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I'm out of the loop and trying to understand - people lent over half a billion dollars of their 'real' fake money (ETH) to a game studio so they could transact
by dpiers 5y ago
I'm out of the loop and trying to understand - people lent over half a billion dollars of their 'real' fake money (ETH) to a game studio so they could transact on the studio's sidechain because gas fees are prohibitively expensive on ETH, and then the game studio got hacked and lost it all?
How was this ever going to end any other way? Imagine how preposterous the idea of storing $650mm in USD in a random game studio's checking account would be.
- alanlammiman 5y agoCash app, Venmo, Wise, and hundreds of other payment apps are also this - perhaps a bit larger, more reputable, more regulated, but not fundamentally different (or am I missing something?)
- motoboi 5y agoYes. People worked hard for electronic dollars to be transferred to their electronic wallets. They tried to use some of that digital money (in another electronic format) in a digital game, but the game got hacked and now those dollars are someone’s else dollars. The hacker may have some difficulty transforming digital money into paper bills, because KYC, but he can launder it like old school people used to and have some.
- profmonocle 5y ago> but he can launder it like old school people used to and have some. Crypto provides exciting new ways to do that, too. First send it through a mixer service. Then, invest in some new NFT project. Six months later, oh nice, someone bought your NFT for 10x what you paid for it. What a great investment.
- gowld 5y agoSelling NFT for over >$1000 should trigger an investigation into provenance of the funds.
- joering2 5y agowhen it comes to banking, random checking accounts are hacked into very rarely. to the point that in USA the FDIC is protecting your account up to $250,000. I don't recall last time seeing news on someone's bank account being hacked and drained, if anything its mostly family fraud. also there are all sorts of checks when you try to wire or withdraw more than $10,000, not to mention wire hundreds of millions. Such transaction will manually cross a desk of at least 2 different bank managers.
- Consultant32452 5y agoWire fraud results in billions of dollars in losses per year from checking accounts. Here's one article from 2019: https://www.cnbc.com/2019/09/11/email-wire-fraud-cost-26-billion-since-2016-says-fbi.html https://www.cnbc.com/2019/09/11/email-wire-fraud-cost-26-bil... We talk about eth/btc as if they're just covering the function of the checking account, but it's also covering the function of the checks, wire transfers, ACH transfers, etc. So for a real comparison you'd have to count up all the related fraud from legacy checking accounts and their various mechanisms to move money between them.
- thirdwhrldPzz 5y ago
- clpm4j 5y agoThis article is about people being fooled into wiring money to fraudulent actors, not about hacking.
- the_svd_doctor 5y agoFDIC protects against bank failures (like the bank goes bankrupts and looses all the deposited money). It has nothing to do with unauthorized transactions as far as I know.
- treis 5y agoDepends on the transaction type. Checks and debit cards are pretty well protected. Wire transfers aren't protected at all.
- radicaldreamer 5y agoThe chance of $650 million being drained from a game studio’s bank account is significantly less than it being drained from their ETH wallets, at least as of now.
- dylan604 5y agoDepends on if the studio's bank account has security questions like "mother's maiden name", "first concert", etc type stuff and an employee with those answers that like to take quizzes on facebook. Otherwise, it could be quite simple to drain the account
- rchaud 5y agoIt could, yet it doesn't. For one thing, most business accounts do not hold 9 figures in cash. Inflows and outflows are likely to be predictable, so you can set flags for certain thresholds. A 9 figure transaction would absolutely be noticed, and possibly flagged before it was permitted to continue.
- mardifoufs 5y agoWhat do you mean not common? Bank account fraud is extremely common here in montreal, it even has a slang name "peter des guichets". It's probably much more common than crypto fraud here, and up until a couple of years ago it was so easy that your average person with no real technical knowledge could do it. Reversing an interac transfert here is just very very hard to do too
- rnk 5y agoJust like SMS access to 'mfa' your bank account also provides an attack vector if they steal your number, stupid (aka all find-able) security questions don't help protect, they are another attack vector. I thought everyone puts fake answers and keeps them in a separate location. Then of course someone can come in an steal them too! Since 16 year olds can hack into auth providers like okta and then hack into microsoft and steal source code, and this crypto stealing endless happens, there's just not good electronic security. But what is good is I can go to my bank in person and fix things. It would be so much harder for someone to get fake id. I actually have a personal relationship with my advisor at my 401k. Those things do give me some additional security, at least I think so.
- gitfan86 5y agoAt least with a checking account you may be able to have the transfer reversed. The idea of buying game credits and trading them in game makes sense, but you would want the game publisher to have root on the ledger so that if there was a hack they could reverse it.
- CartyBoston 5y agothat sounds like a bank
- lolinder 5y ago> but you would want the game publisher to have root on the ledger so that if there was a hack they could reverse it. In other words, you'd want the game publisher to run their game on a centralized database, like MMOs have been doing for decades.
- rinze 5y ago> Imagine how preposterous the idea of storing $650mm in USD in a random game studio's checking account would be. But it's decentralized. (Do the same hand movement as if saying "It's got electrolytes")
- SilasX 5y agoSomeone actually made a gif of that scene with those words at that point, during the bitcoin scaling debate (where some wanted the block size to increase and decentralization was being ridiculed as a spurious defense of the small size). I’ll see if I can find it.
- rinze 5y agoMade one myself, because I think it'll be handy in the future: https://imgur.com/gallery/32t4yRc https://imgur.com/gallery/32t4yRc
- unmole 5y ago> Do the same hand movement as if saying "It's got electrolytes" I'm stealing this.
- glitcher 5y agoJust in case you're not familiar with the reference, it's from the movie Idiocracy.
- 5y ago
- paxys 5y agoGiving $650mm in USD to a random company is still infinitely safer than doing so with crypto. If a regulated bank claims they got hacked and lost that amount, there are a slew of federal and state laws and agencies in place to investigate it. With crypto, it could very well be in the wallet of the CEO or IT guy and no one would know.
- lmkg 5y agoUnlike traditional banks with their burdensome regulations and gate-keepers, the permissionless, decentralized nature of the blockchain means that they can't get the money back.
- gowld 5y agoThe increased risk of total loss in the edge case is in exchange for a more efficient system with lower prices in the average case. Individual users should make an informed decision about the tradeoff. See also http://go/hackernews/item?id=30838572 http://go/hackernews/item?id=30838572 and https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008 https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
- cuteboy19 5y agoThe whole thing exists because etherium is prohibitively expensive. And blockchain is far from efficient
- cecilpl2 5y agoThis sounds like an argument for why companies should be allowed to sell unregulated drugs and use asbestos and lead paint. Individual consumers, who we all know are extremely knowledgeable and informed on all topics interacting with their lives, should weigh the increased risk of total loss against generally lower prices. And then in the event they unluck into in the total loss case, they should just shrug their shoulders and accept that they were lucky.
- 5y ago
- tomatowurst 5y agoHere's another preposterous offering: 20% APY "risk free" from owning crypto.
- MattGaiser 5y agoThey must just be loaning it out and slaying people endlessly on margin calls.
- jazzyjackson 5y agoI report each of these schemes that advertise on facebook as scams; they used to have a rule against crypto advertising but apparently that was lifted last December.
- rchaud 5y agoEverybody thinks they can time their exit before the Ponzi reveals itself.
- mwattsun 5y agoIf I recall correctly, so did most people in 1929 but when it came time to exit, the to rush to the exits overwhelmed the order sale system so people couldn't sell until it was too late.
- sonnyblarney 5y ago
- jsutton 5y agoWhat do you mean by 'real' fake money? ETH is money.