[HN Gopher] The more complex crypto seems, the higher the pyrami...
___________________________________________________________________
The more complex crypto seems, the higher the pyramid schemes can
go
Author : RuffleGordon
Score : 162 points
Date : 2021-04-25 15:31 UTC (7 hours ago)
(HTM) web link (reallifemag.com)
(TXT) w3m dump (reallifemag.com)
| loup-vaillant wrote:
| Okay, I use NoScript. It's a hassle, but it's an eye opener, so I
| keep using it. Here, I needed _yet again_ to enable JavaScript to
| read what ought to be a static, text heavy article.
|
| Nothing new so far. What's interesting however is that instead of
| the article, I didn't get the usual blank page. Instead, I could
| read the following quote:
|
| > _" Appropriate technology" was a movement beginning in the late
| 1960s that aimed to shift the emphasis from mass technology to
| smaller-scale, affordable technologies, informed and targeted to
| local needs and customs. Many of its ideas are as relevant today.
| So is one of its major shortcomings: why would we rely on
| technology to mitigate the harm technology does?_
|
| Turns out I got redirected to
| https://reallifemag.com/appropriate-measures/
|
| How ironic. When trying to disable a technology that's quite
| useless as displaying text (and more often than not is more about
| tracking me than serving me), I got a lecture on appropriate
| technology. And a fairly good one at that, which should probably
| be reflected on by proponents of crypto currencies.
| unnouinceput wrote:
| I have NoScript too. I, too, had nothing on the screen but
| instead of enabling the JS for the site I switched to reader
| mode and boom! the static text heavy article was before my
| eyes. -\\_(tsu)_/-
| dehrmann wrote:
| Not sure if this is a nit or not, but NFTs rarely represent
| ownership of anything other than the NFT. You're not really
| buying the art, you're buying _association_ with the art. At
| least if I buy a Jackson Pollock, but the world realizes he 's a
| one-gimmick artist, I can still enjoy the painting. If the world
| stops caring about NFTs, you're left with "cool story, bro."
| saurik wrote:
| Buying these NFTs is more like buying your name on some
| dedication plaque no one will read unless directed to do so;
| people do this, sometimes with millions of dollars, because it
| is, in fact, a "cool story" vs. merely sending an anonymous
| envelope of cash to the owners of the building (maybe a
| University or local government).
| kibwen wrote:
| It's quite a bit different, since your donation doesn't imply
| ownership of the plaque (or even of anything built by the
| donation). The non-fungibility of the plaque is irrelevant
| because you don't own it, and therefore can't resell it, and
| therefore can't expect it to appreciate in value, and
| therefore nothing approaching a pyramid scheme is possible.
| saurik wrote:
| I appreciate it isn't exactly like (hence why I merely said
| "more like" ;P). I think people are way too focused on the
| idea of the value of these NFTs going up in value: most of
| the discussion about why they are actually valuable in the
| relevant communities is merely as an alternative to
| Patreon-style interactions. (And so like, I totally agree
| that a lot of scams are being built over them: I am just
| defending why the "cool story" part actually is worth real
| value to some people.)
| kibwen wrote:
| Yes, I could have been more clear: I was trying to
| suggest that if someone wants to give money to an artist
| in the form of a Patreon-style interaction, then they can
| just... donate. :P It's clear to me that the hype is
| precisely _because_ people want their tokens to
| appreciate in value; you can design a non- _transferable_
| -token if you want to give patrons the "cool story"
| without muddying the waters with pseudo-investment
| shenanigans (of course, I suppose at this point there's
| nothing stopping anyone from issuing an NFT on your NTTs,
| sigh...).
| cannabis_sam wrote:
| Sure, but so is the world economy apparently:
|
| https://www.forbes.com/sites/jeffmcmahon/2019/04/05/the-worl...
| jb775 wrote:
| My Occam's Razor: NFTs are tax avoidance and/or bribe money
| vehicles that happen to be attracting useful idiots.
|
| They are perfect because:
|
| 1) an unlimited number of them can be created quickly and easily
|
| 2) "artwork" value is subjective and therefore the value and
| short term appreciation/depreciation can't be easily questioned
| jdgoesmarching wrote:
| This is a really fantastic article above and beyond what the
| headline suggests. I recommend giving it a full read.
| pierrebai wrote:
| I disagree, but to each its own. I thought it was full of
| condescending takes.
|
| For example: - "getting" Memento does not
| make it boring. - Finding the art world being often
| vacuous does not mean you are an acculturated ignoramus.
| - Electricity does not make blockchain valuable, it's both the
| social and proof-of-work, the electricity cost is incidental
| and unrelated. (Bitcoins and NFT works even if you are ignorant
| of its inner workings.)
| [deleted]
| gervwyk wrote:
| Agreed. Writing of this quality is very rare, such a talented
| author.
| SavantIdiot wrote:
| The fact that there is so much money, SO much money, being thrown
| around a technology that is dodgy at best, and a scam at worst,
| is terrifying. I'm certain this technology will find a place in
| the future after it has matured, but hoo boy are there gonna be
| big winners and big losers until it shakes out.
| legulere wrote:
| A lot of people that invest simply lack better alternatives. On
| the other hand the people that could invest reasonably like
| homeowners in energy efficiency do not have the money to do so,
| with the current monetary policy. Even if they had, they would
| gain more from investing in overvalued assets that have a
| growth in value detached from reality, driven by loose money
| supply for investors.
| SavantIdiot wrote:
| > lack better alternatives
|
| What?!
|
| Wow, this is a painfully misinformed statement. Like, so
| misinformed I want to hug you.
|
| Index funds have consistently beaten inflation by double
| digits and have practically nil management fees. They are
| vastly more secure alternative to imaginary crypto exchanges.
| dehrmann wrote:
| > A lot of people that invest simply lack better alternatives
|
| Yeah, stocks haven't had a good year in over a decade /s
| legulere wrote:
| Widespread access to low-fee index-fonds is pretty new and
| alternatives were not as bad as they are now. You could at
| least get inflation back by just letting your money stay at
| the bank, which is not possible now anymore.
| dehrmann wrote:
| The biggest change has been free trades and lower account
| minimums. For a long time, as long as you could hit the
| minimum (usually $2500-$5000), Vanguard was an amazing
| choice. The minimum wasn't great, but really, investing
| less isn't all that interesting, at least not as a missed
| opportunity for building wealth. Low-fee ETFs have also
| been around for a while, but the $10 per trade you'd pay
| in 2005 meant you didn't really want to buy less than
| $1,000 of anything.
