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BlockFi files for bankruptcy as FTX fallout spreads

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Re: BlockFi files for bankruptcy as FTX fallout spreads

#191

Post by mattwilsonn888 »

napolux wrote: post #38
simple-thoughts wrote: post #3

With projects like blockfi, users get all the disadvantages of the centralized traditional financial system without any of the regulatory protections that have built up over centuries. Terrible for the people with assets in blockfi but extremely predictable. The point of defi is that you can use financial services without a centralized counterparty. People who can’t handle their own keys should be using traditional b…

it's fascinating how nobody learned from history. Banks and bankers have been heavily regulated as you said, "over centuries". Still today, we get lured by the same businesses (because all these lenders were just banks/financial operators) but without any of the safety nets we have in place when we work with "old school" banks.

It's really worse than you say the amount of ignorance it takes to store crypto in one of these institutions, when one of its motivating and zeitgeist driving features is that third parties are no longer the most secure method of storage.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#192

Post by _jal »

iskander wrote: post #101
Stranger43 wrote: post #95

Earlier quoted context omitted.

Essentially yes. Bitcoins scalability issue should have killed off al notions that it could ever gain widespread usage as an alternative to traditional currency for regular payments and after that it became yet another speculative derivative without any real backing in real world assets. It was never actually going to replace fiat currencies for most people and the industry is absolutely dominated by exotic financial…

On the other hand, people chasing the dream of crypto scalability have actually invented a remarkable amount of math and tooling around large scale proof construction, summarization and validation. The Zero Knowledge proof ecosystem (and its relatives in multi-party computation and fully homomorphic encryption) might be the only useful thing that is left after the current incarnation of crypto fully implodes.

> might be the only useful thing that is left

That's a good point. If nothing else, the stupid money caused more practical exploration of ZKP and other exotic math constructs than we'd seen in decades previously.

I'd like to see more "toy" exploration of this stuff as the money drains out. That's where interesting things are going to come from, for a while. Time for a zero-knowledge app to select lunch destinations, a dating matcher that doesn't leak before the reveal, secret agent spy communicators for kids...

Re: BlockFi files for bankruptcy as FTX fallout spreads

#193

Post by max51 »

danuker wrote: post #169
lawn wrote: post #99

Earlier quoted context omitted.

The endgame is a payments system as originally described in the Bitcoin whitepaper. 99.9% of all "advances" and developments in the space hasn't moved us towards the endgame, if anything it's taking us further away.

I agree. I held Bitcoin Cash since it forked, because it is superior technically. But I am disappointed with its limited adoption. BCH allows more transactions. BTC would take 18 years for 4B people to perform a single transaction each. And it costs ridiculous amounts of resources for a ridiculous amount of constant security.

BCH is just kicking the can down the road a bit further. If it were to gain massive adoption rapidly, the only way it could scale if they follow their current ideology is by hosting the nodes on bigger and bigger server racks, eventually reaching the point where there is only one or two real nodes hosted in a cloud provider datacenter somewhere. I don't know what the perfect block size is, but quadrupling down on on block size and turning down all alternatives is not a good long term plan.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#194

Post by kasey_junk »

TacticalCoder wrote: post #178
woodruffw wrote: post #86

Earlier quoted context omitted.

Given the amount of handwringing we've seen over the past couple of weeks in re: Twitter's headcount, it astonishes me that we haven't seen anything close to that for these cryptocurrency firms. Twitter ran one of the world's largest social media networks with around 7000 people; what in the world is Kraken doing with ~3400[1]? [1]: https://www.linkedin.com/company/krakenfx

> what in the world is Kraken doing with ~3400 Kraken is one of the OG cryptocurrencies exchange. Maybe the oldest still around. They're in the business since 2013 or so. Since then the Crypsy, Quadriga, Mt Gox, FTX, etc. have all come and gone (with their customers' money) but Kraken is still there. If they are on a scam, it's a really long con: a decade and a half of a con? They're not "Binance big" but they do nea…

The CME has ~3400 employees.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#195

Post by mattwilsonn888 »

postalrat wrote: post #7
simple-thoughts wrote: post #3

With projects like blockfi, users get all the disadvantages of the centralized traditional financial system without any of the regulatory protections that have built up over centuries. Terrible for the people with assets in blockfi but extremely predictable. The point of defi is that you can use financial services without a centralized counterparty. People who can’t handle their own keys should be using traditional b…

What's the cryptocurrency endgame? Everyone has keys in cold storage waiting for the day we have the mathematics that destroys them?

