[disruptalot]

This was a failure of traditional financial institutions and people who are ok with them, not of crypto.

Satoshi wouldn't be encouraging people to put their coins on a trusted third party like that. All fundamental crypto values say this.

[gjulianm]

Precisely the failure of crypto is thinking that people will follow "fundamental crypto values" and underestimating the power of convenience and ignorance. "Traditional financial institutions" are inevitable in crypto.

[xur17]

But at least in crypto I have the OPTION of storing it myself.

Also, if I do decide to use a custodial provider, I can choose to use a provider that publishes proof of reserves [0], giving me more confidence in the provider.

[0] https://www.kraken.com/proof-of-reserves

[narrator]

Fractional reserving is taken as something that is good and wonderful, but before you had the fed who could print money at will, you had banking crashes caused by it on a regular basis.

In a fixed money supply currency, fractional reserve banking should be illegal and banks should instead make money off fees. Venture capital should put their own money at risk to invest in the economy. How will people afford houses though? The housing market booms and busts because of the wildly fluctuating availability of credit caused by the money multiplier rapidly creating and destroying money which is tied to the fractional reserve banking concept. Homes would be drastically cheaper and people would actually be able to save to buy them if it weren't for the huge supply of rapidly created and later contracting credit available to buy them. Things we buy with credit like housing and education have gone up steadily in price, while things bought with cash have not.

The fractional reserve people are so sick of crypto, that ,in one platform, you can buy bitcoin but you can't send it to a crypto address. You have to get your friend on the platform, you can send it to them, and then they can convert it back into fiat. It's ridiculous, you're basically just buying and selling a security that tracks Bitcoin and not Bitcoin itself.

[xtracto]

I remember when WikiLeaks first decided to accept Bitcoin's for donations. Nakamoto cautioned that Bitcoin was not mature enough fr something like that.

I think that the problem with the Cryptocurrencies movement has been that the use peopel want to give to it has surpassed the technological advances that it provides. At some point, the ETH network will get there, providing "trustless" alternatives for a lot of the stuff that CeFi services are giving. But that is still several years away.

[jrm4]

I love this observation, because I think it's the perfect wedge point. Will most people fail at this? Yes.

But -- will every single entity that actually does follow "fundamental crypto values" be destroyed? Almost certainly not. That's where the good (and healthy) action is. Follow THAT, everyone.

[zeroclip]

A lot of day traders on FTX are learning first hand the value of DeFi and self custody.

[ethanbond]

But you realize that banks (and individuals) could have all the advantages of decentralization if they just chose to be decentralized too, right? This prompts the question: why are they so centralized? It turns out the advantages of centralization are more significant than the advantages of decentralization, and this is true even in a market with religious orientation toward decentralization.

All you've gotta do to get people to keep their coins "correctly" is eliminate the benefits of agglomeration. Good luck!

[yuvadam]

Banks can't choose to be decentralized when the whole point of their existence is to custody centralized fiat money.

[mtkhaos]

Issue is they reinvented the wheel in the crypto space. Centralized or decentralized it's all on the same market is only a matter of scale. As even in centralized markets the concept of edge is just hitting parity.

What really surprised me about the space was the refusing of not registering as a speculative asset. As even if you look into the regulations, it's merely making the mechanisms transparent and creating reporting.

As if DeFi followed through with the true promise of decentralization and transparency. The FTX situation would never have happened in the first place. So with that, the crypto space actually went against its principles and we are seeing the result.

[more_corn]

There are benefits to both centralization and decentralization. In fact this tension drives a lot of technological improvement.

[dncornholio]

Centralisation isn't even a problem. Not getting any money is a problem though. Doesn't matter if the place where it's at is centralised or not.

The decentralised instances are experiencing all kinds of trouble.

I fucking love centralisation!

[warinukraine]

> But you realize that banks (and individuals) could have all the advantages of decentralization if they just chose to be decentralized too, right?

What are the advantages of decentralization in this context? Be specific.

[gruez]

>But you realize that banks (and individuals) could have all the advantages of decentralization if they just chose to be decentralized too, right?

The closest you can get to decentralization with the traditional finance system is to withdraw and store cash, which is expensive/risky and causes inflation to eat away at your savings. Good luck with other parts of the finance system (eg. investments or loans). It's ironic how you portray centralization as something that people willingly engaged in because it was beneficial, considering that the disadvantages are all there by design (eg. the government refusing to make high denomination bills, or instituting a monetary policy that causes inflation).

[phailhaus]

> Satoshi wouldn't be encouraging people to put their coins on a trusted third party like that. All fundamental crypto values say this.

