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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#641

Post by wizeman »

dragontamer wrote: post #636
wizeman wrote: post #635

Earlier quoted context omitted.

> > Staking is not a loan. > Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later. > Its totally a bond. But in a bond and in a loan you are not guaranteed to get your money back (or the yield), while in staking, you are always guaranteed to get it back because of the consensus rules, right? So I don't thin…

You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). This "risk free rate" serves as the basis of the theory behind our entire banking system. The fact that Ethereum decided to recreate this under separate principles is somewhat amusing, but its just that. A recreation of what we're already familiar with in the financial world. The next questi…

> You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank).

Well, then those loans are also risk-free, right? Because they are also financed by increasing the money supply and the Fed can't spend the money that was loaned to them.

But normal loans and bonds are not risk-free, they have a default risk. Which is the entire reason why when you loan your money, sometimes you can't get it back.

Staking, however, is risk-free, so the following statements of yours are wrong.

> Everyone in the cryptocoin world is doing this "staking" == crappy loans / bonds business.

> > Staking is not a loan.

> Yes it is. You give your money over to another organization, and that organization promises a % yield / APY in return. You aren't allowed the money back until later.

> Its totally a bond.

Re: Crypto exchange AAX suspends withdrawals

#642

Post by acomms »

djbebs wrote: post #411
acomms wrote: post #228

Earlier quoted context omitted.

You aren't wrong, maybe it's my wishful thinking. What do you think the solution is here? Do you think the house of cards stayed propped up because a lot of people were in on the fraud? Were the auditors just incompetent or were they in on it? Auditors are reasonably well known firms.

The solution is simple, relegate centralized exchanges to niches that so far can't be fulfilled in any other way (namely fiat-crypto transactions), and use them only briefly and immediately withdraw any assets from it once the transaction you need is complete. You may also take on insurance against such malfeasance on the part of the exchange, increasing your likelihood of recovering your funds. On the plus side insu…

If you're on HN you can be knowledgable and proactive regarding your security with crypto, but I just don't see mainstream adoption without trusted 3rd parties. I don't think insurers would underwrite that sort of thing given crypto's history.

Re: Crypto exchange AAX suspends withdrawals

#643

Post by tablespoon »

alasdair_ wrote: post #506
tablespoon wrote: post #470

Earlier quoted context omitted.

> 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.

> 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.

That use case at least makes some sense and isn't illegal, but there are probably only dozens of users who'd ever want to do something like that, which isn't enough to support a payment ecosystem.

There are also probably conventional alternatives that probably work for that. I'm somewhat paranoid about getting doxxed based on some teenage internet experiences. There are a couple of forums out there with paywalls that exist mainly to reduce moderator workload, and (10-15) years ago I was able to subscribe with a combination of Visa gift cards and PayPal. The gift cards let you enter (un-validated) identity information so they could be used like credit cards online, and PayPal didn't seem to like them but there was a long delay before they were detected. So I created a throwaway PayPal account with a small-denomination gift card as a payment source, paid for the membership, and abandoned the PayPal account (which would eventually get locked).

Re: Crypto exchange AAX suspends withdrawals

#644

Post by [deleted] »

remcob wrote: post #504
nulbyte wrote: post #494

Earlier quoted context omitted.

> 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 wareh…

[deleted]

Re: Crypto exchange AAX suspends withdrawals

#645

Post by dragontamer »

wizeman wrote: post #641
dragontamer wrote: post #636

Earlier quoted context omitted.

You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). This "risk free rate" serves as the basis of the theory behind our entire banking system. The fact that Ethereum decided to recreate this under separate principles is somewhat amusing, but its just that. A recreation of what we're already familiar with in the financial world. The next questi…

> You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). Well, then those loans are also risk-free, right? Because they are also financed by increasing the money supply and the Fed can't spend the money that was loaned to them. But normal loans and bonds are not risk-free, they have a default risk. Which is the entire reason why when you loan yo…

Frankly, I see no contradiction, with what I said in any of my posts. Could you lay out more clearly where you think a contradiction has occurred?

Re: Crypto exchange AAX suspends withdrawals

#646

Post by twblalock »

lbriner wrote: post #7

Forgive 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…

The problem is that the people who run the exchanges can't stop themselves from using customers' money to try to get rich.

In theory it is possible that an exchange could just take customer money, keep it in a lockbox, and make their revenue by charging transaction fees. But does that ever happen?

The kind of people who are so into crypto that they build a business out of it are fundamentally incapable of that kind of self control. They think they are revolutionaries who are remaking the financial system. They do really dumb financial stuff that the rest of us learned was bad after the 19th century. They aren't the kind of people who would just leave customer deposits alone.

Remember that FTX was supposed to be the responsible exchange. All the other ones were considered to be worse.

