What is the equivalent of home appliances?

Credit didn’t use to be available to the middle class in America. It was for businesses and/or the wealthy. Consumerism didn’t start until the 1920’s, when technological advances made better time-saving devices that was priced just out of reach of individuals.

Smelling a need, financial institutions expanded credit to be available to the average middle class American. For the first time, instead of waiting months/years to save up for a new car / fridge / radio, they could owe it immediately and pay for it over time.

When there’s borrowing, there’s KYC for lending, and credit scoring. After all, banks wanted to be sure the borrower could pay back the loan.

In fact, without the appearance of home appliances, there likely wouldn’t have been lines of credit or credit cards as we know it.

Currently, Defi (decentralized finance) is a growing niche within cryptocurrencies where users borrow and lend money through smart contracts. It’s gotten a bunch of traction and attention. There are currently $466 million of ETH locked up in MakerDao. Check out the rates of other Defi on Loanscan.

Currently, all borrowing is over-collateralized, meaning you can’t borrow more than you’ve deposited. That’s because without credit scoring or KYC, lenders wouldn’t be assured borrowers would pay back the money.

There are people working on KYC and identity in the space. And we know much of the activity right now is trading on speculation. But a second order question is probably more important than how to solve identity on any blockchain:

“What’s the equivalent of the home appliances for cryptocurrencies? What do people want/need to buy that they need to borrow cryptocurrencies for?”

The situation that lead to rampant consumerism in the 1920’s was unique to its time. What is the situation now that’s unique to this time that people will want to borrow money for?

Without a clear answer to this question, it doesn’t yet make sense to solve identity for under-collateralized borrowing and lending. And if you make a Defi lending product, a clear answer will help light your way.

Datalog is a thread to pull on

Ever since Eve, I meant to look into Datalog. Peter Alvaro’s @strangeloop_stl talk also piqued my curiosity. He used Datalog as a restricted language to build concurrent programs.

So what is Datalog? It’s an old language that’s more powerful than relational algebra, because it has recursion. But it’s less powerful than Prolog, because there’s no negation, and the ability to express algos beyond polynomial time. It’s not a Turing complete language.

Why use such a restrictive language? In Peter Alvaro’s talk, he uses the self-imposed constraints to avoid certain classes of programming mistakes in concurrent programs.

I found these two very helpful for beginners (prereq is that you kinda know what logic programming is and can read haskell). This gives you an intro to datalog.

And if you want to build your own naive compiler and evaluator of datalog, that will take you along. And if you’re curious about the Eve implementation in Rust for v0.4, check it out.

Logic programming boils down to essentially a graph search in the possible space. All the details is about how to do the graph search effectively.

Noticed stock gift cards. What about crypto gift cards?

A company called stockpile is selling stocks in the form of gift cards at Target. https://twitter.com/patio11/status/1140119792596033537

Putting it in gift card form with a bit of design (good UX oft missing from traditional finance) seems to make it accessible to kids and lower middle classes. What seems clever about this? It seems like the play here is to find a new distribution channel (retail) to find a new market.

According to the tweet thread, you pay a $5 commission on $20 trade for the plastic gift cards. That’s highway robbery, but you’re paying for the education.

They mostly provide stocks, but also some ETFs. There is a single exposure to Bitcoin through Grayscale’s Bitcoin Trust (search GBTC) https://www.stockpile.com/gift/basket/choose_stock

That should open up markets to people who don’t need to know anything about crypto, and it’s another onboarding ramp.

Taking it further—Technically, you should be able to create new financial instruments with smart contracts that you can sell at Target in the form of a card. The private keys for an address is generated and held in the card itself.

Operationally, I can see how it hard it would be.

1/ Making gift cards should probably not be too hard. But secure cards might take some engineering. Are there off the shelf chip cards you can flash software onto? Seems unlikely for security reasons.

2/ Most big retailers (Target, Costco, Best Buy) are not going to want to carry crypto-based products out of FUD. Maybe Walmart would, as they have a Labs division that’s already looking into blockchain for supply chain.

3/ Even if they do, you’d have to spend $ on making end cap displays. Also, because they own distribution, they can make more onerous demands, like your product has to sell well or they won’t give you good shelf space.

Or for the remaining inventory, you have to promise to buy it back. They have high costs too, such as making advertising flyers and training employees on these new products.

4/ Regulatory restrictions probably would require KYC for these gift card crypto.

Is there a second order effect that makes this an interesting business or technical breakthrough if this works?

I currently don’t see either, but the cultural implications might be interesting. Once people figure out these things have value, they can do a bunch of OTC trades on the streets for any type of behavior normally deemed unacceptable.

Even if regulations require KYC to move the money, having a physical representation of the money is enough for people to trade it around, without having to actually move it. It’s much like how the banks don’t actually move the stock certificates around, but just change a ledger on who owns it at the end of every day.