Binance commingled customer funds and company revenue, former insiders say(reuters.com)
reuters.com
Binance commingled customer funds and company revenue, former insiders say
https://www.reuters.com/investigates/special-report/crypto-binance-money/
260 comments
The irony is that Bitcoin was created in direct response to the perceived shortcomings of the traditional financial system (see the message in the genesis block), but since then the traditional financial system has cleaned itself up enormously, while cryptocurrency has had the exact opposite trajectory and is now nothing more than a magnet for actual or latent fraudsters.
Bitcoin addressed at most one issue in finance, without properly tying it to the financial crisis, and since then has reinvented all the others in a massive Chesterton's Fence speedrun. It's been nothing but "oh, so that's why the rules are that way" since then.
I’d say that Bitcoin itself has been operating pretty well, minus the stupid decision to keep the block size cap in the single-digit MBs that has created tx congestion and excessive fee competition (BCH fixed that, thankfully). The problem with cryptocurrency is simply that it’s attracting to frauds, and is dominated by fraud and get-rich-quick gambling/speculation.
It’s attractive to fraud for the same reasons why it’s attractive to people who take issue with legacy finance. Your “account” (wallet) can’t really be shut down or frozen, you can transact quickly and easily with only an internet connection and a phone regardless of borders or capital controls, and the currency itself can be audited and resists inflation. All those things continue to be true, but unfortunately the current largest, visible use case is fraud.
The original use case for Bitcoin was right in the title of the white paper: P2P electronic cash. Unfortunately, that hasn’t taken off, and some governments like the US have done their best to kill it. See the IRS guidance for Bitcoin taxes from 2013 which made it practically impossible to use as cash in a legally compliant way. That was the first, and clearest, regulation of cryptocurrency I’m aware of. All other currencies are treated differently. Only Bitcoin/cryptocurrency was singled out for particularly onerous tax treatment.
It’s attractive to fraud for the same reasons why it’s attractive to people who take issue with legacy finance. Your “account” (wallet) can’t really be shut down or frozen, you can transact quickly and easily with only an internet connection and a phone regardless of borders or capital controls, and the currency itself can be audited and resists inflation. All those things continue to be true, but unfortunately the current largest, visible use case is fraud.
The original use case for Bitcoin was right in the title of the white paper: P2P electronic cash. Unfortunately, that hasn’t taken off, and some governments like the US have done their best to kill it. See the IRS guidance for Bitcoin taxes from 2013 which made it practically impossible to use as cash in a legally compliant way. That was the first, and clearest, regulation of cryptocurrency I’m aware of. All other currencies are treated differently. Only Bitcoin/cryptocurrency was singled out for particularly onerous tax treatment.
> All other currencies are treated differently. Only Bitcoin/cryptocurrency was singled out for particularly onerous tax treatment.
Well, that's because Bitcoin is not a currency, by many reasonable definitions.
Well, that's because Bitcoin is not a currency, by many reasonable definitions.
How is it not a currency? It is a medium of exchange, right? That is what its intention was, as laid out in the white paper.
You can barter with anything you want, that doesn't make it a currency. In fact, bitcoin has a way harder path to being recognized as a currency explicitly because there is no army to enforce it as a currency. That means it can only really be a currency by consensus, and if walmart and kroger don't take it, good luck making people agree to it being a currency.
Bitcoin does not meet the desires laid out in the whitepaper, not even close. Bitcoin isn't even a currency by it's own standards.
Bitcoin does not meet the desires laid out in the whitepaper, not even close. Bitcoin isn't even a currency by it's own standards.
Barter goods also serve a purpose other than as a medium of exchange. And Bitcoin is legal tender in El Salvador (not that I like El Salvador or their Bitcoin law), so it actually is a currency.
At least with barter exchange tends to happen in person so you can figure out if you're being scammed before you hand over your goods. Bitcoin gives you the worst of all worlds by making the exchange completely impersonal while lacking the ability to look your counter-party in the eye. The two are most decidedly not the same.
Nothing stops you from exchanging Bitcoin in person, though, so I’m not sure what’s been lost there. Bitcoin can also use a multi-signature escrow. Many services are set up like this.
Gold and precious stones can also be mediums of exchange. That doesn't make them currency.
A currency has to be widely accepted as a medium of exchange, and it has to have a relatively stable value. Bitcoin fails bitterly at both of these. And experiments with bitcoin payments in the mainstream quickly failed (Steam, Tesla).
A currency has to be widely accepted as a medium of exchange, and it has to have a relatively stable value. Bitcoin fails bitterly at both of these. And experiments with bitcoin payments in the mainstream quickly failed (Steam, Tesla).
Your definition of a currency is incorrect. Many fiat currencies have experienced rapid devaluations (hyperinflation) while still being recognized as currencies. El Salvador has recognized Bitcoin as legal tender, so it also has at least some recognition as a currency. The IRS has not updated its guidance.
CeFi is not a cryptocurrency technology and thus is cannot solve shortcomings of the traditional financial system because it is the traditional financial system.
Noone who is ideologically consistent with the crypto ethos would expect that ideology overrides greed.
Noone who is ideologically consistent with the crypto ethos would expect that ideology overrides greed.
What do you believe tradfi has done to clean itself up? Please address how the astonishing amounts of global inflation (which I assume will be in your answer) are a good thing for everyone.
> how the astonishing amounts of global inflation
Bitcoin yo-yo’s between hyperinflation and hyperdeflation. Unchecked inflation is a problem. But a currency as volatile as Bitcoin is obviously not the solution.
Bitcoin yo-yo’s between hyperinflation and hyperdeflation. Unchecked inflation is a problem. But a currency as volatile as Bitcoin is obviously not the solution.
Bitcoin has neither hyperinflation or hyperdeflation. It does have volatility[0], but has gotten better. It is about as volatile as the British Pound[1].
[0] https://buybitcoinworldwide.com/volatility-index/
[1] https://www.bloomberg.com/news/articles/2022-10-20/uk-pound-...
[0] https://buybitcoinworldwide.com/volatility-index/
[1] https://www.bloomberg.com/news/articles/2022-10-20/uk-pound-...
> Bitcoin has neither hyperinflation or hyperdeflation
Measured against a basket of goods, Bitcoin’s value soars and free falls.
Using a 17th-century definition of inflation, which in modern parlance is called money supply, Bitcoin is simply inflationary, but that definition swap concedes that it is a curiosity, not a currency.
Measured against a basket of goods, Bitcoin’s value soars and free falls.
Using a 17th-century definition of inflation, which in modern parlance is called money supply, Bitcoin is simply inflationary, but that definition swap concedes that it is a curiosity, not a currency.
You are confusing inflation with volatility. Prices may rise and fall without changes in a money supply. Bitcoin's supply is well documented.
> You are confusing inflation with volatility. Prices may rise and fall without changes in a money supply.
You are confusing inflation and debasement. When price levels rise, it's inflation. Even if the money supply shrinks.
This difference is meaningful because for a currency user, stability in value is more important than stability in the number of imaginary things. In 2008, U.S. dollar broad money supply crashed while central bank money surged. That is less meaningful to a currency user, or even financial market participant, than the amount of goods and services each dollar today buys compared with yesterday and tomorrow.
You are confusing inflation and debasement. When price levels rise, it's inflation. Even if the money supply shrinks.
This difference is meaningful because for a currency user, stability in value is more important than stability in the number of imaginary things. In 2008, U.S. dollar broad money supply crashed while central bank money surged. That is less meaningful to a currency user, or even financial market participant, than the amount of goods and services each dollar today buys compared with yesterday and tomorrow.
> Its a pity that a decade and more of hypeactivity, speculation and noise in cryptofinance will not leave much to show for it but the smoldering ruins of bizzare house-of-cards.
Weirdly, there's still plenty of speculation in this space, and still plenty of people getting rich off of it. Look at the price of bitcoin for example, it's rebounded substantially since the FTX collapse. People have become millionaires from this nonsense and a great many people seem to feel like there's still a lot of value.
I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?
Weirdly, there's still plenty of speculation in this space, and still plenty of people getting rich off of it. Look at the price of bitcoin for example, it's rebounded substantially since the FTX collapse. People have become millionaires from this nonsense and a great many people seem to feel like there's still a lot of value.
I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?
> it's rebounded substantially since the FTX collapse
Who cares about the price? Seriously. Its not that important.
What are the systems in place to prevent another FTX-like collapse in the bitcoin space? Answer: None. In fact, Tether remains a fully unaudited, potential house-of-cards, situation.
People aren't worried about the price going up or down. Its really not that important. People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
It has become abundantly clear that not only is cryptocoin vulnerable to incredible collapses of financial services... but the cryptocoin community is wholly uninterested in solving that problem. Mt. Gox collapsed. Celsius collapsed. Voyager collapsed. FTX collapsed. Each situation, individuals lost anywhere from thousands, to millions, of dollars in one fell swoop.
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Meanwhile, every SIVB and First Republic Bank customer has been made whole. Yes, the banks collapsed, but no one actually lost any money over it. In fact, the mainstream banking collapses occurred over the weekend (when the banks were closed anyway), and everything was fixed by Monday Morning.
I'm not necessarily saying that an "FDIC-of-cryptocoins" needs to be setup. But the cryptocoin community needs to come together and figure this crap out... how to provide assurances to the public that these systems are safe and worth using.
Who cares about the price? Seriously. Its not that important.
What are the systems in place to prevent another FTX-like collapse in the bitcoin space? Answer: None. In fact, Tether remains a fully unaudited, potential house-of-cards, situation.
People aren't worried about the price going up or down. Its really not that important. People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
It has become abundantly clear that not only is cryptocoin vulnerable to incredible collapses of financial services... but the cryptocoin community is wholly uninterested in solving that problem. Mt. Gox collapsed. Celsius collapsed. Voyager collapsed. FTX collapsed. Each situation, individuals lost anywhere from thousands, to millions, of dollars in one fell swoop.
-------
Meanwhile, every SIVB and First Republic Bank customer has been made whole. Yes, the banks collapsed, but no one actually lost any money over it. In fact, the mainstream banking collapses occurred over the weekend (when the banks were closed anyway), and everything was fixed by Monday Morning.
I'm not necessarily saying that an "FDIC-of-cryptocoins" needs to be setup. But the cryptocoin community needs to come together and figure this crap out... how to provide assurances to the public that these systems are safe and worth using.
>but the cryptocoin community is wholly uninterested in solving that problem.
Because it isn't a problem to them. By and large, the people running sketchy "exchanges" and crypto companies make shitloads of money even as their "business" fails. SBF only went to jail because he is a sociopath that's never been punished in his life, and thinks he can do no wrong.
Because it isn't a problem to them. By and large, the people running sketchy "exchanges" and crypto companies make shitloads of money even as their "business" fails. SBF only went to jail because he is a sociopath that's never been punished in his life, and thinks he can do no wrong.
> Who cares about the price?
Most of the Bitcoin believers. They buy Bitcoin because they believe its value will be higher than the worthless currencies they have to put up with. See the latest news: https://www.coindesk.com/consensus-magazine/2023/05/22/why-t...
> Seriously. Its not that important.
Price (in the long run) is all that matters.
> People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
I read this somewhere and it rings true - centralized exchanges are like public toilets. Try to avoid them as much as possible. If you have to use them, get in, do your job quickly and get out. Use such exchanges only to buy Bitcoin with your fiat and then move that bitcoin to your own wallet. In a lot of countries, it is much easier to maintain your own wallet compared to preserving your wealth via other means. I have compiled some real world examples here: https://news.ycombinator.com/item?id=32406095
> Yes, the banks collapsed, but no one actually lost any money over it.
If everyone lived in the US / Canada / Western Europe, maybe. What about people in Venezuela, Russia, Turkey, Iran, China or Sri Lanka. From the article I shared above: "Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
I sometimes feel the visceral reactions to Bitcoin are mainly from people who have experienced only great governance. They simply fail to see that Bitcoin[1] is a lifeline for a lot of people trapped in shitty places.
[1] and every diehard Bitcoiner will agree with you: don't buy shitcoins. not your keys, not your coins. centralized systems should be avoided or else minimally used.
Most of the Bitcoin believers. They buy Bitcoin because they believe its value will be higher than the worthless currencies they have to put up with. See the latest news: https://www.coindesk.com/consensus-magazine/2023/05/22/why-t...
> Seriously. Its not that important.
Price (in the long run) is all that matters.
> People are worried about losing $X0,000+ as the next random exchange or cryptocoin-service collapses randomly.
I read this somewhere and it rings true - centralized exchanges are like public toilets. Try to avoid them as much as possible. If you have to use them, get in, do your job quickly and get out. Use such exchanges only to buy Bitcoin with your fiat and then move that bitcoin to your own wallet. In a lot of countries, it is much easier to maintain your own wallet compared to preserving your wealth via other means. I have compiled some real world examples here: https://news.ycombinator.com/item?id=32406095
> Yes, the banks collapsed, but no one actually lost any money over it.
If everyone lived in the US / Canada / Western Europe, maybe. What about people in Venezuela, Russia, Turkey, Iran, China or Sri Lanka. From the article I shared above: "Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
I sometimes feel the visceral reactions to Bitcoin are mainly from people who have experienced only great governance. They simply fail to see that Bitcoin[1] is a lifeline for a lot of people trapped in shitty places.
[1] and every diehard Bitcoiner will agree with you: don't buy shitcoins. not your keys, not your coins. centralized systems should be avoided or else minimally used.
And when BTC Transaction fees climb to $30, like they did a couple of weeks ago, then what? We just stop transacting?
Centralized exchanges are a natural result of the absurd transaction fees that the BTC community refuses to fix. If it costs $30 to make a transaction, it makes more sense to centralize and perform off-chain transfers of BTC.
