Oh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns).
The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence.
Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now.
When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys).
We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
If you give away your crypto to some centralized entity and "trust them" that they'll keep your stuff and not steal it, then you don't get the point of crypto and you're using it wrong.
Yes, I know holding your own keys is hard. There are a lot of things that can be done to improve the UX. And even then, I don't think crypto needs to be easy enough for your grandma to use it, because I don't think crypto needs to replace TradFi for every transaction.
People always say this, but you definitely have to trust that a group of unknown validators/miners/stakers will choose to keep working on your chosen chain, just as much as you have to trust that the bank will keep doing it's job as they promised you they would.
And before you say "I don't need trust, validators have economic incentive to keep doing it, and if they don't someone else will", I have something to tell you about why people choose to work at banks (it's the salary).
> And before you say "I don't need trust, validators have economic incentive to keep doing it, and if they don't someone else will", I have something to tell you about why people choose to work at banks (it's the salary).
This statement supports exactly the opposite of the point you're trying to make.
Think about it:
* Bankers have economic incentive to work at a bank (the salary)
* Validators have economic incentive to work on your chain (the block rewards)
That's literally the entire point. You don't need to trust any validator, only that the majority are self-interested, rational actors.
> Uhh, do bankers get paid for not doing their job?
> My point is that by the same logic then banks are also trustless.
There's no logical connect with what you're saying at all. Ethereum is "trustless" because nobody can steal ETH from a properly secured wallet, not even the validators.
You should probably understand the basics of how validators work before making a comment on them....
A centralized database is owned by a centralized entity and the admin can change it at will to steal money - or at least the owner of the hardware can shut off power.
Let's talk about Ethereum here since Solana hardly counts as decentralized. Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain. If a validator decides to stop proposing or attesting to blocks, they will be penalized by the network and lose money. There's about $20bn of ETH staked that can literally disappear from existence if all of those validators decide to stop doing work.
This is an even better incentive mechanism than a bank salary. It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
> Let's talk about Ethereum here since Solana hardly counts as decentralized.
1) My joke was how much work you were having “properly secured” do. It’s a genuine trope called no true Scotsman. Every crypto phenomenon that involves theft “wasn’t decentralized enough” or “wasn’t properly secured”. But then centralized databases are discussed as a monolith.
2. > Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain.
Sure. That’s an economic incentive. Bank workers get fired and lose salary if they don’t show up.
3. > It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
Yeah, like getting paid in stock?
Edit: still waiting for the definition of a mempool as well.
You don't need to trust the validator because the protocol and cryptography makes sure they can't do anything against you. And the incentive they have to mine aligns with what you want (having the chain validated)
You need to trust bankers because nothing prevent them to just take your money. They're not working for you, they are working for the bank.
"Validators", and we are making the strong assumption that they can actually support your claims of ownership against scammers and they don't choose to side with the enemy, aren't necessarily going to be around forever.
They can suddenly leave your cryptocurrency of choice by simply cashing out and switching to the "block rewards" of another crypto scheme, and then you are going to be alone with the bad actors.
> The whole point of crypto is that you can own it (ie you and only you have your keys).
I've also heard stories where people were locked out of exchanges during crashes, preventing liquidation, because exchanges stopped or delayed deposits during high volume trading.
Its super cool that you can keep your own crypto, but if you can't trade that crypto, whats the point?
I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap
I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it. You don't even get to know what wallet it's in, and if Coinbase decides to go sideways, they can snatch up your money with no legal consequence. You're right that part of the problem is the US failing to regulate them, but there's nothing to regulate. A public ledger does not a currency make.
Your parents will never have a custodial wallet. The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
>I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it.
No, it is you who missed the point yet again. If you give your crypto to Coinbase it isn't your crypto anymore. You are entrusting Coinbase with your crypto. FDIC insurance may be helpful if your bank has financial difficulties, but any money you entrust to the bank can be seized just as easily as Coinbase can seize your money. Ask a truck driver who participated in the lockdown protests in Ottowa how secure their fiat money was in the bank after it was unilaterally seized by the government.
> The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
Does anyone go into crypto because it is "easier" than traditional banking?
Even if you have a private wallet, you don't 'own' your own crypto.
When the Solana network was down [0], could the people that 'own' their own wallets trade their crypto? What about the people with their coins on an exchange?
A recent example is Solana. Their network keeps crashing [0]. Everyone keeping their own keys are completely locked away from trading their coin. Everyone with their coin owned in a centralized exchange can trade freely.
If you hold your own coins, you're vulnerable to network attacks and AMM instability/hacks.
If you put the coins on an exchange, you're vulnerable to the exchange's liquidity issues.
Yes, if you use Solana you should be aware that the chain very regularly has serious downtime. Ethereum gas fees can spike but generally there has never been downtime.
That's why I think Bitcoin is outdated (yes, get your pitchforks), and you really need something that can do smart contracts.
Bitcoin you can hold it, transfer it, and not much more. Having smart contracts (like Ethereum) allows you to have something like Uniswap, which is decentralized and allows you to trade your coins.
Yes, it's not a fiat on/offramp, but if stablecoins are actually good and backed, in the scenarios you describe you would just buy/sell stablecoins and at a later point exchange those stables for cash.
With tBTC (v2 coming very soon), you can move you bitcoin to the ethereum chain and trade it/use all defi there and then move it back all trustlessly. So in a way it makes ethereum a layer2 for bitcoin to work off of without having to change the bitcoin base chain
We have a solution for that - it is called money and it is anonymous. I can also use it to buy things like Halloween candy at the store even when the power is out. Truly amazing invention.
But it isn't programmable, and I can't easily carry large quantities of it. Is it really so crazy that some people want to use crypto? The person wasn't saying "crypto uniquely solved this problem" they were defending against someone who said "crypto is useless if you can't do this".
Can't wait until all your crypto disappears because of an off by 1 bug:0 I guess that is the ultimate question - Does crypto actually solve a problem? Or at the very least solve some problems without creating more intractable problems in the process. I definitely remember it being touted as an inflation hedge. How'd that workout? Or that you cannot create more than X amount of Bitcoins - until they split the ledger. It seems like a new scam coin is minted daily - talk about lower barriers to entry. Just the fact that you mention transporting large sums secretly is interesting. There are many Drug Cartels wishing it was easier also.
I honestly don't understand how any self-respecting software developer wouldn't be excited by programmable money. I have wanted programmable money for almost a quarter of a century now, ever since I was consulting for a bank on their first website back in 1998. The centralized banking system simply refuses to do it... they barely even give me API access for taxes and accounting purposes, much less being able to automate moving money around or responding to payments :/. I've anxiously followed attempts by startups to build their own credit cards with better APIs (all of which end up sucking and eventually just fold), I've abused the hell out of the mostly-undocumented OFX endpoints offered by traditional banks, I was the largest mobile/phone customer of Amazon Flexible Payments up until they shut it down and replaced it with a lame Stripe competitor, and I have built an entire empire of tooling on top of PayPal... which somehow is the closest thing we still have here in 2022.
In contrast, crypto is this almost futuristic mechanism that centers developers by giving you a serverless transactional database system on which you not only can work with money but you can implement your own money. I can build my own mechanisms for authenticating access to that money, including--if I wanted to--replicating whatever features I liked from traditional systems. It offers functionality similar to ACH and wire transfers, but as a truly federated system that allows anyone to participate. Does it allow scams? Sure... but only in the same sense that other open systems like telephone networks, e-mail, and the web allow people to run scams! Are you really so closed minded as to not think everyone should get the power to automate their own lives as they see fit? God... I bet you are also one of those people who insist no one should be allowed to write or even install software on their own devices without going through Apple, or who insist that private end-to-end encrypted messaging is going to end civilization by mostly empowering terrorists, child abusers, and "Drug Cartels" :/.
There are a large number of different "whole points." One of them, supported by a lot of people, is "programmable money unencumbered by banking institutions." To a lot of people, organizations like Celsius is the point of crypto. And we keep seeing this kind of garbage happen.
I hate to be a "told you so" person, but since 2010 I've been saying bitcoin is just a typical libertarian pipe dream. Yes I missed out on a large financial bubble, but I also made $0 on beanie babies, and that is fine.
But my main point is that people see a problem with the government and jump to the conclusion that we should just get rid of the whole institution without understanding the history of that institution. So bitcoin decided to get rid of govt control of money, which is just like a small town getting rid of their property taxes. It sounds great and works great until a bridge unexpectedly collapses and you have no way to pay for a new one, or until someone finds a bug in your defi code and borrows all your crypto for 1000 years at a zero interest rate.
None of the things you mention are directly related to Bitcoin. Bitcoin has no bridges or DeFi. Only the blockchains with smart contracts (e.g. Ethereum) can have those.
But it will need all of those things to be more useful than the current system. People don’t mail cash to buy products anymore. People transfer cash to exchanges and are safe from attacks like this. Bitcoin and other crypto must provide the same functionality or it will not gain traction.
It's funny you can say that about pretty much anything. If it's not cash on yourself it's not your money, or all sort of other assets where ownership is essentially backed by the government. The issue with all these crypto schemes is, people want to get rid of government oversight when it's inconvenient for them (e.g. have to pay taxes) but otherwise still want the government to guarantee ownership of actual physical assets, because it would be pretty inconvenient to loose the mansion you bought with all the crypto gains.
Non custodial ownership is still an option, even if not advisable.
If my non-tech savvy grandma wanted to own some bitcoin, I'd probably suggest she just keeps it on the exchange. Counterparty risk is probably less than risk of user error.
What is “crypto”? If you hold the keys to some PoS token it’s effectively the same as holding physical fiat dollars. There is crypto and there is Bitcoin, and they are not the same thing.
Bitcoin is a cryptocurrency. It was the first one and it spawned many offspring. Some are identical, some are chain forks, some code forks. Some change, add or remove features. It created the category “cryptocurrency” and shares all of its features with other cryptocurrencies.
This “buh buh buh Bitcoin isn’t a crypto!” meme that’s popped up since the last major crash is childish.
> This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys).
> We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
It's funny how you write "with fiat it unless you hold cash, you can't do that". So what you mean is really with fiat you can do it just as well? The reason why people don't want to hold large amount of cash is convenience, the possibility of it getting stolen, lost... Interestingly many of the same reasons why people don't want to hold crypto themselves either.
You can't sell things on a website if paypal blocks you. Money does not work here, crypto does. also, how do you convert your blocked paypal account into cash? cash and online banking are two different things.
Where did we talk about selling online? Also you can sell online using cash, i.e. one person sends cash the other sends the goods (Mullvad for example sells the VPN services with cash). True most online places don't accept cash, but most also don't accept crypto either, and lets not even talk about physical places.
The Irony is that the owners of celsius were holding crypto's they controlled, They sold the crypto and the fiat currency their users held are now unable to be returned to them. This is why the ability to exchange any given asset(selling) is far more important. Yes, they could have held fiat currency in cash in their couch but buying crypto is far better than that because you own the asset, you dont have to mail anyone money and fear law enforcement from asking questions (very possible if you attempt to buy anything expensive in cash, especially by mail) and crypto is safe even if your house burns down and your deposit box gets stolen. But people buying into celsius decided to give them all the advantage of the cryptocurrency protocol and all the risks with lending someone else money.
I'm not even endorsing crypto, Just pointing out how much people misunderstood what the point of crypto even is. No company should receive money for holding your keys unless its dropbox
It's quite easy: you download this Zero Knowledge Confabulator utility from github and load it up into your TAILS instance. Make sure you pull all this over Tor and use a North Korean VPN and please for the love of god verify the MD5 hashes. Once you've done this, you put your wallet key into the ConfabUtil which will produce a zk-snark. Memorize this because you will next need to go into an airgapped, seismically isolated room and write it down onto a one time pad. Now you start digging, and once you cannot dig any longer you can safely place this one time pad into the bottom of the hole, climb back out, and rest easy knowing Your Crypto Is Safe.
This is pretty much what it sounds like to a laymen like me. It's aggravatingly complex, with like, 18 points of user error failure points. And even if I quadruple checked, I'd wanna check 17 more times after that, and I'd still feel I messed up some crucial step at some point.
With a hardware wallet where you store your seed phrase. You would never type this seed anywhere. You would store backups of this seed in something like a metal sheet that you can buy. You would be extremely careful of the numerous phishing attempts that you will encounter. Also with malicious smart contracts. And you would have a hot and cold wallet, to minimize risk.
Until the operators decide for their own mysterious reasons to make your small card stop working, or that you suddenly owe them a bunch of money you never had, or both at the same time.
How is any of this possible in the real world? If my bank says I owe them money, it’s on them to prove it. If they can’t I can easily take them to court.
I don't know much more, which is the frustrating part of the experience. When we got an actual court date they were suddenly happy to give me all my money back, and I was too tired to push further. But until then it was block, stall, ask for more copies of the same identity verification documents or claim that they somehow didn't meet the requirements (e.g. claiming that my bank statements weren't acceptable identify verification because they didn't show the account being in active use, despite it being my main daily account), insist simultaneously that they couldn't tell me anything but it would all be resolved soon.
Absolutely, as much as any other payment method. Meanwhile there are consumer protections available for them. One phonecall and a form will pretty much instantly reverse a debit card, credit card, or direct debit transaction with any bank in Europe. On more than one occasion this has happened to me and it's taken less than 15 minutes to resolve.
People with time get their money back. People without it get nothing back. And that’s not even mentioning the legal scams like overdraft charges… I’m just saying, the existing system sucks too.
It's not that much time, and frankly you need the time with any method. The last time it happened to me, my card provider noticed the transactions, blocked the card and phoned me to ask if I made them.
The time before, I phoned my bank and told them I had a charge I didn't recognize, they asked me to fill in a form and refunded me within 48 hours.
How do you buy a crypto without the trust? I understand that once you "have" it no-one can claim it's not yours, but is there any secure system about buying?
I'm not sure, it depends on how good the UX and trustless/low trust custodial services get[1]. I don't think crypto will ever be for "my grandma" for example. But I could see it being easy and safe enough for my dad, who knows what phishing is, would understand what private keys are, etc.
[1] This is too long to explain but basically something similar to multisig and time locks to add extra security. Nothing like this exists at least easy to use right now.
In order to prevent fraud and obscure details from spies, the pentagon is setup to hand out money via multiple archaic systems rather than a single computer system. This limits the possible damages, but means audits are really slow and will report massive discrepancies before their complete.
It doesn't prevent it, but it gives you recourse to make yourself whole again, and in a sense prevents a lot of funny business because people are afraid of getting caught and being put in jail.
Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance (especially once multi-sig wallets become common). If Celsius had been more all-in on crypto tech, they would have had FEWER problems.
Also, I don't know any law that exempts crypto companies from being taken to court.
> How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance
Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public.
> Also, I don't know any law that exempts crypto companies from being taken to court.
...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach.
On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
The legal system can only be used to settle payment disputes when parties are known. Buying a tv from the back of a van going home to find out it doesn't work will leave you with little legal recourse. The legal system can only work with entities within it's power. Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems.
Bank of America can do very little for your Russian payment disputes.
> Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems.
It is important to understand that crypto is not an expression of finance (although financial transactions do take place on top of crypto), but an attempt to express law outside of the bounds of IRL legal frameworks, stating, "code is law", which is of course, not true. The legal system always takes precedence when they have a monopoly on force (financial and physical), which is why crypto is destined to be a niche system so long as it does not have mechanisms for the legal system to exert its will on it. What is business logic of traditional systems if not expressions of business rules operating within the constraints of legal frameworks?
It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.
"Code is law" is a property of Ethereum Classic, not all cryptocurrency. I don't really see many crypto people arguing that code should supersede law.
I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it.
By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
> I don't really see many crypto people arguing that code should supersede law.
Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about.
> I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig.
Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete.
For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely.
> Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me.
The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.
Many traditional types of payments, such as wire transfers, cash etc. are also non-undoable.
Incarceration and a variety of other tools at law enforcement's disposal are used to recover funds.
Those payment instruments are generally subject to fairly low transaction limits due to the potential for abuse. Cash is the exception there, but it's extremely inconvenient to move or store large sums of cash and nearly impossible to do so anonymously.
