The explosion in stablecoins revives a debate around “free banking”(economist.com)
economist.com
The explosion in stablecoins revives a debate around “free banking”
https://www.economist.com/finance-and-economics/2021/12/04/the-explosion-in-stablecoins-revives-a-debate-around-free-banking
57 comments
As usual with crypto, it's up to the investor to perform due diligence.
BUSD as of Oct 29th had a market cap of $13.1B USD which was fully backed by fiat USD held in bank accounts which are audited monthly [1]
USDT has a market cap of $74B and has never been fully audited and last released an attestation report in March 2021.
[1] https://paxos.com/attestations/
BUSD as of Oct 29th had a market cap of $13.1B USD which was fully backed by fiat USD held in bank accounts which are audited monthly [1]
USDT has a market cap of $74B and has never been fully audited and last released an attestation report in March 2021.
[1] https://paxos.com/attestations/
> BUSD as of Oct 29th had a market cap of $13.1B USD which was fully backed by fiat USD held in bank accounts which are audited monthly.
You claim this and then link to a page explicitly labelled attestations - an attestation is not the same thing as an audit. None of the stablecoins have had an actual audit done AFAIK - Tether said they were going to do one, and then their accountant dropped them shortly afterwards.
You claim this and then link to a page explicitly labelled attestations - an attestation is not the same thing as an audit. None of the stablecoins have had an actual audit done AFAIK - Tether said they were going to do one, and then their accountant dropped them shortly afterwards.
> I'm assuming these stable coins aren't actually backed by $150bn in actual USD,
Maybe I am missing something, how is this different than banks employing fractional reserve banking?
Maybe I am missing something, how is this different than banks employing fractional reserve banking?
Several differences:
1) Fractional reserve banking has caused numerous financial crisies.
2) In the US, banks are required by law to carry deposit insurance (FDIC). While it is theoretically possible for the FDIC to become insolvent, that is far less likely than a bank becoming insolvent. Further, in practice, the FDIC can't fail because the government will just fund it directly if it's actual funds ran out.
3) While banks have less cash on hand than the sum of their debts; they are still solvent. That is to say, they are capable of paying back all of their creditors, they just need to be able to collect from their debtors in order to afford it.
When a bank takes a deposit for $100, they have a $100 liability, and a $100 asset in cash. Net worth $0, technically solvent.
They then loan out $90. Considering the likelihood of repayment, interest rate, and loan term, this debt is an asset that is worth (hopefully) >$90, so the bank remains solvent. The bank can take some of that surplass worth they have to do things like pay salaries, build offices, fund FDIC, give executive's their bonues, etc.
In contrast, when a stablecoin takes a deposit of $100, they have a $100 liability and $100 asset in cash. If they take $90 to pay salaries, they now have only $10 dollars in assets and are insolvent. In theory, a stablecoin could loan out that $90, or use it to invest is something else. If they do this, they are in roughly the same situation as the bank where they are hoping that their asset ends up being worth as much as they expect. They are also less regulated then banks, so the odds of something going wrong (either mallisiously or not) is greater.
In practice, even the normal banking system runs into some issues:
* Deposits into banks are much more liquid then loans out of banks. In theory, everyone can decide to withdraw all their money tomorrow. But if you took at a mortgage, the bank may have to wait 30 years to be fully payed back. This can be mitigate by selling debt to other institutions, or taking out loans backed by the debt, but you can still run into issue when these markets experience problems.
* Debtors do not always pay back what they owe to the banks. In theory this is accounted for, but if banks overestimate the actual value of the debts, they can end up in a situation where they are actually insolvent.
1) Fractional reserve banking has caused numerous financial crisies.
2) In the US, banks are required by law to carry deposit insurance (FDIC). While it is theoretically possible for the FDIC to become insolvent, that is far less likely than a bank becoming insolvent. Further, in practice, the FDIC can't fail because the government will just fund it directly if it's actual funds ran out.
3) While banks have less cash on hand than the sum of their debts; they are still solvent. That is to say, they are capable of paying back all of their creditors, they just need to be able to collect from their debtors in order to afford it.
