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Comment by matheusmoreira | Hacker News Reader

Truth be told, the FTX case isn't even a cryptocurrency case. The Bankman essentially ran an unregulated bank. People deposited money into it and he just took it. He pretty much robbed his depositors.

It's ironic. Cryptocurrency was supposed to put an end to guys like that by ending the need for banks.

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Well put. Following that line of thought I’d say that by now crypto has shown that you can never trust a system, in the end you have to trust the people behind it. I find people to be more trustworthy when they go to jail if they do wrong.

Cryptocurrency was meant to reduce the number of people you need to trust to an absolute minimum. Ideally, the only people you'd have to trust would be world class cryptographers.

The whole problem here is people reinvented the entire financial system on top of it. Exchanges are really just banks in disguise. They do fractional reserve banking, they offer cryptocurrency loans, they even have savings accounts.

>The whole problem here is people reinvented the entire financial system on top of it

The whole problem is that some of what they do adds value, because it turns out the banking industry as a whole has some valuable functions that people need.

Yeah, but ideally all of those features should be "native" features of the cryptosystem, such that they're all just as zero-trust as the core stuff the cryptosystem does with its gas currency.

The problem is that developers see "this cryptosystem supports smart contracts" and interpret it as "this is a Turing-machine substrate which I can use to deploy effectively centralized / trust-us infrastructure, but then turn around and market it as being decentralized and zero-trust."

If a cryptosystem supports "smart contracts", ideally they should be restricted to only to serve as an interface for extending the deployed cryptosystem with additional decentralized / zero-trust features. Sadly, it's impossible to have a compiler determine whether your code is decentralized / zero-trust.

Other the to exchange fiat for crypto, I’m not quite sure why people keep their cryptocurrencies on these exchanges. They proven time and time again that they’re usually a scam.

Because, as it turns out, using cryptocurrency as currency is too expensive. The exchanges let you "trade" and then settle themselves in way fewer transactions, so you don't have to pay nearly as much in fees.

It's the same reason we keep our money in banks instead of everyone owning a Fed terminal and requesting ACH pulls.

I mean, this article suggests that Binance isn’t a scam, rather it has a perfectly sound business model that is illegal and immoral.

Because you can't gamble if your money isn't in the casino.

Often it's a desire to be able to quickly run a trade or arb play.

Well, the financial system exists because it provides services that are desired. From what I understand there's really no way to offer those same services purely in the blockchain, except for some imitations that have their own equally big problems.

In essence, all a financial system functionally provides is a set of buffers/caches so that individual or company lives can overcome some bumps quickly at the expense of promise to refill the buffer + some extra later.

Not really. The complexity can’t simply be reduced to a computer science metaphor.

There are permissionless and trustless exchanges like uniswap

How do I get real money out of uniswap?

Ultimately there has to be an off-ramp, or it's no different from an ingame currency.

> Ultimately there has to be an off-ramp

Not if people start using the cryptocurrency to actually pay for stuff. That's the point of money, after all.

Once you start buying goods and services in the real world, then the whole “trustless” part of crypto becomes useless.

How is crypto going to ensure the landscaper actually cuts my grass. I have to have some measure of trust and there has to be infrastructure to resolve disputes and try to make people whole. Once you have that, you are in many ways back at fiat currency.

Which is why central back digital currencies will be / are a thing.

I've also argued that we already have workable digital currency for regular consumer transactions. I pay my landscaper with Zelle. Who cares that it's denominated in dollars? Point is I can already move money practically wherever I want with the click of a button. And that money is already accepted by everyone I transact with.

Crypto is a solution looking for a problem. And money laundering/crime ended up being the problem they ended up solving. I'm enjoying watching this space slowly grind down / burn to the ground. Good riddance to a level of evil where the perps joke about the fact they're making money helping criminals "they're here for the crime" etc. 18 months is too little time in prison.

Zelle is among the worst, yuck

That maybe, but my bank offers it and so I've used it because it was there, and I have had no problems with it. Which is all I need. It worked without a seconds thought

That's more than crypto offers me.

> How is crypto going to ensure the landscaper actually cuts my grass.

Same way cash ensured that. People generally don't pay until the service is done.

It’s been 15 years and nobody still uses cryptocurrency to pay for stuff. And as you say, that’s the point of money.

So maybe, just maybe crypto is actually not very good as money, which is why people have been increasingly desperate to invent new stories to keep someone paying real money for crypto (digital gold, NFTs, etc.)

Most people don't use cryptocurrency to pay for stuff, but back when I lived in Cambridge there was a nice pub where you could buy your pizza with it, and last week here in Berlin I passed a Subway[0] that let you pay for your sandwich in BTC. Or at least it said it did, BTC by itself is a terrible idea[1].

[0] And a subway. Except the subway was elevated and the "proper" railway was submerged (but not covered): https://www.google.com/maps/search/S%2BU+Schönhauser+Allee+(...

