Cryptocurrency off-ramps, and the shift towards centralization
blog.mollywhite.net
blog.mollywhite.net
Ultimately, this a civic matter; as much as we want to ensure we have the right to encrypt our communications, to not disclose our passwords to police even when being prosecuted for a crime, as activists commonly insist on, so should we fight to maintain our existing rights to financial privacy.
To me the point of blockchain is to democratise access to financial technology. To other's, it's to create a currency that cannot be manipulated by central bank politics. Only to some people it's about privacy - i woupd be quite happy with a totally open and public financial system if it applies to all people equally.
No we don't. The dangers from allowing use of cryptocurrencies by criminals are far less than dangers to freedoms from corrupt totalitarian governments. When government can easily shut down your finances, you need some kind of way to defy it.
And if you think that your government will never do such thing, think again, harder. Citizens must have a leverage against abuse. With shrinking use of cash, cryptocurrencies allow people to evade a chokehold that can instantly smother them.
If you're in favor of e2ee messaging but not e2ee financial privacy, you're saying that you don't want people to do anything material with the e2ee messaging.
Edit: (HN throttling), reply to below comment.
I agree that there are niche use cases where crypto is bridging a gap for the disenfranchised (sex workers in this example) until policy catches up, but that it’s unsustainable to extrapolate that out as a call for wide adoption of crypto by the masses.
I think crypto has a bunch of other problems, but I consider (for example) sex workers being able to transact online an unalloyed good.
Blockchain won't save you from visit from a man with 5$ wrench, if you know what I mean.
Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
This is accurate however the following isn't necessarily accurate:
> Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
There are plenty of solid privacy chains based on well understood cryptography. On top of that it is becoming increasingly easy/viable for existing networks to integrate privacy preserving Tx into their networks. Ex: Litecoin (a long standing Bitcoin software fork) integrating privacy preserving Tx via the MimbleWimble protocol and Extension Blocks (together referred to as the MWEB hard fork).
Developments like the introduction of MWEB show that even if the government knows you or your Tx today, all you have to do is make an MWEB (or equivalent) transaction and all of a sudden that chain of visibility goes dark.
Additionally while it may be possible for the government or any organisation to forcibly extract access or knowledge from you with force, we as a society should not be content with making that easy. Prior to the introduction of the internet and digital society, organisations had to spend far more effort to collect far less (and far less reliable) information. We should be making every push to set that pre-digital information era as a baseline or absolute minimum for privacy standards.
There is a large middle-ground between a government respecting your ownership and a one stealing your funds using a wrench.
Wikileaks is the easy one here. While it may have some problems, I suspect most of the HN audience believes it should exist. The US government has successfully pressured payment providers to deny service to Wikileaks in the past, which has the potential to become an existential threat.
Cannabis businesses in the US are another example. Cannabis is legal under state law in a significant fraction of states (a majority for medical purposes), but illegal under federal law. The federal government is mostly unwilling to enforce the federal criminal law against businesses that are complying with state law, but it's quite willing to prohibit banks from providing service to cannabis businesses.
I think you have never come across real organised crime, we had a family friend murdered by one.
Think mexican drug cartels and the amount of damage they cause. Ofcourse they operated just fine before crypto existed.
Speaking of your family friend. Among my and my wife's extended families there are many victims of political purges. Deported, confiscated property, murdered, tortured, jailed for decades. State is a far more dangerous adversary then even the most violent criminal organisation .
Corruption is crime. Our ability to have a non-corrupt government depends in large part on the ability of our legal system to track the movement of money and detect corrruption. If you want to create an unstoppable superhighway to absolute government corruption, untraceable currency with perfect privacy is a wonderful way to do it.
People think privacy means "they'll never know I had that porn subscription or bought those legal recreational drugs." But the reality is more likely "they'll never know I took that bribe to deny that permit to that company's competitor."
But you know, you are not anonymous on Blockchain, you're only pseudonymous. If someone correlate your pseudonym with your real identity, they will know your entire financial history (on Blockchain).
