I think you're wrong in many aspects. First of all: Bitcoin is not good for selling arms or drugs or paying ransom, because every transaction is recorded and it's only a matter of time to de-pseudonymize addresses. If you want to do illegal stuff use Monero!
However I wouldn't blame Bitcoin for its shortcomings. After all it's a global transaction system without a single day of outage for over ten years. I never thought this was possible. And due to its shortcomings Bitcoin has triggered so many developments: faster blockchains, more versatile blockchains, decentralized global networks with better data structures than blockchains...
Most of these developments happen in a finance/tech bubble, and we still see failing projects where millions of dollars are being lost just like that. But the technology is so much simpler, transparent, fair, and yes: cheaper(!) than the global financial industry - it's obvious that "DeFi" (decentralised finance) will take over the world in a few years. However: your bank is not obsolete. You've got a perfect example for why we still need trusted intermediaries in the future, e.g.: your bank will take care of your Bitcoin wallet.
One of the most salient features of our Tech Hiring culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted.
...and that's exactly what the financial industry needs.
You might trust your bank, yes. I might trust my bank as well. But does my bank trust your bank? Should they trust each other...? In 2008 we've seen that the collapse of Lehman Brothers triggered a global financial crisis. Now imagine how much worse this would've been if banks weren't suspicious of each other, but trusted each other, if all banks had trusted Lehman Brothers. A domino effect much worse...
Maybe the infrastructure between financial institutions is the only other real use case for blockchains besides Bitcoin, but it's huge. In the aftermath of 2008 regulators have pushed the markets towards central clearing partners for better transparency of the risks in the derivatives market. But now these central clearing partners are a risk themselves since they have become the trusted party for trades with a volume of hundreds of trillions USD. A huge systemic risk!
The trust(less) model of blockchains represent the trust model between financial institutions and provide a solution to resolve the systemic risk of central counterparties without creating new central intermediaries. And that's why banks have started to love blockchains.
Some comments have been hidden by the post's author - find out more
For further actions, you may consider blocking this person and/or reporting abuse
We're a place where coders share, stay up-to-date and grow their careers.
I think you're wrong in many aspects. First of all: Bitcoin is not good for selling arms or drugs or paying ransom, because every transaction is recorded and it's only a matter of time to de-pseudonymize addresses. If you want to do illegal stuff use Monero!
However I wouldn't blame Bitcoin for its shortcomings. After all it's a global transaction system without a single day of outage for over ten years. I never thought this was possible. And due to its shortcomings Bitcoin has triggered so many developments: faster blockchains, more versatile blockchains, decentralized global networks with better data structures than blockchains...
Most of these developments happen in a finance/tech bubble, and we still see failing projects where millions of dollars are being lost just like that. But the technology is so much simpler, transparent, fair, and yes: cheaper(!) than the global financial industry - it's obvious that "DeFi" (decentralised finance) will take over the world in a few years. However: your bank is not obsolete. You've got a perfect example for why we still need trusted intermediaries in the future, e.g.: your bank will take care of your Bitcoin wallet.
But if we have trusted actors, we don't need the blockchain! We can record transaction in decentralized Merkle tree structures like git repositories.
Behind Bitcoin lays the ideology that trust cannot and should not be built.
...and that's exactly what the financial industry needs.
You might trust your bank, yes. I might trust my bank as well. But does my bank trust your bank? Should they trust each other...? In 2008 we've seen that the collapse of Lehman Brothers triggered a global financial crisis. Now imagine how much worse this would've been if banks weren't suspicious of each other, but trusted each other, if all banks had trusted Lehman Brothers. A domino effect much worse...
Maybe the infrastructure between financial institutions is the only other real use case for blockchains besides Bitcoin, but it's huge. In the aftermath of 2008 regulators have pushed the markets towards central clearing partners for better transparency of the risks in the derivatives market. But now these central clearing partners are a risk themselves since they have become the trusted party for trades with a volume of hundreds of trillions USD. A huge systemic risk!
The trust(less) model of blockchains represent the trust model between financial institutions and provide a solution to resolve the systemic risk of central counterparties without creating new central intermediaries. And that's why banks have started to love blockchains.