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This isn’t cryptocurrency, these are sketchy unlicensed banks with a cryptocurrency theme. People holding coins in their own wallets are entirely unaffected. I

by woah 4y ago

This isn’t cryptocurrency, these are sketchy unlicensed banks with a cryptocurrency theme. People holding coins in their own wallets are entirely unaffected. I hope that crypto exchanges are outlawed soon.

gergov 4y ago
Well, once all these go down the prices of currencies will also come down, which affects even those who had their coins in cold wallets - unless they plan to hold without making a profit until the heat death of the universe
- rglullis 4y ago
  Plenty of people were underwater with their mortgages in 2008, but home prices came back up not too long after.
  - JumpCrisscross 4y ago
    > Plenty of people were underwater with their mortgages in 2008, but home prices came back up There is a pretty fundamental difference between houses and crypto.
    - birracerveza 4y ago
      Houses get destroyed, the blockchain is eternal. /s /s
  - AndrewStephens 4y ago
    The difference is that house prices were for material objects that people actually need, and sales are supported by a huge industry of agents, lawyers, and governments to facilitate the safe transfer of houses. None of that exists in the crypto space. The exchanges control the price and regularly trade against their own customers, and recent events have shown that they are all co-mingled and propping each other up. Exchanges going down is bad news even if you keep your coins in your own wallets. With the exchanges gone, actually using your coins will become much harder. Worse, as power consolidates among fewer exchanges the price becomes even easier to manipulate.
    - rglullis 4y ago
      > None of that exists in the crypto space. Bullshit. It exists, it's just that the UI/UX is awful and most people in the developed world have no need for it. But they do exist. My work on hub20 [0] is exactly that, to have a system that would let people and communities create their actual self-custodial "crypto banks". [0]: https://hub20.io https://hub20.io
      - AndrewStephens 4y ago
        I should have made myself clearer - none of that (agents, lawyers, etc) exists in crypto _apart_ from the exchanges, which are meant to facilitate the transfer of crypto assets. The two problems with this setup are: * The exchanges are dishonest and unregulated. * The exchanges are exploding like a chain of firecrackers. So crypto is going from a state of having most transactions go through dishonest exchanges to being in a state where people own crypto but trading will become almost impossible. Is the price going to go up? Will it go down? It doesn't matter, since without exchanges you can't actually use it for anything.
        datadata 4y ago
        Exchanges don't need to act as long duration custodians for them to serve their purpose or be profitable. Exchanges will make a profit from trading fees. They can attract capital and liquidity via market maker fee rebates. You can trickle your capital through an exchange to make a large trade incrementally and only ever risk an arbitrarily small percentage of your total capital. There are ways to run exchanges in a much less sketchy way, that while not perfect, would make the kind of horrific abuse of customer funds that FTX did not possible. For example, merkle tree proof of reserves.
        rglullis 4y ago
        > since without exchanges you can't actually use it for anything Before repeating your baseless argument, please read about my project. Start with the about page. Understand that we can have global commerce with crypto without the big centralized exchanges. It's only an issue of scaling down and accepting that even though "trust" is needed for efficient transactions, this can happen at a much lower level.
- CyberDildonics 4y ago
  Everyone is talking about losing their balance and you are conflating it with price fluctuations.
  - tartoran 4y ago
    Let’s not shy away, those balances are a speculation on the future price of crypto. If the prices don’t go up they’re affected, simple as that.
    - CyberDildonics 4y ago
      That's obviously not what was being talked about in this context. The discussion was about being affected by suspended withdrawals if exchanges never give people their deposits back.
      - pessimizer 4y ago
        That's because gergov and tartoran were not making woah's point about people who don't have accounts at exchanges. They were making their own related point in reply, also about people who don't have accounts at exchanges, being damaged by price drops in the wake of problems at exchanges. Are they allowed to do that?
mudrockbestgirl 4y ago
If they are outlawed, what will be the onramp?
- danuker 4y ago
  P2P trade. I think it's better than exchanges anyway. At the moment there's a significant premium for limit orders (i.e. posting an ad rather than taking one up). https://bisq.network/ https://bisq.network/ https://localbitcoins.com/ https://localbitcoins.com/
  - polygamous_bat 4y ago
