[ExI] lotta splainin to do

Sun Nov 20 01:30:53 UTC 2022

Spike,
No exchanges are not needed, they are just convenient.
1) If we just adopted some of the most solid crypto like BTC and it was a
universal currencies all the transactions would be in BTC so no need to go
back and forth to fiat. Even salaries and services would be paid in BTC so
fiat could be completely bypassed. This is theoretical and not happening
yet but in principle this is the best solution to the problem you are
mentioning.
2) In the meanwhile a better solution to centralization of existing
exchanges would be decentralized exchanges. In this case depositing
electronically cash (using a debit card for example) in such exchange would
not allow the owner of the exchanges to have access to your cash but be
more like an escrow account. The person that owns the account has the key
to the account. Then all the transactions would be peer to peer and only if
both parties agree the exchange is allowed. This is what is called a smart
contract.

The using the debt card part is where we would need collaboration from
existing institutions like banks. Many banks allow you to use your a debit
card or bank account to buy BTC on exchanges like Coinbase. While Coinbase
is pretty solid they are still very much centralized. It would be better if
they would work as an escrow account and facilitate peer to peer
transactions but it doesn't work in that way. They basically have control
of the cash you deposited and give you credit for what you deposited and
then through internal accounting keep track of the trades you have done.

It should not work in that way.
It is done in that way because it is more convenient and easier to put all
the money in a pool and keep track of the transactions and then only when
somebody wants to withdraw crypto from the exchange or convert back to cash
you get back your money and you are in control again.

This allows the incredible weakness of the people in control of the
exchange to run away with the money or do stupid things with it like using
it to trade with high risky leverage exactly like FTX did.

There are some decentralized exchanges but as far as I know they only
convert crypto to crypto and not from fiat to crypto and back to fiat. But
it is a solvable problem not sure why there is not more work in this area.
This is where the real potential of crypto really is. It should be all
about cutting the middle man (almost completely, one would still pay some
little fee for the escrow service).

Here a good article about decentralized exchanges.
https://www.gemini.com/cryptopedia/decentralized-exchange-crypto-dex
Giovanni

On Sat, Nov 19, 2022 at 4:17 PM spike jones via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

