3 ms·

> Never heard this definition, where did you read this? I mean literally the reason why everyone refers to crypto as "triple entry accounting" is because entri

> Never heard this definition, where did you read this? I mean literally the reason why everyone refers to crypto as "triple entry accounting" is because entries on the ledger are cryptographically signed, which makes ledgers less expensive to audit and also prevents certain categories of fraud. So that alone should always make the costs of lending on the blockchain lower, and therefore also reduce interest rates. But if you want a much more detailed explanation of why crypto should reduce the cost of borrowing money, especially in the developing world, here is an extremely detailed explanation on this topic: https://www.youtube.com/watch?v=dla42bY7k90 https://www.youtube.com/watch?v=dla42bY7k90

akiselev 4y ago
I can see it clearly now - the next crypto crash rolling around like clockwork. Except this time it’ll be a speed run through four centuries of debtors law in which the cryptobros realize that the reason for interest rates isn’t the transaction cost or the paperwork but the enforcement arm to get people to complete the whole transaction through to the end. I think it’ll come in two phases: first they’ll come around to the idea of debtor’s prisons and demand the governments of the world bring them back. Then when they’re all in the prisons, they’ll lead a movement to abolish them (again) completing the circle of “why bother?” In the end we’ll be left with a saturated market of repo companies picking up the pieces for pennies on the dollar.
- em_te 4y ago
  > the cryptobros realize that the reason for interest rates isn’t the transaction cost or the paperwork but the enforcement arm to get people to complete the whole transaction through to the end. It's interesting you brought that up because crypto has a similar mechanism to get people to complete the whole transaction and resolve disputes without involving interest rates. For example, imagine person B was buying a product from A. Should A send the product first or should B pay first. When both sides don't want to take the initiative, they use an escrow contract on the blockchain where both sides have to lock up 150% to 200% of the value of the product in crypto inside the contract. A then sends the product. B receives the product. If B accepts the state of the product, he can press a button to release the relevant amount of crypto in the contract to A and refund the extra 50% to 100% he had to put up. If B sees the product is fraud, he presses another button and both sides lose all their crypto. This disincentives both A and B from committing fraud. There are more nuanced conditions involved so I won't bore you with the details, but the main concept is there and it doesn't involve interest rates.
  - JohnFen 4y ago
    > If B sees the product is fraud, he presses another button and both sides lose all their crypto. This disincentives both A and B from committing fraud. That can't possibly be right. It would mean that if person A defrauds person B, person B would lose 150-200% of the asking price, rather than just 100% if no "crypto escrow" were used at all.
  - akiselev 4y ago
    Interest rates exist to incentivize loans in a universe where there’s a risk borrowers might not pay them back. The Roman Catholic Church decisively proved during the middle ages that no interest = no loans You just described escrow with extra ~steps~ risk which has nothing to do with loans unless you’re suggesting borrowers put up 150-200% of the capital they want to borrow? (!?!?)
  - tsimionescu 4y ago
    If that's not a scathing indictment of the kinds of simplistic thinking that cryptobros think can solve real world problems, I don't know what is. Of course, the fact that it makes it impractical to buy any kind of expensive product is merely a detail. As is the extreme cost of non-fraudulent delivery failures in this scheme.
