Will DeFi Kill Banks?

[mjnaus]

1 hour ago, lkn said:

What I was asking for, was an actual use case that would appeal to the common consumer, and a use-case that is actually possible today

Ok, I'll bite.

The Chai payment system, is used by roughly 2 million South Koreans at around 2.200 merchants (including Nike and Phillip Morris) to pay for stuff. As of August the platform processes over 100.000 transactions daily by around 50.000 daily active users. Most of these users have no idea they're using crypto rails to pay for stuff. For subscribing merchants, Chai facilitates instant settlement (which compared to days, or weeks on conventional rails matters a lot) at a fraction of the costs of legacy payment networks. 

Edited October 3, 2021 by mjnaus

[lkn]

1 hour ago, Bassosa said:

I bought some Bitcoin using my savings and that Bitcoin is now yielding approx 7-8% interest. 

Sounds like a fantastic return. I am curious:

1. How is it possible to get such a good return? I.e. how is the value being generated.
2. What kind of security do you have? I.e. is there any risk of losing all your invested funds.
3. Have you heard of Stefan Qin? I.e. the latest kid to be busted for running a crypto investment scheme that turned out to be a ponzi (he ran it for 3 years before being caught).

And btw, if you transfer your bitcoins to me, I will give you 9-10% interests, I have this great arbitrage system, but I need more liquidity to increase the returns. The 9-10% are guaranteed for at least the first 3 years! ????

 

[freedomnow]

5 hours ago, Neeranam said:

Did you know that El Salvador's currency is now Bitcoin and they use volcanoes to mine it? They are also talking about using nuclear power.

Like something out a scifi novel from Arthur C Clarke....

[Bassosa]

2 minutes ago, lkn said:

Sounds like a fantastic return. I am curious:

1. How is it possible to get such a good return? I.e. how is the value being generated.
2. What kind of security do you have? I.e. is there any risk of losing all your invested funds.
3. Have you heard of Stefan Qin? I.e. the latest kid to be busted for running a crypto investment scheme that turned out to be a ponzi (he ran it for 3 years before being caught).

And btw, if you transfer your bitcoins to me, I will give you 9-10% interests, I have this great arbitrage system, but I need more liquidity to increase the returns. The 9-10% are guaranteed for at least the first 3 years! ????

 

Google Nexo and/or Celsius.

Value is being generated through customers who borrow fiat using their crypto holdings as collateral. They obv. pay interest on those loans. Thought behind this is that most don't want to sell their crypto when for instance, they want to purchase a car. Rather take a loan.

[lkn]

45 minutes ago, mjnaus said:

Most of these users have no idea they're using crypto rails to pay for stuff. For subscribing merchants, Chai facilitates instant settlement (which compared to days, or weeks on conventional rails matters a lot)

Majority of these are probably *not* going over crypto rails:

 

“CHAI serves e-commerce companies with an API called I’mport, that allows them to accept payments from over 20 options, including debit and credit cards through local payment gateways, digital wallets, wire transfers, carrier billings and PayPal.”

 

I.e. this is not that different from the many other digital wallets that tend to piggyback on existing payment infrastructure, unless you do wallet-to-wallet.

 

Also, it does not take days or weeks to settle payments: Domestic payments have had instant settlement in most countries for more than a decade.

 

And CHAI is a startup with $75 million in venture funding offering an API, so this doesn’t seem to be decentralized / peer-to-peer.

 

When something has to be decentralized and trustless, there is an enormous overhead, therefore it is by definition always more effective to centralize. I.e. worst case, the overhead for running a trustless network would be zero, but then the central organization could just run the exact same network (it would not add any overhead).

 

Adding to that, in developed countries we generally trust our central institutions like banks, payment processors, and our government. Therefore it really doesn’t make a lot of sense to pay this enormous overhead, to get rid of the centralized institutions we trust, especially because if we remove these centralized institutions, we also remove a lot of security. I.e. in the current system, there is bank deposit insurance, there is a chargeback system, there is a bank you can call if you have any problems, and they can help you, e.g. if you have been the victim of scam.

