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Regarding the list of questions that are presented here EG - "How can we create a more equitable financial system, where everyone has access to banking services

Regarding the list of questions that are presented here EG - "How can we create a more equitable financial system, where everyone has access to banking services?" Can anyone explain to me how crypto is uniquely suited to solve this problem? I'm not in principal against crypto currencies existing, but more and more I just see people trying to apply it to problems that they think exist because "the financial system is over regulated" - without providing any argument for why regulation is causing the unfairness in the first place? I have yet to see anyone define a single problem in the financial system that crypto is uniquely placed to solve (besides funding criminal activity and bypassing sanctions), that wouldn't be better solved from better competition between banks. Not every country in the world has a banking sector that serves it's customers as badly as in the US.

bedobi 4y ago
I'm 100% onboard with the enabling underbanked people argument for crypto. There's countless people all over the world who can't get a bank account, or if they could, can't get one that is reliable or useful enough for their needs. Eg, maybe the currency is too unstable, or maybe there's too many restrictions on international transfers and commerce etc etc. These people are left with cash and predatory "businesses" like Western Union as their only options. It's not fair and can and should change, but sadly, crypto has spectacularly failed to deliver on its potential here.
- greybox 4y ago
  I agree here, it would be nice if this was the case. Like you I also worry that in it's current form a crypto banking implementation for the underbanked people of the world would be a worse solution for everyone. - No human being that's able to reverse fraudulent or mistaken transactions - Currency that's hardly more stable (probably less so) than the world's the least stable currencies - A digital environment that's rife with fraud and a completely fresh and unknown attack surface due to the nature of smart contracts - Sky high transaction costs. Meaning the poor (the unbanked) will may more for banking than the rich do. (like they do for furniture https://www.washingtonpost.com/news/storyline/wp/2014/10/16/she-bought-a-sofa-on-installment-payments-now-its-straining-her-life/ https://www.washingtonpost.com/news/storyline/wp/2014/10/16/...)
mattdesl 4y ago
There are several properties of blockchains that could improve upon our current financial structures. 1) Custody: with fiat, the concept of self-custody is "store your cash under your bed," and as we continue to move away from cash into digital money, this option is being eroded. In crypto, the concept of self-custody may be an EOA (account based on a private key) smart contract (such as a multi-signatory account), or some combination. This is not to say that all users should be choosing non-custodial wallets, but the ability to choose and diversify your assets across a range of these technologies is, in my opinion, better than having no choice at all. 2) Mitigating the need for intermediaries in certain situations. Currently to handle escrow of digital assets in fiat systems, you typically need to hire or use a third-party agency. In some cases escrow could instead be managed by a (cryptographically-verified) program execution, e.g. "transfer X domain name record for Y amount of stablecoin assets". 3) Privacy-preserving attestations via zero-knowledge proofs, which could use a public (decentralized) ledger so that all parties can verify the validity of the proof. 4) The immutable and public nature of smart contracts gives them certain properties we do not have with our traditional financial systems. For example Libor manipulation went unnoticed for several years; partly because the systems were closed and difficult to analyze. The public ledger is comparatively easy to analyze and difficult to manipulate. (The most common manipulations rely on social engineering; e.g. convincing somebody to sign a transaction, or buy ShitCoin2000.) 5) General security and operational improvements. Much of our traditional system is upheld by FORTRAN and questionable security methods (PINs, passwords, cell phone 2FA). Crypto currencies are extremely adversarial environments that are forcing new security models and cryptographic primitives: zk-proofs and zk-VMs, multi-party computation, new methods of private key storage and management, post-quantum cryptography. Hopefully some of these advancements (being funded by crypto currencies) will eventually spill over to other sectors.
- greybox 4y ago
  While I agree with some of your points here, (Mitigating the need for intermediaries in certain situations) - Crypto inherently holds no security benifits over traditional banking. Fortran has been used for decades because it has worked, and there has been little need for change.Fortran isn't a security hole in itself. In fact it has all of the same problems with private PIN access and MFA, PLUS all the downsides that come with malicious smart contracts. As far as personal security goes, crypto is much much worse. - The immutable and public nature of smart contracts. Why should anything be immutable? What if something is done by mistake, or by fraud? The benefits of traditional banking is that at the end of the day, there is a human on the other side that can reverse things if stuff goes wrong. - I see no benefit of the entire chain being public, just because I give someone my public key, because I spend money with them, or my employer needs to pay me, why should they be able to see EVERY transaction I have ever made?

