. @Bitfinexed lays out my hawala theory for a current Bitcoin exchange's operations ( https://twitter.com/patio11/status/910353790901026817 … ) and the liquidity risk consequences: https://medium.com/@bitfinexed/the-bitfinex-dilemma-blow-up-now-or-try-a-hail-mary-to-retain-in-business-10b9d989359f …
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Bitcoin: "I mean that whole preserve-all-balances-on-a-ledger thing is elegant; why do we ever bother moving money into regulated institutions at all?" Finance: "Bank runs." Bitcoin: "But how can you have a bank run if you have no bank?"
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Replying to @patio11 @Bitfinexed
Bank runs are primarily a consequence of maturity mismatching, which doesn't happen with a sound currency like Bitcoin.
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Replying to @mhartl @Bitfinexed
The type of bank run they should be most concerned about at the moment is on tethers, where they purport to have $X00 million of sequestered assets but only some unknown Y% are actually capable of being transferred out to depositors.
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Given any catalyst where people say "Uh oh, then I have to take my assets out of deposit to avoid having a worthless claim against a foreign entity", you get a classic bank run.
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Examples could include e.g. rumors of government seizing or inhibiting access to any one of the accounts, solvency worries on unrelated operations, yet another hack, etc etc.
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