I can't blame people for losing interest / calling bullshit on crypto before spending hours diving into the details of L2, derivative wallets and multi-sig etc etc, details that ameliorate the skepticism. Also these things change over time, so maybe Lightning was unconvincing 3 years ago and skeptics just haven't given it a second look. (This is me, but I'm slowly being convinced that L2 really does make this stuff practical, but for a long time the transaction-per-second and unrecoverability of lost keys made the whole field very uninteresting)
It appears there are solutions available to a lot of concerns, but they require substantial knowledge of the ecosystem to use them and getting it wrong is permanent.
The account model: These networks have accounts and balances. You make a tx sending tokens from one account to another. It looks like normal banking more or less.
The UTxO model: These networks don't have accounts at all. Instead they have what are called "Unspent Transaction Outputs" or UTxO. Every transaction takes in a set of UTxO and outputs a set of UTxO. All the balances of assets in the inputs must sum up to the same values as the assets in the newly created UTxO and you can only ever spend a UTxO once. To spend a given UTxO some criteria must be met. The most often criteria is some signature that only validates with the public key of the private key being used to sign the Tx. This also can be generalised to other multi-signature schemes or even to supporting smart contracts (via policy ids and script refs/hashes).
Ethereum really was the network to push the account model into the forefront and now most networks choose to implement this over the UTxO model due to the ease with which you can get good UX and dev experience. Bitcoin, Bitcoin forks (SW or chain forks), Monero, Cardano, Ergo, Nervos, IOTA 2.0, and a few others use the UTxO model or some extension of it (ex: EUTxO or the Cell Model). One of the big upsides of the UTxO model is that all state is kept local instead of global however this local state also adds a number of complexities that make the model unintuitive to many.
------
So to answer your question: You'd create a Tx from your wallet. This Tx would consume some set of UTxO based on what you want to do and would then produce a number of UTxO going to any number of "accounts". In many UTxO networks, derivative keys are supported and you can give each person you want to receive money from a different derivative public key/address. If they were to send you money, it would go to your derivative address and it would be completely independent from all the rest of your UTxO until you do something on chain to tie them together (say by a delegation Tx in a PoS network, by merging UTxO, or by using UTxO from multiple derivative addresses in one Tx).
As for how you'd that the UTxO is valid: Essentially it just needs to exist on chain and not already been spent somewhere else. Monero for example uses this to their advantage with the "sum to 0" rule to provide a zero knowledge non-interactive proof that a given Tx must be valid without knowing the contents, sender, or recipients.
There have been a few instances of specific payment patterns causing de-anonymization (which just means payments are correlated and identified as not-spoof, due to the way the Monero blockchain works). But to be honest if you think Monero in general can be broken you probably don’t know how it works well enough to make that statement.
One of the big concerns here is retroactivity: if you make decisions because you _think_ you’re anonymous but that changes for any reason in the future (compromised exchanges, insecure clients, sophisticated new analysis techniques, etc.) you can’t pull that history. That necessitates more caution than something where the stakes are lower if an attacker finds something clever to try.
I realize that things get leaked from centralized services, but there's a barrier to seeing that info. You put yourself at legal risk if you download one of those leaks and get caught. But there's no such risk with a public blockchain since the data was intended to be received by anyone who wants it.
Credit and Debit processors likewise directly log everything and sell it to marketing agencies to target you in detail.
If your reason to not use crypto-assets is that they are not private enough then you certainly should not use cash or credit cards either.
Even if it’s true that banks log serial numbers pervasively - most public sources say the opposite, except for things like money given to robbers - the many businesses which accept cash do not. Again, not perfect but the threat model is much easier for most people to reason about.
You would trust cash from your bank before Monero because some public sources you read promises banks never log serials?
I do not know what public sources you have read but FWIIW my interactions with financial fraud investigators in private sector and multiple government agencies have convinced me cash transactions and those that make them can be logged in great detail for people of interest if nothing else.
While complex I would recommend Monero or tumbled Bitcoin for people that require high privacy over anything else today. It also avoids the major risks of having to meet in person to transact as with cash.
That’s the key part: this is very different than all activity being routinely logged. Most of us never need to worry about this and someone in a hypothetical situation like you describe is presumably not a person of interest until afterwards, where that public blockchain history is a risk for the rest of their life.
Similarly:
> It also avoids the major risks of having to meet in person to transact as with cash.
