[LeafGuild]

It is absolutely a blockchain failure. Blockchains are intentionally designed to facilitate this. They have no possible way to stop this kind of fraud. Even if you built an elaborate set of smart contracts that could audit participants, they would still not stop anything. That activity can just be moved to another chain and avoid the audits. This kind of thing can just keep happening over and over again, as it already has for the last 12 years. Remember Mt Gox? Nothing fundamental has changed about blockchains that could ever prevent this from happening. It's viewed as a feature that everyone just loses their money sometimes. The designers of blockchains want this to happen. From speaking to them, they view any kind of fraud prevention as an affront to their definition of "economic freedom" and what it entails.

[siftrics]

This is not true at all.

If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period.

FTX is a centralized entity that custodies funds. It has nothing to do with a blockchain, which could have completely prevented this.

There are many examples of decentralized exchanges (DEXs) for which it is mathematically impossible to loan out depositor's funds without their consent, because the only person capable of signing a transaction to move the funds is the depositor themself.

[stouset]

> If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period.

Right up to the moment you lose your laptop in a fire, forget the password to your wallet, accidentally run malware on your personal computer, etc. Or if you die and haven't gone through the complication of setting up a way for your heirs to gain control of your accounts.

Yes, you can take steps to mitigate these risks. Those steps are absolutely insane from the POV of everyday human beings.

[siftrics]

Totally valid criticism.

But blaming blockchain for the failures of centralized finance, which we've seen time and time again throughout all of history, is literally intentional deception.

If a politician or lawmaker or business person blames blockchain for this, it is FRAUD. Full stop.

[LeafGuild]

Well I'm not a politician or lawmaker and I have no problem blaming blockchain for this. I'm technically a "business person" because I have a job, but technically all crypto people who intend to use it to make money are also business people. The way bitcoin and all its friends are designed is intentionally done so in a way that allows centralized entities to run amok and cause havoc without any accountability until the entire thing collapses. It's blockchains that are the fraud. The designers of blockchains, including Satoshi, were aware of these problems and the risks of the system becoming unstable or getting targeted by scammers. They went forward with their designs anyway knowing the risks. Because they thought they were better than the central banks and they wanted to say they were sticking it to the man. How were they better though, when their inventions gave way to one giant fraud after another in a shockingly small amount of time? These Enron-level and WorldCom-level events are a weekly occurrence in crypto.

[Fnoord]

All these blockchain cryptocurrencies end up being traded on unregulated exchanges. These don't have same protection and requirements as banks. They are a wild west. And why do people use these exchanges so much versus blockchain? Because blockchain is highly inconvenient. I mean for starters how on earth is it user-friendly to require the entire thing on a device, requiring synchronization as well. It also requires a high quality always-on connection.

[pshc]

Pretty easy to download a wallet that’s stored in the Secure Enclave of your iPhone with an encrypted backup to your Apple ID account and all those problems go away.

[TedDoesntTalk]

Even this one? “ you die and haven't gone through the complication of setting up a way for your heirs to gain control of your accounts.”

[pshc]

I think this one is actually possible, they have policy for letting loved ones into accounts.

Better to be sure and write the account password in the will.

[TedDoesntTalk]

> they have policy for letting loved ones into accounts

Who has this policy? The blockchain??

[LeafGuild]

>If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period.

This is completely and utterly irrelevant and has not stopped anyone from performing massive fraud. Just look at the long history of crypto scams. They still happened constantly despite blockchains having that feature. It's just impossible for a blockchain to prevent these frauds. It doesn't matter if you still have all your coins if the value of that coin drops to zero after it's revealed the whole market for that coin is fraudulent, which is exactly what happened this week! And multiple times earlier this year, and multiple times before that! It doesn't matter if it's stored on a DEX either, when you're still stuck with a worthless coin that no one will trade you for! How many shitcoins need to collapse before this is understood? Blockchains do not and will never solve this problem because they create the problem, by design, by allowing anyone to manipulate and dump tokens anywhere they want with no regard for what's fraudulent and what isn't. On a DEX you can't even know if the person on the other end is a real person or not without going outside the chain. I can't believe I'm still talking about this after the long, long string of fraud that's happened over the last 12 years. FTX is not the problem, they are the symptom. The problem is blockchains. They're intentionally built to enable fraud. They have no other purpose, and they aren't even particularly good at that because they stop working when everyone notices the fraud.

I should also mention, your statement isn't even correct! There's a very easy way to get someone else to move their coins for you: threaten them. That's the entire principle that ransomware is built on. It's real easy for criminals and the police and anyone else using the threat of force to get people to give up their coins, blockchains don't prevent that and it's impossible for them to do so because they can't affect anything that happens in the real world outside the chain. I really can't understate this. Blockchains are a fraud. Every claimed authority or security provided by a blockchain is trivially defeated by just routing around it or by gaming the market, which is ridiculously easy for anyone with some cash to throw around because there are no real rules or safeguards. They're probably the worst "invention" that's come out of the tech sector in the last 15 years. I really hope this crash is the end for crypto.

[tl_donson]

> On a DEX you can't even know if the person on the other end is a real person or not without going outside the chain.

why does it matter if the counterparty is a human?