Even today, where the BTC Transaction fee has dropped to "only" $3.60 / transaction, many natural uses of BTC are simply priced out. At least... using a hardware wallet is priced out. A centralized exchange which performs off-chain transactions doesn't have to pay of course.
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The price of Magic the Gathering Black Lotus just keeps rising higher and higher as well. But no one actually plays with the card in practice. Similarly, since BTC transaction fees are denominated in... BTC... the higher the BTC price, the higher the transaction fee, and the less likely everyone is to use the base system.
Seems like lose-lose over the long term. The only ones who want to buy BTC are speculators. Everyone who wants to "use" it for transactions is priced out, or rug pulled.
It doesn't have to be like this by the way. But its like this because the community doesn't care.
> Price (in the long run) is all that matters.
The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
As far as currencies go, I think people care about the number of transactions. How much trade occurs with the currency? There's also a desire to keep prices consistent, rather than going up or down over time (too much inflation, and too much deflation, is both bad. A balance of keeping prices steady is best).
With regards to the Stock Market, companies mostly care about IPOs and SPOs, how many $Billions they can raise by selling stock. Trade volume is kind of a side-show, and even price is a side-show and easily manipulated (see BRK.A shares, which are overpriced on purpose... by having fewer shares control a larger % of the company)
Centralized exchanges are a natural result of the absurd transaction fees that the BTC community refuses to fix. If it costs $30 to make a transaction, it makes more sense to centralize and perform off-chain transfers of BTC.
Even today, where the BTC Transaction fee has dropped to "only" $3.60 / transaction, many natural uses of BTC are simply priced out. At least... using a hardware wallet is priced out. A centralized exchange which performs off-chain transactions doesn't have to pay of course.
------------
The price of Magic the Gathering Black Lotus just keeps rising higher and higher as well. But no one actually plays with the card in practice. Similarly, since BTC transaction fees are denominated in... BTC... the higher the BTC price, the higher the transaction fee, and the less likely everyone is to use the base system.
Seems like lose-lose over the long term. The only ones who want to buy BTC are speculators. Everyone who wants to "use" it for transactions is priced out, or rug pulled.
It doesn't have to be like this by the way. But its like this because the community doesn't care.
> Price (in the long run) is all that matters.
The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
As far as currencies go, I think people care about the number of transactions. How much trade occurs with the currency? There's also a desire to keep prices consistent, rather than going up or down over time (too much inflation, and too much deflation, is both bad. A balance of keeping prices steady is best).
With regards to the Stock Market, companies mostly care about IPOs and SPOs, how many $Billions they can raise by selling stock. Trade volume is kind of a side-show, and even price is a side-show and easily manipulated (see BRK.A shares, which are overpriced on purpose... by having fewer shares control a larger % of the company)
> And when BTC Transaction fees climb to $30, like they did a couple of weeks ago, then what? We just stop transacting?
If it is akin to one-time transaction of buying gold as a safe asset, then people gladly pay 30$. Even in poor countries. If you want to use BTC to buy coffee, then 30$ transaction fee is a hassle. But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
> The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
Sure and it has been in that range for the last 30 years. It has held its value which actually proves my point that Yen is backed by some good governance and hence Japanese citizens may not actually need BTC. Now look at Zimbabwe where government printed 100Trillion bank bills and the currency's value was destroyed in a few years. That is the target market for BTC.
If it is akin to one-time transaction of buying gold as a safe asset, then people gladly pay 30$. Even in poor countries. If you want to use BTC to buy coffee, then 30$ transaction fee is a hassle. But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
> The Yen is 1/100th, or less, than the Dollar. No one doubts that Japan is still an economic power.
Sure and it has been in that range for the last 30 years. It has held its value which actually proves my point that Yen is backed by some good governance and hence Japanese citizens may not actually need BTC. Now look at Zimbabwe where government printed 100Trillion bank bills and the currency's value was destroyed in a few years. That is the target market for BTC.
> Now look at Zimbabwe where government printed 100Trillion bank bills and the currency's value was destroyed in a few years.
Why can't they use US Dollars or Japanese Yen instead?
And if they're a country like Argentina where they print a ton of money and then ban US Dollars/Japanese Yen (etc. etc.), what prevents them from banning BTC as a means to protect the local currency?
Either the country is working in the global economic system (and therefore has access to global currencies like USD / Yen / etc. etc.), or it isn't and its probably cut off (including from BTC).
> But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
At larger than $1000+ valued denominations, you've now got the problem of counterparty risk, because BTC organizations disappear every few months. Who and/or what are you buying in BTC, and why do you trust that the other guy is going to keep existing 6 months from now? Even large companies like FTX turn out to be shams and disappear overnight.
Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
On the other end, trying to use smaller denominations to experiment and grow the community... we have the random price of transactions (ex: $30) that prevents the use of cup-of-coffee-like transactions.
So BTC is dead on the small-end due to transaction fees. And its dead on the high-end due to unreliability of the community. What exactly should I use BTC for?
Why can't they use US Dollars or Japanese Yen instead?
And if they're a country like Argentina where they print a ton of money and then ban US Dollars/Japanese Yen (etc. etc.), what prevents them from banning BTC as a means to protect the local currency?
Either the country is working in the global economic system (and therefore has access to global currencies like USD / Yen / etc. etc.), or it isn't and its probably cut off (including from BTC).
> But trying to judge the merits of BTC on how easily you can buy coffee with it is as dumb as trying to judge a fish by its ability to swim. They are not meant for that activity.
At larger than $1000+ valued denominations, you've now got the problem of counterparty risk, because BTC organizations disappear every few months. Who and/or what are you buying in BTC, and why do you trust that the other guy is going to keep existing 6 months from now? Even large companies like FTX turn out to be shams and disappear overnight.
Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
On the other end, trying to use smaller denominations to experiment and grow the community... we have the random price of transactions (ex: $30) that prevents the use of cup-of-coffee-like transactions.
So BTC is dead on the small-end due to transaction fees. And its dead on the high-end due to unreliability of the community. What exactly should I use BTC for?
> Why can't they use US Dollars or Japanese Yen instead?
If you burnt by your own government, chances are you will not trust a foreign government either, especially the one which has a recurring record of bullying other countries and freezing dollar assets for foreign entities over geopolitical matters. There is a reason why Gold is so popular world over - people had shitty rulers for most of our history and they trusted no one, not even a benign ruler from some other country.
> its probably cut off (including from BTC).
You can't cut off BTC. That's the beauty - as long as you have internet, you can use BTC.
> you've now got the problem of counterparty risk
Which is why you don't trade it every day. Trade it only occasionally when you want to do big value transfer with trusted parties. See how Afghan girls used it to escape Taliban: https://www.reuters.com/article/crypto-currency-afghanistan/...
> Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
Strawman. I didn't propose that at all.
> And its dead on the high-end due to unreliability of the community.
No it's not. You can store your wealth in BTC and use it sparingly with trusted parties, just like people have done it with Gold for centuries.
> What exactly should I use BTC for?
Store of value. Just like Gold. Con: it doesn't have long history of Gold. Pro: it is much easier to transfer or take it with you (just 12 words) when you are fleeing.
If you burnt by your own government, chances are you will not trust a foreign government either, especially the one which has a recurring record of bullying other countries and freezing dollar assets for foreign entities over geopolitical matters. There is a reason why Gold is so popular world over - people had shitty rulers for most of our history and they trusted no one, not even a benign ruler from some other country.
> its probably cut off (including from BTC).
You can't cut off BTC. That's the beauty - as long as you have internet, you can use BTC.
> you've now got the problem of counterparty risk
Which is why you don't trade it every day. Trade it only occasionally when you want to do big value transfer with trusted parties. See how Afghan girls used it to escape Taliban: https://www.reuters.com/article/crypto-currency-afghanistan/...
> Why do you want to transact with denominations of that size with people who are clearly untrustworthy?
Strawman. I didn't propose that at all.
> And its dead on the high-end due to unreliability of the community.
No it's not. You can store your wealth in BTC and use it sparingly with trusted parties, just like people have done it with Gold for centuries.
> What exactly should I use BTC for?
Store of value. Just like Gold. Con: it doesn't have long history of Gold. Pro: it is much easier to transfer or take it with you (just 12 words) when you are fleeing.
> as long as you have internet
Uh huh. And... you don't see any problems with the argument you just made?
Hint: a lot of countries controls utilities/internet. Literally as a government organization.
Uh huh. And... you don't see any problems with the argument you just made?
Hint: a lot of countries controls utilities/internet. Literally as a government organization.
I have never understood Bitcoin from a speculative investment perspective. I've always been a crypto doubter and often a cryto hater. And yet here I am still thinking to myself "If only I'd bought in at X price...."
Same reason as the last 5-6 crashes. People still believe in its potential or are using it to transact today. Bitcoin is not a "bizare house-of-cards" anymore than the web was after the dot-com bubble. All the failures you have heard of were fraudulent or badly run businesses that had very little to do with the actual protocol.
The web was immensely useful before, during, and after the dot-com bubble. Debate about its utility didn't last long because of how obviously useful the Internet was. Skeptics were proven wrong in a matter of weeks or months.
These are key differences in the comparison.
These are key differences in the comparison.
Bitcoin is also immensely useful. I have compiled some real world examples here: https://news.ycombinator.com/item?id=32406095
Also see the latest news: https://www.coindesk.com/consensus-magazine/2023/05/22/why-t...
"Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
Also see the latest news: https://www.coindesk.com/consensus-magazine/2023/05/22/why-t...
"Yet crypto use in Pakistan is nevertheless active, as people are reportedly converting their salaries into stablecoins to prevent currency erosion. The rupee has dropped more than 20% against the U.S. dollar year-to-date, more than 30% over the past year. Meanwhile, BTC in rupee terms is up 103% so far in 2023 (vs 63% in U.S. dollar terms). It’s probably not a coincidence that a 2022 report from forensics company Chainalysis placed Pakistan 6th in terms of global crypto adoption."
Indeed, the analogy is limited. I would agree that Bitcoin has limited utility today, compared to the early days of the web. But there was also no real competitor to the web and it was not threatening some of the most powerful entities on earth (e.g. the US government). I don't know how long it took for gold to become a form of money but I bet it was a lot more than 14 years.
Regardless, the point was not to compare the utility of Bitcoin to that of the web. It was to highlight that the prevalence of bad investments and fraudsters in a given technology sector is not necessarily linked with the merits or potential of the underlying technology.
Regardless, the point was not to compare the utility of Bitcoin to that of the web. It was to highlight that the prevalence of bad investments and fraudsters in a given technology sector is not necessarily linked with the merits or potential of the underlying technology.
Why are we comparing Bitcoin to the web? Bitcoin will never have as much utility as the web. I don't think anyone has ever expected such a thing to happen.
The utility of bitcoin is well defined in my eyes. It is a store of value that can be borrowed against. People will complain all day long on the day to day volatility, but that is irrelevant in the long term when you're using it for collateral.
The utility of bitcoin is well defined in my eyes. It is a store of value that can be borrowed against. People will complain all day long on the day to day volatility, but that is irrelevant in the long term when you're using it for collateral.
> The utility of bitcoin is well defined in my eyes. It is a store of value that can be borrowed against. People will complain all day long on the day to day volatility, but that is irrelevant in the long term when you're using it for collateral.
The volatility is very relevant if you are using it as collateral because it increases the risk of margin calls.
I don't believe there is any way to borrow against bitcoin that isn't susceptible to some kind of margin call when the price of bitcoin drops.
The volatility is very relevant if you are using it as collateral because it increases the risk of margin calls.
I don't believe there is any way to borrow against bitcoin that isn't susceptible to some kind of margin call when the price of bitcoin drops.
Bitcoin when ~50% collateralized is pretty stable honestly. Sure, we see it go to $60k and then eventually down to where we are now at $27k... but we've been in this current range for months now. It also is only an issue in one direction if the item you're borrowing is USD (btc going up, doesn't hurt you). If you borrow something like ETH, they are so tightly correlated, that it is easier to maintain.
Any way... this is something that can be managed, while still giving BTC a lot of utility.
Any way... this is something that can be managed, while still giving BTC a lot of utility.
> I just don't understand it at all at this point. I understand how people would have been duped by the scams before all of the prominent failures, but why are people still willing to trade crypto for so much actual money?
Probably the same reason people throw money at casinos. Despite tales of people losing the shirts on their backs, there are also those that hit the jackpot. The biggest winners are of course the casinos who facilitate the transfer of wealth between the aforementioned groups while directly or indirectly taking a nice cut for themselves.
Probably the same reason people throw money at casinos. Despite tales of people losing the shirts on their backs, there are also those that hit the jackpot. The biggest winners are of course the casinos who facilitate the transfer of wealth between the aforementioned groups while directly or indirectly taking a nice cut for themselves.
Sitting on the sidelines, It makes us feel superior to criticise and derive intellectual pleasure out of that but I haven't seen a lot of people who actually step into the ring and try to fix what's broken. I was one of them.
We can all agree that the current traditional and digital finance systems are broken but I don't see any solutions being provided as an alternative.
In every industry which involves innovation, there will be speculation and definitely people who like to profit off that which results in ponzi schemes but in the end, there are some genuinely hard working people who truly believe in the mission they signed up for 10 years ago and still continue to work. I would suggest you to take a look around and dig deeper into some of the blockchain projects and you will understand how much blood, sweat and bits have been poured into this.
We can all agree that the current traditional and digital finance systems are broken but I don't see any solutions being provided as an alternative.
In every industry which involves innovation, there will be speculation and definitely people who like to profit off that which results in ponzi schemes but in the end, there are some genuinely hard working people who truly believe in the mission they signed up for 10 years ago and still continue to work. I would suggest you to take a look around and dig deeper into some of the blockchain projects and you will understand how much blood, sweat and bits have been poured into this.
