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Author Topic: Who control our bitcoins? WE do!! ☆ BANK RUN ☆  (Read 4382 times)
erre
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January 23, 2015, 10:20:48 PM
 #21

In order for it to be a legitimate transaction it has to be on the actual blockchain, anything happening in the internal database would be fake and completely meaningless to the cryptocurrency itself. You're completely missing that this was the whole point the blockchain was created, it's a public ledger that people have to use in order to make legitimate transactions.

I think you need to go and do some reading on how the blockchain actually works before running around making doomsday comments like everybody else who doesn't understand cryptocurrencies does.


I think you need to go and do some reading on what I actually wrote. I am not talking about on-chain transactions, but about transactions on the exchangers: when bitcoins are exchanged between bitstamp users these transaction are not handled by the blockchain, where bitcoins remain unmoved unless some user withdraw it. I am claiming exchangers are using fractional reserve to artificially pump the number of the coins on the exchangers, not on the blockchain.

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January 24, 2015, 12:18:07 PM
 #22

Yeah, don't even bother, I did read what you wrote and I've answered your questions, you don't realise that if they did what you're claiming they're going to do they would end up being easily spotted as they have done before because the transactions wouldn't match up with anything on the blockchain and in order for the transactions to be a legitimate transfer of value in Bitcoin it has to be on the public ledger.

If you can't withdraw the money that's being transferred to and from an account on the exchange and use it out on the blockchain it's all fake, it's that simple, Bitcoin and cryptocurrencies cannot so easily be used in fractional reserve systems and you're just stuck on the idea that they can.
erre
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January 24, 2015, 02:36:33 PM
 #23

Yeah, don't even bother, I did read what you wrote and I've answered your questions, you don't realise that if they did what you're claiming they're going to do they would end up being easily spotted as they have done before because the transactions wouldn't match up with anything on the blockchain and in order for the transactions to be a legitimate transfer of value in Bitcoin it has to be on the public ledger.

If you can't withdraw the money that's being transferred to and from an account on the exchange and use it out on the blockchain it's all fake, it's that simple, Bitcoin and cryptocurrencies cannot so easily be used in fractional reserve systems and you're just stuck on the idea that they can.

Yes, i'm still stuck with it. I'm sorry for not being able to get this, and I will understand you if u keep up in trying to educate me. But...

bitstamp know that a fraction of the coin will never be withdrawn. That's why they can act on fractional reserve, and I don't understand why you say they couldn't. I explained why " only"  2% fractional reserve means they can make a lot of money.... I really don't understand, are you saying that if a bitstamp user have 3 btc and then let'a say he buy 1 this reflects on the blockchain and you can spot it? Or do you think that there are some spots in the time when users withdraw more than 98% of the total btc funds medially deposited on bitstamp?

Let's say that now I buy 1 btc at bitstamp. How you can spot that this btc has transferred from another user and me and not simply created out of nothing?

If I withdraw they for sure will give me a real bitcoin, i'm claiming that not all the coin on bitstamp are provably real bitcoins. If u can prove it, please explain me how.

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Lethn
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January 24, 2015, 03:28:27 PM
Last edit: January 24, 2015, 05:04:52 PM by Lethn
 #24

If the user can withdraw it then it's real, if however the exchange starts coming up with excuses as mt.gox did like "We are having maintenance problems" or other such comments and try to delay that means somethings going on, it does require communication between the users but this is how the Bitcoin community is able to quickly oust any dodgy dealers.

It's more difficult to track the internal workings of an exchange if it's not public and there will be losses don't get me wrong, but that's what it takes to win against them. There will need to be a chunk of currency lost in order to check whether there is something wrong with the system, someone has to put money down.
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January 24, 2015, 04:34:33 PM
 #25

You do, once you put it in an exchange. Look at this Q&A with Andreas:

https://www.youtube.com/watch?v=1DG98FH1qlo

sadly cant find the part where he talks about exchanges but its there.
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January 25, 2015, 08:48:44 AM
 #26

Keep your bitcoins on exchanges for short durations only. The probability that the exchange would go belly up in that short duration is much lower.
Choose safety over convenience.  Smiley
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January 25, 2015, 09:17:39 AM
 #27

For many users, included me, there are good chanches that the exchangers are acutually doing what banks usually do: operating on fractional reserve.

This is extremely dangerous for bitcoin, besides the price tanking because non-existent bitcoins are currently traded. More than that, letting them to do it invalidate the whole bitcoin concept, a perfect money for an untrusted network.

Bitstamp is constantly refusing to do an audit, also after all the shit that happened. Me and many others do not trust they on their word about not operating on fractional reserve, but they refuse to submit proof because they think they are " too big to fail". They are acting just like a bank, and by all the chanches operating under fractional reserve (maybe, also legally). Let's prove them wrong!

I want to organize a bank run, somebody can help me?





