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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#681

Post by lui8906 »

jandrese wrote: post #385
anticristi wrote: post #109

Pardon for living under a rock, but why are crypto exchanges affected by the mood in the crypto market? I thought that a crypto exchange functions like a currency market: I put an offer to sell 10,000 EUR for 1 BTC and someone else puts an offer to buy 10,000 EUR for 1 BTC. When orders cross, a transaction happens and the exchange gets a fee, whether in currency or crypto units. What are crypto exchanges fundamentall…

The thing that you are missing is that crypto transactions are slow and expensive. When I say slow I mean hours to complete a single transaction. That's why people keep their money on the exchange, it's far more efficient and usable. Of course it's also risky because exchanges do rug pulls all the time. Knowing when to pull your crypto and bail is a trick. If you're seeing news articles about "minor irregularities" a…

Name one Crypto chain that takes hours to confirm a transaction. Bitcoin has a blocktime of 10 minutes and Ethereum is 10 to 20 seconds. More modern networks process transactions in orders of magnitude less time, eg. Solana has a slot time of 0.5 seconds and time to finality being 1 or 2 seconds.

Re: Crypto exchange AAX suspends withdrawals

#682

Post by dragontamer »

wizeman wrote: post #678
dragontamer wrote: post #675

Earlier quoted context omitted.

> No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses. Did you see the asset sheets on VMFXX? Its all government bonds, loans, and so forth. There's no "cash" just sitting there. Its all, completely composed of various kinds of loans (averaging 11-days in maturity). I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's…

> I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's conducting these "loans" / bonds that you're talking about. Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked). This is unlike what happens with traditional banks, wh…

> Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked).

Do... you know what a MMF is? (money market fund)

A MMF is a federally regulated investment product where 1-share equals $1. Investors invest into MMFs because they are "safe", and have a huge amount of federal regulations to almost-guarantee the 1-share == $1 price point. (but not "totally" guarantee). Small levels of risk are acceptable.

Yes, they're offered by investment banks rather than traditional banks. But the "fundamental trust" that 1-share in VMFXX == $1 is extremely deep.

That's why I keep bringing up this comparison. MMFs are allowed to loan out their money and partake in various investment schemes to generate a yield. HOWEVER, there's reporting requirements, there's investment requirements, there's rating requirements, there's transparency, etc. etc.

All of this giant exercise with crytocoins trying to "make a stablecoin", where 1-stablecoin == $1 all the time is just a crazy scheme to recreate MMFs. That's my overall point and viewpoint.

Re: Crypto exchange AAX suspends withdrawals

#683

Post by 867-5309 »

lxgr wrote: post #246
867-5309 wrote: post #140

Earlier quoted context omitted.

it costs them money to exchange, and they add profit on top of this. the "0 fees" are therefore the sum of these masked in an inflated exchange rate

That's not how an exchange works, though. Exchanges provide the infrastructure for trades to happen (i.e. they maintain order books, match market orders against these, ensure that settlement will eventually happen etc.), but do not take on financial positions themselves. The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand. So if an exchange makes money, it needs to charge at…

>The "exchange rate" is only determined by the order book, i.e. ultimately by supply and demand.

if that were true then all exchange rates would be uniform across all providers

Re: Crypto exchange AAX suspends withdrawals

#684

Post by littlestymaar »

rtkwe wrote: post #403
littlestymaar wrote: post #348

Earlier quoted context omitted.

Right, they said it should be a payment method over the internet. But they failed, mostly for two reasons: - they not anticipate ASICs, or even GPUs, which destroyed the idea of decentralized mining where individuals would just mine to get coins to spent, and forced people to buy coins instead (leading to the rise of exchanges). - their Austrian economics prejudice misled them about the nature of money, and the link…

Also the network is far too slow to handle even a fraction of the day to day transactions handled by VISA. Even if you relegate it to more substantial transfers SWIFT handles around 35 million transfers per day and for the whole month of October this year the main chain only handled 7.9 millionish from what I can find. It's so slow there's a whole opaque secondary layer that had to be built to get it even close to po…

True, but if you think about the initial goal of a decentralized payment method over the internet and not in a crypto-maximalist perspective, it doesn't necessarily make sense to compare it with VISA or Swift which mostly process payments IRL.