This wouldn’t matter in your hypothetical scenario where physical goods need to be exchanged.
Again, my point is that this comes down to the marketing push. Even if the system works as planned, the number of people who made other opsec mistakes is high enough that in practice cash is not less safe.
I guess the assumption here is that retailers and the like would be compelled to provide that info to the government, but I'd still prefer that over the info going to absolutely anyone who wants it (since "the government" is a subset of "anyone").
I suppose I wouldn't know how much that data is worth unless I do have a crack for it, so I guess the point is moot :P
[1] https://www.nbcnews.com/politics/justice-department/two-arre...
It isn’t a right.
> (1) Everyone has the right to own property alone as well as in association with others. (2) No one shall be arbitrarily deprived of his or her property.
This right has a history of controversy and various interpretations.
1. Assume the right to private property.
2. Acknowledge that some property is not just a tangible object, but can include a configuration of objects. An existing example of configuration of objects as property is crypto currency as private property or database records reflecting you bank account as private property.
3. Acknowledge that property ownership represents the exclusivity of possession.
4. By 2 and 3 the ownership of intangible property is the exclusive possession of a configuration of objects.
5. Acknowledge that the configuration of objects is isomorphic to information
6. Acknowledge that communication is the transmission of information
7. By 4, 5, and 6, Private communications is the exclusive ownership of the transmission of information.
> Acknowledge that some property is not just a tangible object, but can include a configuration of objects.
While there is a configuration that constitutes:
> database records reflecting you bank account as private property.
it's in the owner's interest that those records are as widespread as possible, lest someone challenges the ownership of the property they describe. If they are widespread, they are not exclusive, and therefore are not owned (even if there might be a right to demand the existence and accuracy of the records).
That doesn't add up even assuming that pure ideas can be property at all.
You could make a case for private communication extending from copyright, but that's not what the parent claimed.
> The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
(There was a concern around the Bill of Rights, that by specifically listing out some rights it would create the belief they were the only rights; the Ninth Amendment was the compromise.)
The Universal Declaration of Human Rights
https://www.un.org/en/about-us/universal-declaration-of-huma...
> Every child has the right to privacy. The law must protect children’s privacy, family, home, communications and reputation (or good name) from any attack.
Convention on the Rights of the Child: The children’s version
https://www.unicef.org/child-rights-convention/convention-te...
> The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The Fourth Amendment
Yet... no one anywhere is trying to track that price discrepancy? This seems like it would be an important bit of data!
Let me just ask everyone what they got after laundering their dirty ETH. I am sure they will answer truthfully.
The weth ("wrapped eth") contract accepts eth and returns a token. Lots of different people deposit eth in the weth contract. Later, they can call the withdraw function, and the weth contract will decrement their balance and send them some eth. This is a legitimate contract that exists so people can use eth in contracts that only support tokens. Lots of people use it for legitimate purposes. All the eth in the contract is held in a single bucket; when eth is deposited then the amount is just added to the contract's account balance.
A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
And here is an auto-generated interface for it: https://etherscan.io/token/0xc02aaa39b223fe8d0a0e5c4f27ead90...
You can see that the code is very short and simple, and there are no special admin functions at all, nothing implementing the sort of whitelisting required to allow KYC. (The Approve function is a standard token function, used by token holders to permit contracts to spend out of their account, up to a specified amount.)
It was very cheap for someone to build and deploy this, and to use it you only pay gas fees. If there were someone checking KYC for every new user, then they would have to charge user fees, and there'd probably be delays getting started. Someone else would deploy the simple version and people would use that instead.
> A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
There's no definite answer to that question. I really can't explain it any better than that, so please give that scenario some thought. If, in the process, you come up with technical questions about exactly how the contract works, I can answer them.
Broadly: if what you think is true is true, then WETH is a trivial evasion of money laundering statutes, in a way that no one has figured out how to exploit. People are smarter than that. Please don't use this to launder, assuming it's anonymous, you'll end up in jail.
I was responding to your specific point above, that some ETH would be "dirty" and some "clean," and potentially have different values. Because of this sort of inadvertent mixing due to ETH being account-based and fungible, this is not really a possibility.
