FTX drama and it’s long term consequences: Bitcoin is a confidence Game.

Bushdark

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Quote from: rokok lokal on November 19, 2022, 11:19:03 PM

Yes. learn from the experience that is happening right now Why did FTX go bankrupt.

In my view, this has a big message for other Exchange Platforms to have a big responsibility to really protect Customer's Money so that it is not corrupted. everything concerns the electability of an Exchange Platform that has been formed from childhood until it already has a name.

Anyone still surprised? This is why we need to be very careful the way we patronize many of these exchanges because who knows when they might go bankrupt or crash since this does not just started today. The case of FTX was very much predictable but some investors Heard about it never took it seriously then. I hope Sam Bankman will be brought to book since the case is already in court.

https://twitter.com/UtilityTheory/status/1600975339400093696?t=i_B0us2miR9YB-KCNTbvig&s=19

It is very obvious that there are many things hidden from us that we don't know and I hope to see them.

https://twitter.com/WhiteOakFX/status/1600956744032612353?t=uezpH16w9kHyrozG_iHeCQ&s=19

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Quote from: fillippone on November 11, 2022, 08:01:23 AM

Regulators: The long tide of these events will be a flurry of new regulations to ban, regulate, oversee the whole crypto industry. I don’t know if they will be successful, the risk of killing a nascent industry is high, but i guess they now know they need to understand the industry better. And maybe this is good for all of us.

Today on the FT an analysis retiming with that consideration of mine here above:

Time for a reset of the crypto opportunity

Quite an interesting article, of course written by a traditional banker, with traditional finance background and focus and the confidence in traditional financial system in mind:

Quote

   Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
   https://www.ft.com/content/5568bd6b-99df-4c8b-91bc-e0b49011da80

   A comprehensive regulatory framework is needed, but much of the underpinning already exists and can be extended from the regulation of traditional assets.

There is a path to be found. We should embrace digital asset innovation, and align it to established rules and measured regulatory principles in order to protect customers and promote resiliency. In so doing, we also protect the most precious asset of all — confidence in our financial system.

rokok lokal

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Quote from: fillippone on November 18, 2022, 02:07:07 PM

Quote from: Fortify on November 17, 2022, 03:19:38 PM

If you really are an investor then you need to be constantly adapting and adjusting to new information as it becomes available.

Correct.
What was I trying to tell you is that investors must now realise where those incredible APR came from: nowhere. So this new breed of investors must now realise that every yield is a counterpart of a risk. If they see the yield but don't see the risks, then they are better to re-evaluate the investment.

Yes. learn from the experience that is happening right now Why did FTX go bankrupt.

In my view, this has a big message for other Exchange Platforms to have a big responsibility to really protect Customer's Money so that it is not corrupted. everything concerns the electability of an Exchange Platform that has been formed from childhood until it already has a name.

fillippone

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Quote from: Fortify on November 17, 2022, 03:19:38 PM

If you really are an investor then you need to be constantly adapting and adjusting to new information as it becomes available.

Correct.
What was I trying to tell you is that investors must now realise where those incredible APR came from: nowhere. So this new breed of investors must now realise that every yield is a counterpart of a risk. If they see the yield but don't see the risks, then they are better to re-evaluate the investment.

Fortify

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Quote from: fillippone on November 11, 2022, 08:01:23 AM

Very good Newsletter From The Pomp.

I think Pomp here had a point.

FTX debacle, which came too close to the LUNA/UST drama, is a harsh call on the whole system.

Something everyone reading this forum should already know. There is Bitcoin, then there is crypto.
But in the crypto Far West it was difficult for everyone to keep the bar to straight , for everyone.

