5 ms·

I concur. Also part of establishing trust is moving away from all the ticking time-bomb centralized intermediaries from Mt.Gox to FTX and everything in between

I concur. Also part of establishing trust is moving away from all the ticking time-bomb centralized intermediaries from Mt.Gox to FTX and everything in between, etc. Either figure out ways of accomplishing everything decentralized and on-chain, or accept the impossibility as a natural constraint of the tech and learn to do without.

maxbond 4y ago
Are you quite sure the root of the problem is centralized exchanges? Everything in "tradfi" is centralized, and there are frequent frauds and bad actors, but it remains much more robust than the cryptoasset ecosystem. I'd submit the root of the problem is finacializing things that are not economically productive. As cryptoasset supporters frequently point out, every market has some ponzenomic qualities, but pulling tokens from thin air amplifies them.
- SkyMarshal 4y ago
  > Are you quite sure the root of the problem is centralized exchanges? That’s the big hypothesis being tested right now. So far it’s only the centralized entities that are collapsing, and crypto market values are down as a result, but that’s not the same thing as a collapse or failure of the protocols. But this train wreck is still happening, so we’ll see if it causes some cryptocurrencies to fail too. Possibly some of the weaker ones will lose too much mining/validating power and get hacked or 51% attacked. If that happens to the bigger ones then it will expose a serious problem with the tech and economics of it all. This is arguably the most valuable informational period in crypto’s history - the first high-interest environment stress test it’s ever had. Either it will cull the weak and leave standing only the ones robust enough to withstand such environment, or will cull the entire industry. Either way at least we’ll empirically know the truth of it all. > Everything in "tradfi" is centralized, and there are frequent frauds and bad actors, but it remains much more robust than the cryptoasset ecosystem. I think the GFC demonstrated “tradfi” is anything but robust. If not for the govt and Fed bailouts, the scale of the losses could have exceeded the banking system’s cumulative revenue of its entire modern history, going back to the 1800s. And that was with regulation (albeit steadily weakened since the 80s). You could potentially make the argument that certain forms of tradfi are robust, for example under the Glass-Steagal regime that separated commercial banking, investment banking, and insurance into separate legal entities, among other restrictions (a form of decentralization). Also Germany’s local community banking system, which until recent decades was the main financier of Germany’s industrial economy, and which has never had a financial crisis since its origins in the 1700s/1800s, is also quite a robust model (also a form of decentralization). > I’d submit the root of the problem is financializing things that are not economically productive I don’t disagree. Low-interest cheap money environments tend to have that effect, crypto or no-crypto.
jgilias 4y ago
The missing piece is having CBDCs that your bank accepts on something like Uniswap. Until that happens on/off-ramps are needed, and these can only be centralised by definition. I’m not sure having ubiquitous CBDCs with all that may entail would be better than having a few trusted centralised exchanges for fiat on/off-ramp though.
- SkyMarshal 4y ago
  Yeah, it’s a pickle, no doubt about it. Both options are undesirable. Not sure what the best solution there is.
  - cinquemb 4y ago
    People may not like it (because it will look similar to the inner workings of the eurodollar ["Eurodollar University" on soundcloud, "Monetary Mechanics" Substack] system that we all live in now, and will continue to interface with such off chain systems in more complex ways [esp as on chain liabilities become more and more valuable in more places compared to off chain liabilities]), but I think native on-chain credit origination, built on top of on chain derivatives protocols will be the solution. Permissioned decentralized global monetary system will simply keep evolving into a more permissionless decentralized global monetary system.

maxbond 4y ago

Are you quite sure the root of the problem is centralized exchanges? Everything in "tradfi" is centralized, and there are frequent frauds and bad actors, but it remains much more robust than the cryptoasset ecosystem. I'd submit the root of the problem is finacializing things that are not economically productive. As cryptoasset supporters frequently point out, every market has some ponzenomic qualities, but pulling tokens from thin air amplifies them.

SkyMarshal 4y ago
> Are you quite sure the root of the problem is centralized exchanges? That’s the big hypothesis being tested right now. So far it’s only the centralized entities that are collapsing, and crypto market values are down as a result, but that’s not the same thing as a collapse or failure of the protocols. But this train wreck is still happening, so we’ll see if it causes some cryptocurrencies to fail too. Possibly some of the weaker ones will lose too much mining/validating power and get hacked or 51% attacked. If that happens to the bigger ones then it will expose a serious problem with the tech and economics of it all. This is arguably the most valuable informational period in crypto’s history - the first high-interest environment stress test it’s ever had. Either it will cull the weak and leave standing only the ones robust enough to withstand such environment, or will cull the entire industry. Either way at least we’ll empirically know the truth of it all. > Everything in "tradfi" is centralized, and there are frequent frauds and bad actors, but it remains much more robust than the cryptoasset ecosystem. I think the GFC demonstrated “tradfi” is anything but robust. If not for the govt and Fed bailouts, the scale of the losses could have exceeded the banking system’s cumulative revenue of its entire modern history, going back to the 1800s. And that was with regulation (albeit steadily weakened since the 80s). You could potentially make the argument that certain forms of tradfi are robust, for example under the Glass-Steagal regime that separated commercial banking, investment banking, and insurance into separate legal entities, among other restrictions (a form of decentralization). Also Germany’s local community banking system, which until recent decades was the main financier of Germany’s industrial economy, and which has never had a financial crisis since its origins in the 1700s/1800s, is also quite a robust model (also a form of decentralization). > I’d submit the root of the problem is financializing things that are not economically productive I don’t disagree. Low-interest cheap money environments tend to have that effect, crypto or no-crypto.

jgilias 4y ago

The missing piece is having CBDCs that your bank accepts on something like Uniswap. Until that happens on/off-ramps are needed, and these can only be centralised by definition. I’m not sure having ubiquitous CBDCs with all that may entail would be better than having a few trusted centralised exchanges for fiat on/off-ramp though.

SkyMarshal 4y ago
Yeah, it’s a pickle, no doubt about it. Both options are undesirable. Not sure what the best solution there is.
- cinquemb 4y ago
  People may not like it (because it will look similar to the inner workings of the eurodollar ["Eurodollar University" on soundcloud, "Monetary Mechanics" Substack] system that we all live in now, and will continue to interface with such off chain systems in more complex ways [esp as on chain liabilities become more and more valuable in more places compared to off chain liabilities]), but I think native on-chain credit origination, built on top of on chain derivatives protocols will be the solution. Permissioned decentralized global monetary system will simply keep evolving into a more permissionless decentralized global monetary system.