If FTX was on chain, SBF could not have absconded with users' deposits.
Crypto mathematically prevents fraud. The problem here is that business was conducted in the fiat world and on a "trust me" basis.
Crypto mathematically prevents fraud. The problem here is that business was conducted in the fiat world and on a "trust me" basis.
Uh what? How could it do that. Fraud isn't even a technical layer issue. It's an identity issue and identity is pretty much entirely abstracted out of the crypto ecosystem. So, if you think about it that way, it's actually impossible for crypto to "mathematically prevent fraud". That you even said something so ridiculous without any reflection speaks to your intuitions in this space.
The decentralized nature of most cryptocurrencies makes it difficult for a single entity to manipulate the market or falsify transactions, but it does not completely eliminate the possibility of fraud. In addition, the anonymity of many cryptocurrencies can make it difficult to trace the source of fraudulent activity, which can make it harder to prevent or prosecute.
It’s a simple truth that an investment fund that is getting more deposits from withdrawals can vaporize the money and not have any problems until people ask for the money back. That is why financial institutions need strict controls.
"we do not invest user deposits, not even in bonds"
and yet he _did_ take user deposits. He defrauded them by taking their funds. This is also known as theft.
This type of fraud, which also counts as theft, is not possible with self-custodied funds.
I never said they were.
> A DEX might preclude the need for trust relationships in order to prevent the circumstances that make fraud possible
So you agree?
You just admitted that DEXs would have prevented SBF from committing this fraud. That's what I'm trying to convince you of.
Those who do not distinguish self-custodied funds from non-self-custodied funds, like you refuse to do, will continue to be defrauded and stolen from.
If you participate in actual DeFi where you keep your keys and participate via smart contracts, nobody can steal your coins.
All of this was true and is true. What happened is that corporations adopted the language of cryptocurrency to mean something totally different to trick consumers, like calling FTX a DeFi platform.
You want a villain, it ain’t the maxis who kept repeating “not your keys, not your coin”. It’s VCs like a16z, sequoias, and paradigm who lended credibility to centralized exchanges that defrauded people who ignored the cryptocurrency advocates.
The FTX story only strengthens the facts and narratives the cryptocurrency advocates have been saying. The real fraud is happening in venture capital which is rotten to the core.
And by the way, bitcoin is down this year but not nearly as much as VC darlings like Carvana and Affirm.
VC is the scam. VC is the engine of pump and dumps in both TradFi and crypto centralized exchanges. The real voices of cryptocurrency have been vindicated.
Yeah, people think that. But what does that have to do with FTX. Yeah, if you never sent money to FTX, they couldn't take it. What insight!
SBF stole users' deposits. Fact.
SBF could not have done this had FTX been a self-custody DEX. Fact.
Crypto's sole purpose is to prevent the theft that occurred. Fact.
The theft happened because crypto was not used. The theft happened because users did not self-custody (which they could have, as is demonstrated by the billions of dollars custodied in numerous DEXs today). Fact.
Only the person with the private key can move the funds.
If this was on-chain, SBF would not have had their private keys and mathematically could not have moved their funds without their consent.
There are DEXs which you can deposit funds and retain full custody.
We have never once seen someone successfully steal users' funds without access to their private keys. That's the entire point of crypto.
Crypto never claimed to prevent fiat fraud. Crypto never claimed to prevent human custodians from absconding with funds.
It's a fallacy. No true crypto. No point in responding further to this approach.
Centralized finance is subject to the whim of creditors and custodians.
Decentralized finance mathematically prevents theft within the system.
The point is, if you self-custody your funds, no one can take them from you except by threatening you.
Everyone had their funds taken from them because they did NOT self-custody.
Everyone could have gotten all the utility of FTX (trading spot and derivatives) via a self-custody solution (a DEX).
Stop blaming self-custody solutions and stop trying to make self-custody solutions illegal. They literally mathematically prevent this type of theft and fraud.
I use centralized exchanges plenty, and I am also aware that it defeats a large portion of the whole trustless money thing. Therefore, I also keep crypto offline in cold storage. Those addresses and the coins involved will go with me to the grave or until someone threatens me with a hammer.
* A contract (a piece of software) hosted on the network * This contract is immutable (its code cannot be changed) * This contract defines rules such as allowing deposits, withdrawals, and trades, and those functions of withdrawing deposits or enacting trades require transactions signed by the depositor
In that scenario, it is a deposit, is controlled (and thus owned, both legally and cryptographically) by the users.
In real life, these contracts are generally mutable, so there is the possibility that users can still get fucked over.
If "Crypto" has proven anything over the last few years the only thing it mathematically prevents is reversing transactions, which is really useful when you want to steal money.
I'm fine with highly regulated exchanges despite that being counter to that glory of crypto. Also, move your large bags to cold storage.