Is crypto era over?

maninasia

You've got a point, but it should bring more options to the table. Getting the assets registered formally on the Ethereum blockchain is key also.

I imagine there will be othet forms of financing against branded assets , cars first. Maybe crypto platforms could see your income through ypur employer or your bank accounts and compete to offer you loans that are better than local institutions. If the bank account is a 'crypto bank account' its visible on the blockchain.

I don't know, I am not a financial guru.

https://www.boards.ie/discussion/comment/119978380#Comment_119978380

For assets being registered on a blockchain to have any consequence, the blockchain would have to be absolute truth and law.

No courts, no judges, no arbitration, no recourse in cases of corruption or fat fingers, and an impossible absolute faith that every record in the country is added to the blockchain correctly.

This is the least safe world I can imagine existing. Apart from a frankly abhorrent risk of losing everything because you forgot your key, or someone transferred your house using your passed out fingerprint, a foreign government could literally finance and mount a sustained 51% attack and steal every asset in the country. And you could do nothing about it because the courts have no jurisdiction over any of it anymore.

maninasia

Not on the Ethereum blockchain, you would have to purchase 51% of all assets in the blockchain.

Not gonna happen.

Besides the government could just tell them to f off .

https://www.boards.ie/discussion/comment/119978430#Comment_119978430

https://u.today/ethereum-eth-on-pos-already-under-51-attack-investor-jason-williams

51% of assets? What?

Within the last three months, it's already been at 51% by a small group. Imagine a nation state operation with an unlimited budget to take over the proof of stake and dictate the ledger.

If your solution is for the government to ignore the ledger, then why implement it in the first place. There are governments under fire for even buying and legitimising crypto, and there are still people who think they should move the very fabric of society, asset ownership, onto it. This network that is attacked daily. If banks were robbed as often as crypto is, we wouldn't use them.

maninasia

Strong buy signal.

I bought some ETH at lows of 80 USD when 'crypto was dead'.

Dohnjoe

https://www.boards.ie/discussion/comment/119978555#Comment_119978555

And Dogecoin, a complete joke coin, with no supply cap that no one uses for anything productive is "worth" 12 billion.

That's the entire sphere in a nutshell.

erlichbachman

https://www.boards.ie/discussion/comment/119978463#Comment_119978463

That’s eth’s version of decentralisation, which appears to be the best they could do whilst converting from pow, which isn’t really the best example of true decentralisation.

check out the bank robbery stats, in the US alone I believe it’s between 2000 and 10000 robberies per year, that’s between 6 and 30 per day up to the early 90s, wherever there is money there will be thieves, it’s completely misleading to suggest this is in any way unique to crypto

Its still very much early days in crypto and the points made are valid, there still is work to do, nobody can argue that a lot is still problematic, like when keys are lost, or how to legally reclaim assets, or how to achieve pure decentralisation whilst identifying scammers, but the potential is surely worth the effort.

The internet in the beginning was intended to be decentralised by its very nature and we have quite the opposite now, it’s consolidated into a handful of companies, us users have become merely targets for consumer goods and ad revenue.

Potatoeman

https://www.boards.ie/discussion/comment/119978380#Comment_119978380

My concern with defi now is the code is exploitable and untested to a high level. Short term transactions are fine but I wouldn’t leave any serious amount of money invested in anything especially now. I have nothing staked right now either so I can sell if necessary. The defi space is just too young to be dabbling in with large amounts sitting in it.

maninasia

https://www.boards.ie/discussion/comment/119978873#Comment_119978873

You've got a point.

BUT d0nt you think it's very interesting that almost all deFi platforms have been operating well throughout this turmoil with CeFi and exchanges?

The code is reviewed by auditors, and seems generally that exploits aren't common of the bigger platforms.

Call me optimistic but DeFi is doing pretty well in my book. Crypto locked in a DeFi contract is not possible to shift around like ehat FTX was up to.

silliussoddius

https://www.boards.ie/discussion/comment/119978372#Comment_119978372

Who will determine the interest rate? Sounds like a recipe for race to the bottom or high rate pay day loan type disasters.

Potatoeman

https://www.boards.ie/discussion/comment/119979417#Comment_119979417

Defi is fine for trading but anything loan related is very high risk. I wouldn’t see it replacing traditional finance anytime soon. Liquidation thresholds and domino cascading liquidations would be a concern. Even leveraged trading by people is causing market issues.

joeguevara

From a commercial sense the business model of providing mortgages or retaii loans makes very little sense. Take Ireland for example lending to retail customers and indeed commercial customers and property mortgages require a firm to be regulated by the Central Bank. There is capital requirements and then compliance with various codes including eg cps , ccma.

