Binance is under threat
wsj.com
wsj.com
If you think a crypto exchange you're doing business with is on shaky ground, the time to withdraw is now. So many crypto exchange collapses have shown that you need to withdraw before the "meltdown" if you want to ensure your assets are safe. If you wait you end up in bankruptcy purgatory for years and might only get a fraction of what you're owed.
However, there's no reason to keep your assets on exchange if you are not actively trading them. I know many trading firms withdraw daily (or maybe even more frequent), and I would imagine the drills mentioned in the article are probably about withdrawing their assets before EOD.
It's been demonstrated time and time again this isn't practical. In crypto your choice is either worry about an exchange collapsing or worry about losing your keys, having your wallet cleaned out by some scammer, etc.
The chances of either are very, very high. "Not your keys, not your coins" just as easily (or even more so) becomes "you don't have your keys" or "some scammer has your coins".
Cue twitter and reddit posts from crypto enthusiasts saying "Oh you should have engraved your seed on steel plates and buried them under the birdbath in your backyard. Sorry you lost everything but hopefully you learned your lesson. Now buy more and try again!".
When the best possible description someone can use is "pretty reliable" I think that underscores my point.
FTX was considered to be in this category for years. Question now is, when will the next "pretty reliable" custodian go the way of FTX? When, not if.
I've been following the space very closely for years and the shenanigans involving other people's money are unreal. Are you aware the former CTO of Kraken was completely anonymous? Literally an avatar - try to find their name anywhere. Kraken employees didn't even know who they were - never came to the office, events, or even turned their camera on in meetings. I would imagine someone in payroll/HR or something knew who they were but maybe not, and they were getting paid in crypto?
Kraken, also considered one of the "more reliable" custodians for years, where the entire platform was in the hands of some random person who could disappear in the night with no reputational harm. Speaking of Kraken, take a look at their executive turnover. Very reliable.
I wanted to believe in the underlying technology for years but it's fundamentally and inextricably linked to other people's finances and there has been plenty of time for this kind of clownish behavior to work itself out. Crypto is almost old enough to have a Driver's License in the US which makes it a senior citizen in technology terms. It has had plenty of time to grow up but I think it's clear it never will.
Within the crypto space, these exchanges are extortionate to project communities and the project founders, and a lot of it can't be talked about because that ensures no listing on Binance, and thats just the tip of the iceberg of what people have to put up with, all of the eastern exchanges have similar practices. eastern europe too, but and to a much lesser extent the US exchanges but to the point that it’s impossible to get listed unless all the VCs backed you.
Outside the crypto space, its pretty obvious that the discussion is much more juvenile, any distress with any crypto exchange represents "crypto" as a whole, and validates whatever people already believe. So the sooner these mismanaged companies go away, the sooner that conversation can mature.
Unpermissioned market making onchain has been a major boon to the crypto space, and so these exchanges like Binance are not necessary. Most of the major wallets have ways of getting fiat into the crypto space, and they can become the primary users of onramps. Both Block and Paypal are crypto exchanges, all that infrastructure is there by better managed companies, and trading of more esoteric asset pairs can be done onchain, as it already is.
… If you’re conducting fire drills on withdrawing your assets when Binance implodes… why not just withdraw them now? Like, it is not the only exchange.
Binance US is dead no doubts about it. Binance won't be available for US customers.
I'm not sure if the article has a point though. The TLDR seems to be Binance's overall size is reducing because Binance US is closing shop.
(Though, who's next? Not that many still standing, really.)
Sure, the code base may be gate-kept by a small clique of developers, sure, the mining may be largely done by a handful of coordinating mining pools, sure, you may need specialized hardware only manufactured by a couple of shady foundries, sure, all of the money may enter and exit through one or two exchanges pretending to comply with various money-laundering laws.
But the scam, the scam is beautifully decentralized.
In a normal scam, there's one or two people at the top who will eventually cut and run or go to jail, and the entire pyramid collapses beneath them.
