> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown.
If you think a crypto exchange you're doing business with is on shaky ground, the time to withdraw is now. So many crypto exchange collapses have shown that you need to withdraw before the "meltdown" if you want to ensure your assets are safe. If you wait you end up in bankruptcy purgatory for years and might only get a fraction of what you're owed.
Well, as long as the exchange is not going down right now, there's still money to make and they will just keep trading.
However, there's no reason to keep your assets on exchange if you are not actively trading them. I know many trading firms withdraw daily (or maybe even more frequent), and I would imagine the drills mentioned in the article are probably about withdrawing their assets before EOD.
It's been demonstrated time and time again this isn't practical. In crypto your choice is either worry about an exchange collapsing or worry about losing your keys, having your wallet cleaned out by some scammer, etc.
The chances of either are very, very high. "Not your keys, not your coins" just as easily (or even more so) becomes "you don't have your keys" or "some scammer has your coins".
Cue twitter and reddit posts from crypto enthusiasts saying "Oh you should have engraved your seed on steel plates and buried them under the birdbath in your backyard. Sorry you lost everything but hopefully you learned your lesson. Now buy more and try again!".
When the best possible description someone can use is "pretty reliable" I think that underscores my point.
FTX was considered to be in this category for years. Question now is, when will the next "pretty reliable" custodian go the way of FTX? When, not if.
I've been following the space very closely for years and the shenanigans involving other people's money are unreal. Are you aware the former CTO of Kraken was completely anonymous? Literally an avatar - try to find their name anywhere. Kraken employees didn't even know who they were - never came to the office, events, or even turned their camera on in meetings. I would imagine someone in payroll/HR or something knew who they were but maybe not, and they were getting paid in crypto?
Kraken, also considered one of the "more reliable" custodians for years, where the entire platform was in the hands of some random person who could disappear in the night with no reputational harm. Speaking of Kraken, take a look at their executive turnover. Very reliable.
I wanted to believe in the underlying technology for years but it's fundamentally and inextricably linked to other people's finances and there has been plenty of time for this kind of clownish behavior to work itself out. Crypto is almost old enough to have a Driver's License in the US which makes it a senior citizen in technology terms. It has had plenty of time to grow up but I think it's clear it never will.
Fireblocks is the preferred custody solution for institutions today. It's 'non-custodial' and your assets can be recovered at any time. The MPC cryptography that enables Fireblocks to exist was only invented in 2019.
So a system that is designed and meant to work trustlessly, rejects centralization, big institutions and middlemen showing that it will not be long-term sustainable for any actor that tries to become a big middleman? Why am I not surprised...
Most of Binance's trading activity isn't about being an "onramp" for crypto, it is mostly crypto to crypto trades, in which case the onchain solutions are far superior. The sooner these vestiges of a prior crypto era are torn apart, the better.
Within the crypto space, these exchanges are extortionate to project communities and the project founders, and a lot of it can't be talked about because that ensures no listing on Binance, and thats just the tip of the iceberg of what people have to put up with, all of the eastern exchanges have similar practices. eastern europe too, but and to a much lesser extent the US exchanges but to the point that it’s impossible to get listed unless all the VCs backed you.
Outside the crypto space, its pretty obvious that the discussion is much more juvenile, any distress with any crypto exchange represents "crypto" as a whole, and validates whatever people already believe. So the sooner these mismanaged companies go away, the sooner that conversation can mature.
Unpermissioned market making onchain has been a major boon to the crypto space, and so these exchanges like Binance are not necessary. Most of the major wallets have ways of getting fiat into the crypto space, and they can become the primary users of onramps. Both Block and Paypal are crypto exchanges, all that infrastructure is there by better managed companies, and trading of more esoteric asset pairs can be done onchain, as it already is.
> One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown.
… If you’re conducting fire drills on withdrawing your assets when Binance implodes… why not just withdraw them now? Like, it is not the only exchange.
Love that the charts and several data points are actually about Binance US which has been dying for a while. Binance global though seems to be doing okay.
