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Thankfully centralized things ljke laws, courts and police exist to bail out the code is law jungle of “decentralized” finance. It’s becoming apparent to me th

Thankfully centralized things ljke laws, courts and police exist to bail out the code is law jungle of “decentralized” finance. It’s becoming apparent to me that the main innovation of crypto is a form of regulatory arbitrage. You or me cannot sell derivatives like Goldman Sachs but in crypto land you totally can from your home with a laptop. You can start a gambling casino on ethereum and get away with not following any of the laws regarding gambling as long as you couch it in financial and blockchain buzzwords. Some people will make a lot of money doing legitimate work and some scamming others until all of this becomes big enough to become mainstream and regulated.

luma 5y ago
It's endlessly amusing to watch a group of (mostly) finance "outsider" engineering teams rediscover all the reasons the current financial system works like it does.
- toomuchtodo 5y ago
  This is what happens when you try to solve people problems with code.
  - starfallg 5y ago
    It's like people watch and read all these Cyberpunk stories and say that nah, it's all fake, can't happen here, tech can solve everything.
- Gatsky 5y ago
  https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws... Just sayin…
  - xadhominemx 5y ago
    This story is only notable because mistaken transactions get reversed all the time. This scenario was the result of a strange but intentional quirk in the law.
  - JackFr 5y ago
    Of course the big difference is Citi actually owed that money.
  - pb7 5y ago
    Did you read your own link past the headline? Citi accidentally repaid the loan in its entirety earlier than necessary. No money was lost or stolen. The lender decided to keep the early repayment of its money which is legally allowed.
    - Gatsky 5y ago
      Yes, I did. Did you read the comment I was replying to? Isn’t it ‘endlessly amusing’ to observe one of the biggest banks in the world discover why the finance system works the way it does? And if it was ‘no big deal’ then why did Citibank sue to get the money returned? I don’t use or advocate for DeFi, but the weird smugness of random people defending the existing financial system is quite off putting and frankly hard to understand given the last few decades.
- londons_explore 5y ago
  In the process of that rediscovery, plenty of people will become rich. That's an incentive to not be too quick remaking those discoveries...
  - cynusx 5y ago
    You are forgetting the multi-millions of people that lost money on crypto so far. They are just written off as sore losers... Confirmation bias plays a big role in the popularity of crypto, in unsettingly the same way as it does with people dreaming to become a famous soccer player... mostly through confirmation bias and very little value-add.
- elevenoh 5y ago
  It's also endlessly amusing to watch traditional finance types take every crypto 'bump in the road' as an opportunity to justify their careers + justify their delusions about the status-quo & future of finance.
  - IfOnlyYouKnew 5y ago
    It can only be "endlessly amusing" because there are "endless" of these bumps, so far. But, as with cryptocurrencies, it just doesn't make any sense. Maybe a boxer taking it on the chin round after round can derive some satisfaction from still being conscious. But they aren't making any progress and would be rather stupid to continue considering it a winning strategy. Oh, wait.. maybe it does make sense.
- steveBK123 5y ago
  Yes, it's main innovation is "not doing KYC" For those with a longer history on Wall St, it was essentially a new asset class with all the easy money arbitrage opportunities that went away in equities 20+ years ago back again.
  - xadhominemx 5y ago
    Strategies that haven’t worked in regulated markets in 25-30 years are still minting cash in crypto.
  - steveBK123 5y ago
    Arguably "not doing KYC" was also Robinhood's secret sauce..
- leephillips 5y ago
  It’s like the NoSQL of finance.
SilasX 5y ago
Or, like in the case of Ethereum’s DAO hack, they can hyper-narrowly renege on “code is law” for this one case, where the logic error affects politically connected leaders, which is soooo much better than the corrupt legal system it’s replacing.
- _jal 5y ago
  That's the thing that kills it for me. Always look for the chump at the table. If you can't spot them, you're the chump.
  - mgarfias 5y ago
    This is why I don’t play.
  - cyberge99 5y ago
    I’ve always heard it as: “Never play a game where you don’t know what the patsy is. Because you’re the patsy.”
wmf 5y ago
Have any crypto hackers even been found, let alone punished by the law?
- smt88 5y ago
  I don't know about punishment, but the recovery rate for stolen/extorted crypto is much higher than for fiat cash. This is likely an issue of sophistication -- crypto hackers don't have decades of "best practices" knowledge to draw from, and may also feel a false sense of security.
  - londons_explore 5y ago
    > recovery rate for stolen/extorted crypto is much higher than for fiat cash. Citation needed for such an extraordinary claim.
    - smt88 5y ago
      I can't find it for the life of me, but I remembered reading that recovery of stolen crypto was both faster and more successful. I'll retract that claim for now. In the meantime, this article explains how and why that would be the case: https://www.nytimes.com/2021/06/09/technology/bitcoin-untraceable-pipeline-ransomware.html https://www.nytimes.com/2021/06/09/technology/bitcoin-untrac... Basically the openness of the ledger allows law enforcement to skip some slow and difficult tracing and requesting of warrants. On top of that, cybercriminals seem to make exploitable mistakes that have enabled stealing their private keys.
- zitterbewegung 5y ago
  MtGOX comes to mind. A bunch of the ICOs were simple frauds so they would practically have a Wordpress website with a Bitcoin wallet address.
  - redisman 5y ago
    They still are. There are more coins released than ever
deleted 5y ago
[deleted]
rmah 5y ago
You most certainly can buy and sell derivatives. Many (most?) discount brokers offer at least equity options, and many offer commodity futures.
- thewarrior 5y ago
  I don't need a license or a lawyer or anything ? I'm talking about creating and selling new types of contracts not trading what brokers already offer.
diamond559 5y ago
There's a large difference in capex required to start and operate a lending/borrowing protocol on Ethereum vs starting a bank/credit union that has nothing to do with regulation.
- thewarrior 5y ago
  Where do the capex differences come from ?
  - diamond559 5y ago
    Look at the size of a dev team for Uniswap or Aave, then look at the number of employees for Wells Fargo. Then look at the physical assets of a bank like their branches and office space.
hcarvalhoalves 5y ago
You're right, but is this news? I understand the whole point of crypto is the future bet that centralisation/regulation by state actors will eventually be _less_ trustable. This one hack means $600MM lost, but how much has been routinely lost to bad governance, inflation or corruption? How much value has been destroyed in the 2008 housing crisis? In the long run, the crypto market can professionalize enough while remaining decentralised, such that the risk/reward is attractive compared to holding 100% fiat – this seems to be people's bet, not that crypto is inherently safe.
- IfOnlyYouKnew 5y ago
  While I understand how inflation may, in theory, be something that could change with some breakthrough in economics (even though I don't buy that inflation is actually a problem, or that cryptocurrencies represent such a breakthrough), I have no idea how they would be of help fighting "corruption and bad governance". Which is the problem with that community: they seem to have these extremely naive yet cynical view of politicians just being "stupid", money being wasted, everyone being corrupt etc. And that, somehow, their funny little hashes are the silver bullet to solve these issues.
  - diamond559 5y ago
    I think the Bitcoin community give the rest of the space a bad name. There are too many people with fringe libertarian views in that space that dominate the narrative. Ethereum, I've found is a much more interesting space. It's valuable because you can actually use the blockchain for things more complicated than just sending coins around. As stupid as many of the NFTs are right now, they have the potential to completely change how the art, music and gaming industries are monetized. Defi has a huge potential to make banking more efficient and provide banking services to underserved areas as long as they have an internet connection.
- lottin 5y ago
  Bitcoin is an attempt to redesign the international monetary system by people who are clueless about economics. The result speaks for itself. A payment system that doesn't work and can't work, and a currency that would sink any country adopting it into a deep depression. Defi is to finance what bitcoin is to currency. A bunch of kids who wanted to "do finance" without actually knowing anything about finance. They still haven't figured out that you can't do finance with unconfiscatable assets. The main problem isn't lack of professionalism, but the fact that it's broken by design.

