[HN Gopher] Crypto crash deepens, stocks slip
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Crypto crash deepens, stocks slip
Author : garraeth
Score : 338 points
Date : 2021-05-19 13:15 UTC (9 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| yawaworht1978 wrote:
| Some of these "guaranteed" returns if you pass custody of your
| btc scammers must be working on exit strategies now.
|
| The article says china banned transactions, does this include
| mining rewards? Technically, that involves a transaction, right?
| paulpauper wrote:
| BItocin has among the worst risk-adjusted returns of any
| investment. I would not touch it. NASDAQ 100 and or fang
| portfolio way better.
| sumedh wrote:
| Why not have 5% or less in BTC, if it does well, good for you,
| if it does not, its just 5% of your portfolio.
| paulpauper wrote:
| by that logic, why not just buy lotto tickets?
| sumedh wrote:
| The probability of BTC going to zero is very very low, the
| probability of you not winning the lotto is very very high.
| hellow0rldz wrote:
| You know... what I am curious, does this logic make sense?
|
| Why wouldn't a given % be allocated to lotto tickets?!
|
| Quite curious from a risk/reward portfolio formula.
| adventured wrote:
| The argument to not buy lottery tickets, is if you have
| no need of the return so it's not worth giving up the 5%
| of your portfolio that could be reliably generating
| returns for you.
|
| Software engineers for example are easily capable of
| reliably earning six figures in the US, outside of the
| Bay Area. With stock compensation their earnings
| potential is that much higher. It's a solid multi-
| millionaire track if you grind away at that career path
| and keep your expenses in line.
|
| So why bother with the lottery in that case? Because a
| few million dollars isn't enough?
|
| If you're earning $40,000 per year with an inability to
| generate much in the way of savings (compared to the
| software engineer), your job prospects are highly capped,
| you do manual labor in a factory in a 2nd tier city, your
| education level is weak, and your shot at a multi-
| millionaire outcome is essentially zero, maybe giving up
| 5% of your savings makes sense for a shot at an epic
| outcome to escape that lower middle class trap.
| mullingitover wrote:
| Lottery tickets are a mechanism for taxing hope.
| dcx wrote:
| Yes, it does, despite the negative expected value. In
| corporate finance it's known that companies that are
| approaching failure are often willing to pay for
| volatility.
|
| This is also why lotto tickets are more popular with the
| poor.
| andruby wrote:
| It's all about Expected Return. lotto's expected return is
| probably ~25% of the ticket price. You could look at past
| performance for BTC's expected return, and that would give
| something >100%. But as is always mentioned "past
| performance is no indication for the future"
| cma wrote:
| Why not 10% in comic books or any other limited non-
| productive asset? If we could just convince everyone to put
| in 10% of their savings into comic book collections, comic
| books too would become incredibly valuable.
| ArkanExplorer wrote:
| Because of the environmental and societal consequences of
| that action. It is a collossal miallocation of electricity,
| advanced manufactured goods, and the time and focus of
| intelligent people all around the planet.
| rawtxapp wrote:
| ~300% return YoY is bad now? Just put a small % of your
| portfolio and if it fails, not a big loss, but if it increases
| at those rates, it'll naturally end up becoming a large % of
| your portfolio.
| JMTQp8lwXL wrote:
| There is no free lunch. Your hypothesis is fed-driven policy
| will continue to be effective (the easy money gravy train).
| It's likely a better thesis, but after a decade of great
| returns, people are under the illusion that the Fed has actual
| control of markets (they can only shape sentiment via policy).
| moneybadger wrote:
| This sounds made up
| drcode wrote:
| This is clearly false- Bitcoin had a return of 100000% in the
| last decade. It's completely irrelevant with those kinds of
| numbers what the "risk" was.
|
| ...Now, you may have a personal opinion that the next decade
| will not see similar returns, but that is a completely
| subjective assessment on your part, even if you try to pretend
| that you're being objective by using the phrase "risk-adjusted
| returns".
| paulpauper wrote:
| the bulk of those returns were from 2010-2013
| randomopining wrote:
| Big banks and the rich are squeezing out paper handed retail and
| leveraged traders. They are buying in at the low and will go full
| steam by the summer.
| Toine wrote:
| I love when bubbles explode. I feel like the world is a tiny bit
| less insane.
| lanstin wrote:
| I worked for an internet company in 2000 and was a stay at home
| parent looking for a job so as to avoid losing my HSBC
| mortgaged house in the fall of 2008 but still I share this
| feeling. I got a job hen and enjoyed the Big Short
| tremendously. I think the crypto documentaries will have nicer
| rich people details tho, tho sports cars etc.
| rawtxapp wrote:
| 2017 and 2013 also looked like bubbles exploding, yet here we
| are.
| ProjectArcturis wrote:
| Bitcoin is the ultimate, purely financial object. It has no
| revenues or profits. The supply is fixed -- unlike, say, gold,
| where high prices mean people will eventually start digging
| mines, BTC supply is entirely price-inelastic. The only thing
| that determines BTC price is demand. And over the past 13 years,
| we've seen reflexivity at work: The price has gone up, so more
| people want it, so the price goes up further, and on and on.
|
| There's no reason this can't happen in reverse. As in previous
| crashes, once the price starts going down, more people want to
| sell.
|
| Really just an interestingly pure experiment in group psychology.
| lend000 wrote:
| Agree. For studying pure markets and financial psychology,
| there is no better case study.
| rednerrus wrote:
| Tether is the only thing driving the price of BTC. When it came
| out that Tether is only 3% backed by actual USD, the prices
| dropped dramatically.
| bordercases wrote:
| BTC has substitutes in the altcoin sphere which can make
| similar claims to scarcity.
|
| So if BTC ends up being too illiquid and slow - build another
| coin.
| [deleted]
| anewaccount2021 wrote:
| How is BTC any different than gold?
|
| The difficulty ratchet in BTC mining means extracting new coins
| is rising in difficulty, just like the difficulty in extracting
| better-hidden gold. The supply of gold is indeed fixed unless
| you can pull it out of an asteroid.
|
| The major difference is that BTC is trivial to destroy, gold
| not so. There is no economic way to actually destroy gold.
| singularity2001 wrote:
| The supply is infinite if you take the whole crypto space:
|
| You can create as many BTC#3 EGold-plus ... as you wish, and
| future generations will.
| aabbcc1241 wrote:
| The later-created coins are similar to bitcoin but they're
| not "the bitcoin". In this way, the supply of bitcoin is
| still limited
| sashimi-houdini wrote:
| This is also why Skepticoin cannot be cloned: the clones
| (cynicalcoin, sarcastocoin etc) are simililar, but they're
| not "the skepticoin". In this way, the supply of skepticoin
| is still limited.
| gruez wrote:
| That's like saying uber shares are infinite because you can
| start your own ridesharing startup and issue more shares.
| allendoerfer wrote:
| Except you cannot just start your own global ridesharing
| service, can