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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

#411

Post by halpmeh »

lottin wrote: post #397
halpmeh wrote: post #385

Earlier quoted context omitted.

Again, you're using a totally non-standard definition of capital. Google "capital definition" > wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing. So yes, if you redefine the word capital to fit whatever you like, then sure, I agree with you.

I'm not redefining anything. I'm an economist, and I know the terminology of economics well. Capital can refer to two things, either 'capital' (or 'real capital') or 'financial capital'. The definition that you've posted matches (more less) the definition of financial capital. But, either way, this is not complicated. The fact remains that destroying money doesn't destroy wealth. Mistaking money for real wealth is a…

Ok, so I think we’re in the same page: there is a definition of capital that includes money but is for some reason not applicable to this conversation because you’re an economist and know better. And if you burn your money in your bank account, then you’re less wealthy but that cannot be referred to as destroying [your] wealth or capital.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#412

Post by MrMan »

rnk wrote: post #403
bpiche wrote: post #266

Earlier quoted context omitted.

A real "this is good for bitcoin" in the wild!

Come on, zubairq must be kidding. This is not good for crypto or bitcoin. What problem were we fixing again with crypto?

smart greedy people who dont yet have enough money have to solve this problem. crypto is an opportunity to convince less-smart greedy people that "centralization" is socialist and bad, and get them to hand over their money.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#413

Post by throw101010 »

danuker wrote: post #164
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…

I agree that Bitcoin has chosen some trade-offs against mass adoption, like limiting block size. I think this is a bad move, since security is more than enough. Lightning is not viable, because it requires "watchtowers" to check for early state commit attacks. Not everyone will be able to run such a server. But, for instance, Bitcoin Cash has larger blocks (the reason for the first fork of Bitcoin). However, in spite…

> I think this is a bad move, since security is more than enough.

Security isn't/wasn't the concern, the trade-offs exist to ensure verifiability in the most trustless way possible (low hardware and bandwidth requirements). This enables a decentralized system which is open to any participant and keeps miners accountable. If running a node is limited to miners and exchanges and requires a renting server racks there is just no point.

> Lightning is not viable, because it requires "watchtowers" to check for early state commit attacks

This is inaccurate. LN has shortcomings currently but this isn't one. Without a watchtower your peer in a channel can force close it while you are offline by publishing an outdated state on-chain and attempt to defraud you, but if at any point before the end of the grace period (usually ~2 weeks) you are online and you produce a more recent state you get the whole balance of this channel back (this is how dishonest peers are punished). This is one channel mechanism (Poon-Dryja), another mechanism (Eltoo) which doesn't require as much monitoring/penalties will eventually come but depends on changes to Bitcoin protocol which are still pending.

Secondly theses optional watchtowers which automate this process minimize trust a lot as they can only publish the most updated state IF and ONLY IF the counterparty in your channel published their outdated state. So they have no real custody of your funds.

Lastly solutions like local federations (Fedi to name one) can address your concern of people not being able to run servers, if the users aren't content with the public offers of existing watchtowers.

> But, for instance, Bitcoin Cash has larger blocks (the reason for the first fork of Bitcoin). However, in spite of its technical advantages, adoption severely lagged compared to Bitcoin. I wonder why that is.

Because having larger blocks is not a technical advantage if your goals are the principles mentioned in the first paragraph. If you intent to compromise on these then just build a centralized database, it will be more efficient and at least you won't lie to people pretending that your system is open/decentralized (like Bcash supporters do).

Re: BlockFi files for bankruptcy as FTX fallout spreads

#414

Post by tootie »

woah wrote: post #250

Another "crypto" company that was not actually crypto. These guys just held people's money custodially and promised some dumb overblown interest rate. Sure their theme was "crypto" and they have the bitcoin logo on their website, but the underlying mechanism of trusting someone who has a slick app with your money is the opposite of crypto. It seems like silicon valley VCs completely missed the boat on crypto by dumpi…

That's what we call the No True Scotsman Fallacy. BlockFi was a crypto bank that promised unlimited returns by investing in crypto. Unregulated, untaxed, unmonitored, secret and opaque. An onramp to a federated market where deposits are tied to the value of the overall market for crypto holders. And it failed because it has no safety net by design. That's like saying Robinhood isn't the stock market.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#415

Post by notch656a »

adam_arthur wrote: post #338
notch656a wrote: post #289

Earlier quoted context omitted.

