Welcome to the rise of privacy, decentralized exchange, and the slow death of KYC/AML. We are seeing centralized exchanges (banks?) require more and more information from their customers, and some are even waiting for (already verified) customers to deposit funds in order to then hold their money hostage in exchange for even more information! I have heard this dubbed “ninja kyc-ing” ...tbh that would be the polite term. Another way to think about it is soft civil asset forfeiture (one of bitcoin’s biggest use cases is avoiding this!). I’m not saying these exchanges are insolvent and/or running fractional reserve systems, but they are indeed wearing the uniforms of such loll. Over the years we have seen many exchanges use such tactics before they went bust.
Further, it used to be that we had popular alt coin exchanges which would allow unverified customers to withdraw up to 100 bitcoin, now of course fiat prices have increased dramatically, but nonetheless these centralized exchanges (for the most part) no longer even allow unverified customers. Yes yes they may be getting pressure from regulators, but nonetheless, that’s not the customers problem. The reality is...even some of the biggest most reputable exchanges have been hacked for their KYC/AML info...as a law abiding customer--in providing your info--you are taking a huge privacy, and in turn, security risk. Even if you want to ridiculously argue FOR more regulation--technology always moves 1000x faster than regulation. I could do a whole separate post entirely on the hypocracy of such an argument, as well as all the racket involved in banker protection laws/the accredited investor protection laws of 1933/1934, etc, but that’s neither here nor there. Just because they slap a nice label on them, pragmatically they do not do what they purport to, they simply create regulatory capture, more subtle forms of bribery. But I digress : )
As previously suggested in prior published charts, I believe we are the start of a new alt coin market cycle. As much as many bitcoin maximalists would like to pretend it’s not true, *one of bitcoins primary use cases (at least for intermediate term) is speculating on alt coins. I believe we are going to see a mad rush to get involved in this, with not many outlets to do so (at least for retail), thus why volume will shift to quasi (and eventually fully) decentralized exchanges. Due to restrictions on popular centralized alt coin exchanges, new prospective demand will be forced to first buy bitcoin on one of the few major exchanges (which have restrictions of their own) to then send to decentralized exchanges. Of course there will be arbitrage and trading opportunities for those who do have accounts on popular centralized alt coin exchanges but nonetheless, you get the point, all of this makes for a deadly combination.
After decentralized exchange mechanisms start to eat the lunch of centralized exchanges, one could imagine, centralized exchanges (in an effort to compete) will be incentivised to implement much more transparent protocols which give users control of their own keys, the ability to audit the exchange itself using cryptographic proofs, and most importantly the freedom to deposit/withdraw as much funds as their heart desires. The value you they will add will on customer support, more polished UI’s, matching engines/orderbooks, etc.
Lastly, on a different note, in crypto there’s a fundamental tradeoff between immutability of monetary policy vs privacy at the base layer. And it is just that, a trade off each having their own benefit. Bitcoin is king and likely always will be but nonetheless that doesn’t mean the market will not value the other side of this tradeoff, it will. I can very much envision a world in which Bitcoin (at least at layer 1) becomes essentially impossible to change going forward, we are likely already there. Bitcoin is digital gold, that is amazing and necessary for the whole ecosystem—but it opens up the playing field for other coins to take on other niches which build off of the highly decentralized/immutable nature of btc as the reserve asset of the space.
Good luck. This is certainly not financial advice.
Further, it used to be that we had popular alt coin exchanges which would allow unverified customers to withdraw up to 100 bitcoin, now of course fiat prices have increased dramatically, but nonetheless these centralized exchanges (for the most part) no longer even allow unverified customers. Yes yes they may be getting pressure from regulators, but nonetheless, that’s not the customers problem. The reality is...even some of the biggest most reputable exchanges have been hacked for their KYC/AML info...as a law abiding customer--in providing your info--you are taking a huge privacy, and in turn, security risk. Even if you want to ridiculously argue FOR more regulation--technology always moves 1000x faster than regulation. I could do a whole separate post entirely on the hypocracy of such an argument, as well as all the racket involved in banker protection laws/the accredited investor protection laws of 1933/1934, etc, but that’s neither here nor there. Just because they slap a nice label on them, pragmatically they do not do what they purport to, they simply create regulatory capture, more subtle forms of bribery. But I digress : )
As previously suggested in prior published charts, I believe we are the start of a new alt coin market cycle. As much as many bitcoin maximalists would like to pretend it’s not true, *one of bitcoins primary use cases (at least for intermediate term) is speculating on alt coins. I believe we are going to see a mad rush to get involved in this, with not many outlets to do so (at least for retail), thus why volume will shift to quasi (and eventually fully) decentralized exchanges. Due to restrictions on popular centralized alt coin exchanges, new prospective demand will be forced to first buy bitcoin on one of the few major exchanges (which have restrictions of their own) to then send to decentralized exchanges. Of course there will be arbitrage and trading opportunities for those who do have accounts on popular centralized alt coin exchanges but nonetheless, you get the point, all of this makes for a deadly combination.
After decentralized exchange mechanisms start to eat the lunch of centralized exchanges, one could imagine, centralized exchanges (in an effort to compete) will be incentivised to implement much more transparent protocols which give users control of their own keys, the ability to audit the exchange itself using cryptographic proofs, and most importantly the freedom to deposit/withdraw as much funds as their heart desires. The value you they will add will on customer support, more polished UI’s, matching engines/orderbooks, etc.
Lastly, on a different note, in crypto there’s a fundamental tradeoff between immutability of monetary policy vs privacy at the base layer. And it is just that, a trade off each having their own benefit. Bitcoin is king and likely always will be but nonetheless that doesn’t mean the market will not value the other side of this tradeoff, it will. I can very much envision a world in which Bitcoin (at least at layer 1) becomes essentially impossible to change going forward, we are likely already there. Bitcoin is digital gold, that is amazing and necessary for the whole ecosystem—but it opens up the playing field for other coins to take on other niches which build off of the highly decentralized/immutable nature of btc as the reserve asset of the space.
Good luck. This is certainly not financial advice.