Crypto is unique in that transactions are immutable and do not scale in difficulty with the amount being transferred. Ransomware gangs do not choose to accept cryptocurrency payments because it aligns with their politics; they do so because it is the only way to move millions of dollars across international borders in an undoable fashion.
Those transactions are still undoable by a third party. Using the legal system you can file lawsuits and the perpetrator can have the cash or electronic debits removed without their participation.
With crypto, you must have the help of the criminal, because only they can unlock the wallet.
You keep talking about "multi-sig wallets" in multiple posts. Are you going to have courts in every relevant jurisdiction have a handle on that wallet? That seems unlikely to go over well with the sorts of people who take these seriously.
One should demonstrate an actual, tangible, serious raison d'etre that is within the bounds of the modern legal system before bothering to find out if it's plausible.
It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.
> Crypto is like the invention of ink that cannot be erased.
No, that was invented in the late 70s, with the Merkle tree.
The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers.
> It's literally perfect for finance
People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain.
> Also, I don't know any law that exempts crypto companies from being taken to court.
>> Crypto is like the invention of ink that cannot be erased.
> No, that was invented in the late 70s, with the Merkle tree.
Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world.
My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.
> Also, I don't know any law that exempts crypto companies from being taken to court.
As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.
Financing is the advancement of funds in exchange for a promise that those funds will be repaid later. For this to work the borrower must own assets that can be seized in the event of default. Since blockchain-based assets cannot be seized, this means financing is fundamentally impossible using blockchain technology. The best they can do is overcollateralised loans, where the borrower must first advance themself the funds that they are "borrowing". This isn't financing because there isn't any advancement of funds. Funds are simply swapped.
I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance.
> Funds are simply swapped.
If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it.
Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
The reason the collateral needs to be deposited with a smart contract is because the collateral assets are unseizable. But that defeats the purpose...
Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing".
Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing.
Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.
Suppose I make an NFT which support liens. I.e. upon mutual agreement, a transaction can modify the NFT to add a lien, while (simultaneously) transferring some USDC from the lender to the NFT owner. The NFT can't be transferred while it has a lien, but the owner can remove the lien by repaying the lender. The lender can also transfer the NFT to herself if the loan isn't repaid after a certain period.
If I wanted to finance an NFT, first I would negotiate with a lender and get a pre-approved loan. The NFT marketplace wouldn't even need to know about the lending mechanism. In a single transaction, I could take a flash loan, purchase the NFT from the marketplace, take the pre-approved loan, and use that to repay the flash loan. I now own an NFT with a lien, which I can enjoy in the usual ways, e.g. I could integrate it with my Twitter profile.
You make an NFT, and then you get a loan that you use to purchase the NFT, and if you don't repay the loan the owner gets to keep the NFT? It seems that you're financing the purchase of something you already owned. And of course the supposed financing is being done by this "pre-approved loan" which you tell us absolutely nothing about. What is that? A loan agreement? What does the agreement say and how is it enforced?
I mean Person A makes an NFT and lists it for sale for $X USDC. Then Person B, who only has $Y USDC ($Y < $X), buys it using a pre-approved loan from Person C in the amount of $X - $Y.
If Person B repays the loan within T days, the lien is removed, so Person B owns it free and clear. Otherwise, the NFT is transferred to Person C.
The pre-approved loan would just be a message signed by Person C, granting anyone permission to transfer a certain amount out of Person C's account if (in the same transaction) they also grant Person C a lien on that particular NFT.
Person C's loan funds wouldn't be in an ordinary account, but rather in a smart contract which understands these liens and loan approval messages.
I see... yes I think such a mechanism could be used to finance the purchase of an NFT. So, I'll admit that I was wrong. You can do financing with a smart contract, although from what I gather you'd be limited to buying NFTs. Not terribly useful, but congrats on coming up with this example.
The quote was "According to SOME estimates ...", FWIW. But even your phrasing is a far cry from the attempt to infer that it was "stolen", which is the clear implication of the hyberbole above.
And in fact that was spun too, because (as you read farther down the linked debunking) the original quote was "$2.3 trillion were unsupported by reliable explanatory information and audit trails or were made to invalid general ledger accounts", which doesn't even support "cannot track". In fact, per that statement, we can track it, we know where it went, we just don't know why or in some cases to precise recipients.
Those are accounting failings. They're bad. A system with failings like that is certainly going to be subject to exploitation and fraud. For sure they should fix it (and to some extend did). But to claim that all of that $2.3T was fraudulent is just a plain lie.
Citizens in my country lost it all in the 90s. Inflation was out of control, politicians were desperate and at some point somebody decided to simply freeze everybody's assets.
Oh, come on. Have you never lost a check? Never seen a credit card bill you can't explain? Never had an argument with your spouse over what the $2k at Costco was for? Never gotten a bill and had trouble figuring out if you've paid it or not?
Accounting failings happen to all of us. The only people with perfect bank accounts are either (1) accountants themselves or (2) never really bothered to look.
No to all of that, never. I lost my debit card once along with, stupidly, my PIN (both were in my wallet, which was left somewhere). The maximum daily withdrawal was taken from ATMs that night. The next day, my bank made me whole. If that had been a crypto wallet, I’d have been out $1000 I couldn’t afford to lose.
Man, was I grateful for the human considerations built into traditional banking!
That's nice anecdote. When a thief intercepted my credit card information, my bank accused me of lying and made sure the thief could keep all the money, including going through the full appeals process for fraud reporting where my claim was denied at every step. Then the bank kept insinuating that my family members must have stolen the money, and called into question my credibility in a condescending tone. Honestly I've found fraud protection at the bank to suck horribly.
With my crypto transactions I never send the private key with it, unlike with credit card payments where I transmit the private information (CC numbers). Going off anecdotes, I've found crypto to be vastly safer for my transactions than the banking system.
Laws never prevent crime they(no gender they) only provide a mechanism to punish people who violate them. Given that there isn't a lot of existing legal framework around crypto or crypto trading it may be difficult to punish Celsius Execs. I'm no lawyer I just play one on board games. In truth the list unscrupulous crypto firms seems to grow daily. By the time crypto becomes safe and energy efficient it will be just as cumbersome as real money.
You can't steal my Bitcoin if I don't deposit them with a custodian. This is like blaming gold itself if the owners of a gold bank run off with the gold.
> You can't steal my Bitcoin if I don't deposit them with a custodian.
Many people have lost their BTC and other coins to hacks, phishes, hardware failures, software failures and so on. So in the sense of the people from the general public, yes, I can steal your Bitcoin.
> This is like blaming gold itself if the owners of a gold bank run off with the gold.
You can keep it under the mattress and expose yourself to one kind of failure mode. You can also keep it with the bank with the clear expectation that the owners will not run off with the gold and also expect the state to go after the owners if they do. Which is not happening here.
But you can blame gold itself for that. Gold is inherently valuable; and one flaw of inherent physical value is that it can physically change hands forcibly and, well, the bearer of that value now controls it in complete and total form.
Cryptographically verified exchange is a different kind of exchange, and it has its own benefits and drawbacks. one of the benefits of this kind of exchange is that mere custody of the currency in question does not relate to ownership.
Does that make gold worse or better than bitcoin? No, it just makes them different.
? Candidly I don't know what you mean, so I will share this anecdote about gold in trucks: there is a building in downtown Chicago, built at the height of the mob days, with an elevator which can lift an entire (full) armored car.
It can lift it several stories up, into the building, where the bank can unload it safely without risk of robbery.
Also, of course, you can't actually steal bitcoin, you can merely steal the keys. That is an actual distinction because possession of the article itself is meaningless without the other half of the cryptographic operation it takes to move it.
Stealing the keys is effectively stealing Bitcoin. Otherwise you get into semantic mumbo jumbo because Bitcoin isn’t owned by anyone, it’s just assigned to an address that is controlled by a private key, etc etc.
If I steal your keys, I steal your Bitcoin. And it’s easier to steal the private keys to $40M in Bitcoin than it is to steal $40M in gold (700 kg).
What I meant with my poor analogy is that if a bank is planning on blocking customers from withdrawing funds, it’s much harder to ship out the gold to their friends than to ship out Bitcoin. It’s pretty trivial to allow Bitcoin withdrawals. It’s just logistically hard to coordinate the transport of 700kg of gold out of the bank and to somewhere else.
yes, i agree, but that is still a distinction, is it not? i'm not making a value argument, i'm merely pointing out that possession of the currency itself is not the same as the keys required to exercise control over the currency.
arguably, if we are making value statements, there are a set of similar trade-offs for physical protection of keys vs. primary material. 700kg is harder to move: that's a security feature. keys are small: that's a security feature, because they are a small O(1) surface area to protect regardless of how much value they maintain control over at any given moment.
these are simply tradeoffs. it is only "easier" to steal keys if they are left unprotected.
I can insure gold, bitcoin is much more difficult to insure. In fact, I can have my gold stored in a secure facility that I don’t own yet still retain full ownership rights.
No bitcoin has always been difficult to insure because no sane company would insure something that can double or triple value overnight. The extreme finite quantity of bitcoins is what makes it difficult to insure.
theft is loss of value. either way the fact remains, Bitcoin is difficult to insure due to its scarcity. If I insure 1 BTC now worth $10k then in 20 years or so (or maybe overnight) it jumps to $1mil. The insurance company hasn’t gotten enough premiums to cover the payout. Insurance works well for inflating assets, not so much for deflating.
Um, no, I don't think language works like that. Let's try to rephrase that with gold: "You CANNOT steal the gold under my mattress. You can steal my keys or break my door, walk in and then move the gold from my house to your car and drive off.". Don't you agree the above is equivalent to me stealing your gold?
That's a good argument, but notice what I'm saying is that stealing the bitcoin wallet keys is the only known way to steal bitcoins (I'm not saying bitcoins cannot be stolen, nor that it would be wrong to phrase that bitcoin was stolen as the result of compromised keys). If you're hiding gold under a bed one could steal your door keys, break the door through brute force, set your door on fire, get in through the window, make a hole through the floor under the bed, wait until you get the trash out and sneak in, and so forth. Bitcoin allow you to be concerned with only one thing: keeping your keys secret.
You’re getting into a semantic argument. The idea of someone stealing bitcoins, vs the keys, is an attempt to deviate from the issue/discussion at hand.
Except that we have regulations for banks and brokerages for how they must operate, what sort of cash reserves they have, and how they must conduct audits. And they pay into an insurance program (FDIC/SIPC) to return money to depositors if they collapse.
Sure people can. They simply have to encrypt and hold your data for ransom or any of the many other schemes to blackmail you. The crypto enables the perp to get that ransom across the border and evade punishment. If it wasn't for crypto such schemes are much harder to pull off.
I would blame gold itself in that circumstance. The fact that gold is so easy to steal, and so hard to then recover, makes it a poor currency. Fiat currency in an electronic account with a legitimate financial institution is much safer and more secure.
> When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
In my mind the advantage for a US Government-backed crypto is the violence you mentioned above and convenience/traceability. The loss of anonymity I'm sure is a feature to them, not a bug.
Anyone remember the Clipper Chip[1]? CBDC's are literally that but for finance.
Being able to see who is sending money to whom is incredible valuable (even without the ability to manipulate that money, which is worth even more) - remember how much the US intelligence community values metadata.
Sure, the US government has a large amount of insight into financial transactions now, but there's a difference between "a lot" and "literally all of it".
People here seem quite comfortable with the idea of giving their own government the Clipper Chip for finance - are they so quick to forget the lessons of history?
It doesn't have to be a legal system or a government in general. E.g. Rai stones are basically a public ledger system akin to a blockchain, but working through social convention.
One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.
Each with their own advantage/disadvantages, and you get to choose which one to use after considering the tradeoffs.
Things I would use crypto for:
* Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties.
* Any transaction that I would like to keep my privacy on (and this does not mean illegal things, btw).
Things I would never use crypto for:
* Storing wealth. For me personally it's too much of a bet, we're always one right (or wrong) math proof away from all of this becoming dust.
* Smart contracts. Anything that requires a contract between me and someone else, I'll keep using the tried and tested way of common law. I'd rather have my business backed by the Delaware Chancery Court (which has proven to be quite effective these past weeks) than by the code wrote by some random upwork contractor.
Crypto is bad at money transfers. It's low capacity. That's why nobody is using BTC to pay for pizza anymore. It's also bad at privacy, since the architecture for most crypto systems relies on storing a permanent, non-modifiable public ledger.
Your usage case doesn't really work because almost nobody cares about that. You'll find a few idealists interested in that, and a very few people that need to transact with some random person in Bangladesh. Pretty much everyone will just do a regular bank transfer or use Paypal.
What got crypto to become popular is the "get rich quick" schemes, which not only don't require stability, but rely on instability and people attracted to the idea of exploiting it for profit.
Monero and other less well-known currencies solve all of that. You can say it's bad or useless for other reasons. But my direct experience with dozens of P2P transfers, outside exchanges, both paying people for products and services and being paid myself, is enough for me to know that the future involves private cryptocurrencies one way or another. It may be akin to the taboo nature of torrenting movies at some point, but it's not going anywhere. CBDCs, traditional fiat, crypto, and even precious metals (yea we used to use those too!) will all have their use cases over the next decade. Paying people (and being paid) with precious metals and private crypto feels so amazing, so freeing, I recommend everyone give it a try.
20K transactions per day currently? A single city would have more transactions than that just from people having breakfast in the morning. And these are world-wide stats.
Ah c'mon gimme something better to chew on, this argument is cake to dismantle. (1) You don't use Monero to buy breakfast. It's for large money transfers so at least compare it to bank wires. (2) Very few people know about Monero yet. Credit cards were at 20K transactions per day at some point. If you know how to look at the chart you linked, you can see the TX count growing sustainably over several years. This is healthy growth, not some SV venture-capital juiced unicorn. (3) There will be very few ultimate winners in the crypto game as far as fungible currencies. It's a more honest comparison to include transaction counts of non-fungible cryptocurrencies like BTC and ETH that people are unfortunately using as a currency for now. (4) Monero is just one of a few other legitimate private cryptocurrencies, so include those transaction counts too.
Well I could go on laughing at the "nobody cares" take, but you don't care so I'll leave it there. Enjoy your CBDCs in the metaverse.
And why the hell not? It's supposed to be a currency.
> It's for large money transfers so at least compare it to bank wires.
And then what, exchange to USD? That'll bind it to an exchange rate, and create the same problems BTC has. Rather than having direct use as a currency, it's a betting mechanism.
> Very few people know about Monero yet. Credit cards were at 20K transactions per day at some point.
It's been almost a decade. That's an eternity in internet terms. If it only has 20K daily users world-wide then it's failed as a currency. People usually trade with people close to them, and if there's 20K people active in the world then that suggests either a very tight knit community somewhere nobody else cares about, or a bunch of nerds all over the world.
> If you know how to look at the chart you linked, you can see the TX count growing sustainably over several years.
I see it growing way too slowly and oddly. Yeah, there's periods of growth but there's also stalls and falls, and going back and forth. Growth also tends to start from a spike. To me that suggests Monero doesn't have that much traction of its own and in a good measure profits from the failures of other crypto systems.
I'm not sure if that's an accurate analysis on my part or not, but if there actually was interest in what monero provides I'm quite confident it should be growing a lot faster and be a lot more prominent. It's the one crypto that actually wants to be a currency, and yet near nobody seems to be interested in that, preferring to gamble with BTC and ETH.
> It's a more honest comparison to include transaction counts of non-fungible cryptocurrencies like BTC and ETH that people are unfortunately using as a currency for now.
Those are heavily congested, so the transaction counts is mostly what the network is capable of, not what people would like to have.
> Enjoy your CBDCs in the metaverse.
My what? If you're talking about the project I work on, we formed specifically around the rejection of cryptocurrency and in general don't care for fiat transactions either.
I would continue easily dismantling your points but you're like a boomer railing against the Internet in the early 90s. It's bad according to your value system so other people shouldn't use it either. You don't understand it or want it or whatever. Which is totally fine. I'm not saying your position is a bad thing. In fact you have my respect. My Dad was like this with the Internet in the early 90's, and still is. He STILL doesn't use the Internet and his construction business is just fine without it. He has my respect. Both he and I ended up being "right". My only advice is to stick to your guns going forward, be like my Dad and NEVER use cryptocurrencies or metal or barter. Only use military-backed currencies and have them tracked and traced as much as possible. In fact don't even use physical cash. For your safety.
