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> and amounts to a tacit admission of failure: that cryptocurrency somehow needs to go through a process of making every single mistake that traditional finance

> and amounts to a tacit admission of failure: that cryptocurrency somehow needs to go through a process of making every single mistake that traditional finance has made and corrected for These problems are different and the solutions are different. The way traditional finance solved this was to incorporate the big scary people with guns to enforce their rules. It would be an admission of failure if they called for government regulation, but that’s not what’s happening here. They are going back to the drawing board to keep hardening the technology in the face of openly adversarial actors.

woodruffw 4y ago
> These problems are different and the solutions are different. The way traditional finance solved this was to incorporate the big scary people with guns to enforce their rules. Traditional finance did not incorporate the Scary Men with Guns. They were already there, are still here, and will remain regardless of how many layers of decentralization you add. Traditional finance's crowning achievement has been to successfully integrate itself into civil law: we don't send people to the Poor House anymore, and we don't execute bankers (or ordinary citizens) when they fail to finance the King's wars. Among the "kinds of crime" you can conceivably execute on as an individual, traditional financial crimes are among a handful that are regulated by agencies that don't have actual criminal enforcement abilities. There is no "going back to the drawing board," only muddying the waters and hoping that someone won't notice the Scary Men with Guns (who have no intention of leaving) in the reflection.
- lmm 4y ago
  > we don't send people to the Poor House anymore We let them get into debt they can't repay and then send them to jail instead, but functionally it amounts to the same thing, except for being harder to get out of.
  - woodruffw 4y ago
    > We let them get into debt they can't repay and then send them to jail instead, but functionally it amounts to the same thing, except for being harder to get out of. These do not amount to the same thing: one is debt, and the other is an extension of the carceral system. As best I can tell, cryptocurrencies do not eliminate individual debt. Rather, they provide myriad new ways for ordinary laypeople to leverage themselves into lifetimes of poverty. So it's not clear what this (true!) observation has to do with the conversation.
    - lmm 4y ago
      I'm no fan of cryptocurrencies, but as far as I know they do avoid debt; while there are e.g. crypto margin loans, if you get margin called and blown out then no-one expects to be able to collect the remainder, much less use the machinery of the state to enforce that.
      - woodruffw 4y ago
        That's a practical matter: either cryptocurrencies will (in their quest to become actual financial systems) make debt a serious problem for the indebted, or they will continue to be financial "mystery meat." In other words: they avoid debt because they're not doing real finance. But the entire point of this grand experiment is supposed to be a real financial system, so "it's currently broken" is not a good argument for "it will get better."
      - p1necone 4y ago
        Cryptocurrencies "avoid debt" only as much as regular currencies "avoid debt". If I borrow USD from someone, I sign a legal document promising to pay it back in a certain time frame and they give me the full balance of the loan immediately - it has nothing to do with the currency itself. Cryptocurrencies don't somehow stop you from doing the same.
        lmm 4y ago
        Sure, the point is that there's a system in place that will enforce that debt with (the threat of, and ultimately the reality of) violence. And the more subtle point is that it's impossible for a system without real-time settlement to avoid having debt baked in at a very foundational level, whereas real-time settlement and smart contracts offer hope that an alternative foundation might be possible.
- betwixthewires 4y ago
  That's one take, I for one am a bit more optimistic. I think we can disempower the scary men with guns quite a bit if we take their feet out from under them.
  - woodruffw 4y ago
    In general, threatening the Scary Men with Guns’ money tends to make them scarier. One recalls images of Iraq divided between oil companies.
threeseed 4y ago
> Going back to the drawing board to keep hardening the technology in the face of openly adversarial actors You just have to hope that those actors are altruistic enough to return some/all of the money. Otherwise you may not get the opportunity to harden the technology.

woodruffw 4y ago

> These problems are different and the solutions are different. The way traditional finance solved this was to incorporate the big scary people with guns to enforce their rules. Traditional finance did not incorporate the Scary Men with Guns. They were already there, are still here, and will remain regardless of how many layers of decentralization you add. Traditional finance's crowning achievement has been to successfully integrate itself into civil law: we don't send people to the Poor House anymore, and we don't execute bankers (or ordinary citizens) when they fail to finance the King's wars. Among the "kinds of crime" you can conceivably execute on as an individual, traditional financial crimes are among a handful that are regulated by agencies that don't have actual criminal enforcement abilities. There is no "going back to the drawing board," only muddying the waters and hoping that someone won't notice the Scary Men with Guns (who have no intention of leaving) in the reflection.

lmm 4y ago
> we don't send people to the Poor House anymore We let them get into debt they can't repay and then send them to jail instead, but functionally it amounts to the same thing, except for being harder to get out of.
- woodruffw 4y ago
  > We let them get into debt they can't repay and then send them to jail instead, but functionally it amounts to the same thing, except for being harder to get out of. These do not amount to the same thing: one is debt, and the other is an extension of the carceral system. As best I can tell, cryptocurrencies do not eliminate individual debt. Rather, they provide myriad new ways for ordinary laypeople to leverage themselves into lifetimes of poverty. So it's not clear what this (true!) observation has to do with the conversation.
  - lmm 4y ago
    I'm no fan of cryptocurrencies, but as far as I know they do avoid debt; while there are e.g. crypto margin loans, if you get margin called and blown out then no-one expects to be able to collect the remainder, much less use the machinery of the state to enforce that.
    - woodruffw 4y ago
      That's a practical matter: either cryptocurrencies will (in their quest to become actual financial systems) make debt a serious problem for the indebted, or they will continue to be financial "mystery meat." In other words: they avoid debt because they're not doing real finance. But the entire point of this grand experiment is supposed to be a real financial system, so "it's currently broken" is not a good argument for "it will get better."
    - p1necone 4y ago
      Cryptocurrencies "avoid debt" only as much as regular currencies "avoid debt". If I borrow USD from someone, I sign a legal document promising to pay it back in a certain time frame and they give me the full balance of the loan immediately - it has nothing to do with the currency itself. Cryptocurrencies don't somehow stop you from doing the same.
      - lmm 4y ago
        Sure, the point is that there's a system in place that will enforce that debt with (the threat of, and ultimately the reality of) violence. And the more subtle point is that it's impossible for a system without real-time settlement to avoid having debt baked in at a very foundational level, whereas real-time settlement and smart contracts offer hope that an alternative foundation might be possible.
betwixthewires 4y ago
That's one take, I for one am a bit more optimistic. I think we can disempower the scary men with guns quite a bit if we take their feet out from under them.
- woodruffw 4y ago
  In general, threatening the Scary Men with Guns’ money tends to make them scarier. One recalls images of Iraq divided between oil companies.

threeseed 4y ago

> Going back to the drawing board to keep hardening the technology in the face of openly adversarial actors You just have to hope that those actors are altruistic enough to return some/all of the money. Otherwise you may not get the opportunity to harden the technology.