I wonder if it occurs to people who "try to fix what's broken" that things are as they are for a reason, and it might be a good reason, a series of compromises and hacks necessary to create a system that is far from perfect, but that more-or-less works.
There are no doubt many things wrong with our financial systems, but I suspect they'll be fixed by gradual evolution that maintains what works, and not by a revolution that seeks to replace what we have with something that sounds good from a naive perspective, but is in reality much worse.
There are no doubt many things wrong with our financial systems, but I suspect they'll be fixed by gradual evolution that maintains what works, and not by a revolution that seeks to replace what we have with something that sounds good from a naive perspective, but is in reality much worse.
Well, the whole point of innovation is to question that "more-or-less works". Without that, we would still be hunter gatherers
And we won't be replacing anything overnight. That would be disastrous to the whole economy. But I really doubt that people who benefit from keeping things the way they are will actually work towards fixing any of them. You are actually asking them give up their incentives for the betterment and I don't think there are enough altruistic people who wanna do that.
Not that I am saying that crypto is any better but we need a strong counter party which questions fundamentals of any belief system (in this case, our current financial system) we have such that they will be forced to innovate otherwise they will go extinct
And we won't be replacing anything overnight. That would be disastrous to the whole economy. But I really doubt that people who benefit from keeping things the way they are will actually work towards fixing any of them. You are actually asking them give up their incentives for the betterment and I don't think there are enough altruistic people who wanna do that.
Not that I am saying that crypto is any better but we need a strong counter party which questions fundamentals of any belief system (in this case, our current financial system) we have such that they will be forced to innovate otherwise they will go extinct
> Well, the whole point of innovation is to question that "more-or-less works". Without that, we would still be hunter gatherers
Do you really believe that it was one person or group of people that said 'hunting and gathering sucks, let's plant seeds and make forges and smelt iron'?
Or was it 'hey, I dropped some seeds and now they are growing, lets put some in dirt and see what happens', i++, goto 1?
To put it another way, how many times has 'let's scrap this working system that has some flaws and start over using an ideology as a back-end' worked out?
Do you really believe that it was one person or group of people that said 'hunting and gathering sucks, let's plant seeds and make forges and smelt iron'?
Or was it 'hey, I dropped some seeds and now they are growing, lets put some in dirt and see what happens', i++, goto 1?
To put it another way, how many times has 'let's scrap this working system that has some flaws and start over using an ideology as a back-end' worked out?
> We can all agree that the current traditional and digital finance systems are broken [...]
Could you expand on that? That's quite a strong opinion to assume everybody agrees on.
Could you expand on that? That's quite a strong opinion to assume everybody agrees on.
Not the original commenter, but: In certain countries transactions take about 2 days to be reflected. In most digital payments, the payment networks (visa/mastercard/amex) take a cut of 1-2.5% of the total payment value which is a large percentage of profit for a small establishment. The bank APIs are inconsistent are a huge mess to manage so including the regulatory barriers, if a new payment solution wants to come up , it's a lot of money , time and work. On top of that , different countries have different API standards.
There's value to be had in payment solutions and banking solutions being decoupled . Banks should more deal with lending and deposits , injecting cash flows into the economy , insuring deposits, etc. Payments should be , well, payments similar to from a wallet, with less regulation overall.
There's value to be had in payment solutions and banking solutions being decoupled . Banks should more deal with lending and deposits , injecting cash flows into the economy , insuring deposits, etc. Payments should be , well, payments similar to from a wallet, with less regulation overall.
This is evolving slowly but surely - take a look at ISO20022 [1] and its adoption by SEPA network [2] in Europe (more slowly - adoption by most other banks throughout the world).
ISO isn't perfect but most things are just a minor XML adjustment, and the schema is well structured.
Europe/SEPA has free non-urgent transfers up to a certain amount. [3]
How do you increase adoption for this except to get involved politically and lobby? Unless you plan on rolling your own - in which case good luck.
[1] https://www.iso20022.org
[2] https://www.ecb.europa.eu/paym/integration/retail/sepa/html/...
[3] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
ISO isn't perfect but most things are just a minor XML adjustment, and the schema is well structured.
Europe/SEPA has free non-urgent transfers up to a certain amount. [3]
How do you increase adoption for this except to get involved politically and lobby? Unless you plan on rolling your own - in which case good luck.
[1] https://www.iso20022.org
[2] https://www.ecb.europa.eu/paym/integration/retail/sepa/html/...
[3] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
Oh, I'm all for innovation here, I just don't see building the financial system back from the ground up as an effective way to innovate.
All the issues you've mentioned aren't issues core to our financial system, they can all be solved through iterative innovation - many countries are solving this, like Poland (which I use as an example cause I live here), which has free instantaneous cashless transactions both for payments and p2p use that work with all banks here (blik, slowly trying to expand to more countries).
Similar systems are in place in many other countries. Open banking standardized APIs have already spread across Europe, etc.
So tldr, no need to redesign the financial system to fix these, just disrupt it a little bit.
All the issues you've mentioned aren't issues core to our financial system, they can all be solved through iterative innovation - many countries are solving this, like Poland (which I use as an example cause I live here), which has free instantaneous cashless transactions both for payments and p2p use that work with all banks here (blik, slowly trying to expand to more countries).
Similar systems are in place in many other countries. Open banking standardized APIs have already spread across Europe, etc.
So tldr, no need to redesign the financial system to fix these, just disrupt it a little bit.
Also cryptocurrency hasn't actually solved any of these problems.
If it did people would be using it in day to day life instead of speculation.
Bailing out Too-Big-To-Fail banks which privatise profits and socialise losses on increasingly abstract / difficult to understand financial instruments springs to mind.
If you're talking about the recent bank failures, that was in fact covered by other banks, no? It was not paid for by tax payers.
While the recent losses were in big part because of bonds and currency rate risk, so not a particularly abstract or difficult to understand instrument.
Not that being hard to understand is a bad thing. Something can be complex and still valuable.
While the recent losses were in big part because of bonds and currency rate risk, so not a particularly abstract or difficult to understand instrument.
Not that being hard to understand is a bad thing. Something can be complex and still valuable.
And those problems are solved by crypto because… ?
How about - "current finance systems are broken for a lot of people across the world". And they manifest in terms of crazy inflation (Venezuela, Turkey, Sri Lanka, Pakistan), currency controls (China and many other places), despotic regimes (Russia, Iran, Taliban) etc. I see Bitcoin doing a lot more[1] for those people than traditional financial systems, either local or western.
[1] https://news.ycombinator.com/item?id=32406095
[1] https://news.ycombinator.com/item?id=32406095
We're also privileged to be closer to understanding the systems and solutions. That makes it easier for us to view the massive amount of issues with the ecosystem as not the core of the cryptocurrency "craze".
Now imagine you're not a techie, that has no idea what's what? The propaganda concept of "rotten herring", that mars the whole, will take effect on the whole cryptocurrency concept.
For laypeople cryptocurrency is as much a mystery with it's own gatekeepers, as fiat money systems. Engineers becoming the gatekeepers, are definitely more open an excited about it... but to others swapping a banker to an anonymous engineer is not much of an upgrade.
So many gatekeepers have failed in providing essential protections that old gatekeepers still provide.
Crypto made fraud and mismanagement obvious and grandiose, even though the exact same happens with traditional financial system.
Technology can't catch on just because "there are some great projects"
Now imagine you're not a techie, that has no idea what's what? The propaganda concept of "rotten herring", that mars the whole, will take effect on the whole cryptocurrency concept.
For laypeople cryptocurrency is as much a mystery with it's own gatekeepers, as fiat money systems. Engineers becoming the gatekeepers, are definitely more open an excited about it... but to others swapping a banker to an anonymous engineer is not much of an upgrade.
So many gatekeepers have failed in providing essential protections that old gatekeepers still provide.
Crypto made fraud and mismanagement obvious and grandiose, even though the exact same happens with traditional financial system.
Technology can't catch on just because "there are some great projects"
> Crypto made fraud and mismanagement obvious and grandiose, even though the exact same happens with traditional financial system.
How? So much of the fraud has been both more common and just as opaque as the traditional finance sector (see FTX).
How? So much of the fraud has been both more common and just as opaque as the traditional finance sector (see FTX).
By association. What do you think FTX is associated with? (It wasn't associated with traditional banking...)
By volume traditional banking had more fraud and mismanagement, but it hasn't had literally years of massive headlines. (See "rotten herring") And in the end it doesn't build any confidence, because all of our money is literally based in trust. Even the value of gold is plain trust in it's value(see Mansa Musa's gold devaluation "pre fiat currency").
I don't remember a single year, without some massive cryptocurrency related headline... Even SVB and CreditSuisse failures were managed out better, than FTX.
By volume traditional banking had more fraud and mismanagement, but it hasn't had literally years of massive headlines. (See "rotten herring") And in the end it doesn't build any confidence, because all of our money is literally based in trust. Even the value of gold is plain trust in it's value(see Mansa Musa's gold devaluation "pre fiat currency").
I don't remember a single year, without some massive cryptocurrency related headline... Even SVB and CreditSuisse failures were managed out better, than FTX.
> We can all agree that the current traditional and digital finance systems are broken
No we can't. I think the traditional and digital finance systems fundamentally work quite well. It's not all perfect, but it mostly works.
No we can't. I think the traditional and digital finance systems fundamentally work quite well. It's not all perfect, but it mostly works.
> We can all agree that the current traditional and digital finance systems are broken but I don't see any solutions being provided as an alternative.
Do we all agree? I think the traditional system is pretty good, and attempts to remove or bypass good regulation are steps in the wrong direction.
Do we all agree? I think the traditional system is pretty good, and attempts to remove or bypass good regulation are steps in the wrong direction.
It's difficult to claim that any system is 'certifiably broken' until you can actually point to an actual effective real-world implementation of a 'better system' (pareto or otherwise), no?
Nah, it's definitely possible to point out failings in systems even before they're implemented, without having to prove that a better solution exists. It might not exist! You might just have to put up with an inadequate solution if it's better than nothing.
Nope. That's a really weird way to think about when you're allowed to call things broken. You can observe the effects, and with clear precision explain exactly what's broken just by looking at the thing itself.
Brazil has a better payment system than the US. Brazil!
The US financial infrastructure is remarkable in how far behind the rest of the world it is though, which is one of the reasons I think Bitcoin took off in the first place. Fast and free transfers of money never seemed quite so magical when every bank in your country already offered that service.
Bitcoin was about getting rich; using it for money transfers was just a fig leaf.
Can you elaborate for the viewers at home in the UK?
Pix money transfer/payment system. Fully digital, easy to use, fast, cheap, available 24/7, launched by Brazil Central Bank and with massive adoption in the first year.
No.
What?
Say you're trying to invent a lightbulb. The first one ever, and it explodes when you plug it in. How would you describe its state?
What?
Say you're trying to invent a lightbulb. The first one ever, and it explodes when you plug it in. How would you describe its state?
"I have failed to invent a light bulb" Broken implies it was working to begin with, or can be compared to something that works, as the post you're replying to states.
Nobody knows what a lightbulb is as it hasn't been invented. What you did was fail to reinvent the candle.
I know what lots of things are that have yet to be invented. Space elevators and their variations, for example.
No. Your attempt is now just shards of glass. It's borked. Before it was broken, it didn't work, but now its broken.
sure, but the thing that's broken was just that, a "thing". It wasn't a "lightbulb", because it was never able to produce light. It's a broken "bulb", at best, and that's a correct use of the word "broken", because it can be compared to other bulbs that aren't broken, in this case the glass bulb itself.
Is the one we have not better than the ones that came before it?
It's popular to look things like the gold standard through rose tinted glasses, but economic numbers don't support it.
It's popular to look things like the gold standard through rose tinted glasses, but economic numbers don't support it.
Say you're selling a lightbulb and millions have bought it and then one day the millions of bulbs you've sold to millions of people all explode at the same time.
It's a great use case for economics textbooks describing human-market behavior with modern technologies to help add fuel to the fire. It will replace tulip mania for a more recent experience. However the cost of that use-case was way to expensive for its net benefit.
alternatively, the tulip mania lasted for like 3 months, was also due to government regulations of the futures market, and there is no learning on what would have happened as the humans died due to the bubonic plague, so its the sort of the worst example of irrational exuberance despite its oft citing
Bitcoin has a sustained 13 year wave, at far greater in amplitude than tulips, and spawned many bubbles along the way of even greater amplitude given the even shorter time periods, and now sustaining even during a period of quantitative tightening
Bitcoin has a sustained 13 year wave, at far greater in amplitude than tulips, and spawned many bubbles along the way of even greater amplitude given the even shorter time periods, and now sustaining even during a period of quantitative tightening
Longer bigger cycles typically imply larger crashes.
It's intensely sobering isn't it? People haven't changed in 500 years.
Still greedy. Still stupid. Still FOMO.
Very much so - people haven't changed since the Sumerian civilization was established. We get smarted but on a fundamental level we don't change. I've been listening to ancient civ podcasts and we do the same things we've always done. Sometimes more complicated, faster etc but its mostly the same.
Science is a big differentiator - that said it gets used and abused in much the same way.
Science is a big differentiator - that said it gets used and abused in much the same way.
It's curious to make this connection between lack of innovation in the financial system and bitcoin. Maybe there's no innovation in the financial system because that system lacks competitors? Or because there's no way to try things out? Bitcoin should help either way. There's some movement towards Fed bank accounts, and I expect Bitcoin to help there — if there's a serious threat of Bitcoin replacing the US dollar, then maybe the interests of banks will seem less important.
The financialization of the economy is downstream from central bank policy.