    Nothing better than meeting a guy in a trench coat behind a garage in the shady part of the town to exchange your cash for outlawed, non-refundable token. No way that can go badly. Actually, scratch that. Nerds will lose their crypto wallet AND their physical wallet to the rubber hose cryptanalysis. In fact, this is a great opportunity for enterprising criminal minds.
    - danuker 4y ago
      You don't need to meet in-person. You can require ID when trading.
      - lxgr 4y ago
        In a world with robust digital ID, maybe that would be a possibility (but still leaves ample room for counterparty risk). Last time I had to "verify my ID" online, it amounted to a photo of my driver's license and knowing my previous address.
danuker 4y ago
I hope they are regulated, not outlawed. As in, "you have to be ready for a 90% withdrawal at any time". This would have solved every problem.
- throwup 4y ago
  Sorry, 90%? Why not 100%?
  - danuker 4y ago
    You are right. I don't know why I said 90%. It should be 100%. There should be no incentive to play with customers' funds.
    - jerf 4y ago
      You do need a little bit of flex. If you rigidly insist on literally 100.00000...% at literally every moment, then deposits and withdrawals are actually impossible, because there are delays between the steps of the transaction. And in those times, there are always fluctuations in the market value of various things, which normally we might not worry about but if you want literally 100.00...%, it matters. And of course, once you've opened the door to not being fully backed, now we're just arguing about exactly how not backed things are. There are other reasons you may need to flex a bit more than you might expect. It is probably more profitable to try to delineate what they are allowed to do rather than what they are not allowed to do. Also, some really superficially appealing regulations cause problems if you try to manifest them in the world. My guts wants to agree that you should always have to have the exact thing your account is denominated in, but if you want to enable international transactions, surely a sensible thing to want to do, now you need to allow some flex for the fact that if there's a three-way transaction between dollars, yen, and bitcoin, there's going to be some conversion. If the exchange is going to permit this, they probably don't want to acquire the other currencies for every single transaction, paying a non-trivial overhead each time, they're going to need to be allowed to hold a certain amount of reserves of each currency they transact in, even though this will come out of the customer funds. All this stuff makes sense and if done responsibly isn't necessarily a problem. The problem is that over the weeks, months, years, decades of it being done in a way that isn't necessarily a problem, there's all the incentive in the world to chip away bit by bit until it becomes a problem. This goes back all the way to the concept of coin shaving (the reason your coins all have ridges on the side) and I'm sure it wasn't a new idea then. Put whatever rails in you like, people always find ways of going right up to them, and then just a bit beyond, and then a bit more beyond....
w1nst0nsm1th 4y ago
> I hope that crypto exchanges are outlawed soon. They will not. According to the Financial Times, A recent (or future?) EU legislation allow supervised crypto exchanges EU wide with the condition of 50.000 euros minimun capitalisation. A member of the board of director of ECB commented: - Crypto providers are very hard to regulate - Banks should step in. - Crypto preys on very fragile people, i.e. poors, minorities, financially illiterates, etc... It sounds like an injonction masquerading as a mere statement.
genghisjahn 4y ago
I wouldn't say that. The value of what's in those wallets is greatly affected by these goings on.
reaperducer 4y ago
People holding coins in their own wallets are entirely unaffected. I'm not a crypto guy, so this may be a very basic question: If people can hold coins in their own wallets, why did they give them to these companies acting like banks? Were they promised interest or something? I hope that crypto exchanges are outlawed soon. Isn't the primary use case for crypto that it's beyond the reach of laws?
- zeven7 4y ago
  There are some exchanges that have offered interest on deposits. Also some offer staking rewards. That draws in some people. The bigger reasons many people keep money on exchanges is: - Self custody can be hard to do securely for less technically savvy investors - Fast access to trading; some people want to swing trade or just have it available to sell or buy in a moments notice
- jasonwatkinspdx 4y ago
  The technical aspects of running your own wallet are too much for most users. And yes, most of these exchanges have programs where you earn interest or otherwise get various perks for staking your coins on the exchange. FTX was offering 8% APR at one point, which should have triggered people's too good to be true whiskers, but the greed around getting rich quick with crypto coins has people breezing right past that.