As for me, I'll continue to use Monero and precious metals and barter, and use fiat and the coming CBDCs as little as possible. If that's alright with you of course!
It takes all kinds. Though if you don't know what the Metaverse or CBDCs are you got some surprises coming!
Nah, you're barking up the wrong tree entirely. I did have a very passing interest in crypto way back, when BTC wasn't yet at full capacity. I was sure back then the situation couldn't last, because paying $50/transaction was completely ridiculous for any kind of currency. People HAD to rebel against that and at least raise the block limit to alleviate the urgent problem now, even if that wasn't the long term solution.
Oddly, that didn't happen. The big players strenuously resisted any effort to alleviate the network congestion. I was feeling very confused.
It slowly dawned on me that my type of usage was a niche. The main players were interested in speculating on the value, and held huge hoards they intended to optimally sell once. They didn't care if it took 10 hours for the transaction to go through or they had to pay a ridiculous fee, because a $100 fee is effectively nothing when you're making a profit of $millions.
So far nothing has really changed my mind. If what Monero offered was what people wanted, they'd have switched over en masse, and they really didn't.
I dismissed it all very early on but for other reasons. I took one look at the BTC whitepaper way back, saw that every transaction and wallet was completely public, and immediately wrote it off based on that, along with everything to do with the cryptocurrency space, until I found Monero then some other related currencies about 4 years ago.
You have different standards than me as far as what constitutes a "successful" currency. And that's cool! For example you generally can't buy breakfast with the currencies of silver or gold or British Pounds (in America) either. All throughout history there has been different currencies for different situations and crypto is just another one on the pile. I wish salt would make a comeback myself. ;)
I use cryptocurrencies as private replacements for bank wires. If your standard is that you must be able to buy breakfast in a city with it, then I agree with you it is not a currency by that definition and probably never will be.
As for me I get paid for my professional services in crypto and turn around and sometimes pay other people for goods and services without any conversion in between. Sometimes I convert it to precious metal directly. Sometimes I convert it to a fiat currency or another crypto. Sometimes I hold. It's all good!
Thanks for the conversation and good luck with everything you're working on.
> Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties.
Let me tell you my experience with trying to remit money to my family with crypto. I really tried to give it a fair shot, because finding a cheaper way to shift money around would be really nice.
I wanted to do it via stablecoins, because I have no interest in playing the speculation game with BTC/ETH prices. So the path should be:
* I transfer money to Coinbase, and buy some USDC
* I transfer said USDC from my coinbase wallet to another exchange's wallet
* I sell USDC on said exchange for MYR
* I transfer said MYR to my bank account
* Money goes from my MYR account to my family's
Simple enough, in theory. But, the Malaysian government has granted four institutions a license to trade cryptocurrency, and three of them only trade BTC and ETH, and the last ist BTC/ETH plus litecoin, bitcoin cash, and a bunch of other ones I've never heard of.
So here I'm stuck. It sure looks like the primary audience is speculators and not people like me who actually do want to transfer money cross-border.
But is it actually cheaper though, if I chose to use ETH/BTC? Well, the target to beat is transferwise's 61 basis points (used to be 45) (I'm also a liquidity taker, since I'm not interested in playing with price movements): first is 200 bps, second is 50+10bps, third is a startup that doesn't even list fees on their website, fourth is 50 bps.
But wait, since I'm not using stablecoins anymore I have to also pay liquidity fees on the USD side. Coinbase charges 60bps, bringing the total up to 110 bps, 50 more transferwise. I'm assuming the other exchanges are around that price, but unless they're under 10bps it's not cheaper than using transferwise.
So it's really not looking so good. It's not cheaper, it's not simpler, and it involves just as many KYC checks (required in both countries, and very strict ones on the Malaysian side).
Can't you just use Uniswap to swap the USDC for ETH, before transferring the ETH to your exchange account in Malaysia? The Uniswap fee is only 0.05% ($0.50 on a $1,000 swap). The transfer and conversion of ETH to MYR should take 5 minutes, so you wouldn't be speculating on ETH's price for long.
This already exists though and is a technical solution to an economic problem. The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise.
Crypto transfers for say USD->EUR via USD->BTC->EUR are just adding extra foreign exchange legs in the hope that the BTC holders on either end will give you a better deal.
>"The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence."
How many people were prosecuted for the 2008 financial crisis though? Neither did the "threat of violence" nor the legal system prevent or even deter those perpetrators.
Exactly. The people who benefit the most from the current system are the already rich, who can afford to the legal fees and come up with creative defenses.
Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system.
This debate reminds me of the nature vs nurture debate in biology. It's a mirage. In reality, it's nature via nurture. Similarly, there is no inherent divide between government and crypto. One can extend the other.
> Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system.
Are you sure? The WSJ says that 0.01% of all holders control 27% of Bitcoin, vs. the top 1% of households who control about a third of all U.S. wealth.
You don’t need a security staff to keep a bitcoin wallet secure, that is a very odd comment.
Cryptocurrencies are not about making poor people rich and rich people poor. It is about having the a ability to do frictionless, uncensorable financial transactions among many other things.
> You don’t need a security staff to keep a bitcoin wallet secure, that is a very odd comment.
The "Bitcoin rich" are vaulting their BTC in tens or hundreds of wallets, mostly cold (hardware and paper), and those have to be managed, backed up, and secured.
> Cryptocurrencies are not about making poor people rich and rich people poor.
Agreed, crypto culture leans to wealth redistribution from suckers to grifters.
That article (from the URL) appears to be about Bitcoin, not "crypto"
And the distribution of Bitcoin might be skewed because one of the largest holders (Satoshi) is possibly dead, and many others would be custodial addresses (centralized exchange addresses, and large funds like microstrategy).
Furthermore, many of the addresses being considered would be inactive addresses by people who have moved on to new addresses. In that case, you have many addreses with "dust" balances which are not claimed by anyone, perhaps as much of 80% of addresses which have ever been used. I have gone through at least 6 such addresses myself, and I no longer use the Bitcoin network (or have funds on it)
It's a lot different than the dataset used for considering wealth distribution among a known population number, whose monetary declarations are necessarily exposed to a government which can publicize this kind of data in a more accurate way.
It's not a monetary system problem, it's a banking problem. The cryptocurrencies themselves are fine. The problem is people keep reinventing traditional banking on top of them. Everything started to go wrong as soon as exchanges showed up. All of the drawbacks of centralized banking with none of the regulatory benefits.
This isn't decentralized cryptocurrency, this is sending coins to some centralized corporation and expecting that everything will be fine.
As an aside, I always point out that countries with no functioning government still have violence and the threat of violence. The earliest writings I've found that use this terminology talk about a "monopoly" on violence, and I think the distinction is important. Also, I think that such a monopoly is not self sustaining but depends to a considerable effect on maintaining its own legitimacy by acting with restraint.
The problem is the people in the government with guns tend to work against the people (or at least certain people, last time I interacted with one of them they were serving me an absurd perjurious warrant). I trust the crypto-anarchists with guns far more than the fiat-authoritarians with guns.
The two are not mutually exclusive. Gold, for example, is not backed by people with guns. However a financial and legal system can be built on top of it, in fact it was build on top of it until 50 years ago.
Sure it is. If someone steals your gold, you can call the people with guns to arrest them and get it back to you (often). It doesn't have to work 100% of the time to be an effective deterrent.
However fiat money must be protected by people with guns against forgery. With one exception: people in power are allowed to counterfeit it, thus robbing the common people, under protection of people with guns.
Gold and Bitcoin are immune to both types of forgery.
I'm not aware of any way to actually increase the total amount of real gold in/on the earth in any meaningful way in an ECONOMICAL matter (i.e. you have a net positive income from producing it). The government can make more REAL MONEY for far less than the value of the money.
That big disadvantage isn’t just “people with guns”. It’s the value of an entire stable society. The reason the USD has reigned supreme for so long is because the US has been a relatively peaceful and stable country for so long. Their fiat value are 1:1.
Crypto, unless it receives the backing of a country (that is, the US decides to switch to bitcoin for some reason), will _never_ have actual value.
> That's why the whole [fiat] system works -- because of the threat of violence.
> Crypto doesn't have that ... for now.
Subtle!
The word violence has many euphemisms, but you are using the word violence here as a euphemism for the power of the state to enforce its laws. You can argue about the laws themselves (as we all do) but to not enforce the law is anarchy.
> That's why the whole system works -- because of the threat of violence.
And that's what bothers me with the fetishization of "violence is not the answer".
Violence is DEFINITELY an answer. It's what state entities do on a regular basis. Now, it's not wise to rely on violence regularly, when more peaceful methods exist and are more effective.
The libertarian leaning, free market lovers on HN won’t entertain your slander. The book Debt really opened my eyes to a flow of logic demonstrating that in fact markets cannot exist without states (laws) and vice versa. That this idea of pure markets corrupted by governments is a complete fantasy invented whole cloth and worshipped by sycophants for centuries. Markets require contracts, which require laws and enforcement. That’s it.
You aren’t actually arguing again the core argument: contracts, laws, and enforcement don’t require governments. Just because this is the dominant system today doesn’t necessarily mean it’s the only way.
that copypasta you found has nothing to do with the asset involved…..
it is not likely what Celsius did was legal (or consequence free via the legal system) , so that has nothing to do with the matter that their company held crypto assets
adding clearer fiduciary duties to company’s that hold crypto assets is entirely possible and so also has nothing to do with crypto
Not sure why you're calling it copy pasta given that I wrote it.
But it does have to do with crypto, because the company involved was holding crypto like a bank, but aren't regulated like a bank because it was crypto.
I'm calling it copypasta because your response wasn't specifically about Celsius, it was looking for a reason to write your pre-existing beliefs about the entire asset class in a place where it wasn't relevant. A lot of people do this, but one of the bigger problems is that it lets poorly run companies get a free pass on bad business practices. "Our unscrupulous behavior won't matter because people will conflate it with crypto. They won't apply scrutiny to us, they'll just try to reduce access"
It also worked before the US went to a fiat currency in 1971 when Nixon took us off the gold standard. It also allowed for massive deficits because before they couldn't spend what they didn't physically have and now they can just print it without gold backing it.
This is the same thing that William DeVane has been saying shilling gold for Rosland Capital at 2am to Fox viewers for the last decade. I'm not worried. [1]
Sorry, when I said "talking his book" that's like a finance term for advocating for things that would benefit the positions you hold.
> Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio.
Sorry for the poor wording of my response, I knew what you meant. I meant that he’s invested the way he is because he believes in what he’s talking about in terms of macro trends. And then I confusingly recommended reading his printed book, which I’ve found very helpful in understanding what the central banks have been doing, and allowed me to be well positioned for this inflation well before it picked up to where it is now.
That’s a fascinating idea but no I don’t think so. I think crypto is just liquidity for the future internet. The idea it has any purpose as a currency seems to me like a relic of the failed Bitcoin principles.
Crypto is a bit like the early internet. People thought the liberation of information would make people smarter and democracies. Instead we built giant skinner boxes where people ignore valuable information in favor of random stimuli.
It’s likely the most dystopian outcome for crypto is the most likely - something like Central Bank Digital Currencies where every transaction is logged and financial privacy is erased. At the edge you might have something like flexible pricing where anyone who doesn’t own a business will be charged more money for transactions if they have more money, thus making sure that capital owns everything and can’t be threatened in the future.
> Central Bank Digital Currencies where every transaction is logged and financial privacy is erased.
That is already the case though with just regular bank accounts and debit/credit cards, no? There's still privacy in cash, but cash is getting more and more limits placed on it to make it harder to use for this exact reason - and it's not even new, e.g. Sweden has been intentionally openly pursuing "cashless society" as a goal for over 20 years now.
Can you point me to any "crypto nerds" affected by this? The article is precisely about how the insiders still come out on top. It's precisely the blindsided non-nerds that are (hopefully) learning now and custodied their funds with Celsius.
Ah yes, nothing more inventive than using the same drum synthesizer for 40 years!
Also, I'm sure it's super hard to push the limits of all 127 values of dynamic range that MIDI offers, especially when you also write all your music on common time
What's hilarious to me is that crypto boosters would often cheer about how crypto doesn't "suffer" from the same things as our existing financial system (e.g. potential run on the bank in a fractional reserve system) - but then they went and built up all the same things they originally said crypto was immune from, this time with no regulations or legal framework.
I use cryptocurrency, however I don't remember ever working on, particiapting in, or endorsing Celcius.
Celcius is not decentralized, it is not a community led-project, it is not free/open source software.
So who is "they"? It's obvious to me that the type of person who endorses something like celcius just sees cryptocurrency as a free money machine, and does not actually have real princples regarding decentralization and whatnot.
Cryptocurrency can be strong against censorship etc. But it is clearly not sufficient in itself for censorship resistance etc (e.g. what value is being secured? from who? how?) It is analagous to saying that encryption is good for security but the presence of encryption is not sufficient for security (e.g. what data is being secured? from who? how?).
The fact that celcius can steal your deposit despite the fact that cryptocurrency is involved is analagous to the fact that GMail can read your emails despite the fact that HTTPS is involved.
They're not even wrong. Cryptocurrencies really are immune to many of these problems. You can't bank run bitcoin: there is no bank, no fractional reserve, nothing.
The issue is people keep reinventing centralized banking on top of it. Exchanges for example are actually just banks in disguise. Of course reinventing centralized banks brings forth all the problems associated with centralized banking. Problems society has already identified and remedied. All the drawbacks and none of the benefits.
The solution is of course to stop reinventing banks and start using cryptocurrency like it was meant to be used: as a currency.
People surprised by this might be the sort of people who try to cuddle a porcupine and are surprised when they get stabbed. That said, we have laws designed to protect stupid people from those who prey on the stupid, so I hope these execs get the book thrown at them.
I'm not sure that quite follows. Yes, cryptocurrencies are currently a wild west, and there are a lot of scams, but I don't think it's fair to paint the whole space with the brush of a single particularly-blatant scam. It's like... when the whole Theranos thing came crashing down, it wouldn't be fair to say "well of course, most claimed medical advances are scams"; Theranos was a scam, and had some fairly major signs of being a scam, but that doesn't mean that most medical advances are scams. Likewise, Celsius was a scam, and AIUI looked like a scam pretty early on, just like a lot of other things in cryptocurrency are scams, but that doesn't mean "people involved in crypto" == "scam artists".
And the most amazing part --- it's not even a scam.
He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.
The DOJ is going after folks for front running [edit: better wording: insider trading, thx jcpham2 for pointing out my lazy language] NFTs on Coinbase. This is not a defense (“not real money”). Can’t have it both ways, that they’re digital assets when you want to scam, but it’s play money when you get caught.
These people will be charged with a crime, and the government is going to find something that sticks. Securities fraud, wire fraud, whatever fits.
Imho we should be careful of using this term front running.
If I buy a thing (simply becqause I can) and then turn around and sell it at artificially high limit sell orders, does this mean I'm front running or market making? Spoofing?
It's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.
Your post is based on an assumption --- that crypto is legally defined as a "security".
Do you have any reference to support this?
If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight.
As I said, this cuts to the very core of the crypto market.
> As noted above, in categorizing the tokens as a security, the SEC’s complaint makes reference to the Howey Test, under which a digital asset, including a “crypto asset security” will be deemed a security “if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.” The DOJ’s complaint alleges that “the defendants made illegal trades in at least twenty-five different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.” The SEC’s complaint claims that at least nine of the 25 crypto assets were “crypto asset securities,” and therefore the defendants’ insider trading of securities fell within the SEC’s “broad jurisdiction to regulate the securities markets and to bring actions for violations of the federal securities laws, including fraud and insider trading.”
> None of the issuers of the nine “crypto asset securities,” or Coinbase itself, are named as a defendant in Wahi as this is an insider trading case. Issuers and exchanges of tokens should take caution, however, as the SEC’s stance in Wahi reiterates the SEC’s a broad view of digital assets as securities and its ability to regulate them.
As duped mentions, if it's not a security, it's a commodity falling under the regulation of the CFTC.
