Hacker News Reader

Comment by rohith2506 | Hacker News Reader

Sitting on the sidelines, It makes us feel superior to criticise and derive intellectual pleasure out of that but I haven't seen a lot of people who actually step into the ring and try to fix what's broken. I was one of them.

We can all agree that the current traditional and digital finance systems are broken but I don't see any solutions being provided as an alternative.

In every industry which involves innovation, there will be speculation and definitely people who like to profit off that which results in ponzi schemes but in the end, there are some genuinely hard working people who truly believe in the mission they signed up for 10 years ago and still continue to work. I would suggest you to take a look around and dig deeper into some of the blockchain projects and you will understand how much blood, sweat and bits have been poured into this.

View on HN

I wonder if it occurs to people who "try to fix what's broken" that things are as they are for a reason, and it might be a good reason, a series of compromises and hacks necessary to create a system that is far from perfect, but that more-or-less works.

There are no doubt many things wrong with our financial systems, but I suspect they'll be fixed by gradual evolution that maintains what works, and not by a revolution that seeks to replace what we have with something that sounds good from a naive perspective, but is in reality much worse.

Well, the whole point of innovation is to question that "more-or-less works". Without that, we would still be hunter gatherers

And we won't be replacing anything overnight. That would be disastrous to the whole economy. But I really doubt that people who benefit from keeping things the way they are will actually work towards fixing any of them. You are actually asking them give up their incentives for the betterment and I don't think there are enough altruistic people who wanna do that.

Not that I am saying that crypto is any better but we need a strong counter party which questions fundamentals of any belief system (in this case, our current financial system) we have such that they will be forced to innovate otherwise they will go extinct

> Well, the whole point of innovation is to question that "more-or-less works". Without that, we would still be hunter gatherers

Do you really believe that it was one person or group of people that said 'hunting and gathering sucks, let's plant seeds and make forges and smelt iron'?

Or was it 'hey, I dropped some seeds and now they are growing, lets put some in dirt and see what happens', i++, goto 1?

To put it another way, how many times has 'let's scrap this working system that has some flaws and start over using an ideology as a back-end' worked out?

> We can all agree that the current traditional and digital finance systems are broken [...]

Could you expand on that? That's quite a strong opinion to assume everybody agrees on.

Not the original commenter, but: In certain countries transactions take about 2 days to be reflected. In most digital payments, the payment networks (visa/mastercard/amex) take a cut of 1-2.5% of the total payment value which is a large percentage of profit for a small establishment. The bank APIs are inconsistent are a huge mess to manage so including the regulatory barriers, if a new payment solution wants to come up , it's a lot of money , time and work. On top of that , different countries have different API standards.

There's value to be had in payment solutions and banking solutions being decoupled . Banks should more deal with lending and deposits , injecting cash flows into the economy , insuring deposits, etc. Payments should be , well, payments similar to from a wallet, with less regulation overall.

This is evolving slowly but surely - take a look at ISO20022 [1] and its adoption by SEPA network [2] in Europe (more slowly - adoption by most other banks throughout the world).

ISO isn't perfect but most things are just a minor XML adjustment, and the schema is well structured.

Europe/SEPA has free non-urgent transfers up to a certain amount. [3]

How do you increase adoption for this except to get involved politically and lobby? Unless you plan on rolling your own - in which case good luck.

[1] https://www.iso20022.org

[2] https://www.ecb.europa.eu/paym/integration/retail/sepa/html/...

[3] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...

Oh, I'm all for innovation here, I just don't see building the financial system back from the ground up as an effective way to innovate.

All the issues you've mentioned aren't issues core to our financial system, they can all be solved through iterative innovation - many countries are solving this, like Poland (which I use as an example cause I live here), which has free instantaneous cashless transactions both for payments and p2p use that work with all banks here (blik, slowly trying to expand to more countries).

Similar systems are in place in many other countries. Open banking standardized APIs have already spread across Europe, etc.

So tldr, no need to redesign the financial system to fix these, just disrupt it a little bit.

Also cryptocurrency hasn't actually solved any of these problems. If it did people would be using it in day to day life instead of speculation.

Bailing out Too-Big-To-Fail banks which privatise profits and socialise losses on increasingly abstract / difficult to understand financial instruments springs to mind.

If you're talking about the recent bank failures, that was in fact covered by other banks, no? It was not paid for by tax payers.

While the recent losses were in big part because of bonds and currency rate risk, so not a particularly abstract or difficult to understand instrument.

Not that being hard to understand is a bad thing. Something can be complex and still valuable.

And those problems are solved by crypto because… ?

How about - "current finance systems are broken for a lot of people across the world". And they manifest in terms of crazy inflation (Venezuela, Turkey, Sri Lanka, Pakistan), currency controls (China and many other places), despotic regimes (Russia, Iran, Taliban) etc. I see Bitcoin doing a lot more[1] for those people than traditional financial systems, either local or western.

[1] https://news.ycombinator.com/item?id=32406095

We're also privileged to be closer to understanding the systems and solutions. That makes it easier for us to view the massive amount of issues with the ecosystem as not the core of the cryptocurrency "craze".

Now imagine you're not a techie, that has no idea what's what? The propaganda concept of "rotten herring", that mars the whole, will take effect on the whole cryptocurrency concept.

For laypeople cryptocurrency is as much a mystery with it's own gatekeepers, as fiat money systems. Engineers becoming the gatekeepers, are definitely more open an excited about it... but to others swapping a banker to an anonymous engineer is not much of an upgrade.

So many gatekeepers have failed in providing essential protections that old gatekeepers still provide.

Crypto made fraud and mismanagement obvious and grandiose, even though the exact same happens with traditional financial system.

Technology can't catch on just because "there are some great projects"

> Crypto made fraud and mismanagement obvious and grandiose, even though the exact same happens with traditional financial system.

How? So much of the fraud has been both more common and just as opaque as the traditional finance sector (see FTX).

By association. What do you think FTX is associated with? (It wasn't associated with traditional banking...)

By volume traditional banking had more fraud and mismanagement, but it hasn't had literally years of massive headlines. (See "rotten herring") And in the end it doesn't build any confidence, because all of our money is literally based in trust. Even the value of gold is plain trust in it's value(see Mansa Musa's gold devaluation "pre fiat currency").

I don't remember a single year, without some massive cryptocurrency related headline... Even SVB and CreditSuisse failures were managed out better, than FTX.

> We can all agree that the current traditional and digital finance systems are broken

No we can't. I think the traditional and digital finance systems fundamentally work quite well. It's not all perfect, but it mostly works.

> We can all agree that the current traditional and digital finance systems are broken but I don't see any solutions being provided as an alternative.

Do we all agree? I think the traditional system is pretty good, and attempts to remove or bypass good regulation are steps in the wrong direction.

Reply on news.ycombinator.com