5 ms·

The "ultimately with physical force" bit is an important one that I think does as much to strengthen the notion of crypto as to weaken it: Namely, consider a h

by jrm4 5y ago

The "ultimately with physical force" bit is an important one that I think does as much to strengthen the notion of crypto as to weaken it: Namely, consider a huge exchange like Binance, which could technically run off with everyone's money. I bet it won't though, precisely because it's SO BIG, and so many people have invested, such that if Joe Binance decided to run off with everything -- he might not be in trouble with law enforcement per se, but a LOT of others might come knocking at his door. Broadly, I think this factor is what a lot of people miss, namely that it is at least possible that we're at the point where crypto is enforceable with "violence" or "threat of harm," even if said harm isn't from government per se.

shadowgovt 5y ago
Specifically, if Joe Binance runs off with everyone's money, he collapses the web of trust that underpins the financial system itself, since there isn't some fiat entity to print more BTC quickly. He destroys faith in the currency ("why would I use a currency that easily stolen of I could just use dollars?") and his ill-gotten goods crash in value... Nobody wants to take them for other things of value because they can't spend them. This creates an incentive for Joe Binance to play fair (or at least, fair enough that he doesn't wreck trust).
- verygoodname 5y ago
  > "why would I use a currency that easily stolen of I could just use dollars?" If you hand out your currency to a third party (Joe Binance or someone else), then it can "easily be stolen", regardless of what currency your are talking about: using dollars instead of BTC changes nothing here.
  - shadowgovt 5y ago
    In the US at least, if a bank steals my dollars, the government in control of the fiat currency makes it their business to prosecute the thief and retrieve the currency, but while that is happening they make me whole by issuing me replacement money via the FDIC insurance system. No such back-stop exists for a third party stealing your bitcoins.
    - verygoodname 5y ago
      And if a bank steals any other assets you may have in their custody (e.g. stocks, forex, bitcoin, etc.) does it work any differently than if they steal USD currency? Isn't there some sort of insurance or legislation that protects you in such cases? Or, if your US bank decides to steal your EUR, you have no recourse and just have to take it? In this case, we are not talking about a bank, but about an exchange which exists outside of US jurisdiction. In this case, it does not matter if you handed USD or BTC to this third-party (outside US jurisdiction): if they decide to take your stuff, there is little actual recourse you have and FDIC won't cover it. On the other hand, if you are dealing with an exchange within US jurisdiction (e.g. Coinbase), I don't see how BTC theft would be treated any differently from USD theft: if they take your assets, they can be brought to a court to have that fixed and return your assets (be it USD or BTC or whatever). TL;DR: What matters is if you keep your assets (USD or BTC) with an appropriately-regulated institution (e.g. a bank within a jurisdiction you trust) or not (e.g. in an unregulated exchange outside your jurisdiction), and not so much the type of assets you have (or that were stolen/taken from you).
      - jrm4 5y ago
        We can take this further: we have "law" and "law" has mechanisms to protect against and recover from theft, no matter what. It's true that the FDIC et al makes "recovery in the case of shenanigans" much easier, but none of it means "if someone steals bitcoin, it's impossible to recover because there's no FDIC for it." (and perhaps even further than that, my earlier point is, "Joe Binance" is in so deep at this point that there's now likely enough of an incentive for parties who aren't "legal" to threaten him with violence or harm if he does something wrong.)
        shadowgovt 5y ago
        The key idea here is replacement is different from recovery. Recovery can take weeks, months, years, or be impossible (if the cash was burned, or the BTC routed to an account with a lost private key). While all that is going on, FDIC insurance on USD means (in the case of a rifle US bank) the Fed steps in and issues new cash to make the victim whole. There is neither a mechanism for printing "emergency Bitcoin" nor a "victim's reserve" operated by a trusted third-party to do something similar if a Binance (for hypothetical example) goes rogue.
kbob 5y ago
> Namely, consider a huge exchange like Binance, which could technically run off with everyone's money. > I bet it won't though, precisely because it's SO BIG Quoth the Wikipedia: Mt. Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan.[1] Launched in July 2010, by 2013 and into 2014 it was handling over 70% of all bitcoin (BTC) transactions worldwide, as the largest bitcoin intermediary and the world's leading bitcoin exchange.[2][3][4][5]

