'Hello world' command but with time I became a founder of a fintech start up and then developer and consultant at a multi-national corporation because this tech evolved so fast and demanded I keep up, so it was a massive learning curve but more than anything I was ready and willing to learn; which I KNOW most people don't want to do. HN is also a very good cross section that makes me keep coming back at ATHs because even amongst tech workers many keep talking about how 'bad' the tech is without taking the time to even look into it beyond the sensationalist headlines the media makes up as fact and they repeat the same tired narrative, and they too are reluctant if not entirely incapable of undertaking what we think is 'simple' but also the best deterrent for the inherit corruption of the fiat World and also the basis of OPSEC and is best inculcated in a simple mantra: not your keys, not your Bitcoin. Out thinking your enemy and creating new way to route around their absurd system is exhausting, and spending time playing factorio and with legos is fun. You'd think for a place like HN that is so quick to pat itself on the back for learning a new programming language and boasting about it here in some perverse form of virtue signalling as an autodidactic impresario they'd be the first to see the immense novelty Bitcoin holds (and to an extension it's Blockchain and it's verification, and consensus model) and the fun challenge to understand it would be and ultimately why some of the world's best cryptographers (who at their core have to love to solve complex problems and learn new skills along the way) work in this space. This sentiment is a total contradiction to the philosophy the early days of Silicon Valley had, but has given way to this more petty and servile wave of infantile 'technologists' that are beholden to FAANG so this is clearly what happens when even 'smart people' get things wrong: they try to justify their errors with these campaign smears. Which is why I'm glad so many are leaving CA, hopefully it can go back to it's cypherpunk roots it had in the 80s and 90s. So, rather than commit to endless Pyrrhic victories trying to fight this with ideological fervor and an unfounded hope people will just eventually 'learn on their own' I realize that time is the most pressing issue, COVID was just a reminder how quickly things can change for the worse, and we should just offer these service as an inevitability for those whose mindsets are not apt to a paradigm shift. It's crazy to see just how many on HN are incredibly jealous and over all envious about Bitcoin's success, you'd think they would be elated that open source tech is what disrupted finance, but then you realize how many are only 'successful' in Life because of their monetary net worth measured in fiat and how they ignored or simply dismissed Bitcoin because it was too complicated. Their work is not their own, and they are beholden to their employers for identity and purpose, and Bitcoin is just a reminder of why it might have been a waste of time when M1 and M2 spikes happen. For those of us who worked in Bitcoin professionally we can point and extrapolate the value we derived from it, and some of us can even point to landmark legislation, thought to be impossible, that had to be changed in part because of our efforts and that gives us a form of satisfaction they will never have. So even if it wasn't the safe, or even profitable undertaking sometimes it was worth it because money may be important but it isn't everything. We got two of the biggest names in Fintech (Musk and Dorsey) on our side, one being the richest man on the planet stating crypto will be used on Mar's economy; but we really need the new wave of users so we should also just acquiesce and create the walled gardens and gaurd-railed sandboxes they so desperately pine for, in hope that one day they could remove the training wheels if they so choose. They thought they had it so good, for so long, so now when something comes along and shows them that their jails are opened they suffer from a sort of anxiety when they're not in one, so I say: lets just build it for them, but give them a key they can keep inside and use if and when they are ever ready, while the rest of us continue to operate as we always intended Bitcoin to be.

I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies.

rorykoehler 6y ago
Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto.
- logifail 6y ago
  > Banks are not just managing money. They are distributors of newly minted money via loans. They are not distributors of crypto and the Fed are not involved (or at least necessary) for the creation of new crypto. So in the brave new post-Fiat world we're thinking of, how does getting a mortgage work, exactly? The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. In the all-cryptocurrency world, who creates the crypto in the getting-a-mortgage process?
  - Melting_Harps 6y ago
    > The house I'm in was financed by my wife and I purchasing a plot of land, for cash, then offering that land as security to a bank, who then created a loan for a fairly sizable chunk of cash with which we paid a builder to construct the house. This begs the obvious question: contract law is all about enforcement. Clearly no one would be right to dispute you own this land and home, you have the deeds and the tax history, which could all be hashed on to the blockchain right now for a nominal fee. But the fact is that the State is what upholds the court system and the need to prove this and they hold the threat of theft and violence if you don't comply and arbitration in their 'legal system' is expensive, slow, and arcane. People being thrown out of their own homes they paid for in full in 2008 was real because the banks created all these complex derivatives and no one knew who owned what in the those CDO and MBS. So when things got messy, and the banks claimed the home the sheriff's showed up and did what they always do: rendered unto Caeser. You may pay your taxes that directly pays their salaries but they work for the State, not you the resident and home owner. This is why we don't need technologists in Bitcoin as much as we need other professionals like legal people to help create an automated arbitration system, divorced entirely from the whims of Mankind: you can clearly prove you've owned this land and home and when you made the purchase(s) for it and the tax history in a timestamped and verified way on the the ONLY immutable ledger, amazing... but we cannot and do not have an enforcement system to ensure you are entitled to keep this land and home should an adversary come and take it other than violence. And this needs to be solved, which is why I would hope HN would be a good breeding ground for such thought instead of this endless non-sense about Bitcoin is just for speculation, as if hedgefunds and FOREX markets aren't a hotbed for illicit, corrupt and even more complex legalized forms of gambling in the fiat Word. And have caused the collapse of the economy countless times in just the 20th and 21st Century that always ends up in hotwars in the end, fought mainly by the people who ironically just wanted to protect their homes from 'foreign adversaries' when it's most often the domestic threat they should have been most vigilant about. Hell, most people don't even realize that the FOREX is the biggest Industry in the entire World, and yet people just forget about things like LIBOR interest rate rigging when it's convenient and time to bash Bitcoin on here. We get it, you missed out on making billions in fiat by ignoring it, get over you not going to be Chamath or Elon and help build the future we all want and maybe have a chance of creating a post-scarce World.
