6 ms·

Can you explain? What happened in the past 200 years that cryptocurrencies are mirroring?

charwalker 4y ago
Crypto solves a bunch of problems of its own making while retaining all the human problems (fraud, etc) of the existing banking system without hundreds of years of regulations and policy to stabilize systems and attempt accountability. Tether is analogous to the gold standard but without verifying the gold exists in reserves, or ever existed at all. Exchanges are facilitating billions in money laundering and fraud while eating massive fees and paying millions to founders. Transactions can be hidden behind shell wallets/groups and filtered through many exchanges reducing transparency and increasing odds of successful illegal activity. There is a ton of legitimate criticism just looking at the fraud side of Crypto and how lack of regulation in that space enables a ton of crime. It's often drowned out by PR or the next big blockchain based thing that seems flashy but still comes with all the same problems as regular physical money. It's like asking your IT group to install spyware on users workstations instead of respecting or enforcing HR policy. It's a people problem, not a tech problem.
gonzo41 4y ago
Banks running out of money and just failing outright leaving their customers high and dry for one. In addition to this, the scams, the lack of any consumer protection. The hype bubbles, the sheer amount of personal faith that is required to have confidence etc etc. Also the lack of standards and the terrible promise of decentralization, yet the reality of centralized markets and brokers. (This is a more modern failure).
- a2tech 4y ago
  Difference here is I don't think the government is going to step in and regulate them so they're safer. I think the government is going to treat this all as fraud eventually
  - gonzo41 4y ago
    As they should, Don't get my started on NFT's. I firmly believe crypto is useless. Unlike gold (with metallic and useful properties) or other floated currencies that map back to an economy. Crypto essentially represents spent energy. If crypto, esp BTC was able to be back converted into the energy used to produce it, that'd be great. But it can't so it's just a net negative IMO.
    - throwaway0x7E6 4y ago
      >Unlike gold (with metallic and useful properties) gold was useless for 99.5% of human history, until the advent of electronics
      - rscho 4y ago
        Jewels?
        jtbayly 4y ago
        I think you mean jewelry, which is what I was going to mention. (Jewels being the pretty rocks that get set in the gold.)
      - gonzo41 4y ago
        Yes, but we have electronics now don't we. So it's useful.
      - onychomys 4y ago
        It may not have been useful, but people from all time periods and all corners of the globe agree that it sure is pretty. That appeal counts for something.
      - dragontamer 4y ago
        Gold was a corrosion free metal that held it's shape with jewelers. Even Silver corrodes. Gold never corrodes. It's excessively stable, malleable, and perfect for art pieces. Since Gold is excessively stable, there are no worries about rashes or itchiness if you wear it all day. In an age before modern plastics, that is basically miraculous.
- trompetenaccoun 4y ago
  How are scams and hype a thing only since 200 years ago? I'm trying to understand but the comment makes no sense if you know the history of finance. Btw it's somewhat ironic because Celsius is essentially a bank and not a blockchain company at all. They've simply found this niche where they're largely unregulated because they're dealing with tokens that are not considered legal tender in most countries and have super shady business practice when you look into it deeper. So this is essentially the old model, branded as blockchain and taking money from people who hold cryptocurrency but do not understand it. The likes who buy Dogecoin on Robinhood. If lending business were on-chain, everyone could look at the exact figures and observe the risks. Maker vaults aren't defaulting, are they? Also a smart contract once securely deployed can not be arbitrarily stopped. So there is no chance for anyone freeze your funds like this centralized platform does now. These are exactly the problems blockchains can solve, if people only understood and used them. With traditional banks, we've tackled the problem trying to use government regulation, but we all know it doesn't really work. Contracts that can not easily be gamed are a much better solution, at least for the base layer of financial system.
  - FormerBandmate 4y ago
    This kind of stuff doesn't happen with normal banks. Wachovia and Washington Mutual essentially failed in 2008 and no one lost anything
    - trompetenaccoun 4y ago
      That's the regulation I mentioned. I don't know these banks but would guess it's because they were insured. In the US and the EU all banks have to be insured to a degree. That's not necessarily true elsewhere, people around the world regularly do lose money in bank defaults. And entire countries can go bankrupt too, because the system ultimately has no failsafe. People in more stable countries like to dismiss that but depending on where you're from you can find examples of the entire nation losing practically everything only a few decades ago. Of course you could do the same with companies like Celsius and insure and regulate them better, but in the end customers are paying for it, it doesn't come free. Also big banks do still fail, are you aware how much money has been paid for bank bailouts just in the past decades? The thing is many don't notice they're paying for it, because they don't understand where the money comes from. My argument is that Celsius would never have gotten as big if the customers knew what happens with their money. This business model shouldn't even be legal, same as what many more traditional banks are involved in. In fact, often it isn't legal in the first place even according to current regulation. But once they get to a certain size, laws don't apply to them as they apply to the rest of us. This is a problem, regulation is clearly not working properly in the banking sector.
IHLayman 4y ago
I would say definitely look at the “Gilded Age” of banking in the US. History may not repeat but it sure rhymes. https://www.federalreservehistory.org/essays/banking-panics-of-the-gilded-age https://www.federalreservehistory.org/essays/banking-panics-...
deleted 4y ago
[deleted]
jgerrish 4y ago
S&L, FDIC, 10k, subprime lending, etc. I don't see why all countries would outlaw "crypto". I hate that term for it's semantic shift, but that kind of rebellious tribalism fueled this drum beat. Each class of cryptocurrency technologies, institutions and securities has an analog in the list above. And each will lead to new protections. Maybe Big Brokerage will invest at most X% in cryptocurrencies but not ones repackaged into NFTs. Etc. This isn't a bull market, or a bear. To borrow a perhaps racist or outdated term, it's a Buffalo market, and regulators are at the buffet.

