Is Crypto dying or just dropping for the moment?

Jarhyn

Wizard
Jarhyn's remark reminds me of a controversy in California several decades ago. Producers were required to state net contents of a package and were permitted 6% "slop" or such. So a "5 ounce" bag of potato chips might legally contain anywhere from 4.7 ounces to 5.3 ounces.

Manufacturers claimed they needed the tolerance for manufacturing efficiency. But instead it was found that they were able to consistently fill the bags with almost exactly 4.75 ounces of product!
It is for manufacturing efficiency: they are manufacturing an efficient way to bilk customers.

The temp control example was in fact one from my work.

Really such regulations should be 5.0 +/-.05 ounces per standard deviation.

Gig them for excessive variance and mean drift, not per bag.
Holy overcomplication, Batman!

The regulation should be 'not less than the stated contents'. It's then up to the manufacturer to decide how much more than that target they aim for, in order to not be caught breaking the rule.
From years of working with systems: there MUST be a tolerance that allows the occasional shortage, but to be properly bounded this must be in terms of the sum total of allowable variance.

Of course, since even among researchers and scientists such messiness is common, I don't see rigor encroaching on packaging and label regulations and time soon.

Loren Pechtel

Super Moderator
Staff member
From years of working with systems: there MUST be a tolerance that allows the occasional shortage, but to be properly bounded this must be in terms of the sum total of allowable variance.

Of course, since even among researchers and scientists such messiness is common, I don't see rigor encroaching on packaging and label regulations and time soon.
Definitely. What I think we should do is not only have an indication of the quantity but also the reliability of that number.

Jarhyn

Wizard
From years of working with systems: there MUST be a tolerance that allows the occasional shortage, but to be properly bounded this must be in terms of the sum total of allowable variance.

Of course, since even among researchers and scientists such messiness is common, I don't see rigor encroaching on packaging and label regulations and time soon.
Definitely. What I think we should do is not only have an indication of the quantity but also the reliability of that number.
Make the standard deviation size be listed, and the problem goes away.

For those unfamiliar with standard deviation units, a standard deviation is a measure of deviation from the mean within a population.

This means that for a distribution like 1 2 3 4 5, you get something like 1.4142135623731, which says the numbes vary fairly widely (it's almost half the mean!)

Where with a number population like 3 3 3 3 3 you get zero.

Of course these are well known processes that are easy to calculate against. Any firmware, production system, or QC is already collecting these numbers and is reporting them to the inventory system, so it should be trivial to adjust the system to produce a tight mean and given a std dev unit target, fulfill the provision of a mean output that is on target with a low STD dev unit.

bilby

Fair dinkum thinkum
Make the standard deviation size be listed, and the problem...
...becomes that almost none of the general public knows what a standard deviation is. You might as well have them print the labels in Chinese, which would be just as informative and useful to the typical consumer.

Jarhyn

Wizard
Make the standard deviation size be listed, and the problem...
...becomes that almost none of the general public knows what a standard deviation is. You might as well have them print the labels in Chinese, which would be just as informative and useful to the typical consumer.
Or, people would actually have a reason to understand it, or a reason to look it up, or a reason to figure out intuitive ways to discuss it, or they would start to get an idea of how systems vary on standard deviation.

It's also kind of like learning to look at the unit price on a label at the store: it's not something everyone will be interested in doing but enough will do it and understand what it is that it would be very hard to pull a bad without consequences.

bilby

Fair dinkum thinkum
Or, people would actually have a reason to understand it, or a reason to look it up, or a reason to figure out intuitive ways to discuss it, or they would start to get an idea of how systems vary on standard deviation.
I have met people. They really wouldn't.

