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Comment by raesene9 | Hacker News Reader

unfortunately for most commercial transactions related to cryptocurrency (at scale) decentralization already seems largely dead.

When you look at the aftermath of exchange hacks (e.g. the recent kucoin hack), and see how quickly funds are frozen by various other exchanges, you can see the direction of travel, especially when combined with the uptick of regulatory interest (e.g. BitMex)

Edit: As this is attracting some downvotes, how about some citations.

On Kucoin From(https://www.coindesk.com/kucoin-crypto-hack-laundering) "The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds."

On BitMex from(https://www.coindesk.com/bitmex-accelerates-identity-verific...) "BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls"

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> As this is attracting some downvotes, how about some citations

Crypto is one of the few topics on HN that has an extremely aggressive following. The followers may not be that numerous, but they'll downvote (and fast, too) on an emotional basis, rather than a rational one, and will thus even downvote simple facts when they displease them.

(not referring to my own posts on crypto, which are at least somewhat opiniated.)

From the HN guidelines:

>> Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. ...

>> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

https://news.ycombinator.com/newsguidelines.html

They're a financially aligned/incentivized "army of HODLers" - and it's quite worrisome to think how this growing body has potential to lead to regulatory capture, let alone manipulation of content online towards positive speak.

I believe that some of the people here are also holders of cryptocurrencies.

So just like socialism. The other day I've politely questioned how price discovery would be possible on socialist economies and got downvoted to oblivion without a single argument.

Yeah I'm expecting downvotes for this one also...

I've also seen downvotes if I ever criticize landlords on HN, even when they are valid criticisms.

Not to disparage your point or the parent comment's but I think part of that is that HN operates to a much lesser degree like an echo chamber (as the majority of social network are wont to steer toward) so it might come as more of a surprise when someone disagrees. Of course I feel I should highlight the obvious fact that discourse is far more valuable than trying to quietly silence a differing opinion...

https://news.ycombinator.com/item?id=23987760

I don't know that this was politely questioned. I do think your tone had a factor in the downvotes.

Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash?

And that a private company who is hacked (and was previously the custodian of a customer's tokens) makes it more difficult to retrieve same through its machinery?

Per your link, "Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap."

So the "problem" is that companies are making decisions for themselves (admittedly, approaching the way Google and Apple can make decisions "for themselves"), and that people who were given control of assets are controlling them.

Decentralization seems fine from a protocol perspective, these are just effects of human behavior.

> Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash?

Yea that's correct. They track the coins as they flow from one address to another. It can be increasingly difficult once the funds are divided, but entirely possible with automation. It's worth noting that this is not possible with some privacy focused cryptocurrencies like Monero.

It is like saying: "I robbed a bank ang got away with $1m, all in $20 bills. The bank has the numbers of the bills I stole. I can no longer use these notes as they will be flagged/raise an alarm if I try to deposit them in another bank."

Absolutely plausible scenario. If one stole $1m from a bank, the value of those bill are no longer $1m. But if that someone can use mules, distribute the money across the city (assuming a big city), ask the mules to spend this on the same day, in various locations, then the value of that $1m will drop to $500k. The reason: mules need a cut, mediators need a cut, value of items purchased, etc.

In that sense, I expect that those "decentralized exchanges" should have large fees, large spreads, etc, practically mimicking the cost of running a 'mules' network.

This is exactly the problem that Monero tries to solve. There you cannot trace transactions or "taint" them, so you don't have to worry that a drug dealer might pay you and you'll get your account locked.

There are always decentralized exchanges. I think eventually people will get used to the UX of handling their own keys and prefer it over keeping their coins in exchanges. Either that, or banks will start doing crypto custody and government will guarantee the assets. But I think that's less likely, I don't see banks inviting the risk of managing crypto keys.

There are decentralized exchanges, the question is whether they'll see large scale adoption, particularly from less technical astute users.

Also to be successful for the general public, they'll need fiat on and off ramps (at least in the short-->medium term). At the moment most of those go via the centralized exchanges...

I'm hardly a crypto stan but it feels somewhat odd to see so many naysayers on decentralized exchanges right as they are picking up huge amounts of steam.

KYC will be dead as soon as there is a liquid decentralized atomic swap for monero

The Aztec L2 for Ethereum uses zkSNARKS for privacy and allows for execution which means a decentralized exchange can be made in a fully private environment. It just released but it's a very exciting protocol for those who like Monero.

Sure, but all it takes is centralized one on-ramp that will take you, then you can transfer out of it. That's a big difference from having your funds in a particular exchange, where it may be seized.

I agree with the UX problem. I think the decentralized exchanges will manage to scale, research is ongoing. And the UX of decentralized exchanges is not much worse than/different from using Coinbase or Kraken, for example. The big UX challenge is self-custody of keys.

> and see how quickly funds are frozen by various other exchanges

As long as this is a community decision, I don't see a problem. Centralization would need a central authority to decide which coins to freeze.

So if I accept bitcoin as payments, do I have to keep to up to date with all the blacklists that are out there? Otherwise I might end up accepting coins that are "blacklisted" and are worthless. Who is the authoritative source for these blacklists? Are merchants forced to subscribe to every blacklist out there, in fear that even some chance of accepting blacklisted coins is too much? We kind of see this in action in the fiat world, with payment providers freezing accounts that sent transactions with certain keywords.

It's not a community decision, it's a decision by private corporations (binance, coinbase et al) often driven by government regulation (e.g. KYC)

Cryptocurrencies are used when you want to hide, or speculatively profit from crime without doing crime. Large scale legitimate transactions don't need to hide, and actively don't want to (the books must balance).

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