Crypto exchange AAX suspends withdrawals

But even talking about Uber on chain or Airbnb on chain is silly right now, since the whole space is yet again on “collapse” days.

I wouldn’t judge crypto for 10-20-30 years. I think we’re on the ARPANET days, and even suggesting Amazon would get you laughed out of the room.

Sure. You said (in the context of talking about Binance and Coinbase):

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

This phrase, in the context of the news we're discussing (about suspending withdrawals), implies that Coinbase and Binance are also incurring in a risk of suspending withdrawals because they might run out of liquidity due to staking (which you said is equivalent to a "crappy loans / bonds business").

However, staking is not equivalent to a "crappy loans / bonds business".

To argue that point, someone said that "Staking is not a loan", implying that unlike loans you can't lose money because of staking, but you said "it's totally a bond" because, I suppose, you're not allowed to get the money back until a certain time.

However, I think that you are missing the fact that unlike with loans and bonds, there is no risk of running out of liquidity because of staking.

If Coinbase and Binance were operating a real loans and bonds business (like banks do), and suddenly all customers demanded their deposits back, these exchanges couldn't force the borrowers to pay back their loans/bonds immediately so that they could fulfill the withdrawal demand. Not to mention that if the borrowers went bankrupt, the money would be lost, which would lead to Coinbase and Binance potentially losing customer funds, also becoming bankrupt and suspending withdrawals.

This seems to be more or less what is happening with some of these exchanges that are running out of liquidity, because they seem to be essentially gambling with customer funds.

But I think in staking it's completely different, because, as I argued, in staking there is no risk that borrowers go bankrupt and default on the loan/bond, as there are no borrowers. Instead, the yield is financed through inflation and the staked coins remain your property throughout the whole staking process -- nobody can spend them, so there is no risk that they can't be payed back.

And on top of that, customers aren't allowed to withdraw the staked amount until the staking expires, so there is no risk that Coinbase and Binance can't fulfill withdrawals because of staking.

Which means there is no risk of running out of liquidity because of staking.

In fact, coins can only be staked if the customer decides to stake them. Which is also completely unlike the loans/bonds business, which happens behind the customer's back, essentially. The latter leads to broken customer expectations (and ruined lives) if/when the loans/bonds business goes under.

Well, that's my understanding at least, but I'm sure I may be missing some points as I'm not actually an expert (or anything close to it) on staking.

BTC is barely used as an actual currency to buy things with. I could be wrong but I thought the idea was that you'd be using BTC in daily life so that you wouldn't need to go "off the ramp".

Unfortunately in order to learn about crypto you have to ignore virtually everything that exists in the space right now, since white collar criminals have realised this is a free for all space where they can commit fraud at will and never get charged (with some exceptions).

Really there is only one interesting thing you need to study. And that’s Ethereum. Bitcoin is pretty much stuck in the past and it’s a mummified open source project imo. And all the other interesting chains are just Ethereum clones with some changes - Polkadot, Algorand, Tezos are perhaps the very few that matter. But everything comes from Ethereum, and if you study and earn about ETH you will understand the whole space.

So look at the interesting ideas and read the books from the good people who’ve done their research - Cryptopians came out recently and that’s a good one even though I haven’t read it I trust Laura Shin (her podcast is also excellent ). Out of the Ether is also good.

But here are some thoughts:

- DAOs are already working in making fully decentralized open source dev collectives and rewarding them for work done. See MakerDAO

- dapps running in cryptoVMs can be made to run at no cost to the developer. That’s pretty cool, since a lot of the “moat” that Uber, FB and Twitter build is two-fold - first they own your data, then they build giant infrastructure to serve you the app. With crypto VMs you don’t need this - people pay for usage. If you could figure out an algorithm that’s better than Uber’s at allocating people who want to drive point to point, you don’t need to go “oh well I guess I go fund raising to build the infra”. Crypto VMs give you that for free, since the user pays for the usage of the application in the transaction.

- decentralised applications can be made safely, even though again they are hard to make and lots of them are just copy paste by fraudsters and schemers (and inevitably get hacked). Uniswap, Compound, Lido, Curve Finance. There are multiple dapps that have never been hacked as far as I know.

- Gitcoin is already quite an incredible little way to fund projects, I believe it’s implemented some form of Quadratic Voting, which Vitalik Buterin has talked about

- NFTs actually work - in the sense that there are real artists building communities and selling their digital art (not monkey pictures) I know of multiple artists who quit mind numbing work at big Corp and became quite successful in NFTs. Again 99% of the space is money laundering, fraud, wash trading - but so is real art (the idea that NFTs are special in that regard is a fiction only someone who hasn’t interacted with the “art world” can hold).

I can go on but illl have to think. But DAOs, NFTs, decentralised VMs with immutable data are pretty cool already. The reason I say I can’t predict what’s going to happen is because even being a digital artist myself, I had no idea about NFTs. And when I discovered them I was blown away. The possibilities that NFTs open up as a digital artist are pretty incredible - you could in theory make “designer levels” for Mario Maker and sell only 7 copies of the map! Making it a collector’s item. And you would colect royalties forever on chain if people sold your map to each other. That’s pretty cool and just couldn’t be done before.

So I have no faith in my ability to predict the future, but I like the internet better with DAOs and NFTs, instead of likes and digital feudal lords who own all your data.

https://overcast.fm/+YVsUUTgOg - the Blockchain Socialist’s interview with Buterin is really interesting, giving you a nice overview of Vitalik’s thinking about the space atm.

You DO own the ETH. Regardless of whether you are staking it yourself, or have given it to Coinbase to stake. Similar to how you maintain ownership of your rental property even if you allow a property management company to run it.

This is true if you move your ETH from a self-custody wallet to coinbase (custodial wallet). Either way, you maintain ownership. The tokens earned are taxable as income, just as income from a paying tenant on your rental property is taxed.

Also, the IRS defines crypto tokens as "property." As far as I know, there is no such distinction for bonds or loans.

From https://www.irs.gov/businesses/small-businesses-self-employe...:

"For federal tax purposes, digital assets are treated as property."