6 ms·

Real banks are regulated and insured by government institutions like FDIC. If there were crypto exchanges with those properties, they’d be fine to trust too. C

by derefr 6y ago

Real banks are regulated and insured by government institutions like FDIC. If there were crypto exchanges with those properties, they’d be fine to trust too. Current crypto exchanges are basically like holding your money in a gaming account in an offshore casino. The companies don’t submit themselves to anyone’s jurisdiction—so there’s no implied legal safety.

rawtxapp 6y ago
Most trusted exchanges have some kind of insurance in place [1][2][3]. 1: https://support.gemini.com/hc/en-us/articles/205823016-Are-my-funds-insured- https://support.gemini.com/hc/en-us/articles/205823016-Are-m... 2: https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured https://help.coinbase.com/en/coinbase/other-topics/legal-pol... 3: https://www.coindesk.com/bitgo-600m-insurance-capacity-big-time-bitcoin-holders https://www.coindesk.com/bitgo-600m-insurance-capacity-big-t...
- joosters 6y ago
  None of these are as good as the protection of your money in a bank. e.g. Coinbase's insurance covers just their 'hot storage', but that's only 2% of your currency. Plenty of exchanges have lost their supposedly secure cold wallets to hackers.
  - PragmaticPulp 6y ago
    Coinbase is so large that if their cold storage was compromised, the ripple effects on the entire crypto market would destroy immense value everywhere. Returning coins to users would only be part of the problem. Everyone’s coins would be worth less from the fallout alone.
cortesoft 6y ago
So what does using a “bank+crypto” offer over just using a bank?
- dandanua 6y ago
  being a part of a financial pyramid
  - arcticbull 6y ago
    My wife, she still does not believe in me, what am I going to do?!
- derefr 6y ago
  What does that even mean? Cryptocurrencies are currencies; there’s nothing fundamentally different about holding them for investment purposes vs. doing regular ForEx trading, save for the fact that the existing ForEx infrastructure hasn’t caught up to support crypto yet.
  - cortesoft 6y ago
    Most people don’t hold currency as an investment, they hold it so that they can spend it on things.
    - derefr 6y ago
      That's why I said ForEx. People don't tend to hold their own currency as an investment (except in the form of treasury bonds); but they do tend to hold (a portfolio of) currencies other than their own — or bonds from the governments that issue those currencies — for investment purposes. The exact kind of trading that crypto people already do all day, is called ForEx trading when applied to fiat currencies; and (investment) banks know how to do it very well. Those banks just haven't built the infrastructure to allow them to manage a BTC or ETH holding through the same ForEx account that they use to manage fiat holdings. If they did build that infrastructure, most of the crypto exchanges would go extinct overnight. Why would I do my (crypto) ForEx trading on a crypto exchange, if I could trade it with my bank instead? (There are benefits to using a DEX over a hypothetical crypto-enabled investment bank for crypto-trading; just no real benefits to using a regular centralized exchange over said bank. Centralized exchanges are investment banks — just fly-by-night ones compared to real investment banks.)

by derefr 6y ago

rawtxapp 6y ago

Most trusted exchanges have some kind of insurance in place [1][2][3]. 1: https://support.gemini.com/hc/en-us/articles/205823016-Are-my-funds-insured- https://support.gemini.com/hc/en-us/articles/205823016-Are-m... 2: https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured https://help.coinbase.com/en/coinbase/other-topics/legal-pol... 3: https://www.coindesk.com/bitgo-600m-insurance-capacity-big-time-bitcoin-holders https://www.coindesk.com/bitgo-600m-insurance-capacity-big-t...

joosters 6y ago
None of these are as good as the protection of your money in a bank. e.g. Coinbase's insurance covers just their 'hot storage', but that's only 2% of your currency. Plenty of exchanges have lost their supposedly secure cold wallets to hackers.
- PragmaticPulp 6y ago
  Coinbase is so large that if their cold storage was compromised, the ripple effects on the entire crypto market would destroy immense value everywhere. Returning coins to users would only be part of the problem. Everyone’s coins would be worth less from the fallout alone.

cortesoft 6y ago

So what does using a “bank+crypto” offer over just using a bank?

dandanua 6y ago
being a part of a financial pyramid
- arcticbull 6y ago
  My wife, she still does not believe in me, what am I going to do?!
derefr 6y ago
What does that even mean? Cryptocurrencies are currencies; there’s nothing fundamentally different about holding them for investment purposes vs. doing regular ForEx trading, save for the fact that the existing ForEx infrastructure hasn’t caught up to support crypto yet.
- cortesoft 6y ago
  Most people don’t hold currency as an investment, they hold it so that they can spend it on things.
  - derefr 6y ago
    That's why I said ForEx. People don't tend to hold their own currency as an investment (except in the form of treasury bonds); but they do tend to hold (a portfolio of) currencies other than their own — or bonds from the governments that issue those currencies — for investment purposes. The exact kind of trading that crypto people already do all day, is called ForEx trading when applied to fiat currencies; and (investment) banks know how to do it very well. Those banks just haven't built the infrastructure to allow them to manage a BTC or ETH holding through the same ForEx account that they use to manage fiat holdings. If they did build that infrastructure, most of the crypto exchanges would go extinct overnight. Why would I do my (crypto) ForEx trading on a crypto exchange, if I could trade it with my bank instead? (There are benefits to using a DEX over a hypothetical crypto-enabled investment bank for crypto-trading; just no real benefits to using a regular centralized exchange over said bank. Centralized exchanges are investment banks — just fly-by-night ones compared to real investment banks.)