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The flipside of that is that the effective capital markets we have depend on a level of trust which could easily be eroded. There were weeks this year where I s

The flipside of that is that the effective capital markets we have depend on a level of trust which could easily be eroded. There were weeks this year where I saw advertisements all over London for DeFi products and cryptocurrency trading portals. I don't think the majority of people putting money in there had any idea whatsoever what they were doing.

ajross 5y ago
That's a bit circular though. I mean, to be clear I don't agree with the upthread point that we should deemphasize crypto crimes. But that said... the trust in the DeFi economy is being eroded right now, and for some very rational reasons. It's certainly not the government's job to jump in and prop up financial systems in which it's not involved. Its interest is in protecting its own citizens from criminality, not in the level of "trust" in "DeFi".
- pjc50 5y ago
  > trust in the DeFi economy I thought the whole point was to be trustless?
  - astoor 5y ago
    > I thought the whole point was to be trustless? No, it is not trustless, it simply shifts trust from central authorities to more nebulous entities such as anonymous developers, shady mining cartels, unregulated exchanges, and even yourself to not lose your private keys. Which you consider to be better is essentially a political decision.
    - AnthonyMouse 5y ago
      The obvious solution is to have both and then make sure that people understand what they're getting into. Traditional banks should exist and be regulated and insured etc. People with a low risk tolerance should be encouraged to use them. People with a higher risk tolerance or who are trying to do something innovative or disruptive should have a system that works for them too. People with a low risk tolerance are not required to use it. People with a high risk tolerance will be exposed to a high risk, as requested.
    - tata71 5y ago
      This is a really gloomy look on "distributed".
  - Sharlin 5y ago
    Having trust in a system is different from trusting individual actors. You have to trust something, there’s no way around it.
    - zepto 5y ago
      It may be technically different, but it’s no different at all for the average consumer who hasn’t done a threat analysis.
      - selestify 5y ago
        In general, one shouldn't "invest" in things one doesn't understand very well.
        zepto 5y ago
        A fairly meaningless statement in reality, since it’s not how most people behave.
        selestify 5y ago
        Well, what is there to do about it? A fool and their money are soon parted. Must we coddle them at the expense of everyone else?
        zepto 5y ago
        Just like with any kind of criminal, stopping deceptive crypto scammers isn’t ‘coddling’ people at the expense of everyone else. Society relies on trust. The crypto dream that it can be trustless is just a way to cheat people.
        selestify 5y ago
        > Just like with any kind of criminal, stopping deceptive crypto scammers isn’t ‘coddling’ people at the expense of everyone else. It is if you're trying to stop these scams by putting greater constraints on, say, the fiat on- and off-ramps. I mean, how exactly are you going to stop the average investor in doing something dumb like dumping their money into a shady project, without placing additional hurdles on everyone else? The whole point is that you're allowed to move, manage, and spend your assets as you see fit, without any government's ability to freeze your assets or block you from accessing financial services via sanctions -- for better or for worse, of course. And yes, the freedom to manage your assets as you see fit includes the freedom to make stupid financial decisions -- as you see fit.
  - chipotle_coyote 5y ago
    It is, and I've had a nagging suspicion for a while now that this is the flaw at the heart of cryptocurrency and related phenomena. It's all built on the premise that the answer to "we can't trust existing institutions" is to try and design systems that don't require us to have trust in any actor, but as Sharlin noted, it's difficult to impossible to do anything transactional that doesn't require some level of trust. Perhaps "trust no one" is not actually the right solution to the problem.
    - TimJRobinson 5y ago
      It's the same as open source software, most people don't personally look at the source code of the Linux Kernel, but they trust it more than Windows because they know many thousands of others have looked at it and haven't found issues. Open systems lead to less trust required, because anyone can verify and report issues. Open finance leads to less trust required because anyone can verify and report issues with the smart contracts.
      - astrange 5y ago
        Don't the smart contract systems not allow patching, so there's no point in reporting issues?
        TimJRobinson 5y ago
        Many are upgradeable, though it's the common libraries that people use that matter. The Ethereum ones have been battle hardened over years of exploits so you can use them just like you can build on common Unix primitives to avoid mistakes in new projects.
      - pjc50 5y ago
        > anyone can verify and report issues with the smart contracts. .. anyone who finds an issue in a smart contract can just steal it. Potentially all of it. Pseudonymously.
      - tata71 5y ago
        > haven't found issues No, they have. https://www.cvedetails.com/vulnerability-list.php?vendor_id=33&product_id=47&version_id=0&page=1&hasexp=0&opdos=0&opec=0&opov=0&opcsrf=0&opgpriv=0&opsqli=0&opxss=0&opdirt=0&opmemc=0&ophttprs=0&opbyp=0&opfileinc=0&opginf=0&cvssscoremin=7&cvssscoremax=7.99&year=0&cweid=0&order=1&trc=662&sha=27cc1be095dd1cc4189b3d337cc787289500c13e https://www.cvedetails.com/vulnerability-list.php?vendor_id=... That's just less important than running free software to some people. For better or worse.
  - ajross 5y ago
    That's the core semantic confusion at the heart of this issue. Cryptocurrency protocols eliminated the need for trust for cryptocurrency transactions. So you can exchange BTC or ETH all day and night and always know who you're paying and no one can get in the middle and mess that up. But it does nothing for transactions outside of that world. The core idea behind the "DeFi economy" is making things happen in the real world (by financing business ideas, buying 230 year old documents, etc...). And that part requires that the crypto resources be given to some kind of real actor in the real world who's going to do something real with them. And those actors are people, and they cheat. Hence the new term of art "rugging". You can cheat people in the crypto world, in some sense, more easily than you can regular consumers precisely because they got fooled into thinking they didn't need to trust you.
- deleted 5y ago
  [deleted]
tata71 5y ago
Darwin called for you.