  - seabird 4y ago
    Nobody is going to post 150% collateral on a capital expenditure where the delivery can take months/years. Cryptocurrency is finance as imagined by people who have never bought anything more expensive than a car or house.
  - HideousKojima 4y ago
    That's just escrow but worse, and could already be accomplished with a non-blockchain based escrow service. What exactly does crypto add here?
    - oblio 4y ago
      A chance for em_te or likeminded folks to make money in some new and interesting way, that they couldn't have made otherwise :-)
psychlops 4y ago
I think you are confusing crypto with the layers on top of it. Lending via crypto is a dubious practice as it needs to tie into the physical world. Interest being paid on loans is an aspect of finance that some areas of crypto are recreating and failing at miserably, as they should, for obvious reasons.
- JohnFen 4y ago
  > Lending via crypto is a dubious practice as it needs to tie into the physical world. But if cryptocurrency is to be anything of actual value, it must tie into the physical world at some point, even if loans don't exist.
  - psychlops 4y ago
    Okay, eventually it must...depending on the form. In it's current implementation being sold, it won't work. Lending to generate income relies on a mature legal system to back up contractual demands. Crypto itself (an algorithm) cannot guarantee repayment of loans. "Exchanges" try to bridge this gap and counterparty risk isn't properly priced in. If anything, the high interest payments aren't high enough to represent risk.
    - kayamon 4y ago
      Algorithms that can control their own energy usage and energy price can leak out into the real world.
PeterisP 4y ago
The cost of ledgers and their auditing is not a meaningful proportion of retail interest rates in the current environment, which is dominated by the cost of funds, default risk, marketing/customer acquisition costs and profit. Reducing or eliminating that cost should not make the costs of lending change in any noticeable way, because you're reducing something that is insignificantly small anyway.
pjc50 4y ago
> entries on the ledger are cryptographically signed, which makes ledgers less expensive to audit and also prevents certain categories of fraud. So that alone should always make the costs of lending on the blockchain lower, and therefore also reduce interest rates. .. but this is obviously garbage. The question in lending is always about default risk, which crypto does nothing to address. Most crypto lending seems to be so-called "overcollateralised" loans, which are secured on other crypto "assets", which also tend to turn out to be garbage. And we can see that everyone in the crypto space is offering higher interest rates for depositors. Even more than Madoff's 8%. 10%? Why not! How about 10% per month! Who's taking the other side of that trade? Well, it turns out to be bankrupt exchanges and fraudsters.
oblio 4y ago
Your video is from these guys: > Sweetbridge converts any Commercial relationship, Supply chain, or Value chain into an Ecosystem that increases the Net Worth of its Members. Just the casing of that phrase makes me suspect them of some fraud :-))) Ah, confirmed: > By running all of the sales and purchases from an organization through an Ecosystem over a 5 year period, members will typically increase their net worth by: https://sweetbridge.com/wp-content/uploads/2021/06/bottom-line.png https://sweetbridge.com/wp-content/uploads/2021/06/bottom-li... For people that can't see the image, it basically promises that companies can increase their net worth by 25-200% and individuals by 50-200%. Get outta here with that garbage, pardon my French.

