Where in the world is it common to lose all money deposited in a bank? And, why not just create better banks?
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)
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.
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.
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.
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.
If someone is in a position to “create a better bank,” they aren’t one of those who needs it.