Dollars of course are the same way: account-based, fungible, all worth the same.
Barring further regulations I think the peak financial repression era has already passed. The worst time was probably 2018 - local peak in crypto interest bringing in heat, but no dexes with any liquidity. Since then it's only getting better - now anyone can hold millions of dollars anonymously and transfer them to anyone in the world, dexes are so liquid there are no reasons to use spot cexes except to cash out, several debit card solutions that can be loaded with crypto and stablecoins. Laundering money from crypto is the easiest it was since probably 2013 when no one cared at all - manufacture fake profits on tokens/nft held in clean wallets.
Without new laws, the situation is only getting better. Exchanges already demand very heavy kyc/aml, so the only thing that would reverse the trend would be making anonymous defi a crime for the users. I think it's unlikely at this point.
I mean, I've seen that happening at an increasing rate since 2013 (the first time I bought a drink at a bar with crypto). Today, there are several monthly services that I pay for with crypto. It's not for everyone of course, but there is a virtual world where crypto is the preferred or only currency. Over time, that world and the real world will converge.
We can already see that starting to happen with China's national crypto currency. As more exchanges support that currency, it will bring this convergence full circle, at least for part of the world. The rest will follow in time.
There sure is.
Crypto doesn't displace trust --- it misplaces it.
Instead of trusting the regulated banking system, you end up trusting unregulated "exchanges" --- where fraud is not even illegal.
Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions.
Yet the exchanges maintain the $1 peg for USDT.
That's the point of proof of work: longest chain wins.
Yes in a netsplit you can spend on both chains, but you would need access to both chains to do so. And you don't even ever have to merge them again, there could just be AmericanBTC and RussianBTC from here on out.
This I took as a sign that the end is near.
Not the case today, but things shift over time.
They will most likely just collude and attempt a simultaneous "rug pull" on the entire crypto market once the SEC announces plans to audit "stablecoins".
Trillions in "crypto wealth" will just evaporate into the electronic ether from whence it came
No government auditor took out Madoff, nobody wanted to touch it, because he was so popular and his clients were influential, and anyone investigating him would be sticking their neck out. That's the kind of risk that if you don't get it perfectly right destroys career and even if you're right you may get blamed and destroyed anyway for pressing the button.
Much easier politically to mop up after it all collapses.
Same thing here since if the SEC pops Tether then now you'll trigger automatic lawsuits from Tesla investors, and there's too many billionaires that are still true believers who have enormous influence over the government and will cause them to be overly cautious.
Anything that is not truthfully fully backed by assets outside of crypto land will almost certainly be affected.
Tether is just a temp variable for trading.
But, if Tether goes down it will be bad news but not enough to destroy the whole market. USDC is gaining ground pretty rapidly.
Now I’m no CoinBase apologist, they’re accused of stuff that would make Dutsche blush, but USDC is a completely different animal than Tether. I won’t take payment someone’s share of dinner in USDT or ETH for that matter, I will happily hold USDC for short periods of time.
Because of volatility, or something else?
The concrete reason is that I'm not (nor interested in being) a currency speculator, and so I do all my currency speculation in the form of being at least somewhat long the one currency I understand reasonably well, which is `USD`.
Basically, you're just trusting Coinbase.
I'd rather trust a publicly-traded company in the United States which has serious accountants certifying the validity of their books and plenty of assets subject to seizure in the the same jurisdiction I live in than some guys who at least one state has already decided don't have the money.
I'm working on my HN etiquette but it's been a long week. If I act a like a fucking smartass, call me on it, and I'll return the favor. Don't be a smartass.
Agreed! But I'd propose refraining from just making stuff up off the top of your head that is demonstratedly wrong on every level. Don't be an idiot.
What part of "I'd much prefer to hold USDC than USDT personally because I think not all accountants are Arthur Anderson-level criminals" are you objecting to exactly?
Use your words.
But everyone who didn’t just fall off a truck knows Tether is capitalized at maybe 30%, and there’s a lot of mediocre commercial paper in the assets it does hold.
USDC and Tether are completely different asset classes.
USDT is casino chips you have to buy to play the low-cap alt-coin slot machine. USDC has a de facto address within reach of the FBI.
