You don't have to trust those institutions. You can custody your own crypto without them, pay for services, etc. What's holding the safety level back ironically is the overbearing regulations making individual financial sovereignty a pain.
True, but let's be realistic, there is no practical way to get crypto outside of exchanges for a normal user, and that's a serious trust bottleneck. And if you are looking to use crypto as real currency, then you'd expect there to be a complex ecosystem of lenders, insurance, and markets around it, money is not just about buying consumer items.
In general, it turns out that it's very hard to build a crypto wallet that both is easy to use for regular people and doesn't take the control of your keys away from you.
Also let's not ignore that the crypto system itself is not magical and can have plenty of security issues too. At this point we can be fairly confident that BTC and ETH are safe, they have been battle-tested, but this is still about trust. When you get into smart contracts and other complex usages of blockchains, who knows what bugs they might have, there is zero enforced oversight. Crypto only ensures that it will work how it is programmed to work, but the programming could be wrong.
If I'm reading and understanding correctly, it looks like Ethereum's blockchain is 18TB, but you only need to download about 1.1TB if pruning: https://eips.ethereum.org/EIPS/eip-4444
It's not actually pruning, the full node is really around 1TB. That 18TB number comes from old naive design for an archive node. Archive is basically cached state after each historical block. The 1.1tb full node can generate all this data by executing blocks and the current generation of archive nodes can store it around 3TB instead of 18TB.
Of course if you're buying a 14" Macbook Pro, the upgrade to 2TB will cost you $400. Or $1,000 if you want 4TB (on top of the cost of upgrading the processor to the Max chip - necessary for that option.)
They were pointing out that crypto users rely on these worse-than-worthless audits and as an example how it wasn't until threatened with traditional law enforcement certik gave tokens back.
> What's holding the safety level back ironically is the overbearing regulations making individual financial sovereignty a pain.
The reality is, that because of KYC/AML laws it's difficult for ordinary people to replace cash with crypto, which - if it were easy - would be a superior form of money and transacting as any amount from tenths of a cent to billions, moves frictionlessly.
We already know crypto is being used for real, actual terrorist funding[1]. How do propose to balance access to crypto against that real harm? KYC rules seems a reasonable compromise here.
You do have a point there, KYC/AML does tend to make a few large exchanges a trust bottleneck.
But still, would you bet a billion dollars that whatever crypto system you are using has no bugs, vulnerabilities or backdoors? Are you going to audit the whole codebase yourself and trust your technical assessment? Do you even have access to the code that is deployed?
In terms of the blockchains themselves, they all have a kind of built-in bounty, in that if on-chain funds have inherent risk of being lost or taken due to faults in the system, this will have happened - as the biggest / most popular systems are valued in the multi-billions. Ie, a huge bounty if an exploit exists.
To my knowledge, this has not occurred to date with any of the major systems themselves.
It's important not to mistake the above with a different issue of trusting applications development built on blockchain projects.
Almost all blockchains have kind of two layers of functionality.
The base layer allows self-custody and transfer.
Above that, people can build other things using smart contract languages, or hardware solutions, or software that interacts with the chain. Those can have huge bugs or be outright scams.
It's a bit like HTTPS could be provably secure, but that doesn't mean if you visit https://dodgy-website.com-dodgy.tk you're protected against it doing something dodgy.
The different is while HTTPS is limited in its user-facing application, the base layer of say Bitcoin or Ethereum isn't so much.
People can securely store and transact any amount with anyone worldwide, sometimes in seconds, with complete finality and determinism, without needing to trust anyone in between.
In almost all cases, you also have access to the code, and can build it yourself. But as mentioned, the built-in bounty acts as your best security.
Eg, if there was a hole in the base layer of Bitcoin right now, there's hundreds of billions up for grabs.
> which - if it were easy - would be a superior form of money and transacting as any amount from tenths of a cent to billions, moves frictionlessly.
We already have that in many countries. Yes, it's subject to AML/KYC regulations, and? Why is that a problem? It's only a problem if you want to remain anonymous (which you don't, really, with crypto), which is a very niche use of money. A lot of it related to crime too, which makes it hard to justify.
It's a problem because AML/KYC laws are created and enforced by governments, who sometimes are also the criminals such laws are supposedly created to protect us all from. Under a corrupt regime, crypto is a potential corrective force.