When a bank takes a deposit for $100, they have a $100 liability, and a $100 asset in cash. Net worth $0, technically solvent.
They then loan out $90. Considering the likelihood of repayment, interest rate, and loan term, this debt is an asset that is worth (hopefully) >$90, so the bank remains solvent. The bank can take some of that surplass worth they have to do things like pay salaries, build offices, fund FDIC, give executive's their bonues, etc.
In contrast, when a stablecoin takes a deposit of $100, they have a $100 liability and $100 asset in cash. If they take $90 to pay salaries, they now have only $10 dollars in assets and are insolvent. In theory, a stablecoin could loan out that $90, or use it to invest is something else. If they do this, they are in roughly the same situation as the bank where they are hoping that their asset ends up being worth as much as they expect. They are also less regulated then banks, so the odds of something going wrong (either mallisiously or not) is greater.
In practice, even the normal banking system runs into some issues:
* Deposits into banks are much more liquid then loans out of banks. In theory, everyone can decide to withdraw all their money tomorrow. But if you took at a mortgage, the bank may have to wait 30 years to be fully payed back. This can be mitigate by selling debt to other institutions, or taking out loans backed by the debt, but you can still run into issue when these markets experience problems.
* Debtors do not always pay back what they owe to the banks. In theory this is accounted for, but if banks overestimate the actual value of the debts, they can end up in a situation where they are actually insolvent.
> if banks overestimate the actual value of the debts, they can end up in a situation where they are actually insolvent.
I think everyone here knows they'd never do that!
I think everyone here knows they'd never do that!
Of course they would do that, which is why they historically are required by regulators to more than 100% back their liabilities with assets.
With stablecoins, does anyone even care?
With stablecoins, does anyone even care?
Banks don't lend out deposits though - a $100 loan creates both a $100 liability - the value in the customer's account - and a $100 (plus interest) asset - the loan itself - which also balances out to $0. The process literally creates money, meaning a bank could theoretically lend money even if it had no deposits at all. The constraints on making loans come from central bank requirements and regulations, not deposits made.
The fractional reserve model makes sense for commodity-backed money or things such as stablecoins that are backed 1:1 in some way, just not for banking in the modern economy where physical money is only a small part of the money supply.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
The fractional reserve model makes sense for commodity-backed money or things such as stablecoins that are backed 1:1 in some way, just not for banking in the modern economy where physical money is only a small part of the money supply.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
>which also balances out to $0
>The process literally creates money, meaning a bank could theoretically lend money even if it had no deposits at all
If the assets and liabilities balance, why describe it as "literally creating money"?
It makes it sound to me like someone gained something, like banks have a special privilege, and like money is a physical resource.
And being able to lend money without deposits is possible whenever a bank has money from another source. Are you suggesting that there is something non-obvious going on that permits bootstrapping from nothing?
>The process literally creates money, meaning a bank could theoretically lend money even if it had no deposits at all
If the assets and liabilities balance, why describe it as "literally creating money"?
It makes it sound to me like someone gained something, like banks have a special privilege, and like money is a physical resource.
And being able to lend money without deposits is possible whenever a bank has money from another source. Are you suggesting that there is something non-obvious going on that permits bootstrapping from nothing?
> If the assets and liabilities balance, why describe it as "literally creating money"?
1) Say you have an account at FooBank with a balance of $1000, and I have an account there with a balance of $0. The total supply of money at this point is $1000.
2) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The total supply of money is now $2000!
Adding another layer:
1) I have an account at FooBank with a balance of $0. You have $1000 in cash in your pocket. FooBank has $0 of assets and $0 of liabilities. The money supply is $1000 of cash.
2) You open an account at FooBank and deposit your $1000 of cash. FooBank now has $1000 of assets (your cash) and $1000 of liabilities (your deposit), balancing out still. The money supply is also still $1000, now made up of $1000 of bank deposits and $0 cash.
3) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The bank now has $2000 of assets ($1000 cash plus my $1000 loan) and $2000 of liabilities ($1000 in each of our accounts), which still balances out. However the money supply is now $2000, made up of $2000 of bank deposits and $0 cash.