What does this mean?
If USDT fails and goes to 0, people will lose their money, and probably no government will be able to go after the creators of USDT (Bitfinex?) and their "collateral".
If USDC fails, the US government can actually make Coinbase responsible. And that's a public company with a 51B USD market cap. As a holder of USDC, you could reasonably expect to see some money back.
Maybe, maybe not. USDC is not legal tender. Coinbase could easily argue it is nothing but monopoly money with a value of $0USD.
But the point is that the USDT people are already some combination of accused/investigated-for/sanctioned-for misrepresenting the amount and quality of the collateral, seem to have very little to lose by doubling down and to many (most?) people look like a worse credit risk than CoinBase.
Not being an accountant I rely a lot on inside baseball, but I know some whales and I’ve never heard Tether described as credibly backed.
See in particular this comment from a user who claims to be a former auditor: https://news.ycombinator.com/item?id=27532670
Thank you for pointing me to it.
The key item here is "attestation report". What does this mean?
It means those issuing the report have no reason to doubt what they are being told/given. They haven't actually verified/audited anything.
Tether paid someone to issue some of these as well.
This has been tried. We've tried pegging currencies. We had the Bretton-Woods system. We've had currencies that were partially or fully backed by hard assets (most notably gold). For the record, since this seems to come up so often, the US dollar was never 100% backed by gold. Not once. Ever. Fiat currencies exist for a reason. Central banks and managing money supplies exist for a reason.
Ultimately a stablecoin is a form of price control between two assets. And just like any other price control, its ability to maintain that peg only go so far as how much money someone has to fight against the market forces driving those prices apart.
Just like all other non-bank fintech companies (like Paypal, Square, etc.), US crypto exchanges are regulated by FinCEN, the Bank Secrecy Act, and the Patriot Act, and are obviously legally liable if they try to commit fraud. Most other countries have similar money servicing legislation, and even if they didn't, fraud is still illegal in all but the least legally responsive jurisdictions. Committing fraud doesn't suddenly become legal just because your company is classed as a crypto exchange.
Now, just like there will always be a poorly regulated bank somewhere in the world, there will always be a poorly regulated crypto exchange somewhere in the world.
> Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions. > > Yet the exchanges maintain the $1 peg for USDT.
USDT is a Bitfinex product. If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning. Most likely, the USDT fraud will collapse at some point, and the rest of the exchanges besides Bitfinex, along with the rest of the crypto market, will go on business as usual after a short market scare.
Yes, it does. Crypto isn't a regulated market. As long as the scam stays inside crypto land, it is totally legal. As far as the SEC and CFTC are concerned, you're playing a game with Monopoly money.
Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
https://www.cftc.gov/PressRoom/PressReleases/7697-18
If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning.
The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
That's your opinion. I would be more interested in the opinion of a judge. If you can demonstrate that monopoly money has some kind of market value, and someone else steals it from you, then that's a crime. There is no legal precedent set that fraud is okay as long as it involves cryptocurrency.
> Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
The CFTC is a mess, so just because they aren't successfully helping prosecute a specific case doesn't mean everything that was done was legal.
> The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Also, I find your "even you" comment to be a strange personal attack. Are you trying to say that I'm stupid?
The fact that crypto is unregulated is not just my opinion --- and I think you know that --- or at least you should.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Pure speculation and misplaced trust on your part. The truth is you really have no way to *know* what the exchanges do to set the "market value" of USDT.
Are you trying to say that I'm stupid?
No, I'm referring to the fact that you called Tether a fraud --- "the USDT fraud will collapse at some point" --- your words, not mine.
Unless you think exchanges are somehow misrepresenting the trades occuring or the state of their order books, but I think this fraud would be difficult to maintain for this long on any exchange that actually supports withdrawal. If you have evidence of exchange manipulation I'd be interested to read it.
How did you verify this?
Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules?
I think this fraud would be difficult to maintain ...
I think it would be incredibly easy to maintain --- simply because no one ever audits their books. The crypto market is *unregulated*.
Coinbase does not trade what are currently considered securities by law, so its trading operations are not subject to SEC oversight. However, Coinbase has gone through the SEC listing process for its common stock.
https://www.sec.gov/Archives/edgar/data/1679788/000162828021...
