I kept my funds on Binance for a while, for convenience's sake. However, the old rule applies: not your keys, not your crypto.
Keeping anything on an exchange, for the time being, is just too risky. This is another example of it. Governments are still trying to figure out how to regulate crypto, ever shifting the amount of hurdles between crypto and the world of fiat.
I'd advise to pull funds if possible. I've recently done so with mine.
Of course that means my keys / wallets are now my responsibility, along with ensuring that I have appropriate backups in place etc.
Doesn’t matter what you do with your cryptocurrency, the value can easily evaporate because of the actions of others, including binance and those who use it and other dodgy exchanges which make up the vast majority of crypto ‘transactions’. What happens when you want to sell it for fiat you can actually use and nobody wants to buy?
So many people pouring money into this space have never seen a bear market or a bank run.
Bitcoin isn't that new thing any more, to me it looks like fiat holders have seen too many bitcoin holders gain significant value. Yes, there are also those that lose their BTC for whatever reason but to me it seems to be quite a minority compared to those who actually have made good dough just holding BTC. To the tune of having retired on their stash.
Fiat holder is a ridiculous term in a false dichotomy. A holding of BTC is a security holding just as holding stocks (despite the fact that they are not legally referred to as such.) Nobody chooses between holding dollars or holding BTC. Nobody.
The fact that this parent has a number of children that don't seem to pick up on this is problematic to say the least.
You hold fiat money to exchange for goods and services. You buy securities (or sometimes physical assets) to eventually get more fiat money to then exchange for goods and services. Currently you buy BTC with fiat to later exchange BTC back into fiat and still use fiat to exchange for goods and services. This is why BTC is more like a security than a currency.
Holding stock in a company (for instance via en index fund) is not a fiat holding. The fact that it is commonly priced in terms of fiat currency is not any different that the fact that BTC is too.
Neither of them have to be. All exchanges take place in pairs; one holding is exchanged for another. Buying BTC with dollars is (USD, BTC); buying Microsoft is (MSFT, USD); buying EUR with dollars is (EUR, USD).
Nothing prevents you from pricing Microsoft stock in BTC or BTC in EUR or Etherium.
The holding as such, however, is only a fiat holding when it is in fact either a (wad of) cash equivalents and/ or a bank balance.
There isn't a person on earth for which there is only two types of relevant holdings, in either USD or BTC. A person that (seriously) considers acquiring a crypto holding, such as BTC, is most likely choosing between other crypto currencies, gold or silver, primarily. Even more likely, they're merely FOMO-speculating as a complement to plain stock holdings.
The fact that a number of you don't seem to understand this should call your competency into question.
I believe the perception of this dichotomy is something of your own imagination. Anecdotally the term fiat is used exclusively in the context of crypto, but to the best of my understanding its usage doesn't imply that the sole alternative to fiat is BTC, or crypto. Rather, I believe the term solely carries a prejudice against money that is declared valuable as such by political authority rather than by its market adoption and de-facto usage.
How could that be of my imagination when it's used and liked in the parent to my comment? Everyone is a fiat holder but holding (not crypto) does not constitute being a fiat holder.
But yes, I agree with you about where fiat is used. It's almost always used by people that don't quite undersand the concept of value or that of money for that matter.
Money is not declared valuable by political authority. That is just not how it works. Crypto is what's declared valuable by fiat, ironically. Its value is described as derived in terms of a limited supply (it's just like Gold!)
Fiat currency derives its value from network effects, debts and the feeling of safety (or the lack thereof.)
If you cashed out to fiat and retired on your stash in this last bubble you’re doing great, though that is at the expense of millions of retail bag holders who bought your cryptocurrency hoping they’d get rich too.
If you didn’t cash out already and are taking your coins offline etc, you’re the bag holder.
Binance has holdings in all sorts of cryptocurrencies that it has no involvement in the creation or minting of.
As a cryptocurrency exchange, Binance must hold Tether to operate.
As the most popular cryptocurrency exchange on the planet, they're likely to be on the larger end of Tether (and various other cryptocurrencies) holdings.
I'm not defending Binance here, I think there's fair potential that they're doing shady stuff, but they're not responsible, in any way, for the minting of billions of dollars of Tether, or involved in any of the dodgy accounting around Tether's backing.
Same goes for Huobi, who are second on that list. They're an exchange. Holding Tether is an essential part of being in that business.
Nobody is actually using Bitcoin to pay for things, because it is a terrible currency due to fundamental design flaws. At this point the narrative of Bitcoin the world currency is dead, it’s now a get rich quick scheme.
A bag thats value getting heavier every year while the bank balance is losing value every year. Are not fiat holders the true bag holders? When you accept that everything is relative value, the dollar is not absolute (far from it!), holding fiat for long times seems foolish.
Yeah, sure, but everyone except cranks who works in fiat openly acknowledges that. Fiat (well, major fiat currencies like the dollar) are good for low-volatility liquidity. For long-term accumulation of value, you invest in productive assets, which are both riskier over the long term and higher volatility over the short term, but have higher average long-term yields. And, ideally, you diversify investments in ways that maximize independence of at least long-term variation, to mitigate risk and get closer to consistent long-term average results.
Crypto“currency” that isn’t fiat-pegged tends to be worse than major fiat at the things people who prefer fiat think fiat is for, while (in the best cases) being a very high-volatility speculative asset with very good average performance over its history to date (which isn’t very long term). It’s thus not a great replacement for fiat, but potentially a bice addition to the stable of available investments.
Replacement, maybe, no, I don’t know. It radically changes things back about 200y to a pseudogold standard but universally harder (energy usage over physical gold supply). I know I spend fiat over harder money. (I don’t spend bitcoin, I save in it).
I think you should not ignore the forest for the trees here. A small purchase today held for another 5-10y could prove quite lucrative for you.
I dumped my BTC (2011ish early adopter) once my mom began to talk about a Bitcoin investor who played the crypto markets and made so much money at my age. My mom does not know how to format a Word file.
I just hope my parents and relatives aren't secretly stashing away their life long savings in crypto because of all the hullabaloo.
