Considering cryptocurrency seemed to originally be a rejection of the traditional banking system, wherein you put your savings in someone else's hands, and instead having your own secured "wallet" that is always securely in your own hands... it always confuses me a little bit at how quickly the crypto space lunged headlong into essentially recreating banks and once again having large numbers of people put their savings in someone else's hands instead of having personal control over their finance.
Are hardware wallets that difficult and/or expensive? Or am I missing something that crypto exchanges offer that I am fundamentally misunderstanding? Because it seems like this keeps happening with these exchanges and that these were the kind of things crypto was supposed to be preventing, not doing.
> Are hardware wallets that difficult and/or expensive?
The entire thing is obscenely difficult and completely inscrutable for the average human. The number of ways a naïve participant can lose their entire balance is staggering. Even the notion of a hardware wallet is something that 90%+ of people holding cryptocurrencies will either never hear about, never understand, or never opt to use due to actual or perceived complexity.
The average person is simply not qualified to hold onto substantial (to themselves) amounts of cryptocurrencies in any form. And as it turns out, all of the available evidence seems to indicate that most exchanges aren't qualified to do so either.
I’m waiting for the inevitable wave of social media posts, etc from all of the people who will lose access to their wallets, have them hacked somehow, etc. I’m sure centralized exchanges are already being flooded with customer support issues from people who don’t fully grasp what self-custody is and the risk it entails.
Most people aren’t qualified or capable to build a fortress with medieval-castle or Fort Knox levels of security and process for their crypto wallets but that’s more equivalent than not of what’s required to properly secure them and maintain access over time.
The general population hasn’t experienced “you’re completely on your own” for nearly anything in at least a couple of generations - and for good reason because it’s absurd.
I gave my brother a Trezor and with approximately $1.5k USD worth of bitcoin on it as repayment for money he lent me. I'm fairly certain he hasn't touched it and has lost the pin/seed.
I think I have his seed written down somewhere, I certainly gave him a written copy when I gave him the trezor, but if I can't find it his BTC will be lost.
No. Most of these systems use enough "bits" in the key or whatever that brute forcing it would basically require hiring the entirety of AWS for a hundred years and also winning the lottery in terms of luck.
Raw number crunching power of silicon would need to double like 5 to 10 times before it's even a thought in the NSAs mind, and I am in the camp of that never happening. There will never be enough computing power for cheap enough to crack a wallet holding $1500 in bitcoin, unless quantum computing literally magics up a solution, which might never happen, even in theory.
1) the seed for the private key - this is infeasible to brute-force just like you can't brute-force a private key directly
2) the authentication credential to the hardware wallet - the key space is small enough that brute forcing it would normally be easy, except the whole purpose of a hardware wallet is to limit the amount of attempts.
The former option is infeasible, the latter has a slim chance if some vulnerability in the hardware wallet was discovered in the future.
An interesting evolution in this space would be when hackers will find a way to "inject" malicious code in the images being installed on the hardware wallets, at the source. Getting access to production networks and/or private github/other version control internal systems, associated with these devices, may prove to be easier than attempting to brute-force keys.
> The entire thing is obscenely difficult and completely inscrutable for the average human.
For a particular kind of perspective (which I don't subscribe to), that could almost be seen as a feature rather than a bug.
The scenario is the one cryptocurrency has actually replaced fiat currencies but the only people who can secure their assets are those with the sophistication and power (basically, weapons and private armies) to maintain the required opsec.
And then we've basically recreated golden treasure hordes and the warlords who own them.
Agree with everything. I will only add that all that complexity is there by design. The design wants to get you to feel like you understand it without you truly understanding it.
Not "obscenely difficult and completely inscrutable". This is a massive exaggeration. Hardware wallets are on par with changing a car tire, filing a tax return, installing an operation system or navigating a foreign subway. Any competent person who can follow directions will be fine.
In addition to opsec and "daily usage" there is a dimension of physical safety that requires people to keep the wallet and the seed safe in different places.
In the worst case of a fire or a flood you don't want to discover that all your life savings are gone as well because you stored them together.