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
"We undergo regular financial and security audits by external firms. SOC 1 Type II, SOC 2 Type II."
If the majority are colluding to game the price of USDT, Coinbase will be forced to either go along or not trade in Tether. And since Tether is used in more than half of all crypto trades, refusing the Tether fraud would place them at a serious disadvantage.
As I tried to explain above, with control of a majority of the Tether trading volume, *you* could pretty much set the price any way you want. Anyone else who wants to participate and trade would have little choice but to follow your lead.
In addition, let's assume you have access to unlimited funds (by simply minting more Tethers) and *you* would have everything you need in place to control the "market price" and commit Tether fraud on a massive scale.
In other words, *you* would be just like the current crypto marketplace.
Honest exchanges could let individuals trade it among themselves using an order book at no particular price, which is what they do. I wouldn't call that following a lead.
The NYSE can't fabricate stocks they are a market maker for. Not legally anyway.
Because mechanically this is how an exchange order book works. Go to any exchange to place a trade and you will see this.
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
Publishing an order book and the resulting trades is the entire point of an exchange. The whole purpose is to provide a venue where buyers submit bids and sellers submit asks that are advertised to each other. When they happen to agree on price a trade automatically occur.
If I go on an exchange and I can see in the order book that there are only 1000 USDT available for $1.00, and the next 1000 USDT are only available for $1.01, and I submit a buy order for 2000, I will break the "peg." However, since the majority of market participants will disagree with me, they will almost certainly quickly submit new orders willing to sell USDT for $1.00 again and the "peg" will be restored.
The "peg" terminology comes from currency markets like USD <-> RMB where China sets the price by law and there is no order book price discovery at all.
This isn't to say it's impossible for exchanges to engage in shenanigans. They can generate wash sales at no cost. But if they see you're going to break the peg, so they magically insert 1000 more USDT available for $1.00, and they support withdrawals, they are going to have to give you that money in which case the exchange has just made itself as regular seller and can only keep it up for as long as it is willing to set money on fire. And before you suggest they have unlimited USDT and so don't care, remember it goes both directions. You could also be a seller of USDT looking to find a buyer paying you in USD. For the "peg" to function the price needs to stay the same both ways.
And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this:
Any offer to sell USDT for less than $1USD, the exchange itself buys it under whatever name they choose and then immediately lists it for sale at --- you guessed it $1USD.
Any order to sell USDT for more than $1USD just sits there unexecuted until a suitable idiot is found or the order is cancelled.
Meanwhile, any offer to buy/sell USDT at $1USD gets executed almost immediately.
You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this.
You know what happens when you ass-u-me too much, right?
As I mentioned in the other comment thread, Coinbase and Kraken trade USDT, are highly regulated under US law, and are audited regularly. Gemini is also highly regulated under US law and audited regularly, though they don't trade USDT. I don't know where you're getting this idea that most exchanges are unregulated and never audited, or that it even matters as long as the particular exchange you are using is regulated and audited.
It would be really hard for me to believe that both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value as determined by their order books.
They may not be a party to any collusion. They may simply be powerless to prevent or affect it in any material way.
As the crypto market stands, the largest exchange in the world has access to unlimited crypto funds simply by minting more Tethers. At the same time, their trading volume alone gives them significant price influence over these same Tethers.
If they collude with enough other exchanges to control a substantial majority of the Tether market volume, any outlier exchanges (like Coinbase and Kraken) would just be along for the ride.
There's no trust or blind faith here, just knowledge of how order books and exchanges actually work.
Not true! In crypto land, they have unlimited funds --- just mint more Tethers --- which they have done repeatedly.
That’s a hardcore misunderstanding of the technology! It makes transparent what until now has been very opaque.
As an example, what does your crypto "technology" say about Tether? Is it fully backed or blatant fraud? Please show the technology that provides a definitive "transparent" answer.
(Edit: to be clear, this isn't a rosy situation: it's usually a adjacent to fraud, so the SEC, CFTC, etc. pursue criminal charges; and other clearing members tend to sue the bankrupt one, letting the courts figure it out.)