> once my mom began to talk about a Bitcoin investor
There’s an ad running on Indian TV literally of this script..Two moms are talking, while one brags about her son being in USA, buying cars etc the other’s son is seemingly trading crypto on a mobile app. The other mom then retorts “all that is fine, but have you invested in crypto?”.
This .... exactly this, You did a good thing by getting out of it.
When a normie on the street starts talking about crypto, it means crypto has jumped the shark and it is a pure bubble driven mainly by people's greed.
As long as the economy stays okish, crypto might fall 50% but it will get up a bit again as well. Wait for an economic crisis to see it tank to for real. When msft drops 80%, btc will be under 5k again. It will happen. People seem to have some weird faith this time is different because covid postponed things. For now you can make a lot of money with btc weekly: it drops hard 1 or 2 times a week and then goes back up 3-4k. But when 'the normal' economy bottoms out, it will drop and the 'hodlers' will be out of trillions. If you keep that in mind: happy trading but hodlers are crazy imho.
I know it is tempting to compare the current price when estimating losses. But really, you cannot do that. I had 2.5M dogecoin that was also stolen. But I don't use the peak valuation (~$1.25M) or the current price (~$0.63M) because that implies I would have singled out the peak or held until now. I really only lost my buy in ~$1,500. It makes for a good story to lose a house, but it is better for your sanity to base your losses in actual line items.
This. If in 2012 you bought a pizza with 1 BTC and now feel silly, don’t. You also bought pizzas for $20 which you could instead have converted to BTC and held until now had you only had a working crystal ball.
This is kind of the emotional mechanism behind a lot of crypto investment. It's not intentional, and it's kind of sneaky, but with the strong fluctuations and chance of "hitting it big" there's always the "what if..." feeling. As someone who doesn't care much for crypto (in its current form anyway) and was never involved in it at all, even I have this to some degree as I was aware of it very early on (when it was still interesting, instead of what it's become now).
This is probably a big reason why there are so many "amateur" investors compared to more traditional investments/trading.
This is probably a big reason for why many cryptocurrencies have a high value as well. Nobody actually uses these things to trade for goods and services (well, maybe for drugs), everyone just expects the USD price to maintain or go up and values it based off of what they think they can get in USD in 5, 10 or maybe even 100 years.
As the comment you're replying to points out, that same opportunity cost applies to literally any non-essential ~$20 purchase they made with any currency in that time period.
Similar to the Monty Hall problem [1], the mistake you're making is calculating the opportunity cost at the time of sale, rather than within the context of perspective. Opportunity cost is dynamic, not static.
If I approached you in 2012 with two envelopes, one with $20 worth of US bank notes, one with $20 worth of Bitcoin, you'd most likely take the cash. If I approach you again in 2021 with the same envelopes (unopened) from 2012, only a fool would take the cash.
Speculative assets would not exist if your theory held water.
The critical difference between spending BTC on a pizza and the Monty Hall problem is that you only receive additional information once you no longer have any option to change your mind.
If Monty Hall asked you if you wanted to change doors before opening one the problem would not be much of a problem.
Except the OP was (almost certainly) in possession of $20 USD in 2012. The opportunity cost of buying that Pizza with Bitcoin rather fiat totals ~$34k at the time of comment.
That is some dumb shit and not only should you feel silly you should feel stupid for saying it.
If you buy anything at $X with intention of "hodling" it to increase it's value, unless you have a plan (i.e. I will sell at $Y) then you are just holding on to nothing. You will either sell too early or too late (now talking about the absolute maximum gains) and then you will always "feel silly".
Unless OP actually put in, say $300k (a price of a small house) and that was stolen he didn't lose "a house worth of money" since he had no exit plan. I don't play crypto, but I could still say that I lost $600 when the market crashed couple weeks back conveniently forgetting that my initial investment was only $10 back in the day. I could even be more dramatic and say that I lost half of my bitcoins just in the crash and not mention that I only had $1.2k.
> If you buy anything at $X with intention of "hodling" it to increase it's value, unless you have a plan (i.e. I will sell at $Y) then you are just holding on to nothing.
I don't think that's holding on to nothing just because there's no exit plan in place.
If I invest 30k in index funds that are managed by my bank, with the expectation that the value will rise and thus beat inflation, i wouldn't say that I'm holding on to nothing.
Similarly, if the value would rise to 35k over time, but something (like an economical crash, or any reason) would have me withdraw my money before that, I think it would be fair to say that my actions made me miss out on the total value of 35k.
I don't see how the case of Bitcoin is that much different - most people won't have sold at its highest point, but the average value has indeed increased bunches compared to when it was not popular.
I don't think you always need an exit strategy for every investment you make - wanting to diversify and perhaps beat the inflation seem like valid goals, regardless of whether you're putting money in index funds, are buying BTC, or are burying pots of gold in your back yard.
Volatility and risks are probably another story, though.
Reasoning that way can only conclude that the opportunity cost is always the investments that an oracle would make.
I.e. you would have to not only account for losing $34k but also lose nearer a few hundred thousand because you could have sold at each peak and bought at each trough.
Mostly agree. The true lost value is the amount you would've sold the coins at, but that's impossible to know. For most people its safe to assume they would've sold the coins during the first price jump years ago so its still less than peak valuation but probably more than purchase value. For more savvy investors who would take profits and hold the rest, the story could be different. The worse case is people who forgot they had coins years after purchase and went to retrieve them only to find that they've been stolen or permanantly lost. In that case you would lose the current values worth. I was in a similar situation with ETH stores on a laptop I donated to my sister years ago but luckily it was still stored on a partitioned drive and I was able to retrieve it.
Easy answer: you get The value that you insured it for (either replacement cost or actual cash value with depreciation). You definitely wouldn’t insure it for 2M because those premiums would be stupid
If it isn't obvious, your simplified accounting excludes opportunity cost. Actualised losses are much higher (otherwise insurance companies would be marketing the same logic).
