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Did you even read the post? The conclusion: > Innovation has the potential to make financial services faster, cheaper, and more inclusive and to do so in ways

Did you even read the post? The conclusion: > Innovation has the potential to make financial services faster, cheaper, and more inclusive and to do so in ways that are native to the digital ecosystem. Enabling responsible innovation to flourish will require that the regulatory perimeter encompass the crypto financial system according to the principle of like risk, like regulatory outcome, and that novel risks associated with the new technologies be appropriately addressed. The Fed recognizes this is a new tech stack with potentially disruptive consequences. Reconcile that with this anachronistic tulip mania point of view you're parroting.

scoopertrooper 4y ago
Crypto may, one day, find utility as part of the financial system (outside of drug deals, sanctions evasion, money laundering, tax minimisation, greater-fool scams, and Ponzi schemes), but its recent volatility has been in no way related to that.
- mistrial9 4y ago
  "one day" ?
  - Karunamon 4y ago
    It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
    - scoopertrooper 4y ago
      Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
      - junofan 4y ago
        It’s being used to build an alternative financial system [1]. What sort of utility would you want an alternative financial system to provide to the current financial system? [1]: https://ethereum.org/en/defi/ https://ethereum.org/en/defi/
      - Karunamon 4y ago
        Generally anytime anyone tries, it devolves into special pleading; basically saying that this or that isn't "real" utility. As if being able to transact with anyone else on the planet sans middlemen isn't enough utility on its own. I would instead ask people who make comments like the one that started this thread to substantiate their affirmative claims about how crypto is only used for these shady things. For some reason, no such evidence is ever forthcoming.
      - where_to_inc 4y ago
        I can’t speak to other cryptocurrencies. But at least re: Bitcoin: 1. International settlements of any sum of money (small to large) in 10-20 minutes instead of days 2. Markedly lower money transfer fees compared wire transfer or ACH 3. Ability to be one’s own bank if so desired, avoiding government bank account pillaging (Cyprus, Argentina, many more) 4. Ability to send money anywhere (try paying your staff in Russia with USD these days… we have two; they both get paid in Bitcoin since following Russia’s removal from SWIFT cryptocurrency is now the only way) 5. When comparing Layer 2 transactions, orders of magnitude more transactions processed (global credit card network: 19,000 transactions per second; Bitcoin’s Lightning network: several million transactions per second), for significantly lower fees (very appealing if you are a merchant); payment settlement in hours instead of days 6. Deflationary savings account over medium- and long-term timescales
        kkielhofner 4y ago
        1) Users don't care about final settlement times. Whether CC, wire, etc perception is reality. I pay with a card, it's done. I wire and they get the confirmation the same day (or less). Some may care but the vast, vast majority of the population does not. Ditto PayPal, Venmo, TransferWise (Wise), etc. 2) Debatable because of volatility. 3) Yes but being your own bank also means losing everything is a forgotten/misplaced password/seed phrase, clicking the wrong link, etc away. I don't know how many password resets a big bank in the US does everyday but I'm sure it's a mindbogglingly large number. The vast majority of the population isn't ready for and won't tolerate this. The fees you describe for payments in the financial system have anti-fraud measure costs (reversals, etc) baked in. Yet another feature of the traditional financial system that has been developed (in reality) after decades of real-world experience. It's the equivalent of every single individual building their own hardened vault and hiring armed private security. 