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15 sats \ 26 replies \ @KingZing 12 Jul 2022 \ on: If You Aren't Trying to be Money, Why Do You Need a Coin? bitcoin
I see them as a more usable, highly liquid stocks that can act as a medium of exchange and store of value.
It could become a norm in the future if some defi stuff really catches on.
In this instance it would not be a coin per say, it would be a Tokenized Security. Regulated fully by the SEC and treated no differently from a stock. That would not be considered money by anyone, thereby validating OP's stance on this.
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labelling those tokens as tokenized security would make transaction on Defi a nightmare for everyone. I don't see that happening. Best thing SEC can do is to come up with a new criteria imo.
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That is what you want them to do, but there is no incentive for them to create a new standard outside of the howey test. The DeFi tokens pass the test on almost all of them, and will eventually be regulated as securities.
Play with fire at your own risk.
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there's no incentives now, but more and more money and talents are flowing into the industry. they will have to deal with it eventually in ways that it won't wipe out the entire sector.
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I appreciate your stance on this, but I just completely disagree with you. I don't think DeFi will ever get so big that they wont regulate under the standard securities laws. That completely defies logic and assumes that DeFi will grow to be larger than TradFi all ahead of them actually regulating it.
I'm sorry to get heated about it, but I just think your take on this is dangerous for anyone reading these posts. 100% based on hopium about something that has very little traction in the real world.
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I don't think there's any hopium here? majority of the financial hubs like SG/UK/HK are working on regulations for digital assets. Why would the US would be any different?
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Because Gary Gensler (Chair of the SEC) has stated over and over that almost all coins besides BTC (and ETH, which is bullshit) are unregistered securities. There is no indication of any type that suggests special laws being created around crypto DeFi. None. Zero.
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But that's why I said, eventually they have to.
The SEC, like central bankers, do not really call the shot. The market does.
It can sit and wait for a couple more years and see if defi dies on its own, but chances are it most likely wouldn't.
A lot of high executives are leaving tradfi to join crypto even during this bear market. This pushes more pressure on them to do something, especially if other financial hubs already have their regulation all set up.
If its a stock it has to be registered with SEC though.
Do you really want to get me started on DeFi? Because I hope DeFi never "catches on".
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SEC will have to accept it one way or another if it gets big enough.
imo Defi is definitely here to stay, it just takes a lot of failed project to find a few gems. It has gone through a lot of boom and bust already, and bitcoin has its own DEX and futures trading on LN in works.
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The SEC will not HAVE to do anything. In its current state, DeFi is akin to a fly on the elephants ass in their eyes. Nowhere even close to being big enough to influence their stance on securities regulation.
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I acknowledge Taro exists if that's what you're refferring to, but the fact that a shitcoin exists using Bitcoin doesn't make it a good project.
There are benefits for investors who buy regulated stocks:
https://www.investor.gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry
I have a huge issue with what is known in the traditional world as "an increase in the total capital stock"
Info: https://www.investopedia.com/terms/c/capitalstock.asp
Now on DeFi, I just have beef with debt in general. Historically, it has been considered "sinful" and it was known as "usury". Usury is the reason we have Keynesianism as it is a method to bail out the banks. DeFi will incur the same problems:
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Debt is a VERY old financial instrument, at least several thousands of years.
I think very few economist, even Austrian side would argue how important debt is, except on a theology level.
It all comes down to whether you see money as THE value (more emphasis on it being a store of value) or whether money is a tool to enable economy activities and growth which generate value (that can be stored in various means)
We have moved on so much on the latter that it's very hard to imagine a world without debt
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If you want to imagine a world without debt, look at Saudi Arabia. In the musilim religion (as well as the Christian and Jewish religions before culture changed) usury is still sinful.
An argument for debt, is effectively an argument for the current system in which case you should be very against sound money.
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DeFi is the natural next-step in cryptocurrencies, be it good or bad.
There are two kinds of currency: hard-assets and debt-assets. One is money, the other is a form of currency, both are assets.
The reason fractional reserve is even possible is that people accept 'debt notes' as a more convenient medium of exchange than the supposedly underlying hard asset. Its through the acceptance of this fungible debt as a currency that the fractional-reserve funny-business is enabled.
We have hope that people will not accept 'bitcoin-backed' currency over bitcoin itself since there is little benefit to using the proxy-currency rather than the hard-money itself. This does not prevent banks from attempting to issue a 'bank note' rather than the bitcoin sats themselves when a person takes out a loan, but the frictionless of the hard-asset bitcoin makes this business model very unstable.
If a bank or defi can find a way to 'lock up' bitcoin in 'checking' accounts, this will enable them to lend out more sats than they have on deposit. This is possible if their clientele are willing to buy and sell within the captive bank accounts. Seekers of debt (lendees) may be willing to participate in this system due to this ability to get your hands on 'cheap bitcoin'. This places the long-term viability of bitcoin itself as a hard asset in question. All that's required in the end is (through the use of force) to disconnect the debt-asset from redeemability for bitcoin and make it only redeemable for more debt and this brings us right back to where we are today with dollars.
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That would be a nightmare scenerio and as such, I think its important to establish a culture that would reject such attempts to prevent it from happening in the first place. Things like "not your keys not your coins" have been good for this.
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Unfortunately that nightmare scenario is exactly where Dorothy's silver slippers on the 'yellow brick road' have lead us. People became ignorant, complacent and easily deceived (or maybe always were). It may have taken one or two generations and a few meat-grinder wars to pull it off, but here we are.
An argument for debt, is effectively an argument for the current system in which case you should be very against sound money.
that's an interesting point. I am more for sound economy than sound money.
I don't see money as the only store of value, generating more value (which is not materialistic by nature) is more important than locking it into one particular thing.
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Damn. Like I get that productivity is the most important part of economics, but not at the cost of theft. Our debt based money is so bad, the rich are using houses as money. Thankfully, with Bitcoin, the average person can use Bitcoin as money instead. Based on current projections, I'm looking forward to taking the path where any debt based money is rejected due to being undesirable to alternatives being better stores of value.
I hope you understand my "Toxic Maximalism" from this point forward. I have to be vehemently against you simply to protect myself from savings theft, as such I will be rejecting DeFi and therefore will encourage others to do the same.
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I can understand people dislike for current system, especially given how out of tuned it is right now, but a system without debt could become far worse.
Afterall debt and credit is so ingrained into the general ledger system already.
Productivity is chasing more efficiency in order to be able to produce more so that the world can sustain more population.
Medical, technology, food, energy production, physical good, infrastructure, employment, education etc all are part of "growth"
Social/wealth inequality is unavoidable.
At its core, it is hard coded into our society, no matter what system or money we use, be it communism/capitalism.
We are creatures driven by desire and want, that's how humans have always progressed and will be so.