[etherael]

> What happens in case of default?

Assuming you live in a world where everything happens mediated by decentralised ledgers and no central source of enforcement or power, an entity is dispatched to repo the house and auction it in order to pay out the initial smart contract financiers. It's a long way from here to there, I know, but there's no "impossible" about it. If you want to get really tricky, just incorporate a token for the house, the ownership of which is decided by a clause in the smart contract for an auction if the terms of the payments for the smart contract are not met, then the physical arbitration component boils down to "this person says they own the house, they have the deed, please leave" just like it would in present world.

> How exactly do cryptocurrencies prevent this?

Because you hold your keys and you get to decide what is broadcast on their behalf on the ledger, not a custodian. There is no central point to pressure or capture in order to execute the same attack as above in tradfi.

[oblio]

> There is no central point to pressure or capture in order to execute the same attack as above in tradfi.

Yes, there is, the person (software system?) with the bat that's actually enforcing the smart contract in real life.

[etherael]

You can dispute it in the case of some hypothetical future architecture that requires physical real world enforcement of some state change on a decentralised ledger, sure, there you might have a point, who can say what the future holds?

That's not the same as denying access to global markets, as long as legitimate cryptocurrencies maintain liquidity with global markets, that attack can be ruled out if you self custody. It doesn't rely on any physical state, it relies on you using a centralised service of custodial account management where a third party can direct that entity to deny service to you, or that service can independently decide to deny service to you. There's no centralised service to attack in a proper peer to peer system, they can't stop you interacting with the market.

[oblio]

> You can dispute it in the case of some hypothetical future architecture that requires physical real world enforcement of some state change on a decentralised ledger, sure, there you might have a point, who can say what the future holds?

It's the present day, not some future. You need real world enforcement of real world states.

I just realized! Cryptocurrency bros are pure function bros. Everything is pure and has no side effects!

Except for the fact that the world is a <<result of side effects>>. All that's nice about computers has to do with them printing to screen/paper, sending across the network, etc...

Similar story with money. All we care about is that effects they have on real life.

> that attack can be ruled out if you self custody.

Which puts a huge target on your head for any kind of real world malicious actor.

[etherael]

> I just realized! Cryptocurrency bros are pure function bros. Everything is pure and has no side effects!

That's a fair criticism to the extent that any theoretical decentralised ledger process pipeline touches the real world, but the extent to which they do touch the real world, and the benefits available from each of them varies enormously.

> Which puts a huge target on your head for any kind of real world malicious actor.

If the choice is between that and having a bank and its chain of dependencies as a tyrannical real world dictator, I'd rather have to deal with that target than be trapped in that tyranny. That risk can be mitigated, it can be compensated for, structures can be erected to address it.

If you're slave to a tyrant, you're simply immediately subject to whatever their whims are. That is utterly unacceptable, even if it does theoretically reduce some risk for some people sometimes.

In a society that was not a cyberpunk dystopia, the price for instruments that allowed you to circumvent said tyranny would probably be much lower than it is. But this is not that world, I guess.