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I've worked in both finance and technology. I think the technical people aren't seeing how amazing this is from a finance point of view. Payments are going to b

by revel 5y ago

I've worked in both finance and technology. I think the technical people aren't seeing how amazing this is from a finance point of view. Payments are going to be completely transformed by this. All of fixed income will change to be oriented around crypto. It's just a matter of time. All the main preconditions for crypto to take off are finally in place. If you are a professional money manager or CFO there is no way in hell you are going to risk managing your own keys, let alone keys on behalf of a customer or supplier. The largest impediment to all the good blockchain projects has been the lack of a cheap, affordable, insured custodian for key management. It's taken years to get to this point because these issues aren't technical in nature; they're governmental. The SEC weighed in on what it takes to be a qualified custodian near the end of last year, so now finally some of the larger names in this space have said they'll offer services. All the best, obvious use cases for crypto have been blocked by this issue: automatic payments, self-settling contracts and futures, escrow with almost 0 overhead, trade finance, etc.

asah 5y ago
Yyy. Once you've experienced 24x7x365 instant, no-human finance, there's no going back to mountains of random paperwork, random bank policies, 1pm wire transfer deadlines, etc etc etc
- quickthrower2 5y ago
  Where do I experience this though? Mostly it’s transfer coins on/off exchange to convert to fiat. Some stores take crypto but it turns out more expensive and there is less choice if I restrict my stores to ones that so
leifg 5y ago
Why is cryptocurrency/blockchain necessary for that? You could have all of this with open banking standards.
- ipnon 5y ago
  Very simple game theory answer to this question: tragedy of the commons. There is a reason popular culture stereotypes financiers as greedy sociopaths. If the system can be cracked then it will be cracked. No shortage of examples, Bernie Madoffs, subprime lending crises, endless financial crashes and crises. Blockchains solve this problem, as in mathematically proves that certain classes of exploits requiring information asymmetry are impossible. We could have all of this with open banking standards? You're looking at them!
  - leifg 5y ago
    That sounds like a typical blockchain enthusiast answer: The banking industry is corrupt. Blockchain solves this. End of argument. I have yet to see a specific, easy to explain answer on how blockchain solves any kind of fraud. Who is forcing any of these fraudsters to put any information on the blockchain? As soon as you need external safe guards you are back to square one. I don’t have the solution to any of the problems of the banking industry but in my experience technical solutions don’t solve any of these societal problems.
    - ipnon 5y ago
      Well my answer would be that there are many different types of exploits that we may consider fraud. As I said blockchains prevent _some_ of these exploits but not all. I don't think we can prevent laundering of illegal arms sales with cryptocurrency just as I don't think we can prevent the same laundering with actual paper bills.[a] However blockchains do prevent problems like double spending and information asymmetry from occurring. My counter point to the lack of specific, easy answers on how blockchain solves any kind of fraud would be that there aren't any, in that there is a certain amount of financial and technical know how that is prerequisite to explaining _why_ these problems are provably non existent. We will need to wait for higher level abstractions to be invented before mainstream adoption is possible, and until that happens I will admit cryptocurrencies are almost hopelessly confusing in their mechanisms of action. [a] China's new central bank currency may be able to solve this problem to some extent but I consider the forced adoption of such a currency in the Western world to be too draconian to be practical.
ipnon 5y ago
No one is going back to a Fed fund rate pegged savings account after parking stablecoins in a DAO governed yield farm aggregator. Critics think we're in the Dotcom bubble of crypto right now, but we're still in the Usenet stages. You need technical expertise in finance and computer science to grok crypto. I would ask any naysayers to this point in particular to share their understanding of some protocol like Aave, Sushi or Yearn and how these fail to surpass similar products in the space of traditional finance.
- graeme 5y ago
  Yield farm generator Madoff levels of returns (10+%). Why do you assume these are risk equivalent to a USD savings account? There’s no free lunch.
  - ipnon 5y ago
    How do you think your bank manages to make billions of dollars in profit every year? Do you think the money that millions of Americans lend to them for effectively 0% returns has anything to do with it? What do you imagine they do with that money, and how does it differ substantially from what DeFi calls yield farming?
    - thirsteh 5y ago
      Yield farming carries a similar or greater risk to investing in stocks and sector ETFs, and that is certainly not what retail banks do with customer funds (that was outlawed by the Volcker Rule in Dodd-Frank), nor is retail banking how investment banks make money. Nevermind that there obviously is no FDIC insurance for these crypto "savings accounts". You're asking good questions, but be careful not to jump to easy answers -- you might lose your money!
      - ipnon 5y ago
        My point is that a bank is essentially a commissioned matchmaker for lenders and borrowers, and that depositing your hard earned money in a traditional big bank savings account is effectively a free cash flow for them insured by the U.S. government. So while I agree with you that a Citibank savings account and a Yearn USDC deposit have frankly incomparable risk profiles, in the sense that if the bank ever needs to claim FDIC insurance then shit has truly hit the fan, I disagree that these two positions generate income (or lack thereof) in any fundamentally different way. I would not recommend my grandmother uses Yearn, but I also wouldn't recommend that my little cousin who knows how to program saves her money in a Wells Fargo account either. Regardless I appreciate your considerate comment. I always know something interesting is afoot when HN relentlessly downvotes both pro and con comments.
ffggvv 5y ago
we get it. it’s just a scam.
jmcqk6 5y ago
>All of fixed income will change to be oriented around crypto. It's just a matter of time. Can you provide one or two technical reasons why this is the case?
stiltzkin 5y ago
"Technical" people saying this is just a scam or ponzi aren't really much technical.

