How can anything than runs a blockchain offer a service at a lower cost? It can't. The only competitive advantage that crypto has over the financial sector is that crypto is by and large operating with disregard for financial regulations. Let's see how long it's gonna last.
/s
Cryptocurrency, namely bitcoin, has lasted 13 years and only looks to be getting stronger and more widely adopted.
Bitcoin's theory, based on its white paper, is that Blockchain offers to remove the middleman, or at least decentralise the middleman. Maybe it won't lower the cost, but it will hopefully spread those costs over a larger group of participants.
When you don't have to pay a ton of salaries to push paper around, you can make things extremely efficient. And like OP said, a lot of the prices for financial services are artificially high due to lack of competition as it is.
But this is completely independent of any cryptocurrency solutions.
Look at retail stock trading. We now have zero-fee trading, but it’s not because some wonderful blockchain thing happened — new competitors like Robinhood made it the standard across the industry. It wasn’t a technological problem.
Some high-cost services in the USA that seem like technological problems are actually due to insufficient regulation. For example, wire transfers can cost $25 here, whereas they’re free and instant in Europe+UK. This is not because Europe has a magic blockchain — it’s simply the result of EU-level regulation that forced banks to interoperate. (Apparently the Fed is finally doing something similar now, decades late.)
The problems that exist can be solved by markets and regulation. The technology layer of cryptocurrencies is a useless substrate and primarily serves to reenact financial scams from the 20th century.
There is absolutely a place for disruptive technical experiments like cryptocurrency in a small part of the system, and to have good regulation of the rest of the financial system. It seems to me that the current balance is doing exactly that. Why are people dogmatically assured that technical advances in payments can only be driven by governments, when technical advances in virtually every other IT-adjacent industry have not worked like this?
Sure, I agree in principle. But the crypto science experiment is out of hand. It's providing negligible actual value to the system while consuming more energy than a mid-size European nation. This is an egregious failure.
If Bitcoin and Ethereum mining were shut down today, nobody would lose access to any necessary financial service, and we (mankind) would be at least 1% closer to the fossil fuel reduction goals we absolutely must meet. Seems like a no-brainer in the current state of emergency. There are many other things we need to do, but it's distressing that we're not even able to stop this novel waste that didn't exist ten years ago.
What will instead crash first are the newer and less-resilient networks that don't use proof of work: proof-of-authority systems like Cosmos/Polygon, centralized systems like Binance Smart Chain, all the scalable rollup servers. Ongoing transitions like Ethereum's move to proof of stake might also be disrupted. Even if a regulatory approach was ultimately successful in shutting down proof-of-work mining, I think it would take years. Those years could be better spent by devising and encouraging more efficient consensus technologies, like the ones already being launched today.
There needs to be some way for the public at large to show preference for regulatory regimes. Voting isn't as effective as it used to be; which smart contracts I interact with seems like a decent alternative.
The stakeholders who control the blockchain will give themselves every crypto holder's money if their interests are threatened in any way. Has everyone forgotten about the 2016 Ethereum DAO scandal?
If so, I remember it quite vividly - not sure how it supports your claim though. Ethereum classic is still around, and a decent number of purists still use it. I don't share their convictions, but I'm glad they have the option.
— so, didn’t steal the money? Or are you admitting a smart contract isn’t any kind of contract at all?
Glad “the community” stepped up to prevent smart contracts from being credible. Though I’m not sure why this community is a preferable regulator to the ones we have for actual money. Since cryptoinvestments are also bound by real-world law, you now have two regulators: the real one and the “community” that transfers cryptomoney to itself when it wants.
The only party that disagreed was the Eth classic community, and they still have a coin and codebase with contracts credible by your unusually high standards. The only thing they lost was investor sentiment. If those standards prove to be advantageous for a group to operate under, they'll gain ground over time. That's the beauty of crypto - people can decide the protocols and community they prefer in real time, and vote with their money accordingly.
Then they laugh at you...
Seriously, you need to think about this more carefully.
You're basically arguing that everybody should make their own rules, and disregard everybody else's rules, which is kind of antithetical to the whole concept of civilisation...
A regional entity can't really have full control over its monetary system unless it's a 'nobody goes in or out' fortress like North Korea. In which case, it's of course difficult to have a democracy in anything but name! So to talk about the rules of local politics as if they can contain the monetary system through which they trade with others doesn't seem to me like the product of careful thought either. The US was sort of in that position because it was the global hegemon, but that should hardly be thought of as the historical norm.
1 - apply to all market participants 2 - apply to some market participants but not others 3 - have no regulations at all
I say that regulations should apply to conventional finance and crypto, because anything else would be giving an unfair advantage to some market participants, so I'm arguing for 1.
The crypto bros are saying that they don't want financial regulations to apply to them, because they don't want to, but they still want regulations to apply to conventional finance, so they are arguing for 2.
What is your position exactly? Because sometimes it seems that you want 3, but it's hard to tell from your confused rhetoric.
For that matter if self-driving cars became able to respond faster than a human, there'd be no need for the old speed limits at all. A car would probably know its hardware much better than a human and know what it's individual fastest safe speed would be. Universal speed limits would only be necessary while there are human and AI drivers on the same roads. Which is why, as I said, a phased change-over would be best.
This very much remains to be seen. Much of the complexity of finance (and the value being provided) arises from the need to quantify risks of many different kinds.
Not nearly all of that information is available on-chain, and for many scenarios I can't imagine it ever will be.