The money supply here is M1 or "broad money" which consists of the total of coins and bank notes plus deposits in checking/current accounts, which you can roughly think about as the total amount of money held by households and companies.
4) I withdraw $1000 in cash from my account at FooBank, leaving me with $1000 cash and $0 in my account. FooBank has assets of $1000 (my loan) and liabilities of $1000 (your account). The money supply is still $2000 but now comprises $1000 of cash and $1000 of bank deposits.
The bank's accounting of assets and liabilities always match up, as do ours - you started with $1000 of assets and no liabilities and ended up with exactly the same, while I started with $0 assets and $0 liabilities and ended up with $1000 of assets and a $1000 liability. However the total of our cash and bank deposit assets has gone from $1000 to $2000 i.e. the money supply has increased.
So yes, banks really do have a special role in the economy in that most "money" is in the form of bank deposits and most transactions involve moving money between bank accounts. It's not super-intuitive and doesn't quite fit the "common sense" view money as a set of tokens that just get moved about that's ingrained in our thinking - that works for cash, commodity money or cryptocurrencies, but not when viewing modern economies and fiat currencies where money is an IOU between two parties.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
https://www.investopedia.com/articles/investing/022416/why-b...
1) Say you have an account at FooBank with a balance of $1000, and I have an account there with a balance of $0. The total supply of money at this point is $1000.
2) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The total supply of money is now $2000!
Adding another layer:
1) I have an account at FooBank with a balance of $0. You have $1000 in cash in your pocket. FooBank has $0 of assets and $0 of liabilities. The money supply is $1000 of cash.
2) You open an account at FooBank and deposit your $1000 of cash. FooBank now has $1000 of assets (your cash) and $1000 of liabilities (your deposit), balancing out still. The money supply is also still $1000, now made up of $1000 of bank deposits and $0 cash.
3) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The bank now has $2000 of assets ($1000 cash plus my $1000 loan) and $2000 of liabilities ($1000 in each of our accounts), which still balances out. However the money supply is now $2000, made up of $2000 of bank deposits and $0 cash.
The money supply here is M1 or "broad money" which consists of the total of coins and bank notes plus deposits in checking/current accounts, which you can roughly think about as the total amount of money held by households and companies.
4) I withdraw $1000 in cash from my account at FooBank, leaving me with $1000 cash and $0 in my account. FooBank has assets of $1000 (my loan) and liabilities of $1000 (your account). The money supply is still $2000 but now comprises $1000 of cash and $1000 of bank deposits.
The bank's accounting of assets and liabilities always match up, as do ours - you started with $1000 of assets and no liabilities and ended up with exactly the same, while I started with $0 assets and $0 liabilities and ended up with $1000 of assets and a $1000 liability. However the total of our cash and bank deposit assets has gone from $1000 to $2000 i.e. the money supply has increased.
So yes, banks really do have a special role in the economy in that most "money" is in the form of bank deposits and most transactions involve moving money between bank accounts. It's not super-intuitive and doesn't quite fit the "common sense" view money as a set of tokens that just get moved about that's ingrained in our thinking - that works for cash, commodity money or cryptocurrencies, but not when viewing modern economies and fiat currencies where money is an IOU between two parties.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
https://www.investopedia.com/articles/investing/022416/why-b...
"1) Say you have an account at FooBank with a balance of $1000, and I have an account there with a balance of $0. The total supply of money at this point is $1000.
2) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The total supply of money is now $2000!"
The money supply didn't change as far as I can see.
At first: Me: $1000, FooBank: $-1000, You: $0
After your loan: Me: $1000, FooBank: $0, You: -$1000
The sum was $2000 before and $2000 after. Do you have an issue with any of the six numbers above?
You could, I suppose, say "I prefer to count the proceeds of my loan, rather than the debt, and not use a negative sign". Ok, but since we're adding the absolute values to get the total, it's still the same number.