What is the point that you're trying to make? People put in real money that they won't get back because they believed in Celsius. Execs made real money by cashing out before closing the doors. That's called a scam.
"I convinced them to pay real money for fake money, stole the fake money, and exchanged it afterwards for real money" is not an argument that is likely to convince the SEC (or a jury).
not an argument that is likely to convince the SEC (or a jury).
Mainly because your argument is wrong all the way around.
Celsius never accepted any "real money" from anyone. Any "fake money" they allegedly "stole" came from their own account, not those of their customers.
That doesn't pass the sniff test: people clearly entered the market with actual money (even if they didn't directly pay Celsius), and left with none.
You can argue (perhaps correctly) that they shouldn't have traded their real money for funny money, but it's ultimately no different from any other financial instrument.
Let's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz.
So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself.
HA! I dodged it all!
.... no. The spirit of the law is that this is a financial transaction just the same.
BitCoin and all the other crypto currencies are no different. It's all play money.
A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.
What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
> What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
Web3. Ask me a hard one next time.
Less-flippantly: Probably fraud, regardless of how many disclaimers your website has in 4pt font.
There's an update at the bottom of the article disputing the claim:
"Your report that Mr. Goldstein withdrew millions of dollars in advance of the “pause” is flatly mistaken. The reality is that Mr. Goldstein did not withdraw even one dollar in the four weeks prior to the pause—to the contrary, he deposited over $90,000 in CEL tokens in late May, just three weeks before the pause. Most of the supposed “withdrawals” from our client’s account were, in fact, regular-course transfers between his accounts and involved corresponding deposits. Indeed, in the year before the pause, Mr. Goldstein had net positive deposits into Celsius (including interest), not withdrawals. Your account unfortunately distorts Mr. Goldstein’s position, as he currently has millions locked up in Celsius, making him one of the Company’s largest unsecured creditors. Nuke is proud of his work to create a secure platform for Celsius users, and has been working tirelessly day in and day out to help restructure the Company to the benefit of all its creditors."
This was an incredibly bold operation from the begining.
They planned to exit one way or another, using the incorporated in the US to gain trust and the plan was not to just disappear, but file for bankruptcy as in "it happens".
It is remarkable how they used the depositors or investors money to pay for their lawyers and yet the government considers this a chapter 11 instead of 7, as if there is any way to conduct business going forward.
Reputation gone, money gone, the owners gone.
Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
I am not sure greed is the only factor, there must be more behind it, some shrinks will have a field day.
And all the victims are now asking for a government intervention.
There is no free lunch, even mashinkis money will come at a large cost. From what I read, many lost over 100k and some lost 7 digits, certainly some shady people amongst these.
In conclusion, this was planned from the very beginning. If they could run this profitable, fine, if not, they hiding money followed by chapter 11 was the backup plan.
> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
The same way that people keep falling for the same sorts of conspiracy theories over the years.
Add to that, the fear of missing out, and you can extra marvelous quantities of wealth from suckers. Several industries use FOMO to manipulate people into purchasing things that they probably shouldn't - like cars, MLMs and real estate (sample: "buy now, or forever be priced out of the market!"). After having been screwed (too many times!) previously by FOMO, I have an extremely adverse over-reaction to it: I have to walk away before I get angry.
> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
Does it?
If you're going to work every day to make a dollar, and your friend just sits on his ass and plays video games and makes a dollar every day off his CryptoKitty investments - and you can see the actual money in your friend's account - after a certain period of time, it's hard for anyone to resist, no matter how dumb it sounds.
Even Newton lost all his money in the South Sea Bubble... Twice!
I was about to write that but let me just copy-paste the first comment from the article: "Banks are not your friends. But obviously Crypto companies are not your friends either. "
Guns, Gold, Bitcoin or DuckDuckGo, VPNs, there is a planet full of gullible idiots whom you can sell anything to by shouting Government, Banks, Google, Amazon
I don't follow crypto, so these are actual questions, not trolling:
- If Celsius is a trading platform, how can Celsius itself owe anybody anything?
- My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by actual funds?
Most brokers- such as coinbase- perform their transactions using off chain methods. All the bitcoin in coinbase is held and owned directly by coinbase, and what users of coinbase actually have is a database table somewhere saying how much of coinbase's coins are marked as being owned by the user.
Celsius is similar, but they also offer a loan system on top of it. So the coins you give to celsius are not only no longer owned by you, but they're also not even present in a Celsuis wallet.
You lend Celsius some coins. In return they promise to pay you some % of interest. Celsius takes those coins and sticks them in another lending system that pays them a higher % of interest. The other lending system collapses and cannot return the coins because of an exploit. Celsius customers demand their coins back and Celsius cannot return them.
Others have answered about how Celsius got into trouble, as it was not a trading platform, but I'll answer the implied question - if it's all on a blockchain, how can a trading platform have a liquidity crisis?
The answer is - it's not all on the blockchain. The vast majority of transactions involving bitcoin are nowhere near a blockchain, they're all on a database (or similar tech) that the exchange runs. Blockchain transactions only occur on deposit or withdrawl of funds into or out of the exchange. If (as in the case of an entity like Quadriga CX) somebody 'accidentally' removes and loses most of the cryptocurrency, the exchange can continue to operate for quite some time, so long as everyone doesn't try to withdraw at once.
1. Celsius was a lending platform which allowed customers to earn yield on deposited crypto. It also had exchange features, but the blow-up is primarily due to the lending aspect.
2. The liquidity crisis happened because of off-chain financing which models current lender/borrower agreements.
custodially held cryptocurrency is not on the ledger. When you own cryptocurrency custodially with someone, what that usually means that they hold all the cryptocurrency and they have their own database of IOUs.
This is why it is unsafe to keep too many funds custodially with untrustworthy parties and why it is a good idea to minimize the amount you have custudially (e.g. on exchanges see mt gox fiasco)
It wasn't a trading platform, and certainly wasn't doing the transactions on a blockchain. It was "lending" platform, where you deposited your crypto and earned interst. Apparently they loaned out your crypto to low risk individuals/companies etc. But turns out it was an outright scam.
By the way, there are legit decentralised blockchain based lending platforms like Aave.
There is no liquidity crisis in the blockchain itself. These crises always happen to custodians which is some kind of newspeak for banks.
The fact is all of these exchanges and most of these crypto corporations are actually unregulated centralized banks in disguise. They're sitting on massive amounts of money in the form of customer deposits and you better believe they're gonna be leveraging as much of it as possible. Meanwhile everybody's accounts are showing the deposits as if all their money wasn't tied up in the bank's own investments. Someone screws up, risks a little too much and gets liquidated or called or something? Money's gone, the bank owes customers more money than it has, people notice and try to withdraw all the money all at once, the bank runs start and the liquidity crises set in.
Fractional reserve banking is at the root of this problem. You literally cannot have these issues without banks.
Yeah, decentralization is the cornerstone of crypto. The reality of it all is that it is not. But don't tell that to the zealots.
I'm pro-crypto, I think the innovation and paradigm are brilliant - I am developing a small project in crypto. I don't fool myself into believing the hype that exceeds it's capabilities, project organization or true architecture at hand.
If you have enough shady people involved in a particular activity, then that activity is effectively shady. Similar to the fact that if you add enough raw sewage to the water supply, you don't have a water supply any more, you just have more sewage.
It's one thing to pull some elaborate and complex fraud, but you'd have to be really stupid to do such blatant insider trading in broad daylight. Are they taking calculated risks in doing this because surely they're getting prosecuted and having all their money taken away as well?
Here is an article about Federal reserve officials selling all their stocks dated September 10th 2021 to avoid "conflict of interest". I would ask you to open the S&P 500 and check the 10th of September 2021.
https://www.reuters.com/business/finance/fed-officials-sell-...
It's not just about crypto, it's about who is allowed to use inside information.
Celsius was a scam, if something seems too good to be true then it is. The same applies to LUNA and it's Anchor protocol which was giving 20% APY on the UST stablecoin. We saw what happened there.
I suspect "Celsius execs" are about to get a tour of US bankruptcy law's clawbacks policy.
Anyone who withdrew money from Celsius in the 90 days leading up to the bankruptcy can be ordered by the judge to put it back in, and that timeline is extended to 1 year for insiders. [1]
A bunch of the folks who thought they got out of Madoff's fund learned that lesson last time.
Web3 is basicially about federated social networks. Maybe cryptocurrency plays a role, but the idea that it takes center-stage is one peddled by people who clearly have money to make.
Oh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns).
The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence.
Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now.
When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys).
We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
If you give away your crypto to some centralized entity and "trust them" that they'll keep your stuff and not steal it, then you don't get the point of crypto and you're using it wrong.
Yes, I know holding your own keys is hard. There are a lot of things that can be done to improve the UX. And even then, I don't think crypto needs to be easy enough for your grandma to use it, because I don't think crypto needs to replace TradFi for every transaction.
>Crypto is about being trustless.
People always say this, but you definitely have to trust that a group of unknown validators/miners/stakers will choose to keep working on your chosen chain, just as much as you have to trust that the bank will keep doing it's job as they promised you they would.
And before you say "I don't need trust, validators have economic incentive to keep doing it, and if they don't someone else will", I have something to tell you about why people choose to work at banks (it's the salary).
> And before you say "I don't need trust, validators have economic incentive to keep doing it, and if they don't someone else will", I have something to tell you about why people choose to work at banks (it's the salary).
This statement supports exactly the opposite of the point you're trying to make.
Think about it:
* Bankers have economic incentive to work at a bank (the salary)
* Validators have economic incentive to work on your chain (the block rewards)
That's literally the entire point. You don't need to trust any validator, only that the majority are self-interested, rational actors.
Uhh, do bankers get paid for not doing their job?
My point is that by the same logic then banks are also trustless.
> Uhh, do bankers get paid for not doing their job?
> My point is that by the same logic then banks are also trustless.
There's no logical connect with what you're saying at all. Ethereum is "trustless" because nobody can steal ETH from a properly secured wallet, not even the validators.
You should probably understand the basics of how validators work before making a comment on them....
Nobody can steal money from a 'properly secured' safe or centralized database either?
And to be clear, what I mean is that there's nothing to stop validators from not doing work on your behalf, therefore killing the chain.
Remember when that literally happened to Solana?
Edit: >You should probably understand the basics of how validators work before making a comment on them....
I'd love for you to walk me through, in detail how Ethereum and Bitcoin compile transactions into blocks, since you're the expert.
A centralized database is owned by a centralized entity and the admin can change it at will to steal money - or at least the owner of the hardware can shut off power. Let's talk about Ethereum here since Solana hardly counts as decentralized. Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain. If a validator decides to stop proposing or attesting to blocks, they will be penalized by the network and lose money. There's about $20bn of ETH staked that can literally disappear from existence if all of those validators decide to stop doing work.
This is an even better incentive mechanism than a bank salary. It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
> Let's talk about Ethereum here since Solana hardly counts as decentralized.
1) My joke was how much work you were having “properly secured” do. It’s a genuine trope called no true Scotsman. Every crypto phenomenon that involves theft “wasn’t decentralized enough” or “wasn’t properly secured”. But then centralized databases are discussed as a monolith.
2. > Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain.
Sure. That’s an economic incentive. Bank workers get fired and lose salary if they don’t show up.
3. > It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
Yeah, like getting paid in stock?
Edit: still waiting for the definition of a mempool as well.
You don't need to trust the validator because the protocol and cryptography makes sure they can't do anything against you. And the incentive they have to mine aligns with what you want (having the chain validated)
You need to trust bankers because nothing prevent them to just take your money. They're not working for you, they are working for the bank.
Nothing prevents them from taking your money, except the legal system of the country the bank resides in.
> makes sure they can't do anything against you
They can 100% choose to stop validator your particular chain, therefore causing all transactions to cease.
Remember when that literally happened to Solana?
"Validators", and we are making the strong assumption that they can actually support your claims of ownership against scammers and they don't choose to side with the enemy, aren't necessarily going to be around forever.
They can suddenly leave your cryptocurrency of choice by simply cashing out and switching to the "block rewards" of another crypto scheme, and then you are going to be alone with the bad actors.
> The whole point of crypto is that you can own it (ie you and only you have your keys).
I've also heard stories where people were locked out of exchanges during crashes, preventing liquidation, because exchanges stopped or delayed deposits during high volume trading.
Its super cool that you can keep your own crypto, but if you can't trade that crypto, whats the point?
I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap
I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it. You don't even get to know what wallet it's in, and if Coinbase decides to go sideways, they can snatch up your money with no legal consequence. You're right that part of the problem is the US failing to regulate them, but there's nothing to regulate. A public ledger does not a currency make.
Your parents will never have a custodial wallet. The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
> Nobody owns anything with crypto. When you give your crypto to Coinbase
Don't do that if you want to actually own your coins.
>I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it.
No, it is you who missed the point yet again. If you give your crypto to Coinbase it isn't your crypto anymore. You are entrusting Coinbase with your crypto. FDIC insurance may be helpful if your bank has financial difficulties, but any money you entrust to the bank can be seized just as easily as Coinbase can seize your money. Ask a truck driver who participated in the lockdown protests in Ottowa how secure their fiat money was in the bank after it was unilaterally seized by the government.
> The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
Does anyone go into crypto because it is "easier" than traditional banking?
I think you're missing the point.
Even if you have a private wallet, you don't 'own' your own crypto.
When the Solana network was down [0], could the people that 'own' their own wallets trade their crypto? What about the people with their coins on an exchange?
[0] - https://status.solana.com/uptime
By the way, these days there are wallets insured by Lloyd's which is a good of a guarantee as FDIC
I think you missed my point.
A recent example is Solana. Their network keeps crashing [0]. Everyone keeping their own keys are completely locked away from trading their coin. Everyone with their coin owned in a centralized exchange can trade freely.
If you hold your own coins, you're vulnerable to network attacks and AMM instability/hacks.
If you put the coins on an exchange, you're vulnerable to the exchange's liquidity issues.
[0] - https://status.solana.com/uptime
Yes, if you use Solana you should be aware that the chain very regularly has serious downtime. Ethereum gas fees can spike but generally there has never been downtime.
All chains have problems. Ethereum hard forked and high gas fees. Just to spend your money costs $20 USD :|.
How much downtime did Terra have before it crashed?
That's why I think Bitcoin is outdated (yes, get your pitchforks), and you really need something that can do smart contracts.
Bitcoin you can hold it, transfer it, and not much more. Having smart contracts (like Ethereum) allows you to have something like Uniswap, which is decentralized and allows you to trade your coins.
Yes, it's not a fiat on/offramp, but if stablecoins are actually good and backed, in the scenarios you describe you would just buy/sell stablecoins and at a later point exchange those stables for cash.
With tBTC (v2 coming very soon), you can move you bitcoin to the ethereum chain and trade it/use all defi there and then move it back all trustlessly. So in a way it makes ethereum a layer2 for bitcoin to work off of without having to change the bitcoin base chain
Layer two on Bitcoin. Lightning network. Stablecoins coming soon.
You can trade crypto in person without an exchange
Yep. Then you can enjoy all the risks of cash, with the additional benefits that you have to manage digital security as well.
Nothing like losing all your money because you can't unlock your wallet any more. Or sent it to the tip.
Finding liquidity might be a problem though. At least, I don’t have any local market makers quoting a bid/ask for BTC or ETH.
I don't know where you are, but it's very likely that you do.
We have a solution for that - it is called money and it is anonymous. I can also use it to buy things like Halloween candy at the store even when the power is out. Truly amazing invention.
But it isn't programmable, and I can't easily carry large quantities of it. Is it really so crazy that some people want to use crypto? The person wasn't saying "crypto uniquely solved this problem" they were defending against someone who said "crypto is useless if you can't do this".
Can't wait until all your crypto disappears because of an off by 1 bug:0 I guess that is the ultimate question - Does crypto actually solve a problem? Or at the very least solve some problems without creating more intractable problems in the process. I definitely remember it being touted as an inflation hedge. How'd that workout? Or that you cannot create more than X amount of Bitcoins - until they split the ledger. It seems like a new scam coin is minted daily - talk about lower barriers to entry. Just the fact that you mention transporting large sums secretly is interesting. There are many Drug Cartels wishing it was easier also.
