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Why should your bank get to decide: - Which code you can run on your own funds - Decide which interfaces you can use to manage your funds - Where you are

by Daviey 5y ago

Why should your bank get to decide: - Which code you can run on your own funds - Decide which interfaces you can use to manage your funds - Where you are allowed to send it I'm quite ok with extended checks with crypto on/off ramps, but once it is in the network, I want control of my funds. [I say this as someone that has spent the last decade working in finance]

UncleMeat 5y ago
A big problem is that if you can run arbitrary code on your transactions, other people can too. This creates the financialization of everything at best. At worst, your access to basic systems is based on your past behavior.
throwaway82652 5y ago
Because that is the entire point of keeping your money in a bank. Those things are all there to prevent other people from defrauding you. In a sense that's also why banks allow you to store money there "for free". This is the service you paid for. And even if you disagree with that premise, the solution is still not smart contracts because you also don't control those. This is more of the same frustrating conversation. You've named a problem and the solution is assumed to be blockchains but the dots don't connect at all. Don't think that finance companies can't get caught up in a market mania, because we know by now that they're often the worst victims.
- Daviey 5y ago
  I do control which smart contracts I interact with, based on my own tolerance to risk. I'm not allowed to do that with traditional traditional banking, but sure - if you want that product (and don't want the control), I can see why DeFi doesn't have a place in your life.
  - throwaway82652 5y ago
    >I do control which smart contracts I interact with No, you don't. This is egregiously wrong and is a blatant misunderstanding of distributed systems. In a typical cryptocurrency blockchain, it's the miners that have control over which smart contracts you interact with. >if you want that product (and don't want the control) This is also a bad assumption. I actually do want this product and the control. However cryptocurrency and defi can never actually provide it because the entire concept and marketing of it is flawed from the beginning. Yes, it's that bad. That's why it's so disappointing to me to see finance people get caught up with it. There is a comment below about "people are trying to figure out what works" when the reality is that it will never work. You fundamentally can't do these things with a distributed system built this way.
    - Daviey 5y ago
      Yes, the more I learn the more I learn I don't know. However, I've worked in infrastructure, security and finance (institutional & retail banking, funds and insurance) for the majority of career. I'm also currently doing a doctoral thesis focussed on smart contract security, so I do know a bit about this. The whole premise of blockchain is execution of intent, in an untrusted environment. The threat you are concerned about is collusion, and the best control against this is further decentralization and scale. Proof-of-Stake (and many DAO's), do provide more assurance against malicious actors by validators risking their own stake if they try malicious activity. Ultimately, I am confident that the "dark forest" will give us much more security and transparency than the current closed/centralised system. You seem quite entrenched in your view, but I'd like to ask. What would it take to change your view? If the answer is nothing, can you really claim to be thinking about this critically?
      - throwaway82652 5y ago
