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Possible maxim: Financial innovation typically is seeded in criminal activity.

by realce 5y ago

elil17 5y ago
Curious, when has this been true historically? I can’t think of one financial innovation outside of crypto that started as criminal activity. I definitely don’t think most of the more recent ones (PayPal, credit cards, online banking) were.
- skohan 5y ago
  Agreed. Crypto has just been a fertile ground to replay every innovation in financial crime and fraud which had already been regulated against in other markets.
  - vmception 5y ago
    Disagreed because the actions didn't start as regulated against in the other markets. We are operating on the same information and made a different conclusion. The other markets also started with the bad activities and then called them criminal. Kind of a stretch to say “well it wasnt criminal at first so crypto is the outlier here”
    - skohan 5y ago
      It just seems stupid not to learn from one's mistakes. We already know these kinds of activities are problematic and amount to theft, so it's comical to see people saying this is our financial "future" when it's hundreds of years behind in terms of the regulations and protections which make traditional financial and monetary systems safe and stable, all well offering dubious actual benefits and being incredibly inefficient from an energy perspective.
- vmception 5y ago
  Ha, I would say all, the actions just weren’t initially considered criminal until they were. There is almost nothing that the Dutch East India company did that we would call “above board” now. Criminal negligence, collusion, foreign corrupt practices, domestic corruption, pillaging, slave trading, shady accounting, and god forbid if those securities were registered or not. More relatable, the book Flash Boys goes into the history of Wall Street regulations going back to the 1850s and finds something similar, every regulation is some kind of reaction to a novel way that some form of brokers are trading ahead of their clients. “Finance” only very recently was a respectable or attractive entity, sure everyone knew there was a money shuffling place that resulted in potentially having a lot of money for yourself, but there was nothing inclusive about it nor did this really bother anyone because this wasnt the aspiration either (and because nothing was inclusive, many other issues to be honest). Just a small club with no national/federal oversight. Rife with scams. 1920s wall street isnt so different than the entire crypto space today. A stoic onlooker would say “why bother its all a scam” an insider would say “there are a lot of scams but there are ways to distinguish” and a person hungry for opportunity would look at them both, chuckle at how they talk past each other, and buy a random asset on margin because distinguishing didn't really matter. Their opportunities either improved or it didnt.
  - skohan 5y ago
    You haven't given examples of financial innovation which started out as crimes. You've given examples of crimes which have since been regulated against and better controlled.
    - vmception 5y ago
      Ok, by that standard, no, the joint share company concept didn't start as a crime and neither did distributed ledger blockchain concept The entire supposition is unsound. Crypto didnt start as a criminal activity.
      - skohan 5y ago
        Wasn't that your entire supposition, that both crypto and traditional finance started as criminal activity?
  - elil17 5y ago
    I guess you've given examples of times where new financial innovations were used for scams - which certainly has happened. But I really can't think of a financial innovation that was itself a scam in the way NFTs are.

Possible maxim: Financial innovation typically is seeded in criminal activity.

by realce 5y ago

Possible maxim: Financial innovation typically is seeded in criminal activity.

Curious, when has this been true historically? I can’t think of one financial innovation outside of crypto that started as criminal activity. I definitely don’t think most of the more recent ones (PayPal, credit cards, online banking) were.

skohan 5y ago
Agreed. Crypto has just been a fertile ground to replay every innovation in financial crime and fraud which had already been regulated against in other markets.
- vmception 5y ago
  Disagreed because the actions didn't start as regulated against in the other markets. We are operating on the same information and made a different conclusion. The other markets also started with the bad activities and then called them criminal. Kind of a stretch to say “well it wasnt criminal at first so crypto is the outlier here”
  - skohan 5y ago
    It just seems stupid not to learn from one's mistakes. We already know these kinds of activities are problematic and amount to theft, so it's comical to see people saying this is our financial "future" when it's hundreds of years behind in terms of the regulations and protections which make traditional financial and monetary systems safe and stable, all well offering dubious actual benefits and being incredibly inefficient from an energy perspective.
vmception 5y ago
Ha, I would say all, the actions just weren’t initially considered criminal until they were. There is almost nothing that the Dutch East India company did that we would call “above board” now. Criminal negligence, collusion, foreign corrupt practices, domestic corruption, pillaging, slave trading, shady accounting, and god forbid if those securities were registered or not. More relatable, the book Flash Boys goes into the history of Wall Street regulations going back to the 1850s and finds something similar, every regulation is some kind of reaction to a novel way that some form of brokers are trading ahead of their clients. “Finance” only very recently was a respectable or attractive entity, sure everyone knew there was a money shuffling place that resulted in potentially having a lot of money for yourself, but there was nothing inclusive about it nor did this really bother anyone because this wasnt the aspiration either (and because nothing was inclusive, many other issues to be honest). Just a small club with no national/federal oversight. Rife with scams. 1920s wall street isnt so different than the entire crypto space today. A stoic onlooker would say “why bother its all a scam” an insider would say “there are a lot of scams but there are ways to distinguish” and a person hungry for opportunity would look at them both, chuckle at how they talk past each other, and buy a random asset on margin because distinguishing didn't really matter. Their opportunities either improved or it didnt.
- skohan 5y ago
  You haven't given examples of financial innovation which started out as crimes. You've given examples of crimes which have since been regulated against and better controlled.
  - vmception 5y ago
    Ok, by that standard, no, the joint share company concept didn't start as a crime and neither did distributed ledger blockchain concept The entire supposition is unsound. Crypto didnt start as a criminal activity.
    - skohan 5y ago
      Wasn't that your entire supposition, that both crypto and traditional finance started as criminal activity?
- elil17 5y ago
  I guess you've given examples of times where new financial innovations were used for scams - which certainly has happened. But I really can't think of a financial innovation that was itself a scam in the way NFTs are.