>
> Here ya go Stuart, forwarded.  I added a comment and question at the
> bottom.
>
> spike
>
>
>
>
> -----Original Message-----
> From: Stuart LaForge <avant at sollegro.com>
> Sent: Saturday, 19 November, 2022 3:20 PM
> To: ExI Chat <extropy-chat at lists.extropy.org>; spike at rainier66.com
> Subject: Re: lotta splainin to do
>
>
> Hi Spike for some reason the server keeps bouncing this back to me as
> spam. Please forward to the list. Thanks.
>
> Quoting Spike:
>
> > I keep hearing of this FTX digital money exchange, but I don't
> > understand it.  Some news agencies are reporting that it was looted by
> > someone, possibly an insider, but that makes no sense because the main
> > selling point of bitcoin was that ownership is maintained by
> > blockchain, which is said to be inherently secure.  So. this looter,
> > what did she steal?  Digital currency?  Or did FTX have a huge pile of
> > paper currency, and if so, why did FXT have a huge pile of cash when
> inflation is at 8%?
> > But if they did, was that cash in a safe, then some sneaky scoundrel
> > with the combination hauled away the loot in the back of a very sturdy
> > heavily-loaded delivery truck?  A USA bill has about 1g mass, so a
> > million bills is a ton, so even if all that moola was in the largest
> > American bill, the 100, we are still talking 4 tons of currency said
> > to be missing and that just doesn't sound like something that would be
> > easily carted away.  It would be a heeellll of a job just loading the
> > truck.  But if it is digital currency which was stolen, how can they
> > suppose the looter somehow got away with 400 megabucks?
> > This story makes no sense to me.  A puzzled rocket scientist I am.
> > Adrian or some of you other hep cats, do explain please.
>
>
> The reason the the FTX saga makes so little sense is that people are still
> trying to see it as some sort of failed business enterprise.
>
> Near as I can tell based on the following bankruptcy filing by John J.
> Ray III (the guy who oversaw Enron's bankruptcy case) the company was
> never meant to be viable and was designed from the ground up to be an
> inscrutable scam meant to defraud investors, funnel money to Sam
> Bankman-Fried and his cronies, and avoid any accountability or
> transparency. It was all just an elaborate shell game using other people's
> money for personal gain.
>
>
> https://s3.documentcloud.org/documents/23310507/ftx-bankruptcy-filing-john-j-ray-iii.pdf
>
> Interesting excerpts include the following items:
>
> 4. I have over 40 years of legal and restructuring experience. I have been
> the Chief Restructuring Officer or Chief Executive Officer in several of
> the largest corporate failures in history. I have supervised situations
> involving allegations of criminal activity and malfeasance (Enron). I have
> supervised situations involving novel financial structures (Enron and
> Residential Capital) and cross-border asset recovery and maximization
> (Nortel and Overseas Shipholding). Nearly every situation in which I have
> been involved has been characterized by defects of some sort in internal
> controls, regulatory compliance, human resources and systems integrity.
>
> 5. Never in my career have I seen such a complete failure of corporate
> controls and such a complete absence of trustworthy financial information
> as occurred here.
>    From compromised systems integrity and faulty regulatory oversight
> abroad, to the concentration of control in the hands of a very small group
> of inexperienced, unsophisticated and potentially compromised individuals,
> this situation is unprecedented.
>
> 46. Many of the companies in the FTX Group, especially those organized in
> Antigua and the Bahamas, did not have appropriate corporate governance. I
> understand that many entities, for example, never had board meetings
>
> 50. The FTX Group did not maintain centralized control of its cash. Cash
> management procedural failures included the absence of an accurate list of
> bank accounts and account signatories, as well as insufficient attention to
> the creditworthiness of banking partners around the world. Under my
> direction, the Debtors are establishing a centralized cash management
> system with proper controls and reporting mechanisms.
>
> 59. The FTX Group’s approach to human resources combined employees of
> various entities and outside contractors, with unclear records and lines of
> responsibility. At this time, the Debtors have been unable to prepare a
> complete list of who worked for the FTX Group as of the Petition Date, or
> the terms of their employment. Repeated attempts to locate certain presumed
> employees to confirm their status have been unsuccessful to date.
>
> 62. The Debtors did not have the type of disbursement controls that I
> believe are appropriate for a business enterprise. For example, employees
> of the FTX Group submitted payment requests through an on-line ‘chat’
> platform where a disparate group of supervisors approved disbursements by
> responding with personalized emojis.
>
> 71. One of the most pervasive failures of the FTX.com business in
> particular is the absence of lasting records of decision-making. Mr.
> Bankman-Fried often communicated
> by using applications that were set to auto-delete after a short period of
> time, and encouraged employees to do the same.
>
> Sam Bankman-Fried is like the Bernie Madhoff of cryptocurrency.
>
> Stuart LaForge
>
>
>
>
>
>
>
> Stuart, this has the ring of truth to it, and leaves me asking the same
> question I was asking 20 years ago in a subgroup of ExI: if we embrace
> digital currency, how do we get to the place where we can all use it the
> way we use fiat currency?  Think of the last dozen transactions you did,
> perhaps the grocery store (owwwww damn) the gas station (owwwww damn) paid
> your power bill (owwwww damn) your mortgage (well at least that one didn't
> change.)  Now, if not for exchanges, how can those be done?  Digital
> currency necessitates exchanges, ja?  We need something like cryptocurrency
> cash machines analogous to what banks already have.  Alternative: those
> institutions listed above need to accept digital currency.  Do we have any
> which do?  Which?
>
> spike
>
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>
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