FTX is a centralised exchange, it is not routing all customer trades on chain. It’s not a blockchain failure, it’s just a lack of client asset segregation by a traditional centralised trading house.
There are always deposits and wihdrawals, and of course maybe you traded your tokens for another before withdrawing. So its hard to parse how much customers deposited vs genuinely withdrew, and so you cant really tell if the exchange is short unless they declare their actual assets and liabilities.
> Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.
This quote is complety antithetical to everything crypto is actually trying to achieve; which is a trustless financial system, a system that would be void of these sorts of melt downs.
Don't trust; verify.
While everything is dumping, RAI goes up.
Disclaimer: I don't usually drop comments like this that don't contribute to anything, but... lmao wow.
These centralized exchanges are an inevitability and a requirement for crypto to function in the real world. You can't run a ponzi scheme without fresh blood, nor can you pump and dump shitcoins unless normal people can easily and quickly trade them.
(but yeah it’s wild)
It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US. There is no reason at all that rogue financial institutions should be allowed to transact with American-regulated banks. If you want to do business in the finance sector with Americans you need to be regulated. Any argument to the contrary is very clearly contradicted by the series of crypto, defi, etc. failures in which gullible Americans lost tons of money while institutions they trusted violated common sense rules that every traditional financial institution in the US must abide by.
If you want to have freedom from this kind of regulation, you have to live in a world where these kinds of failures and frauds don't happen. Clearly they happen over and over without competent government watching them.
"The #LightningNetwork has a theoretical throughput of 40 million #TPS... Lightning enables #Bitcoin to be a planetary scale decentralized medium of exchange."
https://twitter.com/Excellion/status/1456088664132440069?cxt...
Ostensibly this has already been the case. You can't even properly access ftx.com in the US. It just redirects you to the US exchange. FTX US is a distinct company from the international FTX exchange, at least according to Axios. If you still manage to get to ftx.com it gives you a banner saying its read-only, you aren't allowed to use it, and they wont let you.
FTX US is still allowing withdrawals at the moment, unlike FTX proper.
I wonder if Sam being the 2nd biggest funder of Democrats has anything to due with this...
If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period.
FTX is a centralized entity that custodies funds. It has nothing to do with a blockchain, which could have completely prevented this.
There are many examples of decentralized exchanges (DEXs) for which it is mathematically impossible to loan out depositor's funds without their consent, because the only person capable of signing a transaction to move the funds is the depositor themself.
Right up to the moment you lose your laptop in a fire, forget the password to your wallet, accidentally run malware on your personal computer, etc. Or if you die and haven't gone through the complication of setting up a way for your heirs to gain control of your accounts.
Yes, you can take steps to mitigate these risks. Those steps are absolutely insane from the POV of everyday human beings.
But blaming blockchain for the failures of centralized finance, which we've seen time and time again throughout all of history, is literally intentional deception.
If a politician or lawmaker or business person blames blockchain for this, it is FRAUD. Full stop.
Better to be sure and write the account password in the will.
Who has this policy? The blockchain??
I’m not interested in goalkeeping both sides of the convenience-security spectrum. Bury your keys in a tin can if you want, or custody at an insured exchange if that’s your preference. I think installing say Rainbow Wallet is a fine choice.
This is completely and utterly irrelevant and has not stopped anyone from performing massive fraud. Just look at the long history of crypto scams. They still happened constantly despite blockchains having that feature. It's just impossible for a blockchain to prevent these frauds. It doesn't matter if you still have all your coins if the value of that coin drops to zero after it's revealed the whole market for that coin is fraudulent, which is exactly what happened this week! And multiple times earlier this year, and multiple times before that! It doesn't matter if it's stored on a DEX either, when you're still stuck with a worthless coin that no one will trade you for! How many shitcoins need to collapse before this is understood? Blockchains do not and will never solve this problem because they create the problem, by design, by allowing anyone to manipulate and dump tokens anywhere they want with no regard for what's fraudulent and what isn't. On a DEX you can't even know if the person on the other end is a real person or not without going outside the chain. I can't believe I'm still talking about this after the long, long string of fraud that's happened over the last 12 years. FTX is not the problem, they are the symptom. The problem is blockchains. They're intentionally built to enable fraud. They have no other purpose, and they aren't even particularly good at that because they stop working when everyone notices the fraud.
I should also mention, your statement isn't even correct! There's a very easy way to get someone else to move their coins for you: threaten them. That's the entire principle that ransomware is built on. It's real easy for criminals and the police and anyone else using the threat of force to get people to give up their coins, blockchains don't prevent that and it's impossible for them to do so because they can't affect anything that happens in the real world outside the chain. I really can't understate this. Blockchains are a fraud. Every claimed authority or security provided by a blockchain is trivially defeated by just routing around it or by gaming the market, which is ridiculously easy for anyone with some cash to throw around because there are no real rules or safeguards. They're probably the worst "invention" that's come out of the tech sector in the last 15 years. I really hope this crash is the end for crypto.
why does it matter if the counterparty is a human?
You can read the first 1-2 sentences of each paragraph and get a sense for the main points.
Did someone pay you to come here and write these things?
Are you a lawyer?
Are you a crook?
> This is completely and utterly irrelevant and has not stopped anyone from performing massive fraud.
So is fiat currency.
