No, it was a ‘Cryptocurrency Exchange’, which combines some of the functions of an ‘FX Broker’, a ‘Retail Broker’ and an ‘Exchange’. The ‘Bank’ is the blockchain.
Cryptocurrency exchanges allow you to buy and sell cryptocurrencies for other cryptocurrencies (exchange-like) and ‘normal’ currencies (FX broker-like, but with exchange-like elements for pricing and execution). For that, you need to transfer ‘normal’ cash or cryptocurrency to the exchange, and they either have access or hold it for you (the ‘retail broker’ element). It is possible to run exchanges that hold client funds for very short periods of time, although that is inconvenient.
Of course at any point the operator of such an exchange can make a runner or mess up royally. This isn’t the first (e.g., Mt. Gox) and won’t be the last.
Regulation has been the classic answer to issues like that (segregation of funds, supervision, vetting of owners and executives etc.)
According to the general philosophy of cryptocurrencies, the right solution are models that eliminate that risk at a system level – another great example where in principle a technical solution can be found, but behaviour so far indicates that it is a knowledge / people problem, first and foremost (people willingly handing over cash to some random entity run by a random bloke in a foreign country).
“Not your keys, not your coins” is a sound statement.
Maoraigh wrote:
Can anyone explain this?
Quite easy to explain: For every person who understands what blockchain is really about (and basically is there to rip off less informed people) there are dozens if not hundreds that have only a rough idea, believe in the hoax that blockchain is “algorithmically secure” and do not realize that all that they do is to give their money to obscure, completely unregulated “banks” with a P.O. Box address in a county without a proper legal system. But they still feel good because the rippers tell them that bitcoin is secure.
Cobalt wrote:
Cryptocurrency exchanges allow you to buy and sell cryptocurrencies for other cryptocurrencies (exchange-like) and ‘normal’ currencies (FX broker-like, but with exchange-like elements for pricing and execution).
“Exchange like” is everything and nothing. Yes, they exchange something for something. There is, however, a very significant difference that you “forget” to mention: In real exchanges, the true complexity is the clearing, settlement and custodian organization. A highly regulated part of the industry that has no other purpose than to make sure that for every trade on the exchange you get what you bought if you give the money (or that you get the money back if the seller can not fulfill).
The so called “cryptocurrency exchanges” do not have this – their model is, that you send them your money and then pray that you get something back.
Just imagine how we would discuss the case if someone would post here “I sent 55.000 GBP in cash to a P.O. Box address on the Philippines because they promised me to send me a Cirrus SR22 as soon as they got the money – now I’m waiting for 4 weeks and did not hear back from them – what should I do?”
That is exactly what people do when they use one of these so called Crypto-Exchanges.
Cobalt wrote:
According to the general philosophy of cryptocurrencies, the right solution are models that eliminate that risk at a system level – another great example where in principle a technical solution can be found,
Sorry, that is simply wrong: As long as there is nothing you could do with these “tokens” besides paying ransom, drugs or find someone more stupid who is willing to pay a higher price there is no “technical solution” to the ultimate trust issue. That is exactly the reason, why this entire “smart contract” thing does not lift off. People realize that there is no value whatsoever, that a “smart contract” in a certain situation absolutely and unchangeably “guarantees” me that I get 10 GBP from you, if on that very account where the smart contract should take these 10GBP from is no money at that point in time.
And there is no technical solution to look something with real value (e.g. real currency, Gold, etc.) on such a blockchain.
The general philosophy of blockchain currencies is that it is a completely separated parallel universe that has nothing to do with the real world. As soon as interaction with the real world is required, all of the so called advantages of blockchain based Ponzi schemes fall apart.
The blockchain is not about giving your money to unregulated “banks” with a P.O. Box address in a county without a proper legal system.
Use the original Bitcoin Core open-source client with your own keys, and no shady bank will ever be able to access your funds.
Ponzi schemes and other types of scams can also be run with real-world paper money. Bitcoin is simply a replacement for paper money. What you do with it and how smart you’re with it is your decision.
Dimme wrote:
Use the original Bitcoin Core open-source client with your own keys, and no shady bank will ever be able to access your funds.
Yes, you could do that and that is safe – there is, however, no way these days to get a decent amount of btc if you go this way if you are not in the blackmailing, drug or weapon dealing business (yes, you can set up your own server farm and “mine” btc yourself but at the current energy prices in Europe that is completely non economical). But it doesn’t matter because if you are not in such a business there is also no way to do anything with such btc if you strictly want to stay on the chain. You can’t buy anything other than btc for btc if you stay on the chain.
I’ve never said anything against the blockchain itself being unsafe. But it is the weakest and not the strongest link in any chain that defines the overall strength. And in case of bitcoin these weakest links are the ones that interact with what we call “the real world”.
WilliamF wrote:
I see Nassim Taleb has published a paper, and he believes the value of BTC is Zero.
He is spot on: BTC has no practical use for value exchange – because only criminals accept it as payment – and it has no value storage use – because value is heavily oscillating and driven by scammers.
Therefore it does not fulfill the two main uses we typically associate with a “currency”.
With the likes of Michael Saylor, buying large amounts of BTC and being a publicly traded company they must have to do some degree of due diligence to ensure security of what they’re doing in acquiring the bitcoin.