luma 5y ago

It's endlessly amusing to watch a group of (mostly) finance "outsider" engineering teams rediscover all the reasons the current financial system works like it does.

toomuchtodo 5y ago
This is what happens when you try to solve people problems with code.
- starfallg 5y ago
  It's like people watch and read all these Cyberpunk stories and say that nah, it's all fake, can't happen here, tech can solve everything.
Gatsky 5y ago
https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws... Just sayin…
- xadhominemx 5y ago
  This story is only notable because mistaken transactions get reversed all the time. This scenario was the result of a strange but intentional quirk in the law.
- JackFr 5y ago
  Of course the big difference is Citi actually owed that money.
- pb7 5y ago
  Did you read your own link past the headline? Citi accidentally repaid the loan in its entirety earlier than necessary. No money was lost or stolen. The lender decided to keep the early repayment of its money which is legally allowed.
  - Gatsky 5y ago
    Yes, I did. Did you read the comment I was replying to? Isn’t it ‘endlessly amusing’ to observe one of the biggest banks in the world discover why the finance system works the way it does? And if it was ‘no big deal’ then why did Citibank sue to get the money returned? I don’t use or advocate for DeFi, but the weird smugness of random people defending the existing financial system is quite off putting and frankly hard to understand given the last few decades.
londons_explore 5y ago
In the process of that rediscovery, plenty of people will become rich. That's an incentive to not be too quick remaking those discoveries...
- cynusx 5y ago
  You are forgetting the multi-millions of people that lost money on crypto so far. They are just written off as sore losers... Confirmation bias plays a big role in the popularity of crypto, in unsettingly the same way as it does with people dreaming to become a famous soccer player... mostly through confirmation bias and very little value-add.
elevenoh 5y ago
It's also endlessly amusing to watch traditional finance types take every crypto 'bump in the road' as an opportunity to justify their careers + justify their delusions about the status-quo & future of finance.
- IfOnlyYouKnew 5y ago
  It can only be "endlessly amusing" because there are "endless" of these bumps, so far. But, as with cryptocurrencies, it just doesn't make any sense. Maybe a boxer taking it on the chin round after round can derive some satisfaction from still being conscious. But they aren't making any progress and would be rather stupid to continue considering it a winning strategy. Oh, wait.. maybe it does make sense.
steveBK123 5y ago
Yes, it's main innovation is "not doing KYC" For those with a longer history on Wall St, it was essentially a new asset class with all the easy money arbitrage opportunities that went away in equities 20+ years ago back again.
- xadhominemx 5y ago
  Strategies that haven’t worked in regulated markets in 25-30 years are still minting cash in crypto.
- steveBK123 5y ago
  Arguably "not doing KYC" was also Robinhood's secret sauce..
leephillips 5y ago
It’s like the NoSQL of finance.

