Nothing to see here. This is a reputed and transparent financial institution. The government is just jealous of having competition.../s
Binance has no known headquarters or transparent books. If you keep money there and you lose it, it's your fault. The same applies to Tether. You're only betting on trust instead of regulations, which never bodes well in the long run.
As a side note, Binance was founded in 2017 and grew to process hundreds of billions of dollars in transactions in a few years. In a hypothetical world as the CEO of such company, how would I even handle such growth without my mind exploding?
Ain't it funny how a system supposedly designed to prevent a need to trust anyone only functions to it's current barely functional level if you trust a giant, centralized, opaque organization that has on the public record lied in the past about pretty serious things?
Bitcoin functions perfectly without Binance or any centralized exchange. Centralized exchanges are necessary as interface between the centralized world of traditional finance and the decentralized world of Bitcoin.
I work on the theory that any crypto firm is a gang of thieves run by charlatans.
However, the regulated banks also appear to be gangs of thieves run by charlatans. Except everyone is forced to signal, financially, that they have confidence in firms when they turn out to be insolvent. And the people involved with crypto can't be forced to bail out Binance unless they trust them with their funds. I have a lot more faith in the value of my Monero than the USD - which I say for rhetorical effect since I don't trust the USD enough to own any.
Silicon Valley Bank has detoothed a lot of criticism of the crypto industry, and it hasn't even been the biggest collapse this year. Then there is the inflation problem that that fiat currencies have which is on display right now.
> I have a lot more faith in the value of my Monero than the USD
I've heard people say this about various cryptocurrencies over the last few years and I just cannot take the statement seriously. It just always comes across as a deliberately exaggeration of belief in a cryptocurrency in an attempt to persuade others to get in on it. Not only that, I cannot imagine a world where USD collapses and somehow things like Monero or Ethereum stick around and continue to work just fine.
History is littered with global reserve currencies outright failing or losing its global reserve status. USD failing wouldn't surprise anyone looking at financial systems through a historical lens. Years after it happens (and I don't think anyone truly believes USD is the last global reserve currency humankind will see) it will be painfully obvious to everyone how unsustainable our inflation driven economy is.
Ok but the last couple of years is littered with crypto projects outright failing, being rugpulled, found out to be scams, taken down by bumbling idiot CEOs...
So looking at the millenia that currencies have existed we can say that it's not impossible that a currency fails. Looking at cryptocurrencies it's extremely possible that any given crypto project fails.
most crypto projects are independent from one another. Most all of these coin failures happen as tokens on typically the ethereum blockchain, yet ethereum still stands strong as well as many others. There's no argument from me that the vast majority of crypto projects will fail and I sometimes wonder why people portray that as a bad thing. In a free market where pure economic incentives choose the winners and losers, most everything fails. That is what a healthy, dynamic economy looks like. A healthy economy wants many participants trying and only a select few who are positioned at the top of any category should continue to succeed as they are the most well equipped to provide goods or services.
tl;dr; numerous failures is a positive economic signal
Ahhhh you nearly said the line - "this is actually good for bitcoin!"
Alright look the only outcome here for me is good. Either cryptocurrencies melt away into nothing and you guys all go off and find a new Thing. Or Cryptocurrencies surprise everyone and somehow a decade after achieving nothing other than hype they finally find a thing they are useful at, and I can use them for that thing. For now I'm going to continue to treat them all like they're means of buying and selling Ape JPEGs until they can do something else though.
The question isn't whether or not the USD can fail. Of course it can. The question to ask is whether Monero or any other given cryptocurrency will fare better than the USD in the event that it does collapse. That seems much less clear at this point in time.
As a thought experiment: if USD were to fail, yet other world currencies stayed afloat, why would anybody holding non-custodial crypto flock to a dying currency? It’s not entirely unreasonable to predict that “crypto” might outlast a central currency, given the ease at which it can span geographic and state borders.
> if USD were to fail, yet other world currencies stayed afloat,
This "thought experiment" amounts to "suppose I'm right; then I'd be right wouldn't I? Checkmate."
The entire question here hinges on whether there could be scenario where the USD— and only the USD— collapses, without causing so much chaos that cryptocurrencies also become functionally useless. I would argue there is no such plausible scenario.