It’s something you either like or don’t. I like the decentralised idea and fact that by running a node you don’t need to trust any other party like a bank or exchange.
I get Malibuflyer doesn’t like Bitcoin, but a lot of what he’s saying is just factually untrue. As was the example with the fee’s which I pointed out with block evidence earlier.
Malibuflyer wrote:
there is, however, no way these days to get a decent amount of btc if you go this way if you are not in the blackmailing, drug or weapon dealing business
I’m willing to offer my IT and/or FI services to anyone for BTC, however, I would rather prefer DOGE. (not kidding)
Malibuflyer wrote:
And in case of bitcoin these weakest links are the ones that interact with what we call “the real world”.
As you do with real cash, I don’t see the problem.
Malibuflyer wrote:
BTC has no practical use for value exchange – because only criminals accept it as payment
I guess I’m a criminal now.
Off_Field wrote:
I like the decentralised idea and fact that by running a node you don’t need to trust any other party like a bank or exchange.
My point is: The whole “decentralized / no trust myth” collapses as soon as you need to interact with the real world. And there the bitcoin is not only not more secure but actually much less secure than (almost) any currency:
Currencies you can exchange in banks that are highly regulated and have not perfect but quite tight regulations particularly on what happens if the bank goes bankrupt while it has your money. If you go to the bank of your least distrust with let’s say a 100CHF bill and want to have that converted to GBP, you either get the money right away or they put in on your account. The “trick” is that this money is protected from the second the teller gives you the receipt. So the only 2 things that can happen for you to get rid of your money is that either the bank is robbed at the moment you put that 100CHF on the desk (then technically you got robbed) or that the teller takes the money and runs aways w/o giving you a receipt (then again technically you got robbed).
How does the same process work if you want to exchange 1 btc for GBP? You first have to take the 1 BTC out of your wallet and transfer it to some exchange wallet – from this point in time it is no longer your money. That exchange is not regulated – you have no idea where the btc is going to ( remember: btc is by nature anonymous). At some point in time (typically takes several days) you might or might not get a notice from the “exchange” that they got your btc – and perhaps they now send you some money on a bank account. Or not.
By the way: By doing so, you just destroyed one of the core claims of btc made by fanboys – the pretended anonymity. Yes again, on the chain itself everything is anonymous. But now the exchange know both your wallet ID (this is where the btc they should exchange came from) as well as your bank account – and your anonymity is gone once and forever.
So as long as you are not a criminal and therefore can invest significant effort into obfuscating your traces, for all practical purposes (i.e. everywhere were you interact with the real world) btc is actually much less anonymous than traditional banking: In traditional banking only your bank knows what is on your account. With btc every person that ever send money to you or received money to you could forever check how much money you have on your account. There’s nothing you can do against it because even if you transfer your funds to another wallet each of these person sees this as well. It’s all public!
Dimme wrote:
I’m willing to offer my IT and/or FI services to anyone for BTC, however, I would rather prefer DOGE. (not kidding)
The question is: Have you ever? And did you really accept btc (or doge) as compensation or did you do it “the Tesla way” (so basically creating the hoax that you accept btc but all you do is to offer a (costly) exchange service while the amount owed is defined in real cash and during the entire period until the transaction is settled the buyer carries the exchange rate risk…)?
At wich value do you account receivables in btc? On which btc value do you calculate VAT on?
Off_Field wrote:
I get Malibuflyer doesn’t like Bitcoin, but a lot of what he’s saying is just factually untrue. As was the example with the fee’s which I pointed out with block evidence earlier.
Ai don’t like fake news of any kind. An with respect to stating untrue things: Yes, I have been wrong and there have been transactions for less fees. But that doesn’t change the fact that at some times you had to pay as much as $15 to make an trx go through.
But I get you like bitcoin – and I’d assume that you are invested, so that you actually have a clearly vested (but so far unstated) economical interest to make btc look good and to cover up the Ponzi scheme as long as possible.
Malibuflyer wrote:
Currencies you can exchange in banks that are highly regulated and have not perfect but quite tight regulations particularly on what happens if the bank goes bankrupt while it has your money.
Only a certain amount is protected by a bank. Also once a bank holds your cash it no longer “belongs to you”. How do you feel about bank “bail in”s ?
To be honest, I don’t really see why you would particularly want to change btc into fiat unless the person / company that you were intending to purchase from wouldn’t accept btc.
Take for instance bitcoin beach where you can make normal, low price transactions for goods using the lightning network without needing to change to dollars.
I do think that exchanges going from fiat to bitcoin are the weakest element, because as you say you’re relying on their wallets, but equally if you do small amounts and take it out it’s an acceptable risk to me. It’s also possible a bank could go bust and you would lose your money.
Malibuflyer wrote:
Yes, I have been wrong and there have been transactions for less fees. But that doesn’t change the fact that at some times you had to pay as much as $15 to make an trx go through.
you can chose to pay more to get transactions through faster, and it’s true that it can be more. But it is also very true that transactions can be very cheap indeed. You previously made a clear statement for a defined period of time that there were no transactions under a certain amount which was total bollocks. I found many examples on the first block I looked at to check.
If you think bitcoin is a ponzi scheme, what about fiat currency? just turn on the money printer whenever you wish?
