6 ms·

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....
bvrmn 4y ago
And how to make it work with largely unstable crypto/fiat ratio?
- nappy-doo 4y ago
  arguably, all the crypto exchanges are proving crypto's a fiat too.
- danuker 4y ago
  Hold inventory exactly equal to what the customers deposited, be it crypto or fiat. The exchange rate matters only when trading.
- coffeebeqn 4y ago
  For stable coins they have to be backed 100% by reserves of real currency. For crypto - well you just hold the crypto and don’t lend it out. If I give you 1 ETH, you just keep it in the wallet for me to withdraw on my leisure. Simple.
deleted 4y ago
[deleted]

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....

bvrmn 4y ago

And how to make it work with largely unstable crypto/fiat ratio?

nappy-doo 4y ago
arguably, all the crypto exchanges are proving crypto's a fiat too.
danuker 4y ago
Hold inventory exactly equal to what the customers deposited, be it crypto or fiat. The exchange rate matters only when trading.
coffeebeqn 4y ago
For stable coins they have to be backed 100% by reserves of real currency. For crypto - well you just hold the crypto and don’t lend it out. If I give you 1 ETH, you just keep it in the wallet for me to withdraw on my leisure. Simple.

deleted 4y ago

[deleted]