Users Yet once again. “Not your keys, not your coins”. How many times do you have to be reminded doing a good risk assessment, when deciding who is handling your private keys
Please note the at I am not against Bitcoin custodians per se, I am against poorly chosen custodians”, whose category is often identical to “exchanges”
Investors: lured into dubious projects following even more dubious APY or “risk free yield”. Check this thread to clarify what happen when you think you are getting a risk free yield. Hopefully they now understood where the real value is, and where allocate their assets.
Exchanges: instead of focusing on crystal clear operations, regulations and service for clients, setting up convoluted tokenomics schemes, in the best hypothesis out of levity on unintended consequences, but often in dire fraud Hopefully this will lead to a refocusing on that matter the most for their clients (the users, not the governments -Check this thread). Many exchanges have already said are going to significantly improving their operations and transparency adding proof of reserves, as a first step
Developers: instead of focusing on the development of the intellectually rewarding projects (namely: Bitcoin and Bitcoin related Technologies) , they indulged financially regarding projects. Hopefully many dubious project in this sphere will see a drain in funding over the coming months
Regulators: The long tide of these events will be a flurry of new regulations to ban, regulate, oversee the whole crypto industry. I don’t know if they will be successful, the risk of killing a nascent industry is high, but i guess they now know they need to understand the industry better. And maybe this is good for all of us.

If you really are an investor then you need to be constantly adapting and adjusting to new information as it becomes available. It doesn't matter if you're invested in gold, wine, crypto or stocks - sometimes you just have to take a step back an re-evaluate everything that attracted you to it, then identify if anything has changed. There will be a small crowd of people who genuinely put little thought into their buying and just saw "line is going up on the chart, I want to jump in". Those people did no research other than feeling greedy and thinking they had an easy way to make money. Others have bought with conviction, used only small amounts of spare funds and are happy to hold wherever the price goes. That type should hopefully secure their crypto in off exchange wallets.

Bitstar_coin

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"How many times do you have to be reminded doing a good risk assessment," I think as many times as it takes, it appears many people don't take into account the risk assessment of their investment because if they do - fewer people will have funds in a centralized exchange.
Most of these exchanges are reckless and users help them by leaving their funds in the exchange until investors began to understand the consequences of their actions this type of situation will keep happening.
As long as you hold your btc in your personal wallet, you will be far from all these exchange shenanigans.

wiss19

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Quote from: fillippone on November 16, 2022, 04:38:03 AM

Quote from: $anounimus$ on November 16, 2022, 01:28:23 AM

I think the time has come to put “bitcoin as magic internet money” behind us, build proper cryptographic security apart from fiat currency, improve consensus protocols so we can scale to handle VISA and MasterCard transaction volumes. increasing the resilience of the network for adoption as most people are not sophisticated enough for escrow and multisig and making derivatives easier as contracts can be automatically tied to a reliable BTC/USD price, which never will in the future.

Nonsense.

The Bitcoin network has been unaffected in al this drama.
Tik tok, another block

Not a single Bitcoin network instance has been hacked. No need to change anything in the protocol or in the Bitcoin implementation.

All the hacking has been done on the Exchange systems that are well outside the Bitcoin Network.
Closest thing it went down it is some wrapped Bitcoin, but the fault is in the “wrap” part, not in the Bitcoin part.

That is what people say when bitcoin is decentralized and for some reason many do not understand it. A lot of people go "well it's centralized when Elon says something it goes up or down!" or they say "if it's decentralized then how come exchanges have billions of it!" or something like that.

They mistake the decentralization of the bitcoin itself, with the centralization possibility of the price, and yes the price can't be decentralized, but the coin itself has always been like that, and safe and secure and not a single problem has ever occurred in its history ever. That should be proper reason to buy as many as you can, and store it in a safe place and you should be safe from all this drama.

Gayong88

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What caused the FTX drama? Everyone will have their own opinion but I don't think anyone could come close to the truth. The consequences remain to be seen, namely the value is subjective and determined by the market. Will there be a serious attack on Bitcoin? I highly doubt it. What is certain is that trust in Bitcoin and by implication trust in cryptocurrencies has taken a huge hit at the moment.

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Bitcoin is a safe haven. It was designed to be. All the recent facts prove it, including the opinions of experts.
But it is worth remembering that there are many similar experiences that have proven their effectiveness over the years. It may not have had enough updates due to the lack of demand for its use compared to Bitcoin, but many of them have proven to be highly efficient. Currencies such as Monero and Green have proven their effectiveness and ability to provide a good amount of security and decentralization, comparable to Bitcoin, or perhaps in many cases exceeding it.

Flexystar

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Quote from: fillippone on November 11, 2022, 08:01:23 AM

Developers: instead of focusing on the development of the intellectually rewarding projects (namely: Bitcoin and Bitcoin related Technologies) , they indulged financially regarding projects. Hopefully many dubious project in this sphere will see a drain in funding over the coming months

They are the craziest one! If you see the developments after 2015-16 then we can see how there is sudden up surge in the ICO’s for versatile ideas and how millions of dollars were being raised during the pre sales and post sales.