Now if you get over that hurdle there is then the economics. The loans would have to be in fiat as the majority of homesllwrs or car dealerships don’t take crypto. The customer would have to put collateral probably usdc or eth and then pay back a monthly repayment drip feeding it in. The assets could be held as collateral but actually crystaliding that is near to impossible. So capital outlay In a market that protects the customer to the hilt is not financially viable. They would make way more money at less risk of default by Airbnb the market or becoming a market maker.

https://www.boards.ie/discussion/comment/119978828#Comment_119978828

Crypto is pretty unique in that when a robbery happens, you lose your money. When's the last time a bank robbery bankrupted customers? There is probably something recently somewhere but I can't find it, but it's certainly not a common occurrence in a country like Ireland. I was talking about large robberies like Northern Bank, things that are meaningful like the crypto ones, not methheads going into banks holding a banana stealing an average of $6,500.

If there were thousands of bank robberies every year that resulted in material harm to customers, we wouldn't use them.

joeguevara

https://www.boards.ie/discussion/comment/119982519#Comment_119982519

I think we are the end for institutional clients leaving there assets on an exchange. Actual third party regulated custodians should contribute to the safety and protection of the customers. The exchanges are trying their best to make it dffucult for those custodians and are promoting their self custody options. The proof of reserves concept is a joke as it’s literally back of a fat packet and quite similar to alameda AAA rated balance sheet which as literally made of sand.

Exchanges are utilising their unregulated status to in effect con the comfort of their clients as they roll our audit reports and the customer base thinks that’s all that’s needed but the audit report is based on the exchange confirmations rather than a root and branch deep dive.

it’s unbelievable that the likes of SBFstill has a platform at the likes of the NY times summit. Be similar to madoff speaking at the NYSE summer launch 3 days after his clients lost everything. With regards to the robberies or indeed hacks it’s drastically different the chances based on the asset. Tether just burned all the stolen to,ems and replaced them to the customers. Bitfinex had law enforcement watching those wallets for years until that day that they moved them and most are returned.

w are seeing more cases where wallets are being frozen and trying to return stolen assets. Good example of this was the lcx case. However the stakeholders like the exchanges and vasps instinctively jyst say not my problem. Historically this was just accepted as part of the enigma. However it remains to be seen if this concept is going to continue. A multi lateral trading facilit6 cannot have an unreasonable component that could leave a customer to suffer damages without appropriate mitigation and controls. I don’t know how this could be achieved but it’s something that will be expected by legislators. One concern I have is some of the senators on the committee and the depos are literally clueless and obviously of their depth. But then again a lot of people in the industry are too.

Madoff's clients got back something like 80% of their money, which shows how diabolical these crypto scams are where people lose pretty much everything.

joeguevara

https://www.boards.ie/discussion/comment/119982542#Comment_119982542

That’s very true. But customers have to bear responsibility if they leave their assets on an exchange instead of in a cold wallet off exchange, it’s obviously done for ease and convenience and fear of losing the private key but we have seen so many instances of it that the penny has to drop. It’s probably a better baloney rather than a bank, but more like loads of art collectors leaving their master pieces in a warehouse that they don’t really know how safe it is. And even worse several neighbours have had the art robbed over and over.

Another area that the regulators will probably demand is appropriate insurance cover. It’s iinxredibly and that will drive up costs.

maninasia

https://www.boards.ie/discussion/comment/119982531#Comment_119982531

Yeah Proof of Reserves seems well dodgy.

WTF does that even mean.

I belive crypto lending platforms will break thru sooner than later, maybe in developing markets first for poorer people who need payday type loans.

If many assets are formally on the blockchain then it starts to become a lot more useful, for instance you could then use that asset as collateral for other loans. Easy to value branded objects such as cars could be where to start.

And crypto does have potential for crowd investors to change the nature of investing in some high profile assets.

Maybe NFTs could make a comeback sooner than expected.

joeguevara

https://www.boards.ie/discussion/comment/119982788#Comment_119982788

bDefinitely pros in that approach. The biggest issue I would see for entitiesto do this would be not only having to comply with crypto regulations+ they would qoso have to comply with lending. codes of practice which are different in each country. There would be stringent requirements for arrears handling, complaints handling would have to have call centres; strict timeframes for letters etc. it’s bloody difficult and not something that any crypto firm would used to.

Not only that huge capital outlay in funding the loans with a quite a hefty default rate. They then have to have asset collection and sales. And how would they be able to offer the loans at significantly lower rates with all the additional compliance requirements. We have seen the absolute horror show from lending firms offering huge coupons for assets which ended up destroying the firm. The loans would have to priced with a buffer to cover default and then to collect arrears has to be done in a very rigid manner.