| arcticbull wrote:
| > The fact that there is so much money, SO much money, being
| thrown around a technology that is dodgy at best, and a scam at
| worst, is terrifying.
|
| We have very little evidence to substantiate the actual
| quantity of real dollars in this system.
|
| The NYAG settlement with Tether shows that it's backed by
| bailing wire, chewing gum and hope [1]. USDC has stopped
| publishing their attestations as of January (which, btw, - and
| I can't believe I'm going to cite Tether's Saul Goodman but -
| aren't audits [2]) and since then it's market cap has doubled.
| USDT and USDC both use similar weasel wording about the nature
| of what backs them.
|
| An attempted ETF a couple of years ago admitted 95% of all
| trading volume in the crypto space was fake. [3]
|
| The CFTC smacked Coinbase because literally 99% of all Litecoin
| trading volume in 2017 was one dude, Charlie Lee - the LTC
| founder, wash trading internally [4]. Lee then took advantage
| of the market cap he synthesized, dumped literally all his
| holdings at the peak and sailed off to an island.
|
| This is just a couple of examples off the top of my head. It's
| all fraudulent.
|
| [1]
| https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
|
| [2]
| https://twitter.com/bitcoinlawyer/status/1386146486359150597
|
| [3] https://cointelegraph.com/news/bitwise-calls-out-to-
| sec-95-o...
|
| [4] https://cftc.gov/PressRoom/PressReleases/8369-21
| Animats wrote:
| _We have very little evidence to substantiate the actual
| quantity of real dollars in this system._
|
| This is especially true of NFTs. With each item unique,
| there's no meaningful market price. There are just occasional
| stories about sales.
|
| This is important. With a commodity that has an active
| market, prices have some meaning. You can usually sell your
| asset at roughly the current market price. This is not true
| of unique items. You have to find a buyer who wants your
| specific thing.
|
| This works just like collectables on eBay. Here's a current
| collectable.[1] "Rare Tag Error Retired Ty Beanie Baby Claude
| The Crab 1996 Collector - US $1,235.00 [ 0 bids ]" Note the
| "0 bids". Now keep scrolling down until something shows up
| with a bid.[2] "Princess diana beanie baby 1st edition 1997
| w/o tag US $0.99 [ 1 bid ]" That's what a willing buyer is
| prepared to pay. You can scroll through page after page of
| Beanie Baby asking prices without seeing anything with a bid.
|
| That's what an NFT market looks like when you want to sell.
|
| The NFT market is useful only to those with a fan base they
| can monetize. If you're the fan, you're the sucker.
|
| [1] https://www.ebay.com/itm/194065105880
|
| [2] https://www.ebay.com/itm/254955747357
| Nasrudith wrote:
| I think that may be a feature for money launderers. They
| love exploiting subjective valued things like art and wine.
| It would also help explain where the dumb money is coming
| from - losing money during the laundering process is the
| norm so a "bad deal" could still be a win.
| adventured wrote:
| While your broad point is correct, that's not at all how
| you would gauge eBay / marketplace values correctly. The
| $0.99 one bid example doesn't reveal much about what people
| are willing to pay. At a minimum you also want to use
| completed / historical sales, not pick out an item with 0
| or 1 or N bids that is an auction in progress.
|
| People often place an initial entry bid on items when the
| auction begins just to keep track of items of interest as
| an alternative to the watchlist, and typically there is a
| rush of activity in the last minute courtesy of robobids.
|
| That Claude the Crab or Diana - depending on condition -
| might go for $10, $100 or $5,000+. We wouldn't know unless
| we check historical sales and keep in mind how condition
| drastically alters the value of collectibles.
|
| Using eBay's filters you can switch to only showing sold
| items. Or you can use one of the numerous sites that make
| it easy to check historical prices.
| londons_explore wrote:
| Auctions have an issue for rare items - they require at
| least TWO bidders to get an idea of a price. One bidder
| might have been happy to spend a million dollars, but the
| item still sells for $0.99 because nobody bid against
| her.
| pessimizer wrote:
| The value is going to be desire times scarcity. It
| doesn't matter if someone would pay a million dollars for
| something that is available for 99C/; I'd pay $1000 for a
| glass of water if they weren't available for a penny.
| Animats wrote:
| Here we have eBay's listing of Beanie Babies that
| actually sold, sorted highest price first.
|
| There are 21 that actually sold over $5000. How many of
| those are wash sales is not clear.
|
| [1] https://www.ebay.com/sch/i.html?_from=R40&_nkw=Beanie
| +Babies...
| aphextron wrote:
| People are going to have to learn the hard way about
| bid/ask spreads.
| gruez wrote:
| Ironically I learned how exchanges worked (bid/ask, order
| book, spreads, etc.) through crypto.
| Itsdijital wrote:
| I searched for most valuable beanie babies and found a site
| that said the Princess Di bear is worth $500k. The
| completed auctions on ebay reveal a market price
| of....$4.50
| rawtxapp wrote:
| > This is just a couple of examples off the top of my head.
| It's all fraudulent.
|
| I'm not sure how you go from a few examples to -> "it's all
| fraudulent". Does crypto attract gamblers, crooks and
| manipulators? Yes, 100%. Does the same kind of behavior also
| happen on the stock market? Yes, 100%[1][2]. Hedge funds on
| wall street are doing all kinds of manipulations as well, it
| doesn't make the whole stock market fraudulent.
|
| 1: https://www.wsj.com/articles/what-is-archegos-and-how-did-
| it...
|
| 2: https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%
| 80...
| arcticbull wrote:
| What Archegos did is nothing like what any of the links I
| provided show. They leveraged themselves to the tits and
| got rekked. Happens to the most "WSB" of us - I think there
| was a petition to make him a mod. They didn't issue company
| scrip and buy up their own stock with it, then dump it on
| unsuspecting bag holders. Bill Hwang wouldn't be in the
| unemployment lines, he'd be in federal prison.
| toomuchtodo wrote:
| What is the crypto equivalent of the SEC?
| rawtxapp wrote:
| They passed a new bill giving that power to SEC and CFTC.
| They have already sued crypto related people/companies in
| the past.
|
| 1: https://www.coindesk.com/cftc-sec-us-house-
| representatives
|
| 2: https://www.sec.gov/news/press-release/2020-338
|
| 3: https://www.cftc.gov/PressRoom/PressReleases/8270-20
| [deleted]
| bidirectional wrote:
| How is the Archegos case manipulation? They made a terrible
| bet and lost lots of their own money.