    - tsimionescu 6y ago
      > help create an automated arbitration system, divorced entirely from the whims of Mankind No. That is simply not possible with anything resembling today's technology. We'll have flying cars on a Mars city before automated arbitration on real world matters. > help build the future we all want and maybe have a chance of creating a post-scarce World. Except fixed supply currency is going back in the other direction. And the hard parts about eliminating scarcity have nothing to do with the monetary system. Besides, you still haven't explained how lending works with bitcoin but without banks making up extra bitcoin. Note: using bitcoin to refer to any fixed supply currency, whether it's bitcoin, Eth, gold or anything else.
      - Melting_Harps 6y ago
        > No. That is simply not possible with anything resembling today's technology. We'll have flying cars on a Mars city before automated arbitration on real world matters. I don't disagree about its current feasibility, but I think that's mainly so because of a distortion of incentives and that so many are invested in this model (the few) despite how horrible it is (to the detriment of the many) as so many people are incapable of doing anything else at this point. They would sooner die than consider opting for something that they know will end their way of life if successful and this terrifies them rather than excites them about starting something new in life; the sad reality is the legal system is already getting disrupted as we speak all over the World and it's innovating at the edges, but also manifests as distrust and disillusionment and lost of confidence in even basic things like anti-masker, vaccine conspiracy, and refusing to follow curfew and business closures and can lead to having the National Gaurd in Washington DC due to the storming of the Capital by imbeciles fomented by Trump. All of these are legal matters that are complicated and messy, without a doubt, but the current legal system is to blame for why so many loss confidence as it cannot solve them either, and we can easily be overrun with a 'burning of Alexandria' situation if we don't attempt to solve these problems. And I mean in the next decade given how fast things are escalating not just in the West but in Asia: Thailand, Hong Kong and Mynmar are all in revolt right now for obvious break down in trust with thier systems and legal systems. The CCP is the benefactor from these disolving in the region as they can expand their influence in the turmoil and they simply don't care how corrupt their legal systems are or how they appear to the outside World and will disappear you if you resist which is where I think this is all heading. > Except fixed supply currency is going back in the other direction. And the hard parts about eliminating scarcity have nothing to do with the monetary system. WHAT?!!! This smacks of outright detached privilege only HNers can conjure up from its ivory tower, go to countries that suffer from hyperinflation and still suffer from severe capital controls after that period all of which prevent wealth creation before you make such a claim. Otherwise I cannot take you seriously as your ignorance is almost palpably painful to me... I've lived and worked in Eastern Europe in the last decade and I went to baja before the revaluation of the peso in the 90s quite often as tourists, and the amount of poverty is incredibly sad... it was crazy to see how my single dollar bill bought 1000s worth of X in pesos down there. I honestly would buy absurd stuff like 10kg of packaged laundry detergent because it cost something absurd like 96 cents and I had a story to tell when I got back to school. Ill still remember to this day how upset I felt as a kid using quarters on the arcade machines outside the store instead of going to the counter and exchanging my USD to credits for 'free play' tokens, and then suddenly realizing how spoiled I was and how the $10 I spent in that store after a few hours probably helped feed the owners entire family for a week. It's funny how much those experiences make you grow up, and I fear you cannot relate. What you have just said is just beyond belief and I cannot seriously take what you say serious. I can address lending as that is already a thing, BTC is the collateral and fiat is the lent out. But the short is we just revert to a satoshi standard rather than whole Bitcoin (satoshi is 100 millionth of a Bitcoin)... But I seriously don't feel like I can muster the energy to go into depth as to how that would look like because of how struck I am by that statement. I'm not trying to be a SJW trigger queen, but that is just so painfully ignorant that my head literately hurts now and I have to get offline for a while.
