5 ms·

> It is easy to make fun -- and I do make fun -- of bitcoin/blockchain enthusiasts for naively re-creating everything that has existed for decades or centuries

> It is easy to make fun -- and I do make fun -- of bitcoin/blockchain enthusiasts for naively re-creating everything that has existed for decades or centuries in the traditional financial system. From a "blockchain enthusiast"'s perspective, this is exactly why Bitfinex and other centralized Bitcoin businesses are idiotic. If we're just implementing centralization on top of Bitcoin's decentralized structure, Bitcoin has literally no benefits over the traditional financial system. It's actually worse, because when a major traditional financial institution gets hacked, they reverse the charges instead of going bankrupt. Bankruptcies happen all the time in the Bitcoin world because creating a centralized Bitcoin puts a target on the business that grows as the business grows, and the damage when they get hit is irreversible. The benefit of Bitcoin is decentralization, and businesses that don't understand this are always going to come across as naive. Sometimes so naive that they fail.

John23832 10y ago
Playing devil's advocate, the thing that these exchanges can, and often do, try to hang their hat on is anonymity. While through hard work (and lots of money) it can be "had" on the mainstream markets, financial anonymity is not something that you average joe really has access to on the major markets. That being said, is that added benefit worth the (much MUCH bigger) risk of your money going up in smoke? Personally, I don't think so. Overall, I agree... The reinvention of the wheel for the sake of it is laughable.
- devishard 10y ago
  You're right, they do try to hang their hat on anonymity, but when they do that, it's pretty much an outright lie. Centralized Bitcoin services are regulated and tied to other financial services. Coinbase knows exactly who I am. And while you can break the identity chain with tumblers etc., that requires going outside centralized Bitcoin services. Bitcoin isn't trivially anonymous, and centralization almost universally comes with regulation that prevents it from being anonymous.
oolongCat 10y ago
>The benefit of Bitcoin is decentralization, and businesses that don't understand this are always going to come across as naive Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on. Many are happy to buy and sell the whole utopian view of how the block chain is going to liberate them all, how its going to end poverty and and kill all the evil bankers, but everyone saw what happened then the DAO got hacked, that whole utopian view of the irreversible something something was somehow now the responsibility of a central group. If anyone wants to see examples of how most of these users have no idea of how to handle money, look at all the ponzi schemes that are build around crypto currencies. Its insane thinking how easily people give away their money for a piece of the moon.
- devishard 10y ago
  > Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on. I specifically said, "businesses that don't understand this" to talk about the subset of businesses that don't understand decentraliztion. I didn't say that all businesses didn't understand decentralization. There are many businesses that do understand decentralization, but centralized exchanges like Bitfinex definitely don't. If they did, they wouldn't be holding the money of thousands of users. Lack of regulation around cryptocurrencies is only one implication of decentralization, and for that matter, it's one that isn't permanent. Decentralization makes regulation hard to enforce for individuals, but large centralized businesses are going to have a hard time avoiding regulation in the long term.
  - TeMPOraL 10y ago
    > but large centralized businesses are going to have a hard time avoiding regulation in the long term. I think the key phrase here is "in the long term". Who says Bitfinex is in it for the long term? They say it? Why do you trust them? A typical business will try to make money off you any way they can, scamming you if they deem it is profitable. The more legally gray area the business is in, the more likely it is you'll get scammed. I think 'oolongCat was trying to point out that a centralized Bitcoin business may very well understand decentralization perfectly; that doesn't mean they will care about it in any way.
CydeWeys 10y ago
> From a "blockchain enthusiast"'s perspective, this is exactly why Bitfinex and other centralized Bitcoin businesses are idiotic. Speaking as a fellow "Bitcoin enthusiast" who's been involved in it for five years, exchanges are useful for selling Bitcoin. The key is to limit your exposure to hacks by leaving your money with them for as little time as possible. So my balances are always sitting at zero, right up until I want to sell some, at which point I deposit it, wait the six required confirmations (roughly an hour), immediately sell it, then immediately initiate a withdrawal. Even assuming a very pessimistic situation of the exchange I'm using suffering a full loss every year, that still puts my % loss from hacks at well under 1%. That's a risk worth taking considering how much more inconvenient all other ways of selling Bitcoin are.
- craigyk 10y ago
  sounds like a PITA.
  - cloudjacker 10y ago
    its not, its a different best practice just like online banking has different best practices than using checks. bitcoin is the slowest of all cryptocurrencies and many people use alternate cryptocurrencies (colloquially called altcoins) that transfer to exchanges faster than bitcoin (2-10 minutes compared to 10-60 minutes) so storing more securely in your own altcoin's wallet and transferring is very fast. most people aren't selling bitcoin for national currencies when they are using an exchange, they are trading between altcoins and other cryptoassets. In the 5% of the time you actually need a national currency, you deal with those fiat exchanges on the far edge of the cryptocurrency economy, and deal with their slowness and questionable security for a brief amount of time. Also, although less true now, exchanges can't be relied on to broadcast transactions to pay for things as well as a software wallet does. So when you aren't speculating and trying to buy something in a time sensitive way (such as using bitpay or shapeshift.io), using an exchange as a personal bank account for online shopping results in a horrible user experience.
    - devishard 10y ago
devishard 10y ago
EDIT: This is also why Ethereum's recent hard fork is such a ridiculous idea. Now Ethereum has all the downsides of centralization without many of the benefits.