When bitcoin was designed, its throughput was a significant fraction of Paypal's which doesn't sound so bad. In fact, having a decentralized, uncensorable and open-source payment system taking 20% of Paypal's market share would have been a major success regarding Satoshi's stated goals, and this was something achievable even with the slow network. But it never happened, and all we have instead is this gigantic VC-funded distributed Casino where hackers and fraudsters thrive.

Re: Crypto exchange AAX suspends withdrawals

#685

Post by wizeman »

dragontamer wrote: post #682
wizeman wrote: post #678

Earlier quoted context omitted.

> I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's conducting these "loans" / bonds that you're talking about. Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked). This is unlike what happens with traditional banks, wh…

> Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked). Do... you know what a MMF is? (money market fund) A MMF is a federally regulated investment product where 1-share equals $1. Investors invest into MMFs because they are "safe", and have a huge amount of federal…

> That's why I keep bringing up this comparison. MMFs are allowed to loan out their money and partake in various investment schemes to generate a yield. HOWEVER, there's reporting requirements, there's investment requirements, there's rating requirements, there's transparency, etc. etc.

I think that's a good thing, although there are 2 things I disagree with:

1) I believe the investment requirements are a scheme that is unfair and can lead to forced (and unnatural) inequality.

I would replace this with (sufficiently strict) tests of investment knowledge for new investors.

2) In practice the ratings agencies have a less than stellar record, as the way they are set up, they have an inherent conflict of interest. This leads to a false sense of security.

So I would just get rid of these, but I don't see anything wrong with the rest in general (I'm sure there would be some specifics I would disagree with).

> All of this giant exercise with crytocoins trying to "make a stablecoin", where 1-stablecoin == $1 all the time is just a crazy scheme to recreate MMFs. That's my overall point and viewpoint.

It's quite different, as stablecoins can be traded in a completely decentralized way (i.e. peer-to-peer) with blockchain protocols using cryptographic assurances.

But yes, in theory an MMF-backed stablecoin could be traded on a blockchain, and I see nothing wrong with that. That said, an MMF-backed stablecoin would be a bit more risky than a USD-backed stablecoin, due to an MMF being inherently a bit more risky than the USD.

However, yeah.. another point is that the companies that issue stablecoins are also quite far from being sufficiently transparent. They also need to be subject to the same periodic financial audit requirements by a reputable firm as a crypto exchange should!

Re: Crypto exchange AAX suspends withdrawals

#686

Post by chitowneats »

nicbou wrote: post #638
chitowneats wrote: post #68

Earlier quoted context omitted.

Also not your cheese if you bought BTC any time in the last few years. Without the exchanges, and especially without investor confidence, the days of wild speculation are ending. The price is going to continue to fall and everyone with BTC in their personal wallets gets to take a haircut too.

It's still your cheese if no one wants to buy it. It's arguably even more yours.

Cheese typically refers to money. Cryptocurrency isn't money.

Re: Crypto exchange AAX suspends withdrawals

#687

Post by nobody9999 »

MichaelCollins wrote: post #409
horsawlarway wrote: post #342

Earlier quoted context omitted.

Can we acknowledge that both of those options are utter trash compared to conventional banking, though? The system that the crypto advocates hate on, but provides 250k per person + per bank + per account type as insurance by default to all registered financial institutions?

Abso-fucking-lutely. The best time to not be involved in crypto was always, and the second best time is now. Get out now if you have any sense.

>Abso-fucking-lutely. The best time to not be involved in crypto was always, and the second best time is now. Get out now if you have any sense.

But I have drugs to buy and cannabis to smoke and joints to roll before I sleep.[0]

More seriously, there are use cases for cryptocurrency (smart contracts are a different think, unaddressed here), they're just mostly illegal.

