FTX held less than $1B in liquid assets against $9B in liabilities • Hacker News Board

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#171

Post by j7ake » Sun, Nov 13, 2022, 2:35 AM UTC

Bubble_Pop_22 wrote: post #165

People are looking at this thing too closely. When taking the 30000ft wide view then something like this is not extraordinary , and there I say it, not even bad. Fedex was famously down to their last 5,000$ dollars and were facing bankruptcy, and the founder quite literally went to Vegas to play blackjack and won 27,000$ to save the company. Companies and entrepreneurs are supposed to take on risk, that's why bankrup…

I think these exposures and bad practices are fine as long as the ones who broke laws get served justice.

The worst is seeing white collar crime get let off easy while the man who steals from a bank goes to jail for long time.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#172

Post by landemva » Sun, Nov 13, 2022, 3:06 AM UTC

JonathanBeuys wrote: post #15

There should be more discussion about how to store value without counterparty risk. Most people think it is as easy as ordering a hardware wallet, following the process the wallet software suggests and - hurray! - your keys, your coins! But it is not that easy. You also have to cut the wallet manufacturer and the software developer out of the loop. I have yet to see a description on how to safely create a wallet that…

> Most people think it is as easy as ordering a hardware wallet ...

I also don't understand why some folks are so attracted to a custom hardware device. It's straight-forward to grab Bitcoin software from Github, put it on an air-gapped laptop via USB stick, run it and generate a new pubkey, write down recovery info and bury in backyard, send btc to that pubkey, and done.

https://github.com/bitcoin

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#173

Post by JonathanBeuys » Sun, Nov 13, 2022, 4:32 AM UTC

landemva wrote: post #172

JonathanBeuys wrote: post #15

There should be more discussion about how to store value without counterparty risk. Most people think it is as easy as ordering a hardware wallet, following the process the wallet software suggests and - hurray! - your keys, your coins! But it is not that easy. You also have to cut the wallet manufacturer and the software developer out of the loop. I have yet to see a description on how to safely create a wallet that…

> Most people think it is as easy as ordering a hardware wallet ... I also don't understand why some folks are so attracted to a custom hardware device. It's straight-forward to grab Bitcoin software from Github, put it on an air-gapped laptop via USB stick, run it and generate a new pubkey, write down recovery info and bury in backyard, send btc to that pubkey, and done. https://github.com/bitcoin

The pubkey is only secure if the software you downloaded from GitHub, all its dependencies, GitHub itself and all its dependencies, your Browser and all its dependencies and your OS and all its dependencies were neither faulty or malicious at the time you created it.

Otherwise the pubkey might have been created in a way that makes it easy to guess for someone in your supply chain.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#174

Post by JonathanBeuys » Sun, Nov 13, 2022, 4:34 AM UTC

SparkyMcUnicorn wrote: post #170

JonathanBeuys wrote: post #72

Earlier quoted context omitted.

When you "set up and use" that Gnosis thing, how do you verify it is doing the right thing and has no backdoor built in?

It's open source and you can deploy everything yourself. You don't even need to use their hosted website if you don't trust it. What more could you ask for? https://github.com/safe-global/

Open Source does not help here. You cannot read all that code you downloaded with all its dependencies and understand it. Its much too complex.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#175

Post by JonathanBeuys » Sun, Nov 13, 2022, 4:38 AM UTC

smeej wrote: post #149

JonathanBeuys wrote: post #103

Earlier quoted context omitted.

I'm not very worried about the cryptographic security of the Bitcoin blockchain. I am worried that in 5 years we will learn that some hardware wallets used side channels to transfer bits of your private key out to make it easier to guess for someone who worked at the manufacturer.

But you can check this. You can monitor whether info is leaving on other channels. And you can sign on an air-gapped computer and transfer only the signed transaction hash (never the privkey) to a connected one to broadcast. You can do all but the actual signature with open source tools. Just because you haven't taken the time to learn how this stuff works doesn't mean there aren't thousands of incredibly intelligent…

You cannot monitor all channels when you use just a single way to create your hashes.

Example: If you use a single hardware wallet to sign your transactions, you have no way to know if the wallet transmits data out via the hashkey:

https://news.ycombinator.com/item?id=32181462

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#176

Post by JonathanBeuys » Sun, Nov 13, 2022, 4:43 AM UTC

smeej wrote: post #148

JonathanBeuys wrote: post #95

Earlier quoted context omitted.

That's what I mean with 3rd party software. If you use Electrum, you are hoping that Electrum is not buggy or malicious.

It's open-source. Read the code. You don't have to trust anybody.

Nobody can read all the code of Electrum and all its dependencies and be sure it is secure. It is much too complex.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#177

Post by Fezzik » Sun, Nov 13, 2022, 5:15 AM UTC

FerociousTimes wrote: post #167

Fezzik wrote: post #164

Earlier quoted context omitted.

incestuous ĭn-sĕs′choo͞-əs adjective … 3. Improperly intimate or interconnected.

Thanks but I wouldn't use it though as it's an open invitation for misunderstanding and faux pas

For what it’s worth - I have never seen ‘incestuous relationships’ used in any way other than the common usage of referring to ‘nefarious bedfellows’

Edit: grammar, for clarity.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#178

Post by disqard » Sun, Nov 13, 2022, 7:09 AM UTC

rvba wrote: post #140

oldgradstudent wrote: post #107

Earlier quoted context omitted.

The two sentences > Instead of selling and crashing the price and > these are held onto and used as a collateral to borrow against. Are not compatible. If selling the assert crashes its price, it is a terrible collateral. I would like to see how lenders justified in writing accepting large quantities of FTT as collateral.

My understanding that it is an extension of the old joke about someone wanting to sell a dog for 1 million that was finally traded for 2 cats worth half a million each. Basically extended comment of michaelbuckbee. You have your $mikecoins "worth" 1 million and someone else makes $annacoins worth 1 million and some other party makes $bobcoins worth 1 million - and you each "lend" them to each other to make a complica…

Your explanation is the clearest one I've read thus far, of how these token scams work.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#179

Post by grey-area » Sun, Nov 13, 2022, 9:03 AM UTC

JonathanBeuys wrote: post #68

grey-area wrote: post #67

Earlier quoted context omitted.

You’re ignoring the largest risk - that your coins become valueless because nobody wants them. This is entirely beyond your control.

That's not counterparty risk.

I just said risk; depends on your definition of counterparty risk I suppose, but it’s a much greater risk than those you discuss if you’re attempting to store value in cryptocurrencies.

Stated another way: if you can’t find a counterparty, does the risk you’re talking about matter?

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#180

Post by JonathanBeuys » Sun, Nov 13, 2022, 10:54 AM UTC

grey-area wrote: post #179

JonathanBeuys wrote: post #68

Earlier quoted context omitted.

That's not counterparty risk.

I just said risk; depends on your definition of counterparty risk I suppose, but it’s a much greater risk than those you discuss if you’re attempting to store value in cryptocurrencies. Stated another way: if you can’t find a counterparty, does the risk you’re talking about matter?

No matter which asset you use to store value, the bet is that there will be demand for this asset in the future. That is pretty much the definition of value.

How to avoid counterparty risk is a topic for every asset. For self-custodial crypto, it is about how to handle private keys.

Asset picking which you bring up is a different topic.

But hey, we can go there if you like.

You make a bold claim: That in crypto, demand risk is higher than counterparty risk. Can you back that up somehow? Historically, nobody who held crypto for more than a few years faced lower demand. But many faced loss of their crypto due to counterparty risk.

And which asset class do you see as less risky?