by woah 4y ago

gergov 4y ago

Well, once all these go down the prices of currencies will also come down, which affects even those who had their coins in cold wallets - unless they plan to hold without making a profit until the heat death of the universe

rglullis 4y ago
Plenty of people were underwater with their mortgages in 2008, but home prices came back up not too long after.
- JumpCrisscross 4y ago
  > Plenty of people were underwater with their mortgages in 2008, but home prices came back up There is a pretty fundamental difference between houses and crypto.
  - birracerveza 4y ago
    Houses get destroyed, the blockchain is eternal. /s /s
- AndrewStephens 4y ago
  The difference is that house prices were for material objects that people actually need, and sales are supported by a huge industry of agents, lawyers, and governments to facilitate the safe transfer of houses. None of that exists in the crypto space. The exchanges control the price and regularly trade against their own customers, and recent events have shown that they are all co-mingled and propping each other up. Exchanges going down is bad news even if you keep your coins in your own wallets. With the exchanges gone, actually using your coins will become much harder. Worse, as power consolidates among fewer exchanges the price becomes even easier to manipulate.
  - rglullis 4y ago
    > None of that exists in the crypto space. Bullshit. It exists, it's just that the UI/UX is awful and most people in the developed world have no need for it. But they do exist. My work on hub20 [0] is exactly that, to have a system that would let people and communities create their actual self-custodial "crypto banks". [0]: https://hub20.io https://hub20.io
    - AndrewStephens 4y ago
      I should have made myself clearer - none of that (agents, lawyers, etc) exists in crypto _apart_ from the exchanges, which are meant to facilitate the transfer of crypto assets. The two problems with this setup are: * The exchanges are dishonest and unregulated. * The exchanges are exploding like a chain of firecrackers. So crypto is going from a state of having most transactions go through dishonest exchanges to being in a state where people own crypto but trading will become almost impossible. Is the price going to go up? Will it go down? It doesn't matter, since without exchanges you can't actually use it for anything.
      - datadata 4y ago
        Exchanges don't need to act as long duration custodians for them to serve their purpose or be profitable. Exchanges will make a profit from trading fees. They can attract capital and liquidity via market maker fee rebates. You can trickle your capital through an exchange to make a large trade incrementally and only ever risk an arbitrarily small percentage of your total capital. There are ways to run exchanges in a much less sketchy way, that while not perfect, would make the kind of horrific abuse of customer funds that FTX did not possible. For example, merkle tree proof of reserves.
      - rglullis 4y ago
        > since without exchanges you can't actually use it for anything Before repeating your baseless argument, please read about my project. Start with the about page. Understand that we can have global commerce with crypto without the big centralized exchanges. It's only an issue of scaling down and accepting that even though "trust" is needed for efficient transactions, this can happen at a much lower level.
CyberDildonics 4y ago
Everyone is talking about losing their balance and you are conflating it with price fluctuations.
- tartoran 4y ago
  Let’s not shy away, those balances are a speculation on the future price of crypto. If the prices don’t go up they’re affected, simple as that.
  - CyberDildonics 4y ago
    That's obviously not what was being talked about in this context. The discussion was about being affected by suspended withdrawals if exchanges never give people their deposits back.
    - pessimizer 4y ago
      That's because gergov and tartoran were not making woah's point about people who don't have accounts at exchanges. They were making their own related point in reply, also about people who don't have accounts at exchanges, being damaged by price drops in the wake of problems at exchanges. Are they allowed to do that?

mudrockbestgirl 4y ago

If they are outlawed, what will be the onramp?