The role of Developers in this? Well they knew that blockchain is comparatively new and it’s applications are vast subject. They started to put finger on everything they saw and converted them into blockchain project. They however never kept the ideas for long, just coded the basics, few algorithms which would work for initia processes and boom everyone started to think that it’s something unique and it’s going to be astounding project in the future.

However the end of the story? Failed roadmaps, abandoned projects and zero volume in the market.

Developers did not stop there, they started one project after another and still looting the market in the name of advancements, blockchain usage and futuristic agendas. All in vain.

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Quote from: DooMAD on November 16, 2022, 11:26:14 AM

Quote from: fillippone on November 15, 2022, 06:38:15 PM

Quote from: DooMAD on November 15, 2022, 10:08:14 AM

Quote from: fillippone on November 11, 2022, 08:01:23 AM

Many exchanges have already said are going to significantly improving their operations and transparency adding proof of reserves, as a first step

I'm not convinced this goes far enough. Proof of reserves means little without proof of liabilities. If you don't know what these people are doing with the funds they hold, what their financial obligations and debts are, etc, then there's no guarantee those funds are secure.

Proof of reserves is a first step.
This is a technically possible step that can be done with little development in exchange infrastructure. With publicity auditable results and also reproducible anywhere.
What you are requesting is an accounting auditing. Something is certainly possible and actually done in most of western "regulated" countries.

Of course there's not universal recipe for this, but small incremental steps in the right direction.

My concern is that some exchanges are going to claim "We don't need an independent audit, we have cryptographic proof of reserves". If that starts to occur, then it's very much a step in the wrong direction. I really hope I'm wrong on this, but I can see it happening.

Call me suspicious, but I'm convinced it's just another way to obfuscate illicit activities behind the pretense of legitimacy. Exchanges seem way too eager to implement this and I think we should all be pausing to wonder why that might be.

Yep the possibility of that scenario is highly probable. In the near future, People will demand more information from the exchanges knowing that there will be a certain distrust on exchanges given on what is happening currently and also in the future. Binance is one of the top exchanges right now and they are one of the first who volunteer to show their proof of reserves and I believe to likely to agree on an independent audit given that they have a reputation to hold on. Refusing to make a independent audit for them is a really bad move because it can instantly make speculations against them and it would be on their bad side. Sooner or later, I hope that proof of reserves will be standard and auditing it should be part of it.

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Quote from: fillippone on November 15, 2022, 06:38:15 PM

Quote from: DooMAD on November 15, 2022, 10:08:14 AM

Quote from: fillippone on November 11, 2022, 08:01:23 AM

Many exchanges have already said are going to significantly improving their operations and transparency adding proof of reserves, as a first step

I'm not convinced this goes far enough. Proof of reserves means little without proof of liabilities. If you don't know what these people are doing with the funds they hold, what their financial obligations and debts are, etc, then there's no guarantee those funds are secure.

Proof of reserves is a first step.
This is a technically possible step that can be done with little development in exchange infrastructure. With publicity auditable results and also reproducible anywhere.
What you are requesting is an accounting auditing. Something is certainly possible and actually done in most of western "regulated" countries.

Of course there's not universal recipe for this, but small incremental steps in the right direction.

My concern is that some exchanges are going to claim "We don't need an independent audit, we have cryptographic proof of reserves". If that starts to occur, then it's very much a step in the wrong direction. I really hope I'm wrong on this, but I can see it happening.

Call me suspicious, but I'm convinced it's just another way to obfuscate illicit activities behind the pretense of legitimacy. Exchanges seem way too eager to implement this and I think we should all be pausing to wonder why that might be.

fillippone

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Quote from: Yatsan on November 16, 2022, 10:16:52 AM

Quote from: fillippone on November 16, 2022, 04:38:03 AM

[
It became a drame simply because people romantacize it and allowed it to manifest. Just because an exchanger is down, they concluded that this industry would as well fall. Cryptocurrencies in the first place are separated from exchanges. It is just that exchanges became the bridge between cryptocurrencies and fiat currency; that's the only link. This simply happens because people invest into something in which they lack knowledge about; tend to panic whenever there's a problem but never tried understanding why such thing occured. If investors nowadays in this industry are knowledgeable enough of problematic tendencies, there is even a chance for the market price to not be affected simply because people won't care and sell out of panic.