I honestly don't understand how any self-respecting software developer wouldn't be excited by programmable money. I have wanted programmable money for almost a quarter of a century now, ever since I was consulting for a bank on their first website back in 1998. The centralized banking system simply refuses to do it... they barely even give me API access for taxes and accounting purposes, much less being able to automate moving money around or responding to payments :/. I've anxiously followed attempts by startups to build their own credit cards with better APIs (all of which end up sucking and eventually just fold), I've abused the hell out of the mostly-undocumented OFX endpoints offered by traditional banks, I was the largest mobile/phone customer of Amazon Flexible Payments up until they shut it down and replaced it with a lame Stripe competitor, and I have built an entire empire of tooling on top of PayPal... which somehow is the closest thing we still have here in 2022.
In contrast, crypto is this almost futuristic mechanism that centers developers by giving you a serverless transactional database system on which you not only can work with money but you can implement your own money. I can build my own mechanisms for authenticating access to that money, including--if I wanted to--replicating whatever features I liked from traditional systems. It offers functionality similar to ACH and wire transfers, but as a truly federated system that allows anyone to participate. Does it allow scams? Sure... but only in the same sense that other open systems like telephone networks, e-mail, and the web allow people to run scams! Are you really so closed minded as to not think everyone should get the power to automate their own lives as they see fit? God... I bet you are also one of those people who insist no one should be allowed to write or even install software on their own devices without going through Apple, or who insist that private end-to-end encrypted messaging is going to end civilization by mostly empowering terrorists, child abusers, and "Drug Cartels" :/.
> I honestly don't understand how any self-respecting software developer wouldn't be excited by programmable money.
Saurik, it is HN, where people complain endlessly about Paypal, but never want to fix it because that would be 're-inventing banking'.
Can you, with no services at all? You can share your keys... but you can still double spend, etc.
you can trade crypto you own, all the while keeping ownership of that crypto
look into decentralized finance and you will be amazed
There are a large number of different "whole points." One of them, supported by a lot of people, is "programmable money unencumbered by banking institutions." To a lot of people, organizations like Celsius is the point of crypto. And we keep seeing this kind of garbage happen.
I hate to be a "told you so" person, but since 2010 I've been saying bitcoin is just a typical libertarian pipe dream. Yes I missed out on a large financial bubble, but I also made $0 on beanie babies, and that is fine.
But my main point is that people see a problem with the government and jump to the conclusion that we should just get rid of the whole institution without understanding the history of that institution. So bitcoin decided to get rid of govt control of money, which is just like a small town getting rid of their property taxes. It sounds great and works great until a bridge unexpectedly collapses and you have no way to pay for a new one, or until someone finds a bug in your defi code and borrows all your crypto for 1000 years at a zero interest rate.
None of the things you mention are directly related to Bitcoin. Bitcoin has no bridges or DeFi. Only the blockchains with smart contracts (e.g. Ethereum) can have those.
But it will need all of those things to be more useful than the current system. People don’t mail cash to buy products anymore. People transfer cash to exchanges and are safe from attacks like this. Bitcoin and other crypto must provide the same functionality or it will not gain traction.
No True ScotsCoin.
This is a no true scotsman fallacy. It is crypto. It is the shallow, lazy, dangerous way of using it it, but it is still cryptocurrency.
People have been saying "not your keys, not your coins" for over a decade. This isn't anything new.
It's funny you can say that about pretty much anything. If it's not cash on yourself it's not your money, or all sort of other assets where ownership is essentially backed by the government. The issue with all these crypto schemes is, people want to get rid of government oversight when it's inconvenient for them (e.g. have to pay taxes) but otherwise still want the government to guarantee ownership of actual physical assets, because it would be pretty inconvenient to loose the mansion you bought with all the crypto gains.
And this aphorism conflates ownership with possession. Crypto is a bad actors fantasy turned reality.
Non custodial ownership is still an option, even if not advisable.
If my non-tech savvy grandma wanted to own some bitcoin, I'd probably suggest she just keeps it on the exchange. Counterparty risk is probably less than risk of user error.
What is “crypto”? If you hold the keys to some PoS token it’s effectively the same as holding physical fiat dollars. There is crypto and there is Bitcoin, and they are not the same thing.
Bitcoin is a cryptocurrency. It was the first one and it spawned many offspring. Some are identical, some are chain forks, some code forks. Some change, add or remove features. It created the category “cryptocurrency” and shares all of its features with other cryptocurrencies.
This “buh buh buh Bitcoin isn’t a crypto!” meme that’s popped up since the last major crash is childish.
> This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys).
> We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
It's funny how you write "with fiat it unless you hold cash, you can't do that". So what you mean is really with fiat you can do it just as well? The reason why people don't want to hold large amount of cash is convenience, the possibility of it getting stolen, lost... Interestingly many of the same reasons why people don't want to hold crypto themselves either.
You can't sell things on a website if paypal blocks you. Money does not work here, crypto does. also, how do you convert your blocked paypal account into cash? cash and online banking are two different things.
Where did we talk about selling online? Also you can sell online using cash, i.e. one person sends cash the other sends the goods (Mullvad for example sells the VPN services with cash). True most online places don't accept cash, but most also don't accept crypto either, and lets not even talk about physical places.
The Irony is that the owners of celsius were holding crypto's they controlled, They sold the crypto and the fiat currency their users held are now unable to be returned to them. This is why the ability to exchange any given asset(selling) is far more important. Yes, they could have held fiat currency in cash in their couch but buying crypto is far better than that because you own the asset, you dont have to mail anyone money and fear law enforcement from asking questions (very possible if you attempt to buy anything expensive in cash, especially by mail) and crypto is safe even if your house burns down and your deposit box gets stolen. But people buying into celsius decided to give them all the advantage of the cryptocurrency protocol and all the risks with lending someone else money.
I'm not even endorsing crypto, Just pointing out how much people misunderstood what the point of crypto even is. No company should receive money for holding your keys unless its dropbox
How do you safely use crypto?
It's quite easy: you download this Zero Knowledge Confabulator utility from github and load it up into your TAILS instance. Make sure you pull all this over Tor and use a North Korean VPN and please for the love of god verify the MD5 hashes. Once you've done this, you put your wallet key into the ConfabUtil which will produce a zk-snark. Memorize this because you will next need to go into an airgapped, seismically isolated room and write it down onto a one time pad. Now you start digging, and once you cannot dig any longer you can safely place this one time pad into the bottom of the hole, climb back out, and rest easy knowing Your Crypto Is Safe.
I sure am glad that I can be my own bank!
This is pretty much what it sounds like to a laymen like me. It's aggravatingly complex, with like, 18 points of user error failure points. And even if I quadruple checked, I'd wanna check 17 more times after that, and I'd still feel I messed up some crucial step at some point.
I love the juxtaposition of this comment with its sibling. Comedy gold.
With a hardware wallet where you store your seed phrase. You would never type this seed anywhere. You would store backups of this seed in something like a metal sheet that you can buy. You would be extremely careful of the numerous phishing attempts that you will encounter. Also with malicious smart contracts. And you would have a hot and cold wallet, to minimize risk.
Remember that this is an alternative to a small card that is widely accepted internationally that I can reclaim a transaction with a quick phone call.
Until the operators decide for their own mysterious reasons to make your small card stop working, or that you suddenly owe them a bunch of money you never had, or both at the same time.
How is any of this possible in the real world? If my bank says I owe them money, it’s on them to prove it. If they can’t I can easily take them to court.
"Easily" is far from my experience. I eventually got everything back but it took literally years.
I’d love to hear more.
I don't know much more, which is the frustrating part of the experience. When we got an actual court date they were suddenly happy to give me all my money back, and I was too tired to push further. But until then it was block, stall, ask for more copies of the same identity verification documents or claim that they somehow didn't meet the requirements (e.g. claiming that my bank statements weren't acceptable identify verification because they didn't show the account being in active use, despite it being my main daily account), insist simultaneously that they couldn't tell me anything but it would all be resolved soon.
I’m not a crypto fanatic but credit and debit cards are very susceptible to fraud
Absolutely, as much as any other payment method. Meanwhile there are consumer protections available for them. One phonecall and a form will pretty much instantly reverse a debit card, credit card, or direct debit transaction with any bank in Europe. On more than one occasion this has happened to me and it's taken less than 15 minutes to resolve.
https://krebsonsecurity.com/2022/10/report-big-u-s-banks-are...
top of HN today
EDIT: link to thread https://news.ycombinator.com/item?id=33125442
But in those cases the user gets their money back. This isn’t the case with crypto.
People with time get their money back. People without it get nothing back. And that’s not even mentioning the legal scams like overdraft charges… I’m just saying, the existing system sucks too.
It's not that much time, and frankly you need the time with any method. The last time it happened to me, my card provider noticed the transactions, blocked the card and phoned me to ask if I made them.
The time before, I phoned my bank and told them I had a charge I didn't recognize, they asked me to fill in a form and refunded me within 48 hours.
How do you buy a crypto without the trust? I understand that once you "have" it no-one can claim it's not yours, but is there any secure system about buying?
This is absolutely an aspect of crypto, and it exists because of shortcomings in the ease of use of crypto.
Sounds like a classic No True Scotsman fallacy to me.
"Any crypto that is actually usable by normal people isn't real crypto and any problems with that stuff doesn't count!"
Funny how other crypto bros would say the opposite.
But hey now you got my interest: if it's not for normal people for whom is crypto then in your opinion?
I'm not sure, it depends on how good the UX and trustless/low trust custodial services get[1]. I don't think crypto will ever be for "my grandma" for example. But I could see it being easy and safe enough for my dad, who knows what phishing is, would understand what private keys are, etc.
[1] This is too long to explain but basically something similar to multisig and time locks to add extra security. Nothing like this exists at least easy to use right now.
You said it though, it’s all about the UX. It’s much easier when you have something physical like a card or cash.
Huh? If that was true then it would be services like AAVE or Uniswap which would be bankrupt, not the centralized finance Celsius.
The idea that the traditional legal system prevents funny business with money is naive.
9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon https://www.youtube.com/watch?v=xU4GdHLUHwU
The Pentagon’s $35 Trillion Accounting Black Hole https://www.yahoo.com/video/pentagon-35-trillion-accounting-... https://www.bloomberg.com/news/articles/2020-01-22/pentagon-...
Pentagon's Defense Logistics Agency loses track of $800m https://www.bbc.com/news/world-us-canada-42954050
Political theater, the money isn’t missing.
In order to prevent fraud and obscure details from spies, the pentagon is setup to hand out money via multiple archaic systems rather than a single computer system. This limits the possible damages, but means audits are really slow and will report massive discrepancies before their complete.
I am not aware of a successful GAO audit of the defense budget in the US. Do you know of one?
https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
That’s really outdated, referring to things in 2018 as occurring in the future.
https://www.defense.gov/News/News-Stories/Article/Article/20...
It doesn't prevent it, but it gives you recourse to make yourself whole again, and in a sense prevents a lot of funny business because people are afraid of getting caught and being put in jail.
Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance (especially once multi-sig wallets become common). If Celsius had been more all-in on crypto tech, they would have had FEWER problems.
Also, I don't know any law that exempts crypto companies from being taken to court.
> How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance
Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public.
> Also, I don't know any law that exempts crypto companies from being taken to court.
...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach.
On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
DoJ shifts 150 prosectors to crypto cases. A bet at least one will be looking into this.
https://news.bitcoin.com/doj-launches-network-of-over-150-fe...
The legal system can only be used to settle payment disputes when parties are known. Buying a tv from the back of a van going home to find out it doesn't work will leave you with little legal recourse. The legal system can only work with entities within it's power. Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems.
Bank of America can do very little for your Russian payment disputes.
> Cryto can solve these trustless entities problems. > Bank of America can do very little for your Russian payment disputes.
Didn't know crypto had a contract enforcement apparatus in Russia. How does that work?
> Get ripped off from a foreign supplier can require a lawsuit if available to you in an unfriendly legal system. Cryto can solve these trustless entities problems.
Pardon the ignorance, but, how, exactly?
AFAICT crypto's solution to getting screwed by a trustless entity is "screw you, you deserved it for not doing due diligence."
It is important to understand that crypto is not an expression of finance (although financial transactions do take place on top of crypto), but an attempt to express law outside of the bounds of IRL legal frameworks, stating, "code is law", which is of course, not true. The legal system always takes precedence when they have a monopoly on force (financial and physical), which is why crypto is destined to be a niche system so long as it does not have mechanisms for the legal system to exert its will on it. What is business logic of traditional systems if not expressions of business rules operating within the constraints of legal frameworks?
It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.
"Code is law" is a property of Ethereum Classic, not all cryptocurrency. I don't really see many crypto people arguing that code should supersede law.
I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it.
By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
> I don't really see many crypto people arguing that code should supersede law.
Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about.
> I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig.
Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete.
For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely.
https://www.coindesk.com/tech/2020/11/10/multisignature-wall...
> Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me.
The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.
Many traditional types of payments, such as wire transfers, cash etc. are also non-undoable. Incarceration and a variety of other tools at law enforcement's disposal are used to recover funds.
Those payment instruments are generally subject to fairly low transaction limits due to the potential for abuse. Cash is the exception there, but it's extremely inconvenient to move or store large sums of cash and nearly impossible to do so anonymously.
Crypto is unique in that transactions are immutable and do not scale in difficulty with the amount being transferred. Ransomware gangs do not choose to accept cryptocurrency payments because it aligns with their politics; they do so because it is the only way to move millions of dollars across international borders in an undoable fashion.
Those transactions are still undoable by a third party. Using the legal system you can file lawsuits and the perpetrator can have the cash or electronic debits removed without their participation.
With crypto, you must have the help of the criminal, because only they can unlock the wallet.
There are many ways to implement undo-ing transactions on the blockchain. One is with multi-sig wallets.
There are also others: https://www.coindesk.com/tech/2022/09/28/stanford-proposal-f...
You keep talking about "multi-sig wallets" in multiple posts. Are you going to have courts in every relevant jurisdiction have a handle on that wallet? That seems unlikely to go over well with the sorts of people who take these seriously.
I don't know, that's a good question. That's the discussion we should be having, instead of flat out stating that it's impossible.
The "sorts of people who take these seriously" will never be happy, so that's fine.
One should demonstrate an actual, tangible, serious raison d'etre that is within the bounds of the modern legal system before bothering to find out if it's plausible.
One still does not exist for cryptocurrency.
> literally perfect for finance
It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.
> Crypto is like the invention of ink that cannot be erased.
No, that was invented in the late 70s, with the Merkle tree.
The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers.
> It's literally perfect for finance
People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain.
> Also, I don't know any law that exempts crypto companies from being taken to court.
Who said that? No one. No one at all.
>> Crypto is like the invention of ink that cannot be erased.
> No, that was invented in the late 70s, with the Merkle tree.
Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world.
My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.
>> Also, I don't know any law that exempts crypto companies from being taken to court
> Who said that? No one. No one at all.
jedberg: "[crypto] ... prevents a lot of funny business because people are afraid of getting caught and being put in jail" https://news.ycombinator.com/item?id=33110400
> Also, I don't know any law that exempts crypto companies from being taken to court.
As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.
Financing requires seizable assets, which means it's unimplementable using blackchain-based digital assets and smart contracts.
There are plenty of DeFi systems where (crypto)assets are used as collateral - see MakerDAO, Compound, Aave, etc.
(Granted, you can't deposit a house or car as collateral, if that's what you're getting at?)
Financing is the advancement of funds in exchange for a promise that those funds will be repaid later. For this to work the borrower must own assets that can be seized in the event of default. Since blockchain-based assets cannot be seized, this means financing is fundamentally impossible using blockchain technology. The best they can do is overcollateralised loans, where the borrower must first advance themself the funds that they are "borrowing". This isn't financing because there isn't any advancement of funds. Funds are simply swapped.
> blockchain-based assets cannot be seized
I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance.
> Funds are simply swapped.
If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it.
Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
The reason the collateral needs to be deposited with a smart contract is because the collateral assets are unseizable. But that defeats the purpose...
Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing".
Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing.
Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.
