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It's relevant that the first railroad bubbles took place several decades before the events described in the article. Sometimes it takes a long time for capital

It's relevant that the first railroad bubbles took place several decades before the events described in the article. Sometimes it takes a long time for capital-intensive technologies to be fully deployed, and for economic benefits to be fully realized. In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040. And meanwhile, nearly everything "financial" involving counter-parties will happen on-chain. Why? Because public blockchains eliminate counter-party risk for a large number of transactions, provide unparalleled transparency, and give anyone with an internet connection access to global financial markets, enfranchising billions of people who are otherwise locked out due to unsatisfactory local conditions. Blockchain tech will make developed economies more efficient, and will accelerate development world-wide. If you don't agree that public blockchains actually do anything useful, then you'll probably object to the railroad analogy. But if you see value in blockchains, then there are clear parallels: • Initial cost of the build-out being funded by early investors who might not be around to realize the long-term benefits of the technology. • Speculative energy attracting scammers alongside legitimate operators. • Long-term benefits not being obvious after the first wave of investment dies down. • The true value of the technology only being realized when network effects are fully realized, years after the technology's introduction.

dotcoma 3y ago
@legutierr: You say: > In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040. While this is certainly possible, it is not assured. We KNOW that railroads ended up being very important; we can, at best, guess that crypto will be as important for our financial systems.
no_wizard 3y ago
> Because blockchains eliminate counter-party risk for a large number of transactions, provide unparalleled transparency, and give anyone with an internet connection access to global financial markets, enfranchising billions of people who are otherwise locked out due to unsatisfactory local conditions. Blockchain tech will make developed economies more efficient, and will accelerate development world-wide Saying this doesn’t make it self evident. What exact counter party risk is eliminated by blockchain technology? I know there’s alot of hype around the public ledger, but what transparency does it provide beyond that? It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play. What about fraud? Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Look at all the good micro loans have done in developing nations for instance
- legutierr 3y ago
  > What exact counter party risk is eliminated by blockchain technology? Some specific examples currently available: • Atomic swaps, where traded assets are immediately moved between accounts upon execution of the trade, eliminate the possibility that settlement will not complete. • Real-time commerce, where merchants accept payments in a format that can immediately be turned around and spent, without waiting for reimbursement from third-party networks. • Loans backed by on-chain collateral, such that default triggers immediate transfer of collateral, eliminates the risk that collateral may not be obtainable upon default, or that the value of collateral may fall too far before the loan is liquidated. > It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play. Open databases can be digested and analyzed by open-source tools, and by trusted independent third-parties. Closed databases cannot be analyzed by anyone except for the database owner and government authorities. Some government authorities are trustworthy, others are under-resourced, incompetent or corrupt. Even if you personally won't read the full history, you benefit from other people being able to do so. > Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Problems can have multiple good solutions! Still, open API access is different from open access to underlying data and algorithms. Open APIs and blockchains can co-exist and benefit from each other. > What about fraud? Fraud is a complex topic. The traditional financial system has seen lots of fraud over the years (think about what we witnessed in 2008). Credit card fraud is also a rampant problem that is only managed by large financial firms heavily surveilling payment networks. There are fraud vectors that blockchain networks are more susceptible to—just like there are other fraud vectors that blockchain networks are less susceptible to than traditional financial systems. In my view, the greatest fraud risk in crypto comes from the issuance of tokens that are questionable in some way—a risk that I think can be eliminated if strong controls are implemented regarding the issuance of tokens on-chain.
  - gerdesj 3y ago
    "where merchants accept payments in a format that can immediately be turned around and spent" Cash already does that and so does my chip n pin card. There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash). Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.

dotcoma 3y ago

@legutierr: You say: > In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040. While this is certainly possible, it is not assured. We KNOW that railroads ended up being very important; we can, at best, guess that crypto will be as important for our financial systems.

no_wizard 3y ago

> Because blockchains eliminate counter-party risk for a large number of transactions, provide unparalleled transparency, and give anyone with an internet connection access to global financial markets, enfranchising billions of people who are otherwise locked out due to unsatisfactory local conditions. Blockchain tech will make developed economies more efficient, and will accelerate development world-wide Saying this doesn’t make it self evident. What exact counter party risk is eliminated by blockchain technology? I know there’s alot of hype around the public ledger, but what transparency does it provide beyond that? It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play. What about fraud? Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Look at all the good micro loans have done in developing nations for instance

legutierr 3y ago
> What exact counter party risk is eliminated by blockchain technology? Some specific examples currently available: • Atomic swaps, where traded assets are immediately moved between accounts upon execution of the trade, eliminate the possibility that settlement will not complete. • Real-time commerce, where merchants accept payments in a format that can immediately be turned around and spent, without waiting for reimbursement from third-party networks. • Loans backed by on-chain collateral, such that default triggers immediate transfer of collateral, eliminates the risk that collateral may not be obtainable upon default, or that the value of collateral may fall too far before the loan is liquidated. > It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play. Open databases can be digested and analyzed by open-source tools, and by trusted independent third-parties. Closed databases cannot be analyzed by anyone except for the database owner and government authorities. Some government authorities are trustworthy, others are under-resourced, incompetent or corrupt. Even if you personally won't read the full history, you benefit from other people being able to do so. > Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Problems can have multiple good solutions! Still, open API access is different from open access to underlying data and algorithms. Open APIs and blockchains can co-exist and benefit from each other. > What about fraud? Fraud is a complex topic. The traditional financial system has seen lots of fraud over the years (think about what we witnessed in 2008). Credit card fraud is also a rampant problem that is only managed by large financial firms heavily surveilling payment networks. There are fraud vectors that blockchain networks are more susceptible to—just like there are other fraud vectors that blockchain networks are less susceptible to than traditional financial systems. In my view, the greatest fraud risk in crypto comes from the issuance of tokens that are questionable in some way—a risk that I think can be eliminated if strong controls are implemented regarding the issuance of tokens on-chain.
- gerdesj 3y ago
  "where merchants accept payments in a format that can immediately be turned around and spent" Cash already does that and so does my chip n pin card. There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash). Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.