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Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for fi

Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance (especially once multi-sig wallets become common). If Celsius had been more all-in on crypto tech, they would have had FEWER problems. Also, I don't know any law that exempts crypto companies from being taken to court.

eropple 4y ago
> How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public. > Also, I don't know any law that exempts crypto companies from being taken to court. ...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach. On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
- ipaddr 4y ago
  The legal system can only be used to settle payment disputes when parties are known. Buying a tv from the back of a van going home to find out it doesn't work will leave you with little legal recourse. The legal system can only work with entities within it's power. Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems. Bank of America can do very little for your Russian payment disputes.
  - heylook 4y ago
    > Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems. Pardon the ignorance, but, how, exactly?
    - scarmig 4y ago
      AFAICT crypto's solution to getting screwed by a trustless entity is "screw you, you deserved it for not doing due diligence."
  - danans 4y ago
    > Cryto can solve these trustless entities problems. > Bank of America can do very little for your Russian payment disputes. Didn't know crypto had a contract enforcement apparatus in Russia. How does that work?
- seaourfreed 4y ago
  DoJ shifts 150 prosectors to crypto cases. A bet at least one will be looking into this. https://news.bitcoin.com/doj-launches-network-of-over-150-federal-prosecutors-to-combat-criminal-uses-of-crypto/ https://news.bitcoin.com/doj-launches-network-of-over-150-fe...
JumpCrisscross 4y ago
> literally perfect for finance It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.
toomuchtodo 4y ago
It is important to understand that crypto is not an expression of finance (although financial transactions do take place on top of crypto), but an attempt to express law outside of the bounds of IRL legal frameworks, stating, "code is law", which is of course, not true. The legal system always takes precedence when they have a monopoly on force (financial and physical), which is why crypto is destined to be a niche system so long as it does not have mechanisms for the legal system to exert its will on it. What is business logic of traditional systems if not expressions of business rules operating within the constraints of legal frameworks? It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.
- pazimzadeh 4y ago
  "Code is law" is a property of Ethereum Classic, not all cryptocurrency. I don't really see many crypto people arguing that code should supersede law. I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it. By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
  - danans 4y ago
    > I don't really see many crypto people arguing that code should supersede law. Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about. > I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete. For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely. https://www.coindesk.com/tech/2020/11/10/multisignature-wallets-can-keep-your-coins-safer-if-you-use-them-right/?outputType=amp https://www.coindesk.com/tech/2020/11/10/multisignature-wall...
jedberg 4y ago
> Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.
- pazimzadeh 4y ago
  There are many ways to implement undo-ing transactions on the blockchain. One is with multi-sig wallets. There are also others: https://www.coindesk.com/tech/2022/09/28/stanford-proposal-for-reversible-ethereum-transactions-divides-crypto-community/ https://www.coindesk.com/tech/2022/09/28/stanford-proposal-f...
  - eropple 4y ago
    You keep talking about "multi-sig wallets" in multiple posts. Are you going to have courts in every relevant jurisdiction have a handle on that wallet? That seems unlikely to go over well with the sorts of people who take these seriously.
    - pazimzadeh 4y ago
      I don't know, that's a good question. That's the discussion we should be having, instead of flat out stating that it's impossible. The "sorts of people who take these seriously" will never be happy, so that's fine.
      - eropple 4y ago
        One should demonstrate an actual, tangible, serious raison d'etre that is within the bounds of the modern legal system before bothering to find out if it's plausible. One still does not exist for cryptocurrency.
- EVa5I7bHFq9mnYK 4y ago
  Many traditional types of payments, such as wire transfers, cash etc. are also non-undoable. Incarceration and a variety of other tools at law enforcement's disposal are used to recover funds.
lottin 4y ago
Financing requires seizable assets, which means it's unimplementable using blackchain-based digital assets and smart contracts.
- dlubarov 4y ago
  There are plenty of DeFi systems where (crypto)assets are used as collateral - see MakerDAO, Compound, Aave, etc. (Granted, you can't deposit a house or car as collateral, if that's what you're getting at?)
  - lottin 4y ago
    Financing is the advancement of funds in exchange for a promise that those funds will be repaid later. For this to work the borrower must own assets that can be seized in the event of default. Since blockchain-based assets cannot be seized, this means financing is fundamentally impossible using blockchain technology. The best they can do is overcollateralised loans, where the borrower must first advance themself the funds that they are "borrowing". This isn't financing because there isn't any advancement of funds. Funds are simply swapped.
    - dlubarov 4y ago
      > blockchain-based assets cannot be seized I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance. > Funds are simply swapped. If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it. Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
      - lottin 4y ago
        The reason the collateral needs to be deposited with a smart contract is because the collateral assets are unseizable. But that defeats the purpose... Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing". Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing. Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.
TomSwirly 4y ago
> Crypto is like the invention of ink that cannot be erased. No, that was invented in the late 70s, with the Merkle tree. The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers. > It's literally perfect for finance People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain. > Also, I don't know any law that exempts crypto companies from being taken to court. Who said that? No one. No one at all.
- pazimzadeh 4y ago
  >> Also, I don't know any law that exempts crypto companies from being taken to court > Who said that? No one. No one at all. jedberg: "[crypto] ... prevents a lot of funny business because people are afraid of getting caught and being put in jail" https://news.ycombinator.com/item?id=33110400 https://news.ycombinator.com/item?id=33110400
- pazimzadeh 4y ago
  >> Crypto is like the invention of ink that cannot be erased. > No, that was invented in the late 70s, with the Merkle tree. Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world. My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.
Animats 4y ago
> Also, I don't know any law that exempts crypto companies from being taken to court. As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.

