This is... a remarkably concise summary of why most crypto projects are bullshit: https://www.stephendiehl.com/blog/nothing-burger.html
One of many things that continues to boggle my mind is that investors are shoveling millions and millions of dollars into "decentralized finance" projects which can't process more than a dozen transactions per second, when existing financial systems *at a single company* execute literally millions of trades per second at a tiny fraction of the cost. How are DeFi exchanges going to compete?
Like the history of modern financial systems is that higher volume and lower latency yield increased returns. There's immense pressure to shave off milliseconds.
Right now DeFi is a mess of scammers, hype machines, and retail investors with no idea what they're doing; all on top of a slow, high-latency, wildly volatile, largely opaque set of poorly-connected markets: one per coin, really. There's tons of money that you can extract from that kind of environment, but it... presumably won't last.
At some point retail investors will get tired of losing money to scams. Crypto markets will become better connected, and arbitrage will become less profitable. But any consensus system is bound by Lamport's 2002 proof and the laws of physics: transaction latency must be at least 2 network hops *across the globe* (something like ~400 ms). Databases with limited spatial extent can run *rings* around that, and presumably it'll be profitable to do so.
There's an argument that distributed ledgers enable storage/computation executed by counterparties without trust, but as Diehl notes, people like their money transmitters to come with other guarantees, like "not stealing all the money"--and private+federal banks have *already* developed much more efficient clearinghouses for money exchange. Meanwhile, storage and computation are broadly available as services (e.g. S3/EC2) at vastly lower personal and environmental cost.
@aphyr going around that blog I saw this post and I admit I laughed* hard at "This ultimately burns through an acre of rainforest in the Amazon, but we can ignore that because it’s an unobservable side effect": https://www.stephendiehl.com/posts/fpt.html
* is there something that means both "laughing" and "feeling intense pain"?
