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Comment by dmitriid | Hacker News Reader

> Our broken institutions are fighting to protect their kingdom

Three years ago I bought an apartment.

I got a loan from a bank over internet and phone. The contract was three pages of clear Swedish that even I, with my rudimentary knowledge of i, could understand. The contract signing was intermediated by a person whose job is to make sure everything goes smoothly.

In the end, all of the following was guaranteed:

- I had the money

- money was transfered into the other person's account

- I was not a scammer

- that person wasn't a scammer

- I received actual physical keys to an actual physical apartment (and not to an non-existent address)

(a bunch of other stuff)

So, tell me. What exactly does your crypto improve?

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I'm glad it went well for you :)

All of those guarantees are under threat of legal punishment enforced through court systems.

All of those guarantees are given to you based on good standing with various institutions. The bank, the intermediary, the seller.

If you were a person who was not in good standing with a bank, but you still had the money, could you have completed the transaction?

Technology has a trend of destroying middleman industries, as they don't provide value and take a portion of the proceeds for themselves.

DeFi, in this case, is targeting the financial institutions because we now have technological means to replace banks and lenders. Does that mean this process is smooth? or ready for mass adoption? Not necessarily, but the destruction of banks by technology is inevitable. It's just a matter of when

If I'm a person who has money but is in bad standing with the banks, maybe I shouldn't be able to do financial transactions at all. It's that, or I'm imagining the wrong reasons why a person with money would have trouble with banks.

Totally agree, as long as the reasons the banks have are valid.

The problem is that that decision is made by people. Standards of conduct are not universal. What if political affiliation or COVID vaccination status affects your ability to transact with a bank, even though those things have nothing to do with buying or selling real estate

It is I think vastly better for people to make those decisions than for them to be made by smart contract. The institutions we discuss now are at their core social systems.

I think that's a totally valid opinion.

The advantage to people is that they can more flexible.

The disadvantage to people is that they can be more irrational.

Are you suggesting that code is more rational than the imperfect people who implement it?

Even within crypto/defi, it's still people making the decisions. People wrote the algorithms. The only advantage I see there is that, in theory, you should be able to see what rules are encoded in that algorithm, so it's slightly more transparent in that sense.

On the negative side, though, there's essentially no rule of law to prevent the people making the decisions in DeFi from doing things that are bad/illegal/invalid.

> What if political affiliation or COVID vaccination status affects your ability to transact with a bank, even though those things have nothing to do with buying or selling real estate

In the regulated finance world, these sorts of restrictions would be disallowed by the rule of law. You can sue them if they try to enforce those rules, and depending on your jurisdiction, you may win and indeed win damages. What's the equivalent in DeFi? Who do I sue? What court do I ask for relief?

> Even within crypto/defi, it's still people making the decisions. People wrote the algorithms. The only advantage I see there is that, in theory, you should be able to see what rules are encoded in that algorithm, so it's slightly more transparent in that sense.

Agreed. People still create the system, but they have zero to little sway in each individual transaction. So, the system can be biased, but with increased transparency, that should become apparent.

> On the negative side, though, there's essentially no rule of law to prevent the people making the decisions in DeFi from doing things that are bad/illegal/invalid.

Very true, there's a lot of scamming going on. It's still very bleeding edge and not ready for mainstream adoption.

> In the regulated finance world, these sorts of restrictions would be disallowed by the rule of law. You can sue them if they try to enforce those rules, and depending on your jurisdiction, you may win and indeed win damages. What's the equivalent in DeFi? Who do I sue? What court do I ask for relief?

At least in the US, this is not the case for payment processors. Banks may be under more strict regulation. Visa/Mastercard can revoke the ability for anyone to process transactions on their network, even if the activity is completely legal. E.G. OnlyFans/Pornhub recently.

> > On the negative side, though, there's essentially no rule of law to prevent the people making the decisions in DeFi from doing things that are bad/illegal/invalid.

> Very true, there's a lot of scamming going on. It's still very bleeding edge and not ready for mainstream adoption.

Could you elaborate how you think this problem will be fixed for mainstream adoption?

I wish I could. If I knew how, I would be implementing this as fast as humanly possible. The first person to fix this problem will make $1 billion, easy

Could you get more specific about the reasons or the definition of a financial transaction? Not being able to do financial transactions seems like a slow-motion death sentence.

> Technology has a trend of destroying middleman industries, as they don't provide value and take a portion of the proceeds for themselves.

So, these middlemen that "don't provide any value" guarantee that: my money isn't stolen, that I get the apartment I was shown etc.

So, you've removed these middlemen. How exactly is your technology going to solve this?

> DeFi, in this case, is targeting the financial institutions because we now have technological means to replace banks and lenders.

No, you don't. With banks I can revert a fraudulent transaction (I paid, but the goods never showed up). How is defi solving this simple case?

It improves that process in a disintegrating third world country, which many of us may find ourselves in within our lifetimes.

No it doesn’t and no you won’t. Where is this fatalism coming from?

Paying the barest amount of attention to the news and being repeatedly confronted with the myriad ways that once-first-world countries are crumbling.

How does it improve the process in a disintegrating third world country right now? Lay it out, which steps in the process does it improve or replace? Do you know anyone who's utilized it that way, or are there case studies?

That's nice and I hope it works out for them, given how difficult it can be to get physical objects properly tracked in a digital system when the people responsible for entering data into the system can be corrupt. But getting the third world digitized is the very opposite of the "very interesting innovation" that everyone else in this thread keeps referring to; it is just making some thing that already exists again. That is not innovation, that is an incremental improvement at best.

For those of us living in prosperous Western countries (and let's not kid ourselves, that is at least 90% of HN), the biggest attraction of cryptocurrencies seems to be "if you buy this, it might be worth more in the future". Which is nice, but hardly innovative.

> It improves that process in a disintegrating third world country,

A disintegrating third world country will not be able to enforce anything. So, you've transferred your money and got a key to a non-existent place.

Good luck with your "improved process".

If you wake up one day and find that your society is disintegrating with that speed, you're going to need food, water, ammo - all of which are tradeable - and a good support network - not a bunch of fake computer monopoly money tokens.

You don't wake up into a disintegrating society, you wake up into a society that's a little worse every day for decades. See: other highly developed countries that are no longer considered highly developed.

That’s still pretty fast.

There are very few highly developed countries that fell from that status without being at war.

Argentina is the only one that comes to mind.

Planning for the apocalypse isn't really planning, but I guess we all need hobbies.

It doesn't always work out well for everybody. Check this out:

https://www.bbc.com/news/uk-england-essex-59069662

The key is: it works well for most people. So, the question remains: What exactly does your crypto improve?

And on top of that, in this case, how will it help with the stolen house in Luton?

That is an exceptionally well designed purchase process. In my case, I had to go through 3-4 months of wrangling banks and other paperwork. I still don't understand my mortgage contract fully. I just hope it doesn't have any "surprises" in it.

Unfortunately very few people live in a democratic country with the rule of law like Sweden. For the rest, crypto can be a good place to keep their funds without the fear of losing.

The overwhelming majority of people live in countries with representative government and functioning legal systems. Yes, the US and Russia and China and India and Brazil all meet this description. Why do you believe otherwise?

> Unfortunately very few people live in a democratic country with the rule of law like Sweden.

You mean, the absolute vast majority of people in this world live in contries with more-or-less functioning governments. Not perfect, but functioning.

> or the rest, crypto can be a good place to keep their funds without the fear of losing.

Ah yes. The only use case is hoarding. Even though I specifically provided a different case that doesn't involve hoarding.

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