Binance ‘pauses’ Bitcoin withdrawals amid market collapse
telegraph.co.ukI have sat out the crypto craze. I was actually one of the first to introduce the idea to my friends after having stumbled upon Satoshi's paper. I even joined a mining pool early on, but never did I put my own money into it. I'm not an expert economist by any means, and am often intimidated when I go on crypto boards and the average user seems to be able to throw around advanced macroeconomics terms no problem.
Nevertheless, my basic economic background in crypto told me that, since the currency is neither tied to ownership in something with value or some entity that actually produces something valuable or some token which governments will arrest you if you fail to pay, that it has no useful value. For years, I pointed this out to those around me, who thought I was some kind of Luddite.
But, I think this is going to vindicate my basic argument. There is nothing valuable in crypto. It failed as a means of payment. It's failed to decentralize finance. And now, it's failed to be a store of value as well.
> For years, I pointed this out to those around me, who thought I was some kind of Luddite.
Fun fact, the Luddites weren't actually anti-technology - many of them were skilled machine operators. They were protesting for better working conditions, higher pay and apprenticeship programs. [1]
[edit] Of note: the machines they were attacking were not new, and smashing industrial machines in protest was not a concept that began or ended with them. They were some of the more prolific victims of anti-organized-labor smear campaigns.
[1] https://www.smithsonianmag.com/history/what-the-luddites-rea...
I was into bitcoin for method of payment purposes very very early (I think it was 10 cents when I played with it). Never held it though or made money using it. Even before bitcoin some folks might remember digicash - I was into that, but it never went anywhere either.
I'm a sci-fi reader. It seems to me that digital cash has utility. I've gone to Apple Pay wherever possible, my only wish was that apple pay would have taken out Visa and Mastercard with a direct offering with much lower fees.
On merchant side there are still ripoffs - a lot of ACH processing fees are absurd (1% - no cap on amounts etc - so you end up at $100/transaction if you do a $10,000 transaction through certain platforms) and there is no way in person trx have enough fraud to justify the 2.x%. charged there. Chip and pin would solve the issue there anyways but for whatever reason has not been adopted in US.
> Chip and pin would solve the issue there anyways but for whatever reason has not been adopted in US.
Can speak to this. Historically the US has been reluctant to adopt CVM PIN because of the extra transaction time. A CVM Signature transaction (or even a CVM None) takes 1-2 seconds. Asking someone to enter their PIN takes an additional 10-20 seconds. A full order of magnitude longer.
For places like McDonalds, this was a non-starter. It's even fairly painful in the countries where it has been adopted.
The solution in both markets was to move to contactless EMV cards and especially to contactless-enabled mobile wallets. You get the best of both worlds with mobile wallets: low transaction times and low fraud risk.
The interchange rate you're referencing (2.x%) isn't due to fraud risk really, it's used to fund the cost of reward programs. The EU just doesn't have nearly the same kinds of cash-back or frequent flyer program type cards - which just cannot be funded by the regulated 0.3% interchange cap.
What confuses me in all this is just that when I pay with a chip + signature, I have to insert my card AND LEAVE IT IN for something like 10-20 seconds until the beep beep beep of death.
With my apple device, I touch the terminal, and its basically instant.
In other words, the bandwidth sticking my card INTO the device (plus whatever time it takes to do some calcs on device) is something like 2,000 times slower over a wired connection then my iphone does over wireless.
There is some failure in the current CVM implementation in the US because this makes no logical sense at all.
About half the chip terminals have to put big stickers on about LEAVING card inserted until told to remove. We've gone backwards from mag stripe here which despite being supposedly inferior was definitely a lot faster.
> What confuses me in all this is just that when I pay with a chip + signature, I have to insert my card AND LEAVE IT IN for something like 10-20 seconds until the beep beep beep of death.
This depends on the terminal and the EMV kernel. The fastest possible signature transaction is about 1-2 seconds, including powering up the card. Some implementations are just not particularly optimized. Some will perform 'full EMV' transactions which require two round trips from the card to the issuer and may actually run scripts sent by the issuer on your card before you can remove it.