Jarhyn

Wizard
Or, people would actually have a reason to understand it, or a reason to look it up, or a reason to figure out intuitive ways to discuss it, or they would start to get an idea of how systems vary on standard deviation.
I have met people. They really wouldn't.
Some people wouldn't. Perhaps most. But someone would post a TikTok explaining it well, and then enough would that we would stop seeing shit like this.

bilby

Fair dinkum thinkum
Or, people would actually have a reason to understand it, or a reason to look it up, or a reason to figure out intuitive ways to discuss it, or they would start to get an idea of how systems vary on standard deviation.
I have met people. They really wouldn't.
Some people wouldn't. Perhaps most. But someone would post a TikTok explaining it well, and then enough would that we would stop seeing shit like this.
And there will be leprechauns, and little bunny rabbits, and everyone will be happy and smiling, and it will be summer all year long...

Jarhyn

Wizard
Or, people would actually have a reason to understand it, or a reason to look it up, or a reason to figure out intuitive ways to discuss it, or they would start to get an idea of how systems vary on standard deviation.
I have met people. They really wouldn't.
Some people wouldn't. Perhaps most. But someone would post a TikTok explaining it well, and then enough would that we would stop seeing shit like this.
And there will be leprechauns, and little bunny rabbits, and everyone will be happy and smiling, and it will be summer all year long...
That's a fairly sunny disposition. That's not really how the world works.

You know, when we started listing ingredients enough actually looked at them that we stopped seeing a wide variety of fuckery. Few care, vanishingly few, in fact... But it still led to improvements in consumer safety because  enough care.

Loren Pechtel

Super Moderator
Staff member
From years of working with systems: there MUST be a tolerance that allows the occasional shortage, but to be properly bounded this must be in terms of the sum total of allowable variance.

Of course, since even among researchers and scientists such messiness is common, I don't see rigor encroaching on packaging and label regulations and time soon.
Definitely. What I think we should do is not only have an indication of the quantity but also the reliability of that number.
Make the standard deviation size be listed, and the problem goes away.

For those unfamiliar with standard deviation units, a standard deviation is a measure of deviation from the mean within a population.

This means that for a distribution like 1 2 3 4 5, you get something like 1.4142135623731, which says the numbes vary fairly widely (it's almost half the mean!)

Where with a number population like 3 3 3 3 3 you get zero.

Of course these are well known processes that are easy to calculate against. Any firmware, production system, or QC is already collecting these numbers and is reporting them to the inventory system, so it should be trivial to adjust the system to produce a tight mean and given a std dev unit target, fulfill the provision of a mean output that is on target with a low STD dev unit.
The distribution may not be normal. The underfilled bottle doesn't get noticed but the overfilled one spills and gets noticed. Furthermore, standard deviation is more complex than it needs to be for the consumer. List them in the fine print, but the size label should be say "99.9% chance of at least 16oz of product" (or probably a standardized short form of this. Say perhaps "16oz/99.9%".)

TSwizzle

Let's Go Brandon!
This can't be good;

Crypto exchange FTX and many of its affiliated companies have filed for Chapter 11 bankruptcy, the company announced on Friday, with FTX Founder Sam Bankman-Fried stepping down as CEO. I'm really sorry, again, that we ended up here," Bankman-Fried, a former crypto billionaire, said in a Twitter post that went out soon after the filing announcement.

Yahoo

Jimmy Higgins

Contributor
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.

TSwizzle

Let's Go Brandon!
This didn't age well;

blastula

Contributor
At least Larry was right.

Harry Bosch

Contributor
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.

Jarhyn

Wizard
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.
If the portfolio holdings of Bitcoin is not in a wallet only you have the seed and password for, then you hold zero bitcoins.

Which is to say, bitcoins require no banking, and no sane user allows a bank to hold their bitcoins.

The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
It was a bubble from the start.

You buy bitcoins hoping in the future somebody will pay more than you did? Or am I missing something.

As a currency alternative how oes it avoid the same problems with currency and economics? Inflation? To balance inflation money has to be ivested in the ecinomy.

Who controls the supply of bitcoins?

Jayjay

Contributor
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.
If the portfolio holdings of Bitcoin is not in a wallet only you have the seed and password for, then you hold zero bitcoins.

Which is to say, bitcoins require no banking, and no sane user allows a bank to hold their bitcoins.