Binance US is dead no doubts about it. Binance won't be available for US customers.
I'm not sure if the article has a point though. The TLDR seems to be Binance's overall size is reducing because Binance US is closing shop.
The thing to remember about Bitcoin, et al, is that it's decentralized.
Sure, the code base may be gate-kept by a small clique of developers, sure, the mining may be largely done by a handful of coordinating mining pools, sure, you may need specialized hardware only manufactured by a couple of shady foundries, sure, all of the money may enter and exit through one or two exchanges pretending to comply with various money-laundering laws.
But the scam, the scam is beautifully decentralized.
In a normal scam, there's one or two people at the top who will eventually cut and run or go to jail, and the entire pyramid collapses beneath them.
Bitcoin? There's no one at the top. Anyone can just jump in and start scamming, and they'll grow and grow until they maybe reach the top and implode, and then without missing a beat a new group of scammers will be ready to take over even as the last undergoes a very public trial or a very quiet disappearance.
I always hear this and I'm interested where the point of view comes from. Can you elaborate?
Fair warning I am one of the people who thinks it's all the same. Even though I have a lot of experience in the space when you zoom out a tiny bit for the average person it starts to look a lot like us arguing vi vs emacs - religion and meaningless and esoteric distinctions to the 99.999%.
As a very long-term crypto-sceptic (it's a marvellous spectacle; I started watching in 2012 just before the pirateat40 Ponzi collapsed, and then got to see MtGox go), I used to think it was all the same, but in fairness, Ethereum, with its smart contracts, allows even more ridiculous nonsense than Bitcoin, and is thus a welcome addition to the space. With just bitcoin, the DAO chaos of the last few years would never have happened, and where would be the fun in that?
Compare with Ethereum and you can quickly be disabused of this notion that they are at all similar.
- Ethereum uses PoS, and you can run a validator with commodity hardware which costs a couple of hundred dollars.
- All the validators online at this moment consume a fraction of electricity used by all current videogame consoles in stand-by.
- Ethereum's value is not derived from the expectation that it is a "store of a value", but that it will be required to run a lot of basic activities in its blockchain. "If BTC is digital gold, ETH aims to be digital oil" is a good analogy coined by Buterin.
- Because of this focus on the blockchain and its applications, very few people working in ETH actually worry about its price. Bitcoiners by and large do nothing but try convince other people that their coin is the chosen one. Ethereum developers don't really care about any specific coin, just that it runs on the Ethereum blockchain.
I understand your points (I stayed up to watch the switch from PoW to PoS on my Ethereum nodes as one example) but no one else does, and that's my point. If anything you mentioned offered value other than "trade vs USD" there would be adoption - like oil and consoles.
All you have to do is take a quick look at a block explorer, dappradar[0], tokens, etc to discover very quickly no one (0.5% of global internet users - literally) uses any of this stuff other than gambling. Horrible "play to earn" games, NFTs, tokens, DEXes to swap tokens around (more gambling and criminality), etc. The only thing the improved technology of Ethereum has done is continue the "crypto way" of inventing new ways to gamble and scam people.
Even the vast majority of people that interact with the space see ETH, BTC, etc as just another trade ticker they denominate value in fiat with. All of these trades operate on an order book in an exchange and has nothing at all to do with the underlying blockchain and whatever supposed differences/advantages/etc the technology has.
The entire underlying technology could disappear tomorrow and it would have meaningful impact to an even smaller group of people than your favorite text editor. No actual utility lost.
The fact that the majority of people don't use "as intended" does not mean that they are the same. One has a potential for (and welcomes) change, the other is treated as a cult with a single doctrine.
> The entire underlying technology could disappear tomorrow (...) no actual utility lost.
The same could be said, e.g, ActivityPub. Doesn't stop me and others to try to dismantle Facebook/Twitter or at the very least to provide an alternative.
None of this addresses control of code base, limited exchanges handling the majority of traffic, or the scam aspect.
Sure eth solved some of bitcoins issues, it also increased the scope of crypto scams to a whole new level.
