This is becoming a meme. Anyone can post a comment containing the words web3, ponzi, scam, hype and add literally no value but still get upvoted.
My take on crypto at this point is very simple: At least we have the transparency. There are so many scams going on in the financial industry. But it's hard to undercover, because all is opaque.
It is the same with energy costs. Has anyone dared to calculate the CO2 release of traditional core banking systems or even running a large network of physical branches. No, because it's difficult and opaque. With the public blockchain these things actually can be calculated, which is a good thing I believe.
Same with art. Is the broad public aware of the crazy price tags paid in the art scene over the last two decades? NFTs make this public.
If more people would embrace the transparency created instead of complaining about the space all the time, we would create a better world.
You say that Web3 and NFT results in more transparency.
But I work for a bank and our money laundering systems and processes automatically kick in for suspicious transactions and those over a certain amount. We will freeze transactions until we conduct due diligence aiming to identity the true parties e.g by unsheathing shell companies as well as the nature and intent of the transaction.
And this is through a range of methods including requesting supplemental documentation and involving law enforcement.
Can you clarify for any of the million dollar Bored Ape Yacht Club purchases who the true parties are given that supposedly this information can be derived from the blockchain ?
Interesting, we have different view points on similar industries. I work for an insurer and we see a lot cyber related theft and fraud, especially in the financial industry but also in other industries. Often the people are from outside the company, but very often they have people inside the company.
In most cases the money can’t be recovered because it gets quickly wired to countries like Nigeria or HK. It’s a whole industry. Completely opaque because no company likes to talk about the losses. These things are handled quietly.
On a different level: I believe many structured products purchased by private consumers are at least a rip-off and could be categorized as scam. Take for example life insurances sold by brokers with lifetime contracts yielding almost no interest whatsoever. There is a constant battle between regulators, lawyers and companies.
> There is a constant battle between regulators, lawyers and companies
Which has unquestionably benefited consumers.
If you look at the financial system 50 years ago and compare it to today consumers have far more rights and protections. And the system continues to learn and improve e.g. requiring banks to hold more reserve capital and increasing the amount of deposit insurance.
Problem for Web3 is that governments, regulators and the legal system do not play a central role like in Web2. And so all of the safety nets built up over these years will evaporate and consumers will suffer.
Whoever's going to push web3 will still want that opacity, it's a feature, not a bug. They'll want it to make money and to protect and hide their money.
Plus you can't have it both ways, either cryptocurrencies are somehow, magically, privacy protecting and anonymous, or you have transparency. It's impossible to have both.
It would be possible to derive who the million dollar purchasers of bored apes are. Crypto has fiat on-ramps that are mostly controlled these days. And if the crypto changed hands in the meantime then it would be clear where it originated.
Realistically, the buyers of bored apes are not really of interest to anyone and the NFTs probably won't be worth anything in the future.
When crypto is used to purchase things that actually matter then it will most likely be a trivial matter to identify whether the coins are "tainted".
> My take on crypto at this point is very simple: At least we have the transparency. There are so many scams going on in the financial industry. But it's hard to undercover, because all is opaque.
How do you square this idea with the fact that the cryptocurrency ecosystem is widely recognized as being disproportionately riddled with scams?
I am not sure if I understand your question? My whole point is that it is "recognized as being disproportionately riddled with scams" because of the transparency.
You have summarized my main problem with cryptocurrencies: it's cool to have that technology available, but it doesn't really improve on having first world institutions.
Basically it's great for poorer countries, first world criminals and potentially for a dystopian future.
You don't understand how decentralized systems that provide cryptographically-assured accountability improves on existing institutions in the first world?
I find that curious. Usually people get lost on the tech side.
Decentralized systems don't provide cryptographically-assured accountability, they require cryptographically-assured accountability in order to function correctly. If you give up the decentralization requirement, and instead federate authority across well-regulated entities, then you don't need the crypto, not as a base requirement anyway. And you still need the regulation, because all this fancy cryptographical assurance does is prevent man-in-the-middle attacks that arise from the decentralization requirement, and you still need to regulate the input and output--which is where all fraud occurs anyway.
