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From the article: > The density of connections between these players is nicely illustrated with a sprawling diagram in an October report by the Financial Stabi

by shagie 4y ago

From the article: > The density of connections between these players is nicely illustrated with a sprawling diagram in an October report by the Financial Stability Oversight Council ( https://home.treasury.gov/system/files/261/FSOC-Digital-Assets-Report-2022.pdf https://home.treasury.gov/system/files/261/FSOC-Digital-Asse... ) , which brings together federal financial regulators. > To historians, this litany of contagion and collapse is reminiscent of the free banking era from 1837 to 1863 when banks issued their own bank notes, fraud proliferated, and runs, suspensions of withdrawals, and panics occurred regularly. Yet while those crises routinely walloped business activity, crypto’s has largely passed the economy by. I'd also suggest looking at https://www.fdic.gov/about/history/timeline/1850-1899.html https://www.fdic.gov/about/history/timeline/1850-1899.html The "free banking period" ( https://link.springer.com/chapter/10.1057/9781137361219_2 https://link.springer.com/chapter/10.1057/9781137361219_2 ) ended with the passage of the National Bank Act - https://www.occ.treas.gov/about/who-we-are/history/founding-occ-national-bank-system/index-founding-occ-national-banking-system.html https://www.occ.treas.gov/about/who-we-are/history/founding-... Crypto is trying to reestablish the banking system of the 1800s with all the fraud, bank runs, banks creating their own currency, and the like... and then realizing why all the regulations that are in place are in place.

AnthonyMouse 4y ago
> Crypto is trying to reestablish the banking system of the 1800s with all the fraud, bank runs, banks creating their own currency, and the like... and then realizing why all the regulations that are in place are in place. What it's really doing is proving that those regulations aren't necessary, because it's possible to have a crypto crash without affecting the general economy. Because the benefit of those regulations is so that ordinary people can have a safe place to keep their money. But that works even if it applies only to savings banks and not to crypto, because that gives risk-averse people the safe place to hold their deposits even while a fast-moving unregulated system exists alongside it. Which gives the best of both worlds.
- danaris 4y ago
  > it's possible to have a crypto crash without affecting the general economy. This is only true because the only people (to within a rounding error) using cryptocurrencies are speculators, scam artists, and their victims. If cryptocurrency ever became what its proponents suggest—a mainstream currency in general use—then these crashes would affect regular people and the general economy just as the ones mentioned in the 1800s did.
  - AnthonyMouse 4y ago
    Not so. The crashes only significantly affect people holding significant amounts of the currency, i.e. speculators. Ordinary people continue to hold the bulk of their assets in US dollars in banks (or shares of the S&P 500 or real estate or some other non-crypto thing). Meanwhile it could enable technologies like P2P social media where distributed hosts get paid in crypto for providing network services without needing a centralized payments intermediary and various other things.
    - shagie 4y ago
      The amount of "significance" isn't a question of the portion of the total "market cap" for the cryptocurrency but rather the portion of the personal holdings. There are a lot of people who have put a few thousand dollars that they couldn't really afford to lose on the promise that this was the future of money and that they needed to get in on the ground level. https://www.theguardian.com/technology/2022/nov/19/the-money-is-gone-people-who-lost-out-in-ftxs-collapse https://www.theguardian.com/technology/2022/nov/19/the-money... > ‘A lot of us feel cheated’ William, a construction site manager from California, was woken by a text from friends about potential trouble at FTX in the early hours of 8 November. At the time, the 40-year-old had about $85,000 of fiat currencies on the exchange, plus three bitcoins worth about $55,000 and about $10k in other altcoins - a significant chunk of his assets. Bitcoin and other crypto currencies are not the domain of the millionaires and billionaires. Yes, these people are speculators - but they're ordinary people with incomes much closer to the median than likely you or I.

by shagie 4y ago

AnthonyMouse 4y ago

> Crypto is trying to reestablish the banking system of the 1800s with all the fraud, bank runs, banks creating their own currency, and the like... and then realizing why all the regulations that are in place are in place. What it's really doing is proving that those regulations aren't necessary, because it's possible to have a crypto crash without affecting the general economy. Because the benefit of those regulations is so that ordinary people can have a safe place to keep their money. But that works even if it applies only to savings banks and not to crypto, because that gives risk-averse people the safe place to hold their deposits even while a fast-moving unregulated system exists alongside it. Which gives the best of both worlds.

danaris 4y ago
> it's possible to have a crypto crash without affecting the general economy. This is only true because the only people (to within a rounding error) using cryptocurrencies are speculators, scam artists, and their victims. If cryptocurrency ever became what its proponents suggest—a mainstream currency in general use—then these crashes would affect regular people and the general economy just as the ones mentioned in the 1800s did.
- AnthonyMouse 4y ago
  Not so. The crashes only significantly affect people holding significant amounts of the currency, i.e. speculators. Ordinary people continue to hold the bulk of their assets in US dollars in banks (or shares of the S&P 500 or real estate or some other non-crypto thing). Meanwhile it could enable technologies like P2P social media where distributed hosts get paid in crypto for providing network services without needing a centralized payments intermediary and various other things.
  - shagie 4y ago
    The amount of "significance" isn't a question of the portion of the total "market cap" for the cryptocurrency but rather the portion of the personal holdings. There are a lot of people who have put a few thousand dollars that they couldn't really afford to lose on the promise that this was the future of money and that they needed to get in on the ground level. https://www.theguardian.com/technology/2022/nov/19/the-money-is-gone-people-who-lost-out-in-ftxs-collapse https://www.theguardian.com/technology/2022/nov/19/the-money... > ‘A lot of us feel cheated’ William, a construction site manager from California, was woken by a text from friends about potential trouble at FTX in the early hours of 8 November. At the time, the 40-year-old had about $85,000 of fiat currencies on the exchange, plus three bitcoins worth about $55,000 and about $10k in other altcoins - a significant chunk of his assets. Bitcoin and other crypto currencies are not the domain of the millionaires and billionaires. Yes, these people are speculators - but they're ordinary people with incomes much closer to the median than likely you or I.