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And this is the problem. These guys are not regulated. There is no transparency. There are no external auditors. There is no control. When we find out, it is al

• this_user 8y ago
  > These guys are not regulated. There is no transparency. There are no external auditors. There is no control. But that's a feature, not a bug, at least according to the crypto people. But, so far, all they have managed to do is rediscover lessons about the need for regulation, oversight and accountability that the financial industry has learnt decades or even centuries ago.
  • icebraining 8y ago
    Considering 2008, what's the point of those lessons? Might as well save a few tax dollars on "regulators".
    • blibble 8y ago
      how many depositors lost money in the financial crisis?
      • easymodex 8y ago
        Probably an order of magnitude more than whole crypto-sphere combined. People just think if they didn't lose anything it wasn't that bad.
      • poooogles 8y ago
        In the UK and Netherlands plenty due to icesave AFAIK [1]. I'm not sure if deposits over the protected amount were ever paid back. //edit - looks like they were by the UK and NL governments. 1. https://en.m.wikipedia.org/wiki/Icesave_dispute https://en.m.wikipedia.org/wiki/Icesave_dispute
    • Carpetsmoker 8y ago
      The banking crisis happened in large part due to lack of regulation, not because of them.
      • dnautics 8y ago
        I'm not sure. I'd say the banking crisis was catalyzed by the lack of regulation, but it was going to happen anyways. The whole thing was largely a result of political pressure to create incentives for a home ownership society, and, if you go deeper, a result of political pressure fostering a growth-at-all-costs economic system that will periodically hit societal resource and efficiency limits, regulations be damned.
        • worik 8y ago
          Not really. The GFC was a financial/banking crisis There is nothing in "growth at any cost" style "capitalism" that means banks must all collapse together in a coordinated swan dive, like in 2008. That sort of system will collapse, but not necessarily the banks. There is no law of nature that says we have to use free to fuck anybody capitalism run rampant over all. It is a choice. I think it is time we made a different choice!
          • dnautics 8y ago
            The current brand of capitalism is not "free to fuck anybody", it's actually worse, it's "target the poor". Neoliberal economists specifically call for stealing from workers: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Shorter: we create an economic policy to cheat workers out of the take home value of their earnings to make management easier and post favorable employment metrics for political leaders. That "growth at all costs" policy, which, by the way is not inherently a free market policy, exists to short shrift the labor class by means of a compounding treadmill that most will fall off.
  • james_s_tayler 8y ago
    It's comical.
  • vageli 8y ago
    > > These guys are not regulated. There is no transparency. There are no external auditors. There is no control. > But that's a feature, not a bug, at least according to the crypto people. But, so far, all they have managed to do is rediscover lessons about the need for regulation, oversight and accountability that the financial industry has learnt decades or even centuries ago. I feel this is only true for people who have not truly embraced the decentralized aspect of cryptocurrency. For example, many people leave all of their money in one wallet. Centralization. Many people use only one exchange for converting fiat to crypto. Centralization. The harder you look, the more you will find that the only people upset about the state of cryptocurrencies are those that did not diversify and instead reverted to a concept squarely against the cryptocurrency ethos. Thus is human nature. Who wants to manage 30,000 wallets each containing only a few dollars? The supporting tooling is not there (or is not easy enough to use) and thus we see this recurrent user pattern.
    • billsnow 8y ago
      Yeah, if only there was a tool for managing 30,000 wallets in a centralized way, then it would be more obvious why decentralization makes the need for regulation moot.
    • AYBABTME 8y ago
      30,000 wallets using 30,000 independent methods of encryption, else you crack one, you cracked many. It's clearly not practical or achievable for any human being.
    • jm__87 8y ago
      Exchanges are more useful when many users use them. By necessity, this needs to be centralized. Can't buy when there are no sellers.
      • wallacoloo 8y ago
        By “needs to be centralized”, you really mean something like “needs to be strongly connected”.
    • fixermark 8y ago
  • manigandham 8y ago
    Because blockchain is a slow append/overwrite-only consensus database. It does nothing to provide trust. It's also too mechanical for how humans actual deal with each other.
  • ryanlol 8y ago
    Who are the cryptocurrency people advocating against regulation, but rediscovering lessons about the need for regulation? Have you met any of those people? Do they actually exist or are you imagining them?
• jdsully 8y ago
  If they published the wallets everyone would be able to audit how much they have in trust. Its a lot more detail than you'd ever have with your traditional broker.
