Comment by oolongCat | Hacker News Reader

Comment by oolongCat | Hacker News Reader

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>The benefit of Bitcoin is decentralization, and businesses that don't understand this are always going to come across as naive

Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on.

Many are happy to buy and sell the whole utopian view of how the block chain is going to liberate them all, how its going to end poverty and and kill all the evil bankers, but everyone saw what happened then the DAO got hacked, that whole utopian view of the irreversible something something was somehow now the responsibility of a central group.

If anyone wants to see examples of how most of these users have no idea of how to handle money, look at all the ponzi schemes that are build around crypto currencies. Its insane thinking how easily people give away their money for a piece of the moon.

> Businesses understand this really well and they are using this to their advantage, there's not much regulation around crypto-curruncies as of now, so these companies can operate in a legally gray area. It is the customers of these businesses who has no idea what is going on.

I specifically said, "businesses that don't understand this" to talk about the subset of businesses that don't understand decentraliztion. I didn't say that all businesses didn't understand decentralization.

There are many businesses that do understand decentralization, but centralized exchanges like Bitfinex definitely don't. If they did, they wouldn't be holding the money of thousands of users. Lack of regulation around cryptocurrencies is only one implication of decentralization, and for that matter, it's one that isn't permanent. Decentralization makes regulation hard to enforce for individuals, but large centralized businesses are going to have a hard time avoiding regulation in the long term.

> but large centralized businesses are going to have a hard time avoiding regulation in the long term.

I think the key phrase here is "in the long term". Who says Bitfinex is in it for the long term? They say it? Why do you trust them?

A typical business will try to make money off you any way they can, scamming you if they deem it is profitable. The more legally gray area the business is in, the more likely it is you'll get scammed.

I think 'oolongCat was trying to point out that a centralized Bitcoin business may very well understand decentralization perfectly; that doesn't mean they will care about it in any way.

> I think the key phrase here is "in the long term". Who says Bitfinex is in it for the long term? They say it? Why do you trust them?

Assuming they don't plan to die tomorrow, Bitfinex is on the hook for a lot of money to a lot of people right now, and they're likely going to be sued. If they were only in it for the short term, they weren't in it for short enough; they didn't get out in time. Where does Bitfinex benefit from this? If their intent was to scam their users, they've also scammed themselves through their own lack of understanding.

I get what you're saying, but it just doesn't work out, even as a short term scam, for reasons that are obvious to anyone who understands decentralization. Bitcoin centralization can be a way to execute a scam (see various darknet markets that have exited with all their users' escrow Bitcoins). But Bitfinex didn't use centralization to execute a scam. They just failed because they didn't understand how decentralization would affect their business.

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