You cannot divorce the existing financial system from cryptocurrency. Rampant speculation and bubble mania isn't happening in a vacuum. Rather, it is a symptom of easy money and cheap credit. When regulators remove barriers to a natural rate of credit by no longer centrally planning interest rates, speculative mania will be naturally disincentivized.
You cannot divorce the existing financial system from cryptocurrency. Rampant speculation and bubble mania isn't happening in a vacuum. Rather, it is a symptom of easy money and cheap credit. When regulators remove barriers to a natural rate of credit by no longer centrally planning interest rates, speculative mania will be naturally disincentivized.
I hate scammers in the crypto space as much as anyone else. And it feels good at some level to see them getting flushed out in the current environment. Having said that
> cryptofinance will not leave much to show for it
I completely disagree with this. I can confidently bet that Bitcoin's price will cross 50K USD in the next 5 years, and 100K in the next 10 years. I am personally putting my money where my mouth is.
> cryptofinance will not leave much to show for it
I completely disagree with this. I can confidently bet that Bitcoin's price will cross 50K USD in the next 5 years, and 100K in the next 10 years. I am personally putting my money where my mouth is.
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Do you separate the value of Bitcoin from the value of Binance, and Binance's coin?
What is the value of Bitcoin if you can't separate it from its uses?
What is the value of the dollar if you can't separate it from its uses?
Bernie Madoff scammed people, so we should abolish the dollar. No money, no scams. This is the level of thinking of people crying about "crypto" in general. It's like saying "drugs are bad."
Bernie Madoff scammed people, so we should abolish the dollar. No money, no scams. This is the level of thinking of people crying about "crypto" in general. It's like saying "drugs are bad."
I can buy groceries with dollars.
If I open a vegetable stand and accept Bitcoin, what would be the difference?
The reason why no one uses Bitcoin is because it's a nascent technology full of rough corners that needs to be smoothed out with time. Until a few months ago, it would've taken 15 minutes for the payment to go through. Is this reason enough to throw the baby out with the bathwater?
But for some weird reason, many software engineers look at Bitcoin as a finished unchanging product. It is like looking at ARPANET and saying "this is bollocks, it's never gonna work."
I guess drive-by criticism is less work than sitting down and improving something with is new, exciting, a bit crap but with huge potential.
The reason why no one uses Bitcoin is because it's a nascent technology full of rough corners that needs to be smoothed out with time. Until a few months ago, it would've taken 15 minutes for the payment to go through. Is this reason enough to throw the baby out with the bathwater?
But for some weird reason, many software engineers look at Bitcoin as a finished unchanging product. It is like looking at ARPANET and saying "this is bollocks, it's never gonna work."
I guess drive-by criticism is less work than sitting down and improving something with is new, exciting, a bit crap but with huge potential.
You can do whatever you want, it doesn't mean that Bitcoin is suddenly useful to people for grocery shopping just because you opened a stand. How do you plan to be profitable when the currency is constantly deflating? You presumably have to purchase your goods in USD, so any goods you sell have to be converted, which constantly loses money. No one is going to pay you in Bitcoin because they don't want their money to deflate.
The cause of the thing is more than 'there are no shops'. There are no shops because no one wants to do it.
Prove me wrong. Open a Bitcoin grocery store.
The cause of the thing is more than 'there are no shops'. There are no shops because no one wants to do it.
Prove me wrong. Open a Bitcoin grocery store.
Is bitcoin new? It's been 15 years. What did Amazon accomplish in that time? Or Netflix?
What a silly, dishonest argument. Anyone can create incredible things with massive amounts of targeted money and investments.
The entire economy of Bitcoin is not spent on its core developers to improve it. At this point I have to assume trolling if anything that hasn't reached global domination to be a failure. We are talking about a worldwide currency that is working against any law, government, bank.
If it takes 50 years to reach maturity, is it a failure? Why is time taken to mature an important metric? Nothing is born in a vacuum, but builds upon what existed before.
In any case, neither Amazon nor Netflix have global, unlimited reach like Bitcoin. So it makes your question even more silly.
The entire economy of Bitcoin is not spent on its core developers to improve it. At this point I have to assume trolling if anything that hasn't reached global domination to be a failure. We are talking about a worldwide currency that is working against any law, government, bank.
If it takes 50 years to reach maturity, is it a failure? Why is time taken to mature an important metric? Nothing is born in a vacuum, but builds upon what existed before.
In any case, neither Amazon nor Netflix have global, unlimited reach like Bitcoin. So it makes your question even more silly.
What is dishonest is claiming that 'it needs time to get the bugs sorted' when it is a technology literally built on an ideology. The bugs are self-imposed and are never going to get 'sorted out' because they are foundational.
It's currently "sorted out" by the several layers deep you can choose to go: from more centralized and more easy to more decentralized and more complicated.
One can lose paper money. No one out here is trying to solve that problem. Just put it in some shitty bank to avoid that issue, but the problem wasn't solved, just avoided.
One can lose paper money. No one out here is trying to solve that problem. Just put it in some shitty bank to avoid that issue, but the problem wasn't solved, just avoided.
I am struggling to find a coherent point in what you have written.
Try this, Einstein:
> The bugs are self-imposed
I can send BTC to an address and it is there instantly. If you want to be more sure, wait until other nodes have confirmed. Even more safe? Wait for 6 blocks to be written after the one your transaction is on. It's up to you whether you want instant and less secure or wait a while and more secure. Does that make sense as far as coherence?
> The bugs are self-imposed
I can send BTC to an address and it is there instantly. If you want to be more sure, wait until other nodes have confirmed. Even more safe? Wait for 6 blocks to be written after the one your transaction is on. It's up to you whether you want instant and less secure or wait a while and more secure. Does that make sense as far as coherence?
Bitcoin's market cap is $519B as of right now. That seems like an incredible accomplishment. Market is literally voting with their money.
Neither of those companies netted me several hundred thousand USD. And I rarely use either, either.
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> We have financial systems that are certifiably broken, there are countless ideas about how to fix them
You can trace back almost everything that is broken in financial systems to government regulations. It's not a technical problem. The only technical solution is to build a decentralized system that is difficult to regulate (aka Bitcoin). Its "economic objective" is to replace those traditional systems.
You can trace back almost everything that is broken in financial systems to government regulations. It's not a technical problem. The only technical solution is to build a decentralized system that is difficult to regulate (aka Bitcoin). Its "economic objective" is to replace those traditional systems.
Ah yes, not like we have tried to deregulate finance in any way and had three "once in a generation" economic events in 20 years.
Maybe, just maybe, the damn actor from california didn't know much about economics?
Nah, obviously fintech just wasn't free enough to explore weird money games!
Maybe, just maybe, the damn actor from california didn't know much about economics?
Nah, obviously fintech just wasn't free enough to explore weird money games!
Nothing to see here. This is a reputed and transparent financial institution. The government is just jealous of having competition.../s
Binance has no known headquarters or transparent books. If you keep money there and you lose it, it's your fault. The same applies to Tether. You're only betting on trust instead of regulations, which never bodes well in the long run.
As a side note, Binance was founded in 2017 and grew to process hundreds of billions of dollars in transactions in a few years. In a hypothetical world as the CEO of such company, how would I even handle such growth without my mind exploding?
Binance has no known headquarters or transparent books. If you keep money there and you lose it, it's your fault. The same applies to Tether. You're only betting on trust instead of regulations, which never bodes well in the long run.
As a side note, Binance was founded in 2017 and grew to process hundreds of billions of dollars in transactions in a few years. In a hypothetical world as the CEO of such company, how would I even handle such growth without my mind exploding?
Their offices are so transparent, one would think they're not even there! /s
Ain't it funny how a system supposedly designed to prevent a need to trust anyone only functions to it's current barely functional level if you trust a giant, centralized, opaque organization that has on the public record lied in the past about pretty serious things?
Bitcoin functions perfectly without Binance or any centralized exchange. Centralized exchanges are necessary as interface between the centralized world of traditional finance and the decentralized world of Bitcoin.
A hundred percent. Most smart people that work in web3 avoid any kind of long term balance in USDT
If anyone is unaware: https://youtu.be/-whuXHSL1Pg
I work on the theory that any crypto firm is a gang of thieves run by charlatans.
However, the regulated banks also appear to be gangs of thieves run by charlatans. Except everyone is forced to signal, financially, that they have confidence in firms when they turn out to be insolvent. And the people involved with crypto can't be forced to bail out Binance unless they trust them with their funds. I have a lot more faith in the value of my Monero than the USD - which I say for rhetorical effect since I don't trust the USD enough to own any.
Silicon Valley Bank has detoothed a lot of criticism of the crypto industry, and it hasn't even been the biggest collapse this year. Then there is the inflation problem that that fiat currencies have which is on display right now.
However, the regulated banks also appear to be gangs of thieves run by charlatans. Except everyone is forced to signal, financially, that they have confidence in firms when they turn out to be insolvent. And the people involved with crypto can't be forced to bail out Binance unless they trust them with their funds. I have a lot more faith in the value of my Monero than the USD - which I say for rhetorical effect since I don't trust the USD enough to own any.
Silicon Valley Bank has detoothed a lot of criticism of the crypto industry, and it hasn't even been the biggest collapse this year. Then there is the inflation problem that that fiat currencies have which is on display right now.
> I have a lot more faith in the value of my Monero than the USD
I've heard people say this about various cryptocurrencies over the last few years and I just cannot take the statement seriously. It just always comes across as a deliberately exaggeration of belief in a cryptocurrency in an attempt to persuade others to get in on it. Not only that, I cannot imagine a world where USD collapses and somehow things like Monero or Ethereum stick around and continue to work just fine.
I've heard people say this about various cryptocurrencies over the last few years and I just cannot take the statement seriously. It just always comes across as a deliberately exaggeration of belief in a cryptocurrency in an attempt to persuade others to get in on it. Not only that, I cannot imagine a world where USD collapses and somehow things like Monero or Ethereum stick around and continue to work just fine.
History is littered with global reserve currencies outright failing or losing its global reserve status. USD failing wouldn't surprise anyone looking at financial systems through a historical lens. Years after it happens (and I don't think anyone truly believes USD is the last global reserve currency humankind will see) it will be painfully obvious to everyone how unsustainable our inflation driven economy is.
Ok but the last couple of years is littered with crypto projects outright failing, being rugpulled, found out to be scams, taken down by bumbling idiot CEOs...
So looking at the millenia that currencies have existed we can say that it's not impossible that a currency fails. Looking at cryptocurrencies it's extremely possible that any given crypto project fails.
So looking at the millenia that currencies have existed we can say that it's not impossible that a currency fails. Looking at cryptocurrencies it's extremely possible that any given crypto project fails.
most crypto projects are independent from one another. Most all of these coin failures happen as tokens on typically the ethereum blockchain, yet ethereum still stands strong as well as many others. There's no argument from me that the vast majority of crypto projects will fail and I sometimes wonder why people portray that as a bad thing. In a free market where pure economic incentives choose the winners and losers, most everything fails. That is what a healthy, dynamic economy looks like. A healthy economy wants many participants trying and only a select few who are positioned at the top of any category should continue to succeed as they are the most well equipped to provide goods or services.
tl;dr; numerous failures is a positive economic signal
tl;dr; numerous failures is a positive economic signal
Ahhhh you nearly said the line - "this is actually good for bitcoin!"
Alright look the only outcome here for me is good. Either cryptocurrencies melt away into nothing and you guys all go off and find a new Thing. Or Cryptocurrencies surprise everyone and somehow a decade after achieving nothing other than hype they finally find a thing they are useful at, and I can use them for that thing. For now I'm going to continue to treat them all like they're means of buying and selling Ape JPEGs until they can do something else though.
Alright look the only outcome here for me is good. Either cryptocurrencies melt away into nothing and you guys all go off and find a new Thing. Or Cryptocurrencies surprise everyone and somehow a decade after achieving nothing other than hype they finally find a thing they are useful at, and I can use them for that thing. For now I'm going to continue to treat them all like they're means of buying and selling Ape JPEGs until they can do something else though.
The question isn't whether or not the USD can fail. Of course it can. The question to ask is whether Monero or any other given cryptocurrency will fare better than the USD in the event that it does collapse. That seems much less clear at this point in time.
As a thought experiment: if USD were to fail, yet other world currencies stayed afloat, why would anybody holding non-custodial crypto flock to a dying currency? It’s not entirely unreasonable to predict that “crypto” might outlast a central currency, given the ease at which it can span geographic and state borders.
> if USD were to fail, yet other world currencies stayed afloat,
This "thought experiment" amounts to "suppose I'm right; then I'd be right wouldn't I? Checkmate."
The entire question here hinges on whether there could be scenario where the USD— and only the USD— collapses, without causing so much chaos that cryptocurrencies also become functionally useless. I would argue there is no such plausible scenario.
This "thought experiment" amounts to "suppose I'm right; then I'd be right wouldn't I? Checkmate."
The entire question here hinges on whether there could be scenario where the USD— and only the USD— collapses, without causing so much chaos that cryptocurrencies also become functionally useless. I would argue there is no such plausible scenario.
Sure, if the entire world economy collapses and we go back to the dark ages, crypto (and the internet in general) will be functionally useless. It seems like a given.
I am imagining a scenario where USD fails, but some other state currencies (and the internet) continue to exist.
I am imagining a scenario where USD fails, but some other state currencies (and the internet) continue to exist.
The assumptions here are:
1. USD fails
2. All the other currencies are "dying"
3. (let's say) Monero exists and is not dying
So yes in the scenario you've constructed where everything but a cryptocurrency dies or is dying, crypto is more successful.
1. USD fails
2. All the other currencies are "dying"
3. (let's say) Monero exists and is not dying
So yes in the scenario you've constructed where everything but a cryptocurrency dies or is dying, crypto is more successful.