| rawtxapp wrote:
| Through that opaque structure, they hid just how much
| exposure they had. They didn't only lose their money,
| credit suisse also took a huge hit [1], so did many other
| market participants that bought the over-inflated stocks
| in question.
|
| 1: https://www.wsj.com/articles/credit-
| suisses-5-5-billion-arch...
| erentz wrote:
| > The CFTC smacked Coinbase because literally 99% of all
| Litecoin trading volume in 2017 was one dude, Charlie Lee -
| the LTC founder, wash trading internally [4].
|
| I don't have any skin in this. But I found it interesting so
| read it and the timelines don't seem to match your claim here
| about Charlie Lee.
|
| "The order also finds that over a six-week period--August
| through September 2016..."
|
| Note he sold in December 2017. Well over a year after this.
| So it sounds like maybe that could've been him when he was
| working there. But anything subsequent is on Coinbase. (Sadly
| not surprising that SV mindset would legitimize securities
| fraud as a means for growth hacking since they make up
| numbers everywhere else.)
| singularity2001 wrote:
| >>> We have very little evidence to substantiate the actual
| quantity of real dollars in this system.
|
| This is one question I'm really interested in: How much money
| did Coinbase, Kraken and Binance receive so far? That's
| pretty much the whole real worth of the crypto space (IMO).
| Everything else is just "look I have 1000000 signed pieces of
| papers, I sold one for 1000 to my friend, so I'm a
| billionaire now."
| SavantIdiot wrote:
| This is really useful information. I have a cadre of friends
| who are serious crypto heads and I almost dread hanging out
| with them because they are so deep into it. I'd be curious to
| hear their perspective after I understand these links.
| ajkdhcb2 wrote:
| But you are ok with the fractional reserve banking system
| that has now reached the point there are sometimes literally
| no legally required reserves?
|
| If you behave anywhere near as absurdly as the traditional
| financial system then everyone calls you a scam.
| arcticbull wrote:
| Why wouldn't I be?
|
| Fractional reserve lending is one of the ways in which the
| money supply is actively managed. Adjusting the reserve
| rates adjusts how much banks can loan, which adjusts the
| circulating supply. It's not in and of itself intrinsically
| harmful.
|
| Remember, that nobody has lost a single dollar to a bank
| failure since the backstop (the FDIC) was introduced in
| 1933 - following the Great Depression. Even in the
| Washington Mutual failure in 2008. The FDIC by the way is a
| funded through premiums paid into it by the member banks.
| They have an emergency credit facility with the Fed, of
| course.
|
| This is completely different than issuing company scrip and
| buying up assets with it to enrich yourself with it.
| ajkdhcb2 wrote:
| >This is completely different than issuing company scrip
| and buying up assets with it to enrich yourself with it.
|
| That is exactly what the fractional reserve banking
| system does. The dollars in people's accounts don't
| actually exist, but the bank uses the money that people
| deposit to buy assets that enrich the CEO and
| shareholders.
|
| >nobody has lost a single dollar to a bank failure since
| the backstop (the FDIC) was introduced in 1933
|
| I find that difficult to believe. But people have been
| scammed indirectly in any case with bank bailouts that
| pass taxpayer money onto the banks, paying them for
| gambling with your money and not holding reserves. It's
| like saying Tether is safe backing only 10% of assets
| because the government can just bail them out if
| necessary.
| pessimizer wrote:
| > I find that difficult to believe.
|
| Just look it up.
| bonestamp2 wrote:
| > We have very little evidence to substantiate the actual
| quantity of real dollars in this system.
|
| I assume the SEC at least has some idea of how much has been
| deposited through SEC regulated exchanges. That might be the
| most useful place to get a rough low ball number.
| one2three4 wrote:
| That. Combined with the fact that so many productive people and
| healthy business have limited or no access to it.
| jrochkind1 wrote:
| Yes. And I think the OP correctly suggests that this... not
| unique, it's increasing parts of the economy.
|
| > It is understandable enough to want to participate in such
| collective delusions. It's much more fun to be awed by not
| getting a movie than to realize that you do get it and it's
| just boring. This same idea also helps explain speculative
| bubbles. It's more fun to believe in magic than to recognize
| how much of financialized capitalism is just scams and pyramid
| schemes. Nonetheless, if the popular press is full of
| explainers "clarifying" what a "very complicated" investment
| phenomenon is all about, hide your wallet: You are being
| shilled into a game of Three-Card Monte.
| api wrote:
| The last part is why so much money is in it. Everyone remembers
| how everyone said dot.com was over in 2002 when the biggest
| dot.coms were yet to come. Everyone remembers when everyone
| laughed at Tesla and SpaceX. Everyone remembers Bitcoin at $1.
|
| There is a hell of a lot of FOMO around.
|
| There are also record low interest rates not just in the USA
| but globally, and that is inflating every asset at once.
|
| If there is a crash I don't think it will just be
| cryptocurrency. It will be broad and deep.
| rawtxapp wrote:
| Similar to dot-com bubble where people were investing their
| life savings into companies that just had a domain name with no
| business plan whatsoever. Lots of them blew up, but the ones
| that made it through ended up becoming trillion dollar
| companies.
| grey-area wrote:
| Only if you use a circular definition of made it through
| which means became a trillion dollar company.
|
| Plenty of companies made it through but never recovered their
| dotcom market cap or prestige, a few prominent examples:
| Csco, hpq (only recently passed the 2000 price), yhoo, emc,
| vrsn, real networks. There were plenty of also-rans who
| limped through but didn't justify the hype pricing years
| later, and the real revolution came to fruition years later
| with mobile computing and mass-market online stores, but
| there was definitely underneath it all an obvious and real
| information revolution which the dotcom bubble was merely
| irrational euphoria about - everyone knew sonething big was
| happening, even if they rejected the crazy prices.
|
| I sincerely don't think this crypto bubble is similar,
| because there is no there there amd because almost all assets
| are severely overpriced right now - crypto is full of scams
| and nobody is actually using it any more as a currency, this
| means all these joke coins worth 100s of millions are going
| to zero, no doubt just after joe public buys in. There's a
| reason coin base insiders are frantically selling as soon as
| they can and more and more frauds are coming to light. Even
| the more legitimate companies in this space are full of
| fraud.
| arcticbull wrote:
| Yes, it's like that, but with the completely unregulated
| trading environment reminiscent of the Roaring 20s. That's
| why it's much, much worse. The dot-com bubble was driven by
| margin, enthusiasm and poor decision making. This one's got
| all those plus the hallmarks of the 20s: insane leverage
| (see: DeFi), _bonkers_ leverage (see: BitMEX), and a
| fictional currency being printed at a rate of billions of
| dollars per week that 's then used to prop up the prices of
| the assets themselves.
