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FTX failure isnt a cryptocurrency problem, its a plain old boring case of financial mismanagement and fraud. Good reminder to all here that if you don't hold t
by cwkoss 3y ago
FTX failure isnt a cryptocurrency problem, its a plain old boring case of financial mismanagement and fraud.
Good reminder to all here that if you don't hold they private keys to your crypto, all you have is an IOU from a risky new business.
- CapstanRoller 3y agoHow would holding keys to a crypto wallet full of FTT prevent large-scale fraud via currency manipulation and subsequent devaluation of your holdings? This is indeed a failure of crypto, because FTX was the one primarily in control of the coin supply.
- EGreg 3y agoBitcoiners ask the same thing about holding a bank account full of dollars, or in many other countries (like Lebanon, etc.) even worse currency, or they can just freeze your account, etc. Anyway, it should be clear to people that the 7% in an outside currency has to come from somewhere. And most of this stuff has been a zero-sum game so the money comes from: 1) Investors who bought the top 2) Traders who got liquidated 3) IPO investors who bought shares in a money-losing business model like WeWork 4) Advertisers whose ads didn’t pay off (yes, advertising is a zero-sum game too) Sadly, most people do not realize it’s a zero sum game and the bagholder class only grows and grows until the speculative bubble pops.
- deleted 3y ago[deleted]
- ebiester 3y agoIf you have enough money, you will not be immune to rubber hose decryption attacks or other shows of force. Either you live in a country where you can trust your money system, or you don't.
- ChainOfFools 3y agoIt's always been my take that the reason ideological Bitcoin ghouls are so enthusiastic about directly contradicting their entire argument against government control over money, by lobbying countries like El Salvador to adopt Bitcoin as a national currency, is because they recognize (cf. lead pipe attack) that there is ultimately no replacing men with guns when it comes to defending the value of money. Quote back by math quote doesn't cut it when someone has a mortar aimed at the middle of your mining farm. Or even someone with a couple Jerry cans of gasoline, matches, and nothing to lose after some anon creep chilling in a Thai brothel pulled their life savings to fund his 'tech nomad' lifestyle. And since they are too fragmented and comically self-serving to organize anything like their own soveriegn state, they need to piggyback off an existing one.
- lazide 3y agoIt’s a crypto issue. You can figure that out by restating their advertising/business model using ‘cash’ instead of crypto, and asking yourself how long they could go before getting shut down. Hint: they likely could never have even gotten to the point of taking customer deposits, or would have been shut down within weeks or months at most by regulators.
- dlubarov 3y agoThen the issue isn't with crypto itself, but with the regulation of crypto.
- phone8675309 3y agoWhich is a philosophical issue with crypto - the first cryptocurrencies were designed specifically to avoid government regulation.
- dlubarov 3y agoBut here we're talking about exchanges. Resistance to government censorship/control only applies to on-chain activity, not centralized custodians.
- lazide 3y agoMost of the custodians work very hard to side step regulation and enable scams, albeit not necessarily openly on the second part, and are enabled by the on-chain primitives. Pretty hard to avoid gov’t oversight/regulation when a USD Wire and ACH goes through the fed, for instance. Easier when it goes through a blockchain which they can’t control. Which is why a lot of exchanges (and all the sketchy ones) use things like Tether and stablecoins, and avoid US banks.
- __loam 3y agoIt's wild to me that crypto bros will screech about decentralization and how the government shouldn't be able to tell you what to do with your money, then turn around and screech for goverment oversight and regulation. Absolutely nonsensical group of people.
- grey-area 3y agoAnd if you do hold the private keys to your crypto, all you hold is an IOU from a risky market full of fraud and rug pulls. Many coins have failed, many more will fail, and many if not all will drop to zero as the mania subsides. When that happens it doesn’t matter where your keys are if the market turns illiquid in seconds during a crash.
- everfree 3y agoYou hold "an IOU from a market"? I'm not sure that's how that works.
- grey-area 3y agoMarkets have varying levels of risk.
- lesuorac 3y agoI mean it still kind of matters where your keys are if the market turns illiquid. Its the difference between losing an asset and not. I can definitely see a lot of cryptocurrencies losing a ton of a value but they do have a legitimate use for remittances. If you're transferring $1000 it doesn't matter if you convert it into 1 bitcoin or 100 bitcoins since your wife is cashing it out the next day for 20,000 pesos.
- xk_id 3y agoYour argument applies equally to fiat finance too: in case of a catastrophe it all goes to zero or turns illiquid. The fact is that billions in locked value have accrued securely over the years in battle tested protocols like curve, aave and yearn.
- grey-area 3y agoWell that level of risk certainly applies to some risky instruments (say CDOs), but I'd say there is far less risk in VWRL say than speculating on the value of a plethora of currencies which are almost purely vehicles for speculation rather than used for everyday transactions. Doesn't matter if you own your keys if nobody wants to buy your Crypto/NFT etc. Re your numbers, I'm afraid I don't trust any of the numbers in this market as none of them are audited.
- prepend 3y agoIn FTX’s case it’s impossible to hold your keys, right. The condition to get interest payments is to allow them to manage your funds and invest/loan/etc. Is there any crypto “bank” that promises to pay interest while you hold your own keys?
- cwkoss 3y agoThere are decentralized staking mechanisms, but you do take risk in exchange for the interest rewards.
- tornato7 3y agoIf interest rates are any indication, depositing DAI on Aave for example is seen by the market as lower risk than US Govt treasuries. This makes some sense, as with treasuries you run the risk of not having access to your cash when you need it because of trade and settlement windows. Funds in Aave are 100% liquid.