Trust is Overrated
Fictional storyline and characters. But who knows?
Premises: Why bother managing your own crypto wallets? It's difficult, and if you lose your keys you lose your crypto! Entrust us with your cryptocurrencies! We make it easy for you to access them and exchange them, and when you want them back you can have them.
Who are we? The centralized exchanges, of course!
In private: Now that we have the fools' crypto, let's get rich because we are savvy and they are stupid. We know how to make a huge profit, and they just sit on their crypto doing nothing.
How do you propose to do that?
Let's do leverage trading using their crypto!
Isn't that risky? What if it backfires?
Are you stupid? What could go wrong? If it works, we'll become gods of this space! If it doesn't, it's not our crypto!
Exactly! Not our crypto! We need to pay it back.
Are you worrying about the plebs' crypto now? We'll just pay it back using the crypto from other plebs.
But what if there's not enough?
No more buts! There's always enough! We will be gods, comprende?
Count me out!
Your loss! More for me.
...
Sometime later: We're in deep shit! We have to stop withdrawals because we can't pay these idiots. I bet our competitor has his hand in this. On top of this, our leverage trades are in deep red and always need more collateral.
Correction: You are in deep shit! I got out, remember?
Moral of the story: Trust is overrated. Take ownership of your own crypto, at least!
I hope you enjoyed my amateurish story. It's... trendy, at least. :)
The moral of the story is important. Let me repeat it: Trust is overrated. Take ownership of your own crypto, at least!
In line with this conclusion of the story, there is something that can make the Hive ecosystem more trustless.
And that is the multisig option that Hive supports for some time, but isn't used as much in practice.
Part of the reason why I believe it isn't used more is that we lack a tool that will make it easier to use, particularly because multisig transactions require a level of coordination between the key holders who need to sign within a given timeframe, or they expire.
The multisig option is not very interesting for the regular user of Hive (although I've seen a potential use case as a 2FA which can be interesting for regular users too).
But some critical accounts on Hive better be multisig! What that means is to have multiple actors with their own keys to the account and no single actor can broadcast at least important transactions on its own. There are all sorts of combinations that can be created with different weights for the keys, the threshold needed, and the time by which the transactions expire.
There is currently a proposal by @stoodkev (already funded), to create a tool to make the multisig option easier to use. I bet not many knew about it. The author explains well in the text of the proposal what multisig is and what are the potential use cases, so I'm not going to repeat that.
That's another step to further decentralize Hive (as a whole, not the base layer), at a time when this seems very savvy to do.
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What you described are scam and ponzi! Too bad people still opt to keep cryptos on CEX.
I wouldn't trust them with my crypto even if they'd be monuments of correctness, not touching their customers' funds and having solid business models.
When there is a human component and no recourse, trust no one!
When something goes wrong, there is no magical money bailout like in fiat!
In some instances (usually of a more personal nature), we can use reputation as a trust factor. There are people on Hive I would trust more than I trust CEXes. Especially after building a certain relationship with them.
Exactly what FTX did...
Someone had to write a story about that, right? :)
Sounds about right. For new people, centralized exchanges resemble the banks they are used to.
Once they are used to a platform, many don’t even bother or understand the important of self custody.
Great addition for anyone not familiar with them!
It's actually a good story that illustrates one of the key misconceptions with cryptocurrency. You can't trust the other party to hold its part of the bargain especially in a not enough regulated industry.
Investors and users should learn this by now. I hope the recent events will help in getting it logged in our minds.
What regulation is needed for theft? I'd rather see people more crypto-literate and taking ownership of their holdings instead of giving them to random entities which do what they want with them. Just a random thought: banks - which are regulated - do the same with your money, they just get bailed out by governments with our money when something like FTX happens.
Thanks for promoting our proposal!
Development of the front-end is already ongoing！
Glad to do it! I believe using multisig on certain crucial Hive accounts is almost mandatory, given what we keep seeing lately in the crypto world.
https://twitter.com/1415155663131402240/status/1592405483243331585
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I agree. The less risk you can take, the better it is. It's kind of weird how wild things are in crypto when you can't really trust them. It's so shady and there are so many scams in crypto.
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There are so many scams in the fiat world too! I guess it will be a combination of education and exposing and punishing more scammers that will settle things down.
!BBH
!ALIVE
!CTP
P.S. Came here from ListNerds
@gadrian! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @bradleyarrow. (3/20)
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@gadrian! Your Content Is Awesome so I just sent 1 $BBH (Bitcoin Backed Hive) to your account on behalf of @bradleyarrow. (3/50)
Thanks Bradley!
I feel so bad for the users who got caught up in this FTX mess and of course the previous ones. I really thank my instinct that helped me stay away from FTX.
I was blockfolio user since inception and during the ICO days. When FTX bought over Blockfolio, transformed the app and offered lot of attractive benefits, I had some skeptism about the new owners, though the name was big.
I was in-between a very tight situation trying to decide if I should continue using the blockfolio app now FTX. At the end I said to myself NO! So I moved on, not considering the juicy promises offered.
Decentralization is what we need. The sooner people learn and walk away from centralized system, the better it will be for the whole crypto industry.
It must've been hard to break away, especially being a long-time user before they took over. But we have to do that preventively, to protect ourselves.
I got caught a little bit in the LUNA crash, but not directly. I had a decent amount of funds in the Cosmos ecosystem, and UST was their own major stablecoin at the time. So I had some UST in one of the pools. And on Osmosis, where I had them, there is a lockup period for the pools, so I couldn't do anything to recover anything from that before it crashed and burned. It wasn't a great deal, probably something like 1-2% of my portfolio at the time, but it's never pleasant to lose funds in such events.
But there are always lessons to learn from all that.
Yeah it was very hard considering the fact that I had some funds that was almost half of my crypto investment there. I was collaborating with a friend to trade using the blockfolio app. We were offered some incentive if we stay and continue using their service which the new owner started improving immediately after acquisition.
Blockfolio was really trusted as the founders were very active on telegram and always accessible. The user base was huge. I was afraid of the sudden takeover though.
I knew LUNA cash but wasn't ready for DeFi then, especially it was a bit complicated for me. Albeit, I took advantage of the crash to make some good cash though even in a volatile movement lol 😆
Just as you rightly mentioned, all these mishap are for us to learn. And I think most importantly, it is going to reshape the crypto industry in a positive way.
Can't trust any one completely. Back to taking ownership and personal responsibility.
That's the same as someone washing their hands of being involved in their finances and leaving it all up to an accountant and money manager then blaming them when things go sideways. I don't believe in micro managing people but I would still be involved in what is happening with my finances. Same thing for Crypto. Yes, it is a bit of work and takes some time to get started but it's important to do it.
!ALIVE
!CTP
@gadrian! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @lisamgentile1961. (6/10)
The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want.
Good Afternoon and Thank you, @youarealive! Enjoy your day.😀
I like your analogy with personal finances and accountants. There is something there is needed to make sure you know what you are doing with your finances (or crypto). And that is education. In most cases, self-education.
Thank you, @gadrian! And some of that self-education comes with digging in and taking some action even if it's a little bit at a time.
In this case, it's been very worthwhile.
!ALIVE
!CTP
@gadrian! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @lisamgentile1961. (5/10)
The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want.
Good Morning and Thank you, @youarealive! Enjoy your day.😀
Indeed. Practice is the best teacher.
👍😀 Yes, it is.
Have a great day, @gadrian!