Physical security of valuable, small and fragile items is a proven hard problem for regular people. It's one of the reasons banks were created.
Having been in this space since back when a bitcoin was a fraction of a dollar...
"Rejection of the traditional banking system" was mostly a symptom of "Doing things the traditional system would label 'illegal'".
In which case the upsides of crypto are clear - You can pass money around online without regulation.
And the downsides are WELL understood - the "system" does not have your back if/when things go wrong. Just like most black market trades.
The problem happened when the "finance" crowd started seeing bitcoin's value increase at a large rate (and particularly how little media coverage was needed to temporarily spike the value), and essentially turned the entire thing into a ponzi scheme.
They weren't interested in using it as anything other than a pump and dump investment vehicle, and its lack of regulation was a magnet for the worst sort of folks.
As a tool for online dark exchanges, or other government forbidden actives (ex: fleeing the country with ill-gotten gains, or holding businesses hostage with malware) - there is a small niche for digital currency. I'm pretty well convinced there is NO other use case where your national currency does not serve as a better alternative.
Even the semi-plausible use cases (ex: preserve value during times of high inflation) have proven to be utterly meaningless if you're holding US dollars, and the vast majority of cases you would be better holding onto shiny metal instead.
> and the vast majority of cases you would be better holding onto shiny metal instead.
Please explain this a bit more, because historically Bitcoin has seen much better returns than precious metals. What are some of the cases where precious metals have outperformed crypto?
The entire period where we've been experiencing high inflation.
Ex:
Gold went into 2021 at $1,798.89 and is now $1,874.00 (per/oz)
Bitcoin went into 2021 at $40,257 and is now $17,536
Gold passed the "inflation hedge" check, in that it's returning higher yields than both your investment accounts (if you invested in the general US stock market as a whole) and your available savings accounts rates. It's certainly worse than an i-bond, but most everything is in this case, and those are capped at 10k.
Crypto flunked with flying fucking colors. Turns out it's a shite inflation hedge despite that being a common refrain from those who peddled this snake oil bullshit.
most people weren't in it for the cryptocurrency, but the ability to convert it back and forth to actual dollars/euros/whatever. The cryptocurrency itself was just a means, not an end.
On top of difficulty, hardware wallets and lack of centralized exchanges is undesired for majority of the crypto players.
Why? Because, no matter how you spin it, crypto of last few years is get rich scheme. And having centralized entities enable all form of fraud - from super basic ones, like FTX just openly stealing people's funds, through market manipulations all the way to more subtle and complex forms of scam.
Running your own wallet and such is simply beyond what most people are capable of. Hence they outsource it to an exchange.
But the main motivation for people buying into these coins is to speculate on them, having watched the bitcoin billionaires bloom.
And while I think there's a strong argument that "they should have known these crazy returns were too good to be true" I also think you have to take seriously just how hugely this stuff has been pushed in media, and by huge traditional financial player as well. When all the apparent authorities are saying "this is awesome join us" it's just inevitable that a broad swath of people will take that at face value.
It turns out that securing a cryptographic key is super hard especially when the payout is huge.
Luke Dash Jr is an original Bitcoin core developer who understands Bitcoin deeply (he proposed the idea for the practical implementation for segregated witness), and he was able to lose 200 BTC (all his money) just recently by a hack.
Orwellian doublespeak of an Exchange that goes broke when everyone uses it like an Exchange instead of a Broker or Bank?
Perhaps there's a commodities market or something that requires traders to pump assets into accounts that sit on the exchange itself and would somehow have direct fluidity problems if they stopped, but it seems like the wrong term to me.
That's not ironic, it's just a statement somewhat related to the current situation. Irony would be something like a fire station burning down.
And why are you adding in then editing out statements like "thanks for the downvotes?" We can see your edits, if you want to add that phrase, keep it in there, otherwise, keep it out.
I could maybe understand the argument that fractional reserve banking is fraud, if it weren't for the fact that deposits are legally required to be insured by the bank.
In 1974, FDIC insurance backed up to $100,000, or almost three median new houses sold that year. Now, it is $250,000, or just a little over half the median price of a new home. https://fred.stlouisfed.org/series/MSPNHSUS
The value of that insurance has gone down significantly over time because of inflation.