 

I just don’t see a world where normal people would prefer the wild west of finance over the established system, especially because, as we have seen, a trustless system attracts all the people that you can’t trust, so you have removed the guard rails, and also released the wolves…

 

[Bassosa]

2 minutes ago, lkn said:

Majority of these are probably *not* going over crypto rails:

 

“CHAI serves e-commerce companies with an API called I’mport, that allows them to accept payments from over 20 options, including debit and credit cards through local payment gateways, digital wallets, wire transfers, carrier billings and PayPal.”

 

I.e. this is not that different from the many other digital wallets that tend to piggyback on existing payment infrastructure, unless you do wallet-to-wallet.

 

Also, it does not take days or weeks to settle payments: Domestic payments have had instant settlement in most countries for more than a decade.

 

And CHAI is a startup with $75 million in venture funding offering an API, so this doesn’t seem to be decentralized / peer-to-peer.

 

When something has to be decentralized and trustless, there is an enormous overhead, therefore it is by definition always more effective to centralize. I.e. worst case, the overhead for running a trustless network would be zero, but then the central organization could just run the exact same network (it would not add any overhead).

 

Adding to that, in developed countries we generally trust our central institutions like banks, payment processors, and our government. Therefore it really doesn’t make a lot of sense to pay this enormous overhead, to get rid of the centralized institutions we trust, especially because if we remove these centralized institutions, we also remove a lot of security. I.e. in the current system, there is bank deposit insurance, there is a chargeback system, there is a bank you can call if you have any problems, and they can help you, e.g. if you have been the victim of scam.

 

I just don’t see a world where normal people would prefer the wild west of finance over the established system, especially because, as we have seen, a trustless system attracts all the people that you can’t trust, so you have removed the guard rails, and also released the wolves…

 

Again, its the wild west of finance now, but will develop over time and become mainstream, possibly even regulated.

[Neeranam]

17 minutes ago, lkn said:

Sounds like a fantastic return. I am curious:

1. How is it possible to get such a good return? I.e. how is the value being generated.
2. What kind of security do you have? I.e. is there any risk of losing all your invested funds.
3. Have you heard of Stefan Qin? I.e. the latest kid to be busted for running a crypto investment scheme that turned out to be a ponzi (he ran it for 3 years before being caught).

And btw, if you transfer your bitcoins to me, I will give you 9-10% interests, I have this great arbitrage system, but I need more liquidity to increase the returns. The 9-10% are guaranteed for at least the first 3 years! ????

 

I get 12% p.a with my largest crypto holding -  Polkadot. I could get as much as 18% but prefer the security of staking it with a US bank -  Kraken.

There are many possibilities to earn a passive income with cryptos with the DeFi revolution. 

Never heard of Qin. The mistake many make regarding crypto is when there is a Ponzi scheme, they think all crypto is it, which is ridiculous. Most Ponzi schemes use the US dollar. 

 

 

[Neeranam]

5 minutes ago, lkn said:

Adding to that, in developed countries we generally trust our central institutions like banks, payment processors, and our government.

Hmm, Bitcoin was invented because of what happened with the banks in 2008. 

[Chosenfew]

The naysayers are the old farts that don’t understand the internet 3.0. These are the same folks that claimed that cars would never replace horses or airplanes would never replace trains.

 

Regarding energy consumption, brick and mortar old fashion banks waste much more energy than crypto, that’s just a stupid argument.

[mjnaus]

4 minutes ago, lkn said:

Majority of these are probably *not* going over crypto rails:

 

“CHAI serves e-commerce companies with an API called I’mport, that allows them to accept payments from over 20 options, including debit and credit cards through local payment gateways, digital wallets, wire transfers, carrier billings and PayPal.”

 

I.e. this is not that different from the many other digital wallets that tend to piggyback on existing payment infrastructure, unless you do wallet-to-wallet.

