[adament]

Assuming you are allowed to transfer into the base layer. Most currencies and finance have a similar decentralized base layer: Cash. However in many jurisdictions your ability to transfer into that base layer is severely restricted due to money laundering, anti-terror-financing and / or currency-control regulation.

[derefr]

This is not guaranteed as a general property of blockchain systems, but can be guaranteed on a case-by-case basis by the immutable nature of smart-contract systems. I.e., if a centralized system sets up a lockup contract such that value can be forcibly unlocked by making a request on the blockchain side, and the centralized system just has to observe the event and deal with that — then for the company running the centralized system, that contract becomes an immutable part of "the way things are"; they can't decide to later renege on it, keeping people's funds locked up, because nothing can change the working of the [non-upgradable] contract once deployed — it just "is what it is."

By deploying such an immutable contract to be the custodian of customer funds, such an entity is essentially making a hard/inescapable precommitment to doing for users, whatever the contract happens to do. In a sense, the central entity's owner is not the true custodian of people's locked funds; rather, the contract itself is, and the contract can be independently audited by anyone who cares, before anyone begins using it, to prove that it will only ever be able to act in the public interest, rather than in the corporation's interest.

[cryvate1284]

Why can't they renege on it? What if a judge orders them renege?

[derefr]

They technologically cannot. The central entity has no power to decide to keep user funds, nor can anyone compel them to do so, because they don't truly have the user funds in their possession; rather, the contract has control of the funds, and they don't control the contract, the immutable rules burned into the contract upon its creation control the contract.

The central entity get to initially craft those rules however they like, and so can certainly design the contract to act favorably to them; but then the contract gets (immutably) deployed, and everyone else then gets the opportunity to look at the rules of the contract-as-deployed, to decide for themselves if they're equitable. If they're not, nobody will bother to interact with the contract.

[RandomLensman]

Societies (and their evolutions) don't run by truly immutable rules - so having truly immutable things is placing things outside of them in a way. Would mean either the use cases for immutable rules are highly regulated and limited or there has to be a way to change them.

[derefr]

The immutability of a blockchain isn't fundamental; it's rooted in the consensus of the chain state. Look at the Ethereum "The DAO" state-fix hard-fork: if the entire community of node operators agrees to forcefully alter the state-database of the chain, they can do arbitrarily anything they like to that state.

But crucially, this "community of node operators" consists of a multilateral coalition of people and companies operating under every different society / government jurisdiction on the planet, with no single government that can compel enough operators at once to actually get the majority required to compel the state of the blockchain to change.

In other words, blockchains are systems with democratic recourse, but not authoritarian recourse. They can be altered from the bottom up to fix problems caused by immutability, if basically "a referendum run against a representative sampling of the population of Earth" agrees with the alteration; but they cannot be commanded to change from the top down, just because some individual entity with a conflux of power wants it to happen. No legal system can force a smart contract to do what you like; but common sense and human empathy can still override bad machine decisions when necessary.

[TomSwirly]

So we can choose rule of law, or cryptocurrencies?

I vote for rule of law, 100%.

> In other words, blockchains are systems with democratic recourse, but not authoritarian recourse.

No, "lawful" and "authoritarian" are not synonyms. No, letting people "vote" with their money is not democracy.

You pervert the meanings of the words sufficiently that you have literally reversed their meanings. Laws are created by the people's representatives, who are elected democratically.

[RandomLensman]

Very bold societal proposal to abandon the rule of law (in parts), but it is an intriguing way to consider certain things - is there data on how stuff like that (i.e. consensus forming in good ways) performs through big changes in societies?

[actionfromafar]

Sounds like a great way to have a judge make you liable for compensation.

[whatisweb3]

Three properties of cash make it tend toward centralization: physical size, difficulty of movement, and ease of access.

If you store a lot of cash in your home safe, eventually you will need more space - this is one reason banks exist. If you try to move a lot of cash quickly from one person or location to another, you will have a hard time - this is another reason banks and money transfer exists. If somebody breaks into your home safe, they probably will have immediate access to your cash - see smart contract wallets[1] and social recovery wallets[2] as an example of a more secure "crypto safe."

I agree that a concern in blockchain is that regulation and services may restrict users ability to withdraw to the base layer, see my other comment[3]. To me this is not a failing of the blockchain. It would be like governments restricting the use of internet or E2EE chat protocols - which is happening in some parts of the world - this does not mean the protocols have failed to meet their goals.

[1] https://www.argent.xyz/learn/what-is-a-smart-contract-wallet...

[2] https://vitalik.ca/general/2021/01/11/recovery.html

[3] https://news.ycombinator.com/item?id=32422921

[whatisweb3]

To add, cash is not neutral, it is tied to a particular state. It is a US centric view to say that USD cash is the base layer, rather than the EUR or GBP.