bedobi 4y ago

I'm 100% onboard with the enabling underbanked people argument for crypto. There's countless people all over the world who can't get a bank account, or if they could, can't get one that is reliable or useful enough for their needs. Eg, maybe the currency is too unstable, or maybe there's too many restrictions on international transfers and commerce etc etc. These people are left with cash and predatory "businesses" like Western Union as their only options. It's not fair and can and should change, but sadly, crypto has spectacularly failed to deliver on its potential here.

greybox 4y ago
I agree here, it would be nice if this was the case. Like you I also worry that in it's current form a crypto banking implementation for the underbanked people of the world would be a worse solution for everyone. - No human being that's able to reverse fraudulent or mistaken transactions - Currency that's hardly more stable (probably less so) than the world's the least stable currencies - A digital environment that's rife with fraud and a completely fresh and unknown attack surface due to the nature of smart contracts - Sky high transaction costs. Meaning the poor (the unbanked) will may more for banking than the rich do. (like they do for furniture https://www.washingtonpost.com/news/storyline/wp/2014/10/16/she-bought-a-sofa-on-installment-payments-now-its-straining-her-life/ https://www.washingtonpost.com/news/storyline/wp/2014/10/16/...)

mattdesl 4y ago

There are several properties of blockchains that could improve upon our current financial structures. 1) Custody: with fiat, the concept of self-custody is "store your cash under your bed," and as we continue to move away from cash into digital money, this option is being eroded. In crypto, the concept of self-custody may be an EOA (account based on a private key) smart contract (such as a multi-signatory account), or some combination. This is not to say that all users should be choosing non-custodial wallets, but the ability to choose and diversify your assets across a range of these technologies is, in my opinion, better than having no choice at all. 2) Mitigating the need for intermediaries in certain situations. Currently to handle escrow of digital assets in fiat systems, you typically need to hire or use a third-party agency. In some cases escrow could instead be managed by a (cryptographically-verified) program execution, e.g. "transfer X domain name record for Y amount of stablecoin assets". 3) Privacy-preserving attestations via zero-knowledge proofs, which could use a public (decentralized) ledger so that all parties can verify the validity of the proof. 4) The immutable and public nature of smart contracts gives them certain properties we do not have with our traditional financial systems. For example Libor manipulation went unnoticed for several years; partly because the systems were closed and difficult to analyze. The public ledger is comparatively easy to analyze and difficult to manipulate. (The most common manipulations rely on social engineering; e.g. convincing somebody to sign a transaction, or buy ShitCoin2000.) 5) General security and operational improvements. Much of our traditional system is upheld by FORTRAN and questionable security methods (PINs, passwords, cell phone 2FA). Crypto currencies are extremely adversarial environments that are forcing new security models and cryptographic primitives: zk-proofs and zk-VMs, multi-party computation, new methods of private key storage and management, post-quantum cryptography. Hopefully some of these advancements (being funded by crypto currencies) will eventually spill over to other sectors.

greybox 4y ago
While I agree with some of your points here, (Mitigating the need for intermediaries in certain situations) - Crypto inherently holds no security benifits over traditional banking. Fortran has been used for decades because it has worked, and there has been little need for change.Fortran isn't a security hole in itself. In fact it has all of the same problems with private PIN access and MFA, PLUS all the downsides that come with malicious smart contracts. As far as personal security goes, crypto is much much worse. - The immutable and public nature of smart contracts. Why should anything be immutable? What if something is done by mistake, or by fraud? The benefits of traditional banking is that at the end of the day, there is a human on the other side that can reverse things if stuff goes wrong. - I see no benefit of the entire chain being public, just because I give someone my public key, because I spend money with them, or my employer needs to pay me, why should they be able to see EVERY transaction I have ever made?