If governments are acting fairly, some of crypto's use-cases will simply not be adopted en masse. If they're not acting fairly, it will all have huge take up. In that sense it's like a check and balance on democratic values.
This has demonstrably been the case in many countries.
Governments that come down extremely heavy-handed against it, are almost certainly themselves either corrupt in the worst case, or against common democratic principles of freedom and personal sovereignty in the best case.
The common BS trotted out is that crypto os used for financing terrorism. The reality is, cash is used for financing terrorism, banks are used for financing terrorism, and governments are used for financing terrorism.
Why target only crypto for this? Because it's a ruse. It's being targeted for other reasons.
A government truly "for the people, and by the people", would welcome the people being more easily able to transfer value between each other and hold it closer to them without a middle-man they need to trust.
If free to evolve unrestrained, crypto would likely eventuate in a future where governments are less relevant, less powerful, and smaller.
A government structure concerned more with self-preservation, will - accurately - perceive crypto as a threat to its antithetic hegemony, through a diminished ability to, for example:
- conduct itself without transparency. In a functionally-crypto world, government transactions would be immediately and openly public and auditable by anyone, and likely so automated. Currently, months long latency and bureaucratic obfuscation work against accountability.
- unfairly freeze assets for the purposes of self-preservation or power. In many cases there could well be no ability to freeze assets at all. (Private keys can be stored in minds, and this can be plausibly denied.)
- control the economy, and so ultimately, manipulate every aspect of a populations direction. A sufficiently smart-contract operated world could decentralise and democratise economic "policy" so much it may no longer fit inside that definition, as it may potentially become less of an affectation and more of an effect.
A proposed downside of all this is it simply may not work. I don't buy that. I think the main problems we have as a species are in how we allow ourselves to be exploitable. Building in greater sovereignty is the solution, not a problem.
> The common BS trotted out is that crypto os used for financing terrorism. The reality is, cash is used for financing terrorism, banks are used for financing terrorism, and governments are used for financing terrorism.
It's true that all financial institutions are subject to KYC and AML laws. However, if you've ever used a crypto exchange versus a bank, or even just a prepaid debit card, you'll immediately see a massive difference in the application of those laws in terms of what you have to supply and how often.
It's not the crypto exchanges pushing for that - they actively work against it as it's a major expense as well as costing them customers.
Aside from exchanges, consider: cash itself is not targeted by these laws, which is crypto's closest existing analog. Do you need to submit KYC and AML documents to pull cash from your physical wallet and pay someone? Yet the push is for that level of involvement in your crypto wallets.
Finally, the SEC's actions for example are very clear: an obvious scammer like FTX gets a tick of approval and ends up reaming customers for billions. Whereas long-stable contributors such as LBRY or Ripple, get bogged down with heavy-handed enforcement. There are more examples.
HSBC was legally found to be actively engaged in facilitating criminal gangs, money-laundering etc. They paid a fine. You think a crypto exchange found to be doing those things would pay a fine? No, the executives would be jailed.
There's a big difference in application, across the board.
I’m moderately familiar with exchanges. I've had quite a lot to do with them including being involved in a coin listing.
I notice substantially lower documentation requirements for a crypto exchange vs a bank. For example for both Binance and Gate (and I think Coinbase - not entirely sure there) I only had to supply a single identification document. For my bank accounts I've never been able to open one with less than 3 documents.
Not sure what your point about HSBC is. If you think SBF or CZ shouldn't be in jail then I don't know what to say. In the case of HSBC I'm not aware of individual witness accounts of deliberate criminal behaviour of individuals like both CZ and SBF did. But I absolutely agree people should have gone to jail.
In general crypto people seem to disagree with the idea of laws - specifically ones that apply to them. When challenged they resort to whataboutism or conspiracy theories. It's a set of weak arguments and really lays bare the weak intellectual foundation the whole crypto industry is based on.
> I notice substantially lower documentation requirements for a crypto exchange vs a bank.
I notice the reverse though it does vary by jurisdiction.
I described FTX as an "obvious scam", citing it as an example of the SEC greenlighting a bad actor - so your speechlessness is the result of comprehension issues on your part.
It's not a "conspiracy theory" to hold a different opinion to you regarding financial policy direction.
What I regard as "weak" is the use of such derogatory labels, rather than proper discussion.
