Silicon Valley Bank Collapses

[tom66]

So the US federal government shuts down a Signature Bank and stipulates that the bank that buys it not be involved in crypto in any way? (presumably also going forward?)
How is this not a direct federal government attack on the crypto industry?
CBDC conflict of interest much.
The rug pull is in plain sight.

https://www.coindesk.com/policy/2023/03/16/signature-banks-prospective-buyers-must-agree-to-give-up-all-crypto-business-report/

Meh.  We've had so many try to make crypto a success and all I see is one scam after another.  Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more.  There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

[EEVblog]

Meh.  We've had so many try to make crypto a success and all I see is one scam after another.  Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more.  There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

Crypt is a direct threat to governments and their coming CBDC's, they'll take every opportunity they can to shut it down.

[tom66]

Meh.  We've had so many try to make crypto a success and all I see is one scam after another.  Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more.  There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

Crypt is a direct threat to governments and their coming CBDC's, they'll take every opportunity they can to shut it down.

A decentralised system will still need some kind of financial regulation.  What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself. 

[EEVblog]

A decentralised system will still need some kind of financial regulation.  What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself.

In this case it's not regulation, it's an attempt at active supression.

[coppice]

A decentralised system will still need some kind of financial regulation.  What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself.

Nobody has ever come up with a decentralised financial system. They like to talk about crypto as decentralised, but every scheme proposed so far has a choke point where people can take control.

[coppice]

A decentralised system will still need some kind of financial regulation.  What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself.

In this case it's not regulation, it's an attempt at active supression.

While governments don't like crypto, can you really expect a government to bail out a bank that got in trouble through crypto, and hand it back to the volatile crypto world to rinse and repeat?

[tom66]

A decentralised system will still need some kind of financial regulation.  What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself.

Nobody has ever come up with a decentralised financial system. They like to talk about crypto as decentralised, but every scheme proposed so far has a choke point where people can take control.

Well, there are crypto systems that are entirely decentralised.  You can buy and sell Bitcoin without a central authority.  That's the whole point of Bitcoin after all.

The problem is how to make that function in the real world - you have payment dispute, fraud, theft, and the like.  For those the only way to resolve the issue is to add an authority, or to accept that it is a cost of buying and selling.  This might work for crypto-enthusiasts, but I imagine Joe Public will struggle with the idea.

The secondary issue is many cryptotokens that function in a truly decentralised manner, like Bitcoin, have absurd power requirements to maintain the mining rate.  It has to be very difficult to make new tokens, or the currency loses value quickly as hardware escalates in compute power.  Alternatives based on proof-of-storage (e.g. Chiacoin) have a similar issue, with a significant amount of hard drive supply at one point being taken up by storage miners.  Ethereum is now proof-of-stake which is a good thing from energy consumption but means the largest owners of tokens on the network can control the network creating the risk of a fork and destabilising the currency.

[bdunham7]

What if they were to limit the rate at which money could be withdrawn? I suppose that would cause all manner of other problems. The problem happens when too many people withdraw too much too rapidly.

If they try to change the terms retrospective of the deposit you can expect a full blown panic and a spot on the evening news.  To reduce the 'runnability' of a deposit portfolio, the bank has to offer time deposits that are either less likely to be withdrawn (retail CDs) or are impossible to withdraw early (brokered deposits).  Of course they have to pay more for that money.  If you can get billions of deposits in non-interest bearing transactional accounts you can make more profit.  Risk?  Oh, we fired that guy and haven't replaced him.

[coppice]

Well, there are crypto systems that are entirely decentralised.  You can buy and sell Bitcoin without a central authority.  That's the whole point of Bitcoin after all.

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control. Maintaining the blockchain, so its thorough but doesn't explode in size through a myriad of tiny transactions, is the Achilles heal of blockchain systems. They are not as distributed as they are portrayed.

[bdunham7]

Well, there are crypto systems that are entirely decentralised.  You can buy and sell Bitcoin without a central authority.  That's the whole point of Bitcoin after all.

They really aren't decentralized.  The terms and code of Bitcoin have been changed several times by a committee.  It is an oligolopoly at best, a wretched hive of scum and villainy at worst.  North Korea, child pornographers, hit men and drug dealers along with SBF and the Winkelvoss twins.  Bitcoin has merely gone from obscure low-level dirtbag usage to global crisis level criminal usage.

[Bud]

How's that different from your street corner bank? Every bank has an Anti-Money Laundering (AML) department and Fraud department for a reason, to let you know.

[Bud]

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control.

What control ?

[coppice]

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control.

What control ?

He who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

[tom66]

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control.

What control ?

He who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

But you could only do that with 50% of the nodes in your evil network.  That's the whole point of the blockchain authentication which is performed by miners on the network.  It's impractical to take control of so many nodes. 

Ignoring the outrageous power consumption of operational Bitcoin, it is a genuinely novel and smart solution to decentralised currency.  But it doesn't scale.  It handles a couple of transactions a second, compared to Visa/Mastercard processing something like 20k per second, but Visa/Mastercard do that with about 10 datacenters (power consumption ~100MW total) whereas at last count Bitcoin was running at around the power consumption of Czechia!

What if they were to limit the rate at which money could be withdrawn? I suppose that would cause all manner of other problems. The problem happens when too many people withdraw too much too rapidly.

If they try to change the terms retrospective of the deposit you can expect a full blown panic and a spot on the evening news.  To reduce the 'runnability' of a deposit portfolio, the bank has to offer time deposits that are either less likely to be withdrawn (retail CDs) or are impossible to withdraw early (brokered deposits).  Of course they have to pay more for that money.  If you can get billions of deposits in non-interest bearing transactional accounts you can make more profit.  Risk?  Oh, we fired that guy and haven't replaced him.

The other problem at least in case of companies using banks like SVB is it's quite reasonable to draw a significant amount of cash in a business account down, e.g. to run payroll.  If you say max 10% of balance can be withdrawn per day, then payroll becomes non-viable for some companies.

[coppice]

He who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

But you could only do that with 50% of the nodes in your evil network.  That's the whole point of the blockchain authentication which is performed by miners on the network.  It's impractical to take control of so many nodes. 

A committee made changes to how bitcoin works. We are living through a period where many august ancient institutions have been turned upside down by activists getting into the controlling positions. What makes bitcoin immune. Its actually the MOST centrallsed form of finance. One committee rules them all.

[james_s]

Meh.  We've had so many try to make crypto a success and all I see is one scam after another.  Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more.  There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

Crypt is a direct threat to governments and their coming CBDC's, they'll take every opportunity they can to shut it down.

My problem with crypto is the massive amount of energy wasted mining it. I am fundamentally bothered by the idea of expending HUGE amounts of electricity to run hardware that does useless busy work, and that alone is enough that I personally would like to see the whole thing shut down. It is far too volatile to be useful as currency, most of the economic activity and profits are from just speculating on the currency itself.

[coppice]

Meh.  We've had so many try to make crypto a success and all I see is one scam after another.  Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more.  There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

Crypt is a direct threat to governments and their coming CBDC's, they'll take every opportunity they can to shut it down.

My problem with crypto is the massive amount of energy wasted mining it. I am fundamentally bothered by the idea of expending HUGE amounts of electricity to run hardware that does useless busy work, and that alone is enough that I personally would like to see the whole thing shut down. It is far too volatile to be useful as currency, most of the economic activity and profits are from just speculating on the currency itself.

They are trying to move these crypto systems from proof of work to proof of stake, although it might be steak as the whole idea seems BS.

[vad]

Blackchain based crypto by its very nature is 100% traceable, that's the point of it.
Criminals have to jump through a lot of hoops to avoid detection using it.

Bitcoin is a blockchain crypto. Bitcoin transactions are 100% traceable to bitcoin wallet, but are completely untraceable to the wallet owner.

For example, it is known that the largest bitcoin wallet with 1.1 million BTC belongs to Bitcoin creator, but the identity of the creator is still disputed.

Criminals use crypto extensively to safely defraud victims, while hiding their identity.

[Bud]

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control.

What control ?

He who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

Yo can't change (tamper with) what is on the ledger because you do not have everyone's private keys and the private keys for every single record on the ledger. The hash of Each given  record is fed into the next record and becomes part of the next record which is hashed with the next transaction owner's private key. This is where the "chain" term of the blockchain comes from.
And you can't "control" the ledger because there is no central copy of it, every participant gets a latest copy.

[coppice]

As it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control.

What control ?

He who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

Yo can't change (tamper with) what is on the ledger because you do not have everyone's private keys and the private keys for every single record on the ledger. The hash of Each given  record is fed into the next record and becomes part of the next record which is hashed with the next transaction owner's private key. This is where the "chain" term of the blockchain comes from.
And you can't "control" the ledger because there is no central copy of it, every participant gets a latest copy.

I suppose you would have expected the Maginot line to hold, too. You have addressed the obvious bits, where the system is clearly solid unless you can break some very basic things like the public key system used. That currently seems intractable. That probably means you could never tamper with what is well established in the blockchain. What gets into the blockchain is another matter. All the existing crypto systems have problems combining sufficiently fine granularity with a sufficiently compact blockchain. That's where  most of the current development work is expended, and its also where most of the weakness to control freaks like politicians and bankers lie.

[bdunham7]

Yo can't change (tamper with) what is on the ledger because you do not have everyone's private keys and the private keys for every single record on the ledger. The hash of Each given  record is fed into the next record and becomes part of the next record which is hashed with the next transaction owner's private key. This is where the "chain" term of the blockchain comes from.
And you can't "control" the ledger because there is no central copy of it, every participant gets a latest copy.

Editing the already existing blockchain is not the mode of attack you worry about.  The miners determine what get's added to the ledger in each block.  The nodes decide whether or not to accept a new block as posted by a miner.  Control or tamper with either and you control future blocks.  You don't need to control all of them, just enough to cause a meaningful fork. 

[floobydust]

Engineers have to be honest with themselves and their work, to be any good with the Art.
Politicians, banks, investors etc. on the other hand have to be as corrupt as possible - up to a point.
So I doubt EE's will ever understand what is actually going on.

The ultimate bank is corrupt and adept at money laundering, high risk shady derivatives, shell games giving inflated asset/return numbers and anonymity enabling tax evasion etc.

Look at historical charges and fines for Deutsche Bank, Credit Suisse and if we think SVB was just a little management mistake- of course there's criminal activity under the veneer.
Why else install a board of clowns and have no risk official - it's the best way to undermine an institution allowing the mob to party. Look at business news:
Forbes annual ranking "America's Best Banks" SVB on there for the past 5 years in a row.
CNBC's Jim Cramer last month Feb. 8 "Buy SVB!", Buy Signature Bank! , First Republic Bank "FRC is new focus... very good bank".
Kevin O'Leary blasts SVB's "negligent board of directors' with idiot management". Fox News Sean Hannity flat-out asks the SVB depositor ‘Why did you keep your money there if it was run by idiots?’ CRICKETS, DODGE ANSWER lmao. Cockroaches scurrying.

Looking at US indictments involving crypto currencies and exchanges, it's massive fraud, money laundering, Ponzi scheme layers. Crypto is not an answer to corruption.

[coppice]

CNBC's Jim Cramer last month Feb. 8 "Buy SVB!", Buy Signature Bank! , First Republic

Come on. Its Jim Cramer. Everyone knows when he says "Buy SVB" he's just mispronouncing "bye bye SVB".

[HuronKing]

CNBC's Jim Cramer last month Feb. 8 "Buy SVB!", Buy Signature Bank! , First Republic

Come on. Its Jim Cramer. Everyone knows when he says "Buy SVB" he's just mispronouncing "bye bye SVB".

I wouldn't put any real money towards it... but I've enjoyed a few beers on trades from inversing whatever Cramer says.

[TimFox]

CNBC's Jim Cramer last month Feb. 8 "Buy SVB!", Buy Signature Bank! , First Republic

Come on. Its Jim Cramer. Everyone knows when he says "Buy SVB" he's just mispronouncing "bye bye SVB".

I wouldn't put any real money towards it... but I've enjoyed a few beers on trades from inversing whatever Cramer says.

At my broker's office, but not in writing, they all believe that trading on the inverse of Cramer's recommendations is a good strategy.