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OP seems to have no idea about DeFI. You can lend and borrow on compound.finance, aave. You can play no-loss lotteries like PoolTogether. You can bet on your be

OP seems to have no idea about DeFI. You can lend and borrow on compound.finance, aave. You can play no-loss lotteries like PoolTogether. You can bet on your beliefs and hedge your investments on markets platforms like Polymarket. You can gamble. More on: https://ethereum.org/en/dapps/ https://ethereum.org/en/dapps/. All of this without any arbitrary restrictions imposed by governments or companies, you just need an internet connection. How can you look at it and not be in awe? Especially if you're into technology.

amin 5y ago
In DeFi, most of the yield comes from speculators who are using your money as leverage to bet which cryptocurrencies will go up. It's not like a regular loan, whereby a company uses your money to expand, innovate, hire and train new employees, to build and sell something people want.
- whitepaint 5y ago
  So? You still earn way way more than what banks offer and you can withdraw at any point. It's been working very well for quite some time now.
  - amin 5y ago
    1. If you think about it, there is no reason why banks should always offer free money to cash hoarders in the form of interest. During a recession, central banks lower interest rates to incentivize spending and productive investment, which benefits the rest of society. 2. DeFi yield relies on Greater Fools essentially gambling their money on cryptocurrency pairs. It might not last forever. I'd rather have 5% yield in corporate bonds, denominated in a currency that I can pay rent and groceries with, than 20% in a shitcoin which might be worthless tomorrow.
    - whitepaint 5y ago
      You can lend stablecoins such as USDC and have 3-10% APR returns.
  - WJW 5y ago
    You can withdraw at any point, until suddenly you can't anymore. That is the very core of investing: being rewarded for taking the risk of not receiving your money back at all. In particular, the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull. This is clearly a risk that most investors deem quite likely, because if it was a very low risk then the interest rate on DeFi products would not need to be quite that high.
    - whitepaint 5y ago
      $27,000,000,000 is deposited in AAVE's protocol alone. It's been working pretty well for quite a while now.
    - capableweb 5y ago
      > the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull Wouldn't this mean that most DeFi would be hacked or rug-pulled by now? Seems the opposite is true, as only a small percentage of DeFi sees hacks and/or rug-pulls. Could you make the same argument you generally make towards banks as well? Seems like you could, and in that case you're just making an argument against investing in general, not against cryptocurrencies.
      - burnished 5y ago
        No, more like an argument that you'll see the exact same problems that got regulated with the banking industry. Like. You could make this argument.. in a history book. This has already happened.
kethinov 5y ago
Because that is an ideological argument (government controlling currency is bad) masquerading as a technogical argument: https://www.stephendiehl.com/blog/crypto-absurd.html https://www.stephendiehl.com/blog/crypto-absurd.html
- whitepaint 5y ago
  In all of the protocols I mentioned you can use stable coins such as USDC.
- AnthonyMouse 5y ago
  The interesting technical feature isn't that it's a separate currency, it's permissionless transactions. We're heading to a world where authoritarian governments want to eliminate cash. Handing the Stasi the ability to prevent people from so much as buying food from a grocer without their permission is catastrophic, much less the impact from such a comprehensive level of surveillance as takes place when every purchase made by everyone goes into a central database. We need a digital technology that preserves the autonomy and anonymity people have always had since the beginning with cash. (And before the obligatory pedant comes in to say that everything on a blockchain is public, they're still not attached to your identity, and there are technical solutions to preserving anonymity there too.)
  - PeterisP 5y ago
    Well, permissionless transactions is the exact thing that is not going to happen in scale. With cash, you are required to deanonymize transactions unless they're small (<10k USD), and with the recently passed infrastructure bill changes to 6050I, the same would apply to cryptocurrencies. In effect there would be a bifurcation - you can either have permissionless transactions, or you can interact with the real world; since all the legitimate businesses and law-abiding people would have to avoid the "permissionless" system unless they can break the anonymity of the transaction and verify that any required filters have been applied.
    - AnthonyMouse 5y ago
gopiandcode 5y ago
Stephen seems to be a perfect example of how being an expert on one subject doesn't mean that someone has any kind of deeper insight or experience about unrelated areas. If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position.
- capableweb 5y ago
  > If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position. If you take a look at what company he currently works at (and founded), it's pretty obvious where his hate for cryptocurrencies come from.
petesergeant 5y ago
> All of this without any arbitrary restrictions imposed by governments or companies Is that true? Is gambling now legal in jurisdictions where it wasn't before because it's being facilitated by unlicensed entities? Can I do an end-run against money-lending regulations in my country because I'm doing it online? To me it simply seems that enforcement hasn't (yet) caught up.
- AnthonyMouse 5y ago
  Many of the laws against things like gambling apply to the gambling establishment rather than the participant. When the internet was new, people set up offshore gambling sites and people used them. Then the government started harassing payment processors to prevent people from transferring money there. Which doesn't work if there is no payment intermediary to pressure to cut them off, so now they're back. Whether this is illegal or not depends on which law and jurisdiction you're talking about, but the whole concept is kind of ridiculous. If you can go to Las Vegas and legally place bets, you should be able to place bets at a Las Vegas casino over the internet from anywhere. The ability to do this is a feature of the internet, not a problem to be "solved" with more authoritarian control over everything.
- rmah 5y ago
  It's only true if you don't get caught.
TrackerFF 5y ago
There's no free lunch. Just because regulators haven't caught up with things, that doesn't mean it will stay that way. Here's how it's going to go down, like it always does: 1. Gov. tries to regulate and restrict usage 2. If that fails, they will go after bank accounts tied to brokerage accounts etc. Hell, in some countries it's extremely hard to use money made from crypto as a down payment for mortgage, auto loans, and what not - because how hard it is to prove that the money has been earned legally. Some banks won't even touch crypto customers with a 10 feet pole, because all the regulatory uncertainty. 3. If that fails, they will start to lay down the law with even more drastic measures. I love technology, I really do - but there's this extremely naïve and arrogant attitude in the community, that if you just power through in the name of technology, and ask for forgiveness later, then it's OK - it rarely if ever works that way. Regulators do not suddenly give in, and abolish "arbitrary" laws / regulations because someone found ways to circumvent or skirt them. FWIW, I'm not saying that the technology is a dud - only that trying to circumvent regulations by "doing it with crypto" / "decentralized" is a flawed way to go on about things.
- whitepaint 5y ago
  https://en.wikipedia.org/wiki/Zero-knowledge_proof https://en.wikipedia.org/wiki/Zero-knowledge_proof

