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Would you be willing to make a honest try to compare quantitatively the percentage of deposits lost in regulated western banks vs money lost in failed crypto ex
by beefield 4y ago
Would you be willing to make a honest try to compare quantitatively the percentage of deposits lost in regulated western banks vs money lost in failed crypto exchanges, stablecoins etc?
I think the difference must be many orders of magnitude to the benefit of regulated banks.
- omgomgomgomg 4y agoSeems like its around 30 banks a year in the usa. Not sure about deposits, theyre relativelly covered. But shareholders get wiped out every time.
- smugma 4y agoBanks failing is pretty rare, not 30 times a year. “Silicon Valley Bank is no more. It’s the first bank backed by the Federal Deposit Insurance Corp. to fail since 2020.” https://www.marketplace.org/2023/03/10/how-silicon-valley-bank-failed/amp/ https://www.marketplace.org/2023/03/10/how-silicon-valley-ba...
- justahuman74 4y agoI would argue that `since 2020` is still too frequent for most people
- shuckles 4y agoThere was a very uncommon event that began in 2020.
- pksebben 4y agothere was also a very uncommon event in '01, '08, '22.. .. at some point, we're gonna have to step back and take a look at how we're doing business. Something about our whole way of organizing society is busted.
- shuckles 4y agoNot sure how you come to that conclusion with the happenings discussed in this thread.
- TheOtherHobbes 4y agoAside from the crypto scandals, the insider dealing scandals, the money laundering scandals, the price and index fixing scandals, and the corruption scandals, there have been 562 bank failures since 2001. https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/ Finance is inherently an opportunist, if not outright criminal, industry which explodes regularly causing huge economic and political damage.
- shuckles 4y agoAppending scandal to an event isn’t having the persuasive effect you’re looking for. Finance is also the industry which helps us collectively coordinate our resources, grow our wealth for retirement, and facilitate risk taking. Every industry has issues.
- AnimalMuppet 4y ago562? Great. Now give me a context for that. How many banks are there? And, of those 562, in how many of them did the depositors lose money?
- Retric 4y agoWhich is probably well under 0.1% of total companies that failed over the same period. The thing is failed banks don’t mean depositors lose all their money. The point of banking regulation is fail fast so banks are taken out when they still have 98% of their depositors money not 8%. People with under 250k are made whole and people above that have already been compensated for their risk by higher interest rates. It doesn’t always work perfectly, but in many cases a failed bank just means people come in on Monday and there is a new sign on the building with little else changed.
- mirekrusin 4y agoAre you counting bailouts as failure or not?
- mjlawson 4y agoIt depends on the state of the market. During the banking crisis, 157 banks were closed in one year[1]. [1] https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/
- chinchilla2020 4y agoPercentage wise I would bet crypto is way riskier. In gross terms, crypto is tiny compared to the dollar/euro banking system, so it's likely to be a much smaller number. Interestingly, for those who use crypto as-designed, the percentage lost to bank runs is almost nil since you 'hold your own coins'. It's people who leave their money on crypto exchanges that lose their coins.
- beefield 4y agoI think you are selective here. There are lots of coins that have lost value permanently (FTT, luna etc), I also remember reading that there are lots of coins whose network has simply shut down due to lack of interest (no source here, though)
- areyousure 4y agoI don't think including "coins" that have lost value tilts the balance against crypto. The vast majority of traditional currencies have lost nearly all of their value over time, including the US dollar.
- lottin 4y ago> It's people who leave their money on crypto exchanges that lose their coins. People who hold their own coins lose them as well. It was estimated that 3.7 million bitcoin have been already lost irreversibly [1]. That's a staggering number. It's roughly 20% of the entire supply. [1] https://blog.chainalysis.com/reports/bitcoin-market-data-exchanges-trading/ https://blog.chainalysis.com/reports/bitcoin-market-data-exc...
- zarzavat 4y agoThey equate “lost” with “not moved in 5 years”. That’s a strangely short cut off — I would use 10 years instead. It’s completely possible for coins to sit around for 5 years in cold storage addresses without being touched.
- 4y ago
- kybernetikos 4y agoI have personally been bailed out by a government when the bank I had a savings account in failed, and its countrys insurance scheme refused to pay. I have had fraudulent charges made to my bank accounts. On the other hand, the keys to my ethereum remain safe on my hardware wallet, and none of my ethereum has ever moved without me telling it to. Perhaps my experience is atypical, but I am surely not alone.
- subroutine 4y agoThey said quantitatively not anecdotally.
- kybernetikos 4y agoSure, and I didn't answer the question. I think it's hard to answer the question in a fair way. Banks and financial instututions fail in various ways from small to big more than most people think. On the other hand, they are 'too big to fail' so their mistakes get fixed by governments out of the public purse. These options are not currently available to cryptocurrencies, but that's a social choice. I tend to think that the scamming aspect of cryptocurrencies is massively overstated. There are lots of ways to be taken in and scammed, but that's true in the fiat world too. A small amount of care goes a long way in both worlds.
- breck 4y agoUS consumers lose about $30 billion a year to retail banks. http://www.breckyunits.com/the-great-bank-robbery.html http://www.breckyunits.com/the-great-bank-robbery.html