The most powerful people in crypto
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I would though suggest that cryptocurrencies wouldn't be fraction of where it is right now without exchanges enabling everyones grandma to easily enter the casino and pumping up the pyramid scheme.
What people are missing is that crypto is its own self perpetuating economy at this point, even if it's mostly scheme based.
The problem for whom though? Clearly not the problem for the exchanges themselves, owning a busy exchange brings huge amounts of money and power (just look at the coinbase IPO). It's also not a problem for their users, who clearly indicate by their behavior that they prefer to store their coins in exchanges over having to store everything themselves. It's not a problem for the miners and protocol devs either, they don't care either way. And finally any governments are more likely to prefer exchanges over individual holders because it gives them a single point of contact.
So, everyone with any power prefers exchanges. The only people who don't are those with no means to move users away from the exchanges.
In any case you state it as a fact that users should want to give up convenience for independence, but simply by observing their behavior we can conclude that most users don't give a shit about anything except convenience (perhaps because they are already so wrapped up in whatever society they live in that independence is not really possible anyway). Until you manage to change that, persuading users to give up convenience for a higher cost and higher complexity solution is always going to be an extremely uphill battle.
Yeah what i m saying is people should invest in tech that makes the "right" way more convenient
Exchanges of some type will always exist and get re-invented as an emergent phenomenon of humans' desire for efficiency.
- a seller wants to sell something (corporate stock, or commmodity like corn or oil, or collectibles like Nike shoes, cryptocoins, etc) ... but doesn't know who the future unknown buyers will be to fetch the highest price
- a buyer wants to buy something ... but doesn't know the future unknown sellers to try and find the lowest price -- or even availability of an item at any price -- such as hard-to-find NVIDIA video cards
Those 2 forces of each side trying to maximize a marketplace will naturally re-create exchanges. Yes, they are "centralized". That's kind of the point because people value efficiency in finding each other to transact.
There is no computer science technology that lets buyers & sellers store future unknown market participants locally on their smartphones. Likewise, if you try to get around not having hubs/exchanges on a p2p network by constantly broadcasting buy/sell bids/asks, you're basically asking a billion local devices to recreate in their limited RAM a virtual "order book" of which all participants have an incomplete picture of the total market (because time limitations of network hops, latency, etc) -- which means less optimal selling & buying prices. You're also overwhelming the p2p network with traffic for "bids/asks" (pinging price queries) rather than "settlements" (finalized transactions).
In analogous desire for efficiency, this is why p2p bittorrent still has hubs like tracking servers because people want to find the files faster than waiting for cascading peer queries.
EDIT reply to: >Decentralized exchanges exist
Yes, DEX like Uniswap exist but they do not solve the same problems as centralized exchanges and market makers. There is no protocol invention or DEX that can prevent the re-emergence of centralized exchanges because there's always a gap in desirable functions (efficiency, discoverability, liquidity, convertibility, etc). E.g. convert to fiat on Uniswap not currently possible: https://www.google.com/search?q=uniswap+convert+to+fiat
That's a very specific prediction. I'm going to predict that this will not happen. In fact if it's 1% I would be surprised. The reasons are that the systems simply couldn't support such a transaction rate, and it's far too volatile to be used a currency. (And anyway how many businesses accept gold as payment? Approximately none)
It's like those hippies in that South Park episode.
Man 2: Right now we're proving we don't need corporations. We don't need money. This can become a commune where everyone just helps each other.
Man 1: Yeah, we'll have one guy who like, who like, makes bread. A-and one guy who like, l-looks out for other people's safety.
Stan: You mean like a baker and a cop?
Man 2: No no, can't you imagine a place where people live together and like, provide services for each other in exchange for their services?
Kyle: Yeah, it's called a town.
Driver: You kids just haven't been to college yet. But just you wait, this thing is about to get HUGE.
Another crypto currency in use today is Solana. That runs at around 50,000 tps, beating the higher end of today's credit processing networks.
[1]: https://utilli.com/2021/04/26/the-lightning-network-is-poise... [2]: https://www.kraken.com/en-us/learn/lightning-network
Says who? You've just ignored the trustless part of cryptocurrency, what are you left with?
I get the hypothetical of why [cryptocurrency of choice] could be useful, even if I don't subscribe to the idea of a trustless society functioning.
But if you sidestep the one thing it's laboriously designed for (trustless by PoW, or stake/other), why even bother?
I don't have to sidestep it forever and ever since I buy lunch via VisaBTC. And me buying lunch changes nothing about me receiving funds.
The only selling point of bitcoin was that everything was recorded and immutable, and thus volume was transparent. If all of these transactions happen outside of the blockchain (until later, maybe) you can fudge around with trading volume, and game the market, which exchanges have already done.
