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Comment by c01n | Hacker News Reader

But with fiat there is no trust between the people, the trust is provided by the banks, they act as the arbitrators because humans cannot trust each other. When we used to barter we stopped because it was sometimes unfair (convert bread to chickens?) so we invented money (gold) which is natural occurring and rare so we trust it more. Later on we invented banks which are a third party we use them as arbitrators because we don't trust each other. Now we invented blockchains (distributed ledgers) so we can see all the changes being made on the ledger because we don't trust each other.

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>When we used to barter we stopped because it was sometimes unfair (convert bread to chickens?) so we invented money (gold) which is natural occurring and rare so we trust it more.

That's wrong. Debt existed before money and barter didn't exist at all without a medium of exchange like metals or spices.

When you give someone a chicken and the other side gives you bread you remember or even write down that this person owes you more bread in the future and you trust that this person will uphold his promise, the same way you trust that his bread is not rotten.

First - the notion that 'we don't trust the banks' is false. We, you, everyone, trusts that system every single day, with all of our financing. There is an incredible amount of oversight in that system, the Fed publishes it's actions and balance sheets. The banks have immense scrutiny.

While we should never trust banks 'infallibly' we have layers and layers of protections.

We have 'backups' for regular people like FDIC insurance so when that trust invariably gets broken here and there - there are backups. How often has FDIC had to be used? Very rarely.

When someone steals your blockchain stash - which happens - where do you turn? Nowhere.

Commerce is subject to the Judicial system meaning that when there is a problem, we can backtrack and make ammends, people can sue one another there is accounting etc..

Second - it's well established that none of the cryptos thus far are usable as forms of currency, and frankly, they are poor stores of value.

Your local corner store does not accept BTC for the same reason they don't take Euros - because prices fluxuate wildly, far beyond their profit margin. To accept BTC is tantamount to wild currency speculation which, over time, is guaranteed to put them out of business. There's a 100% chance that BTC 'will go down' over some period below their operating credit and will kill them.

They could feasibly accept BTC and immediately transfer to USD, but what would be the point? You do that, it's your risk. And then it's 'not a currency'.

Third - the 'never talked about' Elephant in the room is Monetary Policy. The ability to control currency is extremely valuable - it's dangerous, yes - but also powerful. Using 'Gold' implies 'no monetary policy' but arguably more trust, however, we'd probably all be broke.

'Wars and Pandemics' illustrate this quite well - when a nation faces existential calamity, it definitely needs monetary policy above and beyond normal operations. The economic devastation of COVID without monetary policy would have knocked down the economy like a sequence of dominos and left nothing standing.

'No Monetary Policy' is like building 'Brick Homes in San Francisco'. Brick is 'stronger than wood' you say? Hello 7.7 earthquake, which is guaranteed to happen over time, and, which will knock down brick homes and leave the wood framed homes standing. 'Hard' things are often 'brittle' and without flexibility a single 'hard punch' will break it.

And those are just the obvious points.

So - instead of building something which is 'infinitely decentralized', you could feasibly build something that is partially decentralized and gain basically all of the advantages. Viatalin's notion of 'individuals running nodes' is essentially fundamentally flawed. Individuals should be 'running their own nodes' like they should be 'installing their own wiring, flooring, plumbing, adding their own additions without Engineering approved drawings'. Yes - you can do your own electrical work, but nobody does, because we have very effective division of labour and 'electricians' do that very well which is immensely valuable.

Let 3rd parties 'run nodes'. Make it so the tech requires minimal oversight. But there will never be 'no oversight', it's not feasible, and it never was.

I'd go so far as to argue that 'trust based systems' are probably a kind of biological development based on some kind of actual efficiency optimization: we 'trust our electrician' just like we 'trust the authority of the bank'. Neither are infallible, but it's better than doing it all yourself.

Thank you for the reply. I think you misread my comment, I never said 'we don't trust the banks', I wrote that we invented banks to act as third party arbitrators because we (humans) don't trust each other.

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