After working it out painfully and slowly, it seems to me where you're going wrong is you think there is a fundamental difference between deposits and loans, other than the direction they're going in. I believe that's an error.
When I deposit money in the bank, that's just a type of loan. To the bank, rather than from the bank.
I'm pretty sure millions of people believe in and spread your meme about creating money, so feel free to explain why the majority is right.
2) I apply for a loan of $1000 and get it. My account now has a balance of $1000, and your account still has a balance of $1000. The total supply of money is now $2000!"
The money supply didn't change as far as I can see.
At first: Me: $1000, FooBank: $-1000, You: $0
After your loan: Me: $1000, FooBank: $0, You: -$1000
The sum was $2000 before and $2000 after. Do you have an issue with any of the six numbers above?
You could, I suppose, say "I prefer to count the proceeds of my loan, rather than the debt, and not use a negative sign". Ok, but since we're adding the absolute values to get the total, it's still the same number.
After working it out painfully and slowly, it seems to me where you're going wrong is you think there is a fundamental difference between deposits and loans, other than the direction they're going in. I believe that's an error.
When I deposit money in the bank, that's just a type of loan. To the bank, rather than from the bank.
I'm pretty sure millions of people believe in and spread your meme about creating money, so feel free to explain why the majority is right.
Counting money is complicated. When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.
Put another way, there are essentially 2 types of money: central bank money and commercial bank money.
When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.
When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing. The recipient of the loan is entitled to redeem that for $1000 of central bank money, but they probably wont, because cash is inconvenient and you can do most things with commercial bank money anyway.
Put another way, there are essentially 2 types of money: central bank money and commercial bank money.
When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.
When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing. The recipient of the loan is entitled to redeem that for $1000 of central bank money, but they probably wont, because cash is inconvenient and you can do most things with commercial bank money anyway.
>Counting money is complicated.
Is it?
>When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.
I...think I agree. Check my previous comment. The depositor "Me" has $1000. No negative sign, is there?
Maybe you meant to say something about the bank.
>When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.
If you exchange $1000 in "blue" money for "pink" money, you've got $1000 more "pink" money, I guess. But you've got $1000 less "blue" money.
>When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing.
"SomeoneElse" who got the loan has $1000, right.
It's the bank who doesn't have $1000. The $1000 deposit of "Me" plus the loan to "SomeoneElse" of $1000, means they have a total of $0.
Is it?
>When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.
I...think I agree. Check my previous comment. The depositor "Me" has $1000. No negative sign, is there?
Maybe you meant to say something about the bank.
>When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.
If you exchange $1000 in "blue" money for "pink" money, you've got $1000 more "pink" money, I guess. But you've got $1000 less "blue" money.
>When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing.
"SomeoneElse" who got the loan has $1000, right.
It's the bank who doesn't have $1000. The $1000 deposit of "Me" plus the loan to "SomeoneElse" of $1000, means they have a total of $0.
> Is it?
Take a look at https://en.m.wikipedia.org/wiki/Money_supply
You have M0, MB, M1, M2, M3, M4, and MZM.
I suppose the difficulty is more in defing money than counting. Apart from the M0 component (included in all counts) counting should just be a matter of aggragating data from all banks and the fed.
> "SomeoneElse" who got the loan has $1000, right.
Define $. "SomeoneElse" has $1000 of bank money. But the bank still has the $1000 of cash you deposited.
It might be easier to look at this through the definitions:
M0: Total amount of physical money. This is $1000 throughout the story. Only the Treasury is allowed to create M0.
M1: M0 + checking and savings accounts.
M0 is unchanged at $1000. However, there are 2 checking accounts with $1000, so M1 is $3000.
Take a look at https://en.m.wikipedia.org/wiki/Money_supply
You have M0, MB, M1, M2, M3, M4, and MZM.
I suppose the difficulty is more in defing money than counting. Apart from the M0 component (included in all counts) counting should just be a matter of aggragating data from all banks and the fed.
> "SomeoneElse" who got the loan has $1000, right.
Define $. "SomeoneElse" has $1000 of bank money. But the bank still has the $1000 of cash you deposited.
