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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#331

Post by nemo44x »

MichaelCollins wrote: post #260
kkielhofner wrote: post #106

Earlier quoted context omitted.

As I've noted before on HN the entire concept of people being able to manage their own wallets flies against everything we know about people. People forget stuff, make mistakes, and lose things. The margin of error for a wallet is tiny. It's not rare for crypto forums, twitter, etc to prescribe completely ridiculous processes and systems for securing wallets, backing up seed phrases, etc. There's an entire cottage in…

Print your private key on paper and lose it all when your house burns down. vs Give your private key to an exchange, and enrich the shitheads running the exchange when they run away with your money. First option seems preferable. If you're going to lose your money, better for the money to be truly lost than to enrich a thief.

You could put it in a fireproof safe or a safety deposit box or both.

Re: Crypto exchange AAX suspends withdrawals

#332

Post by roywiggins »

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…

Even if an exchange doesn't start out as a scam, it might become insolvent due to a partial hack, or losing a wallet by accident, or some other screwup.

An exchange can be technically insolvent for a long time without anyone noticing, and try to fill the hole with money from fees etc. All will look normal from the outside... until too much money gets taken out too fast.

Re: Crypto exchange AAX suspends withdrawals

#333

Post by Closi »

xur17 wrote: post #318
gjulianm wrote: post #206

Earlier quoted context omitted.

Precisely the failure of crypto is thinking that people will follow "fundamental crypto values" and underestimating the power of convenience and ignorance. "Traditional financial institutions" are inevitable in crypto.

But at least in crypto I have the OPTION of storing it myself. Also, if I do decide to use a custodial provider, I can choose to use a provider that publishes proof of reserves [0], giving me more confidence in the provider. [0] https://www.kraken.com/proof-of-reserves

> But at least in crypto I have the OPTION of storing it myself.

You have the option with Fiat too - you can get paper currency and store it yourself in a secure location. $10,000 can be stored in $100 bills in as little as c0.03 meters^3.

Using a bank is much more convenient to store Fiat though if you want to buy/sell things, much like using an exchange to store Crypto is much more convenient if you want to trade crypto (because let's be honest, not that many people are using Crypto to buy pizzas!).

Re: Crypto exchange AAX suspends withdrawals

#334

Post by rejectfinite »

phailhaus wrote: post #233
disruptalot wrote: post #187

Earlier quoted context omitted.

This was a failure of traditional financial institutions and people who are ok with them, not of crypto. Satoshi wouldn't be encouraging people to put their coins on a trusted third party like that. All fundamental crypto values say this.

> Satoshi wouldn't be encouraging people to put their coins on a trusted third party like that. All fundamental crypto values say this. You can literally say this about "regular" currency. Just don't put your money in banks! But people do, why? Once you answer that, you'll realize why people do it for crypto too. You can't complain that it's "against fundamental crypto values" when it doesn't have any mechanism for p…

A bank is insured and has a guarantee...

Re: Crypto exchange AAX suspends withdrawals

#335

Post by zzleeper »

ceejayoz wrote: post #75
tibbydudeza wrote: post #51

Earlier quoted context omitted.

How can it be a reserve to hold your own or other "coins" ???. This sector really needs proper regulatory framework like banks.

> How can it be a reserve to hold your own or other "coins" ??? It isn't. They're defrauding folks. Tether got caught doing exactly this, passing money around between themselves and Bitfinex (same ownership) to pad out reserves for an attestation. https://ag.ny.gov/press-release/2021/attorney-general-james-... > In the face of persistent questions about whether the company actually held sufficient funds, Tether publi…

And still, Tether's market cap is many times higher than it was in 2017 or 2018... are investors just too stupid?

Re: Crypto exchange AAX suspends withdrawals

#336

Post by Apocryphon »

zeroclip wrote: post #328
Nursie wrote: post #280

Earlier quoted context omitted.

Yes, because DeFi never suffers from collapses or hacks. Nobody every drained a DAO with a flash-loan, or used one to cash-out illiquid assets with no intention of paying it back... DeFi is as much of a joke as the rest of the ecosystem.

Different category of risk. CEX and DEX can both have hacks. An open source DEX can be verified, formally tested, and made immutable and un-upgradable on chain, like Uniswap. Uniswap V2 contract is 2 years unchanged, $3.8B TVL and $1B daily volume, close to 10 year old Coinbase CEX. Not bad for being a joke.

Those stories about smart contract programming errors leading to money getting permanently frozen are quite scary. Though admittedly in the grand scheme of things they seem to have “only” lost millions of USD, not billions.

Re: Crypto exchange AAX suspends withdrawals

#337

Post by Jerrrry »

roywiggins wrote: post #332
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…

Even if an exchange doesn't start out as a scam, it might become insolvent due to a partial hack, or losing a wallet by accident, or some other screwup. An exchange can be technically insolvent for a long time without anyone noticing, and try to fill the hole with money from fees etc. All will look normal from the outside... until too much money gets taken out too fast.

Bingo.

The only way to be profitable is to fee transactions.

There are a magnitude more ways to be unprofitable, however, and because of rampant incompetence, the the scales are clearly favoring the bold/gullible holding large bags of those who have fleeced.

Re: Crypto exchange AAX suspends withdrawals

#338

Post by bobro »

jacknews wrote: post #77

This all seems like less a problem of crypto as such, and more that exchanges are making a virtual fractional reserve currency by leveraging customer deposits for loans/investments. ie it's a 'banking' problem, specifically a 'fractional reserve banking' problem, not a crypto problem. This is exactly why fractional reserve banking is heavily regulated.

Of all the problems listed in critiques of fiat currency, what percent is just banking?

Seems hard to try to disentangle money and how money gets managed at scale.

Re: Crypto exchange AAX suspends withdrawals

#339

Post by ChadNauseam »

boppo1 wrote: post #300
kkielhofner wrote: post #106

Earlier quoted context omitted.

As I've noted before on HN the entire concept of people being able to manage their own wallets flies against everything we know about people. People forget stuff, make mistakes, and lose things. The margin of error for a wallet is tiny. It's not rare for crypto forums, twitter, etc to prescribe completely ridiculous processes and systems for securing wallets, backing up seed phrases, etc. There's an entire cottage in…

>There's an entire cottage industry built around people etching their seed phrases on steel plates for people to (I'm not kidding) bury them like they're gold in the 1800s. I was about to say this isn't the worst opsec until I realized you mean people are sending businesses their passphrases and not purchasing an etching kit to make the plate themselves.

Your first instinct was right, they come with little steel squares with individual letters pre-etched, and when you receive them you arrange them yourself into your seed phrase

Re: Crypto exchange AAX suspends withdrawals

#340

Post by chasd00 »

gitfan86 wrote: post #138
p0pcult wrote: post #98

Earlier quoted context omitted.

This is the correct take, and why American regulators need to address crypto sooner rather than later.

But the WHOLE point of crypto was to avoid governmental control. If the government is regulating it that means they can control it. And it becomes completely worthless. If you want digital gold as an inflation hedge you can literally buy a GLD ETF. It gives you digital shares in actual GOLD.

> But the WHOLE point of crypto was to avoid governmental control

I think from a purist perspective that is true. I said this upthread but what people really want is more USD in their checking account. These exchanges are a place where they can roll the dice and maybe make that happen. As I said before, i bet 95% of the people burned couldn't care less about the philosophical aims of crypto currencies and just want a chance to get rich (in USD).

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