The fact you keep changing your answer should be evidence to yourself that you are on the wrong side of the argument. The entire point of my comment is that you are supposed to exclude opportunity cost. Did you lose $1M last year because you forgot to convert your cash to <insert any asset that increased wildly in the last year>?
There's also a podcast called A Death in Cryptoland about Quadriga, but I don't recommend it. A lot of the evidence they present is so thin it borders on conspiratorial. Maybe it was going somewhere but I gave up after 5 episodes when very little concrete information was presented.
I disagree. I learned a huge amount of information about Quadriga from that podcast (A Death in Cryptoland). It wasn't produced by some random Joe in his basement. It was produced by the CBC, Canada's public broadcaster and a Canadian federal Crown corporation.
When the producers of that podcast weren't sure about something, they said so. When they couldn't get an interview with a key player in the story (such as the wife), they said so.
That's probably related to the risk of accidentally facilitating money laundering? The exchanges are all forced to implement various "know your customer" processes
FWIW, I don't mind the KYC concern. I even provided my identification documents to facilitate the process. It's the we-only-do-business-with-exchanges angle that irks me.
Wait, the law firm has agreed to give you/pay you in BTC, but they won’t deposit it into a hardware wallet address you provide them? Why do they even care?
I don't know about that. For people like you and me that are likely to be familiar with good infosec practices, run open source OSes and only open source software, with no possibility of spyware or ransomware, have offline backups and offsite backups, sure, this advice is fine.
For most people though, I feel like exchanges are safer from the more common threats: viruses, ransomware, failed hard drives, fire, floods, "gimme-your-laptop" gunpoint, ... They ironically also make your crypto slightly more anomymized since you aren't always spending out of the same wallet address so when you transfer crypto to someone, they don't automatically know your crypto net worth.
I wouldn't trust Binance though. I moved all my funds off Binance for one reason -- their UI (especially authentication workflow) is super buggy, and that makes me extremely not confident that their backend isn't equally buggy. To top that, when I tried to report bugs to them they wanted my national ID to even engage in conversation, instead of fixing the bugs. Fuck that. Fix bugs first and only then will I trust you with my ID.
Kraken, Bittrex, Coinbase Pro have solid UIs and give me more confidence in the quality of their engineering.
How about simply losing your hardware wallet? That's what scares me. If I had enough crypto, I'd probably get a hardware wallet and store it in a safe deposit box, but then I'm going to lose that key.
I wonder if there is an opportunity for smart contracts around insurance for the exchanges...a bit meta...
Sounds hard, because it would be hard to prove that you lost a key. You could always pretend you lost it.
But if the blockchain supports actually invalidating those coins and transferring them to a new wallet via e.g. 3 trusted friends with pre-pregrammed wallets that sign and verify your new wallet, maybe it could work.
Is there an ELI5 guide to keeping coins secure when they're off-exchange? I heard terms like 'cold wallet', 'cold storage', but surely there's work that goes into creating a secure USB stick?
Use a hardware wallet to securely generate keys and sign transactions. Hardware wallet is meant for secure use of cryptocurrency, but it is not optimal for long term storage. It's important to buy devices only from trusted vendors, and to make sure they're not been tampered with (never buy them from a third party).
For long term storage, you need indestructible and physically secured backup of your keys. Basically, you just need to write down the 12 or 24 seed words generated by your hardware wallet and try to keep the words safe from destruction and theft. It's recommended to use a indestructible material such as steel for these, and then store or hide them safely. For more advanced security, seed words can be split in multiple parts using the SLIP39 seed format.
Looking at the cryptosteel - am I missing something or do you need to securely store or destroy all the engraved letters you don't use? Otherwise someone who obtains the remaining letters surely knows exactly which ones are in your secure word store...
> Basically, you just need to write down the 12 or 24 seed words generated by your hardware wallet
Why is that in any way more secure than writing down the private key itself? (inb4 "need to find both the hardware and the written seed words" that's equivalent to writing down the private key and then cutting the paper in half)
BIP39 seed words are used to deterministically generate all of your private keys in your wallet. You don't have to store the private keys themselves. Remember that each address has its own private/public key pair, and addresses shouldn't be reused. BIP39 has been the standard for many years.
Hardware wallet is assumed to generate BIP39 seed words securely. If you don't trust the RNG, some hardware wallets also support adding your own entropy with dice rolls. [0]
In some ways it's less secure, because seed phrases are usually master private keys, versus a single private key.
The point is that you can decide what to do with it... be your own bank. You can also add a password to a seed phrase backup if that makes more sense for your threat model.
how much BTC are you willing to bet that you'll remember 24 randomly generated seed words? probably not much.. that's why parent was advocating "you just need to *write down* the 12 or 24 seed words generated by your hardware wallet"
How much are you willing to bet that you transcribed a string of gibberish correctly (including case variations). Isn't a sequence of real words more fault tolerant?
I just used a tool called BIP39 generator on and offline machine which you can feed entropy and it will generate a bitcoin private key. then sent funds to that address.
you can use multi sig wallets. Which are synonymous to Shamir’s Secret Sharing Algo; tldr you can generate say 5 keys and you need 3 of the 5 to unlock.
As for if you die … you could use one of those services that will send an email out to your significant others if you don’t log in for X amount of time.
> As for if you die … you could use one of those services that will send an email out to your significant others if you don’t log in for X amount of time.
And put your bitcoin private key in there? Surely whoever runs those services would take all your money.
If you use multiple services each with a piece of Shamir’s secret you are more protected. You can get more sophisticated with this if you want e.g each piece can be xored or encrypted with a value only that person would know e.g their birthday or their fav food.
Being your own secure bank isn’t a trivial task. Hopefully this can get easier in the future
Consider a hardware wallet like Ledger or Trezor, both are pretty easy to use and have extensive documentation. I'm sure there are OSS/hardware solutions you can roll yourself, too.
You can buy something like Ledger Nano which is a hardware wallet. Essentially, the private keys never leave the device, you can instead just sign messages directly with it.
You can also have normal software wallets (don't recommend it for larger amounts) or paper wallets.
