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Comment by photochemsyn | Hacker News Reader

Crypto exchanges certainly seem to be geared towards fraudulent activities, and they've lured investors in with promises of high returns. The whole so-called 'decentralized finance' world (DeFi) seems to be full of shady actors and money-launderers, but cryptocurrencies themselves - when no used in the way, say, that subprime mortgages were - as vehicles for gambling - don't seem to be inherently corrupt.

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...

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The poster child for DeFi was never a CEX. The obvious poster child for decentralized finance would be the biggest decentralized exchange in the world , Uniswap.

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.

FTX was working on DeFi with their Serum protocol. [1], [2]

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...

I think the point is that what happened with FTX couldn't plausibly happen with a real DeFi protocol like Uniswap. FTX might have had ties to some real DeFi protocols, but that seems unrelated to what happened. FTX's collapse doesn't make them bad by association, just as SBF's shenannigans don't make veganism bad by association.

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.

I think my point is, don't blame us for getting the nomenclature wrong, when it's clear that the crypto people were smearing the nomenclature around too like a cheap maple syrup, letting it stick to anything that looked "defi-ish"

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.

Point taken. It depends who you listen to though. In the right circles, there are plenty of thoughtful discussions about the (de)centralization of protocols (that haven't imploded). See [1] just as an example.

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.

[1] https://www.youtube.com/watch?v=HO693GJZITY

> (that haven't imploded)

(... 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.

You don't need a morality detector, just a couple rules of thumb:

- 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.

Wasn't FTX considered a reputable custodian before it imploded? That's been my understanding but I didn't pay much attention before it went belly up.

This actually gets into "regulated" vs "buyer beware" banking markets. And crypto is still a "buyer beware" market where reputation can be bought with super bowl ads. And then getting "glowing" reviews from the crypto press on their sudden "success".

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.

They did have a fairly clean brand, but I wouldn't compare them to say Anchorage, which is a US-based bank and qualified custodian. There are more regulatory as well as technical protections with a firm like Anchorage.

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.

These intellectual contortions are great for creating clever arguments, but the entirety of the thefts that were done could only have happened due to centralization. Being a centralization of crypto, FTX was absolutely not and could not have been DeFi. No exchange that centralizes actions, tokens, and crypto is DeFi - even though protocols may appear decentralized.

> but cryptocurrencies themselves - when no used in the way, say, that subprime mortgages were - as vehicles for gambling - don't seem to be inherently corrupt.

If you take away gambling and speculation, cryptocurrencies lack a compelling use case when compared to competing technologies.

What technology is better at being money than bitcoin? Paper dollar?

> What technology is better at being money than bitcoin? Paper dollar?

Pretty much anything? (including cowrie shells and gold) Bitcoin has a lot of hype about being "money," but it's rarely used as such.

This is a very dishonest or ignorant response. Good luck sending somebody shells or gold to make a payment. And good luck with shell inflation. And good luck with every store needing to be able to test that gold is real, store it in vaults, etc

> Good luck sending somebody shells or gold to make a payment.

Good luck sending somebody crypto to make a payment.

It’s a common occurrence. No luck needed.

Don't be obtuse. Using crypto for payments isn't common.

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.

> ...don't seem to be inherently corrupt.

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.

It's absurd but increasingly common to see such bad, ignorant metaphors of technologies used by people with en emotional vitriol on a site like HN.

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.

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