That does not actually indicate anything about the insurance limit not matching inflation because housing prices are not necessarily flat. In fact they are not. However, the fdic insurance limit is indeed worth less now, but most people don’t even have $5,000 in the bank. The mean bank account balance is $40,000 according to a quick Google search.
This is all true, however I don't think very many people keep $100,000, let alone $250,000 in their bank account. There are far more lucrative places to park your money.
The main difference is that they haven't (yet) secured a banking license. But they were not far from it, FTX bought a U.S. bank that it probably wanted to use for legal fractional reserve.
it's "Assets Under Management" and every bank has this number as a KPI, which directly affects their top+bottom line. So it is to "lose" but it's not the same.
Customer deposits are liabilities, but if the exchange acts as one would expect, each $ of liabilities has a corresponding $ of assets (ideally, in a segregated account, so that they're not considered the company's asset in the case of a default). But one may always doubt whether things are as they should, afaik Binance has never had a full audit report (not just proof-of-reserves or similar).
Banks work a bit differently, btw, they should also have more $ assets than liabilities, but there's generally no direct 1:1 link as described above.
> Banks work a bit differently, btw, they should also have more $ assets than liabilities, but there's generally no direct 1:1 link as described above.
The total difference between assets and liabilities is the common stock (equity). This also shows why it's a very bad thing when the stock of a bank goes to zero, it means some liability will not be covered and thus the bank can be considered bankrupt. I'm simplifying here.
From this point we can take a history tour to the 2008 meltdown, when we had this situation everywhere: bank A would short the common stock bank B because bank A had a lot of assets in bank B (which show up in bank B as liabilities). Bank B did the same thing to bank A for the same reasons. This is not as stupid as it sounds, because banks are not the only players in capital markets, using those shorts they essentially spread the default risk all over the equity markets. While this whole clusterfuck of nobody-trusts-nobody is going on the SEC comes out all of a sudden and bans the short sale of bank stocks, because shorting is evil or something. Imagine how much that made things worse after the only way to hedge entire banks going under was suddenly removed.
I think you're confusing market capitalization and (accounting) equity here. What the stock price does does not directly affect the balance sheet (where you see the equity).
Not quite. Your deposits are usually redeemable on a short notice, while most of bank's assets are usually loans and mortgages and other long term debt.
> ideally, in a segregated account, so that they're not considered the company's asset in the case of a default
Correct, they should be parked in an escrow account on which the exchange has limited control. Also, such accounts are monitored by third party auditors, banks as well as government regulators. At least that’s how it’s in India.
> Is the money in my checking account included in the assets for my bank?
The money in their vault is an asset, the balance in your account is a liability. When you deposit money, it creates both, though the asset by design doesn’t sit there for long in that form.
Funny how the replies are full of people explaining how bank deposits work. An exchange is not a bank. They're a custodian that holds something on the customer's behalf and facilitates trades. That crypto "exchanges" act like banks, but without any of the banking regulation we spent the last 100 years learning the hard way is why they keep failing.
My stock broker and the NYSE can't secretly sell my shares and loan out the proceeds. They just hold the stock.
That Crypto "exchanges" think of deposits as assets makes it clear they're more like a hedge fund than a bank or exchange.
The hard distinctions between different types of financial institutions and their services, and most particularly the thing that makes every thing that holds money or other valuables on your behalf not effectively, like a (very sketchy) bank, are mostly a product of regulation.
> My stock broker and the NYSE can't secretly sell my shares and loan out the proceeds. They just hold the stock.
Not in the business so I could be wrong but I believe they can loan shares to short sellers to sell and pocket the interest but they are also regulated which turns out is important.
Lol until like FTX they get caught overleveraged because of a panic and those "assets" go to zero because their creditors get preferred for repayment over "those with assets" in binance.
Binance would be losing 'trust' if they were moving their 'assets' from binance to another exchange. this seems to be part of the global de-investment though
I'd prefer "Binance processes $12B in withdrawals in under 60 days". It's newsworthy both because total assets invested in crypto is falling, and because Binance is still processing withdrawals successfully after over 15% of AUM were withdrawn.
