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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#661

Post by sweetbitter »

cortesoft wrote: post #534
amalcon wrote: post #406

Earlier quoted context omitted.

None of these collapses have been due to fractional reserve banking, because fractional reserve banking requires being open about what you're doing. These collapses have been about fraud . There are lots of other kinds of fraud; getting rid of this type would barely make an impact. While there's nothing intrinsic about cryptocurrency that would make it more prone to fraud than anything else, the culture around it see…

> While there's nothing intrinsic about cryptocurrency that would make it more prone to fraud than anything else There are absolutely intrinsic things that make cryptocurrency more prone to fraud. The inability to reverse transactions, quasi-anonymity, and lack of any central authority to resolve disputes. To limit fraud to the levels you see in traditional finance, you would need the regulations and oversight by cen…

> The entire purpose of cryptocurrencies are to avoid those things, so while you technically could have them with a cryptocurrency, you would end up with no good reason to have a cryptocurrency at all.

I will substitute a word from your post that will help you understand this easier:

"The entire purpose of cash is to avoid those things, so while you technically could have them with cash, you would end up with no good reason to have cash at all."

Cryptocurrency is not antithetical to banks just like cash and gold are not. It is a digital version of cash, not credit.

Re: Crypto exchange AAX suspends withdrawals

#662

Post by krzyk »

constantcrying wrote: post #85
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…

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 customer.

But banks do, multiple times. (one dolar produces n dollars in loans). A test with Bank run can confirm it.

Re: Crypto exchange AAX suspends withdrawals

#663

Post by krzyk »

johannes1234321 wrote: post #176
danaris wrote: post #118

Earlier quoted context omitted.

And that's largely because of the lack of regulation that so many cryptocurrency fans tout. If it's not legally regulated as a currency, or a security, or anything of the sort, then why would it be considered to belong to you, and not Mt Gox, once you've given it to them? All you have is a digital account that's basically the legal equivalent of an IOU on a napkin. Welcome to your libertarian utopia.

> And that's largely because of the lack of regulation that so many cryptocurrency fans tout. In next sentence they will tell you, that you shouldn't have kept the private keys at the exchange. Use your own wallet and keep your copy of the Blockchain.

Basic common sense, not your keys not your coins.

Re: Crypto exchange AAX suspends withdrawals

#664

Post by horsawlarway »

asoneth wrote: post #539
rufusroflpunch wrote: post #457

Earlier quoted context omitted.

In Lebanon, people are robbing banks to get their own money out. Maybe they are a little bit more comfortable than you are with holding keys to an unseizable asset.

If you live in the US and are hedging against the collapse of the FDIC you may be better served by investing in things like dried goods and seeds than cryptocurrencies.

Correct.

Banking may well collapse in the US (I'm not betting it will - quite the opposite, to be honest - but historically speaking it's not an impossibility.)

The issue is that if banking in the US collapses... well - we have much, much bigger issues than "crypto". You'd be far better served with a stash of dried/canned products and a gun or three.

Also - it won't be crypto that matters in this case. It will be the new currency of whatever regional nation states pop up in the US after the collapse, or if the federal gov manages to hang on, the new USD.

Side note - last time I bought in bulk (because hedging against this is relatively cheap, all things considered) split peas were the best bang for the buck in terms of cost/calorie. Just slightly beating out plain white sugar.

75 days of food for 4 people at 2000 calories per day cost about $350 (not including storage containers) and will last a very long time if it's composed of dried legumes, flour, oats, sugar, rice, oil, etc... in airtight containers.

If you cook yourself and rotate through, it's actually a fairly cost effective way to eat cheap and healthy (although without any additional inputs - also very bland) while also keeping storage on hand and not feeling like a complete prepper.

Re: Crypto exchange AAX suspends withdrawals

#665

Post by strogonoff »

sweetbitter wrote: post #661
cortesoft wrote: post #534

Earlier quoted context omitted.

> While there's nothing intrinsic about cryptocurrency that would make it more prone to fraud than anything else There are absolutely intrinsic things that make cryptocurrency more prone to fraud. The inability to reverse transactions, quasi-anonymity, and lack of any central authority to resolve disputes. To limit fraud to the levels you see in traditional finance, you would need the regulations and oversight by cen…

> The entire purpose of cryptocurrencies are to avoid those things, so while you technically could have them with a cryptocurrency, you would end up with no good reason to have a cryptocurrency at all. I will substitute a word from your post that will help you understand this easier: "The entire purpose of cash is to avoid those things, so while you technically could have them with cash, you would end up with no good…

Cryptocurrencies are nothing like cash for one important reason: they are not subject to physical constraints.

