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Comment by melvinmt | Hacker News Reader

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melvinmt·

That's why: block chains.

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How do block chains solve this problem, compared to, e.g. patio11's LAMP app proposal?

https://twitter.com/patio11/status/583696870704152576

It doesn't seem like decentralization or proof-of-work are important here, given that everything is going through a small number of exchanges, and even if not, through a single SEC. The existing system already works on mutual trust between the exchanges and DTC, and it's not the trust that's an issue here, just complexity. Blockchains are complexity.

Cryptographic history and authorization of transfers may be useful, but it just requires some straightforward digital signatures, not blockchains.

You're thinking small. Imagine a world where there aren't parasitic entities littered throughout a process. Imagine a world where I do not need to trust any third parties in order to exchange any sort of value. Imagine a world where you can exchange your stake in a company directly, with another person, P2P.

In such a world, I imagine a good number of investors will only want to trade when there's an overseer who can promise violence to right wrongs, because trading is historically a great way to get scammed. At the moment, given the state monopoly on violence, an organization like the SEC is a good way to do that. There are other ways to accomplish this without a state monopoly on violence, but the ones that come to mind don't sound like worlds I want to live in.

You trust violence more than mathematical improbability? Okay.

How is it mathematically improbable that someone will engage in insider trading?

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