This isn't a cryptocurrency problem though. It's a cryptocurrency exchange problem. As you noted, they have essentially reinvented centralized fractional reserve banking with none of the benefits and all of the drawbacks. They're all unregulated banks in disguise.
Cryptocurrencies were meant to put an end to such things. Ironic how corporations ended up reinventing it all on top of crypto. Exchanges are everything that's wrong with this space.
> Exchanges are everything that's wrong with this space.
Exchanges have provided the necessary convenience for mass adoption, providing a way to get your magic beans in exchange for real money without much hassle. Decentralized systems are inherently more complicated than centralized ones and have a harder time gaining traction in the general population (see Mastodon's adoption in the wake of Twitter's turmoil).
> Without them, there's no way for people to buy into the system with real money in the first place!
Of course there is: mining. It's a very simple proceds: fiat => energy => processor => cryptocurrency.
Yet another thing that failed. Everyone was supposed to be able to mine cryptocurrency using their own computers. Instead things got so competitive that massive centralized operations using specialized hardware became the norm.
that's not true. You could be bartering. Or you could be paying for goods and services directly via crypto.
Exchanges are popular because it's easy, and also it allows you to trade _fast_. And then the exchanges figured out that they could be holding onto your cash and/or crypto, rather than, you know, actually be _just_ a location for which exchanges happen.
I'm not a crypto fan, but don't you need/want things like exchanges to provide liquidity in the market? I mean, that kind of service will spring up entirely naturally due to demand for it, so how do you prevent it from just gravitating to "traditional" finance (which similarly evolved the way it did for a reason)?
> Cryptocurrencies were meant to put an end to such things
Yeah, well, Communism was meant to put an end to poverty and class injustice. Brexit was meant to restore glory to Britain. The Catholic Church was mean to put an end to vice. Things don't always do what they say on the tin.
As the Bible puts it: "For every tree is known by its own fruit".
Specifically, if the fruit seems consist of nothing but speculative bubbles and billion dollar frauds then that may be the true nature of the tree.
Crypto is so hard and so intractable that the only way to use it and interact with it for the majority of people is centralized exchanges. In my opinion there's no way to improve that because its all a product of intentional design choices. Centralization and central authority when properly regulated is good. An anarcocapitalist libertarian free-for-all is terrible.
Crypto is Gentoo. Centralized exchanges are macOS. There's a reason about 10 people use Gentoo. Most people couldn't care less about recompiling their kernel by hand every 10 business days even if when you squint at it from across the room it could be better. They just want to use their computer. Ditto people wanting to etch their recovery phrase onto aluminum and hide it under their birdbath. Blaming the user will only get you so far.
> Cryptocurrencies were meant to put an end to such things.
There's a boatload of very good reasons they didn't and won't. I'm not saying they'll disappear, I've been around this space for like 7 years. I know better than to plant the flag. With that said, there's no reason more people will proportionally use crypto in real life - in the fullness of time - than use Gentoo in real life. What that translates to in price, who knows, and frankly who cares?
Cryptocurrencies were meant to put an end to such things. Ironic how corporations ended up reinventing it all on top of crypto. Exchanges are everything that's wrong with this space.