7 ms·

FTX is just an exchange right? Any sensible person only puts funds into an exchange that they want to trade. Not your keys, not your crypto.

sgt101 4y ago
I think that they said they would pay 8% interest on your funds. Which I guess makes it quite attractive. A discord server I was on in the spring had people offering advice on how to get this... I just assumed it was a scam, perhaps other people weren't so cautious.
- Gasp0de 4y ago
  I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?
  - plasticchris 4y ago
    Not always, I bonds were offering more earlier this year
    - theturtletalks 4y ago
      I Bonds are an exception since everyone is capped at $10K and the rate changes quarterly based on inflation. BlockFi and other DeFi platforms were offering 8%, but had a minimum balance needed ($100K in most cases).
    - colinmhayes 4y ago
      The government is losing money on I bonds
    - quickthrowman 4y ago
      I bonds are subsidized by the US Treasury (this is why there’s a purchase limit), which has never defaulted on its debt.
      - BlueTemplar 4y ago
        Technically speaking, yes, though the USA is not invulnerable : for instance the dollar has lost a third of its value in the decade after the Nixon shock...
  - cesarb 4y ago
    > I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right? That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).
    - nwatson 4y ago
      That's for bond purchase and payback in Brazilian Reais with a bona fide government (with Lula back). To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
      - lupire 4y ago
        Lula might be a good guy, but that doesn't mean he has immediately restabilized the country.
    - quickthrowman 4y ago
      The classic ‘risk free’ asset is US Treasurys, the US has never defaulted on its debt. Any yield above the risk free rate has implied risk, Brazilian bonds yield 13% because Brazil has defaulted on its debt several times. Brazilian bonds are at least an order of magnitude riskier than US Treasurys, and probably more than that. FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.
ryanSrich 4y ago
“Any sensible person”. I think this is an unfair characterization of people that keep large sums on exchanges. It’s not unreasonable to trust a company worth billions to hold your funds. Some might even argue an exchange is safer than a hardware wallet in the sense that if you physically lose the wallet, or completely forget the password, you’re SOL. No one expects a multi-billion dollar exchange to vaporize over night. All that has changed this week. However, I don’t think it will have much impact on people storing their crypto off exchange. What I do expect is that reputable exchanges will start being more open about customer funds, and audits of those funds.
- gitfan86 4y ago
  "No one expects a multi-billion dollar exchange to vaporize over night." Actually that is exactly what us 'crypto sceptics' have been saying the whole time. All of crypto is an accidental or intentional Ponzi scheme sitting on top of a vague promise of "democratizing finance"
- crazygringo 4y ago
  > No one expects a multi-billion dollar exchange to vaporize over night. Except for everyone who has? We don't expect banks to vaporize because they're FDIC-insured with extreme regulations on their lending/investing, highly regulated. But crypto exchanges are the wild west. Totally vulnerable to both hacking and ponzi scheme fraud. Essentially zero regulation or customer insurance. And "vaporizing over night" is how it always goes -- to quote the famous phrase, you go bankrupt slowly and then all at once. So it's actually incredibly unreasonable to trust a company with essentially zero oversight to hold your funds. And sure, there can be a movement towards more openness about funds/audits. But now customers have to decide... which auditors can be trusted to review the numbers, when it's the exchange selecting and paying the auditors? How can you even know? And do the auditors provide any defense against hacking?
  - ryanSrich 4y ago
    I should have said most people, not no one. The reality is most people outside of the HN bubble trust billion dollar companies. Crypto or otherwise. And when I say trust, I don’t mean in the sense that they think the company is doing any moral good, but that they expect a product or service in return for payment. You don’t question that the gas you purchase at a gas station is in fact gas, and not water. Why would a sensible person expect a billion dollar exchange to suddenly halt withdrawals? The point of my comment was that most sensible people would expect a billion dollar company to hold up some aspect of the bargain.
kkielhofner 4y ago
“Not your keys, not your crypto” is one of the most out of touch axioms in the crypto space (and that’s really saying something). See: the vast majority of the population (even within crypto) that can’t figure out how to setup a wallet in the first place. Then, if you get that far, you can join the hordes of people that lose access to it, dig through garbage dumps for a laptop, have malware that inspects the clipboard and replaces addresses, make a wrong click in Metamask and get cleaned out, etc, etc, etc.
- dylkil 4y ago
  smart contract wallets allow users to recover funds in the event they lose their private key - https://www.argent.xyz/learn/what-is-a-smart-contract-wallet/ https://www.argent.xyz/learn/what-is-a-smart-contract-wallet...
  - kkielhofner 4y ago
    I'm aware of that[0]. 1) With chains that support them... 2) They're ridiculously complicated and convoluted. The fact they're suggested by the crypto community only further demonstrates my point about the crypto ecosystem being completely disconnected from reality. 3) They don't do anything to address the other issues I raised. [0] - https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html
- bombcar 4y ago
  If you lose your passphrase or get your coins stolen - should have done security better or used an exchange. If an exchange goes bust, not your keys, not your coins. There is always an answer as to why it it is your fault, which is why it will never really catch on.
unboxingelf 4y ago
People are used to banks and treat CEX as such.
Crosseye_Jack 4y ago
People can be sensible and misinformed at the same time. Personally I don't feel that the flashy tv ads put out by exchanges are targeted at the crypto savvy. For Example https://www.youtube.com/watch?v=noekVG8XLQI https://www.youtube.com/watch?v=noekVG8XLQI & https://www.youtube.com/watch?v=eVdTjxkM1TY https://www.youtube.com/watch?v=eVdTjxkM1TY
hestefisk 4y ago
I think you can say “not your keys…” to people like you and I who understand why. The problem us bulk of retail investors in crypto have no clue and probably couldn’t care less (until they lose their money).

sgt101 4y ago

I think that they said they would pay 8% interest on your funds. Which I guess makes it quite attractive. A discord server I was on in the spring had people offering advice on how to get this... I just assumed it was a scam, perhaps other people weren't so cautious.

