DeFi venture OptiFi permanently locks up $661,000 of assets in code snafu OptiFi, a decentralized options exchange using the Solana blockchain, inadvertently disabled its mainnet service with a misunderstood command and locked up some $661,000 worth of USDC 'digital dollar' tokens. The cryptocurrency assets cannot be recovered, OptiFi said, so the plan is to manually refund affected users. Isn't …
You can't effectively evaluate the knowedge, skills, and wisdom of the crypto-whatever infrastructure dudes and dudettes when you don't know anything about them.
Anonymity doesn't preclude having a good, or bad reputation, but you have to take steps to ensure that the CleverFoxCoder who is behind Crypto Project X is the same high-rep CleverFoxCoder whom you know about from other good projects, and not some impersonator.
In fairness, that's not really a new term. Cryptocurrency is the underlying system that permits relatively basic transactions to occur and be tracked and verified. DeFi is the attempt to layer some kind of financial product on that infrastructure, usually without fixing the problems that product had when it was centralized, but adding in some extra bonus problems from the attempt to reimplement it. Cryptocurrency is like HTTP, and defi* like a specific website that eventually uses it. Well except for the fact that HTTP and websites generally work.
* A question for any grammarians out there, "defi" looks wrong, but it's not a proper noun, so I don't like writing it "DeFi" in the middle of a sentence. If we must write the term on occasion, how do others stand on capitalizing it?
Would this be a problem with one of those curiously named "smart contracts"? Or is this yet another way to screw when trying to make some quick bucks without working very hard for them.
Was anyone else reminded of The Incredibles -- "They keep on finding new ways to celebrate mediocrity"?
"Smart Contract" is another word for a computer program. Putting it on a blockchain means you can't upgrade it or do bug fixes.
Therefore they can only work if you are capable of writing a program that works first time, and as anyone who has ever done programming knows, that *never* happens.
More seasoning required.
Nothing wrong with decentralised digital currencies. You don't need to 'mine' them with the environmental hit. You can peg them to a stable real world currency (if you can find one - sterling went down 20% at the referendum and another 5% since, and even the Yen is declining - maybe the Rouble?). But your anonymous team of leet haxors does need to iron out those pesky bugs before going live to avoid flushing the ethereal lucre down the iBog.
The challenge with monetary systems is that money has different roles, one being a medium of exchange, and one being a store of value. Not all systems work well for both.
A store of value requires stability of value. Gold is excellent in this respect because it cannot be created easily (cost of gold created with a nuclear or particle accelerator would be more costly than the nominal value), nor can it be mined in huge volumes (AFAIK annual newly mined gold is <1% of total world stock of gold), and even if gold price doubles or triples, the miners can't suddenly increase their production hundredfold or tenfold.
Fiat currency is awful as a value store because the issuing government can inflate people's savings away by creating currency out of thin air at zero cost. The only thing stopping them is their own restraint. But when they want to create tons of money (2017 subprime crash or for covid) they just do. Current increase in cost of living is only partly due to Ukraine war and to supply chain issues, a large part of it is due to inflation* (governments printing money due to covid). Bitcoin is seen as an excellent store of value in this respect because it is limited in supply and difficult to create.
Fiat currency and the current banking system work pretty well as a medium of exchange (including allowing for the reversal of and insurance against incorrect or fraudulent transactions). Bitcoin is awful as a medium for exchange.
The trick is to devise a currency that can both work well as a medium of exchange, and stable (ie cannot be printed at will, but supply fluctuates to match increase / decrease in economic activity). Whether it is a traditional currency or a blockchain 'cryptocurrency', centralised or distributed etc is immaterial, what is important is the end characteristics.
* note that what is normally referred to as 'inflation' in newspapers and on TV is actually rise in the cost of living. This is only partly due to inflation, but is not inflation. The real meaning of inflation is an increase in the amount of money (value tokens) in the economic system without a corresponding increase in the total value in the economy.
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