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I would think the seizing up of the financial system in 2008 was more a symptom, than the actual thing itself that needs fixing. How would trustlessness prevent

I would think the seizing up of the financial system in 2008 was more a symptom, than the actual thing itself that needs fixing. How would trustlessness prevent the mortgage/real estate crisis that happened? Doesn't seem like in itself these things would remove the incentive to design predatory mortgages, and exploit an inflated market. Real estate is already non fungible, no?

lostmsu 5y ago
I think the point is to let the banks tank instead of buying them out with taxpayer money.
RedBeetDeadpool 5y ago
The reason the financial system bubbles up then crashes is due to fractional reserve banking. Its what caused the the great depression. Its what caused the great recession. If fractional reserve banking and all its sneaky variants can't exist, and the value of a currency is static, immutable, with custody solely held by the person who owns it(not the bank, not some federal institutions), bubbles become impossible and thereby so do the crashes. The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system. The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.
- beepbooptheory 5y ago
  Honestly all I can say to this is that I wish I believed in anything like you do the concept of money and capitalism. I wish I shared with you the idea that it is "thermodynamic laws" that rules these things, it must be nice to have a ground to stand on! Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete." Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.
  - RedBeetDeadpool 5y ago
    Thankfully concepts like survival of the fittest, thermodynamics, capitalism, market dynamics, gravity, and math don't care who believes in what, and they would not care if you nor I believed in any of them at all. I choose to respect gravity, and it serves me well.
- UncleMeat 5y ago
  Bitcoin does not prevent fractional reserve banking. Even though you cannot mint more Bitcoin, you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database. Nobody will stop you. Fractional reserve banking does not rely on actually physically printing money. Similarly, fractional reserve banking for BTC would not rely on actually mining BTC. The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
  - RedBeetDeadpool 5y ago
    > you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database. I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin. Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal. > The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive. Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.

lostmsu 5y ago

I think the point is to let the banks tank instead of buying them out with taxpayer money.

RedBeetDeadpool 5y ago

The reason the financial system bubbles up then crashes is due to fractional reserve banking. Its what caused the the great depression. Its what caused the great recession. If fractional reserve banking and all its sneaky variants can't exist, and the value of a currency is static, immutable, with custody solely held by the person who owns it(not the bank, not some federal institutions), bubbles become impossible and thereby so do the crashes. The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system. The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.

beepbooptheory 5y ago
Honestly all I can say to this is that I wish I believed in anything like you do the concept of money and capitalism. I wish I shared with you the idea that it is "thermodynamic laws" that rules these things, it must be nice to have a ground to stand on! Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete." Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.
- RedBeetDeadpool 5y ago
  Thankfully concepts like survival of the fittest, thermodynamics, capitalism, market dynamics, gravity, and math don't care who believes in what, and they would not care if you nor I believed in any of them at all. I choose to respect gravity, and it serves me well.
UncleMeat 5y ago
Bitcoin does not prevent fractional reserve banking. Even though you cannot mint more Bitcoin, you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database. Nobody will stop you. Fractional reserve banking does not rely on actually physically printing money. Similarly, fractional reserve banking for BTC would not rely on actually mining BTC. The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
- RedBeetDeadpool 5y ago
  > you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database. I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin. Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal. > The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive. Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.