 

Also, it does not take days or weeks to settle payments: Domestic payments have had instant settlement in most countries for more than a decade.

 

And CHAI is a startup with $75 million in venture funding offering an API, so this doesn’t seem to be decentralized / peer-to-peer.

 

When something has to be decentralized and trustless, there is an enormous overhead, therefore it is by definition always more effective to centralize. I.e. worst case, the overhead for running a trustless network would be zero, but then the central organization could just run the exact same network (it would not add any overhead).

 

Adding to that, in developed countries we generally trust our central institutions like banks, payment processors, and our government. Therefore it really doesn’t make a lot of sense to pay this enormous overhead, to get rid of the centralized institutions we trust, especially because if we remove these centralized institutions, we also remove a lot of security. I.e. in the current system, there is bank deposit insurance, there is a chargeback system, there is a bank you can call if you have any problems, and they can help you, e.g. if you have been the victim of scam.

 

I just don’t see a world where normal people would prefer the wild west of finance over the established system, especially because, as we have seen, a trustless system attracts all the people that you can’t trust, so you have removed the guard rails, and also released the wolves…

 

The TechCrunch article you're quoting is old (early last year if memory serve me right?) and Chai has since moved to settle ALL payments using Terra's blockchain. 

 

The fact that Chai is a venture backed company is completely irrelevant. You asked for a real life use case, for regular consumers, that uses blockchain/crypto tech. This is exactly what Chai does; the (venture backed or not) company uses crypto rails to settle e-commerce transactions. IMO, this is how crypto/blockchain tech will make its way into the "real" world. Onramps tend to be centralized, simply because it makes sense (like centralized exchanges).

[lkn]

22 minutes ago, Bassosa said:

Google Nexo and/or Celsius.

“Transfer your crypto to Celsius and you could be earning up to 17.78% APY in minutes”

 

Right, so I am to believe, that if I transfer my money to them, they can lend them out to someone else, who will pay more than 17.78% (and not default on their loan)?

 

This is double ridiculous because if I want to borrow from Celsius, I only need to pay 1% in interests… although I have to provide 4 times the amount in security, but it still does not explain how they can lend out money for 1% and pay depositors 17.78%.

[sucit]

5 minutes ago, lkn said:

“Transfer your crypto to Celsius and you could be earning up to 17.78% APY in minutes”

 

Right, so I am to believe, that if I transfer my money to them, they can lend them out to someone else, who will pay more than 17.78% (and not default on their loan)?

 

This is double ridiculous because if I want to borrow from Celsius, I only need to pay 1% in interests… although I have to provide 4 times the amount in security, but it still does not explain how they can lend out money for 1% and pay depositors 17.78%.

The owner talks every week on YouTube to people like you. There are hundreds of hours of vids explaining it all. I’m sure you won’t watch any of them and just keep calling it a scam instead. Easier that way. Not quite as wise however. 

[lkn]

15 minutes ago, Neeranam said:

The mistake many make regarding crypto is when there is a Ponzi scheme, they think all crypto is it, which is ridiculous. Most Ponzi schemes use the US dollar

I think it is the opposite. People tend to think that Tether, Binance, etc. are operating ethically, even though there is a lot of smoke (indicating price manipulation, that USDT is unbacked, etc.), and a long trail of exchanges, investment funds, and other former big players, that were caught basically running frauds.

[mjnaus]

3 minutes ago, lkn said:

“Transfer your crypto to Celsius and you could be earning up to 17.78% APY in minutes”

 

Right, so I am to believe, that if I transfer my money to them, they can lend them out to someone else, who will pay more than 17.78% (and not default on their loan)?

 

This is double ridiculous because if I want to borrow from Celsius, I only need to pay 1% in interests… although I have to provide 4 times the amount in security, but it still does not explain how they can lend out money for 1% and pay depositors 17.78%.

If you're so skeptical, maybe shoot an email to BlockFi? They offer a similar product (although rates are a bit lower) and are fully regulated as a financial service provider (check here for all the licenses etc they have). 

