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> What exact counter party risk is eliminated by blockchain technology? Some specific examples currently available: • Atomic swaps, where traded assets are im

> 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.
- legutierr 3y ago
  > Cash already does that and so does my chip n pin card. Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment? In the US, merchants have to pay fees and/or interest to get same-day access to that money—because such access effectively functions as an advance on receivables. In most countries, same-day settlement is completely unavailable. Cash isn't much better. Can a store owner pay for inventory with cash? Maybe some inventory, but most things need to be paid for electronically. Can a retailer process payroll using cash? Turning cash into electronic money is a hassle and a security nightmare. Armored cars exist for a reason, and they aren't free. Crypto payments can be spent immediately upon receipt. No settlement delay, no need for armored cars. > 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). Funny. What is the advertisement selling? > 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. This comment reminds me of the Kodak executives who thought there would never be a market for the digital camera the company had invented, because its resolution was so much lower than that of film. Your information is out-of-date. Bitcoin is slow. Next-gen crypto is fast. Personally, I'm partial to the lightning network, which finalizes payments in seconds.
  - gerdesj 3y ago
    "Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment?" Yes they do. I also get notified about a Chip n PIN transaction or an account to account transfer before I've turned around and walked off (I hear my phone beep). The advert is for onions ... OK for a mobile phone company.
- havnagiggle 3y ago
  Just for FIY: First layer BTC takes 7 minutes, but lightning network (2nd layer) takes a couple of seconds. There are a handful of other cryptos with sub-second transaction speed. It's honestly pretty impressive for such fast consistency in a highly distributed network. I wouldn't expect anything less for a more centralized solution though, so it's not exactly the "selling point" of such a system. Just that it can keep up under most scenarios.

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.

legutierr 3y ago
> Cash already does that and so does my chip n pin card. Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment? In the US, merchants have to pay fees and/or interest to get same-day access to that money—because such access effectively functions as an advance on receivables. In most countries, same-day settlement is completely unavailable. Cash isn't much better. Can a store owner pay for inventory with cash? Maybe some inventory, but most things need to be paid for electronically. Can a retailer process payroll using cash? Turning cash into electronic money is a hassle and a security nightmare. Armored cars exist for a reason, and they aren't free. Crypto payments can be spent immediately upon receipt. No settlement delay, no need for armored cars. > 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). Funny. What is the advertisement selling? > 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. This comment reminds me of the Kodak executives who thought there would never be a market for the digital camera the company had invented, because its resolution was so much lower than that of film. Your information is out-of-date. Bitcoin is slow. Next-gen crypto is fast. Personally, I'm partial to the lightning network, which finalizes payments in seconds.
- gerdesj 3y ago
  "Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment?" Yes they do. I also get notified about a Chip n PIN transaction or an account to account transfer before I've turned around and walked off (I hear my phone beep). The advert is for onions ... OK for a mobile phone company.
havnagiggle 3y ago
Just for FIY: First layer BTC takes 7 minutes, but lightning network (2nd layer) takes a couple of seconds. There are a handful of other cryptos with sub-second transaction speed. It's honestly pretty impressive for such fast consistency in a highly distributed network. I wouldn't expect anything less for a more centralized solution though, so it's not exactly the "selling point" of such a system. Just that it can keep up under most scenarios.