Exactly. The hard problem is to build and maintain the democratic institutions required by a developed country. I find some people seem to be willing to gamble that for a tech solution.
I usually find it's the opposite to be honest. Most people that I know that have a good understanding of how the technology works are far more sanguine about what it can and cannot do. Whereas those friends and acquaintances who understand the technology the least tend to be far more zealous in its potential.
I don't understand it either. In fact, I don't think it's true at all. I think if you think technology is a substitute for well-functioning democratic institutions you're an ignorant fool.
The technology does not replace democratic institutions, but it makes them enforceable and accountable. The real ignorant fools are those kidding themselves into thinking their "democratic institutions" are well-functioning.
You could say that Turkey was a well functioning democracy. But look now with Erdogan, and Turkeys inflation is at 49%.
Having access to some stablecoin like UST could saved a lot of people troubles. Without really having the burden to go buy dollars or euro's in some form or another.
The fact that inflation is at 49% should be the first clue that Turkey does not have well-functioning institutions. In addition to Turkey's numerous economic problems, there was a coup attempt as recently as 2016, and the government has been accused by international human rights groups of using the judiciary to persecute journalists and political opponents. How does Tether, or crypto in general, help solving any of these problems? Not to mention that Tether Inc., the corporation that issues Tethers, has never been audited, and has zero accountability to holders of Tethers. Holding Tethers entails a huge risk.
That's a good example. My current favorite example would be the UK, and the so-called democratic British government. The democratic façade has fallen away spectacularly over the last few years. There is no way to hold anyone to account when there is corruption at the top. They don't even need to hide it anymore.
The borders are gerrymandered, fair voting is hamstrung by FPTP, funding is withheld from constituencies where the MP doesn't tow the party line, and both public money and foreign bribes go into the pockets of the elite few. Clearly a well functioning democracy, a pillar of the West, where government officials may place themselves above the law. Lying in Parliament? Free pass. Calling out lying in Parliament? Ejected from the discourse.
But at least Sir Boris led an inquiry into Sir Boris and found Sir Boris free of guilt.
I really don't think it's so crazy to think that the adequate application of crypto can lead to well-functioning democracies for precisely this reason; we can have real accountability.
>It is the same with energy costs. Has anyone dared to calculate the CO2 release of traditional core banking systems or even running a large network of physical branches. No, because it's difficult and opaque. With the public blockchain these things actually can be calculated, which is a good thing I believe.
I think every major bank has got some folks doing that. It's a prerequisite of green washing.
That might be available on company but not on a system level. So I don't think there is no way to compare it with the energy consumption of an entire blockchain.
But just a very public example: Look-up the company Wirecard or google cum-ex fraud. Fraud on a huge level. All going on behind the curtains. We sometimes get a sneak peak when something on the level of Wirecard blows up. Just extrapolate that for a second to the entire economy.
I agree and I am not trying to defend those people. At the same time you rarely ask for the identities of bankers or people running scam company since you don't know about the fraud in the first place. You need the New York Times to go investigate and uncover.
With web3 you just need to login into twitter and follow-up the transactions. That's a huge advantage from my perspective.
For federally chartered banks the names of all the executives and major shareholders are public records and I do search such things before doing business with a bank.
I just realized I haven't had coffee so off to have that so I can write in a way that doesn't make me sound like a jerk.
My take on crypto at this point is very simple: At least we have the transparency. There are so many scams going on in the financial industry. But it's hard to undercover, because all is opaque.
It is the same with energy costs. Has anyone dared to calculate the CO2 release of traditional core banking systems or even running a large network of physical branches. No, because it's difficult and opaque. With the public blockchain these things actually can be calculated, which is a good thing I believe.
Same with art. Is the broad public aware of the crazy price tags paid in the art scene over the last two decades? NFTs make this public.
If more people would embrace the transparency created instead of complaining about the space all the time, we would create a better world.