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I'm not sure how crypto is becoming more useful, or how traditional finance is becoming worse.

by smcl 3y ago

__MatrixMan__ 3y ago
There's a cousin post where I explain how crypto is becoming more useful. As for traditional finance becoming worse... Suppose somebody approached you in the grocery store and offered to buy your shoes. I assume you have a price, right? I'd walk home from the grocery store shoeless for $100. Why do we participate in a system which empowers this guy? What about the abstraction he's handing out makes us willing to exchange it for something with less abstract value (there's broken glass on the way home, I'd be taking a risk)? The shallow response is that we can later exchange the abstraction for, for instance, a nicer pair of shoes. But that'll work with anything, so far as somebody else is likely to accept the trade down the line. We could use pebbles or bottlecaps or dogecoin or whatever. But why USD in particular? What is it about the US government's (or if you prefer, the banks') behavior that entitles them to issue the tokens that we use for bullying people into giving up their shoes (or you know, whatever other economic activity we chose to engage in). Do you dispute that trust in the government and the banks is steadily declining? They're fundamentally harder to improve than to erode. It's why nature came up with reproduction: eventually the parasites take over and you have to start fresh. It's why there are very few companies around today that were also around 100 years ago. Entropy wins, it's just what happens to centralized systems over time. Or to put it less abstractly: We've got banks collapsing and politicians playing chicken over the debt ceiling. Does that not threaten the idea that we can walk home with that $100 and buy a nicer pair of shoes with it? Wouldn't we be better off with a system that was less susceptible to the kind of cancer that ours has?
- CaptainZapp 3y ago
  Why this whole long winded explanation when I can walk into any shoe shop and buy a new pair of shoes for $ (or Euro or CHF)? Can I do that with crypto currency? Not so much, really.
  - __MatrixMan__ 3y ago
    My example was clumsy. I started with the idea that I'd question whether the guy got his money by doing more harm than good, USD being issued based on whether a loan is expected to be profitable, not whether it benefits the people who are expected to accept it. Maybe it's in your best interest to not blindly support whatever the loan was for by accepting his money. Maybe it was for mining that's poisoning your drinking water. That failure to align incentives (i.e. implicit global fungibility) is the specific deficiency that I see killing USD and it's equivalents. But specifics aren't necessary for the broader argument: Power corrupts, and enough corruption ends the tenure of the powerful. The details of how that is playing out for USD aren't especially relevant.
    - smcl 3y ago
      Your example was clumsy because you have to construct elaborate weird scenarios that don't ever happen for crypto to make sense. Guys have to come up to you in the street and buy your shoes. Entire economies and payment systems have to be assumed to have collapsed. It is a fantasy.
- smcl 3y ago
  > Do you dispute that trust in the government and the banks is steadily declining? Yes. Was that it?

I'm not sure how crypto is becoming more useful, or how traditional finance is becoming worse.

by smcl 3y ago

I'm not sure how crypto is becoming more useful, or how traditional finance is becoming worse.

There's a cousin post where I explain how crypto is becoming more useful. As for traditional finance becoming worse... Suppose somebody approached you in the grocery store and offered to buy your shoes. I assume you have a price, right? I'd walk home from the grocery store shoeless for $100. Why do we participate in a system which empowers this guy? What about the abstraction he's handing out makes us willing to exchange it for something with less abstract value (there's broken glass on the way home, I'd be taking a risk)? The shallow response is that we can later exchange the abstraction for, for instance, a nicer pair of shoes. But that'll work with anything, so far as somebody else is likely to accept the trade down the line. We could use pebbles or bottlecaps or dogecoin or whatever. But why USD in particular? What is it about the US government's (or if you prefer, the banks') behavior that entitles them to issue the tokens that we use for bullying people into giving up their shoes (or you know, whatever other economic activity we chose to engage in). Do you dispute that trust in the government and the banks is steadily declining? They're fundamentally harder to improve than to erode. It's why nature came up with reproduction: eventually the parasites take over and you have to start fresh. It's why there are very few companies around today that were also around 100 years ago. Entropy wins, it's just what happens to centralized systems over time. Or to put it less abstractly: We've got banks collapsing and politicians playing chicken over the debt ceiling. Does that not threaten the idea that we can walk home with that $100 and buy a nicer pair of shoes with it? Wouldn't we be better off with a system that was less susceptible to the kind of cancer that ours has?

CaptainZapp 3y ago
Why this whole long winded explanation when I can walk into any shoe shop and buy a new pair of shoes for $ (or Euro or CHF)? Can I do that with crypto currency? Not so much, really.
- __MatrixMan__ 3y ago
  My example was clumsy. I started with the idea that I'd question whether the guy got his money by doing more harm than good, USD being issued based on whether a loan is expected to be profitable, not whether it benefits the people who are expected to accept it. Maybe it's in your best interest to not blindly support whatever the loan was for by accepting his money. Maybe it was for mining that's poisoning your drinking water. That failure to align incentives (i.e. implicit global fungibility) is the specific deficiency that I see killing USD and it's equivalents. But specifics aren't necessary for the broader argument: Power corrupts, and enough corruption ends the tenure of the powerful. The details of how that is playing out for USD aren't especially relevant.
  - smcl 3y ago
    Your example was clumsy because you have to construct elaborate weird scenarios that don't ever happen for crypto to make sense. Guys have to come up to you in the street and buy your shoes. Entire economies and payment systems have to be assumed to have collapsed. It is a fantasy.
smcl 3y ago
> Do you dispute that trust in the government and the banks is steadily declining? Yes. Was that it?