amin 5y ago

In DeFi, most of the yield comes from speculators who are using your money as leverage to bet which cryptocurrencies will go up. It's not like a regular loan, whereby a company uses your money to expand, innovate, hire and train new employees, to build and sell something people want.

whitepaint 5y ago
So? You still earn way way more than what banks offer and you can withdraw at any point. It's been working very well for quite some time now.
- amin 5y ago
  1. If you think about it, there is no reason why banks should always offer free money to cash hoarders in the form of interest. During a recession, central banks lower interest rates to incentivize spending and productive investment, which benefits the rest of society. 2. DeFi yield relies on Greater Fools essentially gambling their money on cryptocurrency pairs. It might not last forever. I'd rather have 5% yield in corporate bonds, denominated in a currency that I can pay rent and groceries with, than 20% in a shitcoin which might be worthless tomorrow.
  - whitepaint 5y ago
    You can lend stablecoins such as USDC and have 3-10% APR returns.
- WJW 5y ago
  You can withdraw at any point, until suddenly you can't anymore. That is the very core of investing: being rewarded for taking the risk of not receiving your money back at all. In particular, the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull. This is clearly a risk that most investors deem quite likely, because if it was a very low risk then the interest rate on DeFi products would not need to be quite that high.
  - whitepaint 5y ago
    $27,000,000,000 is deposited in AAVE's protocol alone. It's been working pretty well for quite a while now.
  - capableweb 5y ago
    > the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull Wouldn't this mean that most DeFi would be hacked or rug-pulled by now? Seems the opposite is true, as only a small percentage of DeFi sees hacks and/or rug-pulls. Could you make the same argument you generally make towards banks as well? Seems like you could, and in that case you're just making an argument against investing in general, not against cryptocurrencies.
    - burnished 5y ago
      No, more like an argument that you'll see the exact same problems that got regulated with the banking industry. Like. You could make this argument.. in a history book. This has already happened.