        >I'm also currently doing a doctoral thesis focussed on smart contract security, so I do know a bit about this. That to me is another really awful thing about blockchains. They're like candy for academics. It's very easy to get sucked into the illusion as well because if you take it at face value there are a lot of things to study and write about, the algorithms seem complicated and interesting. And they are, if you ignore the rest of the effects. I'm sure you could write 100 doctoral theses on smart contracts. I'm sure companies would pay you to do a lot of things with them. They are still an extremely bad and broken concept. Edit: I'm at the point where academics have sent me so many papers on blockchains. I would go as far as to say the entire point of the "defi industry" is not to produce useful products, but to produce research papers. But I don't even know if I could say that because a lot of the papers aren't even good! It's so common for a blockchain paper to launch into a lot of math and algorithms without even trying to make a problem statement or explain what purpose it actually has. Please don't let your thesis be like this. If all you're writing about is how existing users of smart contracts are avoiding getting hacked then you've been dragged into the same trap. >The whole premise of blockchain is execution of intent, in an untrusted environment. The issue here is that this is a completely nonsense premise. There is no such thing as finance in an "untrusted environment". If you aren't planning to live alone in a bunker, then somewhere along the line you need to have trusted intermediaries. Decentralization does not and cannot ever fulfill this premise, it actually increases the amount of trusted intermediaries you need to deal with. >The threat you are concerned about is collusion, and the best control against this is further decentralization and scale. No, this is also incredibly wrong. When it comes to market manipulation, further decentralization does nothing to reduce collusion. It is already hard enough to track the source of bad behavior in the market without people intentionally designing algorithms to do that, we don't need to make it even harder. >Proof-of-Stake (and many DAO's), do provide more assurance against malicious actors by validators risking their own stake if they try malicious activity This conversation again is veering into territory where it has nothing to do with blockchains or smart contracts at all. You can rephrase this as "people are less likely to engage in bad behavior when they are invested and hold stake in something". >Ultimately, I am confident that the "dark forest" will give us much more security and transparency than the current closed/centralised system. As someone who has been doing open source for the last 20 years, I am not. Much like the Linux desktop mentioned in a parent comment, pretty much every blockchain is just a random open source project that is accountable to nobody. People remain interested as long as there is profit and hype in it, when that dries up they will disappear and any illusion of security and transparency will fade away. This doesn't change because it was applied to finance instead of OS kernels or whatever. >What would it take to change your view? If the answer is nothing, can you really claim to be thinking about this critically? Actually my view is the result of thinking about this critically for the last 10 years. I was like you at one point and I would have made the exact same comments that you're making now. But sometimes a spade is just a spade and we gain nothing from pretending it's not. If you want to change my view, it would help to think about how to bring smart contracts into traditional banking systems. Look at all the reasons why it won't work. Then go forwards from there instead of working backwards from blockchains and "decentralization" because those are held as some kind of panacea.
jdlshore 5y ago
That’s easy: safety and regulation. I am happy for the bank to control the code which determines how my money moves, because bugs are a thing, all code has bugs, and if the code that moves my money has bugs, the bank is responsible and I get my money back. I’m happy for my bank to control the interface, because fraud is a thing and the interfaces they offer are sufficient for my needs. Besides, my real money management is in financial planning, and I have spreadsheets under my own control for that. I’m happy for the bank to enact restrictions (imposed by my government) on where I send my money because global politics are a thing and monetary sanctions are a powerful alternative to war. In short, the benefits of centralized control have far outweighed the negatives.