You cannot easily scam millions of people around the world out of their hard-earned cash in a couple of days. You cannot easily move millions of dollars in cash without conspicuously hauling objects around and/or engaging many people to help with that. You can reverse a cash transaction immediately by grabbing the person and calling the police. You cannot maintain anonymity when dealing in cash without giving strong cues to bystanders and counterparties and risking being recorded on video. It is not the purpose of cash to avoid any of those “downsides”; but it clearly is a feature of cryptocurrencies.

Cryptocurrencies are a qualitatively new thing humanity has never had to deal with ever, no matter how insistent are cryptocurrency aficionados’ in calling it merely “a digital version of cash”. This serves their wallets, by suspending deserved wariness and encouraging unsophisticated people to invest into a financial pyramid, but not truthful description of reality.

Re: Crypto exchange AAX suspends withdrawals

#666

Post by dibt »

dragontamer wrote: post #647
dibt wrote: post #637

Earlier quoted context omitted.

> 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 t…

> 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.

Incorrect! My understanding is it would be illegal for them to give away your deposits. That includes the Reverse-Repo market (RRP), which is the source of the overnight rate you referring to. The RRP is a contract, not a transfer. Factional-reserve banking means they don't loan out customer's deposits.

Also, you are confused about the users of RRP. It is overwhelmingly money-market funds, NOT checking/saving accounts. This would include Vanguard, Fidelity, Schwab, etc. which are not banks.

From:https://fedguy.com/the-on-rrp-will-never-be-a-floor/

"In practice, the vast majority of ON RRP usage is done by MMFs, who have $4.5 trillion in assets. That enormous pool of capital is the mechanism through which Fed policy is transmitted in the money markets."

ON RRP = Overnight Reverse-Repo MMF = Money-Market Fund

And it is never "spent" by the fed. It is held as a liability on their balance sheet. The reason you see such a high RRP now is due to a shortage of low duration treasuries. They want the RRP to be high in case there is a run on MMFs like in 2008.

Re: Crypto exchange AAX suspends withdrawals

#667

Post by sweetbitter »

tablespoon wrote: post #470
alasdair_ wrote: post #455

Earlier 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…

> 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?

Well, there are currencies that do provide strong anonymity, so no?

But yeah agreed that cryptocurrency doesn't have that many use cases, just as cash has a declining number of them. I hope someone makes an Amazon-like platform for it.

Re: Crypto exchange AAX suspends withdrawals

#668

Post by hn_throwaway_99 »

kranke155 wrote: post #653
hn_throwaway_99 wrote: post #625

Earlier quoted context omitted.

There was still plenty that could be imagined in 1989 that the Internet could be capable of - there was none of this "it is just too unimaginable to even consider" nonsense. E.g. there were plenty of dialup BBS services and things like Prodigy with GUI, chat, etc. in the 80s. It wasn't that much of a great leap to see how moving those types of things from proprietary networks to the Internet would occur.

DAOs are fantastically interesting and if you look into the ones that work, Vitalik’s ideas for Quadratic Voting, there’s a lot toucan imagine could happen there. DAOs and NFTs are already incredible in my view, they are just in pre-alpha stage and everything is kind of a mess. But people see the pre-alpha and goes “this will never work”. I really disagree. I see for instance how DAOs and blockchain could help develo…

> I see for instance how DAOs and blockchain could help developers receive compensation for commits to open source software, creating a possibility for the commercialisation of open source that competes with even large companies. I know people who looked into this. And I hope it happens.

I was appropriately reprimanded by dang yesterday for starting a comment with an attack, so I'll slow down and just point out the following:

1. GitHub, for example, already makes it extremely easy to contribute to open source developers. It's called GitHub Sponsors.

2. I have actually donated to a developer that writes a library I love using GitHub Sponsors. It was trivial to do, I just entered my credit card, the money came out on a monthly basis, and I cancelled after a year (I told the dev I'd support them for a year). I'll also note that I don't live in the same country as the developer and the developer's country uses a different currency.

