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Was't "blockchain technology" supposed to prevent this exact thing -- no record of money transfers? Instead it just enables obfuscation and fraud. I really hope

Was't "blockchain technology" supposed to prevent this exact thing -- no record of money transfers? Instead it just enables obfuscation and fraud. I really hope the IRS/FBI have more success tracking down where that money went. No one can spend that much on Adderall.

smsm42 4y ago
No, blockchain technology was never intended to prevent this kind of fraud. How could it? If $N bln is missing, how any blockchain could tell you where it went if those dollars have never been represented on that blockchain? The blockchain can only record operations made within the chain, blaming it for fraud that happened outside the chain is like blaming differential equations that they don't prevent robbery. It's not something that is possible for this technology, and it was never intended to solve it. If all the transactions everywhere happened on the blockchain, then you could make claims that it should be traceable (even then it doesn't mean it actually is, though) - but it's clearly not the case.
- gregjor 4y ago
  I think you missed the sarcasm in my comment even though I tried to make it obvious. Fraud is fraud, technology can’t stop it. In the popular mind, away from the “crypto community,” regular people equate crypto with claims for the revolutionary blockchain. That enables scammers and predators. Technology cannot bear fault or blame because it has no will or action.
  - smsm42 4y ago
    I'm not sure what would be the reason to think blockchain will change anything in the fraud department. It's like expecting electric cars will cure cancer. I mean, maybe some people have weird expectations, but I work in a crypto-adjacent company and it is true that a lot of people misunderstand crypto and blockchains, but I haven't encountered many that would expect it to magically stop fraud.
    - gregjor 4y ago
      Maybe because Satoshi specifically mentioned preventing fraud in the original Bitcoin whitepaper. Blockchain/crypto enthusiasts frequently tout the supposed transparency of an immutable public ledger as a way to prevent fraud. I know they refer to the kind of fraud and financial corruption that led to the 2008 bank meltdown, not necessarily sellers defrauding buyers of NFTs, but the FTX crash seems more Lehman Brothers scale than "this beanie baby is fake" scale.
      - smsm42 4y ago
        Lehman was a legit business that got caught with some risky bets and, for various reasons, it was decided to let it go down. That may be analogous to the situation with Alameda (minus the drugs) - but FTX is more like a cross between Madoff (affinity fraud) and degenerate gambling.
jongjong 4y ago
FTX was not a blockchain, but a centralized exchange. If it had been a decentralized exchange (DEX), all funds would have been traceable. This would never have happened. Most people in the crypto space are familiar with custodial risks and know the difference between a decentralized and a centralized platform. The FTX collapse didn't affect the true crypto community who kept the bulk of their assets on-chain; the consequences mostly fell on the shoulders of speculators and the entities who cater to them. It will surely scare away a few of them from the crypto space, but we don't need them anyway. Crypto doesn't need more speculators. Crypto space actually benefits from these periodic cleansings. If MtGox collapse didn't end crypto, then this surely won't.
- akiselev 4y ago
  Now know as the “no true cryptobro” fallacy
  - twelve40 4y ago
    They do have a point though, now that the bad guys are all exposed and gone from this industry, let's see what it's capable of.
    - gregjor 4y ago
      I doubt it.
  - gregjor 4y ago
    Yeah I didn't know that the decentralized exchanges don't have fraud problems.
deleted 4y ago
[deleted]
andirk 4y ago
Yup and this has almost nothing to do with blockchain technology and everything to do with common capitalistic greed. And money in the hands of someone who's really bad at gambling.
- gregjor 4y ago
  Aside from crypto pretty much nothing has anything to do with blockchain. Crypto and blockchain remain linked as near-synonyms in the public mind. The only real-world remotely useful application of blockchain remains crypto. No one outside of the "blockchain community" or "blockchain adjacent community" (whatever that means) knows about any other use for blockchain "technology." I agree that the FTX crash had everything to do with greed, and in SBF and company's case, incompetence. And I don't get how supposedly savvy investors both within and outside the "crypto space" got sucked in by such a charlatan.

smsm42 4y ago

No, blockchain technology was never intended to prevent this kind of fraud. How could it? If $N bln is missing, how any blockchain could tell you where it went if those dollars have never been represented on that blockchain? The blockchain can only record operations made within the chain, blaming it for fraud that happened outside the chain is like blaming differential equations that they don't prevent robbery. It's not something that is possible for this technology, and it was never intended to solve it. If all the transactions everywhere happened on the blockchain, then you could make claims that it should be traceable (even then it doesn't mean it actually is, though) - but it's clearly not the case.

gregjor 4y ago
I think you missed the sarcasm in my comment even though I tried to make it obvious. Fraud is fraud, technology can’t stop it. In the popular mind, away from the “crypto community,” regular people equate crypto with claims for the revolutionary blockchain. That enables scammers and predators. Technology cannot bear fault or blame because it has no will or action.
- smsm42 4y ago
  I'm not sure what would be the reason to think blockchain will change anything in the fraud department. It's like expecting electric cars will cure cancer. I mean, maybe some people have weird expectations, but I work in a crypto-adjacent company and it is true that a lot of people misunderstand crypto and blockchains, but I haven't encountered many that would expect it to magically stop fraud.
  - gregjor 4y ago
    Maybe because Satoshi specifically mentioned preventing fraud in the original Bitcoin whitepaper. Blockchain/crypto enthusiasts frequently tout the supposed transparency of an immutable public ledger as a way to prevent fraud. I know they refer to the kind of fraud and financial corruption that led to the 2008 bank meltdown, not necessarily sellers defrauding buyers of NFTs, but the FTX crash seems more Lehman Brothers scale than "this beanie baby is fake" scale.
    - smsm42 4y ago
      Lehman was a legit business that got caught with some risky bets and, for various reasons, it was decided to let it go down. That may be analogous to the situation with Alameda (minus the drugs) - but FTX is more like a cross between Madoff (affinity fraud) and degenerate gambling.

jongjong 4y ago

FTX was not a blockchain, but a centralized exchange. If it had been a decentralized exchange (DEX), all funds would have been traceable. This would never have happened. Most people in the crypto space are familiar with custodial risks and know the difference between a decentralized and a centralized platform. The FTX collapse didn't affect the true crypto community who kept the bulk of their assets on-chain; the consequences mostly fell on the shoulders of speculators and the entities who cater to them. It will surely scare away a few of them from the crypto space, but we don't need them anyway. Crypto doesn't need more speculators. Crypto space actually benefits from these periodic cleansings. If MtGox collapse didn't end crypto, then this surely won't.

akiselev 4y ago
Now know as the “no true cryptobro” fallacy
- twelve40 4y ago
  They do have a point though, now that the bad guys are all exposed and gone from this industry, let's see what it's capable of.
  - gregjor 4y ago
    I doubt it.
- gregjor 4y ago
  Yeah I didn't know that the decentralized exchanges don't have fraud problems.

deleted 4y ago

[deleted]

andirk 4y ago

Yup and this has almost nothing to do with blockchain technology and everything to do with common capitalistic greed. And money in the hands of someone who's really bad at gambling.

gregjor 4y ago
Aside from crypto pretty much nothing has anything to do with blockchain. Crypto and blockchain remain linked as near-synonyms in the public mind. The only real-world remotely useful application of blockchain remains crypto. No one outside of the "blockchain community" or "blockchain adjacent community" (whatever that means) knows about any other use for blockchain "technology." I agree that the FTX crash had everything to do with greed, and in SBF and company's case, incompetence. And I don't get how supposedly savvy investors both within and outside the "crypto space" got sucked in by such a charlatan.