Crypto solves a bunch of problems of its own making while retaining all the human problems (fraud, etc) of the existing banking system without hundreds of years of regulations and policy to stabilize systems and attempt accountability. Tether is analogous to the gold standard but without verifying the gold exists in reserves, or ever existed at all. Exchanges are facilitating billions in money laundering and fraud while eating massive fees and paying millions to founders. Transactions can be hidden behind shell wallets/groups and filtered through many exchanges reducing transparency and increasing odds of successful illegal activity. There is a ton of legitimate criticism just looking at the fraud side of Crypto and how lack of regulation in that space enables a ton of crime. It's often drowned out by PR or the next big blockchain based thing that seems flashy but still comes with all the same problems as regular physical money. It's like asking your IT group to install spyware on users workstations instead of respecting or enforcing HR policy. It's a people problem, not a tech problem.

gonzo41 4y ago

Banks running out of money and just failing outright leaving their customers high and dry for one. In addition to this, the scams, the lack of any consumer protection. The hype bubbles, the sheer amount of personal faith that is required to have confidence etc etc. Also the lack of standards and the terrible promise of decentralization, yet the reality of centralized markets and brokers. (This is a more modern failure).

a2tech 4y ago
Difference here is I don't think the government is going to step in and regulate them so they're safer. I think the government is going to treat this all as fraud eventually
- gonzo41 4y ago
  As they should, Don't get my started on NFT's. I firmly believe crypto is useless. Unlike gold (with metallic and useful properties) or other floated currencies that map back to an economy. Crypto essentially represents spent energy. If crypto, esp BTC was able to be back converted into the energy used to produce it, that'd be great. But it can't so it's just a net negative IMO.
  - throwaway0x7E6 4y ago
    >Unlike gold (with metallic and useful properties) gold was useless for 99.5% of human history, until the advent of electronics
    - rscho 4y ago
      Jewels?
      - jtbayly 4y ago
        I think you mean jewelry, which is what I was going to mention. (Jewels being the pretty rocks that get set in the gold.)
    - gonzo41 4y ago
      Yes, but we have electronics now don't we. So it's useful.
    - onychomys 4y ago
      It may not have been useful, but people from all time periods and all corners of the globe agree that it sure is pretty. That appeal counts for something.
    - dragontamer 4y ago
      Gold was a corrosion free metal that held it's shape with jewelers. Even Silver corrodes. Gold never corrodes. It's excessively stable, malleable, and perfect for art pieces. Since Gold is excessively stable, there are no worries about rashes or itchiness if you wear it all day. In an age before modern plastics, that is basically miraculous.
trompetenaccoun 4y ago
How are scams and hype a thing only since 200 years ago? I'm trying to understand but the comment makes no sense if you know the history of finance. Btw it's somewhat ironic because Celsius is essentially a bank and not a blockchain company at all. They've simply found this niche where they're largely unregulated because they're dealing with tokens that are not considered legal tender in most countries and have super shady business practice when you look into it deeper. So this is essentially the old model, branded as blockchain and taking money from people who hold cryptocurrency but do not understand it. The likes who buy Dogecoin on Robinhood. If lending business were on-chain, everyone could look at the exact figures and observe the risks. Maker vaults aren't defaulting, are they? Also a smart contract once securely deployed can not be arbitrarily stopped. So there is no chance for anyone freeze your funds like this centralized platform does now. These are exactly the problems blockchains can solve, if people only understood and used them. With traditional banks, we've tackled the problem trying to use government regulation, but we all know it doesn't really work. Contracts that can not easily be gamed are a much better solution, at least for the base layer of financial system.
- FormerBandmate 4y ago
  This kind of stuff doesn't happen with normal banks. Wachovia and Washington Mutual essentially failed in 2008 and no one lost anything
  - trompetenaccoun 4y ago
    That's the regulation I mentioned. I don't know these banks but would guess it's because they were insured. In the US and the EU all banks have to be insured to a degree. That's not necessarily true elsewhere, people around the world regularly do lose money in bank defaults. And entire countries can go bankrupt too, because the system ultimately has no failsafe. People in more stable countries like to dismiss that but depending on where you're from you can find examples of the entire nation losing practically everything only a few decades ago. Of course you could do the same with companies like Celsius and insure and regulate them better, but in the end customers are paying for it, it doesn't come free. Also big banks do still fail, are you aware how much money has been paid for bank bailouts just in the past decades? The thing is many don't notice they're paying for it, because they don't understand where the money comes from. My argument is that Celsius would never have gotten as big if the customers knew what happens with their money. This business model shouldn't even be legal, same as what many more traditional banks are involved in. In fact, often it isn't legal in the first place even according to current regulation. But once they get to a certain size, laws don't apply to them as they apply to the rest of us. This is a problem, regulation is clearly not working properly in the banking sector.

IHLayman 4y ago

I would say definitely look at the “Gilded Age” of banking in the US. History may not repeat but it sure rhymes. https://www.federalreservehistory.org/essays/banking-panics-of-the-gilded-age https://www.federalreservehistory.org/essays/banking-panics-...

deleted 4y ago

[deleted]

jgerrish 4y ago

S&L, FDIC, 10k, subprime lending, etc. I don't see why all countries would outlaw "crypto". I hate that term for it's semantic shift, but that kind of rebellious tribalism fueled this drum beat. Each class of cryptocurrency technologies, institutions and securities has an analog in the list above. And each will lead to new protections. Maybe Big Brokerage will invest at most X% in cryptocurrencies but not ones repackaged into NFTs. Etc. This isn't a bull market, or a bear. To borrow a perhaps racist or outdated term, it's a Buffalo market, and regulators are at the buffet.