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0 pointsineedasername3y ago0 comments

This is incorrect. such coordination was possible and did happen, only in the opposite direction.

A relatively small group of VC firms effectively did coordinate the depositors very effectively to organize except it was to take money out

Saying coordination wasn’t possible is therefore incorrect. And had it not occurred, getting people to keep their money in would have been a moot point, the whole thing a non issue.

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simonh3y ago

Propagating a run simply takes propagating the info that a run is happening. No other communication is necessary. That signal is enough.

Coordinating stopping a run would take a huge amount of much more sophisticated and time consuming back and forth communication and negotiation, reassurance and confidence building. You’d have to convince people that together right now in this situation you can stop the run. How would you do that? That coordinated consensus building would have to happen and propagate through the community, all of the community, at least as fast as the news of a run in order to stop the run. If it’s slower it’s too late, the people that heard there’s a run before they heard there was a movement to stop it already pulled out their money.

You see the problem?

jrumbut3y ago

I wonder if anyone involved had a vested interest in an alternative to banks.

ineedasernameOP3y ago

I'm not quite ready to embrace that line of thinking, but the thought did cross my mind. Regardless, if someone was trying to maneuver things that way it may have backfired, making it more difficult for alternatives:

First, the speed of action & (so far) efficacy of containing and stabilizing things while keeping all depositor money safe is both an endorsement of traditional regulated finance as well as a sharp counterpoint to recent crypto collapses that were neither contained nor safeguarded customer money.

Second, some of the most crypto friendly finance partners are now gone.

Sure, Bitcoin is up, but from the point of view of growing an alternative I think crypto as a whole has taken yet another hit. Whatever struggle the sector would have had regaining momentum after the past year now just got at least a little harder.

lolinder3y ago

Coordinating action in one direction can be trivial while coordinating in the opposite is nearly impossible. It takes years of engineering and construction to build a dam but only a few critical mistakes to break it down. The same amount of water is involved in either case, but it's a lot harder to hold it back than it is to let it loose.

Bank runs are the same way.

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