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Here are three things that are extremely valuable about blockchain technology: * Financial infrastructure that is transparent and does not rely on corporate CE

Here are three things that are extremely valuable about blockchain technology: * Financial infrastructure that is transparent and does not rely on corporate CEOs being honest: Enron, Lehman Brothers, and now FTX have shown that global regulators cannot be trusted to protect ordinary people when institutions are corrupted from the top. DeFi markets are fully transparent—with code and data being open and replicated thousands of times over—and users maintain custody of their assets at all times. * Instantaneous settlement for payments and trades: With blockchain tech, vendors and merchants don't need to wait for credit-card payments to be deposited in their bank accounts—tokens are transferred in real-time. Traders don't need to wait for the proceeds of their sale to be wired to them two days after the trade takes place—settlement happens instantaneously with each DeFi trade. In some developed parts of the world, these settlement delays are slowly being fixed, but blockchain technology does this out of the box, today, and works everywhere. * Security and automatic transfer of lending collateral: Overcollateralized DeFi loans hold collateral on-chain, and will instantly liquidate any outstanding loan that dips below the collateralization ratio. This is one reason that even through all the recent turbulence in crypto markets no one who leant money through DeFi on an overcollateralized basis—including, for instance, to Celsius—has lost money. (Note however that the courts have not yet ruled as to the disposition of these DeFi loans in bankruptcy cases.) I think it's also important to differentiate between "crypto" and "blockchains". Cryptocurrencies are a type of application that can run on blockchains, and they play an important role by creating a unified market to reimburse providers for delivering the computation and storage services that blockchains depend upon. I would agree with those that believe that they have been overhyped, however.

Nursie 4y ago
The point made in this article applies to your first point - companies like FTX playing fast and loose can tank your value even if you are playing as your own bank. Not using their custody doesn’t fully protect you from their actions. Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster. Nobody is “waiting” for settlement. The transaction is done very fast. Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper.
- legutierr 4y ago
  > Not using their custody doesn’t fully protect you from their actions. Sure, but this is market risk, not counter-party risk, and is unmitigated in traditional markets as well. Just look at how Apple stock was affected by Lehman Brothers’ failure. > Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster. Come again? If you pay me for goods using crypto, I can spend that money immediately, pending finalization. > Nobody is “waiting” for settlement. The transaction is done very fast. Can a merchant spend its customers’ money immediately after running the credit card? No. Money from a credit card transaction processed on a Friday will hit the merchant’s account on Monday or Tuesday. > Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper. OK. Yes, if your underlying collateral is worthless, or if there isn’t a meaningful pricing mechanism or liquid market in which to sell the collateral, automatic liquidation of the loan won’t work, and a different approach must be taken. Like with anything in the world, there are some basic preconditions required for the thing to work. “This technology is inappropriate for these particular use cases” is not a very strong argument against it. That being said, I am unaware of these particular cases that you are referring to. If you could point them out to me, I would appreciate it.
  - Nursie 4y ago
    > market risk Yep, but with cryptocurrency the entire market is a shitshow. Unless you can somehow prevent these folks from playing their games, you haven’t improved upon the situation you complain about. > Can a merchant spend its customers’ money immediately after running the credit card? No. I see you’ve never used Square, the answer is “Yes” > Particular cases There was the near-collapse of Solend, and shenanigans around it earlier in the year. Looks like they had another problem with bad debt due to oracle manipulation recently too. BendDAO, had issues earlier in the year. Moola Market and Mango Market both experienced some sort of collateral manipulation attack that drained reserves. New Free DAO lost a million or so in a flash loan attack… There have been a lot.
    - 4y ago

Nursie 4y ago

The point made in this article applies to your first point - companies like FTX playing fast and loose can tank your value even if you are playing as your own bank. Not using their custody doesn’t fully protect you from their actions. Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster. Nobody is “waiting” for settlement. The transaction is done very fast. Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper.

legutierr 4y ago
> Not using their custody doesn’t fully protect you from their actions. Sure, but this is market risk, not counter-party risk, and is unmitigated in traditional markets as well. Just look at how Apple stock was affected by Lehman Brothers’ failure. > Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster. Come again? If you pay me for goods using crypto, I can spend that money immediately, pending finalization. > Nobody is “waiting” for settlement. The transaction is done very fast. Can a merchant spend its customers’ money immediately after running the credit card? No. Money from a credit card transaction processed on a Friday will hit the merchant’s account on Monday or Tuesday. > Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper. OK. Yes, if your underlying collateral is worthless, or if there isn’t a meaningful pricing mechanism or liquid market in which to sell the collateral, automatic liquidation of the loan won’t work, and a different approach must be taken. Like with anything in the world, there are some basic preconditions required for the thing to work. “This technology is inappropriate for these particular use cases” is not a very strong argument against it. That being said, I am unaware of these particular cases that you are referring to. If you could point them out to me, I would appreciate it.
- Nursie 4y ago
  > market risk Yep, but with cryptocurrency the entire market is a shitshow. Unless you can somehow prevent these folks from playing their games, you haven’t improved upon the situation you complain about. > Can a merchant spend its customers’ money immediately after running the credit card? No. I see you’ve never used Square, the answer is “Yes” > Particular cases There was the near-collapse of Solend, and shenanigans around it earlier in the year. Looks like they had another problem with bad debt due to oracle manipulation recently too. BendDAO, had issues earlier in the year. Moola Market and Mango Market both experienced some sort of collateral manipulation attack that drained reserves. New Free DAO lost a million or so in a flash loan attack… There have been a lot.
  - 4y ago