Then the wrong child becomes the leader of the family and and bam, they start reducing the silver weight and replacing the coins with cheaper metals and the entire trust in that coin disappears.
And that ignores issues like the Conquistadors coming back from the new world with literally tons of gold / silver and royally messing up the gold / silver coinage economy.
//
That's actually a plot point in an anime called Spice and Wolf[1]. I encourage anybody who has an interest in medieval economics and early capitalism to watch it.
Mr. Lawrence had a leg up on his rivals because he's the main character with practically a modern economics degree. So his ability to predict market trends and focus on important information is head-and-shoulders above everyone else.
Holo the Wise Wolf in contrast, is a minor, fictional pagan deity without much understanding of human culture. But her sharp wits gives her a lot of street smarts that stands above even Mr. Lawrence. It seems that she can control the yields of wheat fields to a certain degree, but since the recent invention of crop rotation and some fertilizers, her followers were no longer praying to her (and probably don't need her anymore). So she heads off with Mr. Lawrence (the first merchant to swing by after she decided to leave).
Holo serves as a good stand in for the audience as well: as Mr. Lawrence holds roughly 15+ different coins out and describes their relevant marketplaces, Holo of course gets bored of the discussion (much like the audience probably does).
Giving Mr. Lawrence "knowledge", while giving Holo "wisdom" allows the pair to balance each other out in their journeys. Especially since the basic plot of the show is "follow rumors to make money". Holo can accurately sniff out the truth out of rumors, while Lawrence can predict where the markets go once he's given the facts.
EDIT: In many ways, Holo serves as Watson while Lawrence serves as Sherlock in most situations. Lawrence explains the plans to make lots of money to Holo (much like Sherlock explains the situation to Watson, since Watson is the audience stand-in). But unlike Watson, Holo quickly catches onto the money-making game and is quite capable to changing the plan for the better. So its actually a very fun dynamic to watch the two. Just enough explanation from Lawrence, and just enough improv from Holo to keep things interesting, even though they're just buying and selling things throughout the show.
Which was preceded by the exact opposite problem in Europe:
https://en.wikipedia.org/wiki/Wildcat_banking
It wasn't fiat money, they were deposit notes representing gold or silver. And while outright fraud wasn't much of an issue since physical banks can't just disappear and leave town overnight, if the bank collapsed the currency would probably not be redeemable anymore.
It was not fraud by the institutions as such, but counterfeits was a big problem with as many as 7000 unique notes it was next to impossible to know which was genuine.
Post the civil war as much as half the currency was estimated to be counterfeit. The secret service was given the policing money task as a direct result.
There was streamlining of currency issue after that.
The first banks would have dealt mostly with physical money / gold, so it would be a lot harder to pull off this kind of fraud.
Not if the government intervention is a smart contract. Why do we fear government intervention?
- (individual) errors - (individual) misconceptions - corruption ( individual incentives )
What if we had direct democracy and your case would be reviewed by every citizen? Would you still fear to be spyed upon? Would you fear to be detained without reason?
That's what Cryptography promises. A uncorruptable system which serves society with incentives correctly alligned.
1. education from their fellow salespeople is typically worse, like getting medical advice from a health-supplement vendor.
Simple or not, the current solution is far from perfect and will be reinvented and will fail again and again until a better solution emerges. There is no way that the current banking/government/democracy/economy system will survive this century.
Case in point:
https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s...
https://www.cnn.com/2021/01/21/europe/vatican-bank-money-lau...
https://www.justice.gov/opa/pr/bank-julius-baer-agrees-pay-m...
Find some recent example of the owners of a bank/exchange absconding with their client funds: that would be closer to the matter at hand.
But you’re right. Mostly the normal banks and exchanges are regulated and incidence of fraud is low. A lot of that regulation is “lessons from past failures”, which crypto hasn’t had yet.
Bank owner embezzles for awhile, bank robber shows up, publicly robs the bank, makes off with $1000, bank owner claims $10,000 was stolen. Bank owner now has a reason why he can't give everyone their money back.
Banks and municipalities who issued their own fiat currencies I believe encountered many more problems.
A lot of what's happening in the crypto space is just self-professed libertarians re-discovering fire. They start off by being skeptical of banks and monetary authorities, but eventually realize that an unregulated free-for-all attracts bad actors that ruin it for everyone else. Hence the wet blanket of AML + KYC + Deposit ratios.
https://www.afponline.org/publications-data-tools/reports/su...
Its just as large and just as consequence free as bitcoin/crypto heists and fraud despite the paper trail
Some reinforce their respect of one system by looking at the proportions of the money supply and transactions, I would say that isnt that important as the industry / interest in fraud has a fixed size
ACH fraud was 1% on 21 billion$. That's 210 million in total, way less than the 4 billion from the article with 1 Bitcoin scam ( of an exchange, again).
None of the ACH frauds were the exchange/bank running away with your money fyi.
And probably a lot of them, if end users, was even insured.
Edit: Sorry. Made a mistake corrected below by a comment and follow-up.
0,08% fraud on 51 T. Is still way less than this sole scam vs. BTC market cap.
ACH Fraud has also been going on for at least 20 years or so in similar amounts
Yes big bitcoin heist and no insurance for those victims of that exchange
Both true
21 Billion per year is close to the annual ACH transaction volume measured in count of transactions.
The total value of those transactions in dollars is somewhere over $50T (Trillion) dollars.
1% of that is $500B.
+ The number i found for fraud in ACH afterwards was actually 0,08 %
> ACH fraud is extremely low at 0.08 basis points, or 8 cents for every $10,000 in payments
https://silamoney.com/ach/understanding-the-basics-of-ach-fr...
I took the 1% from you, assuming you got it from somewhere reliable or at least that you believed in it. (I looked for it in the report summary; I didn't find it; I assumed you got it from the full report, which I don't have access to.)
If the correct figure is 0.08%, that's almost $41B on $51T (more now, as the network volume continues to grow).
But the entire fraud /year is way less percentage then this sole scam from the entire Bitcoin market cap valued against its peak.
So his comment is actually a net positive for traditional payments ( even if you neglect insurance, ... )
One one-hundredth (.01) of a percentage point. For example, eight percent is equal to 800 basis points.
https://www.investor.gov/introduction-investing/investing-ba....
The author of the article made the wrong calculation which makes this extra confusing. Ugh...
Since 8 basis points from 10 k is 8 => https://www.wolframalpha.com/input/?i=8+basis+points+of+1000...
Where are those numbers from?
> For example, eight percent is equal to 800 basis points.
Correct. 800 bp = 8% = 0.08 = 8e-2, as in your example there (different than the numbers in the linked article).
Also, 8 bp = 0.08% = 0.0008 = 8e-4, as in the numbers you gave at the top (different than the numbers in the linked article).
Also, 0.08 bp = 0.0008% = 0.000008 = 8e-6, as I’ve pointed out (and corresponding to the numbers in the linked article:
> ACH fraud is extremely low at 0.08 basis points, or 8 cents for every $10,000 in payments.
Note that 8 cents are $0.08.)
I checked it 2 times and always parsed it as 8bp... And not 0,08bp.
I feel embarrassed now. Nice job :p