A lot of people don’t understand that when you deposit to say, Coinbase, they are looking at the COMPLETE history of your wallet back to genesis. If there’s anything they don’t like your funds are toast.
Now, I'm sure there's a place for a reasoned discussion about the breadth of laundering regulation and how it might be improved. But your position seems to be an absolutist one (that AML simply can't be allowed in crypto), and it's not clear to me if you realize that.
Nah, they're definitely in the business of regulatory capture. But they have to be. If they don't capture the regulators, someone else will.
They want "Distributed Code is Law" AND "Openseas validates NFTs"
If you have a functional governance system, you can implement some form of vetocratic de-listing mechanism. It doesn't have to stop the de-listed item from trading but it is a mechanism for a community to collectively decide what is and what isn't a scam/forgery/theft/etc. This same system generalises to a central source of trust for a given network, service, or protocol where the control is decentralised.
Now this falls back to the first condition which is to have a functional governance system. Any failure in the governance system is now a failure in your system for deriving trust.
Can it be done? Yes. Has it been done properly yet or even really been done at all? No not really.
This isn't to say that it's impossible but we aren't there yet by any stretch of the imagination.
The receiver of a LN transaction does not know anything about the sent coins.
Are any exchanges accepting payments via the LN? I so, the issue is solved, no?
And the magic internet points are bitcoin-equivelants, settled in bitcoin, seems pretty bitcoiny to me.
And here are some traditional ones: https://github.com/theDavidCoen/LightningExchanges
you're not supposed to do that!
Now does that mean you should buy bitcoin cause your savings will 10, 100, 1000x? Not necessarily, it could be replaced, and also go sideways or down but I'd be surprised at this point if there's no crypto-economy in 50 years.
> - https://www.bitrefill.com/
Buying gift cards is the same as cashing out but worse in every way. Pre-converting to a limited-use intermediate currency and then spending that intermediate currency isn't the same as spending bitcoin.
I notice that their "stake" requirements are listed in USD, not CRO, and that this runs through both Visa and Metropolitan Commercial Bank to do centralized back-end conversions into and out of their bespoke coin. It sounds a lot like the blockchain aspect adds literally nothing to the equation and is just there to ride the buzzword FOMO zeitgeist.
Same as ^ but with a different centralized backend bank and a different bespoke coin that adds literally nothing to the equation.
- goes down with AWS
- uses mongodb
- money disappeared
- people don't understand it and don't use it
- fees are subsidized
- ...
It's ultimately only used for 5 % of the international transfers AND more expensive currency to currency wise.
( I have a more complete write-up with links somewhere in my comments, if you want them)
Also this doesn’t really apply unless you use the custodial wallet. McDonalds isn’t, and you don’t have to either. If you self custody you’ll be fine.
That i wouldn't want to use it if i lived there. It has no benefits, only disadvantages.
> Bitcoin does not have any place as a real currency
The separation of money and state will bring us better stability, less war, eliminate people like Chavez and Putin from the world, etc etc etc.
Where does money come from according to you?
Through issuing bonds, and then inflating the money supply so as to dilute the amount to pay back.
What are you saying? It is not widely used enough for day-to-day transactions?
So the way around that would be to further obfuscate and layer.
This is not my opinion.
My opinion is that no matter how many people and companies become excited about accepting and using crypto as a method of payment, all of them need to pay some form of tax at some point, and I'm not sure I see a reason why typical governments and / or central banks would be as enthusiastic about relinquishing their sovereignty on their own currency. I imagine that this tax will most likely need to be paid in the currency which is controlled by the government or its central bank, and this is where the off-ramp problem can no longer be avoided.
I really cannot shake off the idea that cryptocurrency has just created high-tech casino chips that are not attached to any particular casino, and I'm not completely sure what problem this really solves in practice. At the end of the day, I stay away from crypto because I fully admit that I do not understand crypto: not from a technical perspective (which IMO is not that important), but from a macro-social perspective (which IMO is the most important).
The common denominator in the examples in the article is that the crypto system at some point has to at some point interface with the Real World and that's where it all falls apart.
There's an example of a woman whose bank won't process the transaction. Just because it's crypto doesn't mean you can escape KYC/AML laws.