A properly optimized solution in the US will use 'quick EMV' where the card is only required to be in the reader until just after the authorization request cryptogram is generated - before its even sent up to the payment network. [1, p.9]
> With my apple device, I touch the terminal, and its basically instant.
Indeed! Contactless transactions are modeled basically like quick EMV transactions and the whole system was brought in because contact PIN EMV was too slow.
> In other words, the bandwidth sticking my card INTO the device (plus whatever time it takes to do some calcs on device) is something like 2,000 times slower over a wired connection then my iphone does over wireless.
It does take a couple hundred ms for a smart card to boot up. Like-for-like you'd have to compare enabling Apple Pay or Google Pay and entering your PIN or capturing your face.
> There is some failure in the current CVM implementation in the US because this makes no logical sense at all.
Hope the above helped clarify!
> About half the chip terminals have to put big stickers on about LEAVING card inserted until told to remove. We've gone backwards from mag stripe here which despite being supposedly inferior was definitely a lot faster.
Yeah, I do agree - but that's also why the US was the last to the party! Low fraud rate, and large transaction duration costs.
[1] https://usa.visa.com/content/dam/VCOM/regional/na/us/run-you...
> It seems to me that digital cash has utility
Digital cash has great utility, but decentralization of digital cash has marginal utility over centralized alternatives. In particular, physical cash is centralized and is just as useful as decentralized fiat.
I'm not against centralization. At least for smaller purchases, I do like some of the privacy elements of some digital cash solutions. It sometimes feels like the temptation with centralized solutions given storage is cheap and the fraud and other arguments are strong is to avoid any privacy elements at all.
I'm not so convinced it's failed. It's enabled the massive expansion of a relatively new industry: computer system hostage taking. This, combined with enabling illegal money-transfers, and other illicit activities, has been of extreme utility for many people. (And some of that money transferring, out of certain countries, is not amoral, IMO.) That being said, as an above-board currency/asset, it certainly has failed.
Cryptocurrencies have been used for this purpose long before the recent spikes in price. I agree it has value for the purposes you mentioned but I doubt the current price actually reflects said value.
-- not really disagreeing with you - only nitpick would be it remains to be seen what happens when BTC is effectively pointless to mine (or is fully mined, but the first will come considerably sooner) - a store of value should obviously hold that value relatively stable - maybe it's being treated as three things simultaneously by three contingents so the use-case hasn't shook out properly? - not sure - just thinking out loud :=) --
I thought the value of crypto is really clear: black markets. I totally agree with what you wrote, so I can't find a better explanation.
Do you believe the US dollar would be worthless if the government eliminated taxes? Because going by your logic, it seems it should.
If the US government stopped collecting taxes, that would heavily devalue the dollar. The dollar is the official currency of several other countries so it wouldn't go to zero, unless they too stopped collecting taxes. Of course, even if that happened, there would be some value, because by US law, the dollar is legal tender, which means offering a third party a US dollar should be sufficient to settle any debts. Of course, as the dollar is also no longer useful to any third party, more and more dollars would be demanded as the value slowly fell to zero.
But yes, if the US stopped collecting taxes, the dollar would heavily devalue, and eventually reach zero
In general, the value of fiat currency comes from how useful it is in satiating the demands of the government backing it. Usually, that is taxes, but there are a few other ways fiat is used that have to be taken into account (judgements, etc)
My crypto is still worth more than I paid for it.
So was Madoff's fund for most of his investors?
It's worth nothing, it's priced higher than you paid. Price is what you pay, value is what you get.
I don’t care what you say it’s worth, I care what people willing to buy it will pay.
Again price vs value.
I've never argued someone wouldn't buy it from you - I'm arguing it's worthless to both parties. It's the manifestation of the bottle imp paradox. [1]
I get all that, it’s a fun philosophical widget to ponder over. But out here in the real world it has value to me because I can sell it for more than I paid. I’ve taken profits and converted it into real goods for myself. I am aware it could go to zero and I’ve hedged my risk appropriately.
