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You're seeing this from a western, first world perspective. If you're in a third world country, you likely don't have access to robust, transparent local stock
by puranjay 5y ago
You're seeing this from a western, first world perspective.
If you're in a third world country, you likely don't have access to robust, transparent local stock markets. Whatever exchanges might exist tend to be rife with scammy companies, insider trading and poor regulation. If you want to invest in, say, the US stock market, you'd have to jump through a ton of hoops or have a ton of money, essentially locking out all but the wealthiest.
These crypto "stocks" essentially allow anyone living anywhere to "invest" in top-tier stocks like AAPL.
I don't see any reason why you'd buy these crypto stocks if you're living in the US. But if you're living in Somalia or Madagascar? Hell yes.
Again, all the crypto criticism is very myopic and first world. HN needs to step out of that POV to understand the value. Decentralized, global markets don't benefit first world citizens, but they definitely level the playing field for us third worlders.
- clavigne 5y agoSo first, investing in DEFI is not exactly simple. If I am reading it properly, you lose 20% in fees at least if you buy bitcoin with Madagascar dollars on paxful, https://paxful.com/buy/bitcoin/madagascar https://paxful.com/buy/bitcoin/madagascar How many more hoops do you then have to jump through to acquire fake stocks? Second, you then have to make sure you avoid pyramid schemes (like OneCoin), rug pulls, exit scams, bad exchanges and bad "smart" contracts (like the Parity bug). This is not easy even for highly informed tech workers in the Global North. Now if you happen to speak another language (as I do) I recommend you go and Google "how to invest in Defi" or whatever in it. In my case (French), you get just articles after articles that are sponsored content from very dubious sounding wallet and exchanges, especially if you add "Madagascar" or "Congo" or whatever to your search. So frankly, I think the idea that "crypto markets are great for the Global South" is more of a convenient story.
- puranjay 5y agoComplex onboarding is still better than not having access to the markets at all. I don't really understand the resistance about this - an imperfect process is always better than no process. Could things be improved? 100% yes. But that doesn't mean this truly global, permissionless market is somehow a scam.
- clavigne 5y agoI guess it comes down to whether one does the cost benefit analysis for society as a whole or for individuals. While decentralized permissionless markets can (and have) helped some individuals escape economic restrictions (capital controls, sanctions, etc.) it's not at all clear to me that they have had an overall positive effect, or ever will. At the end of the day, the rise in the price of bitcoin, scams like AfriCrypt and OneCoin, the new Salvador laws etc are all just new means of extracting capital from the Global South. I'm of the opinion that the benefits to individuals are not balancing the overall societal harms, but I could see how someone with a more individualistic ideology would disagree.
- puranjay 5y agoYou do have a point there. Crypto does have a massive fraud problem. And I'll admit that so far, it's been a net negative for society. I'm hoping this will change as the ecosystem matures.
- nly 5y agoMost people in Somalia probably don't have the disposable income to invest in stocks... The notion of having the money to invest in stocks is made from a position of privilege