|
| It's basically the dot-com bubble, the roaring 20s and 2008's
| CDO shell game rolled into one.
| aphextron wrote:
| >"Yes, it's like that, but with the completely unregulated
| trading environment reminiscent of the Roaring 20s."
|
| If you think the modern day SEC is doing anything about the
| current levels of market manipulation and wild speculation,
| I've got a bridge to sell you.
| SavantIdiot wrote:
| Exactly. I -really- hope crypto ETFs don't end up in
| ordinary people's 401Ks, but I fear it is heading that way.
| Zamicol wrote:
| >being thrown around a technology that is dodgy at best
|
| I have yet to meet someone that says this who has foreseen the
| implications of defi. In my mind, as an early bitcoiner, that
| was the original promise of bitcoin.
|
| A list of coins by market cap is full of absolute junk:
| https://www.coingecko.com/en
|
| A list of tokens by locked in value is full of systems that are
| revolutionizing finance: https://defipulse.com/ Defi protocols
| are providing useful services and are making money. I doubt I
| could overstate their enormity.
|
| There's a huge difference between the two worlds. Don't confuse
| dogecoin's "I like the stonk" hype with Maker's muscle. The
| "blockchain" isn't the point. The systems made possible on top
| were always the point, and that's what makes "blockchain" so
| valuable.
| norswap wrote:
| The top 7 on Defi Pulse (1) are currency exchanges
| ("liquidity pools") and overcollateralized loans, which are
| mostly used by speculators to get leverage. Useful, I guess.
| But enormous -- only in monetary terms.
|
| I believe crypto & blockchain technologies have a future. But
| we ain't there yet.
|
| (1) and I suspect more than that, those are just those I'm
| familiar with.
| graeme wrote:
| What do you think that future is? I'm curious, since you
| believe it in but also are able to see that most of Defi by
| volume is just speculation.
|
| I'd be interested to hear to pro-Crypto case.
| graeme wrote:
| > I have yet to meet someone that says this who has foreseen
| the implications of defi.
|
| Can you give a use case that isn't intra crypto speculation?
| That seems to be what Defi consists of at present.
|
| Ultimately finance serves to help with capital allocation and
| production in the real economy. So: is Defi helping the real
| economy do things it couldn't do before? Or, is there a
| plausible use case for this in formation?
|
| Please be specific. A lot of people seem enthused by this,
| but no one has been able to explain it in a way that shows
| the use.
| gpvos wrote:
| defi = decentralized finance,
| https://en.wikipedia.org/wiki/Decentralized_finance
| ignoramous wrote:
| > _" I like the stonk" hype with Maker's muscle._
|
| Some of the tech in the web3 space is so genuinely
| interesting [0]. And defi's evolution has been nothing short
| of _rapid_. It is kind of sad that crypto-currency related
| topics don 't invite as much positive attention and technical
| discussion on HN.
|
| [0] Especially, XaaS apps on top of Ethereum v2, Cosmos, and
| Polkadot.
| piva00 wrote:
| I suspect because as many others here my time is limited.
| Given the amount of scams, misinformation, hype-fueled
| marketing talk, it's hard to parse information on the
| crypto-space and so I'm completely put off by it.
|
| Don't take me bad, I believe there are innovations
| happening there that we will see the results on the
| mainstream on the next 10 years, it's just too much of an
| effort for just a curiosity from my side. I keep up with
| articles shared here on HN as I believe it acts as a
| curation and filtering tool but I can't keep up with the
| rate of fads, new technologies, scams and dead technologies
| on the crypto-space, it's simply exhausting.
| eMGm4D0zgUAVXc7 wrote:
| I'm pro-crypto-currency but I don't understand this,
| explanation follows:
|
| > A list of tokens by locked in value is full of systems that
| are revolutionizing finance: https://defipulse.com/ Defi
| protocols are providing useful services and are making money.
| I doubt I could overstate their enormity.
|
| The top ones are all lending and exchanges.
|
| Lending money to someone isn't revolutionary, it's been
| possible for centuries - and given how easy crypto is to
| steal and never return, I wouldn't WANT to lend it to anyone
| anyway!
|
| And decentralized exchanges are cool for sure, but they are
| self-serving in terms of only needing to exist because
| cryptocurrencies exist. So they can't really be used as a
| pro-crypto argument like you're doing because then the
| solution you're arguing for would only need to exist to solve
| a problem which it has created itself.
|
| So what is so revolutionary about these?
| Slartie wrote:
| > and given how easy crypto is to steal and never return, I
| wouldn't WANT to lend it to anyone anyway!
|
| That's why all this "lending" is a joke anyway. They lend
| you less than your collateral. If you want to "borrow" 1
| BTC, for example, you need to first have the value of x BTC
| (with x being something larger than 1) in the form of some
| other crypto as a collateral and lock that up somehow.
|
| So if I want to borrow 1000$, I first need to provide
| 1000EUR and then hope the $/EUR rate doesn't come too close
| to 1:1, because at that point my borrowing position is
| liquidated and I end up having paid interest for borrowing
| money I already had in the first place.
|
| If that sounds ridiculous, that's because it is. Lending
| needs trust and is thus inherently incompatible with
| trustless cryptocurrencies.
| monkeydust wrote:
| I have to agree aside from the nonsense coins there is
| something going on about Defi that makes me think it could
| rewrite a lot of capital markets.
|
| The beauty of it is that it's all software, no middle, back
| office teams running reports and reconciliation processes.
| mustafa_pasi wrote:
| It's not all software though. There must be an office
| somewhere where any actual real world assets are somehow
| linked to tokens. This is what puzzles me. When you add
| that one office, you loose the decentralization aspect and
| then what's the point of it all?
| programmarchy wrote:
| Yes there must be interfaces with the real world. The
| classic example is a "tooth fairy" insurance policy where
| a smart contract yields a coin if the user loses a tooth.
| How do you verify "proof of tooth"?
|
| This is where the concept of an oracle comes in.
| Chainlink is attempting to provide a decentralized,
| tamper-proof oracle network for smart contacts so if you
| want to know about the cutting edge look at what they're
| publishing.
| jerry1979 wrote:
| Do Chainlink oracles offer any kind of benefits over
| Discreet Log Contracts like the ones we see on
| Suredbits[0]?
|
| [0] https://oracle.suredbits.com/
| TechBro8615 wrote:
| FYI, but this is HN, so you might like to know that
| "enormity" has a specific meaning with negative connotation,
| it's not just a way to describe something as "really big,"
| (enormous) but rather "really evil."