Sure, but - Binance will successfully be able to clear their liabilities right up until the first person tries to withdraw a single dollar and it fails because they don't have any left. At which point it will probably go to zero in an unrecoverable way.
One of the big issues with Binance (as I understand it, as a mere tourist) is that /nobody knows/ how much actual money they have. They might have $12B + $1, or they might have $60B, or whatever. There is a lot of faith, backed by little evidence, that they have enough actual capital to cover their liabilities.
You have zero visibility into the operations of traditional private businesses. With Binance, you can at least view their wallet balances, in the 10s of billions. You can also estimate their annual revenues. I would recommend doing both. You may find it illuminating. Really, we should all try similar research before commenting on crypto. It would make for much more intelligent discussions.
And I don’t mean to pick on you. But too often I read comments here like: “I don’t know much about crypto, but I’m confident that … (insert choice assertion)”.
> You have zero visibility into the operations of traditional private businesses.
If you need visibility into a private business for commercial reasons before doing business with them, there are ways to do it, including using auditors in the same way Binance did [before their auditors abandoned them for reasons].
Companies that engage private companies do this kind of thing all the time as part of due diligence (e.g. engaging a vendor on a critical project & ensuring they're going to be able to deliver).
> With Binance, you can at least view their wallet balances, in the 10s of billions.
I mean, you're describing the problem! Their wallet balances are irrelevant - it's their bank balances that we're interested in.
I can create a wallet with any arbitrary cryptoasset of my own invention & put "10s of billions" of coins in there and claim they're backed 1:1 with some real currency.
Until I can provide reliable evidence that I actually have the currency, it would be insane to believe me, right?
And this is the situation Binance is in - the state of their actual real-world finances is, and has been for as long as I can remember, questionable. (Arguably, I'd say it's worse now that Mazars have dropped them!)
It's neat they've managed to be liquid for the last few months during this latest crytopocalypse. But I stand by my first comment - they'll have the appearance of being completely fine, right up until the point that they're not. Like every single other exchange.
> And I don’t mean to pick on you.
None taken. I described myself as a 'mere tourist' because I hold no cryptoassets (except for some Stellar I got more or less accidentally in the Keybase drop), but I have been following the space since the release of the Bitcoin whitepaper.
> I mean, you're describing the problem! Their wallet balances are irrelevant - it's their bank balances that we're interested in.
No one holds real world assets on Binance. Why would Binance's bank balance be more relevant than the crypto holdings in their wallets?
> I can create a wallet with any arbitrary cryptoasset of my own invention & put "10s of billions" of coins in there and claim they're backed 1:1 with some real currency.
> Until I can provide reliable evidence that I actually have the currency, it would be insane to believe me, right?
> And this is the situation Binance is in - the state of their actual real-world finances is, and has been for as long as I can remember, questionable. (Arguably, I'd say it's worse now that Mazars have dropped them!)
You keep making these factually incorrect statements, speaking from a position of ignorance yet asserting them as fact. None of your statements here represent the situation with Binance.
Your comment triggered a question in my mind and searching isn't helping find a convincing answer. Does anyone know the size of the largest privately-owned retail bank operating in the world? I believe CTBC Bank (Taiwan) is privately-held, but I don't know of any others.
Having worked for a few banks in Australia, I took it as axiomatic that banks were publicly listed companies. But who knows? Maybe not.
I'd throw Fidelity into that category but I don't know the assets under mgmgt., Just they are huge, private, and more and more offer retail like online banking with some physical locations that are more investment-advisor oriented.
Notably, Fidelity shunts virtually all customer deposits off into separate institutions: FDIC member banks (Fidelity doesn't own one) or Fidelity money market funds (legally separate companies who custody their assets elsewhere). It's technically possible to deposit cash with Fidelity itself (FCASH[1]), but (a) that option is not the default and (b) the interest paid is significantly lower.
One client withdrew his funds long before Madoff was found out. With respect to this one customer, Madoff's service "successfully cleared $5.1 billion in liablities".