Unless crypto is backed actual economies, as fiat currency is, that will propably not happen anytime soon.
> History is littered with global reserve currencies outright failing or losing its global reserve status.
No, its not.
Heck, history isn't even littered with global reserve currencies; there's maybe three total—the Spanish Dollar, British Pound Sterling, and US Dollar—and the Pound Sterling is iffy, given the emergence of the gold standard.
(Regional reserve currencies existed previously, but nothing approximating global.)
No, its not.
Heck, history isn't even littered with global reserve currencies; there's maybe three total—the Spanish Dollar, British Pound Sterling, and US Dollar—and the Pound Sterling is iffy, given the emergence of the gold standard.
(Regional reserve currencies existed previously, but nothing approximating global.)
I don't see anyone arguing that there have been fewer than 6 world reserve currencies in recorded history and plenty that say more. No idea where you're coming up with at most three.
> I don't see anyone arguing that there have been fewer than 6 world reserve currencies in recorded history and plenty that say more
Name six and the time period during which each was the global reserve currency. (Not that six would be enough for history to be “littered with” examples anyway, but...)
Name six and the time period during which each was the global reserve currency. (Not that six would be enough for history to be “littered with” examples anyway, but...)
Well firstly global in this context just means that most financial authorities held the currency as a reserve, which for a lot of history I believe mostly only european countries had centralized financial authorities. So we're talking about european reserves for much of history. With that said:
everyone is capable of deciding if changing reserve currencies every ~100 years is "littered" or not, but it easily passes as being commonplace in my opinion when you're talking about a millennia of history.
florentine florin
venetian ducat
portugese real
spanish real
dutch guilder
french livre
british sterling
USD
everyone is capable of deciding if changing reserve currencies every ~100 years is "littered" or not, but it easily passes as being commonplace in my opinion when you're talking about a millennia of history.
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Oh nice work! And the failed ones were all global reserve currencies as we would recognise them today ... right?
Happy to give a response if you'd like to argue your point, but otherwise this just seems like a snarky comment for sake of being snarky on the internet.
My point is really well established. Many real currencies, some failed. Many cryptocurrencies, most failed. The "snark" appears to be required to actually drive the point home. I don't care if you want to argue your point.
> things like Monero or Ethereum
I guess it comes down to how far you're willing to stretch "like" there. Progress is glacial, but crypto is becoming more useful. Meanwhile, traditional finance appears to be getting worse. Eventually those lines will cross. Although I doubt the cryto's of that time will look very much like what we have today.
I guess it comes down to how far you're willing to stretch "like" there. Progress is glacial, but crypto is becoming more useful. Meanwhile, traditional finance appears to be getting worse. Eventually those lines will cross. Although I doubt the cryto's of that time will look very much like what we have today.
How is it becoming more useful? Arguably it is more difficult to use for buying selling, plus if I spend it I'm taxed as if I sold an equity.
It's value is pegged to the dollar so we can see massive shifts in its "value" constantly happening.
There are almost an infinite number of cryptocurrencies and new ones still being created. Each is a different currency, so how should we determine which of these fake currencies actually have value and which don't?
It's value is pegged to the dollar so we can see massive shifts in its "value" constantly happening.
There are almost an infinite number of cryptocurrencies and new ones still being created. Each is a different currency, so how should we determine which of these fake currencies actually have value and which don't?
I mean that the set of systems that you can build which require neither custodial trust nor have single points of failure is increasing.
To name a few instances of this: This is old news, but I remember when zcash introduced halo and got rid of trusted setup--that's a legit increase in what's possible. NFT's as ownership of digital assets is maybe a silly application of the tech, but the sort of uniqueness constraint that they enforce is useful in centralized databases and I expect it'll find a similar niche in the distributed systems of the future. TCL's that use token price to encourage curation appear to be a non-starter, but coupled with a web of trust I think we can use the same concept to have consensus on a wide variety of useful things.
Their use as money? Sure, wildly inconvenient. But like... duh. Emulated systems are slower than ones running on bare metal because you have to embrace the constraints of both systems--it's the same with the use of cryptocurrencies within the existing financial system.
The point was never to make something that's just as good as traditional money--why bother? The point is to make traditional money obsolete in favor of something else. Something whose rules matter not because the guy who wrote them own has a gun, but because people consent to participate based on their merits.
> how should we determine which of these fake currencies actually have value and which don't?
By their side effects. If you value the endless consumption of electricity and zero sum games, you should value bitcoin. If you value politicians playing chicken over the debt ceiling, you should value USD. As it stands, the options are all pretty bad, but the ability to craft new ones is getting better and the cancer that our current one has is getting worse, so eventually there will be something worth switching to.
To name a few instances of this: This is old news, but I remember when zcash introduced halo and got rid of trusted setup--that's a legit increase in what's possible. NFT's as ownership of digital assets is maybe a silly application of the tech, but the sort of uniqueness constraint that they enforce is useful in centralized databases and I expect it'll find a similar niche in the distributed systems of the future. TCL's that use token price to encourage curation appear to be a non-starter, but coupled with a web of trust I think we can use the same concept to have consensus on a wide variety of useful things.
Their use as money? Sure, wildly inconvenient. But like... duh. Emulated systems are slower than ones running on bare metal because you have to embrace the constraints of both systems--it's the same with the use of cryptocurrencies within the existing financial system.
The point was never to make something that's just as good as traditional money--why bother? The point is to make traditional money obsolete in favor of something else. Something whose rules matter not because the guy who wrote them own has a gun, but because people consent to participate based on their merits.
> how should we determine which of these fake currencies actually have value and which don't?
By their side effects. If you value the endless consumption of electricity and zero sum games, you should value bitcoin. If you value politicians playing chicken over the debt ceiling, you should value USD. As it stands, the options are all pretty bad, but the ability to craft new ones is getting better and the cancer that our current one has is getting worse, so eventually there will be something worth switching to.
I'm not sure how crypto is becoming more useful, or how traditional finance is becoming worse.
There's a cousin post where I explain how crypto is becoming more useful. As for traditional finance becoming worse...
Suppose somebody approached you in the grocery store and offered to buy your shoes. I assume you have a price, right? I'd walk home from the grocery store shoeless for $100.
Why do we participate in a system which empowers this guy? What about the abstraction he's handing out makes us willing to exchange it for something with less abstract value (there's broken glass on the way home, I'd be taking a risk)? The shallow response is that we can later exchange the abstraction for, for instance, a nicer pair of shoes. But that'll work with anything, so far as somebody else is likely to accept the trade down the line. We could use pebbles or bottlecaps or dogecoin or whatever.
But why USD in particular? What is it about the US government's (or if you prefer, the banks') behavior that entitles them to issue the tokens that we use for bullying people into giving up their shoes (or you know, whatever other economic activity we chose to engage in).
Do you dispute that trust in the government and the banks is steadily declining?
They're fundamentally harder to improve than to erode. It's why nature came up with reproduction: eventually the parasites take over and you have to start fresh. It's why there are very few companies around today that were also around 100 years ago. Entropy wins, it's just what happens to centralized systems over time.
Or to put it less abstractly: We've got banks collapsing and politicians playing chicken over the debt ceiling. Does that not threaten the idea that we can walk home with that $100 and buy a nicer pair of shoes with it? Wouldn't we be better off with a system that was less susceptible to the kind of cancer that ours has?
Suppose somebody approached you in the grocery store and offered to buy your shoes. I assume you have a price, right? I'd walk home from the grocery store shoeless for $100.
Why do we participate in a system which empowers this guy? What about the abstraction he's handing out makes us willing to exchange it for something with less abstract value (there's broken glass on the way home, I'd be taking a risk)? The shallow response is that we can later exchange the abstraction for, for instance, a nicer pair of shoes. But that'll work with anything, so far as somebody else is likely to accept the trade down the line. We could use pebbles or bottlecaps or dogecoin or whatever.
But why USD in particular? What is it about the US government's (or if you prefer, the banks') behavior that entitles them to issue the tokens that we use for bullying people into giving up their shoes (or you know, whatever other economic activity we chose to engage in).
Do you dispute that trust in the government and the banks is steadily declining?
They're fundamentally harder to improve than to erode. It's why nature came up with reproduction: eventually the parasites take over and you have to start fresh. It's why there are very few companies around today that were also around 100 years ago. Entropy wins, it's just what happens to centralized systems over time.
Or to put it less abstractly: We've got banks collapsing and politicians playing chicken over the debt ceiling. Does that not threaten the idea that we can walk home with that $100 and buy a nicer pair of shoes with it? Wouldn't we be better off with a system that was less susceptible to the kind of cancer that ours has?
Why this whole long winded explanation when I can walk into any shoe shop and buy a new pair of shoes for $ (or Euro or CHF)?
Can I do that with crypto currency? Not so much, really.
Can I do that with crypto currency? Not so much, really.
My example was clumsy.
I started with the idea that I'd question whether the guy got his money by doing more harm than good, USD being issued based on whether a loan is expected to be profitable, not whether it benefits the people who are expected to accept it. Maybe it's in your best interest to not blindly support whatever the loan was for by accepting his money. Maybe it was for mining that's poisoning your drinking water. That failure to align incentives (i.e. implicit global fungibility) is the specific deficiency that I see killing USD and it's equivalents.
But specifics aren't necessary for the broader argument: Power corrupts, and enough corruption ends the tenure of the powerful. The details of how that is playing out for USD aren't especially relevant.
I started with the idea that I'd question whether the guy got his money by doing more harm than good, USD being issued based on whether a loan is expected to be profitable, not whether it benefits the people who are expected to accept it. Maybe it's in your best interest to not blindly support whatever the loan was for by accepting his money. Maybe it was for mining that's poisoning your drinking water. That failure to align incentives (i.e. implicit global fungibility) is the specific deficiency that I see killing USD and it's equivalents.
But specifics aren't necessary for the broader argument: Power corrupts, and enough corruption ends the tenure of the powerful. The details of how that is playing out for USD aren't especially relevant.
Your example was clumsy because you have to construct elaborate weird scenarios that don't ever happen for crypto to make sense. Guys have to come up to you in the street and buy your shoes. Entire economies and payment systems have to be assumed to have collapsed. It is a fantasy.
> Do you dispute that trust in the government and the banks is steadily declining?
Yes. Was that it?
Yes. Was that it?
The BTC whitepaper was introduced what 15 years ago? There hasn't been anything useful that has come out of that space.
Turns out, nothing needed a solution to the damn byzantine generals problem, and business actually prefers to have trusting relationships with their counter-parties and trust in a system that exists to mediate any breaking of that trust.
The value of USD has collapsed 300x vs XMR over the past 6 years.
Cool, when can I actually do anything with XMR other than trade it to other tokens and play dumb scams on various crypto systems?
You can pay any bills with it, load a debit card with it, use it on eBay, Amazon, etc. through third party facilitators.
Weird I just checked and every single bill I have I can only pay in CZK. Guess this revolution must have slipped by us here in the technological backwaters of Central Europe. Looking forward to reading about how people in the USA can pay their electricity, gas, groceries, internet, mortgage, insurance, tuition, taxes or anything else using XMR though. This sounds like a gamechanger!
By that you mean I can sell it for real money and use real money to do real money things.
What about this statement is so hard to take seriously? There are a variety of concerns one could have about either fiat/fiscal policy or cryptocurrency development/deployment/stewardship.
One is a highly centralized system, the other is relatively decentralized. They have different threat models, strengths, and weaknesses. I would hazard a guess that your demographic profile is similar to the members of the current cabal that try to control USD's supply and value but to those who don't have similar priorities, crypto offers a different set of values than the 'traditional' finance system. The two aren't mutually exclusive, and the person you're replying to didn't say either would be 'just fine' without the other...
Not sure why you're proud of your inability to defeat a straw man!
One is a highly centralized system, the other is relatively decentralized. They have different threat models, strengths, and weaknesses. I would hazard a guess that your demographic profile is similar to the members of the current cabal that try to control USD's supply and value but to those who don't have similar priorities, crypto offers a different set of values than the 'traditional' finance system. The two aren't mutually exclusive, and the person you're replying to didn't say either would be 'just fine' without the other...
Not sure why you're proud of your inability to defeat a straw man!
I thought my comment was pretty self-explanatory but I'll restate it. I don't believe people when they make talk about how their particular favourite flavour of crypto is better/stabler/stronger than reserve currencies like USD, GBP, EUR, CHF etc. My feeling is that they're either just trying to convince you to get on board or perhaps even trying to convince themselves.
> Not sure why you're proud of your inability to defeat a straw man!
Pardon?
> Not sure why you're proud of your inability to defeat a straw man!
Pardon?
There's no scalar measurement for stability, quality, or strength so there's no direct comparison to be made. It's comparing vectors and the properties of each vector may or may not be things you care about but leaving them unspecified and claiming they're collectively inferior or less meaningful than other things is the straw man you're defeating. People have faith in governments for various reasons, giving their currencies value. People have faith in crypto for various reasons, giving their currencies value.
Nobody is making a claim of general superiority except you. The guy you're responding to simply says THEY have more faith in one particular currency. Why is that so hard to believe? They may not be a US citizen! It's not an objective statement they're making about the quality of USD, but a personal one. The straw man you're attacking seems to be a reflection of your own general idea that USD is the 'supreme' currency and anything having comparable properties in any way is some foundational challenge to this multi-faceted strict dominance. The impure and complicated truth is that each currency has strengths and weaknesses. It is a fact that for any given application and person any given currency can be better/worse for their application. If you exist exclusively in the United States and never break any laws, I can see why this might be difficult to imagine.
For example, some people place great value on being able to transact without the enforcement of American cultural values. This quality of the currency for many is objectively a negative property. Since all currency are largely valued based on fiat anyway these days, why is it so hard to imagine people having preferences more closely aligned with groups other than one of the most geriatric and monochromatic governments on earth?
