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Bitcoin does not replace banks. People and business still need loans, they still want to invest money and have money invested with them. Crypto doesn't solve

Bitcoin does not replace banks. People and business still need loans, they still want to invest money and have money invested with them. Crypto doesn't solve that problem. The 2008 collapse had nothing to do with ACH or any of the aspects which crypto has a plausible case for improving.

BLKNSLVR 5y ago
My understanding is that (one of) the point(s) of Bitcoin was to de-centralise the control of the currency so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for handing out to the businesses that caused the crash that seemingly necessitated the bailout. Secondly to that, I find it amusing that the cause of the GFC (amongst numerous other large-scale issues) is both poor regulation and ineffective enforcement of an industry that's over a century old. Proving, basically, that the regulation of cryptocurrency is a pure talk-fest (or that any US regulation is a pure talk-fest). It will result in the honest folks doing the right thing and getting screwed in the process whilst the dishonest still do the bad things because the US' will to enforce regulation is weak.
- ohgodplsno 5y ago
  A few years later, the TheDAO hack happens, and Vitalik and friends pretty much force a fork on the network by spamming FUD and threatening to stop the entire thing because they're losing too much money and they're too big to fail. Totally different from banks: it's no longer the government deciding to bail them out, it's straight up the bank printing the currency telling people to bail them out or their currency becomes worthless.
  - BLKNSLVR 5y ago
    I wasn't paying a lot of attention back then, but from what I've read about it, it was far from the worst decision in the world despite the fact it went against the most basic ideology. I give it a bit of a free pass because it was a new thing built on top of a new thing, so somewhat of a beta test, which failed, so roll back to a working state. Not sure what would happen now, although there are regular hacks that no longer see rollbacks. Also, Ethereum Classic still exists, so that path is still available to those who want to follow it.
  - mateuszf 5y ago
    That's Ethereum though, not Bitcoin.
- jollybean 5y ago
  " so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for" ? What part of 'the economy would crash and burn' do people not understand? The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen. That's what happens when systems are tightly intertwined. We could entirely firewall them, but then they wouldn't be remotely as efficient. The fallacy of 'Hard Currency' is that people think we can avoid these problems with some extant construct, like 'Gold' or 'Digital Proof' but that doesn't solve the problem at all. Economies are integrated systems that have to be regulated as best we can there is just no way around it. 'Hard Currency' is an 'instinct' that develops into an ideology that just doesn't hold up. Far from 'weakly enforced regulations' most Western nations have very well and strongly enforced regulatory regimes. There are rules upon rules about what is allowed and what is not. Securities Regulation are maybe a bit iffy, particularly insider trading, but that's only one thing. The only way to avoid the problems we saw in 2008 would be to have more effective regulation of the parts of that system that failed, crypto won't save us there. Finally, the banks were bailed out mostly with loans which they paid back, not free money. If there was a big funny business bailout, it was the mortgages that the Fed accepted as collateral at face value, which was more or less a bailout of homeowners, related to the fact the issue was with homes, not so much currency.
  - BLKNSLVR 5y ago
    > The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen. And the fact that the Fed could just QE a bailout is why there's no will to properly regulate or enforce. It's a double edged sword. I would have liked to see what would happen in a pandemic if Bitcoin were the world's reserve currency; if no QE were possible to help the suddenly unemployed etc. If / when Bitcoin fails in such a situation, we could see an increase in trust for fiat currencies and government monetary policy. It's a purely hypothetical situation though.
    - jollybean 5y ago

BLKNSLVR 5y ago

My understanding is that (one of) the point(s) of Bitcoin was to de-centralise the control of the currency so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for handing out to the businesses that caused the crash that seemingly necessitated the bailout. Secondly to that, I find it amusing that the cause of the GFC (amongst numerous other large-scale issues) is both poor regulation and ineffective enforcement of an industry that's over a century old. Proving, basically, that the regulation of cryptocurrency is a pure talk-fest (or that any US regulation is a pure talk-fest). It will result in the honest folks doing the right thing and getting screwed in the process whilst the dishonest still do the bad things because the US' will to enforce regulation is weak.

ohgodplsno 5y ago
A few years later, the TheDAO hack happens, and Vitalik and friends pretty much force a fork on the network by spamming FUD and threatening to stop the entire thing because they're losing too much money and they're too big to fail. Totally different from banks: it's no longer the government deciding to bail them out, it's straight up the bank printing the currency telling people to bail them out or their currency becomes worthless.
- BLKNSLVR 5y ago
  I wasn't paying a lot of attention back then, but from what I've read about it, it was far from the worst decision in the world despite the fact it went against the most basic ideology. I give it a bit of a free pass because it was a new thing built on top of a new thing, so somewhat of a beta test, which failed, so roll back to a working state. Not sure what would happen now, although there are regular hacks that no longer see rollbacks. Also, Ethereum Classic still exists, so that path is still available to those who want to follow it.
- mateuszf 5y ago
  That's Ethereum though, not Bitcoin.
jollybean 5y ago
" so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for" ? What part of 'the economy would crash and burn' do people not understand? The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen. That's what happens when systems are tightly intertwined. We could entirely firewall them, but then they wouldn't be remotely as efficient. The fallacy of 'Hard Currency' is that people think we can avoid these problems with some extant construct, like 'Gold' or 'Digital Proof' but that doesn't solve the problem at all. Economies are integrated systems that have to be regulated as best we can there is just no way around it. 'Hard Currency' is an 'instinct' that develops into an ideology that just doesn't hold up. Far from 'weakly enforced regulations' most Western nations have very well and strongly enforced regulatory regimes. There are rules upon rules about what is allowed and what is not. Securities Regulation are maybe a bit iffy, particularly insider trading, but that's only one thing. The only way to avoid the problems we saw in 2008 would be to have more effective regulation of the parts of that system that failed, crypto won't save us there. Finally, the banks were bailed out mostly with loans which they paid back, not free money. If there was a big funny business bailout, it was the mortgages that the Fed accepted as collateral at face value, which was more or less a bailout of homeowners, related to the fact the issue was with homes, not so much currency.
- BLKNSLVR 5y ago
  > The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen. And the fact that the Fed could just QE a bailout is why there's no will to properly regulate or enforce. It's a double edged sword. I would have liked to see what would happen in a pandemic if Bitcoin were the world's reserve currency; if no QE were possible to help the suddenly unemployed etc. If / when Bitcoin fails in such a situation, we could see an increase in trust for fiat currencies and government monetary policy. It's a purely hypothetical situation though.
  - jollybean 5y ago