Would love to better understand the connection between railroads and cryptocurrencies, if possible.
Railroads, scams aside, were extremely important for the economy for at least 50 years after this scam.
Same with crypto? Really? And NFTs, too?
Railroads, scams aside, were extremely important for the economy for at least 50 years after this scam.
Same with crypto? Really? And NFTs, too?
In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040. And meanwhile, nearly everything "financial" involving counter-parties will happen on-chain.
Why? Because public blockchains eliminate counter-party risk for a large number of transactions, provide unparalleled transparency, and give anyone with an internet connection access to global financial markets, enfranchising billions of people who are otherwise locked out due to unsatisfactory local conditions. Blockchain tech will make developed economies more efficient, and will accelerate development world-wide.
If you don't agree that public blockchains actually do anything useful, then you'll probably object to the railroad analogy. But if you see value in blockchains, then there are clear parallels:
• Initial cost of the build-out being funded by early investors who might not be around to realize the long-term benefits of the technology.
• Speculative energy attracting scammers alongside legitimate operators.
• Long-term benefits not being obvious after the first wave of investment dies down.
• The true value of the technology only being realized when network effects are fully realized, years after the technology's introduction.
Saying this doesn’t make it self evident. What exact counter party risk is eliminated by blockchain technology? I know there’s alot of hype around the public ledger, but what transparency does it provide beyond that? It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play.
What about fraud?
Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Look at all the good micro loans have done in developing nations for instance
Some specific examples currently available:
• Atomic swaps, where traded assets are immediately moved between accounts upon execution of the trade, eliminate the possibility that settlement will not complete.
• Real-time commerce, where merchants accept payments in a format that can immediately be turned around and spent, without waiting for reimbursement from third-party networks.
• Loans backed by on-chain collateral, such that default triggers immediate transfer of collateral, eliminates the risk that collateral may not be obtainable upon default, or that the value of collateral may fall too far before the loan is liquidated.
> It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play.
Open databases can be digested and analyzed by open-source tools, and by trusted independent third-parties. Closed databases cannot be analyzed by anyone except for the database owner and government authorities. Some government authorities are trustworthy, others are under-resourced, incompetent or corrupt. Even if you personally won't read the full history, you benefit from other people being able to do so.
> Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today.
Problems can have multiple good solutions! Still, open API access is different from open access to underlying data and algorithms. Open APIs and blockchains can co-exist and benefit from each other.
> What about fraud?
Fraud is a complex topic. The traditional financial system has seen lots of fraud over the years (think about what we witnessed in 2008). Credit card fraud is also a rampant problem that is only managed by large financial firms heavily surveilling payment networks.
There are fraud vectors that blockchain networks are more susceptible to—just like there are other fraud vectors that blockchain networks are less susceptible to than traditional financial systems.
In my view, the greatest fraud risk in crypto comes from the issuance of tokens that are questionable in some way—a risk that I think can be eliminated if strong controls are implemented regarding the issuance of tokens on-chain.
Cash already does that and so does my chip n pin card.
There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash).
Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.
Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment? In the US, merchants have to pay fees and/or interest to get same-day access to that money—because such access effectively functions as an advance on receivables. In most countries, same-day settlement is completely unavailable.
Cash isn't much better. Can a store owner pay for inventory with cash? Maybe some inventory, but most things need to be paid for electronically. Can a retailer process payroll using cash? Turning cash into electronic money is a hassle and a security nightmare. Armored cars exist for a reason, and they aren't free.
Crypto payments can be spent immediately upon receipt. No settlement delay, no need for armored cars.
> There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash).
Funny. What is the advertisement selling?
> Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.
This comment reminds me of the Kodak executives who thought there would never be a market for the digital camera the company had invented, because its resolution was so much lower than that of film.
Your information is out-of-date. Bitcoin is slow. Next-gen crypto is fast. Personally, I'm partial to the lightning network, which finalizes payments in seconds.
Yes they do. I also get notified about a Chip n PIN transaction or an account to account transfer before I've turned around and walked off (I hear my phone beep).
The advert is for onions ... OK for a mobile phone company.
> In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040.
While this is certainly possible, it is not assured. We KNOW that railroads ended up being very important; we can, at best, guess that crypto will be as important for our financial systems.
I am also skeptical of White if he is implying that access to capital was a central limiting factor in the Civil War; a more focused problem was that by far the largest industrial complex in the South was located in Baltimore, Maryland. Since neither opponent, whatever its funding, was in a position to be building new cities during the conflict, the de jure loss of its largest city limited the Confederacy's production of war materiel. In fact in a counterfactual USA where the robber baron Gilded Age had been the first Renaissance of a seceded CSA, I can imagine that a lot of the period's economic development and chicanery which occurred in Philadelphia, New York and New Jersey would have been located in Maryland and of course Virginia.
> Cooke had donated millions of dollars to Grant’s winning re-election bid for the presidency in 1872. Before that, Cooke had grown immensely wealthy by building an investment network that sold more than $1.6 billion in Civil War bonds to small-time investors across the North. Grant had lauded him for ensuring the Union’s successful campaign against the Confederacy, which had far less capital.
> Cooke later harnessed his pioneering direct-to-consumer investment concept to offload bonds in a scheme selling the latest technology—railroads—to the next generation of individual investors. “It was like selling to crypto investors today,” says historian Richard White, author of Railroaded: The Transcontinentals and the Making of Modern America. “These investors were basically living off of the promises of famous people they had trusted before.”