Bitcoin? There's no one at the top. Anyone can just jump in and start scamming, and they'll grow and grow until they maybe reach the top and implode, and then without missing a beat a new group of scammers will be ready to take over even as the last undergoes a very public trial or a very quiet disappearance.
Behold, the power of decentralization.
Fair warning I am one of the people who thinks it's all the same. Even though I have a lot of experience in the space when you zoom out a tiny bit for the average person it starts to look a lot like us arguing vi vs emacs - religion and meaningless and esoteric distinctions to the 99.999%.
- Ethereum uses PoS, and you can run a validator with commodity hardware which costs a couple of hundred dollars.
- All the validators online at this moment consume a fraction of electricity used by all current videogame consoles in stand-by.
- Ethereum's value is not derived from the expectation that it is a "store of a value", but that it will be required to run a lot of basic activities in its blockchain. "If BTC is digital gold, ETH aims to be digital oil" is a good analogy coined by Buterin.
- Because of this focus on the blockchain and its applications, very few people working in ETH actually worry about its price. Bitcoiners by and large do nothing but try convince other people that their coin is the chosen one. Ethereum developers don't really care about any specific coin, just that it runs on the Ethereum blockchain.
Do you need more examples?
I understand your points (I stayed up to watch the switch from PoW to PoS on my Ethereum nodes as one example) but no one else does, and that's my point. If anything you mentioned offered value other than "trade vs USD" there would be adoption - like oil and consoles.
All you have to do is take a quick look at a block explorer, dappradar[0], tokens, etc to discover very quickly no one (0.5% of global internet users - literally) uses any of this stuff other than gambling. Horrible "play to earn" games, NFTs, tokens, DEXes to swap tokens around (more gambling and criminality), etc. The only thing the improved technology of Ethereum has done is continue the "crypto way" of inventing new ways to gamble and scam people.
Even the vast majority of people that interact with the space see ETH, BTC, etc as just another trade ticker they denominate value in fiat with. All of these trades operate on an order book in an exchange and has nothing at all to do with the underlying blockchain and whatever supposed differences/advantages/etc the technology has.
The entire underlying technology could disappear tomorrow and it would have meaningful impact to an even smaller group of people than your favorite text editor. No actual utility lost.
> The entire underlying technology could disappear tomorrow (...) no actual utility lost.
The same could be said, e.g, ActivityPub. Doesn't stop me and others to try to dismantle Facebook/Twitter or at the very least to provide an alternative.
Sure eth solved some of bitcoins issues, it also increased the scope of crypto scams to a whole new level.
The fact that a crypto 'currency' is supposedly operating at prices irrelevant to it's value is not an argument that helps you in any way in this situation.
- Uniswap (one of the first decentralized exchanges running on the blockchain) has more transaction volume than Coinbase. All you need to use is an Ethereum wallet. No dependency on central exchanges.
As for scams: do you also blame Western Union for the billions of dollars they enabled?
Perhaps crypto can be revitalized and made useful at scale, but that’s going to require a continued cleansing fire throughout the ecosystem and a new generation of devs and evangelists who actually give a shit about other people.
You're free to group your favorite cryptocurrency with Bitcoin, or not, as the criticism fits.
Still dishonest.
BTW, wasn't the narrative that crypto goes up because it's bought with printed Tethers? Why aren't they printing some now to start another bull market?
Now the question isn't if, it's when. And as Madoff showed us, it can take a very long time, decades even, before it fails.
And predicting the future is very hard, so nobody knows how much longer it'll take. But down it will go because it's inevitable.
And to your second paragraph, that's an oversimplification. Yes, printing Tether helped dampen the fall and prop up the price, but it did not do so alone and it's not as easy as just printing more to start the bull market.
Trying to do that would smore likely just hurry up their impending doom.
https://www.bloomberg.com/opinion/articles/2023-09-21/tether...
Well, and assuming they have any significant fraction of the assets they claim to have.
But I’m probably wrong…
It's been clearly and obviously explained to death for crypto people where the value of fiat comes from and it's not a "debate" I'm interested in rehashing.
