Benzinga - Mark Cuban on Tuesday said that traditional banking systems possess an array of layers to protect against corruption and social engineering hacks, they also introduce drawbacks such as increased costs, complexity, and limited access for those in need.
What Happened: Cuban was responding to a post from former Securities and Exchange Commission (SEC) official John Reed Stark who tweeted that the creation of a CBDC is perhaps the most absurd financial idea in the history of monetary policy.
According to Stark, digital currencies are already functioning well and are trusted due to their regulation, audits, and oversight by democratic government authorities, in addition to being operated by regulated and insured financial institutions.
Now let's discuss traditional lending vs crypto lending.It's simply a matter of trust and process.
In banking, there are layers upon layers of management and systems to protect against corruption, social engineering hacks and more . Those layers add cost, time, complexity… https://t.co/Msvn9o9PCU
— Mark Cuban (@mcuban) July 4, 2023
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Why It Matters: Cuban acknowledged the risks of hacking, which exist in both traditional and crypto lending. However, he argued that the risks associated with smart contracts decline over time.
Crypto lending is a fundamental element of decentralized finance (DeFi), leveraging blockchain technology to facilitate peer-to-peer lending without intermediaries.
DeFi platforms enable individuals to access loans and earn interest by lending out their digital assets, providing a decentralized alternative to traditional lending.
The ‘Shark Tank' star encouraged individuals to gain a basic understanding of crypto lending by using smart contracts or leveraging tools like ChatGPT for comprehensive summaries. "But to dismiss it without having at least a basic understanding of what it can and can’t do is disingenuous," he added.
On June 11, Cuban criticized the SEC, expressing concern that cryptocurrency firms are not being given a clear registration process. He stated that the lack of clarity from the SEC regarding what constitutes a security makes it extremely difficult for cryptocurrency firms to comply with regulations.
In a January episode of the Club Random podcast with host Bill Maher, Cuban expressed his support for Bitcoin (CRYPTO: BTC) while criticizing those who invest in gold. Cuban stated that he wanted Bitcoin’s price to decrease further so that he could purchase more Bitcoin himself. He went on to assert that individuals who hold gold are “dumb as f***” in his opinion.
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