It might be easier to look at this through the definitions:
M0: Total amount of physical money. This is $1000 throughout the story. Only the Treasury is allowed to create M0.
M1: M0 + checking and savings accounts.
M0 is unchanged at $1000. However, there are 2 checking accounts with $1000, so M1 is $3000.
> The money supply didn't change as far as I can see.
Your numbers (1) look like a attempt to assess net assets and liabilities rather than money supply and (2) are wrong even for that.
Money supply (I’ll use M1 here because it's simple, but M2 or M3 wouldn't differ in any way material to the example, since the example consists entirely of cash and demand deposits) is the sum of all cash, demand deposits, travelers checks, and certain other highly liquid deposits in the economy.
At first: You have $1,000 in demand deposits. M1 is $1,000.
After the loan, you still have $1,000 in demand deposits and the loan recipient has $1,000 in cash (or, more likely, a demand deposit, because they probably get and deposit a check.) M1 is $2,000.
Your numbers (1) look like a attempt to assess net assets and liabilities rather than money supply and (2) are wrong even for that.
Money supply (I’ll use M1 here because it's simple, but M2 or M3 wouldn't differ in any way material to the example, since the example consists entirely of cash and demand deposits) is the sum of all cash, demand deposits, travelers checks, and certain other highly liquid deposits in the economy.
At first: You have $1,000 in demand deposits. M1 is $1,000.
After the loan, you still have $1,000 in demand deposits and the loan recipient has $1,000 in cash (or, more likely, a demand deposit, because they probably get and deposit a check.) M1 is $2,000.
I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.
I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
But I can't really engage with you about stuff other people wrote and what they might mean. I belatedly realized there were a bunch of people tag-teaming me.
I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
But I can't really engage with you about stuff other people wrote and what they might mean. I belatedly realized there were a bunch of people tag-teaming me.
> I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.
A new loan doesn't move assets between buckets it creates a new asset and a new liability. The asset is money, the liability is not money (nor is it negative money).
> I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
Money creation is fairly trivial if somewhat counterintuitive, but people talk about it because it is important in its economic effects.
A new loan doesn't move assets between buckets it creates a new asset and a new liability. The asset is money, the liability is not money (nor is it negative money).
> I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
Money creation is fairly trivial if somewhat counterintuitive, but people talk about it because it is important in its economic effects.
> The sum was $2000 before and $2000 after. Do you have an issue with any of the six numbers above?
Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank. Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean.
The money supply is the total cash and bank deposit assets of all individuals and corporations. Central bank money is different and isn't part of it.
Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank. Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean.
The money supply is the total cash and bank deposit assets of all individuals and corporations. Central bank money is different and isn't part of it.
>Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank
Wait, I thought the entire point is that FooBank is creating money? Do you want to pretend they don't exist?
>Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean
Ok, fine, you can have the $1000, it's not a loan after all.
Lemme update it:
At first:
So the cold hard truth is...
In sort-of real life, the FDIC would bail me out, I guess, and then I would have $1000, but that certainly would be the opposite of the bank creating it.
Wait, I thought the entire point is that FooBank is creating money? Do you want to pretend they don't exist?
>Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean
Ok, fine, you can have the $1000, it's not a loan after all.
Lemme update it:
At first:
Me: $1000 in deposits
FooBank: $1000 in assets - $1000 in deposits, total of $0
You: $0
Me: $1000 in deposits
FooBank: $1000 in liabilities, no assets
You: $1000
So the cold hard truth is...
Me: $0 in deposits
FooBank: (bust)
You: $1000
In sort-of real life, the FDIC would bail me out, I guess, and then I would have $1000, but that certainly would be the opposite of the bank creating it.
That's not a great analogy, you can't redeem currency at a bank.
My understanding is that stable coins are stable because they claim to be backed 1:1 by some other currency. If they are not actually doing that, then thats a fraudulent statement, isnt it?
My understanding is that stable coins are stable because they claim to be backed 1:1 by some other currency. If they are not actually doing that, then thats a fraudulent statement, isnt it?