 

[sucit]

7 minutes ago, lkn said:

“Transfer your crypto to Celsius and you could be earning up to 17.78% APY in minutes”

 

Right, so I am to believe, that if I transfer my money to them, they can lend them out to someone else, who will pay more than 17.78% (and not default on their loan)?

 

This is double ridiculous because if I want to borrow from Celsius, I only need to pay 1% in interests… although I have to provide 4 times the amount in security, but it still does not explain how they can lend out money for 1% and pay depositors 17.78%.

I wanna give you the short answer though just because I am in the mood. The short answer is because the banks have been screwing you over for decades, you think these rates are impossible. Can’t really blame you, but just realize a bank could give you a little piece of the 20% they loan to a cc borrower (and they get to load your money out multiple times to by the way, fractional reserve and all). But they give you nothing, and you think that’s normal. It’s all ok though, you’ll be on board in the end, one of the last to buy in. Fine with me. 

[lkn]

7 minutes ago, sucit said:

The owner talks every week on YouTube to people like you. There are hundreds of hours of vids explaining it all. I’m sure you won’t watch any of them and just keep calling it a scam instead. Easier that way. Not quite as wise however. 

Many scammers have had very public personas, take e.g. the Canadian exchange Quadriga CX, the founder (Gerald Cotten) was very active in the Canadian bitcoin community, sponsored a conference, etc.

 

In the end, the exchange collapsed and more than $100 million in funds were missing.

 

And this is not an isolated instance. Edit: Wasn’t there a BitConnect conference in Pattaya? That also turned out to be a ponzi, despite heavily promoted by some public people.

Edited October 3, 2021 by lkn

[sucit]

4 minutes ago, lkn said:

I think it is the opposite. People tend to think that Tether, Binance, etc. are operating ethically, even though there is a lot of smoke (indicating price manipulation, that USDT is unbacked, etc.), and a long trail of exchanges, investment funds, and other former big players, that were caught basically running frauds.

One thing to think about is the value of all crypto dropped over 50%. Nothing happened. All the loans were backed and settled. No bailouts. Nothing. This is a fair system. 
 

imagine if tomorrow something similar happens to the legacy financial system, and everyone’s assets where worth half. It’s pure collapse and then onto fraud like govt intervention. 

[sucit]

4 minutes ago, lkn said:

Many scammers have had very public personas, take e.g. the Canadian exchange Quadriga CX, the founder (Gerald Cotten) was very active in the Canadian bitcoin community, sponsored a conference, etc.

 

In the end, the exchange collapsed and more than $100 million in funds were missing.

 

And this is not an isolated instance.

The guy who runs Celsius made the <deleted> we use to call people on the internet, or

 

5 minutes ago, lkn said:

Many scammers have had very public personas, take e.g. the Canadian exchange Quadriga CX, the founder (Gerald Cotten) was very active in the Canadian bitcoin community, sponsored a conference, etc.

 

In the end, the exchange collapsed and more than $100 million in funds were missing.

 

And this is not an isolated instance.

So, you’re basically saying “there are scammers in the world”. 
 

ok. Yes. There are scammers everywhere. 

[lkn]

25 minutes ago, Chosenfew said:

Regarding energy consumption, brick and mortar old fashion banks waste much more energy than crypto, that’s just a stupid argument.

The brick and morter banking system do a lot more than 7 transactions per second globally, so that is a bad excuse for bitcoin’s immense waste of resources.

 

As for “old farts”, if it is not clear from my comments, I have been watching this space for many years, I was interested in, and understood, the concept long before there was any mainstream hype.

 

But after a decade, and there is still no proper use case for this, other than regulatory arbitrage, but this can be done more efficient, for example we had Liberty Reserve from 2006-2013 (before 13 different countries co-operated to shut it down, which they probably can also do with many of the blockchains, by going after the on/off ramps).

[lkn]

5 minutes ago, sucit said:

So, you’re basically saying “there are scammers in the world”. 

