Bernard Madoff's scam went on for decades before he was investigated and put behind bars.
Oh ya, right. Just like Paul Bernardo, a former accountant, raped a whole bunch of girls and rape-murdered two of them. Of course this shows that all former accountants are psychopathic rape-murderers.
Bernie Madoff?? Dropping that name is actually an argument in favour of all cryptocurrencies, including Nxt.
Madoff's Ponzi scheme was only possible because no-one looked under the hood. Harry Markopolous had to reverse-engineer Madoff's claimed strategy to find out that Madoff was lying.
A Madoff-type scam is only possible with a closed-source ledger.
In re Ponzis, the only vulnerability comes with a trading fund that does its thing on centralized exchanges, where the trading record of an individual account is not made available to everyone via a read-only API. To be quite frank, this bothers me: it bothered me enough to ask the Poloniex boys for a public read-only API feature. (My request got nowhere.)
Running a Ponzi by purporting to trade on the Nxt AE itself is impossible, because the ledger is public. In fact, Nxt's devs have made it even easier to audit a scheme that claims to make Nxt through AE trades. You can now sign in to
any Nxt account - very much including the account of a Asset issuer - and get read-only access to
all of the account's actions.
Case in point: I've just reactivated an Asset that I'm moving from the NFD AE to the HZ AE: it's an MMNXT-holding Asset for which I pass through MMNXT's dividend on the day MMNXT pays. I also do some spread-trading of MMNXT itself and pass along any profits to the Asset holders.
Want to audit me? Go right ahead:
1. Download the Nxt 1.5.12 client from the
official announcement thread on the Nxt forum - nowhere else;
1a. If you want to make sure the hashes match, make sure that you spend more then 5-20 minutes Googling up on Java - in fact, it would be exceedingly nice of you to ask a Java expert who knows nothing of Nxt to see if you compiled the source code in the way that gets those hashes to match
;
2. Open up the account and sign in with this RS Account ID:
NXT-QQKJ-SWLJ-CPX4-3QXXW .
3. Go to the Asset Exchange and look for the bookmarking for MMNXT - Asset ID:
979292558519844732 4. Go down to the bottom of the page and look for "Trade History" in the centre-right. Click the "You" tab.
You now have a record of all the spread trades I've made in that account. With that record, plus a spreadsheet and some basic bookkeeping skills,
you can now audit my entire performance.
Go ahead...audit me. I dare ya.
Does it get any more anti-Madoff than this? It's as if the securities depository had a read-only API through which
anyone can check
any account's trades. In fact, the Nxt AE is so anti-Madoff that I can see traders rejecting it because it would automatically divulge their trading secrets. It makes reverse-engineering of a trading strategy a breeze.
There have been four Ponzis that I know of on the Nxt AE, all of which were explicitly warned about by scarred Nxt vets. I got burned by one of them, which shows you that I'm somewhat of a fool. What did these Ponzis all have in common? They all purported to deliver huge profits from trading on centralized exchanges
that do not offer any read-only APIs of an account's trading records. You git? None of them would have even been possible had they purported to offer huge profits from trading Nxt Assets. They would have been spotted very quickly.
Nxt's AE in its present form is a major leap forward for transparency - a radical leap, really. As I noted above, many professional traders would actually reject the AE on the grounds that its transparency effectively infringes of traders' trade secrets.
Now if you'll excuse me, I've gotta make my rounds on Bitcointalk and the Nxt forum before paying my Asset holders the dividends I owe them...
