Earlier this month Matt Taibbi put out an excellent post on the cost of cryptocurrencies, and what really caught my eye was the juxtaposition of these two paragraphs:
Using digital currencies to help the billions around the world with no access to banking services become participants in a system that has long excluded them is a great thing, in theory. The issue is the structure of these companies. If a stablecoin firm is taking your dollar and trying to make money lending it somewhere, they’re just “unregulated, uninsured, unaudited banks,” as one financial analyst puts it.
And
However, if the transparency goal isn’t maintained in crypto finance, and risk is allowed to exist that digital assets could end up fought over in something like a bankruptcy court, then you’ve just exchanged one brand of “centralized ledger” for another — maybe even a worse version. “There are so many good things about this industry, right? The micropayments, the cheap transactions, the transparency on chain and so on,” says a high-ranking executive for another oft-criticized crypto firm. “But there is also a ton of centralized behavior still.”
For my money >cough<, there’s a contradiction in this dislike for a centralized ledger when it comes to stablecoin trying to make money through lending out assets. Banks have traditionally acted as a centralizer, a concentrator, of wealth, because in order to act as a lender it must do so.
Decentralization may sound great, but negating a necessary pillar of how we’ve done things, and then try to continue to do it, seems like a lovely brick to be installed on that legendary path of good intentions.
Taibbi concludes:
The tragedy of a corrupted crypto universe is exactly the same story, of a “bespoke” financial market grown to fantastic dimensions in a regulatory dead zone, with a cash-fattened congress keeping questions to a minimum, and the same old insiders extracting billions before a crash that will inevitably be paid for by the rabble again. In fifteen or twenty years, maybe, crypto will evolve to revolutionize finance and eliminate insider corruption in the way its adherents hoped, much as the Internet eventually really did change everything from commerce to communication. But we’re still at the stage of clearing out the phonies, the Pets.com and eToys equivalents, and there are a lot still out there.
If ever.