In the extreme case people will set up a paper wallet using a computer that’s disconnected from the internet. Once they have the keys, they can typically keep them non-digitally and transfer coins to that address as safe cold storage
Use a separate computer with a minimal Linux system (maybe even without GUI) and only open-source software to manage your crypto. Your key should be password-protected. Make multiple backups of the key and remember your password. You can also write your password down on paper and hide it somewhere.
Also a good idea to use ECC Memory with the ZFS filesystem. That combination can correct any single-bit error, and detect and warn about any double-bit error, significantly reducing the chance of losing data to bitrot.
And if you’re backing up your keys on USB drives, use high-endurance SLC NAND industrial drives. They provide the highest reliability and endurance available.
"There's nothing special about ZFS that requires/encourages the use of ECC RAM more so than any other filesystem. If you use UFS, EXT, NTFS, btrfs, etc without ECC RAM, you are just as much at risk as if you used ZFS without ECC RAM. Actually, ZFS can mitigate this risk to some degree if you enable the unsupported ZFS_DEBUG_MODIFY flag (zfs_flags=0x10). This will checksum the data while at rest in memory, and verify it before writing to disk, thus reducing the window of vulnerability from a memory error.
I would simply say: if you love your data, use ECC RAM. Additionally, use a filesystem that checksums your data, such as ZFS."
Note that you can secure the coins but not the purchasing power of the coins. 10k bitcoins may be worth a billion dollars or they may be worth a pizza in ten years time.
Is Coinbase also a case of not your keys, not your crypto? What would be the best way then to have your keys and your crypto? I never really understood the whole crypto storage stuff and how to approach it.
Yes absolutely. Coinbase has terrible customer service, often ignoring support requests completely until you go onto social media and try to get their attention publicly before they'll even give you a response. I don't think there is necessarily a "best" way to have your keys and crypto, but usually depending on the crypto you use they usually have an official wallet that you can use where you'd be responsible for the key(s). This means that you act like your own bank though, so if you lose your private key you also lose your crypto. Therefore it is important to use utmost security, privacy and safety when displaying and saving your key.
A lot of people swear by hardware wallets like Ledger, and I think those are probably the best options for people that don't know a lot about security and crypto or possible even those that do.
Coinbase, a nasdaq listed company, handles customer support through its subreddit. What's more, a few weeks back a customer got scammed through coinbase's subreddit when his support request was answered by another user impersonating coinbase customer support, instructing the customer to move their coins to a wallet number they gave them in order to solve the issue. The customer lost $75k and there was nothing coinbase could do other than "sorry for your loss".
The support is bad but this was phishing: how is it coinbase their fault?
Not to mention that most big companies have kafkesque awful support, but if they offer better for $0.01/year more, all their clients will go elsewhere. Bad support is only noticed when you got bitten and just not that a big % gets bitten, even if support is awful for almost all that needed such support (you need support, the bot chat does not work for you (apparently it works for people) and then you need to have a bad experience).
> The support is bad but this was phishing: how is it coinbase their fault?
Because they chose a support platform that makes it very easy for other people to impersonate them? We would laugh at a bank that was running their support out of /~foobank/ on a shared hosting provider, but reddit is pretty much the same thing.
Yes, but so does no support at all at Google. We can, by now, for go the nonsense that it is a free service: they make money selling our data so we pay. And yet, no support. And there are more examples of huge companies not giving any or adequate support. Here in the EU Revolut is known for support horror shows too.
But yes, support via reddit is weird, I agree to that.
Google provides support roughly proportionately to how much you pay Google. Free-as-in-beer internet services tend to be offered as-is, and this is nothing unusual.
A financial firm providing support through reddit, on the other hand, is a bad joke.
Yeah but the services from Google are not free. So it is just what you put up with. But even when I was funneling 100s of 1000s of $ through then both ways (adsense and adwords), the support was nonexistent. But I see your point.
If the support would be good, reddit would not be that much of an issue, but yes, you are right that it is at least weird. Probably they think it is all OK in the free-spirited crypto world.
I smell a fresh wave of lawsuits in the crypto space with companies like Coinbase. Honestly, they just remind me of Robinhood during the GME fiasco. They are also a Y Combinator company too.
Yea they are terrible. They told me based on my state ID that I scanned and uploaded that my name was "wrong" -- i.e. if I'm "John L Smith III" they basically said my name is really "Smith Iii L John" and refused to fix it, effectively nuking my account because it didn't match my real (wrong?) name. Oh and it took them over a month to respond.
What is a competent and trustworthy guide for choosing a cold wallet strategy? There are many products on the market and none seem trustworthy. Is a raspberry pi kept offline with an external storage drive a good strategy? When the pi needs kernel patches etc, I’d unplug the drive in this scenario?
What if those brands are compromised or back-doored by internal or external actors? Just look at the Western Digital fiasco recently. Do these wallets call home at all? Also: aren’t backups easier to make on a normal SSD?
(PS: these are my personal genuine concerns and I’m at least somewhat willing to have my mind changed: not trolling or being argumentative for entertainment)
Trezor is open source, and neither of them connects to the internet directly. They only connect to open source programs on your own computer, so the ways they talk to the outside world are known.
Banned from setting up a UK specific exchange and not allowed to undertake regulated activities such as lending. This in no way affects the existing Binance exchange or the ability of UK users to use Binance.
"The U.K.’s Financial Conduct Authority (FCA) has ordered crypto exchange Binance to stop undertaking any regulated activity in the country. But since the exchange pulled its application for the FCA's crypto-assets register, it will be unable to offer services that previously counted as unregulated — such as spot trading — either."
Looks like they actually altered that part. It now reads.
"Since Binance pulled its application, that means the exchange can no longer provide services that were previously unregistered either, such as spot trading"
It feels like The Block isn't entirely sure what Binance can or can't do at the moment.
> It feels like The Block isn't entirely sure what Binance can or can't do at the moment.
I'm sure also Binance and the FCA aren't sure about that. The regulatory uncertainty in this space is huge. Even after this statement it is very unclear if there are any effective sanctions FCA can enforce on Binance if they continue doing whatever they are doing. Or they might just stop advertising, and start some stealth advertising campaigns after an year os so.