Re: Crypto exchange AAX suspends withdrawals

#647

Post by dragontamer »

dibt wrote: post #637
dragontamer wrote: post #624

Earlier quoted context omitted.

Just because its a complicated loan/bond doesn't mean its not a loan/bond. Lending money to somebody else, with a promise for future returns, is fundamentally a bond. It will act like a bond, subject to the economic principles of a bond / loans / etc. etc.

> Lending money to somebody else It is not a loan! > promise for future returns There is no such promise! It is an alternative to proof-of-work, which requires capital investment to provide security to the network (e.g. purchase and run Bitcoin mining machines). Staking is a substitute for that capital requirement. You are refusing to understand this simple fact. If you loan a business money or buy a government bond,…

> It is not a loan!

So lets say I own 10 ETH. Explain to me how I get my staking rewards.

Because step #1 involves me transferring that ETH to Coinbase (or some other entity with a large enough ETH basis to serve as a trusted staking entity). That is a loan. I don't own ETH anymore, I gave it to Coinbase.

Coinbase creates an "IOU", saying "I promise that dragontamer will get his 10 ETH back", through some system of trust, contracts, databases and whatnot. It doesn't really matter what the details are, the whole thing is an IOU, a promise to return my ETH later.

Similarly, when I deposit $10,000 into a bank (be it a savings account, or money market account), the Bank writes down an IOU saying it owes me $10,000. The bank then sends the money to the market (and worst-case, to the Fed Overnight loans), and lends the money out. Later, I withdraw the money, the bank undoes the process.

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The only difference is that ETH doesn't allow you to withdraw the money as often as a savings account or money-market account/fund. So its kind of crappier than a normal savings/money market style loan that goes on.

I guess ETH also gives a different level of rewards, seems to be 4.4% (though denominated in ETH rather than dollars).

Re: Crypto exchange AAX suspends withdrawals

#648

Post by [deleted] »

skinnymuch wrote: post #381
hotpotamus wrote: post #86

Earlier quoted context omitted.

It would seem that there are other failures and frauds predating Bankman-Fried, wouldn't it? While I'm told that the ideological and technical underpinnings of crypto are designed to avoid government regulation, I hope that he is prosecuted thoroughly for any crimes he may have committed. But further, I hope that this high profile Democratic donor drives Republicans in the House and Senate to support strong regulatio…

Republicans are about de-regulation. Whatever they may do for optics temporarily means nothing for their actual focus and goal. Democrats are not much better but I’m not hoping only one of the two parties is going to do legit sustained regulation against the way they actually behave in the medium and long term. Why are you only looking to the Repub party? Ilhan Omar for example doesn’t care much if Biden was given co…

[deleted]

Re: Crypto exchange AAX suspends withdrawals

#649

Post by dibt »

wizeman wrote: post #641
dragontamer wrote: post #636

Earlier quoted context omitted.

You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). This "risk free rate" serves as the basis of the theory behind our entire banking system. The fact that Ethereum decided to recreate this under separate principles is somewhat amusing, but its just that. A recreation of what we're already familiar with in the financial world. The next questi…

> You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). Well, then those loans are also risk-free, right? Because they are also financed by increasing the money supply and the Fed can't spend the money that was loaned to them. But normal loans and bonds are not risk-free, they have a default risk. Which is the entire reason why when you loan yo…

I think the confusion is that they believe the token that is staked is a sunk cost, the same way a business would spend the money from a loan. Like you said, the token will be returned when unstaked.

If I take a loan out to buy and run a pizza restaurant, I can't just give the principal back if it fails. I would have to liquidate the business, which would not be equivalent to the starting capital costs.

Re: Crypto exchange AAX suspends withdrawals

#650

Post by dragontamer »

dibt wrote: post #649
wizeman wrote: post #641

Earlier quoted context omitted.

> You're guaranteed to get your money back from an Overnight loan to the Fed. (literally a 1-day loan to the USA's central bank). Well, then those loans are also risk-free, right? Because they are also financed by increasing the money supply and the Fed can't spend the money that was loaned to them. But normal loans and bonds are not risk-free, they have a default risk. Which is the entire reason why when you loan yo…

I think the confusion is that they believe the token that is staked is a sunk cost, the same way a business would spend the money from a loan. Like you said, the token will be returned when unstaked. If I take a loan out to buy and run a pizza restaurant, I can't just give the principal back if it fails. I would have to liquidate the business, which would not be equivalent to the starting capital costs.

The Fed always can return the money, because they control how much money is printed. Therefore, the money loaned to the Fed through the overnight rate is risk-free. That's why its called the risk-free rate.

It may only be a singular day worth of bond / IOU, but its still a loan/bond/debt instrument.

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Similarly, the Ethereum rewards are printed out of thin air, are they not? By the Ethereum staking system? Its not like the Ethereum they print existed beforehand.

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