[AnthonyMouse]

This problem is far worse with a concentrated system than a decentralized one. If there are five local pubs and one of them won't have you, well, still four more. If there is only one bank and their loan officer doesn't like the cut of your jib, or their algorithm has decided to have a false positive, you're done.

Though of course the modern problem isn't that there is only one bank, it's that there is only one bank regulator which subjects all of the banks to the same incentives, and if those rule you out you're effectively prohibited from using a bank in another jurisdiction with different rules.

What you need for this is something permissionless.

[jon-wood]

Fun fact for you, a lot of pubs in the UK are shifting to requiring photo ID to enter, and scanning that ID into a centralised system, often as a requirement from the police to retain their license to serve alcohol.

I ended up chatting to one of the bouncers at a bar a while back and he was telling me about how they refused entry to someone not long before because they were flagged as having caused trouble in a bar 70 miles away.

In some regards I’m not even against this, if you have a record of attacking women in bars I don’t want you in the bar I’m at, but this does seem incredibly prone to abuse. I can totally see someone who has a grudge getting people banned from every pub in the country.

[mlyle]

> This problem is far worse with a concentrated system than a decentralized one.

They can break in different ways. If you're in an out-group or unpopular, it's not clear whether you're better off with n local pubs making a decision to accept your money informally or n/2 national banks making a decision while subject to oversight.

In any case, this is a false premise: it's not like you're choosing from 5 local pubs. The question is whether the pub you attend likes you enough to take your check.

> What you need for this is something permissionless.

Far better to have things work okay without any other entity being involved, sure. But there are reasons why banks exist.

[AnthonyMouse]

> If you're in an out-group or unpopular, it's not clear whether you're better off with n local pubs making a decision to accept your money informally or n/2 national banks making a decision while subject to oversight.

What is clear, however, is that you're better off with both systems existing in parallel because then you can use either one, rather than having the informal one prohibited by law so that you're forced into the other one whether it works for you or not.

> it's not like you're choosing from 5 local pubs. The question is whether the pub you attend likes you enough to take your check.

You are choosing from 5 local pubs. Even if you don't attend one regularly, it's in the same town. You could have mates there who vouch for you. Or you go to the pub of the person who wrote the check, they confirm that they actually wrote it and then it gets cashed on the basis of their standing rather than yours.

> Far better to have things work okay without any other entity being involved, sure. But there are reasons why banks exist.

You want a regulated and insured entity where you can safely store your money, sure. That doesn't explain why they should have a monopoly on various other aspects of finance though. Or why they would even need a monopoly on that -- if you want the assurances you get from a regulated bank, there they are. If you want a permissionless money transfer system that anybody can use and nobody can be refused, why shouldn't that exist too?

[mlyle]

> What is clear, however, is that you're better off with both systems existing in parallel because then you can use either one, rather than having the informal one prohibited by law so that you're forced into the other one whether it works for you or not.

Yes, but we've never had that: pubs don't do banking under normal circumstances because they're outcompeted by the banks.

> If you want a permissionless money transfer system that anybody can use and nobody can be refused, why shouldn't that exist too?

I don't have a big objection to a parallel informal payment system. OTOH, these kinds of systems tend to have the problems that all the reddit alternatives have: they capture the least attractive and most problematic business because they only end up employed by an unusual subset of people.

I guess the closest analog we have of what you describe at scale is hawala.

[AnthonyMouse]

> Yes, but we've never had that: pubs don't do banking under normal circumstances because they're outcompeted by the banks.

Really what happens is that the banks don't wish to be outcompeted so if something starts taking their business under normal circumstances then it gives them the incentive to fix the problem. But that's exactly why the alternate systems should be permitted -- it gives them the kick in the ass needed to make the banking system fix its shortcomings.

> OTOH, these kinds of systems tend to have the problems that all the reddit alternatives have: they capture the least attractive and most problematic business because they only end up employed by an unusual subset of people.

That's what they're for. They serve the needs of the people who the traditional banking system doesn't serve.

And it's not obvious that this is even the case, if they would be allowed to operate openly instead of being something you only use because you cannot use anything else.

For example, there are different kinds of businesses. In some cases the business itself is questionable, e.g. because it's very small and has no reputation history, and then you want a payment system (like credit cards) that offers buyer protection and chargebacks so the customer can feel confident that if the seller doesn't send the goods they can get their money back.

In other cases the business is perfectly trustworthy but it's the kind of business where the customers like to commit fraud, e.g. because the goods can easily be resold after being purchased with a stolen credit card. For this you want an irreversible payment system so the honest merchant can't get ripped off by these scammers.

Sometimes you want a payment system where the buyer can be anonymous, e.g. so that nobody is tracking what kind of literature you purchase.

You don't want a one-size-fits-all system, you want the diversity. Which you can't have if the law mandates one specific kind of system.