akiselev 4y ago

I can see it clearly now - the next crypto crash rolling around like clockwork. Except this time it’ll be a speed run through four centuries of debtors law in which the cryptobros realize that the reason for interest rates isn’t the transaction cost or the paperwork but the enforcement arm to get people to complete the whole transaction through to the end. I think it’ll come in two phases: first they’ll come around to the idea of debtor’s prisons and demand the governments of the world bring them back. Then when they’re all in the prisons, they’ll lead a movement to abolish them (again) completing the circle of “why bother?” In the end we’ll be left with a saturated market of repo companies picking up the pieces for pennies on the dollar.

em_te 4y ago
> the cryptobros realize that the reason for interest rates isn’t the transaction cost or the paperwork but the enforcement arm to get people to complete the whole transaction through to the end. It's interesting you brought that up because crypto has a similar mechanism to get people to complete the whole transaction and resolve disputes without involving interest rates. For example, imagine person B was buying a product from A. Should A send the product first or should B pay first. When both sides don't want to take the initiative, they use an escrow contract on the blockchain where both sides have to lock up 150% to 200% of the value of the product in crypto inside the contract. A then sends the product. B receives the product. If B accepts the state of the product, he can press a button to release the relevant amount of crypto in the contract to A and refund the extra 50% to 100% he had to put up. If B sees the product is fraud, he presses another button and both sides lose all their crypto. This disincentives both A and B from committing fraud. There are more nuanced conditions involved so I won't bore you with the details, but the main concept is there and it doesn't involve interest rates.
- JohnFen 4y ago
  > If B sees the product is fraud, he presses another button and both sides lose all their crypto. This disincentives both A and B from committing fraud. That can't possibly be right. It would mean that if person A defrauds person B, person B would lose 150-200% of the asking price, rather than just 100% if no "crypto escrow" were used at all.
- akiselev 4y ago
  Interest rates exist to incentivize loans in a universe where there’s a risk borrowers might not pay them back. The Roman Catholic Church decisively proved during the middle ages that no interest = no loans You just described escrow with extra ~steps~ risk which has nothing to do with loans unless you’re suggesting borrowers put up 150-200% of the capital they want to borrow? (!?!?)
- tsimionescu 4y ago
  If that's not a scathing indictment of the kinds of simplistic thinking that cryptobros think can solve real world problems, I don't know what is. Of course, the fact that it makes it impractical to buy any kind of expensive product is merely a detail. As is the extreme cost of non-fraudulent delivery failures in this scheme.
- seabird 4y ago
  Nobody is going to post 150% collateral on a capital expenditure where the delivery can take months/years. Cryptocurrency is finance as imagined by people who have never bought anything more expensive than a car or house.
- HideousKojima 4y ago
  That's just escrow but worse, and could already be accomplished with a non-blockchain based escrow service. What exactly does crypto add here?
  - oblio 4y ago
    A chance for em_te or likeminded folks to make money in some new and interesting way, that they couldn't have made otherwise :-)

psychlops 4y ago

I think you are confusing crypto with the layers on top of it. Lending via crypto is a dubious practice as it needs to tie into the physical world. Interest being paid on loans is an aspect of finance that some areas of crypto are recreating and failing at miserably, as they should, for obvious reasons.

JohnFen 4y ago
> Lending via crypto is a dubious practice as it needs to tie into the physical world. But if cryptocurrency is to be anything of actual value, it must tie into the physical world at some point, even if loans don't exist.
- psychlops 4y ago
  Okay, eventually it must...depending on the form. In it's current implementation being sold, it won't work. Lending to generate income relies on a mature legal system to back up contractual demands. Crypto itself (an algorithm) cannot guarantee repayment of loans. "Exchanges" try to bridge this gap and counterparty risk isn't properly priced in. If anything, the high interest payments aren't high enough to represent risk.
  - kayamon 4y ago
    Algorithms that can control their own energy usage and energy price can leak out into the real world.

PeterisP 4y ago

The cost of ledgers and their auditing is not a meaningful proportion of retail interest rates in the current environment, which is dominated by the cost of funds, default risk, marketing/customer acquisition costs and profit. Reducing or eliminating that cost should not make the costs of lending change in any noticeable way, because you're reducing something that is insignificantly small anyway.

pjc50 4y ago

> entries on the ledger are cryptographically signed, which makes ledgers less expensive to audit and also prevents certain categories of fraud. So that alone should always make the costs of lending on the blockchain lower, and therefore also reduce interest rates. .. but this is obviously garbage. The question in lending is always about default risk, which crypto does nothing to address. Most crypto lending seems to be so-called "overcollateralised" loans, which are secured on other crypto "assets", which also tend to turn out to be garbage. And we can see that everyone in the crypto space is offering higher interest rates for depositors. Even more than Madoff's 8%. 10%? Why not! How about 10% per month! Who's taking the other side of that trade? Well, it turns out to be bankrupt exchanges and fraudsters.

oblio 4y ago

Your video is from these guys: > Sweetbridge converts any Commercial relationship, Supply chain, or Value chain into an Ecosystem that increases the Net Worth of its Members. Just the casing of that phrase makes me suspect them of some fraud :-))) Ah, confirmed: > By running all of the sales and purchases from an organization through an Ecosystem over a 5 year period, members will typically increase their net worth by: https://sweetbridge.com/wp-content/uploads/2021/06/bottom-line.png https://sweetbridge.com/wp-content/uploads/2021/06/bottom-li... For people that can't see the image, it basically promises that companies can increase their net worth by 25-200% and individuals by 50-200%. Get outta here with that garbage, pardon my French.