All people owning bitcoins and who wanted to cash out found someone willing to give them fiat for their bitcoins, at least 150$.

erre
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January 25, 2015, 10:51:41 AM
 #28

Very relevant to the topic:

https://en.bitcoin.it/wiki/Controlled_supply


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January 25, 2015, 02:29:35 PM
 #29

erre, now you're just spamming, it's obvious you're not interested in listening to the other side of the debate.
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January 25, 2015, 02:41:39 PM
 #30

Keep your bitcoins on exchanges for short durations only. The probability that the exchange would go belly up in that short duration is much lower.
Choose safety over convenience.  Smiley
I keep hearing this, but how in the f*k are you supossed to do daytrading if you can't keep your bitcoin in exchanges for long periods of time?




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erre
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January 25, 2015, 02:47:38 PM
 #31

erre, now you're just spamming, it's obvious you're not interested in listening to the other side of the debate.

Wut? I just posted a link from bitcoin wiki, stating exactly what i'm claiming:

" While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking"

What is the other side? You said " that can not happen, community will spot it in no-time", but seems that you can't explain me how. MtGox was a real different thing, they where not operating at a very sustainable 2% fractional reserve or so, they were just scamming and faking trades.

I understand that OP was really bad written and I apologise for my english, but my biggest error seemed to assume that everybody already knows about fractional reserve and the related risk, and this seems not.

Please look at this post, it explain the whole thing better than me:
https://bitcointalk.org/index.php?topic=927371.msg10245596#msg10245596

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January 25, 2015, 02:55:10 PM
 #32

Quote
What is the other side? You said " that can not happen, community will spot it in no-time", but seems that you can't explain me how. MtGox was a real different thing, they where not operating at a very sustainable 2% fractional reserve or so, they were just scamming and faking trades.

You ignored my explanations of how the blockchain and transactions worked, so yes, you're just spamming your own point of view now and choosing to ignore what quite a few people have told you.
erre
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January 25, 2015, 03:07:12 PM
 #33

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What is the other side? You said " that can not happen, community will spot it in no-time", but seems that you can't explain me how. MtGox was a real different thing, they where not operating at a very sustainable 2% fractional reserve or so, they were just scamming and faking trades.

You ignored my explanations of how the blockchain and transactions worked, so yes, you're just spamming your own point of view now and choosing to ignore what quite a few people have told you.

I didn't ignored it, I just told that i'm not talking about the coins on the blockchain  (existing bitcoins) but about coins on the blockchain + coins on exchangers (money supply). If exchangers don't operate on fractional reserve, existing btc would equal to money supply.

But I am claiming that the money supply is artificially augmented by faking the amount of coins on exchangers (not on the blockchain), so actually money supply>existing btc. You can do it without faking any tx on the blockchain and you can let users withdraw all they want to, unless users do an organized bank run or force you to do an audit. You seemed to ignore this.

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January 26, 2015, 12:28:39 PM
 #34

erre, now you're just spamming, it's obvious you're not interested in listening to the other side of the debate.

Wut? I just posted a link from bitcoin wiki, stating exactly what i'm claiming:

" While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking"

What is the other side? You said " that can not happen, community will spot it in no-time", but seems that you can't explain me how. MtGox was a real different thing, they where not operating at a very sustainable 2% fractional reserve or so, they were just scamming and faking trades.

I understand that OP was really bad written and I apologise for my english, but my biggest error seemed to assume that everybody already knows about fractional reserve and the related risk, and this seems not.

Please look at this post, it explain the whole thing better than me:
https://bitcointalk.org/index.php?topic=927371.msg10245596#msg10245596

" While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking"

The problem is we don't know what bitcoin websites use a fractional-reserve banking system so we don't know the real money supply.

erre
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January 26, 2015, 03:51:57 PM
 #35

erre, now you're just spamming, it's obvious you're not interested in listening to the other side of the debate.

Wut? I just posted a link from bitcoin wiki, stating exactly what i'm claiming:

" While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking"

What is the other side? You said " that can not happen, community will spot it in no-time", but seems that you can't explain me how. MtGox was a real different thing, they where not operating at a very sustainable 2% fractional reserve or so, they were just scamming and faking trades.

I understand that OP was really bad written and I apologise for my english, but my biggest error seemed to assume that everybody already knows about fractional reserve and the related risk, and this seems not.

Please look at this post, it explain the whole thing better than me:
https://bitcointalk.org/index.php?topic=927371.msg10245596#msg10245596

" While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking"

The problem is we don't know what bitcoin websites use a fractional-reserve banking system so we don't know the real money supply.

Exactly that! We can know if a site is operating on fractional reserve or not only by forcing it to do an audit, or if we withdraw all the money (pretty much the same as doing an audit)... otherwise, it would be impossible to spot it only by blockchain analysis.

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January 27, 2015, 02:00:21 PM
 #36

For many users, included me, there are good chanches that the exchangers are acutually doing what banks usually do: operating on fractional reserve.

This is extremely dangerous for bitcoin, besides the price tanking because non-existent bitcoins are currently traded. More than that, letting them to do it invalidate the whole bitcoin concept, a perfect money for an untrusted network.

