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I'm sorry this is just nonsense, as has been pointed out many times, exchanges are not constrained by the blockchain of any particular cryptocurrency, most of t

by Nursie 4y ago

I'm sorry this is just nonsense, as has been pointed out many times, exchanges are not constrained by the blockchain of any particular cryptocurrency, most of their transactions don't take place on a blockchain and their customer balances are not stored on the various blockchains. You may as well talk about this being impossible with paper money, the bank can't give out more than it has! There are only so many notes! But it doesn't need to. People can trade within the bank and between banks so long as the reserves cover the activities. Quadriga CX worked this way, until it didn't and everyone discovered their cryptocurrency was fictional.

nl 4y ago
> I'm sorry this is just nonsense, as has been pointed out many times, exchanges are not constrained by the blockchain of any particular cryptocurrency, most of their transactions don't take place on a blockchain and their customer balances are not stored on the various blockchains. Sure, within the exchange that's true. The instance the BTC leaves the exchange as a loan or withdrawl it is no longer possible for that BTC. > Quadriga CX worked this way, until it didn't and everyone discovered their cryptocurrency was fictional. I don't think this was the case, unless you can show me otherwise. In particular, they had "BTC ATMs" where people could withdraw cash. Note that this is not loaning BTC. And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy. Notably there is a precise accounting of the BTC that was lost because there is a public ledger of it. Quadriga CX didn't produce any more BTC - they just lost their customer's BTC.
- Nursie 4y ago
  > I don't think this was the case, unless you can show me otherwise. Quadriga CX showed their users having BTC in their accounts. In reality, the guy running the show had already gambled those away on other exchanges. It all held together, ish, until he died and the music stopped. > In particular, they had "BTC ATMs" where people could withdraw cash. This is news to me and hasn't featured in any write-up of QCX I've ever seen. > And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy. Yes, this is exactly what we're talking about - we have no real idea how much BTC is in peoples accounts on exchanges, because they are a black box and may be creating it out of thin air. While they don't try to move too much of it and the exchange remains operational, the ecosystem functions as if those balances are correct. > Quadriga CX didn't produce any more BTC - they just lost their customer's BTC. While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more. Until they weren't.
  - nl 4y ago
    > While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more. So as I said - they can't lend more than 100% of the BTC they have. They can make up anything want within their own exchange of course.

by Nursie 4y ago

nl 4y ago

> I'm sorry this is just nonsense, as has been pointed out many times, exchanges are not constrained by the blockchain of any particular cryptocurrency, most of their transactions don't take place on a blockchain and their customer balances are not stored on the various blockchains. Sure, within the exchange that's true. The instance the BTC leaves the exchange as a loan or withdrawl it is no longer possible for that BTC. > Quadriga CX worked this way, until it didn't and everyone discovered their cryptocurrency was fictional. I don't think this was the case, unless you can show me otherwise. In particular, they had "BTC ATMs" where people could withdraw cash. Note that this is not loaning BTC. And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy. Notably there is a precise accounting of the BTC that was lost because there is a public ledger of it. Quadriga CX didn't produce any more BTC - they just lost their customer's BTC.

Nursie 4y ago
> I don't think this was the case, unless you can show me otherwise. Quadriga CX showed their users having BTC in their accounts. In reality, the guy running the show had already gambled those away on other exchanges. It all held together, ish, until he died and the music stopped. > In particular, they had "BTC ATMs" where people could withdraw cash. This is news to me and hasn't featured in any write-up of QCX I've ever seen. > And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy. Yes, this is exactly what we're talking about - we have no real idea how much BTC is in peoples accounts on exchanges, because they are a black box and may be creating it out of thin air. While they don't try to move too much of it and the exchange remains operational, the ecosystem functions as if those balances are correct. > Quadriga CX didn't produce any more BTC - they just lost their customer's BTC. While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more. Until they weren't.
- nl 4y ago
  > While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more. So as I said - they can't lend more than 100% of the BTC they have. They can make up anything want within their own exchange of course.