Any sort of market involves trust. Without it, there would be no "market" ... and no functioning currency.
In the words of Ronald Reagan, "Trust but verify". The problem with crypto --- there is no verification. Noone is watching those running the market. It's all blind trust.
And consequently, the crypto market is a fraudster's paradise.
There is no escaping this. Even peer to peer traders turn to "trust" in the market (aka the "exchanges") to price their crypto. And the crypto market has proven untrustworthy over and over again. This is just another example.
You will trust somebody --- who is it gonna be? Crypto or fiat?
You seem to misunderstand what the term trustless means in blockchain.
It means that you can verify the transactions on the network yourself and don't have to rely on any 3rd party to tell you whether a transaction is valid.
For example, if you want to sell an NFT to someone for 1 ETH, you don't need to rely on any centralized exchange, price oracle, or API endpoint to do that. You can run your own validator or full node, write and deploy a contract to handle to swap, have both parties verify the contract, and then execute it on chain. The parties don't even have to be two people who have ever met or communicated with each other and can work completely independently to execute the trade.
In reality, people do trust others and only the most extreme blockchain supports verify contract code and run nodes, but it's your choice on how much trust you have to rely on.
Sure, centralized exchanges can manipulate token prices, but the price can only be manipulated in the short term, and decentralized exchanges can help create a more honest market where prices are based off of real, transparent order books and every trade has a cost, which makes wash trading more difficult at scale.
It means that you can verify the transactions on the network yourself and don't have to rely on any 3rd party to tell you whether a transaction is valid.
Wait --- so all this stuff I read about not trusting fiat was just wrong? Seems like a lot of crypto bros are confused too.
Sure, centralized exchanges can manipulate token prices, but the price can only be manipulated in the short term
You mean like when the price of Bitcoin shoots up to $60K before it falls back to $20K --- and then the cycle starts all over again?
Who could possibly object to that? After all, it's only short term. What's a little manipulation among friends?
> Wait --- so all this stuff I read about not trusting fiat was just wrong? Seems like a lot of crypto bros are confused too.
You're seeing multiple perspectives and incorrectly attributing them to the idea of "trustlessness". That isn't an issue with cryptobros being confused, that's an issue with you not understanding what trustlessness means.
There are plenty of people in the blockchain space who don't trust fiat, but "trustlessness" was never meant to represent that a 3rd party couldn't manipulate the price.
> You mean like when the price of Bitcoin shoots up to $60K before it falls back to $20K --- and then the cycle starts all over again?
Again, you're focused on price manipulation which was never part of the idea of trustlessness. It was always expected that a market would arise for BTC and ETH because there would be demand due to their decentralized and trustless nature, but nothing was built into those blockchain protocols to stop price manipulation because that isn't a concern.
Trustlessness is all about your ability to independently verify the code you interact with and whether a transaction is finalized or not.
This story is about an exchange which is just another word for bank and doesn't have much to do with crypto besides selling it. You need to trust the exchange/bank.
Crypto itself has decentralized exchanges like Uniswap where you don't have to trust anyone and nobody can cheat or wash trade. DeFi is what crypto is good at and centralized exchanges like this, Coinbase, and Binance are not DeFi.
Coinbase and Binance own Defi too --- by sheer weight of their marketplace presence and fake trading volume.
The proof --- try to find someone selling Bitcoin on Defi for a rate that differs significantly from Coinbase and Binance.
Whoever has the gold makes the rules --- and it ain't DeFi.
Binance and friends/accomplices have all the gold (aka stablecoins) they need to manipulate any coin they choose in whatever way they choose. If they need more, they can just mint some --- no questions asked. They effectively own the crypto market due to the lack of regulation.
Any sort of market involves trust. Without it, there would be no "market" ... and no functioning currency.
In the words of Ronald Reagan, "Trust but verify". The problem with crypto --- there is no verification. Noone is watching those running the market. It's all blind trust.
And consequently, the crypto market is a fraudster's paradise.
There is no escaping this. Even peer to peer traders turn to "trust" in the market (aka the "exchanges") to price their crypto. And the crypto market has proven untrustworthy over and over again. This is just another example.
You will trust somebody --- who is it gonna be? Crypto or fiat?