Suppose I make an NFT which support liens. I.e. upon mutual agreement, a transaction can modify the NFT to add a lien, while (simultaneously) transferring some USDC from the lender to the NFT owner. The NFT can't be transferred while it has a lien, but the owner can remove the lien by repaying the lender. The lender can also transfer the NFT to herself if the loan isn't repaid after a certain period.
If I wanted to finance an NFT, first I would negotiate with a lender and get a pre-approved loan. The NFT marketplace wouldn't even need to know about the lending mechanism. In a single transaction, I could take a flash loan, purchase the NFT from the marketplace, take the pre-approved loan, and use that to repay the flash loan. I now own an NFT with a lien, which I can enjoy in the usual ways, e.g. I could integrate it with my Twitter profile.
How is this not financing?
You make an NFT, and then you get a loan that you use to purchase the NFT, and if you don't repay the loan the owner gets to keep the NFT? It seems that you're financing the purchase of something you already owned. And of course the supposed financing is being done by this "pre-approved loan" which you tell us absolutely nothing about. What is that? A loan agreement? What does the agreement say and how is it enforced?
I mean Person A makes an NFT and lists it for sale for $X USDC. Then Person B, who only has $Y USDC ($Y < $X), buys it using a pre-approved loan from Person C in the amount of $X - $Y.
If Person B repays the loan within T days, the lien is removed, so Person B owns it free and clear. Otherwise, the NFT is transferred to Person C.
The pre-approved loan would just be a message signed by Person C, granting anyone permission to transfer a certain amount out of Person C's account if (in the same transaction) they also grant Person C a lien on that particular NFT.
Person C's loan funds wouldn't be in an ordinary account, but rather in a smart contract which understands these liens and loan approval messages.
I see... yes I think such a mechanism could be used to finance the purchase of an NFT. So, I'll admit that I was wrong. You can do financing with a smart contract, although from what I gather you'd be limited to buying NFTs. Not terribly useful, but congrats on coming up with this example.
Not true.
https://leadstories.com/hoax-alert/2022/09/fact-check-donald...
"according to estimates we cannot track 2.3 trillion dollars"
The quote was "According to SOME estimates ...", FWIW. But even your phrasing is a far cry from the attempt to infer that it was "stolen", which is the clear implication of the hyberbole above.
And in fact that was spun too, because (as you read farther down the linked debunking) the original quote was "$2.3 trillion were unsupported by reliable explanatory information and audit trails or were made to invalid general ledger accounts", which doesn't even support "cannot track". In fact, per that statement, we can track it, we know where it went, we just don't know why or in some cases to precise recipients.
Those are accounting failings. They're bad. A system with failings like that is certainly going to be subject to exploitation and fraud. For sure they should fix it (and to some extend did). But to claim that all of that $2.3T was fraudulent is just a plain lie.
The video talks about "tracking" funds, there is no mention of theft or fraud.
> But to claim that all of that $2.3T was fraudulent is just a plain lie.
I didn't. But I am replying to people who may think that all of crypto is fraud.
How much money have you lost from your private bank account...?
That's besides the point. I have not lost money from my private account or from my crypto wallets.
I lost money on companies which marketed themselves as using crypto, but were in fact not.
Citizens in my country lost it all in the 90s. Inflation was out of control, politicians were desperate and at some point somebody decided to simply freeze everybody's assets.
Oh, come on. Have you never lost a check? Never seen a credit card bill you can't explain? Never had an argument with your spouse over what the $2k at Costco was for? Never gotten a bill and had trouble figuring out if you've paid it or not?
Accounting failings happen to all of us. The only people with perfect bank accounts are either (1) accountants themselves or (2) never really bothered to look.
No to all of that, never. I lost my debit card once along with, stupidly, my PIN (both were in my wallet, which was left somewhere). The maximum daily withdrawal was taken from ATMs that night. The next day, my bank made me whole. If that had been a crypto wallet, I’d have been out $1000 I couldn’t afford to lose.
Man, was I grateful for the human considerations built into traditional banking!
That's nice anecdote. When a thief intercepted my credit card information, my bank accused me of lying and made sure the thief could keep all the money, including going through the full appeals process for fraud reporting where my claim was denied at every step. Then the bank kept insinuating that my family members must have stolen the money, and called into question my credibility in a condescending tone. Honestly I've found fraud protection at the bank to suck horribly.
With my crypto transactions I never send the private key with it, unlike with credit card payments where I transmit the private information (CC numbers). Going off anecdotes, I've found crypto to be vastly safer for my transactions than the banking system.
Does loss of value via quantitative easing count?
good job the value of crypto is so stable then
How many banks have been held at gunpoint in 2022, by someone demanding withdrawal of their own money?
The number is greater than two.
Depends where you live. In Lebabon you have to go to the bank with a gun in order to get your own money.
Laws never prevent crime they(no gender they) only provide a mechanism to punish people who violate them. Given that there isn't a lot of existing legal framework around crypto or crypto trading it may be difficult to punish Celsius Execs. I'm no lawyer I just play one on board games. In truth the list unscrupulous crypto firms seems to grow daily. By the time crypto becomes safe and energy efficient it will be just as cumbersome as real money.
Legal system isn't preventing all of the the problems
Lack of legal system is allowing for all of the problems
You can't steal my Bitcoin if I don't deposit them with a custodian. This is like blaming gold itself if the owners of a gold bank run off with the gold.
> You can't steal my Bitcoin if I don't deposit them with a custodian.
Many people have lost their BTC and other coins to hacks, phishes, hardware failures, software failures and so on. So in the sense of the people from the general public, yes, I can steal your Bitcoin.
> This is like blaming gold itself if the owners of a gold bank run off with the gold.
You can keep it under the mattress and expose yourself to one kind of failure mode. You can also keep it with the bank with the clear expectation that the owners will not run off with the gold and also expect the state to go after the owners if they do. Which is not happening here.
But you can blame gold itself for that. Gold is inherently valuable; and one flaw of inherent physical value is that it can physically change hands forcibly and, well, the bearer of that value now controls it in complete and total form.
Cryptographically verified exchange is a different kind of exchange, and it has its own benefits and drawbacks. one of the benefits of this kind of exchange is that mere custody of the currency in question does not relate to ownership.
Does that make gold worse or better than bitcoin? No, it just makes them different.
You can blame gold if it is very easy to steal. Or if owners are more likely to have it stolen, etc etc.
Crypto has certain vulnerabilities that gold doesn’t. But it also has lots of benefits.
But I don’t know of any situations where gold banks let them drive trucks of $40M in gold before they stopped customers. It’s just harder to move.
? Candidly I don't know what you mean, so I will share this anecdote about gold in trucks: there is a building in downtown Chicago, built at the height of the mob days, with an elevator which can lift an entire (full) armored car.
It can lift it several stories up, into the building, where the bank can unload it safely without risk of robbery.
Also, of course, you can't actually steal bitcoin, you can merely steal the keys. That is an actual distinction because possession of the article itself is meaningless without the other half of the cryptographic operation it takes to move it.
Stealing the keys is effectively stealing Bitcoin. Otherwise you get into semantic mumbo jumbo because Bitcoin isn’t owned by anyone, it’s just assigned to an address that is controlled by a private key, etc etc.
If I steal your keys, I steal your Bitcoin. And it’s easier to steal the private keys to $40M in Bitcoin than it is to steal $40M in gold (700 kg).
What I meant with my poor analogy is that if a bank is planning on blocking customers from withdrawing funds, it’s much harder to ship out the gold to their friends than to ship out Bitcoin. It’s pretty trivial to allow Bitcoin withdrawals. It’s just logistically hard to coordinate the transport of 700kg of gold out of the bank and to somewhere else.
yes, i agree, but that is still a distinction, is it not? i'm not making a value argument, i'm merely pointing out that possession of the currency itself is not the same as the keys required to exercise control over the currency.
arguably, if we are making value statements, there are a set of similar trade-offs for physical protection of keys vs. primary material. 700kg is harder to move: that's a security feature. keys are small: that's a security feature, because they are a small O(1) surface area to protect regardless of how much value they maintain control over at any given moment.
these are simply tradeoffs. it is only "easier" to steal keys if they are left unprotected.
here's the enormous truck you would need to carry $40m in gold, apparently: https://www.tkingauto.com/mini-truck/rear-single-tire-truck/...
I can insure gold, bitcoin is much more difficult to insure. In fact, I can have my gold stored in a secure facility that I don’t own yet still retain full ownership rights.
yes, you sure can, but that's just a matter of delegated custody; the facility that stores it for you is acting as your agent.
bitcoin is harder to insure because guaranteeing the safety of keys remains a challenge.
No bitcoin has always been difficult to insure because no sane company would insure something that can double or triple value overnight. The extreme finite quantity of bitcoins is what makes it difficult to insure.
i suppose i thought you meant insurance against theft, not loss of value
theft is loss of value. either way the fact remains, Bitcoin is difficult to insure due to its scarcity. If I insure 1 BTC now worth $10k then in 20 years or so (or maybe overnight) it jumps to $1mil. The insurance company hasn’t gotten enough premiums to cover the payout. Insurance works well for inflating assets, not so much for deflating.
you don't actually need to lose your coins for them to lose value... custody and value aren't the same thing.
> yes, I can steal your Bitcoin
Let's fix that phrase:
- yes, I can steal your Bitcoin keys
And then go further and transfer the bitcoins
Other than that, no, you CANNOT steal "my" bitcoins
Um, no, I don't think language works like that. Let's try to rephrase that with gold: "You CANNOT steal the gold under my mattress. You can steal my keys or break my door, walk in and then move the gold from my house to your car and drive off.". Don't you agree the above is equivalent to me stealing your gold?
That's a good argument, but notice what I'm saying is that stealing the bitcoin wallet keys is the only known way to steal bitcoins (I'm not saying bitcoins cannot be stolen, nor that it would be wrong to phrase that bitcoin was stolen as the result of compromised keys). If you're hiding gold under a bed one could steal your door keys, break the door through brute force, set your door on fire, get in through the window, make a hole through the floor under the bed, wait until you get the trash out and sneak in, and so forth. Bitcoin allow you to be concerned with only one thing: keeping your keys secret.
You’re getting into a semantic argument. The idea of someone stealing bitcoins, vs the keys, is an attempt to deviate from the issue/discussion at hand.
Fair point. It has gotten a bit semantic.
Except that we have regulations for banks and brokerages for how they must operate, what sort of cash reserves they have, and how they must conduct audits. And they pay into an insurance program (FDIC/SIPC) to return money to depositors if they collapse.
Relevant XKCD: https://xkcd.com/538/
At the end of the day, any power you think you may have is an illusion. It all comes down to who has the monopoly on violence.
Sure people can. They simply have to encrypt and hold your data for ransom or any of the many other schemes to blackmail you. The crypto enables the perp to get that ransom across the border and evade punishment. If it wasn't for crypto such schemes are much harder to pull off.
I would blame gold itself in that circumstance. The fact that gold is so easy to steal, and so hard to then recover, makes it a poor currency. Fiat currency in an electronic account with a legitimate financial institution is much safer and more secure.
> When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
In my mind the advantage for a US Government-backed crypto is the violence you mentioned above and convenience/traceability. The loss of anonymity I'm sure is a feature to them, not a bug.
It absolutely is.
Anyone remember the Clipper Chip[1]? CBDC's are literally that but for finance.
Being able to see who is sending money to whom is incredible valuable (even without the ability to manipulate that money, which is worth even more) - remember how much the US intelligence community values metadata.
Sure, the US government has a large amount of insight into financial transactions now, but there's a difference between "a lot" and "literally all of it".
People here seem quite comfortable with the idea of giving their own government the Clipper Chip for finance - are they so quick to forget the lessons of history?
[1] https://en.wikipedia.org/wiki/Clipper_chip
Not sure the supporters of the Freedom Convoy over in Canada would agree with your strong faith in the legal safety of fiat money.
Aren't Bitcoin and Ethereum both pseudonymous? Once you know one of someone's transactions, don't you know them all?
Yes, and often you can trace that back to a single person, but not always.
With BTC transactions via lightning, at least, there’s simply a periodic net settlement.
It doesn't have to be a legal system or a government in general. E.g. Rai stones are basically a public ledger system akin to a blockchain, but working through social convention.
https://en.wikipedia.org/wiki/Rai_stones
One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.
Why can't both exist though?
Each with their own advantage/disadvantages, and you get to choose which one to use after considering the tradeoffs.
Things I would use crypto for:
* Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties.
* Any transaction that I would like to keep my privacy on (and this does not mean illegal things, btw).
Things I would never use crypto for:
* Storing wealth. For me personally it's too much of a bet, we're always one right (or wrong) math proof away from all of this becoming dust.
* Smart contracts. Anything that requires a contract between me and someone else, I'll keep using the tried and tested way of common law. I'd rather have my business backed by the Delaware Chancery Court (which has proven to be quite effective these past weeks) than by the code wrote by some random upwork contractor.
Crypto is bad at money transfers. It's low capacity. That's why nobody is using BTC to pay for pizza anymore. It's also bad at privacy, since the architecture for most crypto systems relies on storing a permanent, non-modifiable public ledger.
Your usage case doesn't really work because almost nobody cares about that. You'll find a few idealists interested in that, and a very few people that need to transact with some random person in Bangladesh. Pretty much everyone will just do a regular bank transfer or use Paypal.
What got crypto to become popular is the "get rich quick" schemes, which not only don't require stability, but rely on instability and people attracted to the idea of exploiting it for profit.
Monero and other less well-known currencies solve all of that. You can say it's bad or useless for other reasons. But my direct experience with dozens of P2P transfers, outside exchanges, both paying people for products and services and being paid myself, is enough for me to know that the future involves private cryptocurrencies one way or another. It may be akin to the taboo nature of torrenting movies at some point, but it's not going anywhere. CBDCs, traditional fiat, crypto, and even precious metals (yea we used to use those too!) will all have their use cases over the next decade. Paying people (and being paid) with precious metals and private crypto feels so amazing, so freeing, I recommend everyone give it a try.
Yeah, and pretty much nobody cares:
https://bitinfocharts.com/comparison/monero-transactions.htm...
20K transactions per day currently? A single city would have more transactions than that just from people having breakfast in the morning. And these are world-wide stats.
Ah c'mon gimme something better to chew on, this argument is cake to dismantle. (1) You don't use Monero to buy breakfast. It's for large money transfers so at least compare it to bank wires. (2) Very few people know about Monero yet. Credit cards were at 20K transactions per day at some point. If you know how to look at the chart you linked, you can see the TX count growing sustainably over several years. This is healthy growth, not some SV venture-capital juiced unicorn. (3) There will be very few ultimate winners in the crypto game as far as fungible currencies. It's a more honest comparison to include transaction counts of non-fungible cryptocurrencies like BTC and ETH that people are unfortunately using as a currency for now. (4) Monero is just one of a few other legitimate private cryptocurrencies, so include those transaction counts too.
Well I could go on laughing at the "nobody cares" take, but you don't care so I'll leave it there. Enjoy your CBDCs in the metaverse.
> You don't use Monero to buy breakfast.
And why the hell not? It's supposed to be a currency.
> It's for large money transfers so at least compare it to bank wires.
And then what, exchange to USD? That'll bind it to an exchange rate, and create the same problems BTC has. Rather than having direct use as a currency, it's a betting mechanism.
> Very few people know about Monero yet. Credit cards were at 20K transactions per day at some point.
It's been almost a decade. That's an eternity in internet terms. If it only has 20K daily users world-wide then it's failed as a currency. People usually trade with people close to them, and if there's 20K people active in the world then that suggests either a very tight knit community somewhere nobody else cares about, or a bunch of nerds all over the world.
> If you know how to look at the chart you linked, you can see the TX count growing sustainably over several years.
I see it growing way too slowly and oddly. Yeah, there's periods of growth but there's also stalls and falls, and going back and forth. Growth also tends to start from a spike. To me that suggests Monero doesn't have that much traction of its own and in a good measure profits from the failures of other crypto systems.
I'm not sure if that's an accurate analysis on my part or not, but if there actually was interest in what monero provides I'm quite confident it should be growing a lot faster and be a lot more prominent. It's the one crypto that actually wants to be a currency, and yet near nobody seems to be interested in that, preferring to gamble with BTC and ETH.