Sure, if the entire world economy collapses and we go back to the dark ages, crypto (and the internet in general) will be functionally useless. It seems like a given.
I am imagining a scenario where USD fails, but some other state currencies (and the internet) continue to exist.
Ok then in that case everyone flocks to the other reserve currencies for all normal goods and services and crypto remains the primary means of exchange on the Ape JPEG market
> History is littered with global reserve currencies outright failing or losing its global reserve status.
No, its not.
Heck, history isn't even littered with global reserve currencies; there's maybe three total—the Spanish Dollar, British Pound Sterling, and US Dollar—and the Pound Sterling is iffy, given the emergence of the gold standard.
(Regional reserve currencies existed previously, but nothing approximating global.)
I don't see anyone arguing that there have been fewer than 6 world reserve currencies in recorded history and plenty that say more. No idea where you're coming up with at most three.
> I don't see anyone arguing that there have been fewer than 6 world reserve currencies in recorded history and plenty that say more
Name six and the time period during which each was the global reserve currency. (Not that six would be enough for history to be “littered with” examples anyway, but...)
Well firstly global in this context just means that most financial authorities held the currency as a reserve, which for a lot of history I believe mostly only european countries had centralized financial authorities. So we're talking about european reserves for much of history. With that said:
florentine florin
venetian ducat
portugese real
spanish real
dutch guilder
french livre
british sterling
USD
to name 8
everyone is capable of deciding if changing reserve currencies every ~100 years is "littered" or not, but it easily passes as being commonplace in my opinion when you're talking about a millennia of history.
Happy to give a response if you'd like to argue your point, but otherwise this just seems like a snarky comment for sake of being snarky on the internet.
My point is really well established. Many real currencies, some failed. Many cryptocurrencies, most failed. The "snark" appears to be required to actually drive the point home. I don't care if you want to argue your point.
I guess it comes down to how far you're willing to stretch "like" there. Progress is glacial, but crypto is becoming more useful. Meanwhile, traditional finance appears to be getting worse. Eventually those lines will cross. Although I doubt the cryto's of that time will look very much like what we have today.
How is it becoming more useful? Arguably it is more difficult to use for buying selling, plus if I spend it I'm taxed as if I sold an equity.
It's value is pegged to the dollar so we can see massive shifts in its "value" constantly happening.
There are almost an infinite number of cryptocurrencies and new ones still being created. Each is a different currency, so how should we determine which of these fake currencies actually have value and which don't?
I mean that the set of systems that you can build which require neither custodial trust nor have single points of failure is increasing.
To name a few instances of this: This is old news, but I remember when zcash introduced halo and got rid of trusted setup--that's a legit increase in what's possible. NFT's as ownership of digital assets is maybe a silly application of the tech, but the sort of uniqueness constraint that they enforce is useful in centralized databases and I expect it'll find a similar niche in the distributed systems of the future. TCL's that use token price to encourage curation appear to be a non-starter, but coupled with a web of trust I think we can use the same concept to have consensus on a wide variety of useful things.
Their use as money? Sure, wildly inconvenient. But like... duh. Emulated systems are slower than ones running on bare metal because you have to embrace the constraints of both systems--it's the same with the use of cryptocurrencies within the existing financial system.
The point was never to make something that's just as good as traditional money--why bother? The point is to make traditional money obsolete in favor of something else. Something whose rules matter not because the guy who wrote them own has a gun, but because people consent to participate based on their merits.
> how should we determine which of these fake currencies actually have value and which don't?
By their side effects. If you value the endless consumption of electricity and zero sum games, you should value bitcoin. If you value politicians playing chicken over the debt ceiling, you should value USD. As it stands, the options are all pretty bad, but the ability to craft new ones is getting better and the cancer that our current one has is getting worse, so eventually there will be something worth switching to.
There's a cousin post where I explain how crypto is becoming more useful. As for traditional finance becoming worse...
Suppose somebody approached you in the grocery store and offered to buy your shoes. I assume you have a price, right? I'd walk home from the grocery store shoeless for $100.
Why do we participate in a system which empowers this guy? What about the abstraction he's handing out makes us willing to exchange it for something with less abstract value (there's broken glass on the way home, I'd be taking a risk)? The shallow response is that we can later exchange the abstraction for, for instance, a nicer pair of shoes. But that'll work with anything, so far as somebody else is likely to accept the trade down the line. We could use pebbles or bottlecaps or dogecoin or whatever.