| staticautomatic wrote:
| It's bizarre that this is being downvoted. I wouldn't call
| it "really evil" but the negative connotation is legit.
| See...any dictionary.
| [deleted]
| Udik wrote:
| (in neutral use) large size or scale. "I began to get a
| sense of the enormity of the task"
| staticautomatic wrote:
| Is that a quote from a dictionary or what?
| Udik wrote:
| Yep, Ofxord Languages (the one provided by google)
|
| https://languages.oup.com/google-dictionary-en/
| staticautomatic wrote:
| And when I Google "define enormity" I get " noun 1. the
| great or extreme scale, seriousness, or extent of
| something perceived as bad or morally wrong. "a thorough
| search disclosed the full enormity of the crime" 2. a
| grave crime or sin. "the enormities of the regime" "
| creata wrote:
| > Although enormity has been used since the late 1700s to
| denote large size, this usage continues to be disparaged by
| various language commentators who argue that enormity
| should be reserved for senses related to "great
| wickedness." It is enormousness, they insist (a hefty and
| considerably less common word), that should be used in
| reference to great size, despite the fact that, like
| enormity, it too originally was used to denote wickedness
| or divergence from accepted moral standards. For better or
| worse, this proscription has been widely ignored by many
| English speakers, including professional writers. --
| https://www.merriam-webster.com/dictionary/enormity
|
| It's not as clear as you're making it out to be.
| teh_infallible wrote:
| ^^ You would think a group of engineers and founders would
| see that, and yet HN remains stubbornly, irrationally anti-
| crypto.
| [deleted]
| fossuser wrote:
| Agreed - the DeFi tech is really interesting:
| https://medium.com/dragonfly-research/what-explains-the-
| rise...
|
| There's a lot of snake oil speculative no knowledge spam from
| people that easily give off a bullshit vibe. So I get that a
| lot on HN that haven't closely looked at it would be turned
| off by that and just dismiss it entirely out of hand.
|
| There's some real stuff going on here too and it's worth a
| deeper look - I think the knee-jerk dismissal is a mistake.
| At this point over ten years in, it's worth at least taking a
| deeper look at even if (I'd argue _especially if_ ) you're a
| skeptic.
|
| I also suspect there's some pseudo-intellectual skepticism
| cynicism as signaling going on like there always is.
|
| Specifically on BTC: https://www.matthuang.com/bitcoin_for_th
| e_open_minded_skepti...
| danaris wrote:
| > The fact that there is so much money, SO much money, being
| thrown around
|
| This is the kind of thing that happens when the wealthiest
| people have _so much_ more than everyone else: there are enough
| people with vast amounts of money that they have no idea what
| to do with that they can easily fund a bubble like this,
| especially when they are promised by smart-sounding geeks that
| this is The Next Big Thing that will a) let them get in on the
| ground floor of a whole new currency, and b) give them a way to
| leverage their wealth to retain and increase their power as we
| gradually move more and more toward a post-scarcity society.
| beervirus wrote:
| > I'm certain this technology will find a place in the future
| after it has matured
|
| Why? It doesn't solve any real problem that anyone has ever
| had.
| nyolfen wrote:
| how about this: https://i.imgur.com/lSfdTfK.jpg
| arcticbull wrote:
| This chart affects 0.35% of the global population. This one
| is far more representative [1]. Notice how after Bretton-
| Woods ended, things got really nice and stable? That's
| successful active management.
|
| Venezuela's problem isn't inflation - that's a symptom.
| Venezuela's problem is the Maduro government. Solve the
| latter and you solve the former.
|
| [1] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
| arberx wrote:
| "If only they did this!" -- that's not a solution. The
| goal is to prevent this from even being possible in the
| first place.
|
| There are very real challenges from inflationary monetary
| supplies in countries like Argentina, Turkey, Venezuela
| and notably Zimbabwe.
| arcticbull wrote:
| When you have a bad government, the currency is the least
| of your problems. When you resolve the government, the
| currency is no longer a problem.
|
| Seriously, in Venezuela there have been recently
| shortages of: milk, meat, coffee, rice, oil, precooked
| flour, butter, toilet paper, personal hygiene products
| and medicines. Some Venezuelans have resorted to eating
| wild fruit and garbage [1]. Somehow resolving inflation
| through a cryptocurrency with $50 transaction fees that
| loses 27% of its value in one week every few months
| doesn't change any of that. It's just a different set of
| problems.
|
| However, overthrowing the government will resolve both
| issues.
|
| Sometimes there are no easy answers.
|
| [1] https://en.wikipedia.org/wiki/Shortages_in_Venezuela
| [deleted]
| nyolfen wrote:
| being able to save money is a basic affordance that many
| in despotic monetary regimes are deprived of -- this
| extends far beyond venezuela, which is just a dramatic
| example. defecting from a debased currency to discipline
| abusive central banks is democratic power. "just
| overthrow the government bro" is cold comfort and
| ridiculously condescending to the ordinary people who are
| purely victims of these situations.
| SavantIdiot wrote:
| Are you trying to claim cryptocurrency will "solve" rising
| inflation, as if it is some kind of bad thing?
| rawtxapp wrote:
| Inflation is an implicit tax on the working class and
| savers. How is _that_ not a bad thing?
|
| If you're rich, you can keep borrowing money at rock
| bottom rates to invest and get richer, if you're just an
| average person, everything around you is becoming more
| and more expensive, yet your compensation doesn't change.
| yuliyp wrote:
| Inflation is a tax on money (so yes, savers). It's not a
| tax on labor, nor is it a tax on productive assets.
| Normally speaking, compensation changes with inflation
| SavantIdiot wrote:
| Simple: I'm not naive enough to make reductive arguments
| about trillion dollar economies.
| o_p wrote:
| I hoped HN to have a more informed take but I guess not.
|
| Blockchains solve the problem of having a decentralized
| public database, currency is just a particular use
| oblio wrote:
| > Blockchains solve the problem of having a decentralized
| public database.
|
| That's not a problem. A problem is something like this: "as
| a video editor/doctor/..., I need something that helps
| me...".
|
| Yours is just a tech description.
| bryananderson wrote:
| What problem does a decentralized public database solve?
|
| As far as I can tell, over a decade in, blockchain is still
| hunting for one.
| Nasrudith wrote:
| A decentralized public database is a solution, not a
| problem (snark aside about bitcoin). The question is "What
| is the purpose of it being decentralized and public?".
| dilyevsky wrote:
| So like git?