danuker 4y ago
P2P trade. I think it's better than exchanges anyway. At the moment there's a significant premium for limit orders (i.e. posting an ad rather than taking one up). https://bisq.network/ https://bisq.network/ https://localbitcoins.com/ https://localbitcoins.com/
- polygamous_bat 4y ago
  Nothing better than meeting a guy in a trench coat behind a garage in the shady part of the town to exchange your cash for outlawed, non-refundable token. No way that can go badly. Actually, scratch that. Nerds will lose their crypto wallet AND their physical wallet to the rubber hose cryptanalysis. In fact, this is a great opportunity for enterprising criminal minds.
  - danuker 4y ago
    You don't need to meet in-person. You can require ID when trading.
    - lxgr 4y ago
      In a world with robust digital ID, maybe that would be a possibility (but still leaves ample room for counterparty risk). Last time I had to "verify my ID" online, it amounted to a photo of my driver's license and knowing my previous address.

danuker 4y ago

I hope they are regulated, not outlawed. As in, "you have to be ready for a 90% withdrawal at any time". This would have solved every problem.

throwup 4y ago
Sorry, 90%? Why not 100%?
- danuker 4y ago
  You are right. I don't know why I said 90%. It should be 100%. There should be no incentive to play with customers' funds.
  - jerf 4y ago
    You do need a little bit of flex. If you rigidly insist on literally 100.00000...% at literally every moment, then deposits and withdrawals are actually impossible, because there are delays between the steps of the transaction. And in those times, there are always fluctuations in the market value of various things, which normally we might not worry about but if you want literally 100.00...%, it matters. And of course, once you've opened the door to not being fully backed, now we're just arguing about exactly how not backed things are. There are other reasons you may need to flex a bit more than you might expect. It is probably more profitable to try to delineate what they are allowed to do rather than what they are not allowed to do. Also, some really superficially appealing regulations cause problems if you try to manifest them in the world. My guts wants to agree that you should always have to have the exact thing your account is denominated in, but if you want to enable international transactions, surely a sensible thing to want to do, now you need to allow some flex for the fact that if there's a three-way transaction between dollars, yen, and bitcoin, there's going to be some conversion. If the exchange is going to permit this, they probably don't want to acquire the other currencies for every single transaction, paying a non-trivial overhead each time, they're going to need to be allowed to hold a certain amount of reserves of each currency they transact in, even though this will come out of the customer funds. All this stuff makes sense and if done responsibly isn't necessarily a problem. The problem is that over the weeks, months, years, decades of it being done in a way that isn't necessarily a problem, there's all the incentive in the world to chip away bit by bit until it becomes a problem. This goes back all the way to the concept of coin shaving (the reason your coins all have ridges on the side) and I'm sure it wasn't a new idea then. Put whatever rails in you like, people always find ways of going right up to them, and then just a bit beyond, and then a bit more beyond....

w1nst0nsm1th 4y ago

> I hope that crypto exchanges are outlawed soon. They will not. According to the Financial Times, A recent (or future?) EU legislation allow supervised crypto exchanges EU wide with the condition of 50.000 euros minimun capitalisation. A member of the board of director of ECB commented: - Crypto providers are very hard to regulate - Banks should step in. - Crypto preys on very fragile people, i.e. poors, minorities, financially illiterates, etc... It sounds like an injonction masquerading as a mere statement.

genghisjahn 4y ago

I wouldn't say that. The value of what's in those wallets is greatly affected by these goings on.

reaperducer 4y ago

People holding coins in their own wallets are entirely unaffected. I'm not a crypto guy, so this may be a very basic question: If people can hold coins in their own wallets, why did they give them to these companies acting like banks? Were they promised interest or something? I hope that crypto exchanges are outlawed soon. Isn't the primary use case for crypto that it's beyond the reach of laws?

zeven7 4y ago
There are some exchanges that have offered interest on deposits. Also some offer staking rewards. That draws in some people. The bigger reasons many people keep money on exchanges is: - Self custody can be hard to do securely for less technically savvy investors - Fast access to trading; some people want to swing trade or just have it available to sell or buy in a moments notice
jasonwatkinspdx 4y ago
The technical aspects of running your own wallet are too much for most users. And yes, most of these exchanges have programs where you earn interest or otherwise get various perks for staking your coins on the exchange. FTX was offering 8% APR at one point, which should have triggered people's too good to be true whiskers, but the greed around getting rich quick with crypto coins has people breezing right past that.