BlockFi files for bankruptcy as FTX fallout spreads • Hacker News Board

Re: BlockFi files for bankruptcy as FTX fallout spreads

#211

Post by deltree7 » Mon, Nov 28, 2022, 6:13 PM UTC

whoknew1122 wrote: post #41

corndoge wrote: post #8

Earlier quoted context omitted.

“Ponzi scheme” is a specific type of financial fraud and isn’t a synonym for overexposure, excessive leverage, poor management, or even fraud in general. I do not think labeling things as Ponzi schemes which are not Ponzi schemes is helpful. Nor do I understand how that would help with effecting “real consequences.” The consequences faced by company personnel should be consequent to any wrongdoing.

In the legal sense, a 'Ponzi Scheme' has a specific meaning. In conversation, the definition is a bit looser. Sorta like how expressive has a different definition when you say 'that is an expressive programming language' and 'that is an expressive face'. Crypto, as a whole, is about early adopters trying to convince newcomers that crypto has value. If the early adopters can't convince anyone that crypto has value, it…

Technically everything is a ponzi scheme based on the assumption that it correlates with world GDP growth.

Land, Homes, Gold, Stocks are all Ponzi. It's just that the duration of the scheme is longer. If an asteroid hits and kill all humans tomorrow except 100 people, those 100 people can get all the above 'assets' for $0.

E.g The Gold Scheme has lasted over 5,000 years. Who is to say that BTC will not last at least 50. As an investor, it's not whether something is a ponzi or not, but how long the scheme will last.

For something like land, it could well be till the population peaks or Metaverse makes land less valuable or we find another amazing planet where we can all instantly migrate to. But eventually the land that you own will have no value. When is the question, till then you'll keep buying land in the hope of selling it to someone else for a higher value

Re: BlockFi files for bankruptcy as FTX fallout spreads

#212

Post by karmakurtisaani » Mon, Nov 28, 2022, 6:14 PM UTC

woodruffw wrote: post #159

Mistletoe wrote: post #157

Earlier quoted context omitted.

It’s crazy how I bypass all that with simple adblockers. I don’t think I ever see ads on Twitter. Five billion dollars spent on information asymmetry from users that don’t know how to block ads. I guess I don’t even think about the ad part and workers needed for it.

You (like me) are probably an outlier: over 90% of Twitter users probably use the Twitter apps, which make adblocking much harder (although not impossible -- people maintain mass ignorelists!).

I also feel like people who know of and use adblockers are less likely to be persuaded by ads. So losing that segment is not such a big loss for a platform.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#213

Post by mattwilsonn888 » Mon, Nov 28, 2022, 6:14 PM UTC

anonymousab wrote: post #69

solotronics wrote: post #47

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle. https://nakamotoinstitute.org/trusted-third-parties/

At the same time, storage of value bitcoiners - the majority that titanically dwarfs medium-of-exchange/currency bitcoiners - have been trying to get the average layman to put money into the system as much as possible. More bag holders at any cost. And it turned out that that cost was something that would give the illusion of security, and hide away the technical minutiae that would prevent the system from sucking in…

That doesn't make a whole lot of sense. For starters you make assumptions about the motivations of all 'Bitcoiners,' even extending your cynical projection to the ones most vocal about using Bitcoin safely.

But let's take the cynical viewpoint. If I, as a hypothetical Bitcoin holder, want the dollar value of my Bitcoin to go and stay up, then the last outcome I desire is for massive volumes of Bitcoin to end up centralized into a few pockets where they will be gambled on and sold when those bets fail. The most cynical Bitcoin holder has it in their interest for all retail holders to custody their own supply.

Considering the educated base of Bitcoiners have been screaming and citing examples of what happened with FTX since the protocol's inception, "Not your keys, not your coins," it's rather dubious to try and blame them. The reason people get into the space and trust their coins to some third party is that those people are chasing the end of a market cycle and never even come across or seek out the wisdom of the people that were they in the beginning.

'Bitcoiners' at large, judging by the on chain metrics for holders through negative price action, would much rather the volatile market cycles played out as a smoothed average with each new user coming in educated rather than speculators rushing in at the end by any means necessary.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#214

Post by vasco » Mon, Nov 28, 2022, 6:15 PM UTC

r_hoods_ghost wrote: post #131

cge wrote: post #84

Earlier quoted context omitted.

On the one hand, I can understand this. On the other: as a US citizen, I use it in my daily life, then I file an 8949 every year listing every single purchase I made that year, along with tracking of cost bases? I realize that this is a legal, rather than fundamental, aspect of cryptocurrency, but it does make the idea of using cryptocurrency as a quotidian currency rather frustrating compared to essentially any othe…

No need to. Luckily every transaction has been recorded for you on a public blockchain that is easily traceable to your RL identity! Makes life a lot easier for the IRS and also means your employer can check whethee you've developed a penchant for donkey porn!

