In a system run by algorithms, designed to avoid oversight by people (governments), there is no such powers. There's no reversal. There's no checking the name on the account the transfer was to. It's just gone.
I do not understand why people who have legal intentions would want to be part of the crypto economy. There's nothing but more risks with zero benefits.
The first world doesn't have these problems.
Crypto is a bigger play than 'get rich quick'
The last round of deposit haircuts were in Europe [1]. OP may be talking about having a bank account frozen by a corrupt government. Though if crypto became widespread, those same governments wouldn’t have trouble coercing people into giving up their keys.
Of course my examples are a bit tongue in cheek, much more nuanced and not as "Bank bad" as I paint them to be. But It's entirely possible for a bank run/economic downturn to wipe out a currency overnight.
Does that mean crypto is the solution? It sure doesn't seem to be given cases like this (NFT/ETH being rugpulled from/by videogame devs). But I think that creating "better banks" can only mean "more government oversight", which leads right back to the original problem IE; economic/political factors having too much control.
I of course keep all my money in the form of expired New Hampshire State Highway toll tokens.
It’s juvenile to believe otherwise, and reaffirms the believe that Crypto is just a 21st century pyramid scheme.
I mean, a bank is just a financial business. Why wouldn't it be possible to improve "banks" but it would be possible to improve cryptocurrency companies (also financial businesses). What is the quality that gives you optimism that these new entities will be able to avoid the problems that you are worried about?
Like, I get that the technology is decentralized and it's impractical to track down every node, but if the plan is to run an illegal business that's hard to shut down...you do not need blockchain to do that? And if the business can be legal that seems like it's about laws - not the tech.
I'm not really sure what a secure, generalized zero-trust system really looks like, from an algorithmic standpoint or a political standpoint. ETH is arguably the first large-scale attempt to answer that question, but so far it has unequivocally failed to do that.
> but if the plan is to run an illegal business that's hard to shut down...you do not need blockchain to do that?
It sure as hell makes it easier. Think about NFTs for a moment - they have the perfect recipe for money laundering:
1. Subjective market value (examples: paintings, pokemon cards)
2. High market value.
3. Relatively-unregulated bookkeeping system (examples: other cryptos, any transaction in a tax haven)
4. Trivial mechanisms for layering as a result of (3).
5. Easy (not necessarily cheap) liquidation (examples: casinos)
But most really corrupt countries.
So about half the world, if not more. A large part of Africa, a large part of Asia, a good part of south America, some eastern European countries.
If you want to create better banks, you'd have to pay bribes, millions/billions of dollars of bribes. So you're back to square one because you can't operate without charging huge fees or doing dodgy things.
The general population who had their money in the corresponding currency got f*ed because they could not exchange from their local currency to something better.
Currently, people who left Ukraine are finding out that their Ukrainian credit cards no longer work. Some people who have bitcoin are still able to use that.
There just isn’t a technical fix for a political problem. If you live under the jurisdiction of a government there’s such a wide range of mechanisms available for enforcement.
You also left out the other part of the overseas bank accounts: you have to be rich enough not to need to touch the money — otherwise you'll run into the various restrictions on transfers. The same would be true of Bitcoin for the vast majority of people because very few people receive a paycheck in Bitcoin or can use it to pay their bills. Those meatspace connections are not easy to bypass as long as the government in question is willing to make an effort.
Keeping money under the mattress is done in Argentina, but is not that common for large amounts since getting your hands on physical dollar bills in quantity in Argentina is extremely difficult. It's also difficult to determine if the bills are counterfeit, but Bitcoin does not have this problem.
I have heard stories of people paying their living expenses in Bitcoin and the people who receive it love that because the Argentinian peso is constantly devaluing. The person they pay spends all their money on the person paying them bitcoin because the currency devalues like crazy anyway, so it's much better to pay Pesos and save in Bitcoin.
If someone is in a position to “create a better bank,” they aren’t one of those who needs it.
… but a lot of first-world guys are trying to get rich by selling systems which costs too much even for first-world users and doesn't solve those problems. If you live somewhere where your government will seize your assets, cryptocurrency won't help your physical assets and will only help anything else to the extent that you aren't worried about jail or worse for you or your family. You can't fix that class of problems with technology and it seems rather heartless to use those people's plight as a marketing tactic for a system primarily used by affluent people for speculation & money laundering.
Yes it does:
https://en.wikipedia.org/wiki/WikiLeaks#Financial_blockade_o...
