Honestly, the status quo has not changed since FTX so how do we make these financial institutions accountable for their actions?
It never will... I personally know how hurt every single person out there that fell for each and every rug pull would feel. You see, it's somewhat difficult to build trust in centralize exchanges -- which is why everyone has learnt decentralization. If overtime, everyone tends to follow suit, unless otherwise, I don't think anyone would need some sort of intervention/
medication after death sort of organisation
[or what did you say it was again]?I'm not tryna discourage your motives - but if the governs have more or less done nothing ever since November 2022, then i don't know what else to believe.
Can we actually do this? Who knows but we're not sitting around hoping someone else solves it.
how??. How do you begin?
Thank you. Really appreciate the insight! I feel your sentiment and personally have lost as well and and the distrust of CEX is real and exactly the problem I'm hoping to solve.
To me this is just a gap to fulfill user need. I personally think letting future CEX/Financial institutions off with "it never will be fixed" is letting them off easy and don't trust the government to solve government solve the problem. The CEX I lead operated in one of the toughest regulated environments and the understanding of the regulators were a joke.
I totally agree DEX is the right path for Bitcoin tbh but DEX adoption is not my battle. The PM in me believes that convenience balancing security is the ultimate feature for mass adoption.
How do you begin? I have an idea! I'm hoping to validate first before sharing if its a problem worth solving.
The point of Cryptocurrencies and Crypto-contracts is to be trustless. Build a product that doesn't require trust.
Agree that DEX is the way to go for trustless I dont think I can build a better trustless solution than that tbh. Maybe a way to cheaper fees but that can be solved by the projects.
other things like customer deposits be put into a 2 of 2 multisig where customer+business form a partnership of control of funds. and co-custody the funds whereby the final relinquishing of funds(customer spending in final) gets signed over by both parties to the cex sole custody AFTER a bid win on the market orderbook, to fulfil the order amount win and settle the order
Hey man this is awesome insight. Love it. This would be as close as a self-custody wallet where the CEX cannot move fund without the user's sig.
as for a web of trust system
this could be made where multiple parties vouch for an entity by depositing small amounts into a address that combine to become the trusted reserve(punishment) where by when others vouch for an entity. the reserve becomes a total amount that entity can perform at any given time and would lose that value if they cheat the current customer/user they are performing trade with
this could become its own market where traders/dealers/businesses seek vouching from others to operate many trades or larger trades. whereby those vouching earn small % returns from each trade performed without maliciousness. and the business then able to continue doing business via the continued trusted deposits vouching the business (kinka like staking)
Just want to replay this back so i understand. In this system:
- Users will put up collateral (in collaboration with the company?) to vouch for a company.
- The company can only transact that amount (total volume? transaction per size?)
- Users get a portion of trade for vouching
Who controls the fund and determines what is malpractice? Would this not lead to people just following/vouching for whatever is the biggest entity so they can get the highest "staking%" by the highest volume company?
Really interesting concept especially if the company has to put up some type of collateral as well or all client funds is held in trust via the users that put up collateral.
We want to figure out what information you use to determine how to trust financial institutions that are holding your money. While everything on the blockchain is 100% transparent, there are many things that operate outside the blockchain in Crypto (Fiat transactions, daily operations etc) that create incentive for bad actors to cheat (i.e FTX using client funds to cover trading losses).
Most fiat financial institutions are insured by Deposit Insurance companies which will compensate bank customers in case of bankruptcy. So one can trust these banks because the government have mandated these insurance firms to protect the funds of depositors. But in the crypto space such insurance is scarce or non-existent. Many people have lost funds because of these centralised platforms since it is very difficult to hold them accountable. This is why we have a slogan in the crypto space which says "Not your keys, not your coin". In this industry the only person you can trust is yourself, this is why the best person to have custody of your funds is you.
This insurance does exist and in regulated exchanges and banks are mandated to have it. But these typically cover different things from thief, act of god, etc but many do not cover things like wilful fraud from the leadership team in which case users are fucked. This is true in banks as well. Difficult to hold accountable is exactly the problem we're trying to solve!
One question I have for you is, many people still choose to transact with centralize exchanges that are not regulated because its cheaper forgoing security and trust/regulations in favor of anonymity/convienence etc. Do you personally believe that deposit insurance is important to you?
You build trust by having open source codes which the community can assess and validate. They don't need to trust you're doing anything untoward at the back ends if they can check it themselves.
Upgrade00 is right, an open-source code that everyone can verify is the first step towards building trust. Real Bitcoiners will never trust a centralised platform no matter how it is designed. Centralisation distorts the true nature of Bitcoin, therefore if you want people to trust your services, let it maintain the true nature of Bitcoin which is decentralization.
This is a very good point on opensource which we're definitely taking notes on.
I think the skepticism is exactly the right mindset of what propelled this community. This is probably just my opinion only but I don't necessarily think centralization distorts the nature of bitcoin as much as bridges a user need (convenience) until the time that bitcoin/crypto is the de-facto form of assets/currency but we'll see. Thanks for the insight!