The history of money and banking. Starting with John Law [1], and why private, leveraged money requires a public backstop.
It's unbelievable to me that crypto people don't see/understand/refuse to acknowledge the huge difference.
"It is difficult to get a man to understand something when his salary depends on his not understanding it."
Or (in this case) their gambling.
Though I swear I recall reading some ominous wording, pointed out by another commenter, that subtly suggested the decision to quietly settle vs. aggressively prosecute was based on billions of dollars of potential economic fallout. Other articles [2,3,4] talk about contagion risk, but none are exactly what I recall. Funny how memory works!
[0] https://cryptobriefing.com/jp-morgan-issues-tether-warning-second-guesses-146000-btc-price-target/
[1] https://www.tbstat.com/wp/uploads/2021/02/JPM_Bitcoin_Report.pdf
[2] https://www.bloomberg.com/opinion/articles/2022-05-12/crypto-crash-contagion-could-go-beyond-bitcoin-ethereum-tether
[3] https://decrypt.co/83276/imf-warns-stablecoins-could-pose-contagion-risk-global-financial-system
[4] https://www.cnbc.com/2022/05/19/tether-claims-usdt-stablecoin-is-backed-by-non-us-bonds.htmlSure it can be a distributed concencus/ledger system/smart contract system almost no one important needs or will use, or will reuse the idea internally themselves if it's useful.
Anything important won't be built on something they can't control or manage. Crypto by definition is that. So you have to really consider what this built on it and who's profiting from it.
"No contagion risk" doesn't mean nobody would be harmed by a crypto collapse; obviously there are a handful of morons here and there who would get wiped out. It means there is no systematic, widespread dependency of the real economy on the crypto one. I think the bank failures bear that out.
if balance sheets and collateral for loans for big businesses were all in tether it stopped being redeemable or traded at $0, the businesses would have nothing on their balance sheet and all their lenders would realize the collateral was also missing, and the lenders also would realize they wouldn't get paid and had lent on bad assurances. The lenders would also lose money on all those loans, and their capital partners would lose money (private equity firms and their limited partners) and everyone that relied on payouts from the PE firms would have to change their forecasting, and the PE firm would not be investing in the economy anymore, making a hole in that market. Depending on how many PE firms were doing this it could grind a significant part of the economy to a halt.
good news is that typically the government fills in the gap. but people don't like that.
2. How is this a tangent? It is directly related to the problems discussed in the post
The article was about the specific current situation of Binance. You didn't respond to anything specific in the article. Changing the subject to the 50,000th repetition of the Generic Crypto Flamewar was not only a generic tangent but a perfect example thereof.
Perhaps this might help: the point of HN threads isn't to be right, but to have curious, mutually interesting conversation. That's quite different from repeating the same things over and over, no? That's about as far from curious conversation as it's possible to get. If a conversation can be predicted, then it's not what we want here.
There's another aspect too—predictable conversations, especially on divisive topics, inevitably turn nasty. My theory is that the mind resorts to indignation to amuse itself in the absence of new information (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...). Whether that's true or not, we're definitely looking for conversations that organize around new information.
"BNB can be used to pay for fees when trading on Binance, and usually at a discounted rate. Due to the primary utility, BNB has seen massive growth in interest throughout the years . Several rounds of token burn events have appreciated BNB price and pushed it up as one of the top-10 cryptocurrencies by market capitalization."
Binance or exchanges are 'anti' crypto. Buying/Selling crypto defeats the purpose of crypto entirely, rather supports fiat(do the math please). Exchanges must die before crypto even starts working.
We are still going to need on-ramps/off-ramps and it would be better if they were legal and regulated to be small. Exchanges are still going to be needed. "Retail banking" with managed wallets are still going to be needed. Only allow them to operate in one country, put a cap on the the maximum amount of funds/accounts they can have and get rid of any "investment" scheme.
Essentially, something like the crypto version of credit co-ops.
Mining, swaping, burning, spending is enough. And where it's not, the use-case is not decentralized (has centralized governance or has known membership) & can be achieved more efficiently via fiat.