Seeing SBF and saying 'look how corrupt America/NYT is' feels like deflection from the more obvious 'look how corrupt Crypto is.'
FTX/Alameda is now the poster child for Defi, isn't it? Good overview here:
https://blockcast.cc/news/revealing-the-new-defi-gang-ftx-an...
I recognize there are tons of fraudsters who latch onto the vocabulary of cryptocurrency and twist it to trick naive consumers who don’t know the difference. Another example would be “staking” where the original intent meant earning proof of stake rewards without giving up your keys, but was frequently used as a marketing term for things like Blockfi where you literally transferred ownership if your coins.
Despite the manipulation around the terms, it’s unfortunate how a fairly technical audience like Hacker News refuses to have good faith discussions around this.
This crowd should know better than to call FTX DeFi.
This crowd should know better than to call fractional reserve interest programs staking.
I think this crowd does know the difference but chooses to ignore it in bad faith because of a general dislike of cryptocurrencies.
By all means call out the swindlers but a site called hacker news deserves better when it comes to using technical terms accurate and in good faith. And by calling FTX DeFi you’re doing neither.
Serum was meant to compete with Uniswap. [6]
Oxygen and Solana DeFi tokens were working with FTX on Serum. [3], [4]
Now that FTX has failed, people are saying "FTX was never a De-Fi". We should stop calling it that because if we do we're now "dishonest". [you and 5]
[1] https://www.projectserum.com
[2] https://cryptopotato.com/serum-srm-backs-community-hard-fork...
[3] https://decrypt.co/116652/ftx-solana-defi-serum-starting-ove...
[4] https://cryptoslate.com/defi-protocol-oxygen-held-95-of-supp...
[5] https://www.rebellionresearch.com/is-ftx-a-defi
[6] https://www.coindesk.com/markets/2021/04/28/serum-token-beco...
Serum seems like a special case - it was branded as a DeFi protocol, but wasn't really decentralized, since FTX had sole upgrade authority. Because of that Serum collapsed when FTX did. That couldn't happen with something like Uniswap, where governance is actually decentralized.
Now only after FTX failed people are saying, "Oh that wasn't really defi, and you're being dishonest if you call it that."
Basically we're being gaslit after the fact.
But yes, in other circles, there are "crypto personalities" who cater to an audience that's just hoping to get rich quick. Such people usually don't know or don't care about things like contract upgrade mechanisms.
(... yet).
There does not exist a morality detector that can measure people's true intentions in crypto. SBF may have had a true heart of gold but is just an idiot. Or he's the smartest con-man in the room and squirreled the money away in a series of numbered bank accounts.
Either way, the crypto press gave him very little skepticism, and lauded his venture -- celebrating him as the next financial genius.
In the traditional banking world, I don't need a morality detector. I just need an FDIC bank.
- Not your keys, not your crypto. I.e. don't trust a random foreign company like FTX to custody your funds. If you really don't want to self-custody, there are reputable, insured custodians like Anchorage or Coinbase Custody.
- Don't use niche DeFi protocols if you don't know much about them; stick to widely-used protoocls like Uniswap, Curve, Aave, etc.
It's not foolproof, but neither is traditional finance. There are plenty of ways to lose your money there, particularly if you're looking to get rich quick with exotic investments.
In fact FTX was getting into equities, so it's not just crypto investors who will probably lose money (pending bankruptcy proceedings). It's anyone who decided to trust a questionable Bahamian company with their assets, crypto or not.
I would compare FTX to say Tastyworks. Clean brand, but they're not a bank, not insured, and not focused on custody, so it wouldn't really be prudent to store idle cash or crypto with them.
True custodial banks could in fact be fraudulent for allow e know. But they don't buy super bowl ads to buy reputation -- they've earned it over the course of decades.
Real banking should be boring.
That's kinda like saying the Mafia could be good if it weren't for all the bad actors.
At some point the Mafia itself becomes bad and then becomes the reason someone joins it -- to be paid handsomely for committing crimes.
That's I think where we're at with crypto.
The mafia is a emphatically criminal organization made up of people whose unique and specific purpose is to extort, rob, threaten, kill and steal as their core activities.
Crypto is a bundle of interrelated technologies and cryptographic protocols that can be used for bad, good or neutral purposes by humans with all kinds of agendas. In the case of decentralized cryptocurrencies like bitcoin, nobody's even in specific control and claiming they're evil is like claiming a random algorithm is evil, or that encryption is evil because alongside dissidents and social activists, pedophiles and con men also use it to keep their communication private. Ridiculous.
If you take away gambling and speculation, cryptocurrencies lack a compelling use case when compared to competing technologies.
Pretty much anything? (including cowrie shells and gold) Bitcoin has a lot of hype about being "money," but it's rarely used as such.
Good luck sending somebody crypto to make a payment.