ajross 5y ago

That's a bit circular though. I mean, to be clear I don't agree with the upthread point that we should deemphasize crypto crimes. But that said... the trust in the DeFi economy is being eroded right now, and for some very rational reasons. It's certainly not the government's job to jump in and prop up financial systems in which it's not involved. Its interest is in protecting its own citizens from criminality, not in the level of "trust" in "DeFi".

pjc50 5y ago
> trust in the DeFi economy I thought the whole point was to be trustless?
- astoor 5y ago
  > I thought the whole point was to be trustless? No, it is not trustless, it simply shifts trust from central authorities to more nebulous entities such as anonymous developers, shady mining cartels, unregulated exchanges, and even yourself to not lose your private keys. Which you consider to be better is essentially a political decision.
  - AnthonyMouse 5y ago
    The obvious solution is to have both and then make sure that people understand what they're getting into. Traditional banks should exist and be regulated and insured etc. People with a low risk tolerance should be encouraged to use them. People with a higher risk tolerance or who are trying to do something innovative or disruptive should have a system that works for them too. People with a low risk tolerance are not required to use it. People with a high risk tolerance will be exposed to a high risk, as requested.
  - tata71 5y ago
    This is a really gloomy look on "distributed".
- Sharlin 5y ago
  Having trust in a system is different from trusting individual actors. You have to trust something, there’s no way around it.
  - zepto 5y ago
    It may be technically different, but it’s no different at all for the average consumer who hasn’t done a threat analysis.
    - selestify 5y ago
      In general, one shouldn't "invest" in things one doesn't understand very well.
      - zepto 5y ago
        A fairly meaningless statement in reality, since it’s not how most people behave.
        selestify 5y ago
        Well, what is there to do about it? A fool and their money are soon parted. Must we coddle them at the expense of everyone else?
        zepto 5y ago
        Just like with any kind of criminal, stopping deceptive crypto scammers isn’t ‘coddling’ people at the expense of everyone else. Society relies on trust. The crypto dream that it can be trustless is just a way to cheat people.
        selestify 5y ago
        > Just like with any kind of criminal, stopping deceptive crypto scammers isn’t ‘coddling’ people at the expense of everyone else. It is if you're trying to stop these scams by putting greater constraints on, say, the fiat on- and off-ramps. I mean, how exactly are you going to stop the average investor in doing something dumb like dumping their money into a shady project, without placing additional hurdles on everyone else? The whole point is that you're allowed to move, manage, and spend your assets as you see fit, without any government's ability to freeze your assets or block you from accessing financial services via sanctions -- for better or for worse, of course. And yes, the freedom to manage your assets as you see fit includes the freedom to make stupid financial decisions -- as you see fit.
- chipotle_coyote 5y ago
  It is, and I've had a nagging suspicion for a while now that this is the flaw at the heart of cryptocurrency and related phenomena. It's all built on the premise that the answer to "we can't trust existing institutions" is to try and design systems that don't require us to have trust in any actor, but as Sharlin noted, it's difficult to impossible to do anything transactional that doesn't require some level of trust. Perhaps "trust no one" is not actually the right solution to the problem.
  - TimJRobinson 5y ago
    It's the same as open source software, most people don't personally look at the source code of the Linux Kernel, but they trust it more than Windows because they know many thousands of others have looked at it and haven't found issues. Open systems lead to less trust required, because anyone can verify and report issues. Open finance leads to less trust required because anyone can verify and report issues with the smart contracts.
    - astrange 5y ago
      Don't the smart contract systems not allow patching, so there's no point in reporting issues?
      - TimJRobinson 5y ago
        Many are upgradeable, though it's the common libraries that people use that matter. The Ethereum ones have been battle hardened over years of exploits so you can use them just like you can build on common Unix primitives to avoid mistakes in new projects.
    - pjc50 5y ago
      > anyone can verify and report issues with the smart contracts. .. anyone who finds an issue in a smart contract can just steal it. Potentially all of it. Pseudonymously.
    - tata71 5y ago
      > haven't found issues No, they have. https://www.cvedetails.com/vulnerability-list.php?vendor_id=33&product_id=47&version_id=0&page=1&hasexp=0&opdos=0&opec=0&opov=0&opcsrf=0&opgpriv=0&opsqli=0&opxss=0&opdirt=0&opmemc=0&ophttprs=0&opbyp=0&opfileinc=0&opginf=0&cvssscoremin=7&cvssscoremax=7.99&year=0&cweid=0&order=1&trc=662&sha=27cc1be095dd1cc4189b3d337cc787289500c13e https://www.cvedetails.com/vulnerability-list.php?vendor_id=... That's just less important than running free software to some people. For better or worse.
- ajross 5y ago
  That's the core semantic confusion at the heart of this issue. Cryptocurrency protocols eliminated the need for trust for cryptocurrency transactions. So you can exchange BTC or ETH all day and night and always know who you're paying and no one can get in the middle and mess that up. But it does nothing for transactions outside of that world. The core idea behind the "DeFi economy" is making things happen in the real world (by financing business ideas, buying 230 year old documents, etc...). And that part requires that the crypto resources be given to some kind of real actor in the real world who's going to do something real with them. And those actors are people, and they cheat. Hence the new term of art "rugging". You can cheat people in the crypto world, in some sense, more easily than you can regular consumers precisely because they got fooled into thinking they didn't need to trust you.
deleted 5y ago
[deleted]

tata71 5y ago

Darwin called for you.