I think it is more than that.
ASI. Said in the OP, I am afraid we will now have a “before FTX” and an “after FTX”. This is because of the sheer size of this exchange and above all for the huge amount of money it poured in the industry.

A lot of actors will have to adjust their expectation regarding the way they approach to crypto’s.
And when I say crypto, I do include Bitcoin, as per the Pompliano letter in the OP.

My feeling is that the long ripple of these events will be long felt in the industry.

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Quote from: fillippone on November 16, 2022, 04:38:03 AM

Quote from: $anounimus$ on November 16, 2022, 01:28:23 AM

I think the time has come to put “bitcoin as magic internet money” behind us, build proper cryptographic security apart from fiat currency, improve consensus protocols so we can scale to handle VISA and MasterCard transaction volumes. increasing the resilience of the network for adoption as most people are not sophisticated enough for escrow and multisig and making derivatives easier as contracts can be automatically tied to a reliable BTC/USD price, which never will in the future.

Nonsense.

The Bitcoin network has been unaffected in al this drama.
Tik tok, another block

Not a single Bitcoin network instance has been hacked. No need to change anything in the protocol or in the Bitcoin implementation.

All the hacking has been done on the Exchange systems that are well outside the Bitcoin Network.
Closest thing it went down it is some wrapped Bitcoin, but the fault is in the “wrap” part, not in the Bitcoin part.

It became a drama simply because people romantacize it and allowed it to manifest. Just because an exchanger is down, they concluded that this industry would as well fall. Cryptocurrencies in the first place are separated from exchanges. It is just that exchanges became the bridge between cryptocurrencies and fiat currency; that's the only link. This simply happens because people invest into something in which they lack knowledge about; tend to panic whenever there's a problem but never tried understanding why such thing occured. If investors nowadays in this industry are knowledgeable enough of problematic tendencies, there is even a chance for the market price to not be affected simply because people won't care and sell out of panic.

wiss19

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Quote from: The Sceptical Chymist on November 15, 2022, 07:20:51 AM

Quote from: Darker45 on November 11, 2022, 08:25:21 PM

This is yet again another moment to go back to basics. We have been doing this a number of times. But since we're always failing to learn lessons, history is bound to repeat and we're once again forced to be reminded of the most fundamental principles of nothing else but Bitcoin.

Yep, and I hate to say it but there's no progress in financial intelligence because each generation has to learn the hard way on its own. That's why booms and busts keep happening every 10-20 years, over and over again.

Some of the Youtube videos I've been watching are by people in their 20s, and they're talking about things that seem really obvious to me but are apparently new to them. I'm not blaming any of this crap on the younger generation by any means, but SBF and other big time crypto scammers are all young and obviously ignorant, no matter how wise they've been previously portrayed in the media.

Everything in trading, investment, and finance is a "confidence game". It always has been, going back to the days of JP Morgan and well beyond that. Anyone who uses a centralized exchange has to have some sort of confidence in it, regardless of how little. Anyone who trades with anyone else has to have confidence in their counterparty. No matter how trustless we'd like things to be, if we're buying or selling bitcoin we've got to have a smidgen of trust somewhere.

This whole thing is ugly to the tenth power.

I do not blame them neither, for example when I was 15 years old, I had absolutely no idea how the world works, and when I was 25 I just barely started to understood, and not even the whole thing, just the basic concept and at 35 I started to understand how it all works but have no idea how to navigate it, yes it's unfair and yes the wealthy have a big advantage, but what could I do to overcome that? I have no idea, I just know the problem and I lack the solution and I feel like crypto could be it.

Considering all of this, the generation Z doesn't feel too far behind, in fact a lot of them know much more than I did back that age, and some of them even know better than I do now, so I feel like it’s just a cycle.

