Bitcoin as the world's biggest game of hot potato: https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto-part-ii-fractional-reserve-marmot/ … @prestonjbyrne
Liquidity crunch catalyzed by any disruption in the price would cause a bank run.
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People can use decentralized exchanges like
@bitshares and use bitUSD to avoid bitcoin volatility. Holding cryptocurrency on an exchange is risky, old-centralized-financial thinking. If you don't control the key, you don't own it. -
Hi. Does the exchange manage giving you BTC forked coins? Or do you need to download your BTC to your own wallet and do it? Thanks!
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That would effectively be the same as a traditional "Bank Run"
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Yup! The subtitle of the blog post Patrick linked at the beginning of the thread is "The Great Bank Run".
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i've always assumed e.g. coinbase is holding my BTC, and if i ever wanted USD they'd have to sell it 1st. there could be a run in terms of network bandwidth but I don't get the USD liquidity connection. BTC price should drop until there's USD supply?
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I believe to serve the customers faster most exchange use their own fiat money, a “float”, to pay you back immediately. They then sell your bitcoin later.
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Very well put. But please consider this, so many major hacks have happened in exchanges (from mtgox to recent DAO hacks). While the ones tied up to those entities suffer. Others shrug it off. So I don't see the contagion happening. 1/2
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As the OP article said that is a very robust state machine. So the main thing I fear is some black swan event disrupting that state machine (say some Math discovery, which breaks PKI, but then HTTPS will also break). So hodlers, don't care :) 2/2
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I believe exchanges have been known to freeze withdrawals. Nothing new.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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