The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.
That's the point of bitcoins to some people. It's not the only reason. If a person is just owning bitcoins as an investment or needs to transact with bitcoins for some reason, holding them in a bank isn't any less sane than holding your other money or assets in a bank.

I think banks are naturally poised to take over custodial services if bitcoins or other cryptos become more regulated. It's just numbers on a computer for them, just like normal currency.

Jayjay

Contributor
It was a bubble from the start.

You buy bitcoins hoping in the future somebody will pay more than you did? Or am I missing something.

As a currency alternative how oes it avoid the same problems with currency and economics? Inflation? To balance inflation money has to be ivested in the ecinomy.

Who controls the supply of bitcoins?
Miners. The supply of new bitcoins consists entirely of mining rewards, and is determined by the algorithm used. By agreeing to use the same algorithm to cap the supply. But if less than 50% decide to have a different algorithm, the dissidents get nothing, so there is an economic incentive to stick with the majority, and majority has incentive to stick with the algorithm's limitations for new bitcoins because meddling it would very likely crash the price.

Another alternative is to "fork" the ledger. That's been done multiple times and that's why there are variants like "Bitcoin Gold" (current value ~$14) or "Bitcoin Cash" (~$100). Everyone who owns bitcoin at the time of the fork, will have equal number in the forked chain, but their dollar value depends entirely on who wants to buy them.

Bitcoin supply is limited (the rate at which miners get bitcoins is halved every 4 years, next time in 2024), and ultimately this will make it deflationary, because no new bitcoins will be created at some point, and some will be lost acicdentally due to people forgetting their passphrases or dying without revealing them to anyone.

Jarhyn

Wizard
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.
If the portfolio holdings of Bitcoin is not in a wallet only you have the seed and password for, then you hold zero bitcoins.

Which is to say, bitcoins require no banking, and no sane user allows a bank to hold their bitcoins.

The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.
That's the point of bitcoins to some people. It's not the only reason. If a person is just owning bitcoins as an investment or needs to transact with bitcoins for some reason, holding them in a bank isn't any less sane than holding your other money or assets in a bank.

I think banks are naturally poised to take over custodial services if bitcoins or other cryptos become more regulated. It's just numbers on a computer for them, just like normal currency.
Holding them in a bank is far less sane because there is no value proposition for the risk of letting custodians touch the wallet.

The only difference in transacting with a bank is one more person between you and the actual wallet it's going to be held in, and the power of others to steal your money without recourse to recovery.

Jimmy Higgins

Contributor
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.
If the portfolio holdings of Bitcoin is not in a wallet only you have the seed and password for, then you hold zero bitcoins.

Which is to say, bitcoins require no banking, and no sane user allows a bank to hold their bitcoins.

The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.
That's the point of bitcoins to some people. It's not the only reason. If a person is just owning bitcoins as an investment or needs to transact with bitcoins for some reason, holding them in a bank isn't any less sane than holding your other money or assets in a bank.

I think banks are naturally poised to take over custodial services if bitcoins or other cryptos become more regulated. It's just numbers on a computer for them, just like normal currency.
Holding them in a bank is far less sane because there is no value proposition for the risk of letting custodians touch the wallet.

The only difference in transacting with a bank is one more person between you and the actual wallet it's going to be held in, and the power of others to steal your money without recourse to recovery.
No FDIC on funny money.

Jayjay

Contributor
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
I never bought into bit coins. My financial advisor recommended that I put 2% of portfolio into bit coin. I said no. He convinced my wife though. So we have some exposure. Not a lot though. But I'm sensitive to the fact that I have many other friends and family with much deeper exposure.
If the portfolio holdings of Bitcoin is not in a wallet only you have the seed and password for, then you hold zero bitcoins.

Which is to say, bitcoins require no banking, and no sane user allows a bank to hold their bitcoins.

The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.
That's the point of bitcoins to some people. It's not the only reason. If a person is just owning bitcoins as an investment or needs to transact with bitcoins for some reason, holding them in a bank isn't any less sane than holding your other money or assets in a bank.