Not all stablecoins claim redeemability for USD. Some claim each unit's redeemability for an amount of some digital asset that is worth 1 USD, with the amount redeemed fluctuating in proportion to the value of the digital asset, to maintain the stable value.
And all of the incentives are set up for the maintainer to take the money and run. Excessive ammounts of idle money is an attractive nuisance.
I do not know what I am talking about, but I would love to see some type of crypto actually start solving some type of problem, versus just being a speculative asset.
With the USPS trying to get back into banking, which they used to do in the past, I personally think this would be a great stablecoin opportunity for the underbanked. Be a perfect way to send money orders from end user to end user, USPS could have cash in their coffers.
https://www.executivegov.com/2021/10/usps-launches-pilot-ban...
With the USPS trying to get back into banking, which they used to do in the past, I personally think this would be a great stablecoin opportunity for the underbanked. Be a perfect way to send money orders from end user to end user, USPS could have cash in their coffers.
https://www.executivegov.com/2021/10/usps-launches-pilot-ban...
NFTs have solved a real problem for digital artists.
Outside of that yeah it’s hard to get excited about crypto atm even though I think it’s got a huge potential.
Outside of that yeah it’s hard to get excited about crypto atm even though I think it’s got a huge potential.
What problem is that? We had art auctions before and they already supported money laundering via value inflation.
What? I said NFTs SOLVED a problem. They introduced a liquid global permissionless marketplace for digital Art. That's a solution for digital artists who previously had to jump through tens of hoops to get anything out there with any value.
I think we're agreeing but I'm not sure.
I think we're agreeing but I'm not sure.
> tens of hoops to get anything out there with any value
Does it actually have value then? Money transfers / crypto payments existed before. So did services listing digital art. What did the nft provide?
Does it actually have value then? Money transfers / crypto payments existed before. So did services listing digital art. What did the nft provide?
please refer to the part where I said "liquid global permissionless marketplace" ?
Really tiring to repeat this 100x here on HN. For digital artists NFTs are a revolution.
Really tiring to repeat this 100x here on HN. For digital artists NFTs are a revolution.
[deleted]
The whole internet is a liquid global permissionless marketplace. You could offer me digital art ownership in the next comment and I could buy it from you. There's also lots of online galleries if you're after assets discovery. What does NFT as a tech add to this?
it adds an open-source, decentralized, immutable ledger
if you're a programmer, you'd know the difference between a single dev emailing you the repo and github.
You're effectively saying artists should be happy emailing each other repos (trusting that no one has screwed around with the code), instead of using a decentralized immutable form of version control.
if you're a programmer, you'd know the difference between a single dev emailing you the repo and github.
You're effectively saying artists should be happy emailing each other repos (trusting that no one has screwed around with the code), instead of using a decentralized immutable form of version control.
I don't see why you'd need to share repos, or any code, or involve any ledger. I've bought art online before, sent the payment, received the files, and neither party was interested in the things you mentioned.
You couldn't purchase digital art before NFTs in a permissionless global market. period.
Sorry but I can’t lead blind men to water.
> What problem is that?
They made less money and can now make more money.
They made less money and can now make more money.
>>Nor is it clear that wildcat banks are the summation of all historical experience of privately issued money. George Selgin of the Cato Institute, a libertarian think-tank, has likened the use of wildcat banking by critics of private-money issuance to the use of Germany’s interwar hyperinflation by critics of central-bank money issuance: both are extreme and negative examples, rather than representative. Scotland’s free-banking system between 1716 and 1844, for instance, is often cited as a period of stability. Three large banks and several smaller lenders all issued currency and redeemed each other’s notes at their full value.
>>Furthermore, at least some of the problems with American free banking may have reflected poor regulation rather than a total absence of it. Banks were often not allowed to have networks of branches and interstate banking was near-impossible, which limited the expansion of successful and trusted institutions. Many were also made to hold volatile state bonds as collateral. Slumps in the value of these could—and did—spark local banking crises.
