
Blockchain takes us back to medieval times - hhs
https://ftalphaville.ft.com/2019/06/14/1560516935000/How-blockchain-takes-us-back-to-medieval-times/
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bduerst
This feels like promoted content for the paper, which is hidden behind an lead
generation form.

The author is debating using distributed ledgers for security trading, which I
don't think anyone is seriously considering. Even if they _are_ , the author
is narrowly defining such a system and then attacking it based on it's narrow
definition, without exploring the option of other financial instruments
filling the gaps. I'm critical of blockchains/distributed ledgers/etc. in
finance but this article just seems bizarre, until you try to see the original
paper and hit a form wall.

~~~
etherael
Thanks for the summary. The egregious attempts to accrue data these days are
getting annoying.

> They author is debating using distributed ledgers for security trading,
> which I don't think anyone is seriously considering.

[https://www.tzero.com/](https://www.tzero.com/) You mean like this?

It's interesting the way commentators tend to take all pieces of some random
slice of the blockchain space as "the way things are always will be and must
be by definition", especially without even seeming to realise that's what
they're doing as you say with the example of assuming that you can only
possibly use credit rather than debit instruments on a DLT.

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hash872
While I'm in general a blockchain & crypto skeptic- worth noting that FT
Alphaville are not arguing in good faith, they are self-proclaimed contrarians
who are fanatically anti-tech, anti-tech companies, and in particular anti-US
tech companies. They are especially obsessed with blockchain and Tesla/Musk.
They churn out 1-2 anti-crypto or anti-Musk or anti-Silicon Valley opinion
pieces like this literally every day, apparently for a British finance
industry audience. I used to enjoy the blog, but it's veered into anti-tech
(and frankly, borderline anti-American tech) zealotry. (None of this is meant
to be an endorsement of blockchain, but I can be skeptical while still
examining the system in good faith)

~~~
subsubsub
FT have the same issue with Brexit - woah there! take your mouse of off of
that down vote and hear me out!!!

Since the vote came back they have had a constant stream of negative articles
both related to the current days events and repeats of what they have said on
previous weeks.

Their authors are now at the point that if Brexit does happen, and it is
anything less than a total economic apocalypse, they will look like they got
it wrong.

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jermaustin1
[http://archive.is/fCr8o](http://archive.is/fCr8o) in case you get the
register box like I did

~~~
bduerst
Also reformatted at [https://outline.com/7NYFsJ](https://outline.com/7NYFsJ)

~~~
JumpCrisscross
Outline is wholly inferior to the Internet Archive [1]?

Outline is a private site run by unknown people with unknown motivations. Its
privacy policy [2] (a) names no actual person or responsible entity, (b)
permits business transfers (implying it's a for-profit entity) and (c) permits
changes at Outline's sole discretion.

The Internet Archive, on the other hand, is a nonprofit run by known,
reputable people.

[1] [https://archive.org](https://archive.org)

[2] [https://outline.com/privacy.html](https://outline.com/privacy.html)

~~~
bduerst
That may be true but they're not really competing for archiving. As an end-
user, I prefer an easy-to-read format, and outline is superior in that regard.

~~~
otoburb
>>As an end-user, I prefer an easy-to-read format, and outline is superior in
that regard.

Quite possibly an alternative/new fundraising channel for the Internet
Archive.

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ei8htyfi5e
I do think crypto will allow us to enter a new age feudalism. Companies are
building houses on campus, they have cafeterias, they will have their own
money. This will all be at the expense of the commons and the nation state. In
the process of writing a well thought out piece (by my standards, I'm sure
there will be haters) and I'll post in the coming weeks.

~~~
pathOf_aFineMan
This is a really interesting line of thought which, coupled with current
protections via this idea of corporate personhood, does begin to portray
companies as being far above mere workers in power and status.

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boh
I don't get what this argument is.

Blockchain is software so you can just build layers on top of it that cover
whatever business need you may have. If I look at the just the database layer
of the current system, it'll also be "medieval" in certain respects.

Maybe blockchain isn't a viable technology, but this article doesn't make a
particularly convincing argument against it.

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wpskidd
There are actually several outfits explicitly dedicated to trading equities
(and even mortgages) on blockchain. One of the most advanced is Polymath.io.

The implementation is true blockchain it just isn’t completely decentralized
blockchain like bitcoin. Instead, trust authorities would establish client
accounts after due diligence and KYC and AML requirements had been met. Then
those accounts would leverage blockchain to facilitate transactions on a
transparent and indelible ledger.

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stevedekorte
100% reserves on deposits doesn't prevent anyone from making loans. It only
prevents them from doing so with demand deposits. For example, they are free
to sell bonds - they just can't _force_ depositors to buy bonds unless they
choose to.

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mocha_nate
It takes us back because of pre-funding trades. I dont know what the author
means...

~~~
ksdale
I believe it's referring to the idea that because settlement of transactions
happens instantly on blockchain, there is no lag time between a commitment to
make a trade, and the trade itself, which means there is no credit, which
means much less liquidity in markets.

I read this whitepaper: [http://perspectives.dtcc.com/articles/steampunk-
settlement](http://perspectives.dtcc.com/articles/steampunk-settlement)

In it, they mention that there only needs to be deposited cash of something
like $8 billion to enable like $250 billion (I may be getting the exact
numbers wrong) worth of trades on the NYSE because they can offset trades
against each other as they come in and settle the trades hours after they are
entered without needing cash at the moment the trade is placed. If cash was
required at the moment of placing the order, much, much more cash would be
required than is currently required.

~~~
whatshisface
> _which means there is no credit_

Why not just have explicit credit instead of implicit credit?

~~~
ksdale
I'm not really a finance guy, but just off the top of my head, explicit credit
requires trust, which mostly defeats the purpose of the blockchain, where
you're trying to transact without needing trust.

I also assume that explicit credit is more expensive administratively than the
kind of liquidity provided by a clearinghouse. I guess technically the NYSE
(or whoever the clearinghouse for the NYSE is) is extending traders credit in
the sense that it must believe they are good for the trades they make without
requiring them to post full collateral for every trade, so in a way, it is
explicit, it's just not bilateral between each pair of traders.

But also, I'm in way over my head here.

~~~
dfox
Once you start to do transactions that involve transfer of anything off-
blockchain (ie. any really useful transaction) you still have the same issues
with trust and credit as without blockchain or whatever. What blockchain
solves is somewhat fast settlement of monetary-ish transfers, which to me
looks like a problem that does not really exist. (In my exerience SEPA
transfers are mostly instantenuous and generally irreversible)

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machawinka
To avoid the oracle problem you are forced to pre-fund you side of the
contract with 'real' digital currency. But the financial system moves forward
borrowing from the future and creating private money, neither of which is
posible if you are forced to show upfront that you have the money to serve
your financial obligations. Capitalism is not based on math, it is based on
human trust, take that variable out and we are back into a pre-capitalist
system, a medieval era.

~~~
dead_mall
And thus Chainlink! They aim to do just that: fixing the oracle problem

~~~
hanniabu
Blocknet is also another viable alternative

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cwkoss
A decentralized self-issued credit system will be the next major form of money
after crypto.

~~~
TeMPOraL
You mean like IOUs, aka a step above barter?

~~~
cwkoss
IOU x Barter X Web of Trust X automated market making based on degree of trust
in an individual

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cphuntington97
TL;DR: Distributed ledgers don't allow enough circulating cash to make the
economy go?

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bongobongo
Most forms of technolibertarianism are just feudalism with gizmos.

