QUOTE(Yluxion @ Aug 18 2024, 07:07 PM)
I would say otherwise.
But think deeply, in a financial banking system blockchain would be a superior solution as it is irreversible, unmodifiable but trackable. With all the KYC in place, it would easily trace and locate the culprit then proceed the necessary to retrieve it back and punish offender.
I would say otherwise.
Blockchain tech WILL not, and CANnot, form the basis of a revolution in our global financial system.
They are neither "trustless" nor decentralized.
They cannot create a new paradigm for the web, finance, and micropayments.
They are less secure in practice, and more prone to widespread fraud than our current financial system, and frequently result in
irreversible consumer harm that could have been mitigated using traditional financial processes.
TradFi consists of entries in ledgers maintained by trusted and regulated institutions.
For decades we have used electronic payments on a daily basis, using payment systems maintained by these regulated
intermediaries.
We trust these institutions because they are regulated and backed by explicit government backstops, like the Federal Deposit Insurance Corporation (FDIC).
There are extensive regulatory frameworks that act to protect consumers and, in the end, the government and
the national economy as well.
In our existing system, consumers are strongly protected against fraudulent payments and against failing institutions.
These trusted intermediaries also provide reversibility.
In case of fraud or other problems, transactions can be undone for at least a limited period of time.
This enables error mitigation, as a human can intercede and fix what would otherwise be a potentially
catastrophic loss of funds.
The major difference between Bitcoin and previous systems is how the ledger itself is managed.
In conventional electronic payments, the ledger is managed and validated by the trusted third parties: the bank, the payment processor, or other intermediary keeps a copy of the ledger and can validate and include transactions.
But Bitcoin seeks to eliminate the costs and benefits of the trusted third parties by instead managing the ledger publicly and
collectively through what is known as the mining process.
This system is not impenetrable: in particular, the system could be vulnerable to “double spending” attacks.
The solution to this for Bitcoin is the proof-of-work system, which is designed to make the cost of double-spending significantly more than the potential benefit.
Each block includes a large amount of useless work, but it is very easy to verify that the useless work was done.
The amount of useless work is automatically tuned, so it takes roughly ten minutes for some miner to create the next valid block.
As a consequence, there is no single identifiable third party able to reverse or block disallowed transactions.
This is what cryptocurrency advocates mean when they speak about a “decentralized,” “trustless” system.
The
irreversible design of most cryptocurrencies makes them unsuitable for use as a payment channel for either domestic, or international payments.
The irreversibility of cryptocurrencies also creates an
incompatibility that makes cryptocurrencies hard to buy, due to increased cost of transaction between buyer and seller necessary to increase safety where there are no trusted intermediaries.
The normal financial system(TradFi) relies on trusted intermediaries being capable of reversing transactions to mitigate
problems.
Thefts, bugs, and other problems can be undone if detected in time.
Cryptocurrencies lack this critical feature.This is why cryptocurrency thefts, as a fraction of the available currency, are orders of magnitude more common and severe than thefts in the normal financial system.
Suffice to say, I'll just end here before going into PoW, PoS, "Lightning Network" protocol, stable coins, smart contracts, DAO,
DeFi, wildcat banks, Automated Clearing House system & all the other mumbo-jumbo.
TLDR: This is nothing new. Blockchain is just another ledger system.
The tech already existed for decades, before satoshi even embarked on his grand project.
The existing ledger system being used by TradFi is much more superior & most importantly, inherently stable.
Aug 16 2024, 09:35 PM, updated 2y ago
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