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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

by 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.

by smsm42 4y ago

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.