In addition to the fact that it was the lack of freedom in banking that caused most wild banks in the so-called free banking era of the US, Selgin provides statistics showing that wildcat banks were actually very rare, with the pervasiveness of the phenomenon greatly exaggerated by the popular narrative that individuals in the regulatory sector, who are advocating for more centralization, promulgate, and use to justify their agenda.
>>Furthermore, at least some of the problems with American free banking may have reflected poor regulation rather than a total absence of it. Banks were often not allowed to have networks of branches and interstate banking was near-impossible, which limited the expansion of successful and trusted institutions. Many were also made to hold volatile state bonds as collateral. Slumps in the value of these could—and did—spark local banking crises.
In addition to the fact that it was the lack of freedom in banking that caused most wild banks in the so-called free banking era of the US, Selgin provides statistics showing that wildcat banks were actually very rare, with the pervasiveness of the phenomenon greatly exaggerated by the popular narrative that individuals in the regulatory sector, who are advocating for more centralization, promulgate, and use to justify their agenda.
Imagine being a billionaire because you convinced enough people to give you money in exchange for a promise.
Pretty sure this is exactly how most startups get funded.
And this is HN. Imagine how the rest of the world thinks.
Fundraising as we know it will be replaced by coin offerings soon.
Just consulted on a project that was able to raise $20m on their own through a yield farm and is using it to build out their product team and do tons of marketing.
Defi is the future, anyone who doesn’t see that is being willfully ignorant.
Just consulted on a project that was able to raise $20m on their own through a yield farm and is using it to build out their product team and do tons of marketing.
Defi is the future, anyone who doesn’t see that is being willfully ignorant.
Well, some people will get rich. Many will lose a lot of money.
Yeah, that’s called capitalism.
It's the worst parts of capitalism if you have people getting rich by taking advantage of others.
I love how these conversations always come up in relation to defi/crypto.
I don’t know what world you live in, but it’s like you guys believe there is some kind of ethics or moral high ground in sneering at something you barely understand.
I don’t know what world you live in, but it’s like you guys believe there is some kind of ethics or moral high ground in sneering at something you barely understand.
I'm saying if your plan to get rich is to scam people you're just a jerk.
>>>Just consulted on a project that was able to raise $20m on their own through a yield farm
Jeez. Over how long of a timeframe, and how much did they start farming with?
Jeez. Over how long of a timeframe, and how much did they start farming with?
They launched the token and farm, it was their fundraising mechanism for the project and it is still ongoing.
Its for a game with play-to-earn mechanics, still early phase but they just made a ton of big hires.
Its for a game with play-to-earn mechanics, still early phase but they just made a ton of big hires.
Congrats you've reinvented ponzi schemes
Oh my, never heard that one before.
People’s willingness to speak confidently from a position of ignorance always surprises me.
People’s willingness to speak confidently from a position of ignorance always surprises me.
> raise $20m on their own through a yield farm
What is a yield farm and how is is structured?
What is a yield farm and how is is structured?
That’s a very googleable question, but in a nutshell it is a series of smart contracts that reward token holders for holding a staking a token.
It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility.
It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.
It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility.
It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.
OK, so it's a shadow bank: lend long, into other people's short term borrowing.
So it must have extremely high interest rates? Which raises the question, who's borrowing all this and how's it collateralized?
So it must have extremely high interest rates? Which raises the question, who's borrowing all this and how's it collateralized?
I think you are starting with an incorrect assumption and trying to work your way backwards from it.
If you want more mature examples of this structure in the wild I would start with pancakeswap ($4b market cap) and apeswap ($500m market cap).
If you want more mature examples of this structure in the wild I would start with pancakeswap ($4b market cap) and apeswap ($500m market cap).
I'm assuming these stable coins aren't actually backed by $150bn in actual USD, which is the underlying problem here and harkens back to the issue with the era of unstable "wildcat" banking in the US before 1863:
> Before America instituted a national currency in 1863, banks issued their own banknotes, backed by assets and redeemable for gold or silver. Critics of stablecoins often point to this period of free banking, and the example of unstable “wildcat” banks in particular, as a cautionary tale.