HN user
Some exchanges will let you withdraw to a lightning wallet so you never have to interact with the base blockchain layer for smaller day-to-day transactions.
I would imagine most exchanges will have similar lightning withdrawal options in the future, if there's demand for it.
No institutional investor will pay 7% a year for money.
The borrowing rate can be much higher than 7% for short positions.
There are many different institutional investment strategies that are willing to incur wildly varying rates of interest.
A system where borrowers post $250k collateral to borrow $100k, in theory, sounds more sustainable than traditional lending models where a handful of large borrowers defaulting can start a domino effect until a central bank steps in and punishes taxpayers to bail out lenders that took on too much risk.
It's interesting to watch the progression of DeFi projects as they're being developed. Being an early adopter in experimental financial technologies has its own set of risks, but at least these risks don't affect non-participants.
Good point.
Some people online like to imply that paying for advice means you can blindly trust it. It's always a good idea to DYOR regardless.
Something that you get with communities like HN and Reddit is being able to read replies to comments pointing out bad advice.
I'm pretty impressed with some of the DeFi projects that are being developed. There have been some growing pains with issues like contract bugs and liquidation events during high volatility, but they seem to be improving.
MakerDAO has a pretty well thought-out economic model that lends out stablecoins to borrowers that provide crypto collateral: https://youtu.be/wW1IEZeWY4k
Seems like a good way to get access to spendable funds to buy something like a car without losing crypto exposure and subjecting yourself to capital gains taxes.
It doesn't work as a way of leveraging your money with a small "down payment" like you'd do with a traditional auto loan or home mortgage.
There will always be alternative marketplaces hosted by alternative web hosts that are willing to continue doing business with companies that are deemed dangerous to society...
...until banks and merchant processors cut off financial access to these "dangerous" entities and their service providers.
Wikileaks was a victim of this year's ago, and served as a great example of why cryptocurrencies are important.
DeFi loans and platforms like blockfi let you borrow against your BTC.
Sanctioning political opponents kind of sounds like a dictatorship to me.
China would benefit more by confiscating all hashrate & hoarding all of the BTC for themselves before announcing that BTC is their national currency and driving BTC price to millions per-coin.
It's just as farfetched and unlikely, but anti-Bitcoiners just keep theorizing about a hostile China takeover crashing BTC price as if it's feasible, without considering the inverse.
Remember UASF? If incentives align amongst users, nodes, merchants and exchanges Bitcoin absolutely will switch to another mining algorithm and now the attacker has to start from 0.
If the attacker attempts to keep up the game of cat-and-mouse long enough they will eventually go bankrupt and will no longer be able to participate.
And this theoretical discussion completely dismisses the fact that it's nearly impossible to execute an attack like this at this stage in the game anyway.
It's baked into the incentivization structure, if you prefer it worded that way. Investing hundreds of billions of dollars and years of work to place a temporary speed bump in front of Bitcoin's growth doesn't make sense.
Right. And now this theoretical actor that controls 10x the hashrate of the rest of the world has lost 10x the amount of capital invested compared to the rest of the mining world.
It's the equivalent of shooting a bullet through your chest to shoot your enemy in the finger.
Right. The protections against this are already baked into the protocol.
51% attacks don't make sense because you're hurting yourself 51% and hurting everyone else 49%.
And for this theoretical attack you'd probably need to sustain 90%+ hash power for a long time.
Your first hurdle will be producing enough ASICs to surpass current hashrate by nearly 10x. Solve that problem and you'll need a massive amount of energy and you'll have to set up huge mining facilities in various locations to prevent crippling local power grids.
This would take years to plan & execute. A lot of people would have to be involved. Good luck keeping it a secret. Network hash rate will continue to increase while you're building this infrastructure.
If by some miracle you've pulled this off, Bitcoin users will switch to a fork of Bitcoin that uses a different mining algorithm and your entire investment is now completely worthless.