John23832 10y ago

Playing devil's advocate, the thing that these exchanges can, and often do, try to hang their hat on is anonymity. While through hard work (and lots of money) it can be "had" on the mainstream markets, financial anonymity is not something that you average joe really has access to on the major markets. That being said, is that added benefit worth the (much MUCH bigger) risk of your money going up in smoke? Personally, I don't think so. Overall, I agree... The reinvention of the wheel for the sake of it is laughable.

devishard 10y ago
You're right, they do try to hang their hat on anonymity, but when they do that, it's pretty much an outright lie. Centralized Bitcoin services are regulated and tied to other financial services. Coinbase knows exactly who I am. And while you can break the identity chain with tumblers etc., that requires going outside centralized Bitcoin services. Bitcoin isn't trivially anonymous, and centralization almost universally comes with regulation that prevents it from being anonymous.

oolongCat 10y ago

>The benefit of Bitcoin is decentralization, and businesses that don't understand this are always going to come across as naive Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on. Many are happy to buy and sell the whole utopian view of how the block chain is going to liberate them all, how its going to end poverty and and kill all the evil bankers, but everyone saw what happened then the DAO got hacked, that whole utopian view of the irreversible something something was somehow now the responsibility of a central group. If anyone wants to see examples of how most of these users have no idea of how to handle money, look at all the ponzi schemes that are build around crypto currencies. Its insane thinking how easily people give away their money for a piece of the moon.

devishard 10y ago
> Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on. I specifically said, "businesses that don't understand this" to talk about the subset of businesses that don't understand decentraliztion. I didn't say that all businesses didn't understand decentralization. There are many businesses that do understand decentralization, but centralized exchanges like Bitfinex definitely don't. If they did, they wouldn't be holding the money of thousands of users. Lack of regulation around cryptocurrencies is only one implication of decentralization, and for that matter, it's one that isn't permanent. Decentralization makes regulation hard to enforce for individuals, but large centralized businesses are going to have a hard time avoiding regulation in the long term.
- TeMPOraL 10y ago
  > but large centralized businesses are going to have a hard time avoiding regulation in the long term. I think the key phrase here is "in the long term". Who says Bitfinex is in it for the long term? They say it? Why do you trust them? A typical business will try to make money off you any way they can, scamming you if they deem it is profitable. The more legally gray area the business is in, the more likely it is you'll get scammed. I think 'oolongCat was trying to point out that a centralized Bitcoin business may very well understand decentralization perfectly; that doesn't mean they will care about it in any way.

CydeWeys 10y ago

> From a "blockchain enthusiast"'s perspective, this is exactly why Bitfinex and other centralized Bitcoin businesses are idiotic. Speaking as a fellow "Bitcoin enthusiast" who's been involved in it for five years, exchanges are useful for selling Bitcoin. The key is to limit your exposure to hacks by leaving your money with them for as little time as possible. So my balances are always sitting at zero, right up until I want to sell some, at which point I deposit it, wait the six required confirmations (roughly an hour), immediately sell it, then immediately initiate a withdrawal. Even assuming a very pessimistic situation of the exchange I'm using suffering a full loss every year, that still puts my % loss from hacks at well under 1%. That's a risk worth taking considering how much more inconvenient all other ways of selling Bitcoin are.

craigyk 10y ago
sounds like a PITA.
- cloudjacker 10y ago
  its not, its a different best practice just like online banking has different best practices than using checks. bitcoin is the slowest of all cryptocurrencies and many people use alternate cryptocurrencies (colloquially called altcoins) that transfer to exchanges faster than bitcoin (2-10 minutes compared to 10-60 minutes) so storing more securely in your own altcoin's wallet and transferring is very fast. most people aren't selling bitcoin for national currencies when they are using an exchange, they are trading between altcoins and other cryptoassets. In the 5% of the time you actually need a national currency, you deal with those fiat exchanges on the far edge of the cryptocurrency economy, and deal with their slowness and questionable security for a brief amount of time. Also, although less true now, exchanges can't be relied on to broadcast transactions to pay for things as well as a software wallet does. So when you aren't speculating and trying to buy something in a time sensitive way (such as using bitpay or shapeshift.io), using an exchange as a personal bank account for online shopping results in a horrible user experience.
  - devishard 10y ago

devishard 10y ago

EDIT: This is also why Ethereum's recent hard fork is such a ridiculous idea. Now Ethereum has all the downsides of centralization without many of the benefits.