Well, as large amounts of funds are pulled from Binance, we will find out if they've been stealing.
A good regulatory step for the US would be to require that it can't be harder to withdraw than to deposit. Any ID requirements have to be completed before depositing, not withdrawing. And all withdrawals must be processed by T+2. Same rules as regular brokers.
The reality is they don’t need to. Pegged tokens are the ultimate way to fractional reserve. See tether. Plenty of binance pegged tokens to handle any loss. Best thing is when binance has to buy themselves whole, they just just burn the tokens on their chain. Genius. Not your keys, not your coins.
Also that t+2 thing is just allowing shenanigans. When Rh forces the industry into instant settlement next year (hope!!) we will see who is truly been playing funny money. Looking at you citadel.
Trade day plus 2 business days.[1] This is the standard in the securities industry for most transaction settlements.
Not paying on time is called a "fail". There are penalties. For US stockbrokers, FINRA enforces them.
In the real world, a broker failing to pay out cash on time to multiple customers is a Big Deal. Alerts come up on Bloomberg terminals. It's headline news. Institutional investors stop sending trades to that broker and start demanding collateral. The SEC, FINRA, NASDAQ, NYSE, the Fed, and other become involved. See the collapse of Bear Sterns.
You have to catch them before settlement — that is the only logical and safe way. Any delay just lets the supposed holder mess about with stealing from one to pay another. If you act like every action is permanent, irrevocable… you conduct your life with care. It’s a radical deviation from the fun and games occurring today.
If the UK makes it hard to trade bitcoin, you can also guess that the value of bitcoin denominated in GBP will go down dramatically. You probably don't want to be holding tether in that case.
In my experience, it's typically been the opposite. Countries with harsher capital controls / make it harder to use Bitcoin, attract a premium in the purchase / sale of Bitcoin.
South Africa for example has very strict capital controls, hence the price to buy or sell Bitcoin is higher than elsewhere. The catch is that you can't easily move fiat out of the South African economy, which makes abritrage, to take advantage of this imbalance, impossible.
The UK does not have South African capital controls. Unless it's for proceeds of criminal activities, in which case you don't really want to enter every transaction in a global immutable ledger!
It hasn't done that and it is unlikely that they will. There are UK based exchanges, the issue here is with binance specifically and not cryptocurrencies in general.
I thought it was worth clarifying exactly what has happened here, since neither the BBC nor the FT articles make it particularly clear.
The entity that the FCA has acted against is Binance Markets Limited (BML) which Binance acquired earlier this year, in part because of its existing registration with the FCA which allowed it to carry out a limited range of regulated activities in the UK.
The FCA has now placed restrictions on BML which remove its ability to carry out those regulated activities -- however BML was not actually doing any business in the UK so the effect of this is limited.
The FCA also issued a consumer warning which, among other other things, reiterated that no entities in the Binance group are registered with the FCA and therefore cannot carry out regulated activity in the UK. Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it.
A possibly outcome is that Binance will be a bit more circumspect about offering derivatives trading to UK retail because they want to build a more substantial UK business in the future. We saw this with Bybit a while ago, where they do not allow UK retail to use their website (although they have an exception for sophisticated investors, who can self-certify as an eligible counterparty and continue to trade on Bybit). I wouldn't be surprised to see this.
"The ban, said an FCA spokesperson, only applies to Binance's English incorporation, Binance Markets Limited, which Binance has not registered with the FCA (despite plans to do so).
The spokesperson clarified that "UK consumers can continue to interact" with Binance Group, the wider, international collection of Binance companies that maintains no official headquarters. That means that Binance's customers in the UK can trade on Binance as normal—nothing changes."
I've always believed in the strength and independence of Bitcoin and cryptocoins. But maybe there's just so many evil-doers/criminals out there that the novel trust free payment network will crumble under the weight of all of the adjacent scams. I hope not, but I find myself in the truly puzzling position of rooting for the regulators sometimes.
I can easily partition bitcoin's good qualities from all of the bad things that people do with/for them. But I don't think most people will do that. At the same time, in some ways it's nearly indestructible. So even if it's unpopular it will at the very least continue to serve the black market.
Unfortunately all this stuff is by design - it shouldn’t be a surprise to anyone that a non-reversible currency that can be handled in a non-traceable way might be used for crime and scams.
Yes and no. It's traceable in the sense that pseudonymous public keys are traceable. But generating a public key is cheap, easy and can be done anonymously. As long as the blockchain participant doesn't interact with any party revealing his IRL identity, he can keep his true identity hidden.
yes and no. it’s enough to interact with someone that messes up and your identity is revealed. also, in today’s surveillance society I would assume that the gov knows which bitcoins are yours
It's traceable in the sense you can see the transactions going into an address, but it's not traceable back to an individual in the same way that either bank transactions are via subpoena, or in the same way that you can "follow the cash" with money that has to be physically laundered.
This is the traceability I mean - there is a reason that ransomware uses bitcoin rather than a PayPal account even though the transactions are in the ledger (because the transaction can't be cancelled, and even logging into the PayPal account could result in your physical location being traced unless you are very careful).
How can a merchant or even a crypto exchange know that the Bitcoins they receive weren't stolen in a hack before being laundered through a number of wallets ?
I assume the US government will ask Coinbase to freeze these assets. But that is not DeFi.
I don't think it's the intent, but I don't think it's possible to invent a currency that is non-reversible, globally transferable and not linked to a physical identity without also making it perfect for crime (because those are the same characteristics that would be good for that sector).
The bad people don't disappear when you create gatekeepers. Their power multiplies exponentially, as they use the regulatory process to suppress competition and hold the consumer captive. Theory would suggest that in a free market, people who act maliciously, and fail to build a positive reputation, would steadily be abandoned for those who act benevolently, and succeed in building a positive reputation.
This would be a corrective feedback mechanism which steadily makes the social configuration less exploitive, and I think one could reasonably assume it is a far less failure-prone feedback mechanism than periodic political elections.