Nobody is making a claim of general superiority except you. The guy you're responding to simply says THEY have more faith in one particular currency. Why is that so hard to believe? They may not be a US citizen! It's not an objective statement they're making about the quality of USD, but a personal one. The straw man you're attacking seems to be a reflection of your own general idea that USD is the 'supreme' currency and anything having comparable properties in any way is some foundational challenge to this multi-faceted strict dominance. The impure and complicated truth is that each currency has strengths and weaknesses. It is a fact that for any given application and person any given currency can be better/worse for their application. If you exist exclusively in the United States and never break any laws, I can see why this might be difficult to imagine.
For example, some people place great value on being able to transact without the enforcement of American cultural values. This quality of the currency for many is objectively a negative property. Since all currency are largely valued based on fiat anyway these days, why is it so hard to imagine people having preferences more closely aligned with groups other than one of the most geriatric and monochromatic governments on earth?
> The straw man you're attacking seems to be a reflection of your own general idea that USD is the 'supreme' currency and anything having comparable properties in any way is some foundational challenge to this multi-faceted strict dominance.
Constructing a straw man to attack while accusing someone else of doing a straw man. Folks, we love to see it.
Look this is a dumb argument to be having in 2023. These cryptocurrency projects are going to fizzle out and disappear once enough of those involved find a new grift (either ChatGPT/LLM-based things or whatever comes after that). If you want to be holding the bag when that happens then that's on you.
Constructing a straw man to attack while accusing someone else of doing a straw man. Folks, we love to see it.
Look this is a dumb argument to be having in 2023. These cryptocurrency projects are going to fizzle out and disappear once enough of those involved find a new grift (either ChatGPT/LLM-based things or whatever comes after that). If you want to be holding the bag when that happens then that's on you.
>> or perhaps even trying to convince themselves.
That leads me to a big, big tangent, completely unrelated to crypto. Recently I followed online discusions of a certain car model in comparison to well known alternatives and, no idea why actually, soccer clubs. And one thing I found funny, is to which length people go to, well, rationalize and defend their preferances. E.g. interior finish is just bad of model a compared to brand b, while obviously the fact that brand b can be had without leather interior is better because of animals suffering. Or model b is better because it can be had with a V6, while model a cannot, ignoring the fact that the majority of engines for model b are inline fours as well. That actually did sound a lot like convincing oneself that the preferance for model b is totally rational. You have similar vibes whem it comes to sport teams, it basically boils down to fanboyism.
Which is fine, which car or club people prefer doesn't have to be rational. It gets risky so, if that attitude is extended to finance.
That leads me to a big, big tangent, completely unrelated to crypto. Recently I followed online discusions of a certain car model in comparison to well known alternatives and, no idea why actually, soccer clubs. And one thing I found funny, is to which length people go to, well, rationalize and defend their preferances. E.g. interior finish is just bad of model a compared to brand b, while obviously the fact that brand b can be had without leather interior is better because of animals suffering. Or model b is better because it can be had with a V6, while model a cannot, ignoring the fact that the majority of engines for model b are inline fours as well. That actually did sound a lot like convincing oneself that the preferance for model b is totally rational. You have similar vibes whem it comes to sport teams, it basically boils down to fanboyism.
Which is fine, which car or club people prefer doesn't have to be rational. It gets risky so, if that attitude is extended to finance.
At this point cryptocurrencies are as centralized as fiat currencies(globally).
Why is Etherium be better than South African Rand?
Why is Etherium be better than South African Rand?
It's a reasonable expectation that any and all institutions handling your money might be gangs of thieves run by charlatans. This is why any deviations from regulation should be viewed with extreme suspicion, since that's the only thing that mostly succeeds keeping these thieves and charlatans in check and protecting customers.
Silicon Valley Bank is a great positive example, where the depositors were protected even despite the fact that the thieves and charlatans wanted to take on unacceptable risk by successfully managing in 2018 to lobby exemptions to the Dodd-Frank regulations that would have prevented the thieves and charlatans from doing so. So any financial institution that tries to circumvent even slight parts of regulations should be treated with extreme suspicion (as thieves and charlatans who want to take your money), and any financial process which tries to stay outside regulations as such (e.g. Monero) needs no suspicion at all, as this means that they're explicitly publicly acknowledging that yes, our gang of thieves and charlatans want to re-enable the ways of taking your money which were limited for the other gangs of thieves and charlatans.
Silicon Valley Bank is a great positive example, where the depositors were protected even despite the fact that the thieves and charlatans wanted to take on unacceptable risk by successfully managing in 2018 to lobby exemptions to the Dodd-Frank regulations that would have prevented the thieves and charlatans from doing so. So any financial institution that tries to circumvent even slight parts of regulations should be treated with extreme suspicion (as thieves and charlatans who want to take your money), and any financial process which tries to stay outside regulations as such (e.g. Monero) needs no suspicion at all, as this means that they're explicitly publicly acknowledging that yes, our gang of thieves and charlatans want to re-enable the ways of taking your money which were limited for the other gangs of thieves and charlatans.
The difference is, the US govt has backstopped all the bank charlatans and put their money and their citizens money on the line when it comes to USD backstopping.
The Binance CEO wouldn't backstop his firm any farther than he can throw his yacht.
The Binance CEO wouldn't backstop his firm any farther than he can throw his yacht.
However, the regulated banks also appear to be gangs of thieves run by charlatans. ... I have a lot more faith in the value of my Monero than the USD
Ah yes, Monero. Trying to replace bitcoin as the preferred dark web currency when collecting ransoms from hospitals and pensioners.
A few banks went south, so the entire system is just as bad as the ponzi crypto circus run by the Tether mafia?
Ah yes, Monero. Trying to replace bitcoin as the preferred dark web currency when collecting ransoms from hospitals and pensioners.
A few banks went south, so the entire system is just as bad as the ponzi crypto circus run by the Tether mafia?
I'm reminded of this: https://finance.yahoo.com/news/balaji-srinivasan-lost-1-mill...
Man bets on hyperinflation, obviously loses, and to the surprise of almost everyone it pays out. I'm fairly sure you yourself have been banging on about USD hyperinflation for years, too, without it happening.
Man bets on hyperinflation, obviously loses, and to the surprise of almost everyone it pays out. I'm fairly sure you yourself have been banging on about USD hyperinflation for years, too, without it happening.
That bet didn't make sense even if Balaji was right; he could have bought 40 BTC instead of putting $1M into escrow. Then he would have made 40x the returns if he was right, and would have 1.03x his investment now even though he was wrong. It can really only be interpreted as a publicity stunt, possibly to pump BTC.
Incidentally, I don't know if Manifold is reflective of 'almost everyone', but they had it at >50% for almost the entire duration: https://manifold.markets/chrisjbillington/will-the-1m-vs-1bt...
Incidentally, I don't know if Manifold is reflective of 'almost everyone', but they had it at >50% for almost the entire duration: https://manifold.markets/chrisjbillington/will-the-1m-vs-1bt...
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It's difficult to name a large financial institution that hasn't had a fairly recent "embarrassment of behaviour discovery", be it assisting drug cartels with money laundering, manipulating the price of gold / metals, or just plain immorally giving massive debt to obvious deadbeats and repackaging it with a AAA rating. Yhe whole finance industry is a festering wound.
Cryptocurrency, by comparison, is a mosquito bite, but there's enough blood to have started attracting the real bad bacteria across from the traditional finance world.
Cryptocurrency, by comparison, is a mosquito bite, but there's enough blood to have started attracting the real bad bacteria across from the traditional finance world.
> Silicon Valley Bank has detoothed a lot of criticism of the crypto industry
The problem with SVB was not the same as what we get with FTX and Binance. Let alone, the promise of crypto is to "be transparent", and this proves that they are not at all transparent.
SVB made bad bets, that we knew were made. SVB collapse was not a result of them lying about how they operate, it was a result of the risk they took.
FTX and Binance lied, which is not exactly what you want from someone who you should trust.
The problem with SVB was not the same as what we get with FTX and Binance. Let alone, the promise of crypto is to "be transparent", and this proves that they are not at all transparent.
SVB made bad bets, that we knew were made. SVB collapse was not a result of them lying about how they operate, it was a result of the risk they took.
FTX and Binance lied, which is not exactly what you want from someone who you should trust.
> "the term ‘deposit’ is a communication term, it’s not an indication of the technical treatment of the funds"
That seems like a pretty terrible answer from binance. It's like they are saying, "We're not commingling customer funds and company revenue! We're defrauding our customers by misrepresenting purchases as deposits!"
That seems like a pretty terrible answer from binance. It's like they are saying, "We're not commingling customer funds and company revenue! We're defrauding our customers by misrepresenting purchases as deposits!"
Reading these comments on this radical anti-crypto forum makes me always think of "the rumours of [Bitcoin's] death have been greatly exaggerated."
While I don't have a Twitter profile with laser eyes just yet, I enjoy seeing what I think is a technological and political game changer just chugging along, uncaring of scams, maxis, haters, governments, volatility.
I am surprised that few can notice how impressive it is for a currency with limited usability and extreme volatility to still be worth something, improving and growing. Because at one point, all the concerns one has about it will have been solved, and, as economists love to say, good money tends to drive out bad money. The Internet is still in need of its digital cash.
So I enjoy seeing all the Ponzi schemers, con artists and grifters get their comeuppance, but would also love to see the crypto-Luddites inhabiting this forum to be proven wrong eventually. Because Bitcoin doesn't care, Bitcoin still goes brrr.
While I don't have a Twitter profile with laser eyes just yet, I enjoy seeing what I think is a technological and political game changer just chugging along, uncaring of scams, maxis, haters, governments, volatility.
I am surprised that few can notice how impressive it is for a currency with limited usability and extreme volatility to still be worth something, improving and growing. Because at one point, all the concerns one has about it will have been solved, and, as economists love to say, good money tends to drive out bad money. The Internet is still in need of its digital cash.
So I enjoy seeing all the Ponzi schemers, con artists and grifters get their comeuppance, but would also love to see the crypto-Luddites inhabiting this forum to be proven wrong eventually. Because Bitcoin doesn't care, Bitcoin still goes brrr.
> good money tends to drive out bad money
Actually, it's the other way around: https://en.wikipedia.org/wiki/Gresham's_law
But otherwise, I agree: rumors of Bitcoin's death have been greatly exaggerated.
See https://99bitcoins.com/bitcoin-obituaries/
Actually, it's the other way around: https://en.wikipedia.org/wiki/Gresham's_law
But otherwise, I agree: rumors of Bitcoin's death have been greatly exaggerated.
See https://99bitcoins.com/bitcoin-obituaries/
Greham's law only applies where people are forced to treat good and bad money as equivalent. For example, if people are forced to treat coins of the same denomination as equivalent, regardless of how much gold the contain, you'll spend those that contain less gold and keep those that contain more gold.
Yes, that's right. Note that it also applies to fiat currencies. For example, at various times in recent years many Venezuelans would try to hoard USD (the good money), driving it out of circulation, and spend as much as possible in the latest version of the Bolivar -- until the Bolivar failed. Once the Bolivar failed, everyone would stop accepting it. Venezuela has created several versions of the Bolivar in recent years that have subsequently failed.
Interesting.
I was recently reading an essay from Hayek that explained why a better currency tends to drive out a bad one. I might need a refresher, though this seems to be one of those things that are true depending on how you look at it.
I was recently reading an essay from Hayek that explained why a better currency tends to drive out a bad one. I might need a refresher, though this seems to be one of those things that are true depending on how you look at it.
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What i find especially intriguing is the certainty some people on this forum have of crypto going to zero. The same certainty they had 2, 5 and 10 years ago. Yet here we are. At what stage do they start questioning the strength of their certainty.
I don't subscribe to Bitcoin, I think it was a good Proof of Concept that this "Satoshi Nakamoto" entity released with good ideas that have since been tested and replaced by better ones.
I very well think that Bitcoin itself is going to zero, lest it migrates off PoW technolgoy. I am certain that at some point in the future governments will regulate and maybe even ban that wasteful use of electricity. Particularly when way better double-spending/integrity protection algorithms exist to replace PoW.
Nevertheless, Blockchains and crypto-tokens are here to stay. Ethereum is here to stay and similar networks will keep progressing, as GP said, without regard to scammers, fraudsters, naysayers and skeptics around the world. Technology will keep improving and becoming better performing. This is exciting to me!
I very well think that Bitcoin itself is going to zero, lest it migrates off PoW technolgoy. I am certain that at some point in the future governments will regulate and maybe even ban that wasteful use of electricity. Particularly when way better double-spending/integrity protection algorithms exist to replace PoW.
Nevertheless, Blockchains and crypto-tokens are here to stay. Ethereum is here to stay and similar networks will keep progressing, as GP said, without regard to scammers, fraudsters, naysayers and skeptics around the world. Technology will keep improving and becoming better performing. This is exciting to me!
I agree that the blockchain is an outstanding achievement in software engineering.
It's a distributed, cryptographically secure, decentralised append-only log. It's a data structure that would have a lot of potential in real-world applications, e.g. auditing public institutions, defending against falsifiability, etc. it provides an impartial proof-of-time, which is huge.
Bitcoin might live or die, but blockchains and digital currencies based on it are here to stay.
It's a distributed, cryptographically secure, decentralised append-only log. It's a data structure that would have a lot of potential in real-world applications, e.g. auditing public institutions, defending against falsifiability, etc. it provides an impartial proof-of-time, which is huge.
Bitcoin might live or die, but blockchains and digital currencies based on it are here to stay.
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Agree! It's a tiring situation. On the one hand you have the idealists who know bitcoin is going to radicalize everything because "the Internet needs it."