- littlestymaar 6y ago
  Coinbase and al. also do exactly this though: when you buy bitcoin on an exchange, Coinbase gives you an IOU for bitcoin, with zero transaction recorded in the blockchain it's only when you want to actually take these bitcoins out of your Coinbase wallet, to move them to your own bitcoin wallet, that a real bitcoin transaction exist. In the meantime, there can be more bitcoins owned on Coinbase than real bitcoin in existence, exactly like a bank. (And commercial banks have existed is the US long before the Fed, which was relatively late invention (1913) designed to avoid /limit the scope of financial crisis).
  - uhhhhhhhhhhhhhh 6y ago
    so what would happen in a "bitcoin bankrun", where, for whatever reason, 100% of coinbase customers say "i'll take my coins into my own physical wallet please"

Melting_Harps 6y ago

> I think that's their point. There's a lot of discussion that 'banks will become obsolete with crypto' that forgets that banks are not the currency, they just manage it. If crypto becomes widespread banks will keep on existing, they'll just move to manage cryptocurrencies. > You just recreated consumer banking. While I personally detest the notion of such a model, and things like GME show why that is: I realized that after 10 years we really are going to have to simplify this tech to that level in a way that it's indistinguishable to the old model if we are onboard them at all. Which is why Kraken taking the lead in this is happening [0]. We collectively opposed this system so much that once we on boarded all the nerds we had a massive blindspot and didn't take pause and realize that the immense complexity to work and use Bitcoin on an everyday basis would be near impossible for the average person who struggled with HS math. And that's often who needs this tech the most, as they often the first to fall victim to the pernicious and illegal actions of banks with things like compounding overdraft fees, mortgage scams etc... I was used to having to use run a full node on QT with no smart phone for the first 4-5 years so it's all simple to me now, but that is all relative to where you start and when I started I couldn't even code enough to do more than a simple 'Hello world' command but with time I became a founder of a fintech start up and then developer and consultant at a multi-national corporation because this tech evolved so fast and demanded I keep up, so it was a massive learning curve but more than anything I was ready and willing to learn; which I KNOW most people don't want to do. HN is also a very good cross section that makes me keep coming back at ATHs because even amongst tech workers many keep talking about how 'bad' the tech is without taking the time to even look into it beyond the sensationalist headlines the media makes up as fact and they repeat the same tired narrative, and they too are reluctant if not entirely incapable of undertaking what we think is 'simple' but also the best deterrent for the inherit corruption of the fiat World and also the basis of OPSEC and is best inculcated in a simple mantra: not your keys, not your Bitcoin. Out thinking your enemy and creating new way to route around their absurd system is exhausting, and spending time playing factorio and with legos is fun. You'd think for a place like HN that is so quick to pat itself on the back for learning a new programming language and boasting about it here in some perverse form of virtue signalling as an autodidactic impresario they'd be the first to see the immense novelty Bitcoin holds (and to an extension it's Blockchain and it's verification, and consensus model) and the fun challenge to understand it would be and ultimately why some of the world's best cryptographers (who at their core have to love to solve complex problems and learn new skills along the way) work in this space. This sentiment is a total contradiction to the philosophy the early days of Silicon Valley had, but has given way to this more petty and servile wave of infantile 'technologists' that are beholden to FAANG so this is clearly what happens when even 'smart people' get things wrong: they try to justify their errors with these campaign smears. Which is why I'm glad so many are leaving CA, hopefully it can go back to it's cypherpunk roots it had in the 80s and 90s. So, rather than commit to endless Pyrrhic victories trying to fight this with ideological fervor and an unfounded hope people will just eventually 'learn on their own' I realize that time is the most pressing issue, COVID was just a reminder how quickly things can change for the worse, and we should just offer these service as an inevitability for those whose mindsets are not apt to a paradigm shift. It's crazy to see just how many on HN are incredibly jealous and over all envious about Bitcoin's success, you'd think they would be elated that open source tech is what disrupted finance, but then you realize how many are only 'successful' in Life because of their monetary net worth measured in fiat and how they ignored or simply dismissed Bitcoin because it was too complicated. Their work is not their own, and they are beholden to their employers for identity and purpose, and Bitcoin is just a reminder of why it might have been a waste of time when M1 and M2 spikes happen. For those of us who worked in Bitcoin professionally we can point and extrapolate the value we derived from it, and some of us can even point to landmark legislation, thought to be impossible, that had to be changed in part because of our efforts and that gives us a form of satisfaction they will never have. So even if it wasn't the safe, or even profitable undertaking sometimes it was worth it because money may be important but it isn't everything. We got two of the biggest names in Fintech (Musk and Dorsey) on our side, one being the richest man on the planet stating crypto will be used on Mar's economy; but we really need the new wave of users so we should also just acquiesce and create the walled gardens and gaurd-railed sandboxes they so desperately pine for, in hope that one day they could remove the training wheels if they so choose. They thought they had it so good, for so long, so now when something comes along and shows them that their jails are opened they suffer from a sort of anxiety when they're not in one, so I say: lets just build it for them, but give them a key they can keep inside and use if and when they are ever ready, while the rest of us continue to operate as we always intended Bitcoin to be.