I think banks are naturally poised to take over custodial services if bitcoins or other cryptos become more regulated. It's just numbers on a computer for them, just like normal currency.
Holding them in a bank is far less sane because there is no value proposition for the risk of letting custodians touch the wallet.

The only difference in transacting with a bank is one more person between you and the actual wallet it's going to be held in, and the power of others to steal your money without recourse to recovery.
My point is that the same is true of cash. Putting it in a bank protects you from someone physically robbing you, but also puts you at risk that the bank may go bankrupt or otherwise cheat you. Banking regulation protects you from those risks a bit, but not entirely.

With bitcoin, the risk isn't so much getting physically robbed as it is forgetting your passphrase or otherwise losing the keys. With bitcoins in a bank, you don't have to worry about it more than you have with dollar accounts.

Jayjay

Contributor
No FDIC on funny money.
There is no reason there couldn't be. It's just a matter of regulation.

Swammerdami

Staff member
The whole point was remote payments WITHOUT banks, and third party trust on Bitcoin is really dumb since they can be effectively stolen and cannot be recovered once they ARE securely held in a user wallet.
The "whole point" of the Mississippi Company was gold and silver riches in Arkansas, but this was long forgotten in the bidding frenzy which culminated in 1720. The "whole point" of Tulipomania was that tulips are pretty. I think most purchasers of Bitcoin were either having fun or speculating on price improvement.

If people bought Bitcoin because they didn't trust banks, does it seem odd they instead trusted entrepreneurs barely out of their teens, some operating billion-dollar exchanges literally out of their garage?

A real goal of Bitcoin was tax evasion but with the Blockchain on permanent public display, am I not correct that governments — and anyone else — is often in a position to deduce identities?

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
Miners. The supply of new bitcoins consists entirely of mining rewards, and is determined by the algorithm used. By agreeing to use the same algorithm to cap the supply. But if less than 50% decide to have a different algorithm, the dissidents get nothing, so there is an economic incentive to stick with the majority, and majority has incentive to stick with the algorithm's limitations for new bitcoins because meddling it would very likely crash the price.

Un fucking believable that popele bought into this. It was a bubble from the start.

Only risk is loosing passwords? Billions have dissapeared overnight. Pension funds were invested in crypto. It is a debaucle.

It is not impossible but difficult for a bank to go bankrupt today. The FDIC backs individual depositors for lossees.

Anything not connected to physical economic valuation is a con game.

The 90s .com crash and the looming failure of Twitter. The .coms bibbled based on wild speculation. Companies had exaggerated stock value with little infrstrure and assets.

Using an old saying Musk bought a 'pig in a poke'.

Harry Bosch

Contributor
No FDIC on funny money.
There is no reason there couldn't be. It's just a matter of regulation.
But bit coin users don't want regulation. Thats the purpose of bitcoins.

Swammerdami

Staff member
No FDIC on funny money.
There is no reason there couldn't be. It's just a matter of regulation.
No reason? How would it even work? Would the insurer own real Bitcoins to make good on exchange losses? Would the insurer promise to redeem Bitcoins at some dollar price? (I suppose there are Bitcoin Put options already.)

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
It is sounding like a video game.

I'm not an expert in economics.

As I see at the end of day the only value of currency is in what you can buy with it.

I I go to a storeand potatoes are in dollars/pound or euros/kilogram.

Comparing dollars to euros we can assess relative value in terms of local buyng power.

I'd think bitcoins are useless unless it is valued relative to a state currency.

I have 100 bitcouns, how do I buy something withit?