The fact that a crypto 'currency' is supposedly operating at prices irrelevant to it's value is not an argument that helps you in any way in this situation.
- Ethereum has (last I checked) 9 different independent implementations of the client. No centralized development.
- Uniswap (one of the first decentralized exchanges running on the blockchain) has more transaction volume than Coinbase. All you need to use is an Ethereum wallet. No dependency on central exchanges.
As for scams: do you also blame Western Union for the billions of dollars they enabled?
I don't understand. If I say choose to use a German Shepard to represent dogs is that a dishonest straw-man? Bitcoin isn't all crypto, but it is a type of crypto, and just like how there are valid criticisms of German Shepards that can be used to expand to all dogs, the same can be done with Bitcoin, can it not?
Crypto is effectively all horseshit, because the space has attracted the worst people in both tech and finance, and the vast bulk of implementations and productizations are not useful to anyone other than scammers and gamblers.
Perhaps crypto can be revitalized and made useful at scale, but that’s going to require a continued cleansing fire throughout the ecosystem and a new generation of devs and evangelists who actually give a shit about other people.
I'm still waiting for the "obvious scam that Tether is which is printing fake dollars as everybody knows" to implode. Any moment now.
BTW, wasn't the narrative that crypto goes up because it's bought with printed Tethers? Why aren't they printing some now to start another bull market?
Are you implying that Tether isn't shady? Because it's obviously a huge scam.
Now the question isn't if, it's when. And as Madoff showed us, it can take a very long time, decades even, before it fails.
And predicting the future is very hard, so nobody knows how much longer it'll take. But down it will go because it's inevitable.
And to your second paragraph, that's an oversimplification. Yes, printing Tether helped dampen the fall and prop up the price, but it did not do so alone and it's not as easy as just printing more to start the bull market.
Trying to do that would smore likely just hurry up their impending doom.
It is great as long as they are actually sticking to short dated US t-bills. They've just been super sketchy about if they are or are not in the past. Personally I think they're fine. The absolute worst case there's a run and depositors only get back like 75 cents on the dollar. Which is way better than most places that people park crypto.
My amateur theory is that Tether could have imploded for most of its existence, but now there’s a real chance that they have been (or will be) able to bluff their way to solvency.
You might just as well wait for the 'obvious scam of the FED printing fake money' to implode.
The thing with fiat money is, fake or not, as long as enough people believe in it, it functions well.
Replacing an imperfect implementation with one that has demonstrated time and time again it's far worse should never be the solution. Crypto has languished in obscurity (other than gambling, scams, and criminality) for 15 years because anyone who isn't in the cult (or hyping their "bags") can see how obviously ridiculous it is.
It's been clearly and obviously explained to death for crypto people where the value of fiat comes from and it's not a "debate" I'm interested in rehashing.
You are being downvoted but I think there's some truth. I'd like to see counter arguments. One that I can think of is the difference in intent. Tether is for profit and the FED is to stabilize the economy.
IIRC, the NYAG/JPM report from a few years back almost explicitly said "this is totally criminal and entirely fraudulent, but it's too late to stop, because if we do, the entire global financial system will explode"
I think you're remembering incorrectly. Crypto is large, but nowhere near large enough to cause contagion risk, especially because nobody is stupid enough to lever against it as though it was a AAA asset (like they did for American mortgages). If every single cryptocurrency was zeroed tomorrow, the global economy would shrug and move on.
Quite possible. The closest I can find is [1] (via [0]), which upon re-reading suggests the cryptoverse, not the global economy, would blow up. Perhaps I'm conflating it with the general warnings of the era [2,3,4].
Though I swear I recall reading some ominous wording, pointed out by another commenter, that subtly suggested the decision to quietly settle vs. aggressively prosecute was based on billions of dollars of potential economic fallout. Other articles [2,3,4] talk about contagion risk, but none are exactly what I recall. Funny how memory works!
One almost hopes it happens solely to shut up the crypto bros that still refuse to accept the primary use case for crypto is scams.