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Quote from: fillippone on November 16, 2022, 04:38:03 AM

Quote from: $anounimus$ on November 16, 2022, 01:28:23 AM

I think the time has come to put “bitcoin as magic internet money” behind us, build proper cryptographic security apart from fiat currency, improve consensus protocols so we can scale to handle VISA and MasterCard transaction volumes. increasing the resilience of the network for adoption as most people are not sophisticated enough for escrow and multisig and making derivatives easier as contracts can be automatically tied to a reliable BTC/USD price, which never will in the future.

Nonsense.

The Bitcoin network has been unaffected in al this drama.
Tik tok, another block

Not a single Bitcoin network instance has been hacked. No need to change anything in the protocol or in the Bitcoin implementation.

All the hacking has been done on the Exchange systems that are well outside the Bitcoin Network.
Closest thing it went down it is some wrapped Bitcoin, but the fault is in the “wrap” part, not in the Bitcoin part.

This is true, I recently watch Michael Saylor interview in regards with the recent FTX drama. I kinda feel that he is really all this time that Bitcoin is indeed the solution on everything because it is the only currency that is completely decentralized and proven for more than a decade.

This is Saylor statement on his tweet for interview: Satoshi had a beautiful dream of a world where we don’t need to trust banks and store our life’s savings in collapsing fiat currencies. #Bitcoin means you don’t need to trust the FTXs of the world.

https://twitter.com/saylor/status/1592609346277363713?s=20&t=QWeeCsMmiDLyb1zJ0oXJwQ

fillippone

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Quote from: $anounimus$ on November 16, 2022, 01:28:23 AM

I think the time has come to put “bitcoin as magic internet money” behind us, build proper cryptographic security apart from fiat currency, improve consensus protocols so we can scale to handle VISA and MasterCard transaction volumes. increasing the resilience of the network for adoption as most people are not sophisticated enough for escrow and multisig and making derivatives easier as contracts can be automatically tied to a reliable BTC/USD price, which never will in the future.

Nonsense.

The Bitcoin network has been unaffected in al this drama.
Tik tok, another block

Not a single Bitcoin network instance has been hacked. No need to change anything in the protocol or in the Bitcoin implementation.

All the hacking has been done on the Exchange systems that are well outside the Bitcoin Network.
Closest thing it went down it is some wrapped Bitcoin, but the fault is in the “wrap” part, not in the Bitcoin part.

$anounimus$

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My opinion Probably the biggest thing that came out of this drama is that the FTX hackers are getting a different view of bitcoin.

I think the time has come to put “bitcoin as magic internet money” behind us, build proper cryptographic security apart from fiat currency, improve consensus protocols so we can scale to handle VISA and MasterCard transaction volumes. increasing the resilience of the network for adoption as most people are not sophisticated enough for escrow and multisig and making derivatives easier as contracts can be automatically tied to a reliable BTC/USD price, which never will in the future.

Darker45

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Quote from: arallmuus on November 14, 2022, 02:44:57 PM

Quote from: Darker45 on November 11, 2022, 08:25:21 PM

When everything started, it wasn't about centralized exchanges, lending platforms, investment opportunities, security tokens, lending, and so on and so forth. It was purely about freedom, ownership, peer to peer, transparency, censorship resistance, and so on.

I doubt that we'll ever get away from centralized exchanges. Its becoming part of the crypto ecosystem already wether we like it or not and yeah we stranded far away from original intention of bitcoin being created but its already part of it for now. Most people that get into crypto nowadays dont even know the term of " not your keys, not your coins" anymore

It's just so unfortunate that instead of providing an alternative to the banks and the fiat system, crypto has ended up exactly mimicking the banks and the fiat system. Not only are they centralized, they also demand that personal information be provided. They freeze funds when they are suspicious. They issue nothing but numbers, meaning debts, while the real funds are used and risked somewhere else. They also issue their own coins out of thin air. But the worst part is that people are embracing it.

Quote from: Darker45 on November 11, 2022, 08:25:21 PM

I can only hope that as soon as the dust settles down, there will be a significant change of behavior in the community, although I have doubts.

The effect is pretty decent though for the community. Abit off topic but imagine what would happen if it was Binance Roll Eyes

If Binance were to crash a week after FTX, there will probably still be a lot of wailing because of lost funds. If Coinbase were to follow a week thereafter, the same thing happens. Well, I guess this is just how we are.

Topic: FTX drama and it’s long term consequences: Bitcoin is a confidence Game. (Read 728 times)