by Daviey 5y ago

UncleMeat 5y ago

A big problem is that if you can run arbitrary code on your transactions, other people can too. This creates the financialization of everything at best. At worst, your access to basic systems is based on your past behavior.

throwaway82652 5y ago

Because that is the entire point of keeping your money in a bank. Those things are all there to prevent other people from defrauding you. In a sense that's also why banks allow you to store money there "for free". This is the service you paid for. And even if you disagree with that premise, the solution is still not smart contracts because you also don't control those. This is more of the same frustrating conversation. You've named a problem and the solution is assumed to be blockchains but the dots don't connect at all. Don't think that finance companies can't get caught up in a market mania, because we know by now that they're often the worst victims.

Daviey 5y ago
I do control which smart contracts I interact with, based on my own tolerance to risk. I'm not allowed to do that with traditional traditional banking, but sure - if you want that product (and don't want the control), I can see why DeFi doesn't have a place in your life.
- throwaway82652 5y ago
  >I do control which smart contracts I interact with No, you don't. This is egregiously wrong and is a blatant misunderstanding of distributed systems. In a typical cryptocurrency blockchain, it's the miners that have control over which smart contracts you interact with. >if you want that product (and don't want the control) This is also a bad assumption. I actually do want this product and the control. However cryptocurrency and defi can never actually provide it because the entire concept and marketing of it is flawed from the beginning. Yes, it's that bad. That's why it's so disappointing to me to see finance people get caught up with it. There is a comment below about "people are trying to figure out what works" when the reality is that it will never work. You fundamentally can't do these things with a distributed system built this way.
  - Daviey 5y ago
    Yes, the more I learn the more I learn I don't know. However, I've worked in infrastructure, security and finance (institutional & retail banking, funds and insurance) for the majority of career. I'm also currently doing a doctoral thesis focussed on smart contract security, so I do know a bit about this. The whole premise of blockchain is execution of intent, in an untrusted environment. The threat you are concerned about is collusion, and the best control against this is further decentralization and scale. Proof-of-Stake (and many DAO's), do provide more assurance against malicious actors by validators risking their own stake if they try malicious activity. Ultimately, I am confident that the "dark forest" will give us much more security and transparency than the current closed/centralised system. You seem quite entrenched in your view, but I'd like to ask. What would it take to change your view? If the answer is nothing, can you really claim to be thinking about this critically?
    - throwaway82652 5y ago
      >I'm also currently doing a doctoral thesis focussed on smart contract security, so I do know a bit about this. That to me is another really awful thing about blockchains. They're like candy for academics. It's very easy to get sucked into the illusion as well because if you take it at face value there are a lot of things to study and write about, the algorithms seem complicated and interesting. And they are, if you ignore the rest of the effects. I'm sure you could write 100 doctoral theses on smart contracts. I'm sure companies would pay you to do a lot of things with them. They are still an extremely bad and broken concept. Edit: I'm at the point where academics have sent me so many papers on blockchains. I would go as far as to say the entire point of the "defi industry" is not to produce useful products, but to produce research papers. But I don't even know if I could say that because a lot of the papers aren't even good! It's so common for a blockchain paper to launch into a lot of math and algorithms without even trying to make a problem statement or explain what purpose it actually has. Please don't let your thesis be like this. If all you're writing about is how existing users of smart contracts are avoiding getting hacked then you've been dragged into the same trap. >The whole premise of blockchain is execution of intent, in an untrusted environment. The issue here is that this is a completely nonsense premise. There is no such thing as finance in an "untrusted environment". If you aren't planning to live alone in a bunker, then somewhere along the line you need to have trusted intermediaries. Decentralization does not and cannot ever fulfill this premise, it actually increases the amount of trusted intermediaries you need to deal with. >The threat you are concerned about is collusion, and the best control against this is further decentralization and scale. No, this is also incredibly wrong. When it comes to market manipulation, further decentralization does nothing to reduce collusion. It is already hard enough to track the source of bad behavior in the market without people intentionally designing algorithms to do that, we don't need to make it even harder. >Proof-of-Stake (and many DAO's), do provide more assurance against malicious actors by validators risking their own stake if they try malicious activity This conversation again is veering into territory where it has nothing to do with blockchains or smart contracts at all. You can rephrase this as "people are less likely to engage in bad behavior when they are invested and hold stake in something". >Ultimately, I am confident that the "dark forest" will give us much more security and transparency than the current closed/centralised system. As someone who has been doing open source for the last 20 years, I am not. Much like the Linux desktop mentioned in a parent comment, pretty much every blockchain is just a random open source project that is accountable to nobody. People remain interested as long as there is profit and hype in it, when that dries up they will disappear and any illusion of security and transparency will fade away. This doesn't change because it was applied to finance instead of OS kernels or whatever. >What would it take to change your view? If the answer is nothing, can you really claim to be thinking about this critically? Actually my view is the result of thinking about this critically for the last 10 years. I was like you at one point and I would have made the exact same comments that you're making now. But sometimes a spade is just a spade and we gain nothing from pretending it's not. If you want to change my view, it would help to think about how to bring smart contracts into traditional banking systems. Look at all the reasons why it won't work. Then go forwards from there instead of working backwards from blockchains and "decentralization" because those are held as some kind of panacea.

jdlshore 5y ago

That’s easy: safety and regulation. I am happy for the bank to control the code which determines how my money moves, because bugs are a thing, all code has bugs, and if the code that moves my money has bugs, the bank is responsible and I get my money back. I’m happy for my bank to control the interface, because fraud is a thing and the interfaces they offer are sufficient for my needs. Besides, my real money management is in financial planning, and I have spreadsheets under my own control for that. I’m happy for the bank to enact restrictions (imposed by my government) on where I send my money because global politics are a thing and monetary sanctions are a powerful alternative to war. In short, the benefits of centralized control have far outweighed the negatives.