Beyond the theoretical arguments, the empirical evidence suggests this is what happens. For example, countries with lower levels of government spending as a percentage of GDP have on average higher rates of economic development. For a more relevant example, the quality of project needed for a token sale to be successful massively rose between 2015, when the first token sale was announced, and late 2017, when the SEC shut down token sales. The market was evolving, while massively expanding the number of people participating in early-stage investing: https://link.springer.com/article/10.1007/s11408-020-00366-0
>"The average ICO has almost 4700 contributors. The median contributor invests a relatively small amount. The ICO market appears to have successfully given access to the financing of innovation to a new class of investors, which is a long-standing public policy issue"
I got a message from newton.co about doing a bunch of KYC compliance(they're Canada only), presume Canada Gov generally is starting to wrap its arms around crypto?
From my understanding, this ban applies to regulated activities such as trading some specific securities, as well as options, contracts, and the likes.
From the FCA's website[0]:
> While we don’t regulate cryptoassets like Bitcoin or Ether, we do regulate certain cryptoasset derivatives (such as futures contracts, contracts for difference and options), as well as those cryptoassets we would consider ‘securities’ – find out more information. A firm must be authorised by us to advertise or sell these products in the UK
"Binance has until Wednesday evening to confirm that it has removed all advertising and financial promotions, according to the FCA’s register. The exchange must also make clear on its website, social media channels and all other communications that it is no longer permitted to operate in the U.K."
"Binance is being probed by several agencies in the U.S., Bloomberg News reported in recent months. And Japan’s Financial Services Agency issued a warning against Binance recently, saying it offered crypto services without registration."
After the misconduct I personally witnessed with Binance's voting system[0], I don't think I'll ever use them. Basically, there was conclusive evidence candidate cryptocurrencies allowed blatant manipulation of the voting system and Binance did nothing. I forgot which cryptocurrency or voting round this was specifically but in the candidate cryptocurrency's official discord server, individual users were placing multiple votes instead of the single vote they were allotted. The discord server was filled with this blatant abuse of the voting system, screenshots were taken as evidence, yet the creators of the candidate cryptocurrency and Binance did nothing. I suspect Binance didn't care because more votes, even in violation of their rules, meant more BNB for them. And I suspect the creators of the cryptocurrency didn't care because they wanted to be listed on Binance. I'm certain this wasn't the only instance of misconduct out there, merely the only one I saw.
Funnily enough the reason seems to be poor money laundering measures. I always thought exchanges are the only money laundering gates where govt can have control.
As a US user, I've accessed my old account via VPN to remove funds a couple months ago without issue. I was unable to access binance without VPN though (the original binance not the US specific new one).
Create your own non-custodial wallet. Ideally keys would be generated either on an airgapped computer, or on a hardware wallet (e.g. Ledger).
For non-significant amounts that you want to be able to use in the go, you can choose to additionally have a hot wallet (others have already mentioned MetaMask for ETH-based, for example).
If you do not want to go the extra mile and want convenience, and have an iPhone, personally I think an iOS-based wallet is a more secure choice than having it on your desktop or Android device.
Save your BIP39 seed phrase offline (paper for example). Protect it with a pass phrase. If you want extra protection on the passphrase, there are solutions to “split” it using Shamir’s scheme to for example 2-out-of-3 and store the parts on different locations. (Definitely run this on an offline device, for example on a laptop booted from a live USB key)
Either way I advise against fully custodial wallets such as blockchain.com or crypto.com (commonsly recommended but not your keys not your coins).
Yeah, on-off ramps might be hard in India very soon. The RBI has no fondness for crypto. Don’t think a ban is coming but I do think we will have to rely on P2P to on/off ramp - not a great solution when large sums of money are involved.
Crypto is the only way I can pay for VPN without disclosing my identity. Also it's the only way I can move money abroad without getting a special permission from my country's central bank (except physically flying with max $10k cash). Ah, and also there is a war in my country that may escalate any time, but thanks to cryptocurrencies I can run away with empty pockets and still access my money from anywhere in the world.
The black market exists for a reason and I don't want to take it away from you but that doesn't mean the entire world is going to adopt the black market.
Not OP, but I have also been curious of the popularity of the actual set of transactions that serve utility and result, or facilitate, an exchange between two actors where one of them is providing something tangible (i.e, transactions other than acquiring cryptocurrency to hold, and then exiting back to fiat after some period of it).
Obviously this will be difficult to actually know, for reasons that it's "hard to trace" but also most studies are likely biased in one direction (for the concept of cryptocurrency) or the other (against the concept of cryptocurrency).
My intuition tells me that most transactions (at least in absolute fiat dollars) that result in an exchange of tangible assets are largely illicit transactions that would otherwise be frowned upon the individual's place of residence (e.g., ransomware, drugs, money laundering), but I don't know how that compares to other forms like standard retail services, local inflation hedging, or overseas transfers. The former group (in particular ransomware) is certainly enabled significantly more due to the existence of cryptocurrency however.
Why is this coin 'Monero' being used by these fraudsters and criminals to hide their activity? [0]
The fact that this is making ransomware run rampant and now the victim is also part of the unfortunate process of paying the ransom in Bitcoin, (and now apparently they can also pay in Monero at the hackers, 'convenience')[1] it's getting to a point where regulators need to step in before this happens to more companies and the general public.
Lmao are you serious? Source is 15 years of buying drugs. The illegal drug dealers only took cash, and now that buying drugs is legal, the legal dealers only take cash too. They have an ATM in their shop, but that's because they only take cash.
I guess you never buy drugs IRL, if you really want a source for "drug dealers only take cash". What's next, wanting a source for "water is wet"?
> Also, did you just forget we were (and we are) in a pandemic that started a year ago, forcing almost every person in lockdown?
Guess who stayed open the entire time? The drug dealers. They were excluded from lockdowns due to ostensibly being essential businesses who sold "medicine". And guess what, the entire time they have only accepted cash.