[LeafGuild]

If I'm trying to arrange a trade on the exchange so I can get a pizza for my dogecoins, because the pizza guy says he only wants BCH and not dogecoins, and I would rather not pay double transaction fees just to buy a pizza, how do I know the other person is a real pizza chef and not a bot trying to scam me?

[dmak]

Your arguments are very misguided, long, rambly, and often digresses. It's hard to decipher your points and it is very exhausting to read. Would love to have discourse, but your points need to be shorter, concise, and clear.

[caminante]

I didn't find the comments unclear.

You can read the first 1-2 sentences of each paragraph and get a sense for the main points.

[100001_100011]

I don't find this argument coherent.

Did someone pay you to come here and write these things?

Are you a lawyer?

Are you a crook?

> This is completely and utterly irrelevant and has not stopped anyone from performing massive fraud.

So is fiat currency.

[astrange]

When that guy hacked the DAO and Ethereum reversed the transaction, did he keep the coins or not?

[2muchcoffeeman]

They forked the blockchain right? So the person still has them on the old chain.

[astrange]

And what are they good for there?

[fellellor]

It's a democratic decision. Everyone agreed that chain is no good. Just like everyone agrees on the current state of the chain.

[astrange]

I agree with that, but that's the reason you can't truly store value forever irreversibly. If you can't reverse transactions, you can just abandon the whole currency and start over, and eventually they'll do that.

[caminante]

> That activity can just be moved to another chain and avoid the audits.

> Remember Mt Gox? [...] It's viewed as a feature that everyone just loses their money sometimes [...] From speaking to them, they view any kind of fraud prevention as an affront to their definition of "economic freedom"

I found these observations to be helpful reminders how things are (and used to be!). A blockchain isn't designed to indemnify you if you hop on/off the blockchain.

[dmak]

It's strange to attribute failure to the blockchain in this case. There was no visibility into how much leverage was taken on by Alameda because they aren't borrowing through DeFi means. This a traditional finance problem where a hedge fund takes on too much leverage and no one finds out until they explode.

No visibility leads to no accountability.

[LeafGuild]

No blockchain can ever guarantee there's any visibility or accountability. Defi means are only useful to trade cryptos for other cryptos, and you only have visibility if no one launders the money through crypto mixers. Once you want to cash out and trade your cryptos for any real assets, like buying a pizza, you instantly lose visibility again because all that has to happen off chain. Just because something is a tradfi problem doesn't mean it also can't be a defi problem. In this case, and in a lot of other cases, it's both. Blockchains cannot solve this problem in any meaningful way because you can never force everything to go through that chain. Fraudsters will just move it off the chain and lie about it, and that instantly puts you back into a spot where blockchains aren't doing anything for you.

I argue this is what they wanted out of blockchains. I remember all the rumblings in the days of Silk Road and Mt Gox. The enthusiasts that are responsible for propagating this system into today wanted it to be a wild west where anything goes. They said all the same things back then. I heard people saying it was good that Mt Gox got hacked because it meant all the scammers got what they deserved and they learned their lesson. Well, they didn't! It continued to be a wild west and more scammers just showed up. They'll keep scamming and they won't stop as long as they can make money from it. I don't know why crypto people are so reluctant to acknowledge this. Scammers seek out anywhere they can latch onto and they don't leave until forcibly removed. If a malicious person finds a risk-free way to get free money from unsuspecting victims, with no downsides, why would they ever want to stop?

[100001_100011]

> No blockchain can ever guarantee there's any visibility or accountability

Visibility or accountability of what? Many blockchains are public.

I find you not only misinformed but possibly intentionally trying to mislead people.

"The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it."

- Paul Kedrosky

[caminante]

> Visibility or accountability of what? Many blockchains are public.

I don't know how you ask these questions if you read the parent's post.

Clearly, the parent lays out situations where going off/on blockchain dilutes visibility.

The cross-collateralization of FTX assets wasn't on blockchain.

[100001_100011]

I read the parent's post.

"No blockchain can ever guarantee there's any visibility or accountability."

Ever? Any? Clearly this sentence is false. It takes only one counterexample to prove it.

Here's the counterexample. If someday all the world's money are on a single blockchain and there are no banks, the blockchain guarantees visibility and possibly accountability.

Do you see the meaning of ever now?

Please don't be gratuitously negative. It's to your benefit to be precise. You sell yourself short when you cut off possibilities.

[caminante]

>Here's the counterexample. If someday all the world's money are on a single blockchain and there are no banks, the blockchain guarantees visibility and possibly accountability.

Fine. Let's agree to two premises:

1. all the world's money are on a single blockchain

2. there are no banks

Your conclusion, doesn't necessarily follow!

The problem is I can still contract rights to the blockchain outside of the blockchain, e.g. where on the blockchain did it track FTX's cross collateralization? That's not visible unless I express my right somewhere in the public record.

This scenario (and others) underly the broad point made by the parent.

As far your ad hominem on negativity, I have no idea what you're referring to.

[eric_cc]

> I find you not only misinformed but possibly intentionally trying to mislead people.

This. Brand new account spreading blatant lies.

[100001_100011]

11 months old isn't brand new.

The way I find the OP isn't a blatant lie. It's the truth: how I find the OP.

Now I'm wondering about you.

[user_named]

Maybe the issue is that the creator of the blockchain is inherently trusted but they should not be.

[eric_cc]

> Nothing fundamental has changed about blockchains that could ever prevent this from happening

DeFi