4 ms·

The adjective I would have chosen was not "probably", but being any more explicit than I was might have earned me a "What did you know, when did you know it, an

The adjective I would have chosen was not "probably", but being any more explicit than I was might have earned me a "What did you know, when did you know it, and what was your part in this?" from either of two government agencies who could deport me by either pressing a button or failing to press a button.

sillysaurus3 9y ago
Now that no one has the power to deport you, do you mind if we pose those questions? The answers would be informative for anyone who has to weigh which exchange to be using at any given time.
- jerf 9y ago
  I'm not patio11, but in all seriousness, it is true that just the inexperience and immaturity of the people building these exchanges is sufficient evidence on its own. Here's me telling someone not to build a BitCoin trading platform on September 11th, 2011: https://news.ycombinator.com/item?id=2974770 https://news.ycombinator.com/item?id=2974770 Here's how that went over the next couple of years: https://en.bitcoin.it/wiki/Bitcoinica https://en.bitcoin.it/wiki/Bitcoinica https://www.dailydot.com/business/bitcoin-exchange-bitcoinica-hack/ https://www.dailydot.com/business/bitcoin-exchange-bitcoinic... In a way, the issue here is that if you want to operate in this space, you do need to take the discussion about BitCoin being money seriously. (Even if you don't think it's "money", it's still definitely a money-like asset.)
  - sillysaurus3 9y ago
    Wouldn't that have disqualified Coinbase? Also it's not really responsive to "What are some signs an exchange is insolvent?"
    - eli 9y ago
      Being run by obvious amateurs is a sign of insolvency.
      - sillysaurus3 9y ago
        Again: That would identify Coinbase as insolvent, right? Why or why not? I remember how amateurish Coinbase was in the early days, and you can look up a lot of the controversy on HN. People have been coming out saying they haven't processed $5k deposits, that they haven't responded to support claims in months, and on and on. If you're looking for "This exchange is run by amateurs," look no further than Coinbase. Yet it's not that simple. Coinbase has somehow managed to become the #1 exchange to go to if you're a US citizen that needs an easy way to convert BTC into USD. So I just don't get this line that if an exchange is run by amateurs, it's a sign of insolvency. We have evidence that demonstrates that's not true.
        tempestn 9y ago
        It's entirely possible that keeping your money out of Coinbase was the correct ex ante advice, despite their subsequent success. They may well have gotten lucky and succeeded (at least so far) despite their experience. I don't have any particular knowledge or experience with CB or BTC in general. Just pointing out that it's possible success was despite great risk, and the advice to avoid may have been entirely correct given the evidence at the time.
        eli 9y ago
        Yes, it's a warning sign. I don't think anyone should store more value in Coinbase than they are willing to lose.
        srdev 9y ago
        You're not thinking probabilistically nor in terms of risk. There's no way to know for sure that an exchange is insolvent or at risk of becoming insolvent, but there are signs that increase the probability. Being run by amateurs is one such sign. Other signs are lack of insurance, persistent withdrawal issues, persistent arbitrage opportunities, lack of security reviews, poor technological practices (there are posts about the original Mt Gox codebase's poor handling of passwords for example, before Mark took it on), and misleading public statements. If you bought the line that traditional banks were simply unable to process more than 10 wires a day, rather than it being that Mt Gox was so risky that they refused to process 10 wires a day, then you need to work on critical thinking. Likewise, exhortations that banks were placing restrictions on exchanges because "they were scared of Bitcoin" rather than being because these partners were shady and didn't have sufficient controls should have been met with suspicion. And yes, Coinbase was also risky. The fact that things worked out doesn't mean it wasn't risky to begin with. I didn't give them any money for the first several years they were in business specifically because I saw them as high risk. In hindsight, Coinbase had the benefit of having backing by VCs with real business experience and subsequently hiring people with experience in the space, which reduced risk.

sillysaurus3 9y ago

Now that no one has the power to deport you, do you mind if we pose those questions? The answers would be informative for anyone who has to weigh which exchange to be using at any given time.

jerf 9y ago
I'm not patio11, but in all seriousness, it is true that just the inexperience and immaturity of the people building these exchanges is sufficient evidence on its own. Here's me telling someone not to build a BitCoin trading platform on September 11th, 2011: https://news.ycombinator.com/item?id=2974770 https://news.ycombinator.com/item?id=2974770 Here's how that went over the next couple of years: https://en.bitcoin.it/wiki/Bitcoinica https://en.bitcoin.it/wiki/Bitcoinica https://www.dailydot.com/business/bitcoin-exchange-bitcoinica-hack/ https://www.dailydot.com/business/bitcoin-exchange-bitcoinic... In a way, the issue here is that if you want to operate in this space, you do need to take the discussion about BitCoin being money seriously. (Even if you don't think it's "money", it's still definitely a money-like asset.)
- sillysaurus3 9y ago
  Wouldn't that have disqualified Coinbase? Also it's not really responsive to "What are some signs an exchange is insolvent?"
  - eli 9y ago
    Being run by obvious amateurs is a sign of insolvency.
    - sillysaurus3 9y ago
      Again: That would identify Coinbase as insolvent, right? Why or why not? I remember how amateurish Coinbase was in the early days, and you can look up a lot of the controversy on HN. People have been coming out saying they haven't processed $5k deposits, that they haven't responded to support claims in months, and on and on. If you're looking for "This exchange is run by amateurs," look no further than Coinbase. Yet it's not that simple. Coinbase has somehow managed to become the #1 exchange to go to if you're a US citizen that needs an easy way to convert BTC into USD. So I just don't get this line that if an exchange is run by amateurs, it's a sign of insolvency. We have evidence that demonstrates that's not true.
      - tempestn 9y ago
        It's entirely possible that keeping your money out of Coinbase was the correct ex ante advice, despite their subsequent success. They may well have gotten lucky and succeeded (at least so far) despite their experience. I don't have any particular knowledge or experience with CB or BTC in general. Just pointing out that it's possible success was despite great risk, and the advice to avoid may have been entirely correct given the evidence at the time.
      - eli 9y ago
        Yes, it's a warning sign. I don't think anyone should store more value in Coinbase than they are willing to lose.
      - srdev 9y ago
        You're not thinking probabilistically nor in terms of risk. There's no way to know for sure that an exchange is insolvent or at risk of becoming insolvent, but there are signs that increase the probability. Being run by amateurs is one such sign. Other signs are lack of insurance, persistent withdrawal issues, persistent arbitrage opportunities, lack of security reviews, poor technological practices (there are posts about the original Mt Gox codebase's poor handling of passwords for example, before Mark took it on), and misleading public statements. If you bought the line that traditional banks were simply unable to process more than 10 wires a day, rather than it being that Mt Gox was so risky that they refused to process 10 wires a day, then you need to work on critical thinking. Likewise, exhortations that banks were placing restrictions on exchanges because "they were scared of Bitcoin" rather than being because these partners were shady and didn't have sufficient controls should have been met with suspicion. And yes, Coinbase was also risky. The fact that things worked out doesn't mean it wasn't risky to begin with. I didn't give them any money for the first several years they were in business specifically because I saw them as high risk. In hindsight, Coinbase had the benefit of having backing by VCs with real business experience and subsequently hiring people with experience in the space, which reduced risk.