Maybe you can make 1 on 1 payments to other people who are also convinced to use the same crypto as you. People who don't use that crypto (almost everyone in the world) or your grocery store (most in the world) won't take your payment in crypto.
Crypto mathematically prevents fraud. The problem here is that business was conducted in the fiat world and on a "trust me" basis.
If "Crypto" has proven anything over the last few years the only thing it mathematically prevents is reversing transactions, which is really useful when you want to steal money.
* A contract (a piece of software) hosted on the network * This contract is immutable (its code cannot be changed) * This contract defines rules such as allowing deposits, withdrawals, and trades, and those functions of withdrawing deposits or enacting trades require transactions signed by the depositor
In that scenario, it is a deposit, is controlled (and thus owned, both legally and cryptographically) by the users.
In real life, these contracts are generally mutable, so there is the possibility that users can still get fucked over.
I'm fine with highly regulated exchanges despite that being counter to that glory of crypto. Also, move your large bags to cold storage.
Uh what? How could it do that. Fraud isn't even a technical layer issue. It's an identity issue and identity is pretty much entirely abstracted out of the crypto ecosystem. So, if you think about it that way, it's actually impossible for crypto to "mathematically prevent fraud". That you even said something so ridiculous without any reflection speaks to your intuitions in this space.
The decentralized nature of most cryptocurrencies makes it difficult for a single entity to manipulate the market or falsify transactions, but it does not completely eliminate the possibility of fraud. In addition, the anonymity of many cryptocurrencies can make it difficult to trace the source of fraudulent activity, which can make it harder to prevent or prosecute.
It’s a simple truth that an investment fund that is getting more deposits from withdrawals can vaporize the money and not have any problems until people ask for the money back. That is why financial institutions need strict controls.
"we do not invest user deposits, not even in bonds"
and yet he _did_ take user deposits. He defrauded them by taking their funds. This is also known as theft.
This type of fraud, which also counts as theft, is not possible with self-custodied funds.
I never said they were.
> A DEX might preclude the need for trust relationships in order to prevent the circumstances that make fraud possible
So you agree?
You just admitted that DEXs would have prevented SBF from committing this fraud. That's what I'm trying to convince you of.
Those who do not distinguish self-custodied funds from non-self-custodied funds, like you refuse to do, will continue to be defrauded and stolen from.
If you participate in actual DeFi where you keep your keys and participate via smart contracts, nobody can steal your coins.
All of this was true and is true. What happened is that corporations adopted the language of cryptocurrency to mean something totally different to trick consumers, like calling FTX a DeFi platform.
You want a villain, it ain’t the maxis who kept repeating “not your keys, not your coin”. It’s VCs like a16z, sequoias, and paradigm who lended credibility to centralized exchanges that defrauded people who ignored the cryptocurrency advocates.
The FTX story only strengthens the facts and narratives the cryptocurrency advocates have been saying. The real fraud is happening in venture capital which is rotten to the core.
And by the way, bitcoin is down this year but not nearly as much as VC darlings like Carvana and Affirm.
VC is the scam. VC is the engine of pump and dumps in both TradFi and crypto centralized exchanges. The real voices of cryptocurrency have been vindicated.
Yeah, people think that. But what does that have to do with FTX. Yeah, if you never sent money to FTX, they couldn't take it. What insight!
SBF stole users' deposits. Fact.
SBF could not have done this had FTX been a self-custody DEX. Fact.
Crypto's sole purpose is to prevent the theft that occurred. Fact.
The theft happened because crypto was not used. The theft happened because users did not self-custody (which they could have, as is demonstrated by the billions of dollars custodied in numerous DEXs today). Fact.
Only the person with the private key can move the funds.
If this was on-chain, SBF would not have had their private keys and mathematically could not have moved their funds without their consent.
There are DEXs which you can deposit funds and retain full custody.
We have never once seen someone successfully steal users' funds without access to their private keys. That's the entire point of crypto.
Crypto never claimed to prevent fiat fraud. Crypto never claimed to prevent human custodians from absconding with funds.
It's a fallacy. No true crypto. No point in responding further to this approach.
Centralized finance is subject to the whim of creditors and custodians.
Decentralized finance mathematically prevents theft within the system.
The point is, if you self-custody your funds, no one can take them from you except by threatening you.
Everyone had their funds taken from them because they did NOT self-custody.
Everyone could have gotten all the utility of FTX (trading spot and derivatives) via a self-custody solution (a DEX).
Stop blaming self-custody solutions and stop trying to make self-custody solutions illegal. They literally mathematically prevent this type of theft and fraud.
I use centralized exchanges plenty, and I am also aware that it defeats a large portion of the whole trustless money thing. Therefore, I also keep crypto offline in cold storage. Those addresses and the coins involved will go with me to the grave or until someone threatens me with a hammer.