But why USD in particular? What is it about the US government's (or if you prefer, the banks') behavior that entitles them to issue the tokens that we use for bullying people into giving up their shoes (or you know, whatever other economic activity we chose to engage in).
Do you dispute that trust in the government and the banks is steadily declining?
They're fundamentally harder to improve than to erode. It's why nature came up with reproduction: eventually the parasites take over and you have to start fresh. It's why there are very few companies around today that were also around 100 years ago. Entropy wins, it's just what happens to centralized systems over time.
Or to put it less abstractly: We've got banks collapsing and politicians playing chicken over the debt ceiling. Does that not threaten the idea that we can walk home with that $100 and buy a nicer pair of shoes with it? Wouldn't we be better off with a system that was less susceptible to the kind of cancer that ours has?
I started with the idea that I'd question whether the guy got his money by doing more harm than good, USD being issued based on whether a loan is expected to be profitable, not whether it benefits the people who are expected to accept it. Maybe it's in your best interest to not blindly support whatever the loan was for by accepting his money. Maybe it was for mining that's poisoning your drinking water. That failure to align incentives (i.e. implicit global fungibility) is the specific deficiency that I see killing USD and it's equivalents.
But specifics aren't necessary for the broader argument: Power corrupts, and enough corruption ends the tenure of the powerful. The details of how that is playing out for USD aren't especially relevant.
Your example was clumsy because you have to construct elaborate weird scenarios that don't ever happen for crypto to make sense. Guys have to come up to you in the street and buy your shoes. Entire economies and payment systems have to be assumed to have collapsed. It is a fantasy.
Turns out, nothing needed a solution to the damn byzantine generals problem, and business actually prefers to have trusting relationships with their counter-parties and trust in a system that exists to mediate any breaking of that trust.
Weird I just checked and every single bill I have I can only pay in CZK. Guess this revolution must have slipped by us here in the technological backwaters of Central Europe. Looking forward to reading about how people in the USA can pay their electricity, gas, groceries, internet, mortgage, insurance, tuition, taxes or anything else using XMR though. This sounds like a gamechanger!
What about this statement is so hard to take seriously? There are a variety of concerns one could have about either fiat/fiscal policy or cryptocurrency development/deployment/stewardship.
One is a highly centralized system, the other is relatively decentralized. They have different threat models, strengths, and weaknesses. I would hazard a guess that your demographic profile is similar to the members of the current cabal that try to control USD's supply and value but to those who don't have similar priorities, crypto offers a different set of values than the 'traditional' finance system. The two aren't mutually exclusive, and the person you're replying to didn't say either would be 'just fine' without the other...
Not sure why you're proud of your inability to defeat a straw man!
I thought my comment was pretty self-explanatory but I'll restate it. I don't believe people when they make talk about how their particular favourite flavour of crypto is better/stabler/stronger than reserve currencies like USD, GBP, EUR, CHF etc. My feeling is that they're either just trying to convince you to get on board or perhaps even trying to convince themselves.
> Not sure why you're proud of your inability to defeat a straw man!
There's no scalar measurement for stability, quality, or strength so there's no direct comparison to be made. It's comparing vectors and the properties of each vector may or may not be things you care about but leaving them unspecified and claiming they're collectively inferior or less meaningful than other things is the straw man you're defeating. People have faith in governments for various reasons, giving their currencies value. People have faith in crypto for various reasons, giving their currencies value.
Nobody is making a claim of general superiority except you. The guy you're responding to simply says THEY have more faith in one particular currency. Why is that so hard to believe? They may not be a US citizen! It's not an objective statement they're making about the quality of USD, but a personal one. The straw man you're attacking seems to be a reflection of your own general idea that USD is the 'supreme' currency and anything having comparable properties in any way is some foundational challenge to this multi-faceted strict dominance. The impure and complicated truth is that each currency has strengths and weaknesses. It is a fact that for any given application and person any given currency can be better/worse for their application. If you exist exclusively in the United States and never break any laws, I can see why this might be difficult to imagine.