> It's a more honest comparison to include transaction counts of non-fungible cryptocurrencies like BTC and ETH that people are unfortunately using as a currency for now.
Those are heavily congested, so the transaction counts is mostly what the network is capable of, not what people would like to have.
> Enjoy your CBDCs in the metaverse.
My what? If you're talking about the project I work on, we formed specifically around the rejection of cryptocurrency and in general don't care for fiat transactions either.
I would continue easily dismantling your points but you're like a boomer railing against the Internet in the early 90s. It's bad according to your value system so other people shouldn't use it either. You don't understand it or want it or whatever. Which is totally fine. I'm not saying your position is a bad thing. In fact you have my respect. My Dad was like this with the Internet in the early 90's, and still is. He STILL doesn't use the Internet and his construction business is just fine without it. He has my respect. Both he and I ended up being "right". My only advice is to stick to your guns going forward, be like my Dad and NEVER use cryptocurrencies or metal or barter. Only use military-backed currencies and have them tracked and traced as much as possible. In fact don't even use physical cash. For your safety.
As for me, I'll continue to use Monero and precious metals and barter, and use fiat and the coming CBDCs as little as possible. If that's alright with you of course!
It takes all kinds. Though if you don't know what the Metaverse or CBDCs are you got some surprises coming!
Nah, you're barking up the wrong tree entirely. I did have a very passing interest in crypto way back, when BTC wasn't yet at full capacity. I was sure back then the situation couldn't last, because paying $50/transaction was completely ridiculous for any kind of currency. People HAD to rebel against that and at least raise the block limit to alleviate the urgent problem now, even if that wasn't the long term solution.
Oddly, that didn't happen. The big players strenuously resisted any effort to alleviate the network congestion. I was feeling very confused.
It slowly dawned on me that my type of usage was a niche. The main players were interested in speculating on the value, and held huge hoards they intended to optimally sell once. They didn't care if it took 10 hours for the transaction to go through or they had to pay a ridiculous fee, because a $100 fee is effectively nothing when you're making a profit of $millions.
So far nothing has really changed my mind. If what Monero offered was what people wanted, they'd have switched over en masse, and they really didn't.
I dismissed it all very early on but for other reasons. I took one look at the BTC whitepaper way back, saw that every transaction and wallet was completely public, and immediately wrote it off based on that, along with everything to do with the cryptocurrency space, until I found Monero then some other related currencies about 4 years ago.
You have different standards than me as far as what constitutes a "successful" currency. And that's cool! For example you generally can't buy breakfast with the currencies of silver or gold or British Pounds (in America) either. All throughout history there has been different currencies for different situations and crypto is just another one on the pile. I wish salt would make a comeback myself. ;)
I use cryptocurrencies as private replacements for bank wires. If your standard is that you must be able to buy breakfast in a city with it, then I agree with you it is not a currency by that definition and probably never will be.
As for me I get paid for my professional services in crypto and turn around and sometimes pay other people for goods and services without any conversion in between. Sometimes I convert it to precious metal directly. Sometimes I convert it to a fiat currency or another crypto. Sometimes I hold. It's all good!
Thanks for the conversation and good luck with everything you're working on.
> Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties.
Let me tell you my experience with trying to remit money to my family with crypto. I really tried to give it a fair shot, because finding a cheaper way to shift money around would be really nice.
I wanted to do it via stablecoins, because I have no interest in playing the speculation game with BTC/ETH prices. So the path should be:
* I transfer money to Coinbase, and buy some USDC
* I transfer said USDC from my coinbase wallet to another exchange's wallet
* I sell USDC on said exchange for MYR
* I transfer said MYR to my bank account
* Money goes from my MYR account to my family's
Simple enough, in theory. But, the Malaysian government has granted four institutions a license to trade cryptocurrency, and three of them only trade BTC and ETH, and the last ist BTC/ETH plus litecoin, bitcoin cash, and a bunch of other ones I've never heard of.
So here I'm stuck. It sure looks like the primary audience is speculators and not people like me who actually do want to transfer money cross-border.
But is it actually cheaper though, if I chose to use ETH/BTC? Well, the target to beat is transferwise's 61 basis points (used to be 45) (I'm also a liquidity taker, since I'm not interested in playing with price movements): first is 200 bps, second is 50+10bps, third is a startup that doesn't even list fees on their website, fourth is 50 bps.
But wait, since I'm not using stablecoins anymore I have to also pay liquidity fees on the USD side. Coinbase charges 60bps, bringing the total up to 110 bps, 50 more transferwise. I'm assuming the other exchanges are around that price, but unless they're under 10bps it's not cheaper than using transferwise.
So it's really not looking so good. It's not cheaper, it's not simpler, and it involves just as many KYC checks (required in both countries, and very strict ones on the Malaysian side).
Can't you just use Uniswap to swap the USDC for ETH, before transferring the ETH to your exchange account in Malaysia? The Uniswap fee is only 0.05% ($0.50 on a $1,000 swap). The transfer and conversion of ETH to MYR should take 5 minutes, so you wouldn't be speculating on ETH's price for long.
This already exists though and is a technical solution to an economic problem. The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise.
Crypto transfers for say USD->EUR via USD->BTC->EUR are just adding extra foreign exchange legs in the hope that the BTC holders on either end will give you a better deal.
>This already exists though and is a technical solution to an economic problem.
Immediately followed by:
>The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise.
Huh? Is it solved or not? It's unclear to me where do you stand.
de facto, moving ETH->ETH is faster and cheaper than using the standard forex infrastructure.
>"The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence."
How many people were prosecuted for the 2008 financial crisis though? Neither did the "threat of violence" nor the legal system prevent or even deter those perpetrators.
Exactly. The people who benefit the most from the current system are the already rich, who can afford to the legal fees and come up with creative defenses.
Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system.
This debate reminds me of the nature vs nurture debate in biology. It's a mirage. In reality, it's nature via nurture. Similarly, there is no inherent divide between government and crypto. One can extend the other.
> Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system.
Are you sure? The WSJ says that 0.01% of all holders control 27% of Bitcoin, vs. the top 1% of households who control about a third of all U.S. wealth.
https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
You're missing the point. The point is that the poorest Bitcoin wallet is as secure as the richest wallet.
Whereas in legal-land, the more money you have, the better your lawyers (and whatnot) you can hire.
> The point is that the poorest Bitcoin wallet is as secure as the richest wallet.
I stand by my point that crypto disproportionately benefits the rich far more than fiat.
In my view that extends to wallet management, since the rich have security staff dedicated to keeping their Bitcoin secure.
You don’t need a security staff to keep a bitcoin wallet secure, that is a very odd comment.
Cryptocurrencies are not about making poor people rich and rich people poor. It is about having the a ability to do frictionless, uncensorable financial transactions among many other things.
> You don’t need a security staff to keep a bitcoin wallet secure, that is a very odd comment.
The "Bitcoin rich" are vaulting their BTC in tens or hundreds of wallets, mostly cold (hardware and paper), and those have to be managed, backed up, and secured.
> Cryptocurrencies are not about making poor people rich and rich people poor.
Agreed, crypto culture leans to wealth redistribution from suckers to grifters.
That article (from the URL) appears to be about Bitcoin, not "crypto"
And the distribution of Bitcoin might be skewed because one of the largest holders (Satoshi) is possibly dead, and many others would be custodial addresses (centralized exchange addresses, and large funds like microstrategy).
Furthermore, many of the addresses being considered would be inactive addresses by people who have moved on to new addresses. In that case, you have many addreses with "dust" balances which are not claimed by anyone, perhaps as much of 80% of addresses which have ever been used. I have gone through at least 6 such addresses myself, and I no longer use the Bitcoin network (or have funds on it)
It's a lot different than the dataset used for considering wealth distribution among a known population number, whose monetary declarations are necessarily exposed to a government which can publicize this kind of data in a more accurate way.
That's trading "some people being protected better" to "nobody is protected"
It's not a monetary system problem, it's a banking problem. The cryptocurrencies themselves are fine. The problem is people keep reinventing traditional banking on top of them. Everything started to go wrong as soon as exchanges showed up. All of the drawbacks of centralized banking with none of the regulatory benefits.
This isn't decentralized cryptocurrency, this is sending coins to some centralized corporation and expecting that everything will be fine.
As an aside, I always point out that countries with no functioning government still have violence and the threat of violence. The earliest writings I've found that use this terminology talk about a "monopoly" on violence, and I think the distinction is important. Also, I think that such a monopoly is not self sustaining but depends to a considerable effect on maintaining its own legitimacy by acting with restraint.
The problem is the people in the government with guns tend to work against the people (or at least certain people, last time I interacted with one of them they were serving me an absurd perjurious warrant). I trust the crypto-anarchists with guns far more than the fiat-authoritarians with guns.
Is your sample size small, though : 1 legal system with guns compared to 0 anarchists with guns?
It's the exact opposite - this was done in the legal system, not in the defi one.
The two are not mutually exclusive. Gold, for example, is not backed by people with guns. However a financial and legal system can be built on top of it, in fact it was build on top of it until 50 years ago.
Sure it is. If someone steals your gold, you can call the people with guns to arrest them and get it back to you (often). It doesn't have to work 100% of the time to be an effective deterrent.
It's the same with coins.
However fiat money must be protected by people with guns against forgery. With one exception: people in power are allowed to counterfeit it, thus robbing the common people, under protection of people with guns.
Gold and Bitcoin are immune to both types of forgery.
Counterfeit gold is a long-standing art, even to the present day https://www.thermofisher.com/blog/metals/buyer-and-seller-be...
Gold is not, and has never been, immune to forgery. Science has made it harder, but still happens all the time. See: gold plating, gold alloys, etc.
I'm not aware of any way to actually increase the total amount of real gold in/on the earth in any meaningful way in an ECONOMICAL matter (i.e. you have a net positive income from producing it). The government can make more REAL MONEY for far less than the value of the money.
That’s not forgery. That’s inflation.
You only get a net positive income for producing gold if the price is higher than the cost of production.
The same thing applies to cryptocurrency. You can call up people with guns to do that too.
That big disadvantage isn’t just “people with guns”. It’s the value of an entire stable society. The reason the USD has reigned supreme for so long is because the US has been a relatively peaceful and stable country for so long. Their fiat value are 1:1.
Crypto, unless it receives the backing of a country (that is, the US decides to switch to bitcoin for some reason), will _never_ have actual value.
This story is about a filing in the United States legal system, under which this entity works.
> That's why the whole [fiat] system works -- because of the threat of violence.
> Crypto doesn't have that ... for now.
Subtle!
The word violence has many euphemisms, but you are using the word violence here as a euphemism for the power of the state to enforce its laws. You can argue about the laws themselves (as we all do) but to not enforce the law is anarchy.
> That's why the whole system works -- because of the threat of violence.
And that's what bothers me with the fetishization of "violence is not the answer".
Violence is DEFINITELY an answer. It's what state entities do on a regular basis. Now, it's not wise to rely on violence regularly, when more peaceful methods exist and are more effective.
There is no anonymity aspect, except (maybe?) with some coins.
The libertarian leaning, free market lovers on HN won’t entertain your slander. The book Debt really opened my eyes to a flow of logic demonstrating that in fact markets cannot exist without states (laws) and vice versa. That this idea of pure markets corrupted by governments is a complete fantasy invented whole cloth and worshipped by sycophants for centuries. Markets require contracts, which require laws and enforcement. That’s it.
You aren’t actually arguing again the core argument: contracts, laws, and enforcement don’t require governments. Just because this is the dominant system today doesn’t necessarily mean it’s the only way.
Hobbes layed this all out 300 years ago. But apparently “this time it’s different”.
loose -> lose
that copypasta you found has nothing to do with the asset involved…..
it is not likely what Celsius did was legal (or consequence free via the legal system) , so that has nothing to do with the matter that their company held crypto assets
adding clearer fiduciary duties to company’s that hold crypto assets is entirely possible and so also has nothing to do with crypto
Not sure why you're calling it copy pasta given that I wrote it.
But it does have to do with crypto, because the company involved was holding crypto like a bank, but aren't regulated like a bank because it was crypto.
I'm calling it copypasta because your response wasn't specifically about Celsius, it was looking for a reason to write your pre-existing beliefs about the entire asset class in a place where it wasn't relevant. A lot of people do this, but one of the bigger problems is that it lets poorly run companies get a free pass on bad business practices. "Our unscrupulous behavior won't matter because people will conflate it with crypto. They won't apply scrutiny to us, they'll just try to reduce access"
But wait! I thought decentralised is sooo much better??
Celsius is centralized. Was this comment sincere?
It's centralized. Turns out people like centralized things because it's easier!
> The reason fiat money works
It also worked before the US went to a fiat currency in 1971 when Nixon took us off the gold standard. It also allowed for massive deficits because before they couldn't spend what they didn't physically have and now they can just print it without gold backing it.
Which was necessary for the economic revolution.
Balancing the money amount to the workforce.
Fiat works until it doesn't. Whether that's inflation, corrupt government, or the long term debt cycle which we nearing the end of.
Ray Dalio has a good video about what that means and how this has played out every time over the past 500 years:
https://www.youtube.com/watch?v=xguam0TKMw8
This is the same thing that William DeVane has been saying shilling gold for Rosland Capital at 2am to Fox viewers for the last decade. I'm not worried. [1]
Dalio is talking his book.
[1] https://www.youtube.com/watch?v=VVcdvT09qr4
It’s his book because he believes it’s true, not because he’s trying to influence things. I’d highly recommend reading Big Debt Crises.
Sorry, when I said "talking his book" that's like a finance term for advocating for things that would benefit the positions you hold.
> Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio.
[1] https://abnormalreturns.com/2010/02/18/everybody-talks-their...
Sorry for the poor wording of my response, I knew what you meant. I meant that he’s invested the way he is because he believes in what he’s talking about in terms of macro trends. And then I confusingly recommended reading his printed book, which I’ve found very helpful in understanding what the central banks have been doing, and allowed me to be well positioned for this inflation well before it picked up to where it is now.
Crypto is pretty much speed running our existing financial institutions’ past history.
What it's doing is giving techno nerds a free crash course in government, monetary policy and regulation --- or rather the lack thereof.
Pretty much. Every piece of financial regulation is being justified by crypto scams in record speed.
So you're saying crypto will eventually race pass fiat and discover new regulations we don't have yet but will eventually need?
That’s a fascinating idea but no I don’t think so. I think crypto is just liquidity for the future internet. The idea it has any purpose as a currency seems to me like a relic of the failed Bitcoin principles.
Crypto is a bit like the early internet. People thought the liberation of information would make people smarter and democracies. Instead we built giant skinner boxes where people ignore valuable information in favor of random stimuli.
It’s likely the most dystopian outcome for crypto is the most likely - something like Central Bank Digital Currencies where every transaction is logged and financial privacy is erased. At the edge you might have something like flexible pricing where anyone who doesn’t own a business will be charged more money for transactions if they have more money, thus making sure that capital owns everything and can’t be threatened in the future.
> Central Bank Digital Currencies where every transaction is logged and financial privacy is erased.
That is already the case though with just regular bank accounts and debit/credit cards, no? There's still privacy in cash, but cash is getting more and more limits placed on it to make it harder to use for this exact reason - and it's not even new, e.g. Sweden has been intentionally openly pursuing "cashless society" as a goal for over 20 years now.
Can you point me to any "crypto nerds" affected by this? The article is precisely about how the insiders still come out on top. It's precisely the blindsided non-nerds that are (hopefully) learning now and custodied their funds with Celsius.
Seriously. The "nerds" aren't the ones dumping their keys into other peoples custody to yield farm obvious ponzi schemes
"techno nerds"
what does this have to do with EDM?
I wouldn't lump Techno in with 'EDM'
Techno = A movement that is largely an exercise in pushing computers/midi to their limit while creating inventive music.
EDM = event driven marketing. pop music with a 4x4 kick drum.
...Yeah I know, semantics.
Ah yes, nothing more inventive than using the same drum synthesizer for 40 years!
Also, I'm sure it's super hard to push the limits of all 127 values of dynamic range that MIDI offers, especially when you also write all your music on common time
Well, TR-808s (and the re-makes) still sound great.