Eventually Picower (his widow) had to forfeit his gains from Madoff's account where all customer deposits were pooled, because let's be honest, it was not Picower's money.
Perhaps not all, but certainly some. Several have already returned funds, others are making arrangements. If not returned then equal donations will be made to charities.
Why does the article keep calling people "Binance investors"? These are not investors in Binance, they are traders trading on a cryptocurrency exchange and withdrawing deposits.
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[ 4.9 ms ] story [ 184 ms ] threadAre hardware wallets that difficult and/or expensive? Or am I missing something that crypto exchanges offer that I am fundamentally misunderstanding? Because it seems like this keeps happening with these exchanges and that these were the kind of things crypto was supposed to be preventing, not doing.
The entire thing is obscenely difficult and completely inscrutable for the average human. The number of ways a naïve participant can lose their entire balance is staggering. Even the notion of a hardware wallet is something that 90%+ of people holding cryptocurrencies will either never hear about, never understand, or never opt to use due to actual or perceived complexity.
The average person is simply not qualified to hold onto substantial (to themselves) amounts of cryptocurrencies in any form. And as it turns out, all of the available evidence seems to indicate that most exchanges aren't qualified to do so either.
I’m waiting for the inevitable wave of social media posts, etc from all of the people who will lose access to their wallets, have them hacked somehow, etc. I’m sure centralized exchanges are already being flooded with customer support issues from people who don’t fully grasp what self-custody is and the risk it entails.
Most people aren’t qualified or capable to build a fortress with medieval-castle or Fort Knox levels of security and process for their crypto wallets but that’s more equivalent than not of what’s required to properly secure them and maintain access over time.
The general population hasn’t experienced “you’re completely on your own” for nearly anything in at least a couple of generations - and for good reason because it’s absurd.
I think I have his seed written down somewhere, I certainly gave him a written copy when I gave him the trezor, but if I can't find it his BTC will be lost.
Raw number crunching power of silicon would need to double like 5 to 10 times before it's even a thought in the NSAs mind, and I am in the camp of that never happening. There will never be enough computing power for cheap enough to crack a wallet holding $1500 in bitcoin, unless quantum computing literally magics up a solution, which might never happen, even in theory.
1) the seed for the private key - this is infeasible to brute-force just like you can't brute-force a private key directly
2) the authentication credential to the hardware wallet - the key space is small enough that brute forcing it would normally be easy, except the whole purpose of a hardware wallet is to limit the amount of attempts.
The former option is infeasible, the latter has a slim chance if some vulnerability in the hardware wallet was discovered in the future.
For a particular kind of perspective (which I don't subscribe to), that could almost be seen as a feature rather than a bug.
The scenario is the one cryptocurrency has actually replaced fiat currencies but the only people who can secure their assets are those with the sophistication and power (basically, weapons and private armies) to maintain the required opsec.
And then we've basically recreated golden treasure hordes and the warlords who own them.
Think higher of your fellow man.
In addition to opsec and "daily usage" there is a dimension of physical safety that requires people to keep the wallet and the seed safe in different places.
In the worst case of a fire or a flood you don't want to discover that all your life savings are gone as well because you stored them together.
Physical security of valuable, small and fragile items is a proven hard problem for regular people. It's one of the reasons banks were created.
"Rejection of the traditional banking system" was mostly a symptom of "Doing things the traditional system would label 'illegal'".
In which case the upsides of crypto are clear - You can pass money around online without regulation.
And the downsides are WELL understood - the "system" does not have your back if/when things go wrong. Just like most black market trades.
The problem happened when the "finance" crowd started seeing bitcoin's value increase at a large rate (and particularly how little media coverage was needed to temporarily spike the value), and essentially turned the entire thing into a ponzi scheme.
They weren't interested in using it as anything other than a pump and dump investment vehicle, and its lack of regulation was a magnet for the worst sort of folks.
As a tool for online dark exchanges, or other government forbidden actives (ex: fleeing the country with ill-gotten gains, or holding businesses hostage with malware) - there is a small niche for digital currency. I'm pretty well convinced there is NO other use case where your national currency does not serve as a better alternative.