On the other you have the "radical anti-crypto(currency) ludites" who is anyone on this forum who holds a different opinion.
On the other you have the "radical anti-crypto(currency) ludites" who is anyone on this forum who holds a different opinion.
And will go brr until self-induced climate change kills off the human race. Proof-of-work coins are obscene and immoral, and you should feel bad.
Yes, Bitcoin is what is causing climate change. Also stop eating meat.
You're repeating the propaganda lines from big corporation and big government, while they keep subsidizing oil companies and ultra-rich take their private jet to have dinner in Paris. Also it feels good to believe climate change is within our (we the people) grasp, and we just have to recycle a bit more.
This is literally putting the masses at each other's throats, while Unilever hopes to make billions if you buy their vegan products, and petrol companies go brrr.
Divide et impera.
--
Bitcoin turns energy into money. The problem is that we need more clean energy, not cry that people are using off-grid energy to mine Bitcoins.
Build more nuclear. Invest in fusion research. But you nor I can't, so we're at each other's throat. Saying we need to consume less energy is misguided and absurd.
You're repeating the propaganda lines from big corporation and big government, while they keep subsidizing oil companies and ultra-rich take their private jet to have dinner in Paris. Also it feels good to believe climate change is within our (we the people) grasp, and we just have to recycle a bit more.
This is literally putting the masses at each other's throats, while Unilever hopes to make billions if you buy their vegan products, and petrol companies go brrr.
Divide et impera.
--
Bitcoin turns energy into money. The problem is that we need more clean energy, not cry that people are using off-grid energy to mine Bitcoins.
Build more nuclear. Invest in fusion research. But you nor I can't, so we're at each other's throat. Saying we need to consume less energy is misguided and absurd.
No monetary system is worth 703KWh per transaction.[1] Is that propaganda?
[1] https://www.statista.com/statistics/881541/bitcoin-energy-co...
[1] https://www.statista.com/statistics/881541/bitcoin-energy-co...
That's not a very good comparison. Visa is more like the lightning system of bitcoin and ignores the breathtaking energy use of the underlying network. It's a good thing that people can give a decent estimate of bitcoin energy usage.
Try doing that with a fiat currency of your choice. Because it's invisible doesn't make it free.
Try doing that with a fiat currency of your choice. Because it's invisible doesn't make it free.
Yawn. No monetary system works on 7 transactions per second either, this is why we now have Lightning and people are doing something about it, instead of repeating the same tired, exaggerated arguments.
I find it disturbing how engineers in here can only claim for the prohibitionism of an inefficient yet radical technology. This ain't no hacker spirit.
I find it disturbing how engineers in here can only claim for the prohibitionism of an inefficient yet radical technology. This ain't no hacker spirit.
Ok, seeing as you’re not answering my questions, in what way do Bitcoin and other proof-of-work coins get down to even vaguely sensible levels of energy consumption? Fission takes decades to spin up, fusion is a pipe dream, and we need all the renewables we can get to transition away from an oil-based economy.
> fusion is a pipe dream, and we need all the renewables we can get to transition away from an oil-based economy.
That's a load of nonsense but to address your question: with one Bitcoin transaction, with Lightning, you can have millions of transactions with little than hashing a few numbers each. There is no theoretical limit. With one single Bitcoin transaction that you claim is killing the Earth.
This information was just a Google away if you really wanted an answer, but crypto has become like football or party politics: my camp is always good, the other are the literally Satan. Since you started by saying I am immortal and should feel bad for even just talking positively about Bitcoin, there is no intelligent discussion to be had here. I don't even own Bitcoin, for crying out loud.
I'll go back causing climate change or whatever you think I do.
That's a load of nonsense but to address your question: with one Bitcoin transaction, with Lightning, you can have millions of transactions with little than hashing a few numbers each. There is no theoretical limit. With one single Bitcoin transaction that you claim is killing the Earth.
This information was just a Google away if you really wanted an answer, but crypto has become like football or party politics: my camp is always good, the other are the literally Satan. Since you started by saying I am immortal and should feel bad for even just talking positively about Bitcoin, there is no intelligent discussion to be had here. I don't even own Bitcoin, for crying out loud.
I'll go back causing climate change or whatever you think I do.
Since you're such a massive lightnight fan, can you answer something very quickly for me?
Imagine Bitcoin gets very popular, so much so that 10% of the world is using it. They all will at least need to open a lightnight channel, and then settle that channel back to Bitcoin. What is the minimum number of Bitcoin transactions needed, and how long would it take to settle all those transactions? For this exercise, assume world population stays fixed at current levels.
(For those not so drunk on the cool aid, it's 6 years. 6 years minimum to settle one meaningful transaction for any reasonable number of people.)
Imagine Bitcoin gets very popular, so much so that 10% of the world is using it. They all will at least need to open a lightnight channel, and then settle that channel back to Bitcoin. What is the minimum number of Bitcoin transactions needed, and how long would it take to settle all those transactions? For this exercise, assume world population stays fixed at current levels.
(For those not so drunk on the cool aid, it's 6 years. 6 years minimum to settle one meaningful transaction for any reasonable number of people.)
They already know that.
In engineering, when there is a problem, we don't go crying about it or feel good because we have identified a bug, but work to fix it.
What you said is true. What you said will not be true forever. So it's a constant moving of the goalposts with people like you that measure everything in a vacuum and as an absolute unit.
Technology tends to improve over time. But apparently you are able to design perfect global distributed systems that are infinitely scalable from day 1, so chapeau.
As I said elsewhere, I am not invested, but I am an engineer, and I approach it as such. The kool aid is being drunk by the anti-crypto-at-all-costs cult, attacking with dishonest and frankly ridiculous arguments for people working with distributed systems and networks all day.
In engineering, when there is a problem, we don't go crying about it or feel good because we have identified a bug, but work to fix it.
What you said is true. What you said will not be true forever. So it's a constant moving of the goalposts with people like you that measure everything in a vacuum and as an absolute unit.
Technology tends to improve over time. But apparently you are able to design perfect global distributed systems that are infinitely scalable from day 1, so chapeau.
As I said elsewhere, I am not invested, but I am an engineer, and I approach it as such. The kool aid is being drunk by the anti-crypto-at-all-costs cult, attacking with dishonest and frankly ridiculous arguments for people working with distributed systems and networks all day.
Please let me know how many times Bitcoin transactions per second has gone up in the last 14 years.
I can tell you how many times iPhone has upgraded their specs in approximately the same time period.
One of those is a cult, another a product of engineering. Don't confuse them.
I can tell you how many times iPhone has upgraded their specs in approximately the same time period.
One of those is a cult, another a product of engineering. Don't confuse them.
(Angry posting causes typos. Sorry. I hope my comment is still readable enough.)
[deleted]
Random but, what do you mean by ‘goes brrr’?
Sorry, it's a meme: https://knowyourmeme.com/memes/money-printer-go-brrr
It means it keeps chugging along with no care in the world.
It means it keeps chugging along with no care in the world.
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"Binance, commingled customer funds with company revenue in 2020 and 2021, in breach of U.S. financial rules"
Guess it is fortunate for them they are not a US company governed by U.S. financial rules.
Guess it is fortunate for them they are not a US company governed by U.S. financial rules.
"commingling happened almost daily in accounts the exchange held at U.S. lender Silvergate Bank"
The very next sentence in the article. If you're going to quote, quote with context.
"Binance allowed U.S. customers to trade on its platform from 2019 to this year"
The very next sentence in the article. If you're going to quote, quote with context.
"Binance allowed U.S. customers to trade on its platform from 2019 to this year"
In the same way that European data protection regulations apply to firms with European person’s data, even if they aren’t European firms, US money protection regulations apply to firms with U. S. people’s money, whether or not they are US firms. And, also from the article:
“Binance allowed U.S. customers to trade on its platform from 2019 to this year despite publicly claiming to restrict access to Americans, the U.S. Commodity Futures Trading Commission alleged in a complaint against the exchange in March.”
“Binance allowed U.S. customers to trade on its platform from 2019 to this year despite publicly claiming to restrict access to Americans, the U.S. Commodity Futures Trading Commission alleged in a complaint against the exchange in March.”
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Well, OK, sure but the same basic rules are present in (for example) the UK, Hong Kong, Singapore ... the Bahamas ... I mean, I am sure you can find some craptastically-regulated country somewhere which doesn't have client money rules but still.
I mean, commingling is verboten pretty much everywhere.
Alas, if you serve US customers (which they do) you need to abide by US financial rules.
Binance US, separate entity, serves US customers. Binance from the article does not.
Weren't those separate entities found to have comingled funds though?
Binance from the article most certainly does: https://amp.cnn.com/cnn/2023/03/27/business/binance-cftc-law...
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This would also be an issue in the UK too - mixing client money with company money is a big no-no. I imagine plenty of other countries have similar regulations.
Except this is more akin to "don't serve food that was left under room temperature for a day" than an arbitrary procedural US-rule.
For all the great promises and actually great ideas behind using cryptography to ensure efficient flow of funds... it has become scammers' paradise.
Bitcoin is many things, but "efficient" has never been one of them. Today if you wanted to send $10,000 to someone in a different country it would be less wasteful and environmentally harmful to cut down a tree and process it into cardboard, put the cash in that cardboard box, and put that on a fossil fuel burning airplane to fly it halfway across the world and hand deliver it to the person.
Color me surprised.
There is no accountability or recourse of any kind in cryptoland. You and your money are totally at the mercy and trust of the exchanges.
There is no accountability or recourse of any kind in cryptoland. You and your money are totally at the mercy and trust of the exchanges.
This is true only if you keep your funds in an exchange instead of your own wallet.
No, this is still true.
Even with your own wallet, the exchanges set the value of what is in it. Even if you trade P2P, the exchanges are still an overarching influence and can easily manipulate prices as they see fit using their unlimited supply of "stable coins".
Face facts, cryptoland is owned by the exchanges. They operate with all the power of the Federal Reserve minus any oversight or accountability. There is nothing accountable or transparent or "free market" about it. When trading crypto, you are totally at their whim and mercy.
Even with your own wallet, the exchanges set the value of what is in it. Even if you trade P2P, the exchanges are still an overarching influence and can easily manipulate prices as they see fit using their unlimited supply of "stable coins".
Face facts, cryptoland is owned by the exchanges. They operate with all the power of the Federal Reserve minus any oversight or accountability. There is nothing accountable or transparent or "free market" about it. When trading crypto, you are totally at their whim and mercy.
I'd argue that, in some sense, their accountability comes from two places: that if they try to enforce a price--as you are claiming that they are actually setting the price--that is non-sensical, then people will fleece them by taking advantage of the arbitrage opportunity, and--and I'd argue that this is particularly important as this is part of the narrative of this whole concept--that there are multiple of them and the only thing preventing there from being a lot of onramps are government regulations trying to prevent such: decentralized systems and markets get their trust from having options and backup plans in the case that a bunch of people are (and they always are) corrupt.
He who has the gold makes the rules --- and can create his own market/arbitrage opportunities.
The exchanges have all the crypto gold they need --- if/when they need more, they can just make it by way of "stable coins".
The exchanges have all the crypto gold they need --- if/when they need more, they can just make it by way of "stable coins".
Ya, then in your own wallet, you're just waiting for the inevitable hack to lose it all, like one of the bitcoin core devs. https://siliconangle.com/2023/01/02/bitcoin-core-developer-l...
Nobody trusts banks, but these crypto characters make banks look like solid organizations.
The magic of banking is that retail depositors don’t have to trust them.
Banks require us to give them large amounts of trust. We deposit our money. They lend that money out, while the general public is under the impression that you deposit money and it stays there. The bank's very business model relies on all of their depositors not needing/withdrawing their money at the same time; should everyone happen to need/withdraw their money at the same time, the bank would fail. Fractional reserve banking at its finest.
That's not really how modern banking works anymore. The vast majority of loans aren't funded by customer deposits.
A lot of people don't understand how securitization works at all.
A lot of people don't earn enough money to care. Just as most people don't understand how their TV, smartphone or kidney works they don't need to know how the banking industry works.
Government puts the deposit guarantee at 250k. That covers the vast majority of society and prevents riots in the streets.
Government puts the deposit guarantee at 250k. That covers the vast majority of society and prevents riots in the streets.
>the general public is under the impression that you deposit money and it stays there
After decades of reruns and annual 24-hour marathons of "It's a Wonderful Life" I don't think the general public is unaware of this very basic aspect of the banking industry. I knew by the time I was 8 that the money was in Joe's house etc., and I didn't grow up in a household that had any particular knowledge of the banking & finance industry.
If you asked most people "Do banks keep all of the money everyone deposits in one big vault, or a bunch of little vaults, all of the time?" I think most people would at least have some vague notion that the answer is "Um, No?"
After decades of reruns and annual 24-hour marathons of "It's a Wonderful Life" I don't think the general public is unaware of this very basic aspect of the banking industry. I knew by the time I was 8 that the money was in Joe's house etc., and I didn't grow up in a household that had any particular knowledge of the banking & finance industry.
If you asked most people "Do banks keep all of the money everyone deposits in one big vault, or a bunch of little vaults, all of the time?" I think most people would at least have some vague notion that the answer is "Um, No?"
You don't have to trust the bank, as long as the bank is a FDIC member and you're not depositing personal business amounts of money you only need to trust the government to keep your deposit safe.
You're right, we don't have to trust them, because we know we cannot trust them. Regular banks are not keeping your money ready for you to withdraw. They are investing your money (the profits are for them, the losses are for the taxpayers), while they hope that not everyone want their money at the same time. Binance is accused to mix customer funds with their own funds. If it were a bank, that would be essentially a given. Not necessarily defending Binance, but ...
