To paraphrase the first episode of https://podcasts.apple.com/us/podcast/two-and-a-half-coins/i... the banking world was already decentralized, so much that it’s inefficient and insecure. Crypto, at least part of the technology, is about simulating some sort of centralization by using a distributed database (which is resilient to byzantine faults). So banks can switch backbone for a more efficient and secure one, users don’t have to know or care about it.
I see this as a great opportunity to learn the next few lessons of traditional Finance system that lead to them not being finite and only driven by market forces.
Crypto really feels like a speed run of human monetary history.
Which money are you talking about? Most monies are driven substantially by monetary policy and other direct government intervention. The very reason fiat is no longer finite is due to government intervention in the 1930s (going off the gold standard).
Bitcoin (e.g.) is actually much more like gold in that the amount of it in circulation isn't determined by any law, policy or intervention.
It's more fair to say that currencies only decided to 'go infinite' starting in 1971. [1] Up until then Western currencies were still driven by the Bretton Woods System. [2] In this system the USD was convertible to gold at a fixed rate, which was a defacto gold backing. Of course 50 years feels like an eternity to most of us, because it's literally our entire existence. But on a historic scale 'infinite' currencies may yet end up being one of the most short-lived widescale experimental failures in monetary systems, ever.
This is even more true if one considers that after we defaulted on our obligations under Bretton Woods, we almost immediately transitioned to the petro dollar, making the USD the only way to obtain the most in-demand commodity in existence. So it still kind of had a backing. We've only really started to become 'free floating' extremely recently as more major oil producers turn against the petrodollar. And it doesn't seem to be leading to happy places.
There's a nuance here. When Germany and Canada trade, they settle that balance in USD. This means if another country just prints a bunch of money, they're actually going to suffer for it. By contrast, when the US prints a bunch of money, it means countries whose currencies strengthen against it stand to risk pricing themselves out of the biggest consumer market in the world. It tends to drive other countries to also weaken their currency. This is one of the ways that the US exports its inflation - "exporting inflation" being a term you could find a lot more hits on if this topic interests you.
If you look at countries by debt to GDP, the US is peers with economies like Laos, Sudan, Italy, Venezuela, and so on. [1] The unique position of the dollar alongside being the largest consumer economy gives the government immense room to absorb economic blunders. At least until the house of cards collapses, which will make 1929 look like the good ole days. This is one of the many reasons people are interested in currencies that cannot be manipulated outside of normal market forces.
> Bitcoin (e.g.) is actually much more like gold in that the amount of it in circulation isn't determined by any law, policy or intervention.
How so? Bitcoin is a set of political/economic ideas about money encoded into software by a group of humans, who are historically known to sometimes change their minds over time.
As long as I don't change my mind, my wallet software will not see any of those changes as legitimate, just as it didn't see Bitcoin Cash or Bitcoin SV as legitimate.
The chain is very mutable! How would SegWit and other changes have been implemented otherwise? Or does the official chain stop at some point in 2011 for you, soon after the genesis block?
Every fork happens in order to effect some change – and whether that change is beneficial or not is the matter of policy, not technology.
Voting against a fork (with your mining power or wallet) is also a policy decision. You can't escape human nature in a system built and used by humans, not even in a very conservative/change-averse one, because conservatism is, once again, a human value, not a technological one.
> The chain is very mutable! How would SegWit and other changes have been implemented otherwise?
Through backwards-compatible soft forks.
Nobody removed the ability to make non-segwit transactions. SegWit did not change the existing transaction format or change the chain, it repurposed the "anyone-can-spend" transaction space.
Unlike with a lot of other cryptocurrencies, the Bitcoin dev team bends over backwards to try to make sure their protocol updates extend the existing protocol rather than changing it.
And most critically neither issuance nor balances have been changed, with the exception of the isolated value overflow error that was corrected during Bitcoin's infancy in 2010.
> Every fork happens in order to effect some change – and whether that change is beneficial or not is the matter of policy, not technology.
It's a matter of individual opinion. And with Bitcoin, every individual user can assert their own opinion by running the protocol version that aligns most with their own opinion. You can't opt out of your bank's software update.
> Voting against a fork (with your mining power or wallet) is also a policy decision. You can't escape human nature in a system built and used by humans, not even in a very conservative/change-averse one, because conservatism is, once again, a human value, not a technological one.
I can't argue with that. Being a bitcoin user is inherently a policy decision.
Everyone makes a policy decision by clicking the "download" button. It's part of Bitcoin's strength and it's part of Bitcoin's weakness.
The amount of bitcoin in circulation is very much determined by policies - the software of the bitcoin clients and servers. It is quite possible that mining rewards will be altered in the future as the amount dries up.
The difference is this would require a hard fork, and the value of this fork would be determined entirely by market forces. Imagine if when the US decided to 'print' a few trillion bucks, it resulted in the creation of a new USD2 currency. And you were free to keep using USD1 or swap over to USD2. More or less the exact same thing has already happened with Bitcoin multiple times, with the outcome you could expect.
It's quite interesting in an economic sense too because, unlike our USD2 analogy, in the Bitcoin world users actually keep all their money in both forks (so if you have $1000 in USD, you'd also have $1000 in USD2) yet disproportionately favor one currency to the point that e.g. Bitcoin Cash is worth $217 per coin, while BTC mainline is worth $26,000 per coin.
Not necessarily. The main BTC software has already changed a few times over the years, and nothing prevents it from changing again. If the BTC maintainers and major miners would agree, they could very well push this change. The same way they decided to stop expanding the block size, for example.
The forks were the result of a split in the community. Not every change actually results in a fork.
Bitcoin is not immutable. The current chain would make absolutely no sense to a (full-validating) client from 2011 due to various additions and protocol changes.
What it is, as a project, is being extremely conservative, but that's a human political value, not a property of a technical system.
None of that is a given with central custodians, which very often already have to comply with regulations concerning money laundering, embargo enforcement etc.
> (instead of the awful SWIFT)
SWIFT is a real-time messaging network.
International transactions being slow has almost nothing to do with legacy technologies – it's partially outdated processes (batch processing facilitates netting, and netting preserves liquidity!), but overwhelmingly that we (or at least the regulators making the rules) want them to be slow enough to be able to intervene in case of financial crimes.
I’ve transferred a few million dollars with CurrencyFair by now, the transfer across continents has always been less than 24hrs, the notification from my bank arriving before the emitter tells me it’s sent; only 4$ per transaction (so 0.003%) and the rate always within 0.5% of the stock exchange (less than the 2-3% it costs with Bitcoins).
Therefore the point of faster settlement and less burocracy doesn’t stand unless you are selling weapons, which proves that Bitcoin is only useful for criminal schemes.
State of the art crypto is instant payment, not “less than 24h”. For example, I get paid in crypto sometimes for work, I just get the money directly. The last gig I did in USD was like 2 weeks ago and I still haven’t seen the money in the bank account (altho bill.com has confirmed that it was sent)
Corrupt courts can't steal it, so my phrases on paper and USB locked in safes separated by 2000 miles helps me diversify. Governments do collapse, and I can recreate my signing keys from anywhere. It's different than a dozen gold coins in my pocket.
How is a crypto custodian immune to court orders, corrupt or otherwise?
> my phrases on paper and USB locked in safes separated by 2000 miles
That's nice (unless you lose access to both or make some other operational mistake), but literally the opposite of central crypto custody, which is what this thread is about.
I thought it was about self-custody via a web browser extension. Did I misread the article about Mark Cuban losing funds and then sending some to a custodian?