Even with 10% losses he lost less than those storing equity in ultra boring indexes. Honestly anybody who only lost 10% in the last year looks like a genius (crypto included).

100% loss > 25% equity drawdown Obviously you know that, just somewhat of a silly observation to make that he "lost less" when he actually lost 100% of his investment (barring recovery in bankruptcy court)

A self selected fund that risks 10% of the wealth on BlockFi cannot and did not lose 100%.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#416

Post by notch656a »

rnk wrote: post #398
notch656a wrote: post #314

Earlier quoted context omitted.

If you assume I assumed the things you assumed then I assume we can assume that would be a fair question.

Generally people don't lose all their investments in a stock or index fund. They might go down in price 10% on fund xyz but won't lose all their value. Do you not get that difference with this, this would not happen if he bought stocks with 10% of his money.

If I buy a fund that holds 90% cash and 10% of a BlockFi farming contract, then I only lost 10%. OP said only 10% was in blockfi, so he did not lose all his value.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#417

Post by MrMan »

ihumanable wrote: post #203
jb12 wrote: post #71

Earlier quoted context omitted.

Do you think self-custody is simple enough for mass adoption by non-technical users?

The internet at large says no. People won't run their own mail exchange, because it's too much work and too complicated. People won't run their own blog, because it's too much work and too complicated. The downside to doing either of these things poorly is that you can't send email / become a spam email relay / get hacked and lose your blog content. Now tell those people that they can take on all the downside risk of…

I would go much farther than this. It's not since the internet that the answer is no. It's since civilization that people collectively choose not to try to do everything themselves.

No one thinks it's a good idea to be your own bank. No one thinks they need to make their own shoes cars food computers hand tools ... the list is an enumeration of all the artifacts of civilization.

crypto is an anti-social fantasy at best, it flies in the face of reality.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#418

Post by WeylandYutani »

notch656a wrote: post #317
ethanbond wrote: post #308

Earlier quoted context omitted.

Not really. There are good reasons to lose money and there are bad reasons to lose money. This was a bad one.

I think it looks less bad in the weird context of 2020-2022, when breaking even with inflation meant moving money into riskier and riskier investments just to keep up with the money printer. I wouldn't have chosen something like BlockFi, but then again I'm one of the idiots that lost via a mix of inflation and various ultra boring indexes. I can see where it might look tempting or even rational to see how long you ca…

I think the lesson is that you can't hide your money from what is going on in the world.

No matter what you invest in war, plague and inflation will get you.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#419

Post by Karunamon »

ceejayoz wrote: post #380
Karunamon wrote: post #355

Earlier quoted context omitted.

A fork implies 2 diverging lines. Nobody's hand was forced in the ether versus ether classic fork. Tether is centralized and a scam (and arguably a scam because it is centralized) and irrelevant to the discussion. Anyone can make any token they want and run it according to whoever's rules; this logic would indict the entire internet based on the existence of badly moderated websites. And cryptography can be made a cr…

> A fork implies 2 diverging lines. Nobody's hand was forced in the ether versus ether classic fork. The two diverging lines were very much unequal. > Tether is centralized and a scam (and arguably a scam because it is centralized) and irrelevant to the discussion. Arguing Tether is irrelevant to the crypto space is absurd. (I agree it's a scam. That's a major problem for the whole ecosystem.) > And cryptography can…

Nobody said they were equal, the community as a whole decided to move to the new fork. The old one still exists and still has substantial value, but it's not where any of the mind share is. More to my point, nobody forced anyone to move. This was an organic action.

What is your point? Surely you aren't arguing that the governance of one specific token in the broader crypto ecosystem invalidates the general uncensorability of crypto transactions? Because that would be pretty fucking disingenuous as a false equivalence.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#420

Post by stickfigure »

lawn wrote: post #273
max51 wrote: post #193

Earlier quoted context omitted.

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…

> 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. BTC's 1 MB (or a bit more with segwit accounting) is just hopelessly obsolote, we could easily handle multiples without any issue whatsoever, and it would require a massive increase there after to reach the state of "one or two nodes". Further, BCH isn't "turning down al…

BCH's block size is also hopelessly obsolete. You simply cannot fix the system by making the blocksize bigger, so BCH is a pointless exercise.
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