I suspect that's more about the weird 'state-legal/federal-illegal' hybrid situation. Banks with federal charters can't touch the industry, so it mostly runs on cash.
Two weeks after we get Federal legalization, someone's going to offer a rewards Visa with 4.20x points for cannabis purchases. You heard it here first.
> Lmao are you serious? Source is 15 years of buying drugs...
So the source is you then? If so, that is an anecdote and that isn't a reputable source, try again.
> The illegal drug dealers only took cash, and now that buying drugs is legal, the legal dealers only take cash too. They have an ATM in their shop, but that's because they only take cash.
So you are saying that cryptocurrencies was never an option for these people at all? If it was legal bank transfer or credit cards would be just fine.
Would be nice if you provide sources for your claims to these.
> Guess who stayed open the entire time? The drug dealers. They were excluded from lockdowns due to ostensibly being essential businesses who sold "medicine". And guess what, the entire time they have only accepted cash.
Again, do you have any reputable sources for these claims?
No I wouldn't. But the claim that most drug dealers don't accept anything other than greenbacks has less significant (even if just in pure dollar terms) than the claim that you've broken the fundamental threat model related to the largest crypto-asset system that currently has a market cap (as of this moment) of more than half a billion USD
You seem to be under the impression that anyone here has an obligation to make sure that you're adequately convinced.
You clearly won't believe that most drug transactions are done in cash unless you see incontrovertible evidence. That's fine. But no-one cares, so I don't know why you expect demands for a source to be met.
If this was an even remotely controversial or decisive topic, it's worth providing sources, because they convince not only the person demanding it, but also anyone reading. But in this case, it's such a well-known and obvious fact that there's no such benefit.
You can ask for sources for "the sky is blue" all you want, but I'm happy to just stick my head out the window and go "yep, I'm pretty sure". I'm not too fussed if you still don't believe me.
> You seem to be under the impression that anyone here has an obligation to make sure that you're adequately convinced.
All I'm just asking for clear evidence to a claim, like someone asked me for evidence of a claim I made, I provided a source and evidence. Not hard, seems you and others have an issue with it.
> You clearly won't believe that most drug transactions are done in cash unless you see incontrovertible evidence. That's fine. But no-one cares, so I don't know why you expect demands for a source to be met.
Do you expect me or anyone else to believe a random person like you making a bold claim at first glance?
So unless you have a source to a bold claim, I can dismiss it.
> But in this case, it's such a well-known and obvious fact that there's no such benefit.
Then the refutation should be quick and easy right? Again, I see none so far.
"Cash are only used for scammer and fraudster." More true in today since most person have used a credit card and phone paying. Any tool with anonymous means can also have uses for bad person. But is not any excuse for banning, good person can sometimes not want to make a public purchase.
so what is the point of cryptocurrencies then? other than to make ponzi schemes efficient to the unsuspecting general public who don't even know what they are getting into? [0]
> But is not any excuse for banning, good person can sometimes not want to make a public purchase.
It is when ransomware is on the rise [1] and the cryptocurrency exchanges like binance are letting them get away with it.
The utility, to me, seems to be creating a global financial market that is truly trustless and permissionless, aka no gatekeepers.
Right now, if I want to buy American stocks, I have to go through the handful of brokers licensed to sell foreign stocks in my country. I have to meet their funding requirements and I have to pay their hefty fees, not to mention meet their kyc requirements. This effectively makes it inaccessible to small players who might not meet the minimum requirements and/or pay the fees.
With crypto, I can buy wrapped synthetic versions of the stocks without going through any third party. The only fees I pay are transaction fees.
I'm sort of intrigued on this 'synthetic stocks' thing. What exactly are you buying there?
In the US, we have 'ADR" (American Depository Receipt) products for foreign companies. A company holds foreign shares, then issues ADRs which can (nominally) be exchanged 1:1 for them. That allows investors to get involved without the legal complexities of actually getting the shares in their name.
They're a normal thing you buy through ordinary domestic brokerages.
You’re essentially buying a token that’s pegged to the price of a stock. You don’t have the same benefits as the actual stockholder, but you do get exposure to the price appreciation.
I get it that its not the same thing, but if your intention is to profit from stockmarket speculation (like many investors), its a workaround, especially if your local market doesn’t have any brokerages that allow access to US equities to retail investors. Even in India, retail couldn’t easily buy US equities until two years ago.
Imagine the situation for someone in a poor African country. There are no local brokerages that allow them to access US markets. They are effectively forced to invest in poorly regulated, low value local companies through heavily manipulated local stock markets. For such people, being able to buy some ETH and buy a liquid, synthetic version of AAPL is a gamechanger
The Ethereum dApp Synthetix has a "DeFi" version of those. It's extremely inefficient and relies on centralized Chainlink oracles but it's permissionless and the assets keep their pegs.
The Korean project Luna has I believe a similar system although it's even more of a decentralization theater.
Buying or selling services governments or payment processors don't approve of. This includes drugs, pornography (cryptocurrency is the only payment method available on PornHub at the moment), and distasteful speech (Gab has been banned from various payment services).
Extortion, protection racket, "normal" ransom all done in cash, you think criminal take traceable wire transfer? Maybe we are make a ban on cash? Persons with nothing to hide should not fear government seeing theyre transactions?
Financial literacy already is of concern in fiat currency, so no surprising that here we have many people who are not very knowing of what they do. "Some people do bad things with this thing" cannot make excuses for "ban this thing". Having any ability for moving money out of sights of government, out of control of government, it can be in bad employment or it can be in good employment. Having any ability for moving money out of control for governments is the point of cryptocurency.
They are very useful as black market currencies. Black markets are an escape hatch for bad governance and that is all they will ever be. Good governance will win in the end.
Maybe, but given how very far from any kind of sophisticated democratic governance we are, their use, and thus cryptocurrencies' use, will persist for at least our lifetimes.
Exchanges are commodities, people can just move to another one. Hinderances in the way of shady exchanges can only make the market healthier by pushing funds towards more trustworthy exchanges.