This was in response to company promising 17.78% in interest rate, just transfer all your crypto to them, and no, they are not scammers, because the founder talks on YouTube…

[lkn]

OK guys, we are nearing 3 pages, and no-one have explained what DeFi can do *better* than traditional finance, so I’m calling it quits…

 

Enjoy the rest of the weekend!

[mjnaus]

Just now, lkn said:

OK guys, we are nearing 3 pages, and no-one have explained what DeFi can do *better* than traditional finance, so I’m calling it quits…

 

Enjoy the rest of the weekend!

Alright bud. I am sure you're exhausted from all the mental gymnastics needed to make the world fit with your chosen narrative. You'll come around sooner or later.

Night night!

[The Cipher]

Quote

But after a decade, and there is still no proper use case for this

At first I was gonna answer this for the 1,359,329,494th time on here, but then I thought I'd just get straight to asking what we all really want to know.

...

Are you Grand Papillon's alt account?

[GrandPapillon]

10 hours ago, QPRFC said:

ICP Crypto is the future coin....believe me. 

 

However, this is not financial advice and you should seek professional advice as always ????

of course, thanks for clarifying and will go to coinbase ASAP and buy a sh*t load of them like a good lemming that I am ????

Edited October 3, 2021 by GrandPapillon

[GrandPapillon]

6 minutes ago, The Cipher said:

At first I was gonna answer this for the 1,359,329,494th time on here, but then I thought I'd just get straight to asking what we all really want to know.

...

Are you Grand Papillon's alt account?

seeing me hiding under your bed now, I should feel honored I guess ????

[GrandPapillon]

6 hours ago, lkn said:

Because it is a negative sum game.

 

I am familiar with both MicroStrategy, El Salvador (and the dumpster fire from their bitcoin law), and most other things happening in this space. I have been following it since the beginning. Initially based on interest in the concepts, but these days all the fraud is far more interesting, all the problems that happen in an unregulated space, all the mistakes made costing double digit millions in accidentally entered gas fees, or bugs in smart contracts paying out millions, hacks, all the libertarians that haven’t gotten a clue about how the real monetary system works, Tether printing $70 billion worth of stable coins, and repeatedly caught lying about how this is backed, refusing to do any audits, yet the peg continues to hold, Etherium keep saying they will retire proof of work in 18 months, the lightning network which require solving the Canadian traveller problem to work, etc.

 

The only actual use of this “technology” seems to be avoiding regulation on money transfers (in a highly inefficient way) and various forms of frauds (ponzi/pyramid schemes, pump & dumps, etc.).

 

And the energy waste is very real!

amen to that brother,

[GrandPapillon]

4 hours ago, lkn said:

This is appeal to authority, but none of these people are really authorities about this, and if you dig into these people, for some you will find skeletons in the closet, some already got scammed in the crypto space and are now calling for regulation, some are just riding the hype, etc.

 

Twenty years ago, when people were skeptical about Madoff, you could also argue with A-list celebrities who had fallen for his con, that doesn’t change the fundamentals.

 

What benefit is DeFi / crypto providing?

please stop using logic in your arguments, it's just beginning to be embarrassing ????

 

[GrandPapillon]

3 hours ago, Bassosa said:

Gensler is chairman of the SEC. His lectures at MIT are on Youtube. You should look into it. He is definitely an authority.

and he is cracking down on Cryptos, he made an announcement about it early this year

[GrandPapillon]

50 minutes ago, lkn said:

This was in response to company promising 17.78% in interest rate, just transfer all your crypto to them, and no, they are not scammers, because the founder talks on YouTube…

priceless, isn't it? there is indeed one born every minute ????

[GrandPapillon]

48 minutes ago, lkn said:

OK guys, we are nearing 3 pages, and no-one have explained what DeFi can do *better* than traditional finance, so I’m calling it quits…

 

Enjoy the rest of the weekend!

that's because there is nothing they can do a better, it's a pipe dream of frustrated GenY and GenZ, they will learn the hard way when they lose all their savings in that scam ????