Free, for some definitions of free :-)
What's hilarious to me is that crypto boosters would often cheer about how crypto doesn't "suffer" from the same things as our existing financial system (e.g. potential run on the bank in a fractional reserve system) - but then they went and built up all the same things they originally said crypto was immune from, this time with no regulations or legal framework.
I use cryptocurrency, however I don't remember ever working on, particiapting in, or endorsing Celcius.
Celcius is not decentralized, it is not a community led-project, it is not free/open source software.
So who is "they"? It's obvious to me that the type of person who endorses something like celcius just sees cryptocurrency as a free money machine, and does not actually have real princples regarding decentralization and whatnot.
Cryptocurrency can be strong against censorship etc. But it is clearly not sufficient in itself for censorship resistance etc (e.g. what value is being secured? from who? how?) It is analagous to saying that encryption is good for security but the presence of encryption is not sufficient for security (e.g. what data is being secured? from who? how?).
The fact that celcius can steal your deposit despite the fact that cryptocurrency is involved is analagous to the fact that GMail can read your emails despite the fact that HTTPS is involved.
Celcius Binance etc are part and parcel of the crypto world, where you like it or not
They're not even wrong. Cryptocurrencies really are immune to many of these problems. You can't bank run bitcoin: there is no bank, no fractional reserve, nothing.
The issue is people keep reinventing centralized banking on top of it. Exchanges for example are actually just banks in disguise. Of course reinventing centralized banks brings forth all the problems associated with centralized banking. Problems society has already identified and remedied. All the drawbacks and none of the benefits.
The solution is of course to stop reinventing banks and start using cryptocurrency like it was meant to be used: as a currency.
Because they all saw an opportunity to rake/skim/scam off the top of each transaction moving through the system, and wanted a piece of that.
At this point, I see crypto as nothing more than digital penny stocks. It isn't all scams, just mostly.
any% noreg tas
[INFINITE MONEY GLITCH -- WORKING!!!]
Are you implying that existing financial institutions have put this type of scam entirely in the past? Because they certainly have not.
I don't feel like that's implied in the comment at all.
Doesn't "past history" imply something that is no longer happening?
What's the next scam on the list?
People surprised by this might be the sort of people who try to cuddle a porcupine and are surprised when they get stabbed. That said, we have laws designed to protect stupid people from those who prey on the stupid, so I hope these execs get the book thrown at them.
gasp I'm shocked, absolutely SHOCKED, that people involved in crypto would be scam artists.
I'm not sure that quite follows. Yes, cryptocurrencies are currently a wild west, and there are a lot of scams, but I don't think it's fair to paint the whole space with the brush of a single particularly-blatant scam. It's like... when the whole Theranos thing came crashing down, it wouldn't be fair to say "well of course, most claimed medical advances are scams"; Theranos was a scam, and had some fairly major signs of being a scam, but that doesn't mean that most medical advances are scams. Likewise, Celsius was a scam, and AIUI looked like a scam pretty early on, just like a lot of other things in cryptocurrency are scams, but that doesn't mean "people involved in crypto" == "scam artists".
P(scam/crypto)=99.99%
P(scam/medical)=0.3%
would be or could be?
Would be; anybody could be a scam artist.
I can't even see you your horse is that high
And the most amazing part --- it's not even a scam.
He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.
The DOJ is going after folks for front running [edit: better wording: insider trading, thx jcpham2 for pointing out my lazy language] NFTs on Coinbase. This is not a defense (“not real money”). Can’t have it both ways, that they’re digital assets when you want to scam, but it’s play money when you get caught.
These people will be charged with a crime, and the government is going to find something that sticks. Securities fraud, wire fraud, whatever fits.
https://www.justice.gov/usao-sdny/pr/three-charged-first-eve...
https://www.justice.gov/usao-sdny/press-release/file/1521186...
Imho we should be careful of using this term front running. If I buy a thing (simply becqause I can) and then turn around and sell it at artificially high limit sell orders, does this mean I'm front running or market making? Spoofing?
It's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.
Your post is based on an assumption --- that crypto is legally defined as a "security".
Do you have any reference to support this?
If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight.
As I said, this cuts to the very core of the crypto market.
https://www.manatt.com/insights/newsletters/financial-servic...
> As noted above, in categorizing the tokens as a security, the SEC’s complaint makes reference to the Howey Test, under which a digital asset, including a “crypto asset security” will be deemed a security “if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.” The DOJ’s complaint alleges that “the defendants made illegal trades in at least twenty-five different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.” The SEC’s complaint claims that at least nine of the 25 crypto assets were “crypto asset securities,” and therefore the defendants’ insider trading of securities fell within the SEC’s “broad jurisdiction to regulate the securities markets and to bring actions for violations of the federal securities laws, including fraud and insider trading.”
> None of the issuers of the nine “crypto asset securities,” or Coinbase itself, are named as a defendant in Wahi as this is an insider trading case. Issuers and exchanges of tokens should take caution, however, as the SEC’s stance in Wahi reiterates the SEC’s a broad view of digital assets as securities and its ability to regulate them.
As duped mentions, if it's not a security, it's a commodity falling under the regulation of the CFTC.
https://www.cftc.gov/digitalassets/index.htm
What is the point that you're trying to make? People put in real money that they won't get back because they believed in Celsius. Execs made real money by cashing out before closing the doors. That's called a scam.
The SEC considers some crypto as commodities and some as securities. In either case, it's not "funny money" - it's a regulated financial asset.
it's a regulated financial asset.
If true, this is a cataclysmic moment for the crypto market --- the entirety of which has been operating illegally.
"I convinced them to pay real money for fake money, stole the fake money, and exchanged it afterwards for real money" is not an argument that is likely to convince the SEC (or a jury).
not an argument that is likely to convince the SEC (or a jury).
Mainly because your argument is wrong all the way around.
Celsius never accepted any "real money" from anyone. Any "fake money" they allegedly "stole" came from their own account, not those of their customers.
That doesn't pass the sniff test: people clearly entered the market with actual money (even if they didn't directly pay Celsius), and left with none.
You can argue (perhaps correctly) that they shouldn't have traded their real money for funny money, but it's ultimately no different from any other financial instrument.
Let's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz.
So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself.
HA! I dodged it all!
.... no. The spirit of the law is that this is a financial transaction just the same.
BitCoin and all the other crypto currencies are no different. It's all play money.
A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.
Still fraud if you steal a painting
Celsius didn't steal anything.
What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
> What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
Web3. Ask me a hard one next time.
Less-flippantly: Probably fraud, regardless of how many disclaimers your website has in 4pt font.
If you think that anything written in 4pt font on a website can turn "fraud" into "not fraud", I got some sweet bridgecoin I could sell you.
There's an update at the bottom of the article disputing the claim:
"Your report that Mr. Goldstein withdrew millions of dollars in advance of the “pause” is flatly mistaken. The reality is that Mr. Goldstein did not withdraw even one dollar in the four weeks prior to the pause—to the contrary, he deposited over $90,000 in CEL tokens in late May, just three weeks before the pause. Most of the supposed “withdrawals” from our client’s account were, in fact, regular-course transfers between his accounts and involved corresponding deposits. Indeed, in the year before the pause, Mr. Goldstein had net positive deposits into Celsius (including interest), not withdrawals. Your account unfortunately distorts Mr. Goldstein’s position, as he currently has millions locked up in Celsius, making him one of the Company’s largest unsecured creditors. Nuke is proud of his work to create a secure platform for Celsius users, and has been working tirelessly day in and day out to help restructure the Company to the benefit of all its creditors."
"and has been working tirelessly day in and day out"
Sorry, that is garden variety PR verbiage.
"regular-course transfers between his accounts and involved corresponding deposits"
So is it accounting, or fraud? Answer: Yes to both.
If that statement had any credibility, there would be "independent auditor" and the named auditor in it.
This was an incredibly bold operation from the begining. They planned to exit one way or another, using the incorporated in the US to gain trust and the plan was not to just disappear, but file for bankruptcy as in "it happens".
It is remarkable how they used the depositors or investors money to pay for their lawyers and yet the government considers this a chapter 11 instead of 7, as if there is any way to conduct business going forward. Reputation gone, money gone, the owners gone.
Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
I am not sure greed is the only factor, there must be more behind it, some shrinks will have a field day.
And all the victims are now asking for a government intervention.
There is no free lunch, even mashinkis money will come at a large cost. From what I read, many lost over 100k and some lost 7 digits, certainly some shady people amongst these.
In conclusion, this was planned from the very beginning. If they could run this profitable, fine, if not, they hiding money followed by chapter 11 was the backup plan.
> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
The same way that people keep falling for the same sorts of conspiracy theories over the years.
Add to that, the fear of missing out, and you can extra marvelous quantities of wealth from suckers. Several industries use FOMO to manipulate people into purchasing things that they probably shouldn't - like cars, MLMs and real estate (sample: "buy now, or forever be priced out of the market!"). After having been screwed (too many times!) previously by FOMO, I have an extremely adverse over-reaction to it: I have to walk away before I get angry.
> Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
Does it?
If you're going to work every day to make a dollar, and your friend just sits on his ass and plays video games and makes a dollar every day off his CryptoKitty investments - and you can see the actual money in your friend's account - after a certain period of time, it's hard for anyone to resist, no matter how dumb it sounds.
Even Newton lost all his money in the South Sea Bubble... Twice!
The irony of the CEO’s t-shirt in that photo is… staggering.
There is an asterisk at the end of that statement, and then in 8pt font it says "And neither am I, dipshit!"
I was about to write that but let me just copy-paste the first comment from the article: "Banks are not your friends. But obviously Crypto companies are not your friends either. "
It's probably best to assume that most people blatantly lie on the regular for the sake of their agenda.
Guns, Gold, Bitcoin or DuckDuckGo, VPNs, there is a planet full of gullible idiots whom you can sell anything to by shouting Government, Banks, Google, Amazon
I don't follow crypto, so these are actual questions, not trolling:
- If Celsius is a trading platform, how can Celsius itself owe anybody anything?
- My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by actual funds?
Most brokers- such as coinbase- perform their transactions using off chain methods. All the bitcoin in coinbase is held and owned directly by coinbase, and what users of coinbase actually have is a database table somewhere saying how much of coinbase's coins are marked as being owned by the user.
Celsius is similar, but they also offer a loan system on top of it. So the coins you give to celsius are not only no longer owned by you, but they're also not even present in a Celsuis wallet.
At least Coinbase has a database table, Celsius had a spreadsheet. [1]
[1] https://www.cnbc.com/2022/09/23/celsius-has-a-hail-mary-bank...
You lend Celsius some coins. In return they promise to pay you some % of interest. Celsius takes those coins and sticks them in another lending system that pays them a higher % of interest. The other lending system collapses and cannot return the coins because of an exploit. Celsius customers demand their coins back and Celsius cannot return them.
> The other lending system collapses and cannot return the coins because of an exploit
And also because the entire business model is completely unsustainable, preying on peoples greed.
Oh, those poor, distressed, miserable greedy people!
Others have answered about how Celsius got into trouble, as it was not a trading platform, but I'll answer the implied question - if it's all on a blockchain, how can a trading platform have a liquidity crisis?
The answer is - it's not all on the blockchain. The vast majority of transactions involving bitcoin are nowhere near a blockchain, they're all on a database (or similar tech) that the exchange runs. Blockchain transactions only occur on deposit or withdrawl of funds into or out of the exchange. If (as in the case of an entity like Quadriga CX) somebody 'accidentally' removes and loses most of the cryptocurrency, the exchange can continue to operate for quite some time, so long as everyone doesn't try to withdraw at once.
1. Celsius was a lending platform which allowed customers to earn yield on deposited crypto. It also had exchange features, but the blow-up is primarily due to the lending aspect.
2. The liquidity crisis happened because of off-chain financing which models current lender/borrower agreements.
custodially held cryptocurrency is not on the ledger. When you own cryptocurrency custodially with someone, what that usually means that they hold all the cryptocurrency and they have their own database of IOUs.
This is why it is unsafe to keep too many funds custodially with untrustworthy parties and why it is a good idea to minimize the amount you have custudially (e.g. on exchanges see mt gox fiasco)
It wasn't a trading platform, and certainly wasn't doing the transactions on a blockchain. It was "lending" platform, where you deposited your crypto and earned interst. Apparently they loaned out your crypto to low risk individuals/companies etc. But turns out it was an outright scam.
By the way, there are legit decentralised blockchain based lending platforms like Aave.
There is no liquidity crisis in the blockchain itself. These crises always happen to custodians which is some kind of newspeak for banks.
The fact is all of these exchanges and most of these crypto corporations are actually unregulated centralized banks in disguise. They're sitting on massive amounts of money in the form of customer deposits and you better believe they're gonna be leveraging as much of it as possible. Meanwhile everybody's accounts are showing the deposits as if all their money wasn't tied up in the bank's own investments. Someone screws up, risks a little too much and gets liquidated or called or something? Money's gone, the bank owes customers more money than it has, people notice and try to withdraw all the money all at once, the bank runs start and the liquidity crises set in.
Fractional reserve banking is at the root of this problem. You literally cannot have these issues without banks.
The equivalent of $104M for Fahrenheit Execs.
Yeah, decentralization is the cornerstone of crypto. The reality of it all is that it is not. But don't tell that to the zealots.
I'm pro-crypto, I think the innovation and paradigm are brilliant - I am developing a small project in crypto. I don't fool myself into believing the hype that exceeds it's capabilities, project organization or true architecture at hand.
Cheers
These are the same people that are selling 'unbankrupt yourself' t-shirts after going bankrupt.
See this (entertaining) video :) https://www.youtube.com/watch?v=rTwzM0_PjPw
This isn't crypto, it's just a shady investment fund that happened to invest in crypto
This is not a useful distinction: most cryptocurrencies and "DeFi" startups seem to be propped up by shady, unattested corporate entities.
If you have enough shady people involved in a particular activity, then that activity is effectively shady. Similar to the fact that if you add enough raw sewage to the water supply, you don't have a water supply any more, you just have more sewage.
Lots of shady people were involved in web startups in 1999 (and still are tbh).
And the only thing keeping these creeps in check is our legal system. Once you remove that, the bottom falls out on quality.
Should we segue into a discussion about the Nigerian Princes who flood our email inboxes on a daily basis?
It's one thing to pull some elaborate and complex fraud, but you'd have to be really stupid to do such blatant insider trading in broad daylight. Are they taking calculated risks in doing this because surely they're getting prosecuted and having all their money taken away as well?
but you'd have to be really stupid to do such blatant insider trading in broad daylight.
LOL!
Either really stupid --- or really smart.
He did nothing that was technically illegal --- because it was only play money --- i.e. not legal tender.
The really stupid people are those surrendering legal tender in order to play a game with "Monopoly Money".
Here is an article about Federal reserve officials selling all their stocks dated September 10th 2021 to avoid "conflict of interest". I would ask you to open the S&P 500 and check the 10th of September 2021. https://www.reuters.com/business/finance/fed-officials-sell-...
It's not just about crypto, it's about who is allowed to use inside information.
Celsius was a scam, if something seems too good to be true then it is. The same applies to LUNA and it's Anchor protocol which was giving 20% APY on the UST stablecoin. We saw what happened there.
I suspect "Celsius execs" are about to get a tour of US bankruptcy law's clawbacks policy.
Anyone who withdrew money from Celsius in the 90 days leading up to the bankruptcy can be ordered by the judge to put it back in, and that timeline is extended to 1 year for insiders. [1]
A bunch of the folks who thought they got out of Madoff's fund learned that lesson last time.
[1] https://www.lowenstein.com/media/3095/beware-of-bankruptcy-c...
Ponzi scheme gonna ponzi
That rug really tied the room together, man.
US should regulate the crypto industry ASAP. A lot of investors are losing money due to scams.
Web3 is fine
Web3 is basicially about federated social networks. Maybe cryptocurrency plays a role, but the idea that it takes center-stage is one peddled by people who clearly have money to make.
Celsius has nothing to do with Web3
It isn't your crypto if you don't hold your own private key.
People being burned by Crypto has to stop being so funny
Why?
because of empathy.
Its almost like we need regulation for it