| o_p wrote:
| But you host git on a centralized server, blockchain git
| when
| dilyevsky wrote:
| That's github model, you can host it on many "servers" if
| you so choose
| Udik wrote:
| It's not guaranteed to be unique. Blockchains are.
| _Microft wrote:
| Crypto technologically solves the social problem of trust.
|
| I'll leave the interpretation of this statement up to you ;)
| zepto wrote:
| Crypto really has nothing to do with trust.
|
| It provides a mechanism that enables distant parties to be
| confident that they hold copies of the same document.
|
| That's all.
| Udik wrote:
| Enables distant parties to be confident that there is
| only one specific version of the document that is valid,
| even when each of the parties could have an interest in
| creating and spreading its own version.
| zepto wrote:
| Valid for what?
| _Microft wrote:
| The blockchain, consensus algorithms and the whole
| shebang are only needed because cryptocurrencies do not
| want transactions to be mediated by a central authority
| that would need to be trusted. Crypto is about trust, or
| rather a lack thereof.
| Hjfrf wrote:
| Despite all that, people mostly trade crypto on
| centralized exchanges.
|
| The users really hate the decentralized aspect of crypto,
| as shown by immediately giving away their wallet to some
| "trusted" third party if it reduces fees.
| api wrote:
| Users neither love nor hate decentralization. Users don't
| care how it works. They love features like not having to
| worry about losing their wallet if a piece of hardware
| dies or having to manually back it up.
|
| People hate manual IT management. We are nearing the
| point at which the idea of doing this will be compared to
| cranking a car engine by hand to start it. If
| decentralized systems can't offer this kind of "it just
| works" experience then the future is 100% centralized.
| zepto wrote:
| Crypto users may be distrustful, but crypto doesn't
| create trust or solve any problems to do with it. It's
| just currency for the distrustful.
| FDSGSG wrote:
| It solved the problem of paying for drugs which you ordered
| online.
|
| It solved the problem of ransomware payments, before
| winlockers used to ask for gift cards which didn't scale
| well.
|
| It solved the liberty reserve problem where the US government
| shuts down your sketchy no-KYC money transfer platform.
|
| At a very general level cryptocurrency has solved the
| "anonymous online payments"-problem.
|
| These are all very real problems solved by cryptocurrency.
| oblio wrote:
| So what you're saying is that it solves a set of problems
| for a bunch of very problematic people for which we'd
| rather have a better solution? (maybe jail?)
| SavantIdiot wrote:
| Un-alterable ledgers like blockchain are incredibly useful
| for legal and economic applications. Unfortunately there are
| a lot of caveats that need to be worked out, and crypto is
| finding them at scale.
| radicalbyte wrote:
| It solves the problem of: how can I start a pyramid scheme
| relatively anonymously.
| base698 wrote:
| Ever want your money to earn interest? Banks used to do this,
| and you could get good returns on savings.
|
| You can earn interest parking your crypto here:
| https://compound.finance/
| aphextron wrote:
| You can also do this with the stock market by investing in
| revenue generating companies that are innovative and
| creating value. This is literally no different than
| investing in gold.
| base698 wrote:
| More like Lending Club. People using Compound are getting
| loans.
| rawtxapp wrote:
| But then you need to research and understand the
| companies you're investing in. If you're busy with your
| daytime job, you might not have as much time for this
| research. The parent comment is talking about interest,
| which is "risk-free" money (risk-free if the smart
| contract doesn't have any bugs, etc).
| aphextron wrote:
| >But then you need to research and understand the
| companies you're investing in. If you're busy with your
| daytime job, you might not have as much time for this
| research.
|
| Then just invest in a Vanguard ETF. There's no such thing
| as "risk free" money short of US treasuries or an FDIC
| insured CD, and those don't require any research.
| o_p wrote:
| Unless you are participating in an IPO. Buying stocks its
| not investing in the true sense you mention, you are just
| transfering ownership of stocks but that money doesnt
| fund any enterprise.
| JohnPrine wrote:
| This is not true. Buying shares in a company increases
| the company's value, which allows it to raise more money
| to fund future enterprises.
| o_p wrote:
| That doesnt make any sense at all, buying shares does not
| increase the company value as someone is selling on the
| other side, you could be buying when the price drops. If
| what you said would be true, you would make profit by
| just buying more shares!
| 8192kjshad09- wrote:
| But the share price going up enables the company to raise
| money easier by offering more shares.
|
| See TSLA for example.
| yaa_minu wrote:
| Not everyone is an investor. People who are not ready to
| invest now should beable to save their earnings
| withouthhaving to worry about their savings losing value.
| bidirectional wrote:
| The risk-free rate is that yielded by bonds issued by
| creditworthy governments. It's available to everyone and
| is the same whether you're Goldman Sachs or a nobody.
| aphextron wrote:
| >People who are not ready to invest now should be able to
| save their earnings without having to worry about their
| savings losing value.
|
| You can. It's called a CD. They currently return about
| 0.8%, which is the max you're ever going to get for a
| "risk free" investment right now. Anything beyond that is
| going to be some form of speculative investment. This is
| precisely why the stock market has become so inflated.
| haolez wrote:
| While you wrote this, your country's Central Bank printed a
| few billions (or trillions, if you are american) in your
| currency, so that your money now is worth a lot less than
| before.
| arcticbull wrote:
| This is a dramatic misunderstanding of economics.
|
| Inflation is a function of both supply and velocity.
| Velocity is low because US savings are at an all-time high.
| The central bank has a number of tools to contract the
| supply once velocity increases. [1]
|
| Your statement that an increase in supply leads to a
| commensurate reduction in the value of each unit is
| strictly false. And something you can measure by going to
| the grocery store and checking if your bill is 100% higher
| this year than last.
|
| [1] https://www.stlouisfed.org/on-the-
| economy/2014/september/wha...
| o_p wrote:
| You are obfuscating with technical terms the fact that
| the central bank haves the power to devaluate your cash
| savings.
| arcticbull wrote:
| No, that's not what I'm doing.
|
| What I'm telling you is that supply is simply half the
| picture, and you're neglecting the other half of the
| picture. If you print a $10 trillion dollar coin, then
| give it to me and I throw it into a vault, has that
| increased the price of goods? No. Supply went up,
| velocity went down commensurately. This is what you're
| seeing in a macro scale.
|
| Yes the central bank actively manages the money supply,
| and maintains a consistent 2% inflation rate. Inflation
| is good for debtors (i.e. most people) as debts are
| denominated in the currency of the year of issue and
| repaid with inflated money. So long as wages keep pace
| (they do [1]) it's generally a benefit.