Even the semi-plausible use cases (ex: preserve value during times of high inflation) have proven to be utterly meaningless if you're holding US dollars, and the vast majority of cases you would be better holding onto shiny metal instead.
Please explain this a bit more, because historically Bitcoin has seen much better returns than precious metals. What are some of the cases where precious metals have outperformed crypto?
The entire period where we've been experiencing high inflation.
Ex:
Gold went into 2021 at $1,798.89 and is now $1,874.00 (per/oz)
Bitcoin went into 2021 at $40,257 and is now $17,536
Gold passed the "inflation hedge" check, in that it's returning higher yields than both your investment accounts (if you invested in the general US stock market as a whole) and your available savings accounts rates. It's certainly worse than an i-bond, but most everything is in this case, and those are capped at 10k.
Crypto flunked with flying fucking colors. Turns out it's a shite inflation hedge despite that being a common refrain from those who peddled this snake oil bullshit.
Why? Because, no matter how you spin it, crypto of last few years is get rich scheme. And having centralized entities enable all form of fraud - from super basic ones, like FTX just openly stealing people's funds, through market manipulations all the way to more subtle and complex forms of scam.
But the main motivation for people buying into these coins is to speculate on them, having watched the bitcoin billionaires bloom.
And while I think there's a strong argument that "they should have known these crazy returns were too good to be true" I also think you have to take seriously just how hugely this stuff has been pushed in media, and by huge traditional financial player as well. When all the apparent authorities are saying "this is awesome join us" it's just inevitable that a broad swath of people will take that at face value.
Luke Dash Jr is an original Bitcoin core developer who understands Bitcoin deeply (he proposed the idea for the practical implementation for segregated witness), and he was able to lose 200 BTC (all his money) just recently by a hack.
note sure if the irony was intentional or not - but made me laugh.
Perhaps there's a commodities market or something that requires traders to pump assets into accounts that sit on the exchange itself and would somehow have direct fluidity problems if they stopped, but it seems like the wrong term to me.
Are they Binance's assets or the users assets?
I think people just don't know what the word irony means anymore.
And don't make assumptions about what i know or don't know. very arrogant.
And why are you adding in then editing out statements like "thanks for the downvotes?" We can see your edits, if you want to add that phrase, keep it in there, otherwise, keep it out.
The value of that insurance has gone down significantly over time because of inflation.
Banks work a bit differently, btw, they should also have more $ assets than liabilities, but there's generally no direct 1:1 link as described above.
The total difference between assets and liabilities is the common stock (equity). This also shows why it's a very bad thing when the stock of a bank goes to zero, it means some liability will not be covered and thus the bank can be considered bankrupt. I'm simplifying here.
From this point we can take a history tour to the 2008 meltdown, when we had this situation everywhere: bank A would short the common stock bank B because bank A had a lot of assets in bank B (which show up in bank B as liabilities). Bank B did the same thing to bank A for the same reasons. This is not as stupid as it sounds, because banks are not the only players in capital markets, using those shorts they essentially spread the default risk all over the equity markets. While this whole clusterfuck of nobody-trusts-nobody is going on the SEC comes out all of a sudden and bans the short sale of bank stocks, because shorting is evil or something. Imagine how much that made things worse after the only way to hedge entire banks going under was suddenly removed.
yes there is, its accounting.
How are we not supposed to interpret their lack of doing so as “hiding something ugly”?
Correct, they should be parked in an escrow account on which the exchange has limited control. Also, such accounts are monitored by third party auditors, banks as well as government regulators. At least that’s how it’s in India.
The assets are then used to create revenue and anything that has to be paid to the depositor are expenses.
When the deposit is withdrawn, the asset and the liability both decrease.
The full term is Assets Under Management so it's semi-understandable, but yes definitely not correct.
It's just a custodial wallet solution until a position is opened by the customer and even then Binance doesnt trade anything on their behalf.
The money in their vault is an asset, the balance in your account is a liability. When you deposit money, it creates both, though the asset by design doesn’t sit there for long in that form.
My stock broker and the NYSE can't secretly sell my shares and loan out the proceeds. They just hold the stock.