I don't think any modern (post-1600AD) bank ever just kept depositors money ready for withdrawal.
Mixing shareholder equity with depositor funds is a totally different thing. In general, depositors are a bank's most senior creditors (they get money before the electric bill gets paid) and shareholders are the least senior (they only get money after ever single other bill is paid). Mixing these funds makes a mess of that promise and should rightfully reduce trust that Binance would be willing or able to pay depositors in a crisis.
Mixing shareholder equity with depositor funds is a totally different thing. In general, depositors are a bank's most senior creditors (they get money before the electric bill gets paid) and shareholders are the least senior (they only get money after ever single other bill is paid). Mixing these funds makes a mess of that promise and should rightfully reduce trust that Binance would be willing or able to pay depositors in a crisis.
I'm not sure you read the article, it's not about shareholder equity...
> I don't think any modern (post-1600AD) bank ever just kept depositors money ready for withdrawal.
I'd have thought it was a more modern issue, but let's agree. And that seems in any case perfectly fine for most, or at least for many people. Incidentally, playing with customer money was what FTX has been doing, albeit it was amateur, no official oversight, ...
> I don't think any modern (post-1600AD) bank ever just kept depositors money ready for withdrawal.
I'd have thought it was a more modern issue, but let's agree. And that seems in any case perfectly fine for most, or at least for many people. Incidentally, playing with customer money was what FTX has been doing, albeit it was amateur, no official oversight, ...
Eh, the FDIC is $250k per account, and total coverage in the fund is pretty small. I'd think we'd stop making blanket statements like this after seeing a couple large bank failures back-to-back in the US. If there are more, we won't be able to make all retail depositors while without significant additional tax revenue or currency debasement.
The stats I can find show that 95%+ of Americans have less than $100k of savings, and much of savings is in non-cash means, so $250k per account seems completely sufficient to consider that yes, people are protected.
If a bank failure like SVB was not covered ad-hoc and out of policy by FDIC, the economic impact of thousands of companies suddenly going bankrupt and tens of thousands more pulling out of other banks across the country would probably be pretty significant, even though the majority of the country isn’t directly vulnerable to FDIC limits.
How many people would you presume are vs aren't covered by FDIC in full? In joint accounts, the limit goes to $500k.
Sure, you've got some businesses with poor risk and treasury management who might be carrying a bunch of cash in a demand deposit account that isn't covered, but your vast majority of depositors will be fine.
Sure, you've got some businesses with poor risk and treasury management who might be carrying a bunch of cash in a demand deposit account that isn't covered, but your vast majority of depositors will be fine.
No, the FDIC can just levy additional fees on the remaining banks. There will be no additional currency debasement.
This raises some pretty interesting thoughts to the table that I think many people don't see:
Yes, 95% of the US population don't have more than $250,000. Let's say that that 95% has on average something like $5,000 in saving/actives. The problem is not that the FDIC will not "honor" those millions of $5,000 checks. The problem is that most of those "actives" are actually managed by other entities, who "bulk load" the money into bank accounts. Adding those up will make more than $250,000 pretty quickly. So the question still remains: If a bank goes under, and say, a hedge-fund with retirement money is saving a good chunk of its customer funds in said bank under a consolidated account with more than $250,000. Will the FDIC cover the excess to make the hedge-fund whole?
It's like the farce that a lot of those Crypto centralized companies put in their websites: "We are FDIC insured" ... well yeah, their accounts might be FDIC insured, but it is only THEIR first $250,000 that is insured, not the first $250,000 of each of their customers.
Yes, 95% of the US population don't have more than $250,000. Let's say that that 95% has on average something like $5,000 in saving/actives. The problem is not that the FDIC will not "honor" those millions of $5,000 checks. The problem is that most of those "actives" are actually managed by other entities, who "bulk load" the money into bank accounts. Adding those up will make more than $250,000 pretty quickly. So the question still remains: If a bank goes under, and say, a hedge-fund with retirement money is saving a good chunk of its customer funds in said bank under a consolidated account with more than $250,000. Will the FDIC cover the excess to make the hedge-fund whole?
It's like the farce that a lot of those Crypto centralized companies put in their websites: "We are FDIC insured" ... well yeah, their accounts might be FDIC insured, but it is only THEIR first $250,000 that is insured, not the first $250,000 of each of their customers.
a quick google search suggests that this is false. Given the FDIC's perfect 100 year track record of covering depositors, the burden of proof is on naysayers.
The rescue of Silicon Valley Bank implies to me that the $250k is more a suggestion than a rule
$250k is guaranteed. Above that you take your chances on policy.
I don’t think the $250k was ever intended to be an absolute upper limit.
I don’t think the $250k was ever intended to be an absolute upper limit.
In any case, SVB was primarily a commercial bank, rather than a taker of retail deposits.
Nope. Banks are just the devil you know, so they get more of a free pass. You're desensitised to banks, but sensitive to anything else that may end up being "just as bad" as the banks.
Banks already exist, don't inflict more similar behaviour on us! Please!
Banks already exist, don't inflict more similar behaviour on us! Please!
The big risk for Binance is AML. If they’re violating U.S. sanctions, they’re liable to having their funds frozen and ability to access dollars in blocked.
Their KYC is actually pretty strict. They have a separate entity for US customers, which I assume doesn't violate US sanctions.
It is anything but strict. In fact they’ll help you circumvent it.
https://amp.cnn.com/cnn/2023/03/27/business/binance-cftc-law...
https://amp.cnn.com/cnn/2023/03/27/business/binance-cftc-law...
Too little, too late.
Part of KYC is also not sending dollars to sanctioned international corporations & individuals as well.
Part of KYC is also not sending dollars to sanctioned international corporations & individuals as well.
> Binance’s website told customers their dollar transfers were “deposits” that would be “credited” to their trading accounts in the form of BUSD. Customers were told they could “withdraw” their deposits as dollars. These representations created the expectation that clients’ funds would be safeguarded in the same way as traditional cash deposits, the former regulators said.
So this makes sense to me in that users buy a deposit dollars to buy a shitcoin, but the deposit and purchase are a single operation. If I buy BUSD and then I want to withdrawn, I need to sell my BUSD back to Binance, and it it's value has drifted down, then I will get less dollars. How is that commingling and how is there ab expectation of safeguarding deposits?
So this makes sense to me in that users buy a deposit dollars to buy a shitcoin, but the deposit and purchase are a single operation. If I buy BUSD and then I want to withdrawn, I need to sell my BUSD back to Binance, and it it's value has drifted down, then I will get less dollars. How is that commingling and how is there ab expectation of safeguarding deposits?
I never understood why commingling was illegal.
Instead, simply require that if any customer funds and corporate funds are in the same account, then customers have priority in any liquidation of the contents of that account.
Then, companies have an incentive to separate their funds, but don't need to.
Instead, simply require that if any customer funds and corporate funds are in the same account, then customers have priority in any liquidation of the contents of that account.
Then, companies have an incentive to separate their funds, but don't need to.
> I never understood why commingling was illegal.
The answer is straightforward. It is obviously possible to spend all of the money in an account. This is bad if some of that money was customer money which the fiduciary was not supposed to spend.
Spending all the money in an account can be the result of bad business decisions. But equally, it can be the result of a series of negative events. For example, a business line of credit could pledge as security funds in an account. Later, the business runs into trouble due to rare macro events (e.g. war, pandemic, natural disaster, etc.) and the loan goes into default. The creditor can then seize the funds in the account. It is better for customers if that pledged account did not contain their money.
> customers have priority in any liquidation of the contents of that account.
Neither of the scenarios above results in the ability to prioritize in any kind of orderly liquidation. Bankruptcy will likely come eventually, but by the time the courts get involved all the customer funds are gone and unrecoverable.
Preventing commingling provides a mechanism for the fiduciary to fail without having lost all of the customers' money.
The answer is straightforward. It is obviously possible to spend all of the money in an account. This is bad if some of that money was customer money which the fiduciary was not supposed to spend.
Spending all the money in an account can be the result of bad business decisions. But equally, it can be the result of a series of negative events. For example, a business line of credit could pledge as security funds in an account. Later, the business runs into trouble due to rare macro events (e.g. war, pandemic, natural disaster, etc.) and the loan goes into default. The creditor can then seize the funds in the account. It is better for customers if that pledged account did not contain their money.
> customers have priority in any liquidation of the contents of that account.
Neither of the scenarios above results in the ability to prioritize in any kind of orderly liquidation. Bankruptcy will likely come eventually, but by the time the courts get involved all the customer funds are gone and unrecoverable.
Preventing commingling provides a mechanism for the fiduciary to fail without having lost all of the customers' money.
Customers have priority of the assets anyway, even if they're in a corporate account. The commingling rules help because by the time the funds in any commingled account would get frozen they'd already be gone. Look to SBF, Madoff, etc.
The content in article doesn't even satisfy the headline/title. The quotes in the article specifically state what the accounts are for but the author hand-waves on what "could" be if many hypotheticals are reality. Do better Reuters.
> content in article doesn't even satisfy the headline/title
How does “the news agency reviewed a bank record showing that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money” not satisfy the headline?
How does “the news agency reviewed a bank record showing that on Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money” not satisfy the headline?
> According to the sources and the February 2021 bank record seen by Reuters, Binance mixed customer money and company revenues in a third Silvergate account, belonging to a Zhao-controlled Cayman firm. Binance converted money from this third account into the dollar-linked token BUSD, according to the person with knowledge of Binance’s group finances and company messages
> These accounts were not used to accept user deposits; they were used to facilitate user purchases” of crypto, said spokesperson Brad Jaffe. “There was no commingling at any time because these are 100% corporate funds.” When users sent money to the account, he said, they were not depositing funds but buying the exchange’s bespoke dollar-linked crypto-token, BUSD. This process was “exactly the same thing as buying a product from Amazon,”
The article has a lot of details and infographics - but ends with no conclusion, just guesswork. I appreciate the work and time that went into an article like this - it would be nice if it was more factual and less "blind-sourced" extrapolated hypothesis.
> These accounts were not used to accept user deposits; they were used to facilitate user purchases” of crypto, said spokesperson Brad Jaffe. “There was no commingling at any time because these are 100% corporate funds.” When users sent money to the account, he said, they were not depositing funds but buying the exchange’s bespoke dollar-linked crypto-token, BUSD. This process was “exactly the same thing as buying a product from Amazon,”
The article has a lot of details and infographics - but ends with no conclusion, just guesswork. I appreciate the work and time that went into an article like this - it would be nice if it was more factual and less "blind-sourced" extrapolated hypothesis.
There is no business advantage to co-mingling funds...
So why do it? The only benefit appears to be that you don't need to do precise/accurate accounting and it's easier to hide fraud.
So why do it? The only benefit appears to be that you don't need to do precise/accurate accounting and it's easier to hide fraud.
In this case the business advantage may simply have been that it was much easier to avoid following the rules while growing from its start 2017 to (at times) > $50B in holdings. They simply didn't care enough to devote the resources needed, i.e., apathy (and even antagonism) towards the normal business protocols.
That's assuming it wasn't done for less honest purposes.
That's assuming it wasn't done for less honest purposes.
Most crypto grifters have cashed out, moved on to other projects, and are keen for people to forget that chapter.
There is still a monumental amount of notional markups that need to be erased - this is not a real market and there is no real price discovery. The real $ have been round tripped many times over, I don't think there's a single "stablecoin" out there that's worth any constant amount.
There is still a monumental amount of notional markups that need to be erased - this is not a real market and there is no real price discovery. The real $ have been round tripped many times over, I don't think there's a single "stablecoin" out there that's worth any constant amount.
That's how businesses are run in 21st century. Lol
I bet US gov will go after binance/coinbase at some point this/next year
I bet US gov will go after binance/coinbase at some point this/next year
They’re already going after Coinbase.
https://www.reuters.com/legal/coinbase-issued-wells-notice-b...
https://www.reuters.com/legal/coinbase-issued-wells-notice-b...
They've ramped up e-mail spam to the point that I unsubscribed and am going to delete my account. Can't be a good sign, be careful.
Isn't this what they also accused FTX of doing?
FTX also spent the customer money on themselves.
More importantly, FTX couldn't make customers whole during an exit stampede. As long as there is no rush to the exits or until there is, the entire issue is relatively irrelevant.
The exit stampede had nothing to do with it. FTX had less assets than liabilities. Customer's wouldn't have been made whole if they gave FTX a hunderd years.
Give them time
there was a run recently, everything was paid out and life continued normally. the binance CEO actually encourages this as it's a stress test [1].
[1] https://cointelegraph.com/news/crypto-community-members-disc...
[1] https://cointelegraph.com/news/crypto-community-members-disc...
That is irrelevant?
Money is just a number in a database. Who cares if that number is over 1 account or split over more. It is equivalent.
Yeah I'm inclined to agree. They shouldn't have done it, but this seems to be a case sloppiness rather than malice, and nothing actually bad seems to have came of it from my cursory reading. Just a bunch of playing up what could have happened.
Are the improprieties of a cryptocurrency exchange more scandalous relative to the improprieties of traditional finance?
I'll say no, but only because cryptocurrency is a single toddler to traditional finance's group of cigar smoking, sociopathic men with the scars to prove they've learnt through experience how far they can stray from legal boundaries before too much attention is brought.
Feels like tradfi's improprieties are normalized. They're adjacent to or in bed with government's financial abuses, which are politicized and sometimes portrayed as just.
We have financial systems that are certifiably broken, there are countless ideas about how to fix them, the digital era makes new ideas easy to explore and everybody would objectively be better off with some genuine innovation
yet all we've got is this manic obsession spawned by bitcoin that has no economic objective whatsoever.
If that is "efficient allocation of capital" one wonders what inefficiency looks like.