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> These also exist in the bitcoin world, and have already caused problems— How long did MtGox operate without reserves? Exchanges are not part of the bitcoin w

by knocte 7y ago

> These also exist in the bitcoin world, and have already caused problems— How long did MtGox operate without reserves? Exchanges are not part of the bitcoin world, they are bridges to it. Longer version of the above remark: what bitcoin is truly about is financial sovereignty, or, to put it in more layman's terms, lack of counterparty risk. The bitcoins held in a bitcoin exchange are mismanaged funds, you should never leave your cryptofunds in the exchange: "not your keys, not your coins". PS: These days, you can even find "bridges", i.e. exchanges, that don't have even this problem anymore, e.g. HodlHodl exchange, which doesn't hold customer's funds, so it's impossible to achieve a fractional reserve malpractice.

kd5bjo 7y ago
I’m less concerned with philosophy and how people “should” be managing their assets than I am observing what people actually choose to do. The exchanges exist, their actions affect the value of bitcoin, and the value of bitcoin affects them. Therefore, any analysis of the bitcoin ecosystem must take them into account in one way or another. Similarly, there’s no fundamental barrier to promising to pay someone bitcoins later that you don’t currently possess. That’s the seed of a credit-based economy, and also the piece of the fiat system that makes things so complicated. It is disingenuous to make a comparison that includes this complexity on one side but not the other without giving justification.
- knocte 7y ago
  It's no longer "philosophy" but education and awareness. The longer bitcoin exists, the more custodial exchanges get hacked and consequentially the better knowledgeable bitcoin users we will have. You cannot bring points against bitcoin which actually happen more in centralization-backed entities than in decentralized scenarios.
  - kd5bjo 7y ago
    There are plenty of examples of bank runs and other crises pre-regulation and pre-fiat currency, dating all the way back to the 1600s— that’s about as decentralized as you can get. If you want to argue that there’s something fundamentally different this time around, that’s fine, but I’d appreciate evidence rather than assertions. In fact, the least problematic time in terms of bank runs appears to be the years of the highly-centralized Bretton-Woods system post-WW2 (1). It’s also not like holding bitcoins yourself is entirely risk-free. You can accidentally expose your private key and have your money stolen or you can lose your private key and have it locked away forever. Either scenario means you no longer get to use your money, and any defense against one makes the other more likely; it’s a difficult balance to ask people to get right. (1) https://en.m.wikipedia.org/wiki/Bretton_Woods_system https://en.m.wikipedia.org/wiki/Bretton_Woods_system
    - knocte 7y ago
      Giving me an example of decentralisation set in the 1600s? Dude... The best way to finish this convo is the way Satoshi replied once: "If you don't believe it or don't get it, I don't have the time to try to convince you, sorry"

by knocte 7y ago

kd5bjo 7y ago

I’m less concerned with philosophy and how people “should” be managing their assets than I am observing what people actually choose to do. The exchanges exist, their actions affect the value of bitcoin, and the value of bitcoin affects them. Therefore, any analysis of the bitcoin ecosystem must take them into account in one way or another. Similarly, there’s no fundamental barrier to promising to pay someone bitcoins later that you don’t currently possess. That’s the seed of a credit-based economy, and also the piece of the fiat system that makes things so complicated. It is disingenuous to make a comparison that includes this complexity on one side but not the other without giving justification.

knocte 7y ago
It's no longer "philosophy" but education and awareness. The longer bitcoin exists, the more custodial exchanges get hacked and consequentially the better knowledgeable bitcoin users we will have. You cannot bring points against bitcoin which actually happen more in centralization-backed entities than in decentralized scenarios.
- kd5bjo 7y ago
  There are plenty of examples of bank runs and other crises pre-regulation and pre-fiat currency, dating all the way back to the 1600s— that’s about as decentralized as you can get. If you want to argue that there’s something fundamentally different this time around, that’s fine, but I’d appreciate evidence rather than assertions. In fact, the least problematic time in terms of bank runs appears to be the years of the highly-centralized Bretton-Woods system post-WW2 (1). It’s also not like holding bitcoins yourself is entirely risk-free. You can accidentally expose your private key and have your money stolen or you can lose your private key and have it locked away forever. Either scenario means you no longer get to use your money, and any defense against one makes the other more likely; it’s a difficult balance to ask people to get right. (1) https://en.m.wikipedia.org/wiki/Bretton_Woods_system https://en.m.wikipedia.org/wiki/Bretton_Woods_system
  - knocte 7y ago
    Giving me an example of decentralisation set in the 1600s? Dude... The best way to finish this convo is the way Satoshi replied once: "If you don't believe it or don't get it, I don't have the time to try to convince you, sorry"