Can decentralised finance lay the foundations for an open digital economy?
economist.com
economist.com
Seems like it should make some things more efficient? That is, if the things that the arbitrage is about have any actual meaning to them.
If the price went up since you took out the loan, you benefited. You're over collatralized so you'll always want to buy back, unless its below your collateralized value, in which case it would have been liquidated anyway
- miner agreed bc is not currency
- Miner agreed that software is not a constant of nature. If I want to fork bc at current block and change bc supply from 21mm to 10 billion and offer miners 30% premium over classic bc ... Nothing stops me.
- for a random person such a move may be dubious ... But not if Goldman Sachs or the nyse did it. Thus the value of classic BC can radically change if serious competition arises. Such competition might push down classic bc to dollar value. As such the claim bc isn't deflationary I find iffy at best
- in classic bc as things stand now ... What happens when all 21 million coins are mined? At that point all miners can do is take a percentage of money they mine. If the transaction is too small they might say screw it. If they only work on big transactions it'll be for the relatively more affluent ppl buying rolexes, art, and yatchs.
- miner agreed bc is too slow ... It can't compete with cc rates. There is operational inertia to increased use
- Miner said it costs ~$15k to mine a coin. At current bc to USD there's lots of profit for him
Some other things that we could not agree on:
- miner made classic claim that bc is no different from usd; fiat USD is not asset or gold backed like bc. However he agreed bc isn't currency. So no crisp conclusion arose here. My stand however was that bc would have come and gone except that people believe it's valuable --and-- they can convert it to real bonafide fiat currency. If either one of those fail bc is noise; nobody would care. It's not clear here why bc to USD is possible. Where's the cause and where's the effect? Is it that bc is something (cause) and converting to USD is effect? Or rather did ppl merely believe bc is valuable (no cause) and the fact those same ppl accepted usd for bc and vice versa was the effect that caused bc to seem important? I think it's the latter case in which case bc is a shell game, a elaborate multi-level marketing game.
- on the question of what happens if a Goldman Sachs gets into the game ... The miner implied (I inferred) that it'd be good for much the same reason. While miners like him might get a hit in short term because ppl flock to a serious crytpo player GS, it'd actually be good long term because the GS brand gives gravitas to crypto that bc by itself doesn't have. Here again cause and effect is subtle.
- fiat usd is a reserve currency and integrated into the us economy and world economy at fantastically higher numbers and complexity. It has had to respond to economic cycles, fiscal problems, stock market crashes and numerous other pressures. Bc has none of this. The idea that bc would survive as-is with a fixed 21 million bc in the real world ... is pretty silly. Bc isn't the locked in deflationary currency that could survive as is not subject to external pressures claimed.
Finally:
- it's worth pointing out bc isn't as anonymous as claimed
- miners are fairly centralized. And here problems with block sizes and other aspects of running the block chain have arisen between users and miners
To make a change to the actual behavior (such as to make new money or move money without authorization)--as opposed to merely the order of events (which is important, of course: it allows you to change which of two parties got money if someone tried to send money to both and only had enough for one)--requires the users to all buy into your new fork, not merely the miners; this is something many people seem to get wrong, but it is the most important property to understand: the rules are the rules and no one can change them without pretty extreme buy-in (which does happen, but is quite difficult to pull off).
This contrasts with AWS, Nvidia, GM, or AIG: it's not so easy for new comers to take market share. You gotta have a lot more going for you than a data center monthly rental bill.
Sure, you are supposedly paying them (by your tweaked rules that gives them more reward per block), but you are paying them in a currency that is incompatible with the software used by every exchange, every bank, every supermarket, and every other user, who all see your "more profitable" blocks as "invalid"... they are buying real energy and you are giving them a currency no one has heard of or accepts in exchange for goods and services.
What makes these networks hard to get everyone to switch between, even when they suck, is thereby all of the momentum of software deployment and brand recognition and "belief in the value of such" that they have. This network effect is extremely difficult to quickly replicate and is a massive barrier to entry for not just newcomers but even mere upgrades... bug fixes to these protocols require everyone to agree!
Truly: if you could just create a new network that was slightly better or which paid miners slightly more per unit (which isn't real value) and somehow immediately sweep away all of the miners, Bitcoin--which is clearly an antiquated piece of shit to most of the people who work in this space--wouldn't exist, as not only do new networks come out every day that offer small improvements but new networks exist that offer large improvements, and it is extremely painful to get anyone to switch.
At least in the case of the Bitcoin lineage, _tightening_ rules is not too hard (soft fork), while _loosening_ rules (eg. increasing supply via hard fork) is hard.
If you are the dev, control all miners and run all the nodes of your fork - everything becomes trivial (and quite useless)
What people miss about cryptocurrency is the basics. It's a way to create a secure, public, auditable ledger that prevents cheating. It's mathematically and technologically superior digital money. In very obvious ways.
You're posting on HN, a site where "Use Boring Technology" is often cited. I think there is good odds that Bitcoin is the Windows Forms of cryptocurrency and everything else that is currently "interesting" will be proved to have made mistakes and crumble. In the end only Windows Forms and HTML will survive.