You are literally just describing banking as it has existed forever, but with less oversight.
I am describing banking without the issues of banks. No need to have a headache because my transaction from Iran to EU is lost somewhere in between without any traceability whatsoever, etc; no need to have a headache because the receiver didn't realize it'll cost them $100 to receive money internationally, etc; no need to think about the hardship of pulling my own money out of the bank while I'm not in my home country, etc...
Then there's smart contracts - show me a bank that supports it? Show me groups of banks (because not everyone has the same, right?) that support it among each other?
> all of these transactions
Again, that's your mistake. That most transactions happen off-chain doesn't mean all or the important ones do. And it also doesn't mean there aren't cross off-chain network transactions - e.g. VisaBTC to MCBTC needs a blockchain to happen in a trustless way. Trust is easy when it's Visa to MC but not so easy when it's EU to Iran banking system.
> You just trust the end result to be accurate
Hahahaha, good luck in Africa...
Doesn't matter if it's all, just that some can be. The issue is that the transaction ledger and the "currency" or asset is the same thing. That exchanges or Visa et al are implicitly trusted with out-of-blockchain transactions means that there's no longer a natural relationship with the finite number of BTC or the veracity of the blockchain. You have just started outsourcing trust again, which IMO is fine, but why the rodeo then.
Pick a lane, you can't have both. It's no longer trustless if you try to do both, at least not on the (speculated) asset value level.
I am going to prefer on-chain BTC transactions to make international business transactions in thousands of USD.
I don't need the full force of trustlessness to buy my lunch - the risk to me is that I get a free lunch. Yeah I could use a classic payment card - but then I'd have to keep shuffling my funds around and that's not fun.
No you don't. You have a speculative asset no longer bounded by the designed limit of BTCs, where banks, i mean exchanges, can create volume out of thin air outside of the ledger, as long as something is later cleared on-chain. Ergo, back to square one.
[1]: https://cointelegraph.com/bitcoin-for-beginners/what-is-the-...
Get off my lawn!
This ratio closely resembles what I hear about whenever I hear the term, and I actually have a cryptography function in my company's product. For regular people the ratio will be even more extreme.
I would prefer for it to mean cryptography, but this ship has sailed, and we have to accept it.
"Crypto" only means cryptography in technical circles. The average person speaking colloquial English does not know or need that abbreviation.
Whereas the average person buying cryptocurrency does need an abbreviation for cryptocurrency and since "crypto" is vacant for them the abbreviation is made.
Where do you think you are, dude?
Anyways, the definition of "reactionary" is to hold onto an outdated believe or assumption. Crypto means cryptocurrencies these days. I was just stating the obvious.
But even if I had, wouldn't you equally be a shill for having invested in companies that merely exist for the sake of cryptographic functionality? Do you think any FAANG would be able to exist without cryptography? Do you hold any kind of stock? Because if so, your incentives aren't likely more inspiring than mine.
So, let me just say, I'm not trying to weirdly argue with by saying you're right, and still the word can be overloaded. Idk language is weird.
Haha in 20 years maybe crypto will be abject failure and it'll become synonymous with pumping and dumping, like "pyramid" scheme, or maybe it'll be a huge success the likes of which no one has ever seen and will be used in that way in certain contexts.
Strategies range from ... fancy analytical methods finding intricate patterns in order to try to capitalize from inevitable regularities by magnifiying fluctuations on a short time scale and maximizing frequency ... to mining, staking ... to simply HODL. Not to mention the f*ery on top and in between trying to profit from common "strageties" by pumping, hyping, dumping, inducing FUD ... finally knighted by tweets of centibillionaires.
Every "currency" afaik (which is transparent of course) is a disaster in terms of wealth distribution. It is not a trivial issue to solve and some inequality is healthy and desirable but for me it still remains the big elephant in the room nearly everybody invested in the "crypto space" - understandbly so - glosses over some to the point of simply equating technologically decentralized = sociologically decentralized eg DeFi.
Another example to better illustrate my point: The game "monopoly" was meant to be educative and enlighting on the destructive centralizations at the beginning of the 20th century but the board game was enjoyed so much that its "purpose" is now a long forgotten remnant. I kind of feel the same when looking back at the original paper "A peer to peer electronic cash system" published in the wake of the "banking crisis". The game of betting on the right coin to attain "LAMBO" (the "Hotel" in Monopoly-Lingo) is enjoyed so much that it ends to be ironically - beside all honorable intentions - the driving force.
Do people suddenly believe they’ve gotten honest, even though nobody in the commercial paper market they are supposedly a big player in have heard of them?
- Changpeng Zhao of Binance
- Arthur Hayes of Bit mex
- Brian Armstrong of Coinbase