Sure it can be a distributed concencus/ledger system/smart contract system almost no one important needs or will use, or will reuse the idea internally themselves if it's useful.
Anything important won't be built on something they can't control or manage. Crypto by definition is that. So you have to really consider what this built on it and who's profiting from it.
Arguably the crypto blowup last year did result in some contagion, being one of the triggers for the US’s recent Medium Sized Bank Crisis. Though, also, arguably that was coming anyway, one way or another.
I think the 2023 bank crisis proves the opposite of what you're claiming. Only 3 banks failed, and of those three one had nothing to do with crypto. It was not a contagion, and people predicting it would have widespread repercussions on the economy turned out to be wrong.
"No contagion risk" doesn't mean nobody would be harmed by a crypto collapse; obviously there are a handful of morons here and there who would get wiped out. It means there is no systematic, widespread dependency of the real economy on the crypto one. I think the bank failures bear that out.
the term is contagion. and in this case it is probably hyperbolic, but basically when people rely on one asset as a medium of exchange, and that asset turns out to be of poor quality or worthless, then it affects many other assets and businesses.
if balance sheets and collateral for loans for big businesses were all in tether it stopped being redeemable or traded at $0, the businesses would have nothing on their balance sheet and all their lenders would realize the collateral was also missing, and the lenders also would realize they wouldn't get paid and had lent on bad assurances. The lenders would also lose money on all those loans, and their capital partners would lose money (private equity firms and their limited partners) and everyone that relied on payouts from the PE firms would have to change their forecasting, and the PE firm would not be investing in the economy anymore, making a hole in that market. Depending on how many PE firms were doing this it could grind a significant part of the economy to a halt.
good news is that typically the government fills in the gap. but people don't like that.
Low-information putdowns are flamebait regardless of how right you are or feel you are.
The article was about the specific current situation of Binance. You didn't respond to anything specific in the article. Changing the subject to the 50,000th repetition of the Generic Crypto Flamewar was not only a generic tangent but a perfect example thereof.
Perhaps this might help: the point of HN threads isn't to be right, but to have curious, mutually interesting conversation. That's quite different from repeating the same things over and over, no? That's about as far from curious conversation as it's possible to get. If a conversation can be predicted, then it's not what we want here.
There's another aspect too—predictable conversations, especially on divisive topics, inevitably turn nasty. My theory is that the mind resorts to indignation to amuse itself in the absence of new information (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...). Whether that's true or not, we're definitely looking for conversations that organize around new information.
BNB is a token issued by Binance to faciliate trading on their platform. If it dropped in value, it could indicate a lack of confidence in the platform itself (it's price could also be manipulated of course).
"BNB can be used to pay for fees when trading on Binance, and usually at a discounted rate. Due to the primary utility, BNB has seen massive growth in interest throughout the years . Several rounds of token burn events have appreciated BNB price and pushed it up as one of the top-10 cryptocurrencies by market capitalization."
Binance or exchanges are 'anti' crypto. Buying/Selling crypto defeats the purpose of crypto entirely, rather supports fiat(do the math please). Exchanges must die before crypto even starts working.
We are still going to need on-ramps/off-ramps and it would be better if they were legal and regulated to be small. Exchanges are still going to be needed. "Retail banking" with managed wallets are still going to be needed. Only allow them to operate in one country, put a cap on the the maximum amount of funds/accounts they can have and get rid of any "investment" scheme.
Essentially, something like the crypto version of credit co-ops.
Honestly all I hope for is for people to stop thinking of crypto as stocks/investments but treat them as currency. Majority of the embarrassing press and downsides of crypto in the past decades have to do with the former.
Mining, swaping, burning, spending is enough. And where it's not, the use-case is not decentralized (has centralized governance or has known membership) & can be achieved more efficiently via fiat.
Nice tongue-in-cheek joke. Don't. At a given time, you are to be crypto savvy & be protected in the first place or don't be crypto savvy & use the legal system with fiat for better efficiency & solution