|
| Money isn't long-term savings. It's a short-term store of
| value that only needs to be fungible, cheap to transact,
| and retain the bulk of its value for as long as you hold
| it. Above all, it just needs to be predictable. Anything
| else is honestly a non-goal. Your job as a participant in
| the economy is to spend that money on basic needs or
| invest it productively.
|
| [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-
| most-us...
| o_p wrote:
| But the central bank doesnt print money to throw it into
| a vault. The commercial banks borrow that money to lend
| it themselves to the people for consumption and
| investing, so printing money definitely haves an effect
| on your buying power even if its not 1 to 1.
|
| Maybe you live in a country with a independent central
| bank but many countries are far more corrupt and the
| goverments make their central bank print money for
| themselves and have huge inflation rates. Cryptocurrency
| gives them a way to protect their savings from that.
| arcticbull wrote:
| > But the central bank doesnt print money to throw it
| into a vault.
|
| Correct, _however_ US personal savings rates are at all-
| time highs. [1] So, you are correct, the banks aren 't
| taking the money and locking it into vaults. However,
| people are taking _their_ money and locking it up in
| savings accounts and investment accounts. This is
| reducing velocity. The "printing" was to offset this
| reduction in velocity and avoid a deflationary spiral.
| Through lending, so they can be used for productive
| things.
|
| This also explains how asset prices spiked without
| actually causing inflation.
|
| > Cryptocurrency gives them a way to protect their
| savings from that.
|
| I don't want to get too far down this rabbit hole, but
| literally everything that isn't currency is inflation-
| proof. Inflation only affects _currency_. So, if you buy
| real estate, or stocks, or even un-productive assets like
| gold, silver or cryptocurrencies, you 're equally
| protected from inflation. It may underperform, but now
| we're talking about rate of return in constant-dollar
| terms.
|
| Cryptocurrencies do protect you from inflation, yes, but
| they have massive deficiencies that make them a poor
| choice relative to their peer investments, in my opinion.
| Such as the rampant fraud in the space. This hinders
| price discovery, and makes it impossible to determine a
| real value. It also causes massive swings of 27% week-to-
| date. That's an annualized inflation rate of 25,000,000%
| when measuring the value of a bitcoin against CPI.
|
| [1] https://fred.stlouisfed.org/series/PSAVERT
| seibelj wrote:
| Out of all the things you can argue in defense of,
| central banks printing money and handing it straight to
| the richest people on earth has got to be one of the
| weakest. "Just throw out the Venezuelan government!" If
| only that were so easy. Meanwhile millions of people
| starve to death! There really isn't a use for a monetary
| unit decoupled from the government?
| haolez wrote:
| Time will tell. Let's come back here in five years.
| [deleted]
| anyfoo wrote:
| https://en.wikipedia.org/wiki/Deflation#Effects
| [deleted]
| Kinrany wrote:
| It does solve the problem of being unable to get a bank
| account. In theory, once the scaling problems are solved and
| the transactiom fees go down.
| hoppyhoppy2 wrote:
| >It does solve the problem of being unable to get a bank
| account. In theory, once the scaling problems are solved
| and the transactiom fees go down.
|
| You could say the same thing about Walmart's money orders
| and check-cashing services, but that doesn't use an entire
| country's worth of electricity, suck up the world's supply
| of GPUs, or support the same number of scammers.
| wickoff wrote:
| It's understandable why people consider 100% of crypto to be a
| scam.
|
| But several projects have an actual P/E ratio now. You can't
| deny a P/E ratio. Value is being created here.
|
| In 2013 bubble everything was bitcoin clone but "better". No
| cash flow. In 2017 it was unregulated securities - illegal, no
| cash flow. In 2021 with Defi you don't need to struggle to
| explain anything.
|
| People get paid for providing capital at a higher rates than in
| traditional finance because smart contracts are removing
| friction. Stakeholders get paid dividends for governance, just
| like a normal company.
| meltedcapacitor wrote:
| LOL defi is a neat idea but the current reality is order of
| magnitude slower and orders of magnitude more expensive than
| "legacy". It adds a lots of friction. Players "get paid"
| because folks can't read smart contracts and see that behind
| the cover story it's just flows from new players to exiting
| players, which looks good as long as inflows are larger than
| outflows, which of course will last forever.
| graeme wrote:
| Can you please give specific examples which are enabling
| things that aren't intra crypto speculation?
|
| The only examples I've seen tend to be services that make
| money off crypto investing, which is obviously circular:
| those revenues ultimately depend on there actually being
| value in crypto.
|
| But perhaps there are cases I've missed.
| Daishiman wrote:
| > now. You can't deny a P/E ratio. Value is being created
| here.
|
| Which ones?
| wickoff wrote:
| https://sushi.com is the best example.
| Nasrudith wrote:
| Madoff had a price to earning ratio too. I don't think that
| variable doesn't say what you think it does. Higher rates
| implies more risk which certainly applies to
| cryptocurrencies.
| SavantIdiot wrote:
| > You can't deny a P/E ratio. Value is being created here.
|
| Oh yes, yes you can. You're talking about a currency
| exchange, not a commodity. I guess you weren't around for the
| last two bubbles.
|
| There literally is no value being created. Coinbase earnings
| are based on people paying to use its service, and that
| service is trading imaginary currency with no intrinsic
| value. Unlike a semiconductor, oil, or even industrial labor.
| lowdest wrote:
| Coinbase provides KYC compliance which then gives it
| government blessing to be a gateway between crypto and the
| US dollar financial system. That is the value. Otherwise,
| there are DApps that allow trading between cryptos and
| don't require employees, offices, centralized server
| infrastructure, etc. that would take the place of Coinbase.
| SavantIdiot wrote:
| it is value based on vaporware. don't be a K=1 thinker.
| astoor wrote:
| A successful pyramid scheme has a couple of valuable attributes:
| "plausible deniability", i.e. the ability to disguise the pyramid
| scheme to convince as many people as possible that it isn't
| actually a pyramid scheme, and "self-sustainability", i.e. the
| ability to keep the scheme going for as long as possible without
| collapsing.
|
| The article's headline suggests the article is about "plausible
| deniability". This has indeed been improving over time as the
| schemes have become more sophisticated. With Bitcoin for example,
| articipants could say "it's not a pyramid scheme because you can
| buy a pizza with it", although that was about the extent of it in
| practical terms (excluding more nebulous claims like "it is going
| to change the world", "it is the internet of money" etc.).