  • deleted 8y ago
    [deleted]
• blotter_paper 8y ago
  > Every "cryptocurrency bank" is a potential Enron. Yeah, these institutions are antithetical to the whole cryptocurrency model. Regulation isn't necessary, education would suffice. The public is not yet ready for this paradigm, and perhaps never will be, but I'm hopeful.
• stcredzero 8y ago
  These guys are not regulated. There is no transparency. There are no external auditors. There is no control. When we find out, it is always too late. Every "cryptocurrency bank" is a potential Enron. I think Enron actually had more transparency, and did more good in the world than the failed cryptocurrency companies. I've worked on two pieces of software that originated in Enron, which I believe are still used in production today. I think Enron participated in the invention of weather derivatives. (No, I have never worked for Enron.)
• bangau1 8y ago
  Yup, crypto lesson in hard way
• tha_nose 8y ago
  The Central Bank isn't regulated, isn't transparent and certainly doesn't have any external auditors either. I don't think you understand how cryptocurrencies, central banks and regulations work. Also, regulations doesn't protect against hacks or theft or shady practices.
  • propter_hoc 8y ago
    Actually, every central bank is audited externally. USA: https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm https://www.federalreserve.gov/aboutthefed/audited-annual-fi... Canada: https://www.bankofcanada.ca/wp-content/uploads/2018/03/annualreport2017.pdf https://www.bankofcanada.ca/wp-content/uploads/2018/03/annua... England: https://news.sky.com/story/kpmg-faces-fight-t https://news.sky.com/story/kpmg-faces-fight-t
    • Consultant32452 8y ago
      The US federal reserve is audited by a private firm hired by the board. They are not audited by a government regulatory body.
  • elliekelly 8y ago
    Do you have a source for any of this? Because my career as a securities regulation & banking attorney tells me the truth is actually the exact opposite of literally everything you’ve asserted.
    • vermontdevil 8y ago
      The source is Ron Paul
• Solar19 8y ago
  This would seem to be a private problem. If people choose to park their money with a non-transparent, unaudited random crypto startup, that's their decision and their problem. I'm not interested in paying for "regulators" in such cases.
  • wpietri 8y ago
    Not really. It's a private problem only if it stays within the confines of the participants. But when it reaches a scale like this, the harm is wider. I think the most important societal issue is that it damages investor and consumer confidence. As a parallel, consider food regulation. When I go into a store or restaurant, the food I buy is very likely to be safe, because there are a lot of regulators making sure it happens. If they weren't operating, then I'd have to exert a lot more effort to make sure that each thing I eat is safe. Not only would this be a giant waste of effort, but it would significantly reduce the opportunity for innovation and cost reduction, because people would be reluctant to try new products and new restaurants. Market confidence is even more important for finance, because it's much harder for individuals to know if a given company is really working. It would be a huge problem for society if everybody went back to keeping their money in mattresses and physically moving it everywhere.
  • gowld 8y ago
    And what if the startup fakes transparency and audits? How far down the stack of turtles do you want to climb?
  • zaphar 8y ago
    And this is why cryoto is unlikely to go mainstream. Because the market for people who are willing to put up with the risks of unregulated banking are too small a minority to be worth it.
  • naravara 8y ago
    You don’t need to pay regulators, you just need to make people able to sue for damages or charge crypto purveyors with fraud. It’s manifestly clear that the majority of these are just pyramid scams.
• rocqua 8y ago
  There are decent ways for exchanges to prove they are solvent without revealing details [1]. It's just that very few of them take the effort to set up the system. If you want decent privacy, it also depends on creditors checking their credit was properly committed. [1] https://eprint.iacr.org/2015/1008.pdf https://eprint.iacr.org/2015/1008.pdf
• repomies68 8y ago
  Though if crypto funds are stolen from cold storage due to hack ortheft, there is nothing to do, even if you are regulated. When crypto transfer is done, there is no way to reverse it. Regulation might help to enforce best practices to prevent theft, but it wouldn't help to recover funds if theft happens.
• DeonPenny 8y ago
  Yes the features of a fiat currency
• mcnichol 8y ago
  Is it a problem though. The risks of not using your own cold storage is real. The ability to store your own is outlined by numerous tutorials, explanations. Nobody is crying for those who sent money to the nigerian prince, I don't think we should cry for anyone here either. These player are smart enough to know most folks are uneducated on the topic and can be readily swindled by players looking and talking the part. This happens every day in so many realms outside of blockchain; the opportunity for transparency, the lack of sympathy or control to help those with a lack of understanding, there are certain elements here that can change an environment that is so aggressively finance driven. This is the hope, something different. The regulation, the trickery, etc it all gets sorted in time to a level we choose to accept. The question is if the potential for change is worth putting up with it until then.