We already have SWIFT and networks layered under humans in the fiat system, so now we're just pushing more complex algorithms. In the case of block chains, I'd say the concept of asymmetric cryptography is an improvement over mutual trust in secure backoffice communication channels.
I'm not into crypto (still thinking it's a solution waiting for a problem), but arguing that banks can do reversals isn't fair. Someone moving fiat quickly between banks will make it hard to reverse as well. I can't imagine a bank is going to just say "I guess they stole it from you, transferred it to us, but then withdrew from us. Let me go ahead and reimburse you anyway." That smells like a insurance case, no matter the underlying algorithms.
> I think this is where insurance companies generally pop up as a solution.
Real legitimate DeFi protocols are now often supported by DeFi insurance as well. I know nothing about Axie Infinity and have no idea if this applies for them at all.
> (still thinking it's a solution waiting for a problem)
IMO, although this has been said many times the past few years, I think we're starting to get past this. In a very simplified view, DeFi protocols that do lending (e.g. loans based on collaterals), can do this fully automated, and it's because "the money is programmable" thanks to smart contracts and value stored. This type of lending took human work to do in TradFi and has overhead, in both costs and speed. I feel like this is the start of what real solutions/applications look like; it's something that wasn't possible before.
You don't get bailed out if you fuck up, but also you aren't on the hook for bailing out other people when they fuck up. If you hold BTC, nobody's going to suddenly take a bunch of it to bail out banks that made shitty loans like during the GFC.
It's like the saying live by the sword, die by the sword.
Another benefit of some blockchains: incredibly low transaction fees.
Another benefit: smart contracts.
I don't understand why you need to straight up lie.
Indeed. This was the benefit of Ronin.
As a Canadian, and a former Ottawa resident, I can assure you those were not "peaceful protestors". I had friends and family who had to leave the city to escape the unending noise, the harrassment by the 'protestors'. There were arson attempts, assaults, threats, and general disregard for the law.
I've literally been a peaceful protestor in Ottawa (I was a student there after all). There's a serious difference between a daytime march for a cause and what those people did.
They're criminals, and were treated as such. I'm fully in favor of the government being able to seize the financial assets of criminals.
> Another benefit: smart contracts.
What benefit do such contracts hold over actual legal contracts? The biggest difference is that when legal costs have bugs, courts can resolve them.
Canadian protesters limited their noise to 10pm, didn't burn anything, didn kill anyone. Noise is what I saw from hours of footage. I didn't see harassment, maybe it happened, but it must have been an exceptionally rare thing.
How do you reconcile this?
I agree 100% on the risk, and my main problem with it is the avg person getting caught up in it. But at the same time, you see all the "PayPal froze my funds" posts, etc, so obviously the current system is flawed in its own way.
You could imagine a future in which PayPal is a layer on top of Ethereum (or any other L1 chain) and provides reversibility, etc, for a fee, but at the same time the user also has the freedom to eject out of it and take all the funds with them. The maxi "everything must be 100% decentralized" take is a bit naive, so hopefully these accidents help us move in the right direction.
I think long term we might have a lot of the same guard rails we have today, but they'll just be re-built from scratch in a digital-first way, rather than what we currently have.
Institutional-quality digital asset custody and signing was basically non-existent until Fireblocks launched just over two years ago, and there is still a lot of progress to be made on cryptography primitives and infrastructure best practices.
People cannot be made to become perfectly incorruptible. Look at what happened in Canada, with the federal government envoking emergency powers to shut down bank accounts without due process. Look at the "haircuts" during financial crises, where states have seized citizens' funds held in bank accounts, to bail out troubled banks.
Look at Hong Kong after the protests, where some of those involved in the protests were prevented from opening bank accounts.
Funny, that's exactly what happened to nearly everyone in my country some decades ago. Government screws up the economy like always. Runaway inflation destroys the value of currency and our purchasing power. Then president gets desperate or something and just freezes everybody's accounts. Everyone's money at the bank, just gone. Because people trusted the banks and the government, just like you're advising.
In a headline-grabbing caper like this the advantage seems obvious. But from the less sensational, day-to-day perspective of a small seller, reversals can be a nightmare ripe with fraud (google "chargeback fraud" for anecdotes) infeasible to pursue.
It does put onus back on the buyer / investor to do some diligence on who they buy from or send their money to, and increases the importance of reputation in the space. (I personally feel there's an opportunity right now for a reputation mechanism to complement the crypto economy and believe when that catches up it will help incentivize good seller behavior).