I think I said it previously, that the possibility to make way more money by utilising the assets that you are lending out. I got the first retail credit firm authorised in Ireland and they were quite successful in the non bank mortgages. They received major funding and invested into mortgage based securities and 5 major bonds using the mortgaged properties as collateral. Perhaps something similar but In a crypto package. But definitely in the EU crypto asset service providers would never have experienced the operational compliance disclosures that are required. There is also the risk that the digital assets they would hold as collateral dramatically in value meaning the solvency and liquidity requirements of the regulators would be breached and then a default event occurs.

There is a lot of great ideas being discussed at the moment but what the participants need to realise is the landscape has and will completely change in the next 18 months making the roadmaps maybe not quite as attractive or straight to product as they previously have been

joeguevara

Bit of excitement over the weekend when news broke that SBF secretly funded Th Block news site which always claimed to be completely independent and unbiased news. https://twitter.com/coffeebreak_yt/status/1601296842826080256?s=61&t=u7JjCQj1IiyjO-mfCeIHE

But even more news worthy was Coffeezilla making SBF admit that he committed a fraud by transferring 5 billion us from client funds from ftx to alameda at the end. How he got I’m was only focusing on mononucleosis wrapped, non staked and non optioned btc which user agreement saiid that ftx can not move them under any circumstances . All clearly laid out here https://twitter.com/coffeebreak_yt/status/1600703441726164994?s=61&t=u7JjCQj1IiyjO-mfCeIHEQ

erlichbachman

At this stage it will be an absolute miracle of SBF stays out of jail, market manipulation and gambling with customer funds will not go down too well. He's already stated he doesn't have all his data so I expect there to be a lot of memory loss at any upcoming hearings.

He doesn't seem to me the kind of guy who would do well in an American prison

It’s mad how there was a Signal group where CZ Binance, SBF, Paolo from Tether (not the CEO….), Jesse from Kraken were pretty much making decisions amongst themselves. Usually making decisions that left retail suckers out of pocket. It’s the most centralised thing in the world, and I get the feeling we’ve only seen the start of the unraveling.

My own “theory” is that Tether is largely backed by stuff like Tron and BNB, and that’s why Coinbase are offering to swap tether for usdc with no fees. Tether was used for capital flight and money laundering from places like Russia, Iran and China. It’s all going to come crashing down.

erlichbachman

https://www.boards.ie/discussion/comment/119986586#Comment_119986586

Has that actually been verified? I mean on one hand they are competitors, but he nature of the crypto market is such that they all have a vested interest so it would make sense, however the notion that a 250k transaction would jeopardise the coin seems a bit off.

https://www.theverge.com/2022/12/9/23502193/ftx-alameda-binance-kraken-tether-exchange-texts

Jesse from Kraken is saying it’s fake news. He’s also starting to suggest in roundabout ways that Binance may be insolvent. It does seem unusual that CZ would be telling SBF to not execute a 250k trade to destabilise the price of Tether.

I think it’s been a really interesting week in crypto - the Binance “audit” has a load of rivals out suggesting things are not as they seem.

Dohnjoe

https://www.boards.ie/discussion/comment/119986736#Comment_119986736

If it's true, it's very serious

It's like a bunch of college kids playing business while being utterly ignorant of competition law or risk frameworks.

The DoJ moves extremely slowly but this would be massive if charges are brought.

https://www.reuters.com/article/idUSL8N3321X6

silliussoddius

https://www.boards.ie/discussion/comment/119987086#Comment_119987086

Yeah, it makes me think that the FTX downfall may be down to sheer stupidity and arrogance. I have a hard time believing someone would do something deliberately criminal in such an open way, such as not having proper accounting controls and going to US congress. It just reeks of arrogance where people think they are the smartest people in the room and everyone else doesn't get it.

Dohnjoe

https://www.boards.ie/discussion/comment/119987733#Comment_119987733

That said, I have no issues if they are fully prosecuted. In finance and tax and competition law, ignorance isn't innocence. They are about to learn a lesson that they can't "oops I didn't know" their way out of this.

silliussoddius

https://www.boards.ie/discussion/comment/119987840#Comment_119987840

Of course, I expect him to be locked up in the future. There is a lot of outrage about why he isn't in jail straight away, it takes time to build a case and people being angry online isn't a reason for someone to be in prison.

Potatoeman

https://www.boards.ie/discussion/comment/119987851#Comment_119987851

He should have been picked up as a flight risk and extradited back to the US right away. There are legal obligations as a CEO, even one operating off shore to American clients no less.

The irony might be for all his Trump hating, he might get him more support if people see the Democratic Party going easy on him. Especially given his political donations.

erlichbachman

https://www.boards.ie/discussion/comment/119987123#Comment_119987123

I dont get it, reuters put out an article basically saying they haven't actually spoken to the authorities but have spoken to people in and around the case, and the authorities may or may not prosecute CZ and others