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Comment by timdaub | Hacker News Reader

posters in this thread believe that there are obviously really bad people using and working with crypto currencies.

these same posters, however, don't have an inch of skepticism that there could be equally bad people sitting in powerful western financial institutions.

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That’s a blatant straw man fallacy. No one here is insinuating that financial institutions are pure and innocent.

If anything, crypto news over the past year has proven one thing: that the crypto space is just as corrupt as “traditional finance,” but with none of the guardrails that make it harder to commit blatant scams.

Society developed immune responses to financial fraud in the form of regulations. They are insufficient and evil people still take advantage of loopholes in the system. However, crypto right now is a living example of how much worse it could be.

The difference between traditional finance and DeFi is that DeFi is so transparent that a single person (Molly) can run a blog to aggregate all things that went wrong. They can arise at a single number of error that the industry has created. This is an achievement of radical transparency; something that should be celebrated.

She states that the "single number" is a "very conservative" estimate, in part because it's very difficult to track some of the "radically transparent" obfuscation in the cryptocurrency world.

In addition, being able to state that X worth of cryptocurrency disappeared into a tumbler or mixer isn't particularly transparent, either.

The difference between DeFi and traditional finance is that traditional finance is actually useful, while DeFi has absolutely no societal value. https://news.ycombinator.com/item?id=34210334

If society deems that level of transparency beneficial, it can be implemented on centralized databases much more cheaply.

Wake me up when we get some transparency on what's backing all those Tethers or whether Binance is solvent or not. It's one thing to document scams after the fact, it's another to have mechanisms to identify them before they grow out of hand.

DeFi is orders of magnitude smaller, which makes aggregation much simpler.

Not to mention that traditional finance helps billions of people and businesses buy their houses, spread out payments, invest in their futures, see their business through growth/lean periods etc. There are real world success stories - too many to aggregate even within people's own social circles.

On the other hand, if there are people using DeFi's ability to take out very short term overcollateralised loans at above tradfi rates to finance anything other than speculation on crypto, they're being very quiet about it...

On the contrary, it is my certainty that there are bad people in every area of life that causes me to prefer the system with checks and balances and laws and enforcers and insurance, all of which help to protect me from those bad people.

"don't have an inch of skepticism" seems to better describe the collective from whom more than $4 billion was stolen this year without recourse than those who did or didn't fall prey to traditional banking fraud with consumer protections in place.

It's more similar than people want to think. I suspect that when all the dust settles, the FTX collapse will look something like the MF Global collapse. And in 2008, the only difference in the outcome of your checking account to the outcome of an FTX customer is that in the former case, the government bailed the bank out.

posters in this thread also believe that there are bad people in western financial institutions but that 1) the laws and regulations in place ensure that the system is at least usable by normal people to do useful work, as evidenced by the bajillions of dollars of money made by selling products and services that are not stolen from their bank accounts; and 2) that western financial institutions will not in general repeat the same mistakes as they committed in the past that resulted in things like the Great Depression, and in particular will not last long enough to collect billions of dollars based entirely on hype and become a critical cornerstone of the entire market, as certain centralized exchanges this past year had

we'll see how this "don't repeat prior mistakes' thing will play out with maxed out inflation, raging corruption in western democracies, moral wars in Ukraine, rising distrust in media and a laissez-faire approach to white collar crime after the financial crisis in 2008.

I won’t comment about your other topics, but I’ll point out that current inflation is far from “maxed out”, at least in mature Western democracies with their own central bank and currency. ~9% is high historically, but inflation has run hotter in the not-so-distant past.

2% inflation is not a natural state of affairs, it’s a target that’s considered the “appropriate” amount of inflation.

Crypto solves none of those problems because those are social and political problems. You can not free your self from oppression by changing the brand on the boot.

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