Kind of like when coins were primarily used as a medium of exchange. Coin payments didn't have reversibility, and adjudication stayed within the purview other institutions, i.e. courts, instead of being diluted and delegated to e.g. VISA. A more efficient dispute resolution system - some kind of analogue of the legal system civilization has built up over centuries - is another opportunity I feel is ripe for innovation in connection to the crypto space.
I do think the missing gaps of reputation and justice will be filled eventually and adopted by users, which would go a long way toward addressing your criticisms. In the meantime existing options of criminal / civil litigation remain available and people sending large sums of money would do well to make sure they know who they're sending it to so they can pursue if things go sideways.
The answer to your question is encoded in the very first block of the very first blockchain.
> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
https://en.bitcoin.it/wiki/Genesis_block
Some people feel like they weren't being represented by the "justice" you're talking about, so they built their own thing where all the rules are publicly viewable, and consensus is run by the community. It seemed like a weird idea at the time, but the idea got popular, and people who like this new system have moved about two trillion dollars of global wealth into it.
If you like the old way money was managed, by big institutions doing everything they could to extract wealth from the general public with no legal repercussions, then the good news is that the old system still exists. There are just some other options now too.
Also, the idea that all cryptocurrencies are some laissez-faire Randian wet dream is simply not true. An extremely diverse array of crypto governance mechanisms are being experimented with. Many run by humans, all with their own interpretations of "justice", which you can read up on and participate in at will. Governance proposals reclaim funds judged to be unfairly allocated all the time. I doubt that will happen here, because Ethereum governance is generally very harsh on people who suck at testing code, but every person who lost money here knew exactly what they were getting in to when they chose to participate.
Come on now. You may not like the due process that was followed, but it was still due process (as-in following the letter of existing law). By this logic the US should also be included on your list because of civil asset forfeiture.
`When Prime Minister Justin Trudeau decided a week ago to invoke his country’s Emergencies Act for the first time in Canadian history to quell the unrest, it gave the police sweeping new powers to go after the finances of the protesters.`
https://www.nytimes.com/2022/02/22/world/americas/canada-pro...
As for the US, I agree they belong on the list because of civil asset forfeiture.
In the case of Canada, the process was the PM tells the banks to freeze the funds.
[1] https://www.fresnobee.com/news/local/article259205608.html
This has happens with humans too. [1]
[1] https://www.washingtonpost.com/world/2021/10/07/ghani-afghan...
I can't wait for the law to change.
At some point there will be a tax for receiving and sending dollars to a blockchain converter, or it will require some heavy regulations and control, and then maybe things will improve.
Unless people understand the Blockchain is used to launder money, nothing will change.
Risk has upside. That is the benefit.
Hence Ethereum Cassic, which didn't roll back.
However, there is a physical limit, pretty damn hard to run off with half a billion worth of paper notes.
How do you deal with it when the money could be in the pockets of an Eastern European teenager with one script run?
You absolutely can keep millions under your mattress and some do when they cannot launder it but it would be up to you to reverse the transaction in a forced wealth transfer vs the bank who can simply trace or even reverse a fraudulent transaction.
I am wholeheartedly a supporter of centralized, fiat currencies.
See:
Civil forfeiture: https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
Executive order 6102: https://en.wikipedia.org/wiki/Executive_Order_6102
Greek austerity measures (which include the reduction of social welfare and benefits due to incompetence of government spending): https://en.wikipedia.org/wiki/Greek_austerity_packages
And the most important consequence, hyperinflation, often caused by central banks and governments: https://www.investopedia.com/terms/h/hyperinflation.asp
The illusion of security and stability is a very nice fantasy to live in. The price of everything you bought went up ~7.5% in the last year, the debt grows perpetually higher with no plan to ever pay it off, housing and stock market bubbles continue to grow, and this is totally normal and sustainable.
Who is determining our monetary policy then? Who is setting interest rates? Where does the money for a trillion dollar stimulus package come from?
> The whole crypto narrative seems thought out by people who don't have a clue about how things work and have zero real-life experience.
Right now I'm questioning how much you understand about what money is and how it works.
I don't know... does the answer to any of these questions suggest to you that the issuance of currency is a government monopoly? If that's the case, you should probably start here: https://en.wikipedia.org/wiki/Monopoly
You should probably start here:
https://en.wikipedia.org/wiki/Bretton_Woods_system
So maybe you shouldn't dismiss it so quickly just because it never happened to you.