3. The thing that gets me about these kinds of examples proposed by crypto fans is that the mechanics of how to, for example, pay open source devs is zero part of the problem. The problem is that a lot of people are willing to work for free, and software users don't like to pay for stuff that they can get for free.

Again, I see a lot of "hand-wavy utopianism" from crypto enthusiasts, but I see zero examples of (a) why this would be better than GitHub Sponsors, or (b) why do you think GitHub Sponsors hasn't been more successful (hint, it's not that actually making payment with a GH Sponsorship is difficult).

Re: Crypto exchange AAX suspends withdrawals

#669

Post by dragontamer »

wizeman wrote: post #654
dragontamer wrote: post #645

Earlier quoted context omitted.

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?

> 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? 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 Coinb…

> real loans and bonds business

You mean, like a Money Market fund like VMFXX?

https://investor.vanguard.com/investment-products/mutual-fun...

VMFXX has federal regulations, where it is _required_ to prove your liquidity reserves _DAILY_. EVERY SINGLE DAY, VMFXX publishes how much money they have that can be satisfied within 1-day, 1-week, and other such benchmarks.

The entire publication is available online, every single day, not only from VMFXX, but also all of VMFXX's competitors (such as SWVXX).

https://www.schwabassetmanagement.com/products/swvxx

----------

What Coinbase / Binance is doing is "Crappy" because their reporting guidelines are so much worse than what "the real banks" are doing. There's no one checking or double-checking these reserves.

Every single dollar (and even penny) is tracked in a money market fund. The _EXACT_ makeup of the loans is also tracked. The rules for how a "bank run" would be handled, are regulated and stated in advance. Everything has been planned out, discussed, debated, in Congress over-and-over again for the past 100 years as our laws have evolved.

VMFXX handles over $200 Billion of assets, and has been doing so for decades, in a tradition that follows US legal rules for nearly a hundred years (established since the times when the banks did lose a lot of money: back in the Great Depression). Its battle tested, pragmatic, and cheap (0.11% fees/year), extremely transparent, well regulated, well understood.

The comparison to Coinbase and Binance is laughable. There's no regulations, they haven't even been around for a decade, Binance isn't even being checked by anybody (being an offshore accounts), though I admit that Coinbase is at least in the USA and subject to US Law. But even Coinbase's reports on their assets pales in comparison to the information I get from VMFXX's pages.

-------

I'm trying to show you what a "real bank" does, such as VMFXX / Vanguard, with their "equivalent stablecoins" (aka, money market fund).

Re: Crypto exchange AAX suspends withdrawals

#670

Post by sweetbitter »

strogonoff wrote: post #665
sweetbitter wrote: post #661

Earlier quoted context omitted.

> The entire purpose of cryptocurrencies are to avoid those things, so while you technically could have them with a cryptocurrency, you would end up with no good reason to have a cryptocurrency at all. I will substitute a word from your post that will help you understand this easier: "The entire purpose of cash is to avoid those things, so while you technically could have them with cash, you would end up with no good…

Cryptocurrencies are nothing like cash for one important reason: they are not subject to physical constraints. You cannot easily scam millions of people around the world out of their hard-earned cash in a couple of days. You cannot easily move millions of dollars in cash without conspicuously hauling objects around and/or engaging many people to help with that. You can reverse a cash transaction immediately by grabbi…

> Cryptocurrencies are a qualitatively new thing humanity has never had to deal with ever, no matter how insistent are cryptocurrency aficionados’ in calling it merely “a digital version of cash”. This serves their wallets, by suspending deserved wariness and encouraging unsophisticated people to invest into a financial pyramid, but not truthful description of reality.

Holding no cryptocurrency myself (I don't need to buy anything with it atm :D) I would hardly call myself an 'aficionado'. But you must understand that to compare does not mean to equate. All I was saying is that cryptographic currencies have some of the properties that cash has, but that they also have the ease of transport and storage afforded to us by credit.

I don't see the issue with being able to transport cash across the 'net. Governments can still regulate businesses, banks, so if you go and buy a car and your government wants to know to tax it, the business selling you the car can just report this income. If a bank held your asset for you, they could just be subject to similar regulations as when they hold other assets for you. Once you stop treating it like credit or like some amorphous blob that cannot be regulated, this stuff gets pretty simple to understand.

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