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FTX held less than $1B in liquid assets against $9B in liabilities

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Re: FTX held less than $1B in liquid assets against $9B in liabilities

#91

Post by nfcampos »

Even if I take the most charitable view, ie. that everything they did was above board etc, there’s still a lesson here about diversification -

a startup (ie. a private company which represents the majority of the founders assets) is already a massively concentrated, ie. not diversified, financial position -

no need to compound it by making a myriad bets (through Alameda or otherwise) in in other tokens/companies in the same market, which are ultimately incredibly correlated assets.

If there was no fraud, that will ultimately be the explanation for their downfall.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#92

Post by smeej »

JonathanBeuys wrote: post #77
brianvli wrote: post #75

Earlier quoted context omitted.

Smart contract storing a vector of signer addresses, vector of votes and a staged transaction. Each signer has to vote yes before the smart contract executes the staged transaction.

And you do that with pencil and paper? If you use software by a 3rd party, we are back to squear one.

You don't use 3rd party software to generate the wallet. Electrum, Specter, or another FOSS app can do it fine.

The keys have 3rd-party software, but all they do is sign. Don't have a quorum from the same manufacturer. If it takes 3 signatures of 5, don't use 3 from the same company.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#93

Post by ozzydave »

bitxbitxbitcoin wrote: post #22
tyre wrote: post #16

Earlier quoted context omitted.

You must consider what the banks are lending with that ratio. It’s mostly mortgages, which are far less risky than what FTX was doing.

Hard to quantify far less but a few orders of magnitude probably isn’t too “far off.”

Closer to selling mortgages for metaverse real estate

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#94

Post by smeej »

JonathanBeuys wrote: post #88
sanjayio wrote: post #84

Earlier quoted context omitted.

OP explained this, if the signing is required by multiple 3rd parties then you’re good. You can do this with pencil and paper btw and write down keys. It’s not far fetched.

Still sounds far fetched to me. Do these types of smart contracts exist on Bitcoin?

They don't need to. Multisig is built directly into the protocol for BTC.

Search BTC multisig and you can learn all about it.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#95

Post by JonathanBeuys »

smeej wrote: post #92
JonathanBeuys wrote: post #77

Earlier quoted context omitted.

And you do that with pencil and paper? If you use software by a 3rd party, we are back to squear one.

You don't use 3rd party software to generate the wallet. Electrum, Specter, or another FOSS app can do it fine. The keys have 3rd-party software, but all they do is sign. Don't have a quorum from the same manufacturer. If it takes 3 signatures of 5, don't use 3 from the same company.

That's what I mean with 3rd party software.

If you use Electrum, you are hoping that Electrum is not buggy or malicious.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#96

Post by zen21 »

JonathanBeuys wrote: post #81
zen21 wrote: post #79

Earlier quoted context omitted.

What are you talking about? You can inspect both the hardware and software. If you can verify a ‘deterministic algorithm’, you can verify this.

You verify the deterministic algorithm in a wallet by comparing its output to the output of a wallet by a different manufacturer. It does not need any technical expertise.

That would tell you nothing. The two manufacturers could easily be using the same compromised software or hardware inside the casing.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#97

Post by smeej »

encryptluks2 wrote: post #70
smeej wrote: post #30

Earlier quoted context omitted.

Multisig, with hardware from different companies, no one of which could constitute a quorum of your keys. If you have even just a 2-of-3 keyset with one Ledger, one Trezor, and a Coldcard, none of those companies can screw you by itself. If you go up to 3-of-5, it's even more robust. You can set it up yourself using FOSS like Electrum. Or you can hire somebody like Casa[0] to get it all set up and set up the infrastr…

The issue with hardware wallets that make them significantly risky is if you are storing wallets that contain any substantial amount of assets then it as risky as storing large sums of money in your house. If you lose that, it gets corrupted or destroyed then you've just lost those assets. There are pros and cons vs having a password-protected file that you can at least backup to whatever devices you decide.

Mulsitig fixes this.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#98

Post by smeej »

JonathanBeuys wrote: post #88
sanjayio wrote: post #84

Earlier quoted context omitted.

OP explained this, if the signing is required by multiple 3rd parties then you’re good. You can do this with pencil and paper btw and write down keys. It’s not far fetched.

Still sounds far fetched to me. Do these types of smart contracts exist on Bitcoin?

I don't want to be rude, but you're not the only smart person who's thought of counterparty risks. There's tremendous incentive to all sorts of people to break the cryptographic security that secures these networks. And, thus, also incentive to stay ahead of those people.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#99

Post by JonathanBeuys »

smeej wrote: post #94
JonathanBeuys wrote: post #88

Earlier quoted context omitted.

Still sounds far fetched to me. Do these types of smart contracts exist on Bitcoin?

They don't need to. Multisig is built directly into the protocol for BTC. Search BTC multisig and you can learn all about it.

I know Bitcoin multisigs.

But nobody is creating them with pencil and paper.

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