| However, with more sophisticated schemes like Ethereum,
| participants used to say things like "it's not a pyramid scheme
| because you can run DApps on it", now say things like "it's not a
| pyramid scheme because you can do DeFi with it", and may in
| future have something else with which to deny it is a pyramid
| scheme.
|
| However, the article itself talks specifically about NFTs. These
| aren't so much about "plausible deniability", but about "self-
| sustainability". People need to buy Ethereum to buy the NFTs. It
| is like the ICOs - people needed to buy Ethereum to participate
| in the ICOs. When the ICOs dried up and the ICO companies started
| cashing out their Ethereum the prices collapsed, but now we have
| NFTs to take their place. If NFT sales dry up and NFT sellers
| cash out the prices may collapse again, but by then there may be
| something else to take their place and keep the scheme self-
| sustaining.
| diego wrote:
| The author of the article may have some valid points, but she
| doesn't understand crypto so she completely discounts any
| mechanisms of value creation that might come from it. Near the
| end of the article it gets really bad. She attempts to make the
| case that paper menus are more efficient than apps, without doing
| any math whatsoever:
|
| > For example, delivery apps make it feel "easy" to order food,
| when in fact we are spending much more in buying the phone,
| keeping it charged, paying our data plan, paying our
| subscriptions, and so on, for every order -- in other words, we
| are using more hours of our labor to do so. Before smartphones,
| we could call the restaurant with a landline, but we also had to
| have previous knowledge of the restaurant as well as potentially
| a menu or at least a phone book's yellow pages. The app replaces
| the drawerful of menus with a commensurate amount of electricity,
| which we pay for when we buy and charge our phone and pay our
| phone bill, which the restaurant pays for on their end in keeping
| their computers up, and which the app skims a huge percentage of
| to pay back venture-capitalist investors and keep the servers
| running.
|
| If you look at only a single transaction, the app is much more
| efficient: Instead of requiring the restaurant to hire a printer
| and someone to deliver menus to you, you just press a button. But
| with a paper menu, restaurants have to do that only once, whereas
| you need to marshal the same amount of energy each time you use
| the app. By the third or fourth time you order takeout from a
| particular place, suddenly the paper menu is looking like an
| ecological marvel.
| scandox wrote:
| I thought you were going to provide the math(s)? A little
| disappointed.
| diego wrote:
| I'm just quoting her. My point is that she provides no math.
| tfang17 wrote:
| Every technology comes with good and bad. Better and more
| rewarding to be an optimist!
| kabdib wrote:
| Comparing tulip bulbs and NFTs: With one of them you can grow a
| flower, while the other isn't even good fertilizer.
|
| In the past weeks I've seen a ton of ads (on Youtube, Twitter,
| etc.) that look an awful lot like elements of pump-and-dump
| schemes. Even to this financial idiot, the scam factor looks
| very high.
| badkitty99 wrote:
| Crypto isn't for everyone, Karen
| RichardHeart wrote:
| People overpaying for serial numbers loosely related to jpgs is
| terrible in my opinion. There's truly intelligent and useful
| things going on in cryptocurrency. Don't like the bubbles?
| There's billions in stable coins tied to the dollar, like the $11
| billion in US based USDC. There's scams galore, just like in all
| other markets, but this one actually makes technical progress day
| by day.
| dmitriid wrote:
| > like the $11 billion in US based USDC.
|
| "USDC is issued by regulated financial institutions, backed by
| fully reserved assets, redeemable on a 1:1 basis for US
| dollars"
|
| $11 billion dollars in reserved assets? Instantly redeemable?
| Why does this remind me of another scam with similarly "backed
| by assets" USDTs
| 0tt049 wrote:
| Try to cash $11B out of a bank then
| dehrmann wrote:
| > Don't like the bubbles? There's billions in stable coins tied
| to the dollar, like the $11 billion in US based USDC.
|
| Unless I'm trying to avoid high transaction fees when
| exchanging currency with an undeveloped banking system with
| dollars, what's the point? My dollars already work fine, and
| for large amounts, international wire transfers work well.
| timbit42 wrote:
| > My dollars already work fine
|
| Only if you don't mind the deflation.
| fwip wrote:
| USDC is (supposedly) tied exactly to the price of USD. If
| USD deflates, USDC deflates.
| cevered wrote:
| The more complex our global monetary system seems, the higher the
| pyramid scheme can go.
| [deleted]
| [deleted]
| hparadiz wrote:
| Why is this garbage on hacker news?
|
| The author clearly doesn't understand crypto or how they work.
| antpls wrote:
| How one does explain that the price of Ethereum follows the price
| of Bitcoin, while both networks are separated, and follow a
| different roadmap?
| vghhfvg wrote:
| ETHBTC is up 40% this month. The chart is totally chaotic.
| ETHUSD (sometimes) goes up after Bitcoin does because people
| hear about ETH after they hear about bitcoin - most price
| movements in either pair are due to new money. The prices of
| all cryptocurrencies also respond together to any regulatory
| threat.
|
| The weak correlation between ETHUSD and BTCUSD has many obvious
| explanations.
|
| Most things crypto are suspicious. I don't think there is
| anything suspicious about the ETHBTC chart.
|
| Edit - This may be informative:
|
| https://en.wikipedia.org/wiki/Beta_(finance)
| georgyo wrote:
| Arbitrage.
|
| Many exchanges deal only in crypto currencies, where exchange
| rates are relative to other coins. Price differences between
| both coins and exchanges create an ability for someone to make
| money while equalizing the market.
|
| It also means that all coins are inevitably linked together in
| some way. And why obvious scam coins also follow same curves.
| fighterpilot wrote:
| Arbitrage isn't the fundamental explanation. There's no pure
| arb relationship between ETH and BTC.
|
| The real reason they're linked is for macro reasons. Hype for
| ETH is correlated with hype for BTC. Regulatory environment
| for ETH is correlated to that for BTC.
|
| Statistical arbitraguers then front run the resulting macro
| flows, but the core reason they're linked is the macro flows,
| not the arbitrageurs.
| shepardrtc wrote:
| Market makers. They have to determine a price, but ETH hasn't
| yet evolved to a point where it operates in its own world, so
| they lazily (but understandably) follow the price fluctuations
| of BTC while allowing people to buy or sell within a certain
| range. Obviously if a huge buy comes in, or a lot of people are
| buying, they'll let it go up (or down if its the opposite), but
| once that dies down they'll again follow BTC price swings.
| However, I expect this to change as cryptocurrencies mature.
| fighterpilot wrote:
| Market makers can't force a correlation to exist. They're
| neither a sufficient or necessary condition for it. They only
| front run an already existing correlation.
|
| The correlation exists because of non market makers.
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