You can literally say this about "regular" currency. Just don't put your money in banks! But people do, why? Once you answer that, you'll realize why people do it for crypto too. You can't complain that it's "against fundamental crypto values" when it doesn't have any mechanism for preventing it. It's convenient, it has benefits, therefore people do it.

[criddell]

I put my money into a bank because the bank is FDIC insured. The risk is less than keeping it in a safe in my house.

[gruez]

>But people do, why?

1. cash is bulky and risky to keep at home

2. inflation eats away at your savings

Bitcoin is designed to solve both issues.

[rejectfinite]

A bank is insured and has a guarantee...

[300bps]

Satoshi wouldn't be encouraging people to put their coins on a trusted third party like that.

I find this sentiment of "not your coins, not your crypto" unsettling. The average person doesn't even back up the pictures on their computer or phone and they are one storage device failure away from losing all of their wedding pictures, baby pictures, etc.

The big push now is for people to use hardware wallets. I guarantee that 50% of people over the span of a decade will lose access to 100% of their funds.

2023 will be about everyone learning how much of a joke cryptocurrency is.

[criddell]

> will lose access to 100% of their funds

Or, if you think like foreignpolicy.com thinks:

> The crypto bag-holders all actually lost their money long before, when they bought the bitcoins. In the time since, they’d been telling themselves and everyone else that their magic beans were worth money and never mind the lack of buyers. But this was not the case. The beans were always worthless, and the only way to make money from them was to sell them off before other people caught on.

[RC_ITR]

Yes, but that happening is a failure of crypto.

If decentralized were actually better, then why would people flock to centralization?

[ushtaritk421]

Crypto can't fail, it can only be failed.

[dagmx]

I’d argue that your comment is a failure to understand human desire for convenience and trusted services however.

Decentralization is at odds with that. It’s not convenient. It’s not easy. It’s not simple. Not for a lay person anyway.

When an ecosystem comes along and can solve those for the masses, it’ll be revolutionary.

[andybak]

I'm technically competent and (before I got out entirely) my coins were on Coinbase.

Why? Because I decided the odds of Coinbase going down were less than the odds of losing the coins myself without their help. There were just too many ways I could have messed up my own wallet.

[skinnymuch]

We don’t even know if Satoshi is an intelligence agency or not.

In any case. Satoshi was about using Bitcoin as a currency not a store of value, right? So either way this view is butchering what Satoshi wanted

[GrabbinD33ze69]

Traditional institutions will always be dominant in some capacity, as many people are attracted to the convenience they offer. Unless something catastrophic occurs, crippling traditional financial systems or are truly compelling/easy to use platform releases, I can't imagine anything not owned by a "Traditional institution", let alone anything close to what Web 3 proponents preach regarding decentralization & where ownership lies.

[bmitc]

The only way for crypto to ever be a thing will be to integrate with traditional financial systems, to a degree. Continually beating the drum of “this isn’t crypto” has not worked and will never work aside from making crypto fundamentalists feel like they’re the only ones on the one true path.

[anon291]

Unfortunately, absent the crypto exchanges, which let you easily convert crypto to fiat, there is no reason why crypto has any value. Given that bitcoin transaction times are nowhere near VISA or cash times, bitcoin is fairly useless to purchase things in person and few online vendors take bitcoin alone (most use an exchange to convert bitcoin to cash instantly).

So without exchanges, there is literally no purpose or use of bitcoin. Currently it mainly serves as a way to record a store of fiat value.

There is no conspiracy here. The reason exchanges came into being and were successful was that there was no other purpose to bitcoin. Few users successfully use bitcoin as it was intended.

[raspberry1337]

> there is no reason why crypto has any value. Given that bitcoin transaction times are nowhere near VISA or cash times,

You interchanged crypto with bitcoin, but bitcoin is not all crypto. The value of crypto comes from them being decentralized and independent of a financial bank. This has the negative side effect of it being very valuable to illegal and fradulent activity, too.

[alangibson]

I can't believe it's been 5 minutes and no one has said 'lightning network' yet.

[status200]

Having sent $100k via traditional banks as well as crypto, I can add my anecdote that the latter was far easier. Some would argue that it shouldn't be that easy, and I agree to some extent.

Setting up our tax system to be transparent and auditable by any citizen would be the greatest benefit to a distributed ledger, but something tells me that the current institutions would heavily resist that transition, so you are correct that it has little current value.

[anonymousab]

> All fundamental crypto values say this.

This feels mighty similar to the old "communism didn't fail people, people failed to do real communism" rationalization.

[roflyear]

Then it proves that crypto is flawed for other reasons.

[disruptalot]

Alternatives:

- Crypto is being used and abused by people and purposes that don't need it.

- Fundamental practices haven't matured yet.

[WFHRenaissance]

Literally a non-argument lol

[Tao3300]

I'll bet you use the word "fiat" a lot.