Gasp0de 4y ago
I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?
- plasticchris 4y ago
  Not always, I bonds were offering more earlier this year
  - theturtletalks 4y ago
    I Bonds are an exception since everyone is capped at $10K and the rate changes quarterly based on inflation. BlockFi and other DeFi platforms were offering 8%, but had a minimum balance needed ($100K in most cases).
  - colinmhayes 4y ago
    The government is losing money on I bonds
  - quickthrowman 4y ago
    I bonds are subsidized by the US Treasury (this is why there’s a purchase limit), which has never defaulted on its debt.
    - BlueTemplar 4y ago
      Technically speaking, yes, though the USA is not invulnerable : for instance the dollar has lost a third of its value in the decade after the Nixon shock...
- cesarb 4y ago
  > I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right? That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).
  - nwatson 4y ago
    That's for bond purchase and payback in Brazilian Reais with a bona fide government (with Lula back). To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
    - lupire 4y ago
      Lula might be a good guy, but that doesn't mean he has immediately restabilized the country.
  - quickthrowman 4y ago
    The classic ‘risk free’ asset is US Treasurys, the US has never defaulted on its debt. Any yield above the risk free rate has implied risk, Brazilian bonds yield 13% because Brazil has defaulted on its debt several times. Brazilian bonds are at least an order of magnitude riskier than US Treasurys, and probably more than that. FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.

ryanSrich 4y ago

“Any sensible person”. I think this is an unfair characterization of people that keep large sums on exchanges. It’s not unreasonable to trust a company worth billions to hold your funds. Some might even argue an exchange is safer than a hardware wallet in the sense that if you physically lose the wallet, or completely forget the password, you’re SOL. No one expects a multi-billion dollar exchange to vaporize over night. All that has changed this week. However, I don’t think it will have much impact on people storing their crypto off exchange. What I do expect is that reputable exchanges will start being more open about customer funds, and audits of those funds.

gitfan86 4y ago
"No one expects a multi-billion dollar exchange to vaporize over night." Actually that is exactly what us 'crypto sceptics' have been saying the whole time. All of crypto is an accidental or intentional Ponzi scheme sitting on top of a vague promise of "democratizing finance"
crazygringo 4y ago
> No one expects a multi-billion dollar exchange to vaporize over night. Except for everyone who has? We don't expect banks to vaporize because they're FDIC-insured with extreme regulations on their lending/investing, highly regulated. But crypto exchanges are the wild west. Totally vulnerable to both hacking and ponzi scheme fraud. Essentially zero regulation or customer insurance. And "vaporizing over night" is how it always goes -- to quote the famous phrase, you go bankrupt slowly and then all at once. So it's actually incredibly unreasonable to trust a company with essentially zero oversight to hold your funds. And sure, there can be a movement towards more openness about funds/audits. But now customers have to decide... which auditors can be trusted to review the numbers, when it's the exchange selecting and paying the auditors? How can you even know? And do the auditors provide any defense against hacking?
- ryanSrich 4y ago
  I should have said most people, not no one. The reality is most people outside of the HN bubble trust billion dollar companies. Crypto or otherwise. And when I say trust, I don’t mean in the sense that they think the company is doing any moral good, but that they expect a product or service in return for payment. You don’t question that the gas you purchase at a gas station is in fact gas, and not water. Why would a sensible person expect a billion dollar exchange to suddenly halt withdrawals? The point of my comment was that most sensible people would expect a billion dollar company to hold up some aspect of the bargain.

kkielhofner 4y ago

“Not your keys, not your crypto” is one of the most out of touch axioms in the crypto space (and that’s really saying something). See: the vast majority of the population (even within crypto) that can’t figure out how to setup a wallet in the first place. Then, if you get that far, you can join the hordes of people that lose access to it, dig through garbage dumps for a laptop, have malware that inspects the clipboard and replaces addresses, make a wrong click in Metamask and get cleaned out, etc, etc, etc.

dylkil 4y ago
smart contract wallets allow users to recover funds in the event they lose their private key - https://www.argent.xyz/learn/what-is-a-smart-contract-wallet/ https://www.argent.xyz/learn/what-is-a-smart-contract-wallet...
- kkielhofner 4y ago
  I'm aware of that[0]. 1) With chains that support them... 2) They're ridiculously complicated and convoluted. The fact they're suggested by the crypto community only further demonstrates my point about the crypto ecosystem being completely disconnected from reality. 3) They don't do anything to address the other issues I raised. [0] - https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html
bombcar 4y ago
If you lose your passphrase or get your coins stolen - should have done security better or used an exchange. If an exchange goes bust, not your keys, not your coins. There is always an answer as to why it it is your fault, which is why it will never really catch on.

unboxingelf 4y ago

People are used to banks and treat CEX as such.

Crosseye_Jack 4y ago

People can be sensible and misinformed at the same time. Personally I don't feel that the flashy tv ads put out by exchanges are targeted at the crypto savvy. For Example https://www.youtube.com/watch?v=noekVG8XLQI https://www.youtube.com/watch?v=noekVG8XLQI & https://www.youtube.com/watch?v=eVdTjxkM1TY https://www.youtube.com/watch?v=eVdTjxkM1TY

hestefisk 4y ago

I think you can say “not your keys…” to people like you and I who understand why. The problem us bulk of retail investors in crypto have no clue and probably couldn’t care less (until they lose their money).