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The future of blockchains?

Summary:
I also think it is noteworthy that actual cryptocurrency exchanges exist to get around the limitations of blockchain-based settlement. It’s hard to short bitcoins or buy bitcoins on margin, which is why exchanges exist and use off-blockchain methods (lending you money, keeping custody of your bitcoins, etc.) to allow you to do those things. (Sometimes that’s a mess!) It’s not like you’re using the blockchain to buy bitcoins with dollars on a cryptocurrency exchange; you’re using your credit card. If you want to rebuild the regular financial system along blockchain principles, you have to wrestle with the fact that even the bitcoin financial system doesn’t really operate on blockchain principles. That is from Matt Levine. The post The future of blockchains? appeared first on Marginal

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I also think it is noteworthy that actual cryptocurrency exchanges exist to get around the limitations of blockchain-based settlement. It’s hard to short bitcoins or buy bitcoins on margin, which is why exchanges exist and use off-blockchain methods (lending you money, keeping custody of your bitcoins, etc.) to allow you to do those things. (Sometimes that’s a mess!) It’s not like you’re using the blockchain to buy bitcoins with dollars on a cryptocurrency exchange; you’re using your credit card. If you want to rebuild the regular financial system along blockchain principles, you have to wrestle with the fact that even the bitcoin financial system doesn’t really operate on blockchain principles.

That is from Matt Levine.

The post The future of blockchains? appeared first on Marginal REVOLUTION.

Tyler Cowen
Tyler Cowen is an American economist, academic, and writer. He occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. Cowen and Tabarrok have also ventured into online education by starting Marginal Revolution University. He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, the Wall Street Journal, Forbes, Newsweek, and the Wilson Quarterly.

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