> Remember Mt Gox? [...] It's viewed as a feature that everyone just loses their money sometimes [...] From speaking to them, they view any kind of fraud prevention as an affront to their definition of "economic freedom"
I found these observations to be helpful reminders how things are (and used to be!). A blockchain isn't designed to indemnify you if you hop on/off the blockchain.
No visibility leads to no accountability.
I argue this is what they wanted out of blockchains. I remember all the rumblings in the days of Silk Road and Mt Gox. The enthusiasts that are responsible for propagating this system into today wanted it to be a wild west where anything goes. They said all the same things back then. I heard people saying it was good that Mt Gox got hacked because it meant all the scammers got what they deserved and they learned their lesson. Well, they didn't! It continued to be a wild west and more scammers just showed up. They'll keep scamming and they won't stop as long as they can make money from it. I don't know why crypto people are so reluctant to acknowledge this. Scammers seek out anywhere they can latch onto and they don't leave until forcibly removed. If a malicious person finds a risk-free way to get free money from unsuspecting victims, with no downsides, why would they ever want to stop?
Visibility or accountability of what? Many blockchains are public.
I find you not only misinformed but possibly intentionally trying to mislead people.
"The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it."
- Paul Kedrosky
I don't know how you ask these questions if you read the parent's post.
Clearly, the parent lays out situations where going off/on blockchain dilutes visibility.
The cross-collateralization of FTX assets wasn't on blockchain.
"No blockchain can ever guarantee there's any visibility or accountability."
Ever? Any? Clearly this sentence is false. It takes only one counterexample to prove it.
Here's the counterexample. If someday all the world's money are on a single blockchain and there are no banks, the blockchain guarantees visibility and possibly accountability.
Do you see the meaning of ever now?
Please don't be gratuitously negative. It's to your benefit to be precise. You sell yourself short when you cut off possibilities.
Fine. Let's agree to two premises:
1. all the world's money are on a single blockchain
2. there are no banks
Your conclusion, doesn't necessarily follow!
The problem is I can still contract rights to the blockchain outside of the blockchain, e.g. where on the blockchain did it track FTX's cross collateralization? That's not visible unless I express my right somewhere in the public record.
This scenario (and others) underly the broad point made by the parent.
As far your ad hominem on negativity, I have no idea what you're referring to.
This. Brand new account spreading blatant lies.
The way I find the OP isn't a blatant lie. It's the truth: how I find the OP.
Now I'm wondering about you.
DeFi
Is there a coin that distinguishes agent and owner? Seems like you want trustless agency if you're pursuing trustless finance.
>The value of the tokens is completely and totally dependent on a consensus of crypto miners doing their job within the parameters of the system, assuming you want them to maintain a price and trading volume that's favorable to the token holders.
Number of miners has absolutely nothing to do with trading volumes, not sure where you got that from. Miners don't maintain a price any more than a whale maintains a price.
>If the majority of miners suddenly go bust due to outside circumstances
The rest of the miners would step in and start making more money, actually.
>they decide to conspire together and attack the system, or conspire with some whales to perform a rug pull
Not much of a rug pull to sell the tokens you've legitimately acquired through mining or fiat buying. That's just selling. High volatility selling, yes, but still just selling.
>it's extremely likely that your tokens aren't going to be worth anything anymore. This applies to every token, including bitcoin.
Oh yes, Bitcoin has died thousands of times. Maybe you'll be right one day, but I doubt it.
Avoid this style of comment, please.
>Miners don't maintain a price any more than a whale maintains a price.
Yes, my point is both of them have a means and incentive to manipulate the price in ways that may not be favorable to the trader.
>The rest of the miners would step in and start making more money, actually.
Yes, at the cost of removing some of the security of the system. They can only maintain security if they have immediate access to more hash power which they probably don't. In that moment because of the sudden drop in hash power, the network is vulnerable to an attack by other malicious miners coming in and taking over. Alternately, if the rest of the miners notice what's going on they could see this as increased opportunity for them to conspire and become malicious.
>Not much of a rug pull to sell the tokens you've legitimately acquired through mining or fiat buying. That's just selling. High volatility selling, yes, but still just selling.
This right here is the conversation I most dread having with crypto people. It's fraud. You can call it fraud. Manipulating the market so the price is artificially high and then dumping it off onto unsuspecting buyers is a fraud. It doesn't matter how you initially got the coins. Yes, we can group different types of selling into different categories, like ones that are fraudulent and ones that aren't.
>Oh yes, Bitcoin has died thousands of times.
The exception that proves the rule, huh? There are definitely thousands of shitcoins that have crashed and burned and won't ever recover because they were plain old ponzis. Bitcoin crashed a lot of times, not thousands, but enough to wipe lots of people out every time it happens, relative to the number of people using bitcoin at the time. It's still not clear that any of the money moving around in bitcoin is actually real money or assets. I'm certain it's a ponzi too.
>Maybe you'll be right one day, but I doubt it.
So you're saying bitcoin is too big to fail, is that right?
> Nobody actually has any custody of anything in crypto.
This is insanely wrong and it’s unreal things like this are being said in 2022.
DeFi Example: Take your self-custody bitcoin to Thorswap and exchange it for Ethereum. Pure defi. No trust needed. Total self-custody cross chain trading.
FTX was based in the Bahamas.
a decentralized decentralized decentralized exchange!
That's bullet proof folks!