Bitstamp is constantly refusing to do an audit, also after all the shit that happened. Me and many others do not trust they on their word about not operating on fractional reserve, but they refuse to submit proof because they think they are " too big to fail". They are acting just like a bank, and by all the chanches operating under fractional reserve (maybe, also legally). Let's prove them wrong!

I want to organize a bank run, somebody can help me?

The mainstream at large is allowing demanding Bitcoin to go this way. Exchanges are the interface between the customer and the miners (BTC minter) just as banks are the interface between the customer and the Fed (money creator). It has been shown time and time again trust is difficult in practice. Not saying I agree with it, but it appears this is a necessary evil if the technology is to be implemented in the real world.

Another problem is that the technology may be public, however; all infrastructure is private. As nice as it sounds, demanding solvency audits and inner circle information doesn't have to happen with private industry.
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January 27, 2015, 02:31:02 PM
 #37

Maybe it doesn't with the private industry but it should. Fractional reserve is fraud made legal, plenty of bankers have been lynched after runs on supposedly full reserve banks in times when it was a crime and tolerating any possibility of it with Bitcoin allows the same thing to happen, 10 times more on the books than in the vaults.

100% agreement here, just the normative evil of the world. I urge you to check out the FDIC website regarding historical reserves since the 70s. They publish yearly values. If you look at their ratios, you will soon realize that even the FDIC hasn't remained solvent (they are public). They are below a ratio of 1:1 many years now. It's quite sad, but the system is backed by the Fed which is backed by the USG. Centralization allows this to occur unchecked.

Quote
If some exchanges and services can operate with full transparency and store everything in user controlled wallets then why can't others? What do they have to hide? Anyone not asking that is irresponsible with their coins and deserves to loose them.

They don't want you to know because it relinquishes their control on you as a customer. If you don't know, you are forced to believe in them and form a bond of trust. This makes the equation one-sided and it doesn't benefit the customer (us). This is what they want.

We can ask all we want, take our business elsewhere, etc., but if mainstream gets it, you can bet it will go this way. The sheeple do not care about transparency. It is not important to them; I'd dare to say most like not having to make any decisions of their own. It boggles my mind sometimes.

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January 27, 2015, 03:06:15 PM
 #38

Some people are getting this, I think that spread  thisinformation would be good for the btc ecosystem, I was really shocked when I understood how much it can damage bitcoins.

This is another very good explanation about how fractional reserve would work for bitcoins:

It is important to recognize the difference between Currency Supply and Money Supply. The currency supply of bitcoins is limited to 21 million. Money supply is higher because it includes demand deposits. Let us take an example: Suppose that there are only 100 Bitcoins on Earth all owned by Satoshi. He puts all 100 in Bank Alpha. Bank Alpha puts 20 of the bitcoins (20%) in a special account and leaves them there. They then lend out 80 bitcoins to Gavin. Bank Alpha tells Satoshi on his account page that his account has 100 bitcoins in it. The total money supply of Bitcoins at this point is 180. You can see that there is no magic required. Now, Gavin buys some LolCat comics from Cameron for 80 bitcoins. Cameron puts his 80 bitcoins in his bank, Bank Beta. Bank Beta puts 20% in reserve (16 bitcoins) and has 64 to lend out. They lend those 64 bitcoins to someone else. Cameron's account page on Bank Beta's website says he has 80 bitcoins in his account. The money supply of bitcoin is now 100+80+64 = 244 bitcoins. Supposing all banks put 20% in reserves for safe keeping, and suppose everyone uses banks (as opposed to keeping them in a wallet on their computer) then the money supply of bitcoin will max out at 500 bitcoins. Obviously because some people will hold their own bitcoins and because they will be used out in the world for transactions, the money supply wouldn't reach 500 bitcoins, but it can easily exceed 100.
An obvious response is 'Well what happens when Gavin takes his bitcoins out of the bank!?' The answer is that that is what the reserves are for. Although not reflected in this example, the actual reserves held by a bank would be vastly greater than the amount held in any individual customer's account.
And that is how Fractional Reserve Banking works.


https://en.bitcoin.it/wiki/Talk:Myths#Fractional_reserve_banking_with_Bitcoin_is_fundamentally_different

(Note that there are plenty of solutionso other than "simply"  borrowing, like shorting or mining

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February 05, 2015, 06:46:33 PM
 #39

here my topic about BTC exchanges and their way of using a fractional-reserve: https://bitcointalk.org/index.php?topic=945881.0

GUIDA PER NUOVI UTENTI https://bitcointalk.org/index.php?topic=1241459.0
DO NOT HOLD YOUR BTC ON THIRD PARTY EXCHANGES – BE YOUR OWN BANK https://bitcointalk.org/index.php?topic=945881.0
BITCOIN... WHAT IS IT ? https://bitcointalk.org/index.php?topic=2107660.0
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February 05, 2015, 07:04:10 PM
 #40

we are all waiting for decentralized exchange like open bazar, they should finish this year their job

We are all waiting for bitcoin to be global reserve currency so that we can abandon all exchanges.
By the time allts will also be proven worthless.

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