eropple 4y ago

> How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public. > Also, I don't know any law that exempts crypto companies from being taken to court. ...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach. On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.

ipaddr 4y ago
The legal system can only be used to settle payment disputes when parties are known. Buying a tv from the back of a van going home to find out it doesn't work will leave you with little legal recourse. The legal system can only work with entities within it's power. Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems. Bank of America can do very little for your Russian payment disputes.
- heylook 4y ago
  > Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems. Pardon the ignorance, but, how, exactly?
  - scarmig 4y ago
    AFAICT crypto's solution to getting screwed by a trustless entity is "screw you, you deserved it for not doing due diligence."
- danans 4y ago
  > Cryto can solve these trustless entities problems. > Bank of America can do very little for your Russian payment disputes. Didn't know crypto had a contract enforcement apparatus in Russia. How does that work?
seaourfreed 4y ago
DoJ shifts 150 prosectors to crypto cases. A bet at least one will be looking into this. https://news.bitcoin.com/doj-launches-network-of-over-150-federal-prosecutors-to-combat-criminal-uses-of-crypto/ https://news.bitcoin.com/doj-launches-network-of-over-150-fe...

JumpCrisscross 4y ago

> literally perfect for finance It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.

toomuchtodo 4y ago

It is important to understand that crypto is not an expression of finance (although financial transactions do take place on top of crypto), but an attempt to express law outside of the bounds of IRL legal frameworks, stating, "code is law", which is of course, not true. The legal system always takes precedence when they have a monopoly on force (financial and physical), which is why crypto is destined to be a niche system so long as it does not have mechanisms for the legal system to exert its will on it. What is business logic of traditional systems if not expressions of business rules operating within the constraints of legal frameworks? It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.

pazimzadeh 4y ago
"Code is law" is a property of Ethereum Classic, not all cryptocurrency. I don't really see many crypto people arguing that code should supersede law. I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it. By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
- danans 4y ago
  > I don't really see many crypto people arguing that code should supersede law. Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about. > I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete. For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely. https://www.coindesk.com/tech/2020/11/10/multisignature-wallets-can-keep-your-coins-safer-if-you-use-them-right/?outputType=amp https://www.coindesk.com/tech/2020/11/10/multisignature-wall...

jedberg 4y ago

> Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.

pazimzadeh 4y ago
There are many ways to implement undo-ing transactions on the blockchain. One is with multi-sig wallets. There are also others: https://www.coindesk.com/tech/2022/09/28/stanford-proposal-for-reversible-ethereum-transactions-divides-crypto-community/ https://www.coindesk.com/tech/2022/09/28/stanford-proposal-f...
- eropple 4y ago
  You keep talking about "multi-sig wallets" in multiple posts. Are you going to have courts in every relevant jurisdiction have a handle on that wallet? That seems unlikely to go over well with the sorts of people who take these seriously.
  - pazimzadeh 4y ago
    I don't know, that's a good question. That's the discussion we should be having, instead of flat out stating that it's impossible. The "sorts of people who take these seriously" will never be happy, so that's fine.
    - eropple 4y ago
      One should demonstrate an actual, tangible, serious raison d'etre that is within the bounds of the modern legal system before bothering to find out if it's plausible. One still does not exist for cryptocurrency.
EVa5I7bHFq9mnYK 4y ago
Many traditional types of payments, such as wire transfers, cash etc. are also non-undoable. Incarceration and a variety of other tools at law enforcement's disposal are used to recover funds.

lottin 4y ago

Financing requires seizable assets, which means it's unimplementable using blackchain-based digital assets and smart contracts.

dlubarov 4y ago
There are plenty of DeFi systems where (crypto)assets are used as collateral - see MakerDAO, Compound, Aave, etc. (Granted, you can't deposit a house or car as collateral, if that's what you're getting at?)
- lottin 4y ago
  Financing is the advancement of funds in exchange for a promise that those funds will be repaid later. For this to work the borrower must own assets that can be seized in the event of default. Since blockchain-based assets cannot be seized, this means financing is fundamentally impossible using blockchain technology. The best they can do is overcollateralised loans, where the borrower must first advance themself the funds that they are "borrowing". This isn't financing because there isn't any advancement of funds. Funds are simply swapped.
  - dlubarov 4y ago
    > blockchain-based assets cannot be seized I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance. > Funds are simply swapped. If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it. Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
    - lottin 4y ago
      The reason the collateral needs to be deposited with a smart contract is because the collateral assets are unseizable. But that defeats the purpose... Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing". Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing. Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.

TomSwirly 4y ago

> Crypto is like the invention of ink that cannot be erased. No, that was invented in the late 70s, with the Merkle tree. The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers. > It's literally perfect for finance People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain. > Also, I don't know any law that exempts crypto companies from being taken to court. Who said that? No one. No one at all.

pazimzadeh 4y ago
>> Also, I don't know any law that exempts crypto companies from being taken to court > Who said that? No one. No one at all. jedberg: "[crypto] ... prevents a lot of funny business because people are afraid of getting caught and being put in jail" https://news.ycombinator.com/item?id=33110400 https://news.ycombinator.com/item?id=33110400
pazimzadeh 4y ago
>> Crypto is like the invention of ink that cannot be erased. > No, that was invented in the late 70s, with the Merkle tree. Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world. My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.

Animats 4y ago

> Also, I don't know any law that exempts crypto companies from being taken to court. As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.