> 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.
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.
All the facts go against you. You are wrong about the fundamental ideas, the first principles and the big picture.
It's an immutable public ledger. We know exactly what happened when someone commits fraud on it, whereas we could know next to nothing about what happened to $10 billion when someone commits fraud in the fiat world — exactly what has just happened with Alameda and FTX.
It's as if you don't understand the basic, fundamental concepts of a blockchain.
No and no. Avoid asking these questions please, they're fallacious and kind of rude. I just see fraud and I call it out. I'm sick of seeing these crypto-Enrons keep happening. I hope the SEC finally cracks down and anyone still involved in crypto after any more of these tumbles goes straight to prison. The entire thing is a ponzi scheme and a fraud and the technology is useless beyond any kind of recovery. I'm dead serious. They should have cracked down on all of these crypto exchanges years ago when it became obvious they were a huge vehicle used to sell ICOs, aka illegal unregistered securities that were complete scams.
>It's an immutable public ledger. We know exactly what happened when someone commits fraud on it
No, you don't. You know almost nothing at all just from looking at one blockchain. If you see a bunch of blockchain transactions moving around, you have no idea what the transaction is actually for or whether that's a legitimate transfer or not. You don't know if a pizza was exchanged for those coins or if anything actually happened, or if the coins were actually stolen, or if some exchange was hacked, or if it was just a wash trade. It's extremely easy for people to commit fraud on blockchains this way so they just do. All you can know from this is that some tokens were transferred to some anonymous wallet address. Just from the blockchain you can never know what it's actually being spent on or who it's being sent to or if there's even any real assets anywhere in the system at all because that information only exists in the real world outside of the chain. There are places to get this information off chain and that's the only way to actually make any of this useful, it totally defeats the purpose of using that chain.
As an independent reporter the only way to figure any of this out is to take data from multiple chains, cross-reference it together, compare it to proprietary data coming from the exchanges, look at public data published by traders, and try to put it all together to paint a picture of where the real money and assets moved. You need a lot of other data sources besides that chain. And when you actually do that, you see things like how there's evidence that most bitcoin transactions are actually fake, fraudulent wash trades for the purpose of market manipulation, and nobody in bitcoin is doing anything about it because they either can't, or they're the ones profiting from it: https://www.forbes.com/sites/javierpaz/2022/08/26/more-than-...
The entire crypto market is awash with fraud. Nothing about blockchains can solve any of these problems. They're intentionally designed to create these problems. Blockchains can't prevent you from just taking that activity off chain and doing it outside of the view of everyone, and that's how you get another Alameda and FTX or Terra or Luna or 3AC or Celsius or Voyager or any of these. If you could force everyone to do all their transactions on one blockchain, then what you're saying would be true. But the technical design of blockchains intentionally makes it so you can't do that and anyone can just create another token out of thin air, or fork an existing token into a second chain, and then start trading it on some exchange and loaning it out with no regulations whatsoever. This is what the cryptobros wanted. It's a perfect recipe for fraud.
Now the only real way to force all these people to use a single blockchain and make them follow normal accounting procedures would be to pass a law making them do it. On that note I always found it funny that a certain segment of cryptobro was pushing for CBDCs. Most of them would probably cry foul if they were forced by law to use a single central bank chain, because then it wouldn't really be decentralized anymore and they couldn't get away with so much fraud.
I can see exactly what Alameda and FTX was doing on chain. I can see the exact amounts of each token they sent, where they sent it, what they swapped it for, etc. It's all publicly documented.
Why should it?
Does your bank tell the world the details of what you shopped from the grocery store today?
Financial privacy either is or should be a human right. Banks fail to protect this right. Blockchains can protect this right.
The technology works. People use crypto for payments.
> Now the only real way to force all these people to use a single blockchain and make them follow normal accounting procedures would be to pass a law making them do it.
I wouldn't be surprised if someone put you up to coming here and writing all this, so you can go back and claim something like "I ran this by lots of smart people and they agree the only way is to pass a law", and then use this to back some legislation.
Not guaranteed compared to putting the account and phone passwords in a will.
Who has this policy? The blockchain??
I’m not interested in goalkeeping both sides of the convenience-security spectrum. Keep your keys in a buried 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 pay 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?
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.
You can read the first 1-2 sentences of each paragraph and get a sense for the main points.
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 collapsed 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.
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
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.
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? Clearly this sentence is false. It takes only one counterexample to prove it.
Here's the counterexample. If all the world's money are on a single blockchain and there are no banks, the blockchain guarantees visibility and possibly accountability.
Please don't be gratuitously negative. It's to your benefit to be precise.
Your example misrepresents reality and a lack of understanding the point.
Where on the blockchain did it track FTX's cross collateralization?
There is your counterexample.
As far your ad hominem on negativity, I have no idea what you're referring to.
DeFi
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.
Disclaimer: I don't usually drop comments like this that don't contribute to anything, but... lmao wow.
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.
(but yeah it’s wild)
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.
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.
a decentralized decentralized decentralized exchange!
That's bullet proof folks!
FTX was based in the Bahamas.
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.
I wonder if Sam being the 2nd biggest funder of Democrats has anything to due with this...
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.
"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...