How much is $1 US in bitcoin? 0.000059633 BTC 1 USD = 0.000059633 BTC Nov 12, 2022 04:39 UTC Loren Pechtel Super Moderator Staff member It was a bubble from the start. You buy bitcoins hoping in the future somebody will pay more than you did? Or am I missing something. As a currency alternative how oes it avoid the same problems with currency and economics? Inflation? To balance inflation money has to be ivested in the ecinomy. Who controls the supply of bitcoins? It has never remotely been a meaningful investment. It could have had use as a medium of exchange for transactions your government or financial institution doesn't approve of but the transaction costs are too high for this to be of much use. Elixir Made in America WTF is "physical economic valuation"? A government sponsored version of bitcoin, equivocable to bitcoin. bilby Fair dinkum thinkum It is sounding like a video game. I'm not an expert in economics. As I see at the end of day the only value of currency is in what you can buy with it. You can buy anything with bitcoin that you could buy with any other foreign currency. You can't buy potatoes in Idaho or Washington with euros, but that doesn't make the euro valueless or useless. I I go to a storeand potatoes are in dollars/pound or euros/kilogram. Comparing dollars to euros we can assess relative value in terms of local buyng power. I'd think bitcoins are useless unless it is valued relative to a state currency. OK. And are they? I have 100 bitcouns, how do I buy something withit? How much is$1 US in bitcoin?

0.000059633 BTC

1 USD = 0.000059633 BTC Nov 12, 2022 04:39 UTC
Yes, according to you, they are.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
A claimed benefit was transparency and traceability of global trasactions. The idea was it would be impoosible for organized crime to move money around.

That did not work out.

Like many I use a credit card for daily purchasing, and I pay it off every month.

Credit cards and debit cards as well have a degree of fraud protection. If you buy online with crypto and it is bogus you are probably shit out of luck.

As the ecoonomy improves and inflation drops bank CDs and money markets are a generally safe way to get some relief from inflation.

Investing in the stock market in the long run is the best way to make money and beat inflation.

Jayjay

Contributor
No FDIC on funny money.
There is no reason there couldn't be. It's just a matter of regulation.
No reason? How would it even work? Would the insurer own real Bitcoins to make good on exchange losses? Would the insurer promise to redeem Bitcoins at some dollar price? (I suppose there are Bitcoin Put options already.)
I'm not sure what you're talking about.

If a bank gets robbed by Bonnie and Clyde, insurance or the bank covers certain amount of savings in $or € or other currencies. All I'm saying is that there's no reason why it couldn't work exactly the same way with bitcoin. How the insurance works is immaterial. Cheerful Charlie Contributor One of the problems with bitcoin et al is exchanges and the like. Almost weekly I read about some hack, enbezzlement, or collapse costing millions or more. Virtual currencies draw theives like over ripe bananas draw fruit flies. Harry Bosch Contributor No FDIC on funny money. There is no reason there couldn't be. It's just a matter of regulation. No reason? How would it even work? Would the insurer own real Bitcoins to make good on exchange losses? Would the insurer promise to redeem Bitcoins at some dollar price? (I suppose there are Bitcoin Put options already.) I'm not sure what you're talking about. If a bank gets robbed by Bonnie and Clyde, insurance or the bank covers certain amount of savings in$ or € or other currencies. All I'm saying is that there's no reason why it couldn't work exactly the same way with bitcoin. How the insurance works is immaterial.
Yea, but in exchange for the FDIC insurance, the banks have to follow rigorous regulations and laws.

marc

Veteran Member
One question I have about crypto currency.

say a bitcoin is worth $1,200 at the moment. I want to buy something with it that costs$159. How is change handled?!? Can you have a fraction of a coin?

Jayjay

Contributor
One question I have about crypto currency.

say a bitcoin is worth $1,200 at the moment. I want to buy something with it that costs$159. How is change handled?!? Can you have a fraction of a coin?
Yes. It's just a decimal number and the smallest unit is "satoshi", which is 0.00000001 bitcoin. I suppose the system can be updated to be able to handle even smaller fractions in the future, if bitcoin value becomes ridiculously large.

Due to transaction fees, it's actually really hard to own "one bitcoin". You almost always have something like 1.00497 or 0.99997 in your wallet.

Bronzeage

Super Moderator
Staff member
Jebus... makes the S&L scandal look quaint.

Who'd think an unregulated system for funny money would be so volatile.
The problems arise when cryptonites try to do things that are usually done by highly regulated institutions. FTX and its uncountable number of subsidiaries tried to be an investment bank and use other people's cryptocurrency as if it were regular money. National banking regulators such as the Federal Reserve and the Bank of England work very hard to keep their currency stable.