That fact that they can find it out doesn't mean you don't have to report it accurately. Most countries around the world know how much salaried employees make and still require them to declare it in a yearly tax submission and if they do it wrong, they'll get fined. The government knowing has nothing to do with you still needing to accurately report it.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#215

Post by jrm4 » Mon, Nov 28, 2022, 6:15 PM UTC

almost wrote: post #119

jrm4 wrote: post #65

Earlier quoted context omitted.

Unfortunately, you're also literally describing the fiat money system we use.

Cryptocurrency people seem to think that's an argument for cryptocurrency!

Yeah, I see all my downvotes. I'm not saying it because I strongly favor OR hate either of these systems. I'm not here trying to say "Fiat is dumb and evil and crypto will save us all."

I'm just saying because it's the truth.

We don't do real "fractional reserves," we don't have "gold" etc. Our money is backed up by "America, with the guns, is good for this made up money," which I believe is generally true, and not a terrible system.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#216

Post by Stranger43 » Mon, Nov 28, 2022, 6:17 PM UTC

Mistletoe wrote: post #97

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

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. What do (did) 7000 people do at Twitter? I hate to ask the question because it aligns me with Elon whom I despise right now. But what do all the employees do at tech companies? I thought the beauty of tech and why the valuations we…

At lot of that is dealing with large customers(advertisers etc.) who need to be able to talk to someone at those companies to make sure they get their money's worth of services, and isn't left alone to sort out their issues based on bad documentation and internet hearsay.

Another big part of it is simply admin, for twitter a lot of that is babysitting the moderation algorithms as their customers(who is not the people tweeting) can be pretty sensitive about what kind of content they are associated with.

Then there is defensive research i.e. any big company in a particular space wants to have prototypes and technology ready to compete with anything their competitors might come out with especially if they expect a growth in overall sector revenue.

For uber they are also a de-facto employer for a lot of drivers and a provider of real world services so they need the full range of hr and customer support services that those kind of services and driver numbers would require had it not been a tech company.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#217

Post by smitty1110 » Mon, Nov 28, 2022, 6:17 PM UTC

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?

The endgame is regulation. The US Treasury launches a digital dollar and declares other USD-demoninated stablecoins as illegal, crushing the on and off ramps for most exchanges. Adoption by banks and brokerages removes the need for separate crypto exchanges. KYC/AML requirements crush whatever remains.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#218

Post by graeme » Mon, Nov 28, 2022, 6:18 PM UTC

graeme wrote: post #184

gumby wrote: post #155

Earlier quoted context omitted.

> Unbelievable the amount of destruction of value here Destruction of value or destruction of paper wealth? I'm pretty cynical of the whole crypto* space, mainly because I think the people making any money in it are themselves cynical and predatory. I suppose that billion dollars of investment was actual cash lost. * Using the new definition, not cryptography, which is what the term really means and will again soon.

Both. If you take 900 reasonably skilled people and direct them towards nonsense for a few years, that is definite value lost to society. It sounds like $1 billion in actual cash was lost this way. And the buildings they were in could have housed useful activity, the computers they bought could have done useful things, etc. Those people could have been doing useful things. And it sounds like their activities were wor…

^Haga, if you can see this, your comment below mine is dead. Went through your history, doesn't look like you've said anything astonishingly objectionable recently. Your comments are all dead

Re: BlockFi files for bankruptcy as FTX fallout spreads

#219

Post by mattwilsonn888 » Mon, Nov 28, 2022, 6:18 PM UTC

malthaus wrote: post #145

solotronics wrote: post #47

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle. https://nakamotoinstitute.org/trusted-third-parties/

There's a reason no normal human being outside of a small nerd-circle uses PGP for encrypting mails or rsync instead of Dropbox. Why would any non-techie ever want to deal with safely storing keys to a wallet. Or without having access to a trusted third party to help when issues arise. This is such a non-starter and one of the many reasons why there will NEVER EVER be mass adoption of Bitcoin outside of speculation.…

That's simply not true. I have personally and remotely set up a professed tech-phobe with a hardware wallet. If I were to die they could recover it on their own.

But, taking your point and rolling with it, there is nothing necessarily wrong or futile about using a properly set up and insured bank with crypto if the hardware wallet is still too intimidating. It could even be set up with certain multi-sig schemes such that a fourth party + the client could withdraw without the bank's permission.

The point is that even when custodied, Bitcoin has arguable benefits over normal currency. I'm sure you will disagree with those benefits, but at this point that would be a Red Herring.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#220

Post by iskander » Mon, Nov 28, 2022, 6:19 PM UTC

Stranger43 wrote: post #167

iskander wrote: post #101

Earlier quoted context omitted.

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.

And yet their fundamental lack of functional economic theory means that all of that is currently being completely wasted on crypto projects that's often little more then window dressing for what is basically very unimaginative financial scams. There is probably scenario's where a temporary blockchain can solve some synchronization issues but the idea that a single static blockchain will replace traditional dynamic st…

I think you'll see the ZK stuff used increasingly for non-financial applications, it's a legitimately novel and powerful area of mathematical primitives for verifiable computation. FHE is also very cool and just starting to be usable for privacy preserving ML.