by revel 5y ago

asah 5y ago

Yyy. Once you've experienced 24x7x365 instant, no-human finance, there's no going back to mountains of random paperwork, random bank policies, 1pm wire transfer deadlines, etc etc etc

quickthrower2 5y ago
Where do I experience this though? Mostly it’s transfer coins on/off exchange to convert to fiat. Some stores take crypto but it turns out more expensive and there is less choice if I restrict my stores to ones that so

leifg 5y ago

Why is cryptocurrency/blockchain necessary for that? You could have all of this with open banking standards.

ipnon 5y ago
Very simple game theory answer to this question: tragedy of the commons. There is a reason popular culture stereotypes financiers as greedy sociopaths. If the system can be cracked then it will be cracked. No shortage of examples, Bernie Madoffs, subprime lending crises, endless financial crashes and crises. Blockchains solve this problem, as in mathematically proves that certain classes of exploits requiring information asymmetry are impossible. We could have all of this with open banking standards? You're looking at them!
- leifg 5y ago
  That sounds like a typical blockchain enthusiast answer: The banking industry is corrupt. Blockchain solves this. End of argument. I have yet to see a specific, easy to explain answer on how blockchain solves any kind of fraud. Who is forcing any of these fraudsters to put any information on the blockchain? As soon as you need external safe guards you are back to square one. I don’t have the solution to any of the problems of the banking industry but in my experience technical solutions don’t solve any of these societal problems.
  - ipnon 5y ago
    Well my answer would be that there are many different types of exploits that we may consider fraud. As I said blockchains prevent _some_ of these exploits but not all. I don't think we can prevent laundering of illegal arms sales with cryptocurrency just as I don't think we can prevent the same laundering with actual paper bills.[a] However blockchains do prevent problems like double spending and information asymmetry from occurring. My counter point to the lack of specific, easy answers on how blockchain solves any kind of fraud would be that there aren't any, in that there is a certain amount of financial and technical know how that is prerequisite to explaining _why_ these problems are provably non existent. We will need to wait for higher level abstractions to be invented before mainstream adoption is possible, and until that happens I will admit cryptocurrencies are almost hopelessly confusing in their mechanisms of action. [a] China's new central bank currency may be able to solve this problem to some extent but I consider the forced adoption of such a currency in the Western world to be too draconian to be practical.

ipnon 5y ago

No one is going back to a Fed fund rate pegged savings account after parking stablecoins in a DAO governed yield farm aggregator. Critics think we're in the Dotcom bubble of crypto right now, but we're still in the Usenet stages. You need technical expertise in finance and computer science to grok crypto. I would ask any naysayers to this point in particular to share their understanding of some protocol like Aave, Sushi or Yearn and how these fail to surpass similar products in the space of traditional finance.

graeme 5y ago
Yield farm generator Madoff levels of returns (10+%). Why do you assume these are risk equivalent to a USD savings account? There’s no free lunch.
- ipnon 5y ago
  How do you think your bank manages to make billions of dollars in profit every year? Do you think the money that millions of Americans lend to them for effectively 0% returns has anything to do with it? What do you imagine they do with that money, and how does it differ substantially from what DeFi calls yield farming?
  - thirsteh 5y ago
    Yield farming carries a similar or greater risk to investing in stocks and sector ETFs, and that is certainly not what retail banks do with customer funds (that was outlawed by the Volcker Rule in Dodd-Frank), nor is retail banking how investment banks make money. Nevermind that there obviously is no FDIC insurance for these crypto "savings accounts". You're asking good questions, but be careful not to jump to easy answers -- you might lose your money!
    - ipnon 5y ago
      My point is that a bank is essentially a commissioned matchmaker for lenders and borrowers, and that depositing your hard earned money in a traditional big bank savings account is effectively a free cash flow for them insured by the U.S. government. So while I agree with you that a Citibank savings account and a Yearn USDC deposit have frankly incomparable risk profiles, in the sense that if the bank ever needs to claim FDIC insurance then shit has truly hit the fan, I disagree that these two positions generate income (or lack thereof) in any fundamentally different way. I would not recommend my grandmother uses Yearn, but I also wouldn't recommend that my little cousin who knows how to program saves her money in a Wells Fargo account either. Regardless I appreciate your considerate comment. I always know something interesting is afoot when HN relentlessly downvotes both pro and con comments.

ffggvv 5y ago

we get it. it’s just a scam.

jmcqk6 5y ago

>All of fixed income will change to be oriented around crypto. It's just a matter of time. Can you provide one or two technical reasons why this is the case?

stiltzkin 5y ago

"Technical" people saying this is just a scam or ponzi aren't really much technical.