For example, some people place great value on being able to transact without the enforcement of American cultural values. This quality of the currency for many is objectively a negative property. Since all currency are largely valued based on fiat anyway these days, why is it so hard to imagine people having preferences more closely aligned with groups other than one of the most geriatric and monochromatic governments on earth?
> The straw man you're attacking seems to be a reflection of your own general idea that USD is the 'supreme' currency and anything having comparable properties in any way is some foundational challenge to this multi-faceted strict dominance.
Constructing a straw man to attack while accusing someone else of doing a straw man. Folks, we love to see it.
Look this is a dumb argument to be having in 2023. These cryptocurrency projects are going to fizzle out and disappear once enough of those involved find a new grift (either ChatGPT/LLM-based things or whatever comes after that). If you want to be holding the bag when that happens then that's on you.
That leads me to a big, big tangent, completely unrelated to crypto. Recently I followed online discusions of a certain car model in comparison to well known alternatives and, no idea why actually, soccer clubs. And one thing I found funny, is to which length people go to, well, rationalize and defend their preferances. E.g. interior finish is just bad of model a compared to brand b, while obviously the fact that brand b can be had without leather interior is better because of animals suffering. Or model b is better because it can be had with a V6, while model a cannot, ignoring the fact that the majority of engines for model b are inline fours as well. That actually did sound a lot like convincing oneself that the preferance for model b is totally rational. You have similar vibes whem it comes to sport teams, it basically boils down to fanboyism.
Which is fine, which car or club people prefer doesn't have to be rational. It gets risky so, if that attitude is extended to finance.
It's a reasonable expectation that any and all institutions handling your money might be gangs of thieves run by charlatans. This is why any deviations from regulation should be viewed with extreme suspicion, since that's the only thing that mostly succeeds keeping these thieves and charlatans in check and protecting customers.
Silicon Valley Bank is a great positive example, where the depositors were protected even despite the fact that the thieves and charlatans wanted to take on unacceptable risk by successfully managing in 2018 to lobby exemptions to the Dodd-Frank regulations that would have prevented the thieves and charlatans from doing so. So any financial institution that tries to circumvent even slight parts of regulations should be treated with extreme suspicion (as thieves and charlatans who want to take your money), and any financial process which tries to stay outside regulations as such (e.g. Monero) needs no suspicion at all, as this means that they're explicitly publicly acknowledging that yes, our gang of thieves and charlatans want to re-enable the ways of taking your money which were limited for the other gangs of thieves and charlatans.
The difference is, the US govt has backstopped all the bank charlatans and put their money and their citizens money on the line when it comes to USD backstopping.
The Binance CEO wouldn't backstop his firm any farther than he can throw his yacht.
Man bets on hyperinflation, obviously loses, and to the surprise of almost everyone it pays out. I'm fairly sure you yourself have been banging on about USD hyperinflation for years, too, without it happening.
That bet didn't make sense even if Balaji was right; he could have bought 40 BTC instead of putting $1M into escrow. Then he would have made 40x the returns if he was right, and would have 1.03x his investment now even though he was wrong. It can really only be interpreted as a publicity stunt, possibly to pump BTC.
It's difficult to name a large financial institution that hasn't had a fairly recent "embarrassment of behaviour discovery", be it assisting drug cartels with money laundering, manipulating the price of gold / metals, or just plain immorally giving massive debt to obvious deadbeats and repackaging it with a AAA rating. Yhe whole finance industry is a festering wound.
Cryptocurrency, by comparison, is a mosquito bite, but there's enough blood to have started attracting the real bad bacteria across from the traditional finance world.
> Silicon Valley Bank has detoothed a lot of criticism of the crypto industry
The problem with SVB was not the same as what we get with FTX and Binance. Let alone, the promise of crypto is to "be transparent", and this proves that they are not at all transparent.
SVB made bad bets, that we knew were made. SVB collapse was not a result of them lying about how they operate, it was a result of the risk they took.
FTX and Binance lied, which is not exactly what you want from someone who you should trust.
Binance has no known headquarters or transparent books. If you keep money there and you lose it, it's your fault. The same applies to Tether. You're only betting on trust instead of regulations, which never bodes well in the long run.
As a side note, Binance was founded in 2017 and grew to process hundreds of billions of dollars in transactions in a few years. In a hypothetical world as the CEO of such company, how would I even handle such growth without my mind exploding?