[1] And to shortcut the conversation: Alice: *something about payment layers*, Bob: *how payment layers destroy the one thing BTC actually does provide*

I paid for something with crypto just two days ago. I don't do many transactions with crypto, because most of the time it's easier to just use my cards, but on occasion it's handy.

Frankly, it works well, but it's not user-friendly for non-technical users still.

So basically unless the existing financial system gets really broken, it’s not worth using?

It's been worth using for me when I've used it, just not very often.

I would contend that being friendly for non-technical users is a necessary condition to consider it working well. It clearly works, nobody is saying it doesn't.

Plenty of things works well only for people with niche knowledge.

And plenty of people take a far more negative view of crypto.

‘Niche money for nerds’ doesn’t sound like a world changing concept.

I'm writing this post over a VPN subscription I bought using BTC, paid from my wallet. It was as painless as putting in credit card details.

You are not addressing the point. There's a wold of difference between usable for something, and it being a good use case. You can go shopping in a monster truck, but that doesn't mean it's a good general use case for monster trucks in society.

Why is it a bad use case? It was literally as convenient as any credit/debit card transaction.

Because when it comes to fraud, myself and the average person tend to have a lot of protection against fraudulent actors.

“caveat emptor” is a very poor society wide model.

I've gotten paid for services via Monero. It works surprisingly well. Just start using it.

And what did you do with that Monero after you received it?

Tried to find stuff to buy with it. Didn't find anything, sadly. I want people to start using it because then I can pay them with crypto too.

You can have cryptocurrency or you can have wildly manipulated assets in an attempt to become rich at the expense of everyone else who didn’t get in first. It’s a stampede toward number two by literally everyone I’ve encounter over the past decade who plays crypto markets.

P2P exchanges like Bisq use escrow and verification methods with dispute resolution for on/off ramp. There are other options as well for secure decentralize offramps, but bisq is much larger than any other protocol.

And why can’t bisq play games and be bribed to release things out of escrow or just steal escrowed funds and run?

Because it’s a p2p open source protocol. If you’re interested in the details of how it works, rtfm.

Ah, so someone can trick it into doing all the above (via bug or code push) and no one is 'on the hook', since no individual is responsible for everything?

And escrow isn't really escrow (in the sense of independently verified), but honor based? At least based on the FAQ.

Since things like 'USD arrived in a bank account' can't be verified by a third party.

So, seriously - what's the point?

The point is self custody. Even if a trade were to fail (it’s more difficult than you might think) the funds stay in you custody before and after the trade. That’s different from a cex where you’re trusting someone to hold all your assets. Someone like SBF could not do a similar fraud, even if such a party existed within bisq.

Regarding code, there have been attempts by people to take over p2p protocols before. Most famous was Justin Suns takeover of Steem. Since all the code was open source, most of the community forked the code over to Hive successfully. If a malicious actor tried something similar with Bisq, the community would just fork an older version of the code.

More fundamentally, these protocols work because people are incentivized to make them work. It’s quite different than the vc crypto with the big marketing budgets that most people hear about; most of those are just traditional finance reskinning itself.

Ethereum DAO hack? Hello?

You just moved the cheese to the escrow agent.

There is no agent. Funds are held in a 2 of 2 multisig wallet, with the sole key holders being the trading partners.

Sure, but that doesn't mean you have to hold your money at the off-ramp. Just pass through briefly and you minimize your exposure to centralized actors.

I apologize, in my post I meant to say centralized exchanges.

The thing is... I honestly am not smart enough to trust the cryptography! I guess at a high level I could make some sense of it but there is no way I could fully evaluate any crypto as safe or not.

I think there is great irony in the fact that probably 90% of the people involved in crypto don't understand the math behind the systems they trust so much. They could swear these systems are more trustworthy than traditional banks cause decentralization, smart contracts, cryptography, etc. But all of these are just abstract concepts for them in which they just chose to place their trust, because of vibes or smth.

Also because some of the code was supposed to be open source I guess ? Trust the code ?

The code is not the system, the code is not the network, the code (and the coins) themselves have zero value. Much like money itself is valueless. You can't eat the money, you can't build anything with money. It's the interface between money and real objects that gives money said value. The digital coins wanted to cheat that connection to fungibility with real life objects.

People put money into FTX to buy and sell cryptocurrencies.

FTX appropriated assets for a hedge fund that bought and sold cryptocurrencies.

Why did they think they could run an exchange without complying with the laws for those? It was for cryptocurrencies.

There are few if any "crypto cases" in the sense of cases about breaking laws specific to cryptocurrencies. There are very few of those laws.

There are an awful lot of "crypto cases" in the sense of companies focused on cryptocurrencies breaking laws that long predate cryptocurrency. That is and should be affecting general perception of "cryptocurrency".

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