Crypto, by its very nature is volatile. A crypto bank can very easily wake up one morning to discover the value of its assets have dropped by double digit percentages. It's all very predictable. The things like European wars, Brexit, and a rise in the price of oil, are what national banks try to anticipate and act accordingly. When the smoke clears, I'm sure we'll find the root cause of all of this is the people in charge simply didn't know what they were doing.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...

It sounds a lot like a pyramid scheme. It is interesting that my Firefox browser says it inhibits crypto mining.

It is also not green. A cmpany wanted to buy a shut down natural gas power plant to power a crypto miming operation.

It appers that as crypti grows the CPU time grows and enrgy demnd grows. It is not a fixed bounded opertion.

As of August 2022, published estimates of the total global electricity usage for crypto-assets are between 120 and 240 billion kilowatt-hours per year, a range that exceeds the total annual electricity usage of many individual countries, such as Argentina or Australia.Sep 8, 2022

To verify transactions, Bitcoin requires computers to solve ever more complex math problems. This proof of work consensus mechanism is drastically more energy-intensive than many people realize.May 18, 2022

People don't trust banks and governments but trust crypto companies with no oversight, transparency, and accountability.

You are better off buying gold and burying it in the back yard.

Bronzeage

Super Moderator
Staff member

It sounds a lot like a pyramid scheme. It is interesting that my Firefox browser says it inhibits crypto mining.

It is also not green. A cmpany wanted to buy a shut down natural gas power plant to power a crypto miming operation.

It appers that as crypti grows the CPU time grows and enrgy demnd grows. It is not a fixed bounded opertion.

As of August 2022, published estimates of the total global electricity usage for crypto-assets are between 120 and 240 billion kilowatt-hours per year, a range that exceeds the total annual electricity usage of many individual countries, such as Argentina or Australia.Sep 8, 2022

To verify transactions, Bitcoin requires computers to solve ever more complex math problems. This proof of work consensus mechanism is drastically more energy-intensive than many people realize.May 18, 2022

People don't trust banks and governments but trust crypto companies with no oversight, transparency, and accountability.

You are better off buying gold and burying it in the back yard.
The first time someone explained bitcoin to me, my first thought was it was either a Ponzi scheme or a Bubble. Now I think crypto is actually both.

Swammerdami

Staff member
No FDIC on funny money.
There is no reason there couldn't be. It's just a matter of regulation.
No reason? How would it even work? Would the insurer own real Bitcoins to make good on exchange losses? Would the insurer promise to redeem Bitcoins at some dollar price? (I suppose there are Bitcoin Put options already.)
I'm not sure what you're talking about.

If a bank gets robbed by Bonnie and Clyde, insurance or the bank covers certain amount of savings in $or € or other currencies. All I'm saying is that there's no reason why it couldn't work exactly the same way with bitcoin. How the insurance works is immaterial. I'm not sure why you didn't understand what I am talking about. Banks pay premiums to an entity backed by an entity with great financial strength (the same entity, BTW, which prints the Benjamins in which restitution is made). That is how FDIC works. Bitcoin deposits are not operated by banks — nor by anything else — this is the "beauty" of Bitcoin, at least in the eyes of some beholders. "How the insurance works is immaterial" ?? Can you at least give us a clue? WHO is paying premiums to WHOM? Is the restitution made in the insured coin? Can you agree that "work exactly the same way" is at best an . . . exaggeration? Jayjay Contributor No FDIC on funny money. There is no reason there couldn't be. It's just a matter of regulation. No reason? How would it even work? Would the insurer own real Bitcoins to make good on exchange losses? Would the insurer promise to redeem Bitcoins at some dollar price? (I suppose there are Bitcoin Put options already.) I'm not sure what you're talking about. If a bank gets robbed by Bonnie and Clyde, insurance or the bank covers certain amount of savings in$ or € or other currencies. All I'm saying is that there's no reason why it couldn't work exactly the same way with bitcoin. How the insurance works is immaterial.