4) Fair enough but there are realities in potentially "skirting" the "law" like this. Banks have significant processes to make sure you're not (for example) "funding terrorism" or whatever which is a serious crime in the US and very easy to do with cryptocurrencies. I, for one, don't want to risk the Feds showing up at my door because my funds ended up with someone on my government's enemies list. Just because you can do it with Bitcoin doesn't magically mean the people with guns and prisons will just say "Oh Bitcoin - nevermind - that's ok". 5) Lightning (and for that L2s) are mostly bolt-on hacks that sacrifice one or more features/properties of cryptocurrencies as originally intended when it became clear they fundamentally don't work for anything beyond toy-level. Again, from a users perspective as long as the payment network allows you to swipe a card and walk out with your purchase ASAP transaction rates are invisible to the user. If traditional payment systems needed higher transaction rates they would magically appear. 6) This is a very dangerous supposition.
    - olalonde 4y ago
      Indeed, the amount of misinformation and repetitive comments in those threads is something... It's up there with religion and politics at this point, if not worse.
- Zamicol 4y ago
  I know people that have bought houses with MakerDAO loans. Its utility is here. To say otherwise is just sticking heads in sand.
  - unicornmama 4y ago
    So someone can collatoralize $1,500,000 worth of ETH to take out $1,000,000 worth of DAI loan. [I will let all my millionaire friends know] This isn't exactly useful for home ownership, as I can collatoralize $200,000 deposit to buy the same house with a bank. The difference that the bank does home valuation and risk assessment, and bears the risk that I will default. And MakerDAO charges a few percent interest for the loan [And at the extreme these loans are only repayble because of fiat monetary expansion...] These pseudo zero-risk loans aren't exactly useful. The hard part of finance is in valuations, risk assessment, and regulatory compliance. And I stress the word pseudo, even DAI is built on a house of cards, although somewhat sturdier than its competition [order of mangitude depreciation, and when the market can't catch a bid it may be game over]
  - wmf 4y ago
    I did the same with TradFi. There's no additional utility.
    - atwood22 4y ago
      I think the utility is the medium itself. Your TradFi loan was delivered to you using a financial system maintained by thousands of highly specialized bankers and engineers leveraging billions of dollars in infrastructure. A DeFi loan is delivered to you via a smart contract that runs on a generic financial computing platform known as a blockchain. Even if the only thing you can do with a blockchain is implement existing financial systems, that itself is utility because the blockchain has lower barriers to entry, both in terms of knowledge and capital, which thus democratizes the financial system. I agree with the beanie baby analogy when it comes to the various tokens that people "invest" in. But I wouldn't be so quick to say there was no utility, at least conceptually. It didn't really "click" for me until I implemented a smart contract. I realized that I could implement the entire financial system relatively easily, e.g. I could create an analog for stocks, options, margin lending, etc. Building a similar system without the blockchain would be much more difficult. I certainly couldn't do it alone. And even if I did do it with the blockchain, there would be an additional step of convincing people to trust that my system would stay up. Smart contracts run "forever" (in a sense).