Your doomsday scenario affects all online security equally. The only outcome you are partially vindicated in is one with a quantum miracle in the short term, which even then is not catastrophic for protocols which make the necessary hard forks.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#196

Post by deltree7 »

michaelt wrote: post #160
largepeepee wrote: post #52

Earlier quoted context omitted.

There is value, in that a generation of moderately wealthy idiots got convinced that monkey pictures are worth something. Like a cult brainwashing, they have attached their identities to those worthless pictures and now are trapped in greedy stupidity.

Weren't all those ape NFTs brought with monopoly money anyway? I mean, buying a $1M ape NFT with real money makes no sense - but if you were Sam Bankman-Fried and you had an unlimited supply of coins you knew to be worthless, you're just swapping something worthless for something maybe-worthless, which is much easier to explain.

No, when you bought an NFT for X Coins, at the same time you could have bought Y dollars.

So, the NFT did really cost Y dollars and if it's trading at Z, you have lost Y-Z dollars

Re: BlockFi files for bankruptcy as FTX fallout spreads

#197

Post by makeitrain »

SilasX wrote: post #142
vkou wrote: post #136

Earlier quoted context omitted.

> Kraken actually handles money so it needs customer service and Twitter is just a bunch of already written code for posting stuff and sometimes (although much less now!) getting ad dollars. If you view Twitter as a 'service for posting 140 characters', they don't need 7000 employees. If you view it as a 'service for supporting five billion dollars worth of ad spend across the entire world', with all the proprietary…

But why does it add up to 7000 headcount rather than 3500 headcount or 14000 headcount?

Just count the number of employees to get the total headcount.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#198

Post by sjsdaiuasgdia »

SilasX wrote: post #142
vkou wrote: post #136

Earlier quoted context omitted.

> Kraken actually handles money so it needs customer service and Twitter is just a bunch of already written code for posting stuff and sometimes (although much less now!) getting ad dollars. If you view Twitter as a 'service for posting 140 characters', they don't need 7000 employees. If you view it as a 'service for supporting five billion dollars worth of ad spend across the entire world', with all the proprietary…

But why does it add up to 7000 headcount rather than 3500 headcount or 14000 headcount?

The accumulated events and decisions over the lifespan of the company.

What's done in house, what's done elsewhere? What "bus factor" do you want your engineering teams to have? What events have left scars on the organization? What prejudices and preferences does the executive leadership have? How does the company handle the fiefdom builders who hire just to make their org size increase? How does the company handle attrition?

It's not like there's one "correct" staffing for a large company. There's hundreds of factors, some large some small, that add up over time. The company has goals to reach and problems to solve as each of those decisions are made, and those evolve as the company evolves.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#199

Post by mattwilsonn888 »

jdprgm wrote: post #163
paulgb wrote: post #2

> At the start of the year, there were three big North American retail crypto lenders. Now all three are bankrupt. https://twitter.com/kadhim/status/1597250428378705921

It's kind of absurd the level of failure in crypto lending. Putting aside anyone with criticisms of all things crypto these should all be based on the very basic and long established business model of taking deposits, making loans, and paying interest. There shouldn't be anything inherently difficult or "scammy" in that and it should be a successful business pillar in the crypto space. Besides the basic business your…

Perhaps it was competition with decentralized stable-coin lending protocols offering decent APR for the risk that drove and legitimized such reckless behavior. At least the decentralized protocols were auditable from day 0.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#200

Post by weard_beard »

Animats wrote: post #177
weard_beard wrote: post #151

Earlier quoted context omitted.

To be fair, that is how the entire fractional reserve banking system started. Safe houses for gold handed out slips of paper to make it easier for the guys storing their gold to spend it and said, "hey, we'll actually pay you to let us hand these slips of paper out to people who want to borrow your gold. We just need you to stay quiet and be cool with us committing fraud and handing out WAY more borrow slips than the…

That's the crypto community delusion about how fractional reserve banking works. The way fractional reserve banking actually works is that banks lend out money, and the loans are their major assets. This only works if there's heavy regulation on how sound the loans have to be. Without regulation of loan quality, there's a banking panic every few years. All the US banking crises since the 1920s have involved some form…

The same could be said for FTX. There just needs to be regulation about how sound the self-created coin backing your margin needs to be. Without regulation of the soundness of the economic value of your self-created coin you get a crypto crash.

Am I crazy? Are we not describing 2 identical problems and classifying 1 of them as fraud?

The soundness of loans in a deregulated environment is no better than the soundness of a self-invented currency.

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