| > Trading it on a blockchain eliminates only the counterparty risk from the person you trade with I think we agree here. The question then is: how useful is this really? For example, assume I have some USD that I want to trade for VT, and I want to decide between using a blockchain or not. The counterparty risk solved by using a blockchain is: 1. No blockchain: the broker (who's between me and the person I want to trade with) can technically keep the USD and the VT. 2. Blockchain: this cannot happen because a smart contract prevents it. But: a. How often are you in a situation where you trust the entities backing the two assets (USD and VT here) but can't find a broker whose trustworthiness is implied by the trustworthiness of the two entities backing the two other assets? b. Less trust is always better, but blockchain-based solutions bring their own problems (e.g. private key custody). Are there even cases in which this trade-off is worth it? |
- Am not in a jurisdiction where there is a trustworthy broker for VT or USD?
- Want to loan someone my VT (for example for them to short)?
- Want to buy some derivative of VT (easy to do in the US for VT American-style options, but this isn't true for all derivatives on all assets in all markets)
- Need to buy a large amount of VT and using the open market isn't cost effective?
VT maybe isn't the best example in favor of crypto as it's probably already one of the easiest assets in the world to trade safely online. There's lots of other stuff that's way trickier in the current system.