scoopertrooper 4y ago

Crypto may, one day, find utility as part of the financial system (outside of drug deals, sanctions evasion, money laundering, tax minimisation, greater-fool scams, and Ponzi schemes), but its recent volatility has been in no way related to that.

mistrial9 4y ago
"one day" ?
- Karunamon 4y ago
  It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
  - scoopertrooper 4y ago
    Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
    - junofan 4y ago
      It’s being used to build an alternative financial system [1]. What sort of utility would you want an alternative financial system to provide to the current financial system? [1]: https://ethereum.org/en/defi/ https://ethereum.org/en/defi/
    - Karunamon 4y ago
      Generally anytime anyone tries, it devolves into special pleading; basically saying that this or that isn't "real" utility. As if being able to transact with anyone else on the planet sans middlemen isn't enough utility on its own. I would instead ask people who make comments like the one that started this thread to substantiate their affirmative claims about how crypto is only used for these shady things. For some reason, no such evidence is ever forthcoming.
    - where_to_inc 4y ago
      I can’t speak to other cryptocurrencies. But at least re: Bitcoin: 1. International settlements of any sum of money (small to large) in 10-20 minutes instead of days 2. Markedly lower money transfer fees compared wire transfer or ACH 3. Ability to be one’s own bank if so desired, avoiding government bank account pillaging (Cyprus, Argentina, many more) 4. Ability to send money anywhere (try paying your staff in Russia with USD these days… we have two; they both get paid in Bitcoin since following Russia’s removal from SWIFT cryptocurrency is now the only way) 5. When comparing Layer 2 transactions, orders of magnitude more transactions processed (global credit card network: 19,000 transactions per second; Bitcoin’s Lightning network: several million transactions per second), for significantly lower fees (very appealing if you are a merchant); payment settlement in hours instead of days 6. Deflationary savings account over medium- and long-term timescales
      - kkielhofner 4y ago
        1) Users don't care about final settlement times. Whether CC, wire, etc perception is reality. I pay with a card, it's done. I wire and they get the confirmation the same day (or less). Some may care but the vast, vast majority of the population does not. Ditto PayPal, Venmo, TransferWise (Wise), etc. 2) Debatable because of volatility. 3) Yes but being your own bank also means losing everything is a forgotten/misplaced password/seed phrase, clicking the wrong link, etc away. I don't know how many password resets a big bank in the US does everyday but I'm sure it's a mindbogglingly large number. The vast majority of the population isn't ready for and won't tolerate this. The fees you describe for payments in the financial system have anti-fraud measure costs (reversals, etc) baked in. Yet another feature of the traditional financial system that has been developed (in reality) after decades of real-world experience. It's the equivalent of every single individual building their own hardened vault and hiring armed private security. 4) Fair enough but there are realities in potentially "skirting" the "law" like this. Banks have significant processes to make sure you're not (for example) "funding terrorism" or whatever which is a serious crime in the US and very easy to do with cryptocurrencies. I, for one, don't want to risk the Feds showing up at my door because my funds ended up with someone on my government's enemies list. Just because you can do it with Bitcoin doesn't magically mean the people with guns and prisons will just say "Oh Bitcoin - nevermind - that's ok". 5) Lightning (and for that L2s) are mostly bolt-on hacks that sacrifice one or more features/properties of cryptocurrencies as originally intended when it became clear they fundamentally don't work for anything beyond toy-level. Again, from a users perspective as long as the payment network allows you to swipe a card and walk out with your purchase ASAP transaction rates are invisible to the user. If traditional payment systems needed higher transaction rates they would magically appear. 6) This is a very dangerous supposition.
  - olalonde 4y ago
    Indeed, the amount of misinformation and repetitive comments in those threads is something... It's up there with religion and politics at this point, if not worse.
Zamicol 4y ago
I know people that have bought houses with MakerDAO loans. Its utility is here. To say otherwise is just sticking heads in sand.
- unicornmama 4y ago
  So someone can collatoralize $1,500,000 worth of ETH to take out $1,000,000 worth of DAI loan. [I will let all my millionaire friends know] This isn't exactly useful for home ownership, as I can collatoralize $200,000 deposit to buy the same house with a bank. The difference that the bank does home valuation and risk assessment, and bears the risk that I will default. And MakerDAO charges a few percent interest for the loan [And at the extreme these loans are only repayble because of fiat monetary expansion...] These pseudo zero-risk loans aren't exactly useful. The hard part of finance is in valuations, risk assessment, and regulatory compliance. And I stress the word pseudo, even DAI is built on a house of cards, although somewhat sturdier than its competition [order of mangitude depreciation, and when the market can't catch a bid it may be game over]
- wmf 4y ago
  I did the same with TradFi. There's no additional utility.
  - atwood22 4y ago
    I think the utility is the medium itself. Your TradFi loan was delivered to you using a financial system maintained by thousands of highly specialized bankers and engineers leveraging billions of dollars in infrastructure. A DeFi loan is delivered to you via a smart contract that runs on a generic financial computing platform known as a blockchain. Even if the only thing you can do with a blockchain is implement existing financial systems, that itself is utility because the blockchain has lower barriers to entry, both in terms of knowledge and capital, which thus democratizes the financial system. I agree with the beanie baby analogy when it comes to the various tokens that people "invest" in. But I wouldn't be so quick to say there was no utility, at least conceptually. It didn't really "click" for me until I implemented a smart contract. I realized that I could implement the entire financial system relatively easily, e.g. I could create an analog for stocks, options, margin lending, etc. Building a similar system without the blockchain would be much more difficult. I certainly couldn't do it alone. And even if I did do it with the blockchain, there would be an additional step of convincing people to trust that my system would stay up. Smart contracts run "forever" (in a sense).