That Crypto "exchanges" think of deposits as assets makes it clear they're more like a hedge fund than a bank or exchange.
The hard distinctions between different types of financial institutions and their services, and most particularly the thing that makes every thing that holds money or other valuables on your behalf not effectively, like a (very sketchy) bank, are mostly a product of regulation.
Not in the business so I could be wrong but I believe they can loan shares to short sellers to sell and pocket the interest but they are also regulated which turns out is important.
Clickbait bullshit.
Edit: The stock broker that went bankrupt in 2020?
One of the big issues with Binance (as I understand it, as a mere tourist) is that /nobody knows/ how much actual money they have. They might have $12B + $1, or they might have $60B, or whatever. There is a lot of faith, backed by little evidence, that they have enough actual capital to cover their liabilities.
And I don’t mean to pick on you. But too often I read comments here like: “I don’t know much about crypto, but I’m confident that … (insert choice assertion)”.
If you need visibility into a private business for commercial reasons before doing business with them, there are ways to do it, including using auditors in the same way Binance did [before their auditors abandoned them for reasons].
Companies that engage private companies do this kind of thing all the time as part of due diligence (e.g. engaging a vendor on a critical project & ensuring they're going to be able to deliver).
> With Binance, you can at least view their wallet balances, in the 10s of billions.
I mean, you're describing the problem! Their wallet balances are irrelevant - it's their bank balances that we're interested in.
I can create a wallet with any arbitrary cryptoasset of my own invention & put "10s of billions" of coins in there and claim they're backed 1:1 with some real currency.
Until I can provide reliable evidence that I actually have the currency, it would be insane to believe me, right?
And this is the situation Binance is in - the state of their actual real-world finances is, and has been for as long as I can remember, questionable. (Arguably, I'd say it's worse now that Mazars have dropped them!)
It's neat they've managed to be liquid for the last few months during this latest crytopocalypse. But I stand by my first comment - they'll have the appearance of being completely fine, right up until the point that they're not. Like every single other exchange.
> And I don’t mean to pick on you.
None taken. I described myself as a 'mere tourist' because I hold no cryptoassets (except for some Stellar I got more or less accidentally in the Keybase drop), but I have been following the space since the release of the Bitcoin whitepaper.
No one holds real world assets on Binance. Why would Binance's bank balance be more relevant than the crypto holdings in their wallets?
> I can create a wallet with any arbitrary cryptoasset of my own invention & put "10s of billions" of coins in there and claim they're backed 1:1 with some real currency.
> Until I can provide reliable evidence that I actually have the currency, it would be insane to believe me, right?
> And this is the situation Binance is in - the state of their actual real-world finances is, and has been for as long as I can remember, questionable. (Arguably, I'd say it's worse now that Mazars have dropped them!)
You keep making these factually incorrect statements, speaking from a position of ignorance yet asserting them as fact. None of your statements here represent the situation with Binance.
Here, I'll help you get started on some research: https://twitter.com/Dynamo_Patrick/status/160279172319278694...
Please do some basic research next time. Then hopefully we can have intelligent and intellectually honest discussions on crypto here on HN.
Having worked for a few banks in Australia, I took it as axiomatic that banks were publicly listed companies. But who knows? Maybe not.
[1]: https://www.fidelity.com/trading/faqs-about-account#faq_abou...
One client withdrew his funds long before Madoff was found out. With respect to this one customer, Madoff's service "successfully cleared $5.1 billion in liablities".
https://www.propublica.org/article/madoff-client-jeffry-pico...
This is not where the story ends though.
Eventually Picower (his widow) had to forfeit his gains from Madoff's account where all customer deposits were pooled, because let's be honest, it was not Picower's money.
https://archive.boston.com/business/articles/2010/12/18/pico...
It is only a matter of time with Binance. The story is still unfolding.
https://news.yahoo.com/politicians-giving-back-donations-dis...
https://www.nbcnews.com/politics/2022-election/candidates-ba...
https://www.politico.com/news/2022/11/15/lawmakers-return-ft...
https://www.forbes.com/sites/jayadkisson/2022/12/23/why-the-...
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