by jrm4 5y ago

shadowgovt 5y ago

Specifically, if Joe Binance runs off with everyone's money, he collapses the web of trust that underpins the financial system itself, since there isn't some fiat entity to print more BTC quickly. He destroys faith in the currency ("why would I use a currency that easily stolen of I could just use dollars?") and his ill-gotten goods crash in value... Nobody wants to take them for other things of value because they can't spend them. This creates an incentive for Joe Binance to play fair (or at least, fair enough that he doesn't wreck trust).

verygoodname 5y ago
> "why would I use a currency that easily stolen of I could just use dollars?" If you hand out your currency to a third party (Joe Binance or someone else), then it can "easily be stolen", regardless of what currency your are talking about: using dollars instead of BTC changes nothing here.
- shadowgovt 5y ago
  In the US at least, if a bank steals my dollars, the government in control of the fiat currency makes it their business to prosecute the thief and retrieve the currency, but while that is happening they make me whole by issuing me replacement money via the FDIC insurance system. No such back-stop exists for a third party stealing your bitcoins.
  - verygoodname 5y ago
    And if a bank steals any other assets you may have in their custody (e.g. stocks, forex, bitcoin, etc.) does it work any differently than if they steal USD currency? Isn't there some sort of insurance or legislation that protects you in such cases? Or, if your US bank decides to steal your EUR, you have no recourse and just have to take it? In this case, we are not talking about a bank, but about an exchange which exists outside of US jurisdiction. In this case, it does not matter if you handed USD or BTC to this third-party (outside US jurisdiction): if they decide to take your stuff, there is little actual recourse you have and FDIC won't cover it. On the other hand, if you are dealing with an exchange within US jurisdiction (e.g. Coinbase), I don't see how BTC theft would be treated any differently from USD theft: if they take your assets, they can be brought to a court to have that fixed and return your assets (be it USD or BTC or whatever). TL;DR: What matters is if you keep your assets (USD or BTC) with an appropriately-regulated institution (e.g. a bank within a jurisdiction you trust) or not (e.g. in an unregulated exchange outside your jurisdiction), and not so much the type of assets you have (or that were stolen/taken from you).
    - jrm4 5y ago
      We can take this further: we have "law" and "law" has mechanisms to protect against and recover from theft, no matter what. It's true that the FDIC et al makes "recovery in the case of shenanigans" much easier, but none of it means "if someone steals bitcoin, it's impossible to recover because there's no FDIC for it." (and perhaps even further than that, my earlier point is, "Joe Binance" is in so deep at this point that there's now likely enough of an incentive for parties who aren't "legal" to threaten him with violence or harm if he does something wrong.)
      - shadowgovt 5y ago
        The key idea here is replacement is different from recovery. Recovery can take weeks, months, years, or be impossible (if the cash was burned, or the BTC routed to an account with a lost private key). While all that is going on, FDIC insurance on USD means (in the case of a rifle US bank) the Fed steps in and issues new cash to make the victim whole. There is neither a mechanism for printing "emergency Bitcoin" nor a "victim's reserve" operated by a trusted third-party to do something similar if a Binance (for hypothetical example) goes rogue.

kbob 5y ago

> Namely, consider a huge exchange like Binance, which could technically run off with everyone's money. > I bet it won't though, precisely because it's SO BIG Quoth the Wikipedia: Mt. Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan.[1] Launched in July 2010, by 2013 and into 2014 it was handling over 70% of all bitcoin (BTC) transactions worldwide, as the largest bitcoin intermediary and the world's leading bitcoin exchange.[2][3][4][5]