Another example was the person whose crypto was tainted by going through the same service used to launder ill-gotten gains, which even assumes their story is true (eg their Bitcoins may well have been ill-gotten).
NFTs are the same. I could buy an artwork but something outside of that system is required to show it's "authentic". I mean I could save the same image to my hard drive (possibly modifying a pixel) and then create a new NFT and what's really to distinguish it from the original? If there is no original NFT, how will a potential buye revaluate the artist actually issued the token?
I've yet to see an actual problem crypto solves other than avoiding laws. It's the biggest solution looking for a problem I've ever seen.
You can 'mint' the same image or hash or URL as new NFTs, forever.
They're taking the old confidence scam of "This is the original copy of something that other people are gonna want! (with no intrinsic value)" and tech-washing it to claim that the blockchain enforces originality. It doesn't, it's still all up to humans to say "This is the oldest copy of all the copies."
People keep saying "But it might be good for concert tickets!" I'm sick of hearing that. Don't carry water for a scam based on some what-aboutism that hasn't even been implemented. Concert tickets are working fine and TicketMaster would be dead if someone didn't like the way they did things. The venue still has to honor the ticket, so NFTs are still a middle-man, just dumber.
You're saying like that is not a huge deal. Central banks will hold Bitcoin in the future, it's inevitable.
(Btw, I doubt a country would want to hold something as volatile as bitcoin since the whole point of national currency reserves is to be a stable source of value. Bitcoin is basically the opposite of that)
It's the only one immune to Russia/USA/China intervention.
> I doubt a country would want to hold something as volatile as bitcoin
Research why it's so volatile.
As for the ever-popular "research more" response, everything I ever read about it is that the whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators. In any case, even if there would be a valid reason for the volatility that still makes it unsuitable as a reserve currency. The whole point of a reserve currency is to be stable and bitcoin is anything but.
Cold storage hold %
diversity of holders
My only suggestion for those who seek stability is the typical one: diversify.
It does have one: it's the only cryptocurrency where everyone's vote counts regardless of how much they have, even zero-balance wallets as long as they are online, they have an equal stake on the network as anyone else.
I will concede that when Ethereum has Proof of Stake, which would make it cheap in terms of electricity to run, and can distribute power in an equal manner, will be a big contender for Bitcoin as store of value, and even then as a currency but they gotta fix theyr chokehold problems.
This is why Ethereum is the 2nd biggest, because this is priced in.
Some people say PoS will centralize power, but who knows so everyone buy just in case they do it right.
Value goes up.
Because if they do it right, they could replace Bitcoin.
Bitcoin is the only one that gives you, today, equal voice just like anyone else.
> whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators.
Yes! Because cryptocurrencies has brought MILLIONS of people worldwide into trading.
Whereas they couldn't do anything like that before, Americans are lucky they get easy access to the US stock exchange, in most other countries trading is just not a profitable position.
Cryptocurrencies allowed these million of people to actually be traders in a sizeable market: Almost $1 trillion as of now, that's biggest than a lot of GDPs, for example Colombia's GDP is less than $271b, US's GDP is $21t for comparison.
You get a lot of newbies and beginner traders that use leverage and stuff like this happens.
Doesn't need to be centralized because it's totally transparent (with some caveats, will improve in the future).
> The whole point of a reserve currency is to be stable and bitcoin is anything but.
Some say when you look at its fundamentals (Market Cap, Volume) and its properties (non-printable, fixed cap) you can deduce it will not go down in the long-term, it will only go up.
Whether this is factually accurate I don't know, Economics is hard.
Unless they banned it, and they could, that's a whole other can of worms but it might push 1st world capital into the likes of Russia etc. El Salvador does its thing because it wants to attract this capital.
There's lots of people that LOVE saving in Bitcoin, even if you don't "get it", this is what some people like, they like saving in crypto, and that's a sizable market for buy/sell pairing (aka trading).
I don't think that's what bitcoin is for, it's a bit like saying a speaker is great because is makes a great footrest
What world do you live in?
All regulators are increasing regulation and oversight on crypto, whether it's the western world, China or Russia.
The only ones happy with it seem to be El Salvador and some crypto lobbyists