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Easy: imagine one of the poor sobs decides to withdraw, hop a bit of creative accounting and your money is borrowed to pay for the withdrawal. It s not each of
by secondaryacct 5y ago
Easy: imagine one of the poor sobs decides to withdraw, hop a bit of creative accounting and your money is borrowed to pay for the withdrawal.
It s not each of the user individually seeing their balance go down, it s the company lying even more about its ability to liquidate all accounts.
Your number on their html page they graciously present to you will go unchanged. It s not a new phenomenon, every bank does it, except crypto.com does it to pay losses for a theft while banks would do it to lend to a baker buying a bakery on mortgage. If said baker screws up and cant repay, and many more others as well, clients cant all withdraw the pretty number.
Another interesting difference is that a bank pays you for lending to them with your savings account, at market rate (very low these days), while I dont think crypto ponzis do because you re suppose to just wait and moon.
- ashtonkem 5y agoAlso, banks are insured by the government (FDIC) and heavily regulated to reduce the risk of failure. Crypto exchanges are not, which is why they seem to fail about as often as a 19th century bank would.
- secondaryacct 5y agoBeing insured by the gov for up to a certain amount will not solve the default issue (this is what crypto.com is pretending with their eerily similar worldwide protection thing), it was made to save poor people from complete ruin, not protect your savings. If you re retiring and expect the bank to be good on a million $ worth of some sort of instrument, you're fucked minus 250k. And this is totally fine: you re compensated for a low risk of default when you lend to your "savings account" and must accept this could happen. There s no way to make money waiting doing nothing risklessly. Creeptards know that well, they all in on wind, there s no worse risk.