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So can cryptocurrencies be converted. Each form of storage comes with its upsides and downsides. During the Cypriot banking crisis of 2012-13, 47.5% of savings

by mopsi 6y ago

So can cryptocurrencies be converted. Each form of storage comes with its upsides and downsides. During the Cypriot banking crisis of 2012-13, 47.5% of savings over 100 000 EUR were seized by the government. A 200 000 EUR deposit became a 152 500 EUR deposit overnight.

arcticbull 6y ago
I think you're not following what I'm saying but I'll dive into the two aspects here: (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. Not to mention at the end QuadrigaCX sent $400,000 on crypto to their dead founder's wallet which is just thrown in with the rest of the pool of lost coins. [1] https://www.forbes.com/sites/dantedisparte/2019/02/05/quadrigacx-how-to-lose-140-million-in-an-instant/ https://www.forbes.com/sites/dantedisparte/2019/02/05/quadri...
- mopsi 6y ago
  > (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. There can be unlimited number of copies of the same key. For more secure storage, a key can be split into parts that allow reconstruction only if, for example, any 3 of the original 5 parts are present. You can't have such backups with cash. There's no single point of failure, unless the whole system fails and keys have no value anymore. Speaking of which... > (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. I lived through the collapse of the Soviet Union when money became completely worthless. The photos of the Weimar Republic and baskets full of bills - I've seen that with my own eyes, and I'm not sure that was the last time for me to experience a complete financial collapse. Cash isn't as long-lasting as people seem to think, with a few notable exceptions like the USD. Most currencies that existed in Europe 30 years ago are gone. If you tear down a wall during home renovations and come across a hidden stash of 1997 French francs, they're worthless and can't be exchanged for the Euro anymore: https://europa.eu/european-union/about-eu/euro/exchanging-national-currency_en https://europa.eu/european-union/about-eu/euro/exchanging-na... As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed.
  - arcticbull 6y ago
    > There can be unlimited number of copies of the same key. Unlimited copies of a single point of failure remains a single point of failure. > ... 47.5% of savings over 100 000 EUR were seized by the government. A 200 000 EUR deposit became a 152 500 EUR deposit overnight. I should say that Cypriot haircut is nothing compared to how far all the cryptos have fallen in the last 3 years. Nothing. [1] If you got in over the last few years a Cypriot haircut would look downright luxurious. Speaking of wheelbarrows full of garbage, how do you think Zcash and Iota holders feel? Think they're glad they invested in "secure money"? Or are we just going to blame them for picking the wrong crypto? > As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed. They are not. Traditional bank accounts are insured by the government which is also the sole issuer of the currency. To the extent the government remains functional your cash is secure, safe and insured. If the government fails, your bitcoin won't help you either. [1] athcoinindex.com
    - mopsi 6y ago
      > Unlimited copies of a single point of failure remains a single point of failure. There's no single point of failure if any single point can fail without destroying the private key. Cash is inferior in many ways, can't restore from backup if you've burned a $100 bill to ashes by accident. > Traditional bank accounts are insured by the government which is also the sole issuer of the currency. To the extent the government remains functional your cash is secure, safe and insured. Nice in theory, doesn't really work in practice. Look up how little the insurance funds actually have per every insured account. Where I live, accounts are insured up to 100 000 EUR and the insurance fund has 400 EUR per account. Should shit hit the fan with any bigger bank, the money printing press will go brrrrrr and everyone will get poorer through inflation, because the insurance fund has nowhere near the money to cover the promised amount. Crypto exchanges can't rob customers like that, their failures are more obvious.
deleted 6y ago
[deleted]

by mopsi 6y ago

arcticbull 6y ago

I think you're not following what I'm saying but I'll dive into the two aspects here: (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. Not to mention at the end QuadrigaCX sent $400,000 on crypto to their dead founder's wallet which is just thrown in with the rest of the pool of lost coins. [1] https://www.forbes.com/sites/dantedisparte/2019/02/05/quadrigacx-how-to-lose-140-million-in-an-instant/ https://www.forbes.com/sites/dantedisparte/2019/02/05/quadri...

mopsi 6y ago
> (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. There can be unlimited number of copies of the same key. For more secure storage, a key can be split into parts that allow reconstruction only if, for example, any 3 of the original 5 parts are present. You can't have such backups with cash. There's no single point of failure, unless the whole system fails and keys have no value anymore. Speaking of which... > (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. I lived through the collapse of the Soviet Union when money became completely worthless. The photos of the Weimar Republic and baskets full of bills - I've seen that with my own eyes, and I'm not sure that was the last time for me to experience a complete financial collapse. Cash isn't as long-lasting as people seem to think, with a few notable exceptions like the USD. Most currencies that existed in Europe 30 years ago are gone. If you tear down a wall during home renovations and come across a hidden stash of 1997 French francs, they're worthless and can't be exchanged for the Euro anymore: https://europa.eu/european-union/about-eu/euro/exchanging-national-currency_en https://europa.eu/european-union/about-eu/euro/exchanging-na... As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed.
- arcticbull 6y ago
  > There can be unlimited number of copies of the same key. Unlimited copies of a single point of failure remains a single point of failure. > ... 47.5% of savings over 100 000 EUR were seized by the government. A 200 000 EUR deposit became a 152 500 EUR deposit overnight. I should say that Cypriot haircut is nothing compared to how far all the cryptos have fallen in the last 3 years. Nothing. [1] If you got in over the last few years a Cypriot haircut would look downright luxurious. Speaking of wheelbarrows full of garbage, how do you think Zcash and Iota holders feel? Think they're glad they invested in "secure money"? Or are we just going to blame them for picking the wrong crypto? > As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed. They are not. Traditional bank accounts are insured by the government which is also the sole issuer of the currency. To the extent the government remains functional your cash is secure, safe and insured. If the government fails, your bitcoin won't help you either. [1] athcoinindex.com
  - mopsi 6y ago
    > Unlimited copies of a single point of failure remains a single point of failure. There's no single point of failure if any single point can fail without destroying the private key. Cash is inferior in many ways, can't restore from backup if you've burned a $100 bill to ashes by accident. > Traditional bank accounts are insured by the government which is also the sole issuer of the currency. To the extent the government remains functional your cash is secure, safe and insured. Nice in theory, doesn't really work in practice. Look up how little the insurance funds actually have per every insured account. Where I live, accounts are insured up to 100 000 EUR and the insurance fund has 400 EUR per account. Should shit hit the fan with any bigger bank, the money printing press will go brrrrrr and everyone will get poorer through inflation, because the insurance fund has nowhere near the money to cover the promised amount. Crypto exchanges can't rob customers like that, their failures are more obvious.

deleted 6y ago

[deleted]