Usually every new field sees its share of scammers until strong regulation is rolled out. But many people don’t want regulation associated with crypto which makes this a tougher nut to crack.
Regulated crypto defeats the purpose of crypto in the first place. A regulated currency is just your actual fiat currency. But the system is filled with so many bad actors that I don't see any way out but regulation.
Regulating securities didn’t turn them into fiat money so I’d say regulation isn’t incompatible with the intrinsic characteristics of crypto. And I’m sure a few tens (hundreds?) of thousands of users of QuadrigaCX’s users wouldn’t have too many qualms with regulated crypto right about now...
Crypto is about decentralization and reliance on strong cryptography. There’s nothing in the definition that rejects regulation. It’s mostly people’s misconception that crypto is just a means to “fight the power”.
And it’s not even the currency itself that has to be regulated, it the entities that want to deal with it, like your shady exchange that has no transparency or accountability. They didn’t play with financial instruments after all.
The deeper problem is that most people want to amass crypto and get rich from it, and only a minority want to actually use it as a currency or for some heartfelt ideological reason.
As a corollary to that, you also have an army of people who are driven to madness because they didn't get to cash in, and seek to undermine crypto in the hopes of healing those gaping mental wounds. But it doesn't change the fact that the masses who drove the prices up wanted it to be a pyramid scheme in which they were the winners.
These crypto hoarders and traders are also the people keeping crypto from being used as a currency. You can't buy/sell things in a currency that fluctuates several percentage points in a week.
In terms of using it as a currency that’s orthogonal to investment returns. A low cost, highly scalable, easy to use, system could still be created. But it would need to have some advantages for users over existing systems. Further, any technical solution would need to compete with just using an existing currency as the internal token.
That’s a hard problem. Irreversible transactions look nice for the merchant, but as legal organizations can be taken to court that’s mostly valuable for scammers etc. Anonymity is a prized feature, but brings the legal hammer down as governments will actively fight such systems.
PS: Crypto investment is an obvious pyramid scheme mathematically as it does not generate profits internationally. Further it makes no difference to adoption if you buy or don’t buy a given coin. It can only move them from later investors to early investors.
Crypto is just a very effective security with which to speculate, part of the game is that its not tied to any real world asset so no price is too high or too low. high volatility, low regulation, built in deflation, limited supply(because people like to hoard coins) and just enough technical innovation and jargon that it seems "high tech", fear of missing out... all these things created the perfect storm for smart and dumb people alike to pump bitcoin to the moon.
It is no more akin to gambling than simple trading is akin to gambling. The only difference is that funds are also borrowed, which in this case means it was borrowed plus fraudulently obtained funds. And he was likely extra desperate, as most pyramid schemes usually are, taking extra risks because he really needed to make it whole again.
There is no debt on good exchanges that offer crypto derivatives. Exchanges automatically close your positions when your margin balance nears zero. The best one - bitmex.com - has a 250 million insurance fund to cover the potential losses in case the price action becomes too volatile and there is not enough liquidity to close out everyone's positions in time.
Everything is seamless for the user, they don't even need know how leverage works, it's no different from trading on any other exchange.
You're right, in that situation you're not borrowing from others, you're borrowing from your own capital.
That said, it is a little different, because without margin you can ride out any position, but with margin you get margin called (liq'd) at increasingly smaller deviations.
Or in another view of it, it does the equivalent of turning low-return 1:1 odds into high return 100:1 odds which further attract problem gamblers.
Watch the rekt bot for a while and tell me that there aren't a lot of problem gamblers on mex.
It was an awful exchange. I waited a month for Canadian funds to be transferred out and it never happened, eventually covered back to Bitcoin and now it sits in a wallet somewhere.
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[ 3.5 ms ] story [ 54.9 ms ] threadCrypto is about decentralization and reliance on strong cryptography. There’s nothing in the definition that rejects regulation. It’s mostly people’s misconception that crypto is just a means to “fight the power”.
And it’s not even the currency itself that has to be regulated, it the entities that want to deal with it, like your shady exchange that has no transparency or accountability. They didn’t play with financial instruments after all.
As a corollary to that, you also have an army of people who are driven to madness because they didn't get to cash in, and seek to undermine crypto in the hopes of healing those gaping mental wounds. But it doesn't change the fact that the masses who drove the prices up wanted it to be a pyramid scheme in which they were the winners.
If the hoarders and traders disappeared, the volatility would be due to other more inexplicable market mechanics.
That’s a hard problem. Irreversible transactions look nice for the merchant, but as legal organizations can be taken to court that’s mostly valuable for scammers etc. Anonymity is a prized feature, but brings the legal hammer down as governments will actively fight such systems.
PS: Crypto investment is an obvious pyramid scheme mathematically as it does not generate profits internationally. Further it makes no difference to adoption if you buy or don’t buy a given coin. It can only move them from later investors to early investors.
It is no more akin to gambling than simple trading is akin to gambling. The only difference is that funds are also borrowed, which in this case means it was borrowed plus fraudulently obtained funds. And he was likely extra desperate, as most pyramid schemes usually are, taking extra risks because he really needed to make it whole again.
Gambling debt wasn't even enforcable in this country until recently because lending people money to gamble with is fundamentally wrong.
Everything is seamless for the user, they don't even need know how leverage works, it's no different from trading on any other exchange.
That said, it is a little different, because without margin you can ride out any position, but with margin you get margin called (liq'd) at increasingly smaller deviations.
Or in another view of it, it does the equivalent of turning low-return 1:1 odds into high return 100:1 odds which further attract problem gamblers.
Watch the rekt bot for a while and tell me that there aren't a lot of problem gamblers on mex.