[lxgr]

In a functioning market, any middleman has competitors and its "vampiric profits" should quickly converge towards marginal costs.

Regulation, compliance and customer support actually cost money, and by cutting most or all of it out, crypto based services are obviously cheaper.

A better criticism of regulation would be that, depending on how it's enforced, it can serve to create regulatory motes for incumbents and hinder mentioned competition.

Crypto doesn't solve this – it just sidesteps the problem, and that isn't feasible in the long term.

[BLKNSLVR]

Bitcoin was created for the very reason that US finance was, indeed, not a functioning market and was unlikely to be a functioning market in the foreseeable future.

Theoretically, I can't argue your points. Practically, however, in the world that produces the news articles I read, the theory remains entirely ... theoretical.

The point of crypto is to sidestep the way finance markets work in practice. Regulatory capture, paid-for ratings, revolving door appointments between finance companies and government, all sidestepped, by design, by bitcoin and various other cryptocurrencies.

But, yes, cryptocurrency is an immature alternative market, so the myriad potential opportunities to deflower its purity are many a long year from being discovered and exploited.

[lxgr]

Thanks for a very nuanced reply!

> Regulatory capture, paid-for ratings, revolving door appointments between finance companies and government

This is a very valid concern to have about traditional finance.

I'm just not convinced that the same structures won't emerge in DeFi sooner rather than later, and that in the regulatory vacuum in between a lot of retail investors will be left holding bags.

[BLKNSLVR]

The, hah, theory with DeFi is that the 'code is law' ideology and decentralised governance acts as defacto regulation.

Uniswap's dropping of a number of coins / tokens fairly recently proved that a decentralised exchange that supposedly had decentralised governance could still be controlled by a central entity.

DeFi is so young, however, that there just hasn't been the time to run through enough scenarios to see how well, or poorly, it works.

It doesn't help that there have been so many rug-pulls and scams because so many people are blinded by dollar signs they can't see an elephant sized flashing neon sign saying "we will steal whatever isn't nailed down". This is what needs regulation, somehow...

Regulating against greed and / or stupidity is one of those eternal problems: If humans could do it, they wouldn't need to.

The conundrum of DeFi is the lack of a centralised entity to either have a trustworthy reputation or take to court. Uniswap being a counter-example.

My approach is to move slowly and diversify to minimise risk.

Re-reading what I just wrote, I think I just repeated your last paragraph in a whole lot more words.

[imtringued]

>But, yes, cryptocurrency is an immature alternative market, so the myriad potential opportunities to deflower its purity are many a long year from being discovered and exploited.

Strange, the vast majority of complementary currencies simply work and have no existential crisis. Nobody dreams of a day when they live up to their full potential. People simply use them. Even stranger, the vast majority of cryptocurrencies are not designed to be complementary currencies and are subsequently never used for that purpose.

Here is an example: https://en.wikipedia.org/wiki/WIR_Bank