this post was submitted on 13 Nov 2024
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Blockchain is a solution in search of a problem. A way to establish trust while not trusting any party is a cool concept, but in the real world it's far easier to establish a source of trust.
Idk I think centralised trust is a problem in and of itself but you can just look to history and world events that created bank runs and financial crashes like y'know - 2008, a year later the bitcoin ledger began.
Yes but it also comes with problems as mentioned above. Blockchain tech being used for scams if anything is evidence of it being a mature and functional technology for finance because under capitalism it's all inherently a scam of some sort.
That said we shouldn't let perfect be the enemy of good, I'm glad the technology exists even if I don't think it achieved what it set out to do quite as well as one would've hoped, if for no other reason than the fact we can all just buy any drugs online now with one day delivery instead of being stabbed on the street after calling some number like barbarians in the olden days.
The blockchain doesn't prevent a run on the "banks." If everyone decides to cash out at the same time out of fear of a crash then the currency crashes and there isn't enough money to liquidate everything (until it has no value). It isn't an improvement for that. If anything, it's a negative. Banks can implement policies to prevent it, but you can't really do so with crypto.
It would be useful for things like deeds and contracts. Instead of having a bank hold it and provide proof you could store it on the blockchain. There are a handful of good uses for it, but it's generally not useful for the stuff most people think it would be.
Well, you can't do fractional-reserve banking with bitcoin (or any other coin I know of), so in that way, a "run" on a bitcoin can only ever exhaust the supply. lending out more than you have requires trust, and that's not available in a blockchain structure.
On the other hand, fractional reserve banking is the foundation of all modern financial systems, so it's not really a thing we're going to scrap.
Well, yes but no.
There's a lot of problems with blockchain deeds, and one of the big ones is confirming the first owner. What's to prevent me from minting a smart-contract that says I own your house? Or that I own a house that doesn't even exist? In the real world, we've solved those problems (and MANY more) with notaries and central registration systems. At the interchange of digital-ownership and real-world, physical assets, you're always going to need a trusted party to verify that the two match. And at that point, you don't need the blockchain at all.