Whether that illegality is appropriate or not is another question.

That said, there are use cases for cryptocurrency.

[0] With apologies to Robert Frost.

Re: Crypto exchange AAX suspends withdrawals

#688

Post by dragontamer »

wizeman wrote: post #685
dragontamer wrote: post #682

Earlier quoted context omitted.

> Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked). Do... you know what a MMF is? (money market fund) A MMF is a federally regulated investment product where 1-share equals $1. Investors invest into MMFs because they are "safe", and have a huge amount of federal…

> That's why I keep bringing up this comparison. MMFs are allowed to loan out their money and partake in various investment schemes to generate a yield. HOWEVER, there's reporting requirements, there's investment requirements, there's rating requirements, there's transparency, etc. etc. I think that's a good thing, although there are 2 things I disagree with: 1) I believe the investment requirements are a scheme that…

USDC doesn't keep its USD in "cash". Its claiming its got "commercial paper" backing it. ("Commercial paper" being a codeword for loans, the same 5-day / 9-day loans that make up an entity such as SWVXX). Or government loans, etc. etc. Its the same thing, but worse.

Its no more secure than an MMF as it is. In fact, due to the much weaker reporting guidelines, USDC is likely worse than an MMF like SWVXX.

No stablecoin promises "cash" holdings. Literally none. The best you've got in the cryptocoin world is MMF-like promises, except without any of the MMF regulations.

-------

There's no guarantees that USDC's backing of "commercial paper" has any good rating at all. What 5-day loans are USDC banking on? Is it Bank of America? Or is it a loan to Binance? No one knows.

> USDC has always been backed by the equivalent value of U.S. dollar denominated assets; USDC reserves are kept in the management and custody of leading U.S. financial institutions, including BlackRock and Bank of New York Mellon

Re: Crypto exchange AAX suspends withdrawals

#689

Post by Animats »

bredren wrote: post #487
Animats wrote: post #472

Earlier quoted context omitted.

There's a market here for a safe way to store crypto. Something like a thing you carry with you, a thing you can keep at home, a thing you have a friend hold, a thing you have in a safety deposit box, and info a service holds for you. Some combination of majority votes, time delays in days or weeks, and warning messages lets you recover from loss and damage. With backup from an insurance company. But nobody has addre…

Variations of this have been tried many times, for example hardware wallets. But a lot of this is too troublesome or adds too many hoops to jump through than is practical for many people.

Yes. Someone has to get the user experience right.

Re: Crypto exchange AAX suspends withdrawals

#690

Post by wizeman »

dragontamer wrote: post #688
wizeman wrote: post #685

Earlier quoted context omitted.

> That's why I keep bringing up this comparison. MMFs are allowed to loan out their money and partake in various investment schemes to generate a yield. HOWEVER, there's reporting requirements, there's investment requirements, there's rating requirements, there's transparency, etc. etc. I think that's a good thing, although there are 2 things I disagree with: 1) I believe the investment requirements are a scheme that…

USDC doesn't keep its USD in "cash". Its claiming its got "commercial paper" backing it. ("Commercial paper" being a codeword for loans, the same 5-day / 9-day loans that make up an entity such as SWVXX). Or government loans, etc. etc. Its the same thing, but worse. Its no more secure than an MMF as it is. In fact, due to the much weaker reporting guidelines, USDC is likely worse than an MMF like SWVXX. No stablecoin…

Yeah, I know... what these companies are doing is absolute crap and I suspect that in the future this is going to lead to an even bigger crisis than what's happening right now in the crypto industry.

I suspect that this is a side effect of 1) being impossible to store large amounts of USD cash in a bank, at least without incurring into significant risks of losing it or actually even losing money over time due to negative interest rates and/or 2) being more lucrative to hold these paper products rather than keep everything strictly in cash, perhaps even also 3) lack of moral standards? I don't know.

I think this is even worse than what the traditional banks are doing and I'm completely against it. Especially due to the lack of transparency that you are mentioning.

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