kethinov 5y ago

Because that is an ideological argument (government controlling currency is bad) masquerading as a technogical argument: https://www.stephendiehl.com/blog/crypto-absurd.html https://www.stephendiehl.com/blog/crypto-absurd.html

whitepaint 5y ago
In all of the protocols I mentioned you can use stable coins such as USDC.
AnthonyMouse 5y ago
The interesting technical feature isn't that it's a separate currency, it's permissionless transactions. We're heading to a world where authoritarian governments want to eliminate cash. Handing the Stasi the ability to prevent people from so much as buying food from a grocer without their permission is catastrophic, much less the impact from such a comprehensive level of surveillance as takes place when every purchase made by everyone goes into a central database. We need a digital technology that preserves the autonomy and anonymity people have always had since the beginning with cash. (And before the obligatory pedant comes in to say that everything on a blockchain is public, they're still not attached to your identity, and there are technical solutions to preserving anonymity there too.)
- PeterisP 5y ago
  Well, permissionless transactions is the exact thing that is not going to happen in scale. With cash, you are required to deanonymize transactions unless they're small (<10k USD), and with the recently passed infrastructure bill changes to 6050I, the same would apply to cryptocurrencies. In effect there would be a bifurcation - you can either have permissionless transactions, or you can interact with the real world; since all the legitimate businesses and law-abiding people would have to avoid the "permissionless" system unless they can break the anonymity of the transaction and verify that any required filters have been applied.
  - AnthonyMouse 5y ago

gopiandcode 5y ago

Stephen seems to be a perfect example of how being an expert on one subject doesn't mean that someone has any kind of deeper insight or experience about unrelated areas. If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position.

capableweb 5y ago
> If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position. If you take a look at what company he currently works at (and founded), it's pretty obvious where his hate for cryptocurrencies come from.

petesergeant 5y ago

> All of this without any arbitrary restrictions imposed by governments or companies Is that true? Is gambling now legal in jurisdictions where it wasn't before because it's being facilitated by unlicensed entities? Can I do an end-run against money-lending regulations in my country because I'm doing it online? To me it simply seems that enforcement hasn't (yet) caught up.

AnthonyMouse 5y ago
Many of the laws against things like gambling apply to the gambling establishment rather than the participant. When the internet was new, people set up offshore gambling sites and people used them. Then the government started harassing payment processors to prevent people from transferring money there. Which doesn't work if there is no payment intermediary to pressure to cut them off, so now they're back. Whether this is illegal or not depends on which law and jurisdiction you're talking about, but the whole concept is kind of ridiculous. If you can go to Las Vegas and legally place bets, you should be able to place bets at a Las Vegas casino over the internet from anywhere. The ability to do this is a feature of the internet, not a problem to be "solved" with more authoritarian control over everything.
rmah 5y ago
It's only true if you don't get caught.

TrackerFF 5y ago

There's no free lunch. Just because regulators haven't caught up with things, that doesn't mean it will stay that way. Here's how it's going to go down, like it always does: 1. Gov. tries to regulate and restrict usage 2. If that fails, they will go after bank accounts tied to brokerage accounts etc. Hell, in some countries it's extremely hard to use money made from crypto as a down payment for mortgage, auto loans, and what not - because how hard it is to prove that the money has been earned legally. Some banks won't even touch crypto customers with a 10 feet pole, because all the regulatory uncertainty. 3. If that fails, they will start to lay down the law with even more drastic measures. I love technology, I really do - but there's this extremely naïve and arrogant attitude in the community, that if you just power through in the name of technology, and ask for forgiveness later, then it's OK - it rarely if ever works that way. Regulators do not suddenly give in, and abolish "arbitrary" laws / regulations because someone found ways to circumvent or skirt them. FWIW, I'm not saying that the technology is a dud - only that trying to circumvent regulations by "doing it with crypto" / "decentralized" is a flawed way to go on about things.

whitepaint 5y ago
https://en.wikipedia.org/wiki/Zero-knowledge_proof https://en.wikipedia.org/wiki/Zero-knowledge_proof