SilasX 5y ago

Or, like in the case of Ethereum’s DAO hack, they can hyper-narrowly renege on “code is law” for this one case, where the logic error affects politically connected leaders, which is soooo much better than the corrupt legal system it’s replacing.

_jal 5y ago
That's the thing that kills it for me. Always look for the chump at the table. If you can't spot them, you're the chump.
- mgarfias 5y ago
  This is why I don’t play.
- cyberge99 5y ago
  I’ve always heard it as: “Never play a game where you don’t know what the patsy is. Because you’re the patsy.”

wmf 5y ago

Have any crypto hackers even been found, let alone punished by the law?

smt88 5y ago
I don't know about punishment, but the recovery rate for stolen/extorted crypto is much higher than for fiat cash. This is likely an issue of sophistication -- crypto hackers don't have decades of "best practices" knowledge to draw from, and may also feel a false sense of security.
- londons_explore 5y ago
  > recovery rate for stolen/extorted crypto is much higher than for fiat cash. Citation needed for such an extraordinary claim.
  - smt88 5y ago
    I can't find it for the life of me, but I remembered reading that recovery of stolen crypto was both faster and more successful. I'll retract that claim for now. In the meantime, this article explains how and why that would be the case: https://www.nytimes.com/2021/06/09/technology/bitcoin-untraceable-pipeline-ransomware.html https://www.nytimes.com/2021/06/09/technology/bitcoin-untrac... Basically the openness of the ledger allows law enforcement to skip some slow and difficult tracing and requesting of warrants. On top of that, cybercriminals seem to make exploitable mistakes that have enabled stealing their private keys.
zitterbewegung 5y ago
MtGOX comes to mind. A bunch of the ICOs were simple frauds so they would practically have a Wordpress website with a Bitcoin wallet address.
- redisman 5y ago
  They still are. There are more coins released than ever

deleted 5y ago

[deleted]

rmah 5y ago

You most certainly can buy and sell derivatives. Many (most?) discount brokers offer at least equity options, and many offer commodity futures.

thewarrior 5y ago
I don't need a license or a lawyer or anything ? I'm talking about creating and selling new types of contracts not trading what brokers already offer.

diamond559 5y ago

There's a large difference in capex required to start and operate a lending/borrowing protocol on Ethereum vs starting a bank/credit union that has nothing to do with regulation.

thewarrior 5y ago
Where do the capex differences come from ?
- diamond559 5y ago
  Look at the size of a dev team for Uniswap or Aave, then look at the number of employees for Wells Fargo. Then look at the physical assets of a bank like their branches and office space.

hcarvalhoalves 5y ago

You're right, but is this news? I understand the whole point of crypto is the future bet that centralisation/regulation by state actors will eventually be _less_ trustable. This one hack means $600MM lost, but how much has been routinely lost to bad governance, inflation or corruption? How much value has been destroyed in the 2008 housing crisis? In the long run, the crypto market can professionalize enough while remaining decentralised, such that the risk/reward is attractive compared to holding 100% fiat – this seems to be people's bet, not that crypto is inherently safe.

IfOnlyYouKnew 5y ago
While I understand how inflation may, in theory, be something that could change with some breakthrough in economics (even though I don't buy that inflation is actually a problem, or that cryptocurrencies represent such a breakthrough), I have no idea how they would be of help fighting "corruption and bad governance". Which is the problem with that community: they seem to have these extremely naive yet cynical view of politicians just being "stupid", money being wasted, everyone being corrupt etc. And that, somehow, their funny little hashes are the silver bullet to solve these issues.
- diamond559 5y ago
  I think the Bitcoin community give the rest of the space a bad name. There are too many people with fringe libertarian views in that space that dominate the narrative. Ethereum, I've found is a much more interesting space. It's valuable because you can actually use the blockchain for things more complicated than just sending coins around. As stupid as many of the NFTs are right now, they have the potential to completely change how the art, music and gaming industries are monetized. Defi has a huge potential to make banking more efficient and provide banking services to underserved areas as long as they have an internet connection.
lottin 5y ago
Bitcoin is an attempt to redesign the international monetary system by people who are clueless about economics. The result speaks for itself. A payment system that doesn't work and can't work, and a currency that would sink any country adopting it into a deep depression. Defi is to finance what bitcoin is to currency. A bunch of kids who wanted to "do finance" without actually knowing anything about finance. They still haven't figured out that you can't do finance with unconfiscatable assets. The main problem isn't lack of professionalism, but the fact that it's broken by design.