I'm not sure why you didn't understand what I am talking about.

Banks pay premiums to an entity backed by an entity with great financial strength (the same entity, BTW, which prints the Benjamins in which restitution is made). That is how FDIC works.
Bitcoin deposits are not operated by banks — nor by anything else — this is the "beauty" of Bitcoin, at least in the eyes of some beholders.

"How the insurance works is immaterial" ?? Can you at least give us a clue? WHO is paying premiums to WHOM? Is the restitution made in the insured coin? Can you agree that "work exactly the same way" is at best an . . . exaggeration?
I'm talking about a hypothetical scenario where banks would provide a custodial service to its customers to hold their bitcoin (or other crypto) for them. Basically what all crypto exchanges do already now. (Except that they don't have any insurance, so it's insane to keep your bitcoin in the exchanges for any longer duration of time.)

For the customer, it would be just another account, just "bitcoin" as the currency instead of dollar, euro, or yen.

For the bank, it would be just handling digital numbers just like with regular currencies. They'd need to have the actual bitcoin in some cold wallet and need to keep that secure, but that would not be specific to any customer. It's like money in a bank vault.

From insurance point of view, it'd mean that if someone does nick the keys and steals the actual bitcoin, or if there is a fire at and all the keys and their backups gets destroyed, the bank still owes its customers the bitcoin which it now has to buy back at market price. To avoid non-payment in case of bankruptcy, there would need to be enough funds reserved somewhere to do this. Either by the bank itself, or the insurer.

There is nothign fundamentally preventing banks from dealing with bitcoin exactly the same way they do with other currencies, if there was demand for it. Right now it seems banks are hesitant because of the lack of regulation and high volatility.

Swammerdami

Staff member
OK. With FDIC the bank is the money's custodian and the insurEE; insurance is against failure OF THAT BANK. The insuror is a "firm" with unrivaled financial strength.

In your scenario, bank is both custodian AND insurOR. The custodian is guaranteeing his custody is secure. I think custody already comes with such a "guarantee"; the problem is that that guarantee doesn't protect against custodian's bankruptcy.

Swammerdami

Staff member
Considering various security problems, the chance that the ID(s) on the blockchain owned by the custodian are compromised (some enemy has the key) should not be ruled out! Bitcoin reserves might be drained quite quickly by even untalented criminals. Contrast this with. e.g. SWIFT where large illicit transactions are likely to be spotted and stopped. (SWIFT, like blockchain, is a reliable protocol in its own way .)

And anyone who commits to buying Coins at some unknown future price assumes great risk.

Gospel

Unify Africa
You guys ( Swammerdami & Jajay) must be crypto oracles or something cause FTX Trading Limited is looking like

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
STX took daily user money and invested in risky ventures,. A regulated bank could never do that.

If rthe intent was a decentralized banking system crypto failed. It has a defacto central bank.

Jayjay

Contributor
You guys ( Swammerdami & Jajay) must be crypto oracles or something cause FTX Trading Limited is looking like

View attachment 41117
Hey, I'm just interested in the tech. I have no clue if crypto is a good investment.

I got some cryptos around somewhere but I take the attitude that it's worth nothing, and maybe will check again in decade or two.

TSwizzle

Let's Go Brandon!
STX took daily user money and invested in risky ventures,. A regulated bank could never do that.

Are you kidding, sarcasm or just a bad memory?

Harry Bosch

Contributor
You guys ( Swammerdami & Jajay) must be crypto oracles or something cause FTX Trading Limited is looking like

View attachment 41117
Hey, I'm just interested in the tech. I have no clue if crypto is a good investment.

I got some cryptos around somewhere but I take the attitude that it's worth nothing, and maybe will check again in decade or two.
Steve is correct. The FDIC would not allow a bank to make the crazy investment that FTX did. The comparison to 2009 is faulty. They crypto investments are gone. No recovery. Many of the bad loans from 2009 were paid back (often when the home sold or was foreclosed).