Anti money laundering is (rightly or wrongly) pretty incompatible with crypto. The question "where did these funds come from" is something no one using crypto can really answer honestly and it's the core question in AML.
I like crypto. I like defacto drug decriminalisation and sanctions busting. But it was never gonna make it past AML.
What? I have used BTC for years and never had problem answering that honestly. I would argue the opposite, most BTC users are very straightforward investors, they bought BTC, maybe bought something with it along the years, then held the rest, then when the value went up sold some.
Maybe the ones who have something shady going on are just the noisiest?
The issue is a buy and hold investor will get $5k and sit on it. Another user sells $5k's worth every month because he's a small drug dealer. That second user is 1000x more revenue for the exchange because he trades every month. But you can't do business with him unless he tells you exactly what he's doing and who he is and gives you evidence he's getting those bitcoin from legitimate sources. Which he is not. So he really can't do any of that...
You get the same thing in most exchanges: a few percent of users are 80% of revenue. And that's true even when there is no "secondary market" which can only make it worse.
There's a protocol on Ethereum called Aave providing lending/borrowing to banks/institutional investors in separate permissioned pools that comply with AML and kyc regulations.
This perspective is just so alien to me. I don't understand how anyone can casually express such vulgar celebration of the state, knowing the misery that it inflicts on the most vulnerable in society, with money as its chief method of lifelong emotional torment.
Moreover, your predictions seem completely bombastic to me. Has there ever been a case where governments banned something and the resulting black market settled at a cheaper equilibrium? I can't think of one.
The perspective you are offering seems to be an extreme one as well. The idea that the 'misery' inflicted on society is caused by financial manipulation by governments seems out there.
I'm guessing the laws and cultural norms around how you acquire your money (monopoly, disclosure, insider trading, kickbacks) or pay tax (or game the system to avoid it) have much more to do with inequities in society, and that financial manipulation is far more rampant in the private sector than the public. The rabid anti-government messaging is not one I can relate to.
Not who you're replying to, but my perspective around the rabid anti-government messaging is that it is Government that's responsible for regulation of the existing financial system, which has been breaking laws with impunity and getting merely slaps on the wrist and continuing on their way.
Regulation appears to be simultaneously lacking in scope and under-enforced. And it's the role of the Government do make sure that regulation is both appropriate and enforced.
Without appropriate regulation and enforcement, the government is the facilitator to the finance industry's villainy. For the people.
Bitcoin et al are also algorithmically supply inelastic. As demand for the coins decreases (due to the inability to actually buy them), the price will decline. This is basic supply and demand economics.
Tell that to my friend who had his family's fortune wiped out in Argentina twice due to government seizure and hyperinflation before fleeing the country. Are these people just supposed to just take it on the chin for generations until their governments/societies stabilize?
I don't know how anyone can see no value in a medium of exchange outside of government currency controls.
If you think it's a pump and dump, then just don't participate. Stop forcing people to do what you want, stop banning things you don't like. Leave me alone.
No, that's "the market", that's capitalism (computer parts anyway).
Electricity shortages haven't been caused by crypto, and neither is crypto the cause of widespread ransomware. It may be the currency in which ransoms are desired to be paid, but to say they're the cause is misleading.
You could well argue that the fact currency for which payment is demanded is proof of its use-case as a currency / transfer of value. Criminals and the porn industry are always the canaries in the coal mine for "new". That criminals are increasingly using it is evidence of it's success as opposed to evidence of its imminent demise.
I care a lot about my communities, and I don't think that, from my position of privilege, I can justify going around and telling people, "just vote - the violence against you will stop eventually."
I'm not saying crypto is a complete answer either, but I think that its status as a change agent outside the political process is something to be celebrated, not condemned.
This perspective is completely alien to me. What misery and violence is the state uniquely causing that wouldn't be recreated by other forces in a non-state society?
That's putting aside all the generations, centuries and millenia of lessons learned that are enshrined in how a government-run state runs. It's hard to guess what alternative you're even imagining, but do you think some anarcho-crypto-decentralized-eco-intentional-autarkic commune where all internal "violence" has been eradicated can live in a bubble detached from the rest of the world?
I'm not much for utopian visions, though I respect some people who are.
I do notice that, at this moment in history (but I grant, not at all moments) the political processes (tactics like voting, lawsuits, etc) seem to produce changes that concentrate privilege. And I also notice that change agency outside the political processes seems to be much more humane. Crypto is just one example of this; mutual aid in the broader sense remains an example.
I've gone back-and-forth on this in my lifetime (including the 5-year period of formal study for my polysci degree), but from where I stand now, I don't think that the marginal safety conferred by sticking to the political processes alone is worth the sacrifice to our suffering friends and neighbors.
It's 2021, and we still have two million people in prison, six million in various phases of the carceral system, wars for profit around the globe, and a currency controlled exclusively by the already-wealthy for their own purposes (which, by the way, I don't think are actually served in this configuration either).
So yeah, I think let's start to build things to allow the state to be relieved so that we can take care of each other.
> I don't understand how anyone can casually express such vulgar celebration of the state, knowing the misery that it inflicts on the most vulnerable in society, with money as its chief method of lifelong emotional torment.
Power goes both ways. States created more prosperity and misery than anything else.
>Power goes both ways. States created more prosperity and misery than anything else.
Citation needed? America had more economic growth in the 1800s when the state was much smaller. The large states in communist Russia and China held their economic back decades compared to western countries with smaller states.
> The technology will float around, but the actual formal legal exchange of fiat for crypto should be banned.
The opposite is pretty much happening, regulation. So government is licensing the exchanges and after that the licenced exchanges will have much better foothold in their business as the unlicenced exchanges get kicked out. In the long run for the legit users of crypto this will be for the better.
Keeping anything on an exchange, for the time being, is just too risky. This is another example of it. Governments are still trying to figure out how to regulate crypto, ever shifting the amount of hurdles between crypto and the world of fiat.
I'd advise to pull funds if possible. I've recently done so with mine.
Of course that means my keys / wallets are now my responsibility, along with ensuring that I have appropriate backups in place etc.