"Industry" People gave us money and now they want it back but we spent it
Well said. It is exactly this simple.
Crypto exchange AAX suspends withdrawals
501–510 of 843 posts
Re: Crypto exchange AAX suspends withdrawals
#502Who's next?
Re: Crypto exchange AAX suspends withdrawals
#503How likely is this cascade to reach Binance?
anyone who claims to know is lying to you. historically speaking, a good heuristic would be: not your keys not your coins, no matter what the exchange is. if you control your own keys then you don't need to wonder about whether binance is solvent or not.
Re: Crypto exchange AAX suspends withdrawals
#504Earlier quoted context omitted.
An exchange shouldn't count deposited crypto as their asset. It is an asset of their customer. I do not think the actual problem here is crypto exchanges being unprofitable. Even if a crypto exchange goes under, it could (and frankly should ) still be able to go under gracefully, e.g. letting all customers withdraw their assets for a month (and E-Mailing private keys as a last resort). The issue here is crypto exchan…
> An exchange shouldn't count deposited crypto as their asset. It is an asset of their customers. Yes they should. A deposit liability arises from the fact that they received an asset in a deposit transaction. Liabilities and assets aren't mutually exclusive in any transaction, and both must increase when you receive a customer's deposit, or else where does the liability come from? > Banks need to be heavily regulate…
> Yes they should. A deposit liability arises from the fact that they received an asset in a deposit transaction. Liabilities and assets aren't mutually exclusive in any transaction, and both must increase when you receive a customer's deposit, or else where does the liability come from?
Does a cash transporter count the contents of their armored vans as assets? Does DHL count the contents of their vehicles and warehouses as assets? Why should exchanges be different?
I know it's the law for exchanges to account custodial funds as assets (SAB121), but I don't see why it should be this way. In fact it seems to achieve the opposite of consumer protection.
Re: Crypto exchange AAX suspends withdrawals
#505Earlier quoted context omitted.
>The only reason it exists is because smart contracts didn't exist when they first started. Calm down. That is not true. Smart contract based exchanges do not let people exchange real money into crypto. There will always need to be offchain exchanges for trading USD for crypto. Additionally, trading off chain is much cheaper than on chain. Centralized exchanges will always exist because people want on / off ramps, pe…
> Additionally, trading off chain is much cheaper than on chain. How this does not wake up all the idiots, I will never understand. How come your superior technology is inferior in one of the crucial axes of trading technology???
You can't forget that it's also usually slower than trading off-chain.
It's inferior in a lot of ways, which is why it never took over the way its proponents thought.
Re: Crypto exchange AAX suspends withdrawals
#506Earlier quoted context omitted.
Buying drugs online was a real use case that actually worked, as was being able to smuggle wealth out of a country with exit restrictions. As for legal uses, yeah, there are not many at the moment. Maybe some day there will be a DAO-type org that is worth being invested in or something but not today.
> Buying drugs online was a real use case that actually worked, Kinda sorta. Wasn't that back when people assumed cryptocurrency provided the same kind of privacy that cryptography does, which was (in retrospect), pretty dumb? > as was being able to smuggle wealth out of a country with exit restrictions. That one doesn't make much sense either. How are you supposed to get your cryptocurrency to smuggle out in such a…
For me, my one and only use of crypto (back in the day) was to put it through a mixer and then use it to pay for hosting for some TOR exit nodes in Iceland that I didn't want tied to me personally.
Re: Crypto exchange AAX suspends withdrawals
#507I put all my coins into a cold wallet after the tether crash.
History just keeps on repeating here. At the beginning Mt Gox, now this FTX and AAX meltdown. People stealing billions of dollars.
The problem is now that the trust in the exchanges has been eroded.
How can it go back up?
Probably im the end we will really need government guarantees like in the normal banking system, so eventually we will have come full circle.
Re: Crypto exchange AAX suspends withdrawals
#508Forgive my ignorance but it seems that one major problem with crypto-exchanges is that they don't necessarily have any assets other than the crypto that has been deposited there, which means all overheads (which I am assuming for some of these guys is $Ms/year) can only come from trading crypto unless they are charging reasonable money for the privilege of using their exchanges. In the FIAT world, banks make tonnes o…
I know nothing about the world of crypto currencies, but I do know finance.
The exchange does not hold the trades instruments/currencies/securities as assets. The business of a normal exchange is normally risk free (just matching buyers to sellers). Some exchanges step in as middle man in the trades, a process that I believe is called novation of the trade. The original trade between the buyer and the seller is novated, transformed into two trades, both against the exchange, one for each party and opposite direction. In this case the main risk is counterparty risk, the risk that one of the counterparties fail in some way.
An exchange never holds its own positions.
What is the difference in these cases? Have the crypto exchanges somehow used their users cryptosecurities as assets?
Re: Crypto exchange AAX suspends withdrawals
#509Earlier quoted context omitted.
Crypto exchanges are more like a bank grafted onto a hedge fund that happens to also do some exchange stuff on the side.
Recent collapses have shown that Crypto exchanges are more like a casino grafted to a Ponzi scheme.
Which is remarkably similar to a bank grafted to a hedge fund.
Re: Crypto exchange AAX suspends withdrawals
#510Earlier quoted context omitted.
Transactions on the exchange don't take place on the blockchain. The data they're "proofreading" is probably in a traditional db.
I mean this as a genuine question (not an indictment), and as a complete blockchain/crypto noob who has just been a spectator: Why is this the case? Isn't this like one of the best use cases of the blockchain in crypto? Why would they not utilize the technology to prevent this exact thing from happening? Are there tradeoffs I'm not aware of?
The practical tradeoff for not using the actual currency blockchain is instant settling time and 0 cost for transactions. If every transaction was on the chain, they may take hours or longer to settle (not unlike trading shares on a "real" stock exchange), and there'd be a fee for each one.
As for why they don't keep them on an internal blockchain, there's really no advantage in doing this vs a proper setup with a database. The part that makes crypto work isn't necessarily the blockchain, it's the public record part.
Blockchain and crypto go together because the blockchain acts as a public ledger between parties who don't (or don't need to) trust each other. On an exchange, there's no trust issues- you and the person you're trading with have both agreed to trust the exchange and their records.
Edit: I'm not super up-to-date on the crypto world, but I'm reasonably sure that there are on-chain/decentralized exchanges. I also think that there's been a lot of development towards making pseudo-on-chain exchanges through projects like the Lightning network in regards to BTC.