Szabo: Traditional Finance Destroyed its Tradition, Merit of Crypto Over Fiat 🚨 This article is 6 years old...
Szabo: Traditional Finance Destroyed its Tradition, Merit of Crypto Over Fiat
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Updated: Dec. 7, 2019 at 4:10 pm UTC
Photo by Shawn Appel on Unsplash
According to blockchain, crypto, and smart contracts pioneer Nick Szabo, the traditional finance sector has destroyed its tradition and has implemented inappropriately complex policies to limit the public’s access to money.
“Traditional’ finance has destroyed its traditions in favor of naive experiments in digital centralization. Payment vendors now ask questions ludicrously irrelevant to the function of sending payments. Every year their ‘money’ degrades more into tools of political control.”
The statement of Szabo came after PayPal has started to ban transactions sent to specific regions and groups of people.
Every PayPal Ban is a Bitcoin Advertisement
On Nov. 9, Matt Odell, the co-host of RHR on Tales For The Crypt, a cryptocurrency-focused podcast, stated that every PayPal ban is an advertisement for Bitcoin and crypto, as it demonstrates the necessity and importance of decentralized financial systems.
Every PayPal ban is an advertisement for bitcoin. https://t.co/1PRjfXAQQs
— Matt Odell (@matt_odell) November 9, 2018
Earlier this week, Verge reported that PayPal, the largest digital payment processing platform in the world, has started to ban Antifa-linked accounts by far-right groups and anti-fascist groups. a PayPal representative said:
“Striking the necessary balance between upholding free expression and open dialogue and protecting principles of tolerance, diversity and respect for all people is a challenge that many companies are grappling with today. We work hard to achieve the right balance and to ensure that our decisions are values-driven and not political. We carefully review accounts and take action as appropriate. We do not allow PayPal services to be used to promote hate, violence, or other forms of intolerance that is discriminatory.”
The issue of the unilateral termination of accounts by PayPal is that a central party decides whether an action is considered ethical or not and justifies its censorship based on the outcome.
For instance, this week, one PayPal user tried to finance an artist in Spain through PayPal. The company requested the user to provide information on why, what, how, and who the payment is being sent to. Ultimately, PayPal denied the payment and prevented the user from funding an artist in Spain.
The user said:
“Tried to commission artist in Spain thru PayPal. I had to make a phone call explaining who, what, why, how much, and how many payments there would be in the future. Canceled. Bitcoin is the future.”
As Szabo emphasized, businesses in the traditional finance sector have shifted from enabling the general population with financial access to denying users from freely utilizing money under the strict and opaque guideline set forth by industry giants.
Moving Users From Centralized Platforms to Decentralized Alternative
Since mid-2017, a rising number of experts in the crypto sector have started to state that the second phase of blockchain technology development is to convince the mainstream to switch from centralized systems to decentralized systems.
Decentralized financial networks by nature are more inefficient than centralized systems. But, as seen in the case of PayPal, decentralize systems enable anyone to process the settlement of money and data without the approval of a central party, which can be valuable to a relatively large group of people–especially in regions with subpar banking systems.
Kim Hyun Joong, information technology professor at Korea University, said:
“Bitcoin and Ethereum are reference models but not a bible. Even the bible is understood differently from 2,000 years ago. Even if a project has an advanced technology, if the project doesn’t sell, there is no use. But, if the project is less sophisticated in technology but sells well, it can compete. It is important for developers to not sacrifice everything for technology. It is crucial to survive in the market first.”
The censorship practiced by payment platforms and businesses in the traditional finance sector could serve as an incentive for users on centralized platforms to move to decentralized alternatives.
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Bitcoin
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Nicholas Szabo, a prominent figure in computer science and cryptography, is renowned for his extensive work in digital contracts and digital currency.