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Courts, law enforcement and contract law. All of which will take a dim view of using a currency which appears designed wholly to make their function harder.

ifwinterco 11mo ago
A crypto advocate would argue smart contracts can fulfil that role, but also that applies in developed countries but not in the countries where the vast majority of the world population lives. I think if a true crypto economy does emerge anywhere it's likely to be Nigeria, Lebanon etc - places with a significant population of educated entrepreneurial people but where the state is run abysmally and you can't rely on those institutions anyway
- kasey_junk 11mo ago
  It seems to me that the crypto absolutists have it backwards. You can’t solve the problem of failed states by changing the technology of currency, because the state is there to solve for the counterparty risk at the point of exchange. The alternative to governments monopoly on violence for enforcement, no matter if you exchange in monero or giant stone discs, is broad use of vigilante violence. So while crypto seems like an interesting technology for moving money around, it seems like it doesn’t solve for the point of exchange problem and thus crypto that focuses on making that difficult for government mediation are bound to be only useful for illegal activities.
  - ifwinterco 11mo ago
    There is no counterparty risk for the seller in the traditional sense with bitcoin or monero, they're bearer assets, once the transaction is confirmed in your wallet there's no risk for you. You don't need to use violence to make sure you get paid? What you actually have is the opposite problem (in a sense) - the transaction is irreversible, the seller will receive payment and keep it even if they shouldn't (i.e fraud). So there is more risk for the buyer than in a fiat system where transactions can be reversed by legal processes
    - kasey_junk 11mo ago
      That’s all counterparty risk. If you deliver the payment before the service/good the buyer takes on the risk. The opposite is true if the payment or good is delivered first. You can dial the risk in either direction with any payment scheme (20% down balance due on delivery etc) but you can’t eliminate it.
      - ifwinterco 11mo ago
        Right yep, I understand what you mean. Yes, ultimately you need some kind of dispute mechanism that probably requires actual human intervention. A good example is how disputes work on P2P crypto exchanges like bisq - you have a crypto contract of some kind that holds funds in escrow, but ultimately disputes are resolved by a team of actual humans who look at the facts and make a decision, not everything can be "code is law"
meowkit 11mo ago
That is not where trust in the dollar comes from. It comes from stability. Predictability. Courts and law enforcement certainly provide these things, but they are not required. The inherent design of blockchains makes them trustworthy (an oversimplified statement), which is even better.
- kasey_junk 11mo ago
  Blockchains don’t, and can’t, solve for the risk of the off chain component of an exchange. The transactions aren’t atomic so someone is taking on counterparty risk. One of governments prime responsibilities is dealing with that risk, no matter the currency in question.
fluoridation 11mo ago
>Courts, law enforcement and contract law. That's the wrong answer. The existence of tokens predates the existence of government. It's the next step after barter. The correct answer is reputation. A vendor who cheats his customers builds up a bad reputation, and the only way he can keep doing it is by changing customer bases, for example by moving to a different town. Think of the traveling snake oil salesman who moves on once people realize his remedies don't work.
- kasey_junk 11mo ago
  The courts etc are there so we don’t have to create a posse and ride out to find the snake oil salesman. You _can_ have commerce without them but it’s much higher friction. So if a crypto wants me to abandon the existing systems it needs to show it creates less friction.
  - aaomidi 11mo ago
    Crypto’s use case isn’t for the layman. It’s for countries that aren’t aligned with America to have a separate currency system. Doubly useful for bypassing sanctions.
    - otterley 11mo ago
      It's also a useful mechanism by which criminals can store their wealth so that it can't easily be seized by law enforcement.
    - deleted 11mo ago
      [deleted]
  - fluoridation 11mo ago
    There's no need for a mob, government-backed or not. A vendor who scams his customer base is harvesting its good will, and eventually it will run out and he'll no longer able to do business.

ifwinterco 11mo ago

A crypto advocate would argue smart contracts can fulfil that role, but also that applies in developed countries but not in the countries where the vast majority of the world population lives. I think if a true crypto economy does emerge anywhere it's likely to be Nigeria, Lebanon etc - places with a significant population of educated entrepreneurial people but where the state is run abysmally and you can't rely on those institutions anyway

kasey_junk 11mo ago
It seems to me that the crypto absolutists have it backwards. You can’t solve the problem of failed states by changing the technology of currency, because the state is there to solve for the counterparty risk at the point of exchange. The alternative to governments monopoly on violence for enforcement, no matter if you exchange in monero or giant stone discs, is broad use of vigilante violence. So while crypto seems like an interesting technology for moving money around, it seems like it doesn’t solve for the point of exchange problem and thus crypto that focuses on making that difficult for government mediation are bound to be only useful for illegal activities.
- ifwinterco 11mo ago
  There is no counterparty risk for the seller in the traditional sense with bitcoin or monero, they're bearer assets, once the transaction is confirmed in your wallet there's no risk for you. You don't need to use violence to make sure you get paid? What you actually have is the opposite problem (in a sense) - the transaction is irreversible, the seller will receive payment and keep it even if they shouldn't (i.e fraud). So there is more risk for the buyer than in a fiat system where transactions can be reversed by legal processes
  - kasey_junk 11mo ago
    That’s all counterparty risk. If you deliver the payment before the service/good the buyer takes on the risk. The opposite is true if the payment or good is delivered first. You can dial the risk in either direction with any payment scheme (20% down balance due on delivery etc) but you can’t eliminate it.
    - ifwinterco 11mo ago
      Right yep, I understand what you mean. Yes, ultimately you need some kind of dispute mechanism that probably requires actual human intervention. A good example is how disputes work on P2P crypto exchanges like bisq - you have a crypto contract of some kind that holds funds in escrow, but ultimately disputes are resolved by a team of actual humans who look at the facts and make a decision, not everything can be "code is law"

meowkit 11mo ago

That is not where trust in the dollar comes from. It comes from stability. Predictability. Courts and law enforcement certainly provide these things, but they are not required. The inherent design of blockchains makes them trustworthy (an oversimplified statement), which is even better.

kasey_junk 11mo ago
Blockchains don’t, and can’t, solve for the risk of the off chain component of an exchange. The transactions aren’t atomic so someone is taking on counterparty risk. One of governments prime responsibilities is dealing with that risk, no matter the currency in question.

fluoridation 11mo ago

>Courts, law enforcement and contract law. That's the wrong answer. The existence of tokens predates the existence of government. It's the next step after barter. The correct answer is reputation. A vendor who cheats his customers builds up a bad reputation, and the only way he can keep doing it is by changing customer bases, for example by moving to a different town. Think of the traveling snake oil salesman who moves on once people realize his remedies don't work.

kasey_junk 11mo ago
The courts etc are there so we don’t have to create a posse and ride out to find the snake oil salesman. You _can_ have commerce without them but it’s much higher friction. So if a crypto wants me to abandon the existing systems it needs to show it creates less friction.
- aaomidi 11mo ago
  Crypto’s use case isn’t for the layman. It’s for countries that aren’t aligned with America to have a separate currency system. Doubly useful for bypassing sanctions.
  - otterley 11mo ago
    It's also a useful mechanism by which criminals can store their wealth so that it can't easily be seized by law enforcement.
  - deleted 11mo ago
    [deleted]
- fluoridation 11mo ago
  There's no need for a mob, government-backed or not. A vendor who scams his customer base is harvesting its good will, and eventually it will run out and he'll no longer able to do business.