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Can’t you use an exchange, keeping your money offline (eg, in an hardware wallet) and just authorize the required amount out and in, in real time?

by aborsy 4y ago

pjc50 4y ago
Not in "real time": blockchain settlement has to wait for a block. And you incur on-network transaction fees plus whatever fee the exchange imposes for transfers out. (Besides, many people are "day trading" on these exchanges because it's a form of addictive gambling) Oh and then there's "staking": https://ftx.com/staking https://ftx.com/staking which encourages people to keep tokens on the exchange by pretending to pay them interest rates. And offering various other multi-level-marketing incentives. I see "Free Daily ERC20/ETH Withdrawals : NaN" on that page, which is fun.
WeylandYutani 4y ago
Actually using crypto is ridiculously complicated compared to a SEPA transfer from your bank account or a shares trade in an app. People like the path of least resistance which is why everyone uses exchanges- it's easier than using your own cold wallet. Exchanges for good or ill has made crypto accessible to the masses.
- Ekaros 4y ago
  It is funny that solution to problems of crypto is exactly the thing they were invented to fight against.
  - lupire 4y ago
    Because crypto doesn't work yet (which is OK, it's new and experimental), but people want to pretend is does. Same as as these people people building allegedly quantum computers but where the real work is done by classical computers.
    - Tesl 4y ago
      It's not new it's nearly fifteen years old. Why are you still pretending it's new????
    - irae 4y ago
      Nope. Crypto does work. Day trading is a problem of the old system that requires the old system tech to work. Assets should be valued for their properties and for their scarcity (amongst other things), and not by trend waves amplified by day trade and/or even bigger waves of chained margin calls. There are some advantages of day trading, yes, but it is mostly noise and IMO it is very good that "real crypto" can't operate "fast enough" for those who practice it.
meltedcapacitor 4y ago
You can, but it's impractical (operationally and in tx costs) as it requires a live bot to constantly adjust margin between the exchange and the self-custody wallet, due to the way typical crypto trading products work: at max margin, the chance of liquidation is too high, not so much because of liquidation itself (that can be risk managed and averaged out) but due to the enormous implied fees associated with liquidations. Example pricing: bet 5 at max leverage, lose 2 due to market movements, the account is zeroed aka liquidation fee of 3.

Can’t you use an exchange, keeping your money offline (eg, in an hardware wallet) and just authorize the required amount out and in, in real time?

by aborsy 4y ago

Can’t you use an exchange, keeping your money offline (eg, in an hardware wallet) and just authorize the required amount out and in, in real time?

pjc50 4y ago

Not in "real time": blockchain settlement has to wait for a block. And you incur on-network transaction fees plus whatever fee the exchange imposes for transfers out. (Besides, many people are "day trading" on these exchanges because it's a form of addictive gambling) Oh and then there's "staking": https://ftx.com/staking https://ftx.com/staking which encourages people to keep tokens on the exchange by pretending to pay them interest rates. And offering various other multi-level-marketing incentives. I see "Free Daily ERC20/ETH Withdrawals : NaN" on that page, which is fun.

WeylandYutani 4y ago

Actually using crypto is ridiculously complicated compared to a SEPA transfer from your bank account or a shares trade in an app. People like the path of least resistance which is why everyone uses exchanges- it's easier than using your own cold wallet. Exchanges for good or ill has made crypto accessible to the masses.

Ekaros 4y ago
It is funny that solution to problems of crypto is exactly the thing they were invented to fight against.
- lupire 4y ago
  Because crypto doesn't work yet (which is OK, it's new and experimental), but people want to pretend is does. Same as as these people people building allegedly quantum computers but where the real work is done by classical computers.
  - Tesl 4y ago
    It's not new it's nearly fifteen years old. Why are you still pretending it's new????
  - irae 4y ago
    Nope. Crypto does work. Day trading is a problem of the old system that requires the old system tech to work. Assets should be valued for their properties and for their scarcity (amongst other things), and not by trend waves amplified by day trade and/or even bigger waves of chained margin calls. There are some advantages of day trading, yes, but it is mostly noise and IMO it is very good that "real crypto" can't operate "fast enough" for those who practice it.

meltedcapacitor 4y ago

You can, but it's impractical (operationally and in tx costs) as it requires a live bot to constantly adjust margin between the exchange and the self-custody wallet, due to the way typical crypto trading products work: at max margin, the chance of liquidation is too high, not so much because of liquidation itself (that can be risk managed and averaged out) but due to the enormous implied fees associated with liquidations. Example pricing: bet 5 at max leverage, lose 2 due to market movements, the account is zeroed aka liquidation fee of 3.