Traditional banking abstracts the complexity of finance from you, gives you guarantees that your money is held by a regulated authority that can reimburse you in some cases of fraud. The bank has a know your customer (KYC) system and has to answer to regulators.
Underneath this nice facade is a compartmentalised and opaque system and machinery that holds your ledger. Someone can type into a computer and move your money to another account. Its a ledger under the hood that is only secured by internal protocols, external regulation and safeguards.
Leaky abstractions #
All systems are vulnerable to fraud, social engineering because the weakest link in any system is the human. In banking if a rogue employee starts lining their own pockets or acting in a dishonest way they can be sent to prison or fined. The bank is keen to avoid this sort of abuse because it will generate huge fines from regulators so the bank will be compartmentalised.
Crypto currencies are a kind of leaky abstraction where you as custodian of your crypto wallet have more freedoms and less middle men interfering. The complexity and risk is now completely on your shoulders so crypto has become synonymous with scams, fraud, hype cycles and complexity.
Crypto currencies need sharp edges #
I believe that algorithmic systems like crypto currencies are the future of finance. I want to be the custodian and have complete control over my money without middlemen. This means I have to worry about my own cyber security and deal with the massive responsibility.
The alternative is to trust a bank, and trust they won’t farm my transactions (a rich source of intel) to sell to third parties or train crappy ** personalisation ** features. Crypto needs to have sharp edges because the financial system is in the open and you get to see its gory innards.
Unsolved problems #
Any technical political system, a system that is build to facilitate some sort of social or human interaction will inevitably end up mirroring the hierarchies and interpersonal dynamics of the people using it. Bank structures mirror the internal corporate hierarchy. Crypto, DeX, DeFi, web3 or whatever you want to call it is no exception.
The sentiment of a market is largely fed by a disparate and diverse range of people: some informed, some lost in FUD, some actively working with some intent or scheme (paid shills and goon squads). The issue of fraud / social engineering and the weakness of human beings within a technological system has not been solved.
The idiots are winning #
Doing sentiment analysis for crypto is depressing because you see beautiful systems being dragged through the mud by armies of trolls. Awful tactics by sub-par companies and products using Cambridge Analytica style tactics to win control of sentiment by drowning out any intelligent discourse.
You simply cannot compete with an army of idiots generating FUD on x, reddit, discord channels. Its psychological warfare and crypto is just another battlefield for corporate and geopolitical warfare. Just like cyber, its not the crypto currency that enables it. Crypto currencies work effectively as digital currency which is why they create this space for other murky forces to operate.