Genuinely, best of luck! It sounds like you've managed your risk appropriately, and of course, I want everyone to make a ton of money :)
Looks like those buyers are reconsidering it's value too.
HODL? Illogical unless you believe there is some underlying value. Otherwise there will be bagholders and all you've accomplished is to guarantee you'll be among them.
What is the point of raising this distinction? Air has infinite value/worth to every human, but its price is zero. It would make as little sense to start accumulating air on the converse assumption that something that has value will eventually have a non-zero price as it would to short bitcoin on the hypothesis that it will eventually be priced at zero because it is worth zero. The goal of investing/speculating is increase the price fetched for assets you control. You can only do that with prices, value is irrelevant.
Anecdotally, a lot of people have been using a lot of leverage to do a lot of insanely speculative things with cryptocurrency over the past few years. And it's worked out great for them... until now. I imagine many leveraged speculators are facing the prospects of financial ruin.
This is basically all markets when the government prints 80% of all US dollars in existence. Everyone gambles with money they got from thin air. The air wants it back now.
I believe you are right, and it is quite awful. Though from what I can tell, stock trading accounts offer similar leverage tools.
I sincerely feel for the people who got in over their heads.
> I sincerely feel for the people who got in over their heads.
They were insufferable pricks when they were making loads and laughing at everyone else staying poor. Why would I give them a second thought on the other side? btw: same goes for some tech entrepreneurs too.
Remember: Be Nice to People on Your Way Up. You’ll Meet Them On Your Way Down
The vocal people you read about online are a minority. The vast majority (99%+) of investors losing money are doing so silently.
>> Why would I give them a second thought on the other side?
Because if enough of them hurt, soon the government wants to bail them out, and you and I pay for that bailout with taxes.
Or perhaps the government forces the platform to absorb the losses, and you and I pay for that with higher fees in the future.
I think there is a far more likely third option; the government hands down crypto regulations similar to the financial regulations put in place during the first half of the 20th century.
> soon the government wants to bail them out
I would be genuinely shocked, and outraged, if the government bails out crypto investors. It has been common knowledge how risky that sector is.
Government might go after those selling unregulated securities, but I doubt tax money will be used to bail anyone out.
Heads they win, tails I lose.
Retail stock trading accounts generally don't allow more than 2× leverage (although options trades and certain ETFs can sort of simulate higher leverage).
Why should I feel for cryptocurrency "investors" who got in over their heads? If they all end up bankrupt that would be a perfectly acceptable outcome, and a valuable object lesson in the importance of making smart decisions.
You are correct to use the term "investors" with quotes, but if I understand your intention, you are suggesting they are gamblers, and therefore deserve to lose.
You're talking about the general public who for the most part don't own stocks, or when they do, that is treated like gambling (RobinHood).
Then you get big name stars, people they trust, to tell them they should be buying crypto. They see it go up, and then see they don't have to spend more, they can just get more, like BNPL, or payday loan for investments that go up. They say "yes please, how much can I get".
Sure, some people were just a*holes over leveraging themselves and taking a risk. But I suspect many people didn't know how deep they could go, or what they could get themselves into.
Even if you disagree with how somebody got into a situation, doesn't mean you can't have empathy for their position.
I have no empathy for their position.
You might want to get that looked at :)
Their official explanation, that bitcoin txns are getting stuck due to low fees, is plausible.
See: https://mempool.space/graphs/mempool#24h & zoom out farther to see how the current fee regime is higher than usual.
This does show a nasty form of contagion within crypto. One player pauses withdrawals which causes a run for the doors elsewhere, any given L1 can only process so many txns per second, so fees spike, their code doesn't handle it gracefully so more players pause withdrawals to fix it.
CNET says Binance withdrawals are back up.[1]
[1] https://www.cnet.com/personal-finance/crypto/binance-resumes...
As does Binance: https://nitter.net/binance/status/1536370988924882945
Binance has been making it hard and expensive to make withdrawals for years, well before the crash.
Misleading - a transaction was stuck due to the fee being too low. See https://twitter.com/binance/status/1536337215877283840
Fees were higher than that for a few days a month ago.