It does sound like that! The mistake there was to assume the failure of one mortgage was statistically independent of the failure of another, which is obviously incorrect for many failure scenarios. In this case, it it would be similar if all nodes were in, say, the same datacenter. That doesn't appear to be the case, but there may be other dimensions on which the network lacks the required diversity to support the reliability claims (disk vendor and age...? There must be others.)

Your mind is going to be blown when you learn how TCP/IP works.

Not really. Just probability. If you have fully redundant services then ALL of them have to go down to have an outage. Suppose you 5 copies with 75% uptime each. The probability that all of them are down is 0.25^5 ~ 0.0009

Now of course that assumes they are uncorrelated, but since Sia nodes are distributed across the internet, that's likely as opposed to multiple servers at a few data centers like AWS.

Turns out mortgage bonds tend to be correlated.

Reminds me of a saying from the first dot.com crash. (Or at least I heard it then first.)

Tying two bricks together doesn't make them float.

I mean, the concept actually works, but you have to understand what is actually going into the bundled product. There is no reason you couldn't bundle 100 million in mortgages that had a 10% default risk and sell 10 million of that bundle as AAA.

It is when you just start bundling everything and then saying the entire thing is AAA that the trouble starts.

Except the people who put those sub prime mortgages in probably didn’t apply rigorous statistical analysis to their situation.