Crypto hype is tiresome

2 points by tgarma1234 8y ago ↗ HN

I was interested in the idea of XRP when I first saw their value proposition, especially when they say “Today’s Payment Rails Don’t Cut It” but in reality I can transfer money between my accounts on ally, chase, and tcf bank without the slightest effort or delay. In contrast, my account on coinbase has been inaccessible for almost a month now because of system issues and my account on kraken has been locked in tier 2 for weeks pending verification. So whatever the crypto shills are proposing, the most basic exchange websites do not work for the “3 billion people using the internet” (quoting ripple.com).

These are a bunch of half baked concepts being promoted through websites that cannot scale. And I am talking about websites like kraken and coinbase that have huge numbers of developers working on them.

Finally, if large numbers of people tried to log into their online bank account (e.g. chase or ally) and got system issues for weeks without being able to access any of their money, the economy would literally come screeching to a halt. That these cryptocurrency sites can simply fail to be able to handle the traffic is reason enough to say that this system of transacting cannot be used by large numbers of people globally for essential financial transactions. They can simply turn off everyone's access and take everyone's money whenever they want and we have no legal recourse. This is not banking.

These sites are cashing in on a ponzi scheme that really should be illegal.

2 comments

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ralmidani 8y ago ↗

I agree the status quo is unacceptable, but do not think it is due to Coinbase, Kraken, etc. being out to rob people. These companies simply did not anticipate having to deal with such rapid growth. That is not a valid excuse when so much money is at stake, but that does not make it a "Ponzi scheme."

tgarma1234 8y ago ↗

It is unacceptable to take money from the crowd without making the appropriate effort to deal with demand.

The ponzi scheme aspect of it is this: the cryptocurrencies become more valuable as more people buy them. Very few people can access their accounts to sell them though, and that technical glitch will continue until the value collapses, at which point anyone who bought in will have lost the incentive or desire to sell and be left holding assets at a loss. This is designed into the system as a feature not a bug.

The coinbase status page is practically the definition of a ponzi scheme: https://status.coinbase.com/

In particular they write that while there is no friction whatsoever to putting money INTO the scheme, it is not currently possible to take money out reliably:

"Update - Due to outgoing wire delays, we recommend withdrawing via ACH (bank transfer) instead of wires for faster processing. This applies to withdrawals only. Deposits via wire transfer are not currently delayed."

If this were a real estate scam every red flag imaginable would be raised: you can buy but you cannot sell.

That this is passed off as a technical issue beyond anyone's control is the very nature of ponzi scheming.