This incident shows once again cryptocurrencies is pure speculation and gambling
> Never heard of an “exchange” before that somehow collapses due to a good one bank run.
Well, in these “modern more sophisticated” times, exhanges do things like lend against items stored with them. i.e. they are using somebody else’s property as collateral for loans.
A crash in the fake currency market. Is that a bad thing?
FR Crypto Ping List!!
But what it does for crypto traders is things like automatic trading stops when crypto is dropping rapidly, like the SEC does for stopping stock trading or ETF trading when a stock price drops rapidly on NYSE. To me it's a vain attempt at reducing chaos in a market of traders that claim to thrive on chaos. LOL
These exchanges are essentially banks.
You put you money in, and they give you some registered cryptocurrency, that money is in the account of someone who put their currency in, which that person can withdraw at any time. But pretty soon, it’s holding a bunch of people’s cash, which those people can redeem their crypto for at any time.
But what’s to stop the person operating the exchange saying, screw it, shuts everything down and flee with the cash. Because even though the exchange can make a small profit on the transactions, it will never approach how much it can make for the owner if he just takes the money and run.
As the exchange gets bigger, the temptation to take the money and run gets greater. Until it becomes irresistible.
I’m totally familiar with FTX because major league baseball allowed uniforms to have one sponsor logo this season: the Nike swash for players’ uniforms, and the FTX logo for umpire uniforms.
Baseball uniforms will trend toward looking like NASCAR racing suits. Next year, FTX’s slot will be open for bidding.
Something like this is just screaming for a modern Antony Trollope to write a novel. One of Trollope’s is “The Way We Live Now” about speculating, dodgy financial practices and panic.
The exchange is where you buy, sell and trade the coins. It may also be a place where people keep their coins e.g. an exchange wallet. I am not familiar with these two platforms but do know CoinBase where you can buy and sell, and also keep the coins in your account (I don’t invest or trade).
Anyway the price might be down because fears if the exchange goes down people will lose access to their coins and money. So they sell to get the cash. It’s happened before with other exchanges where people got scammed and who knows how these exchanges may be leveraging other people’s assets. They are not to my knowledge insured and only lightly regulated unlike stock/commodities exchanges.
those what made a fortune aside, crypto is not an investment...
Fiat “currency” that’s exchangeable for another fiat currency that’s based on the good faith and credibility of the US government.
This in part is a result of a bank run. Just saying.
FTX ownership leveraged heavily his company and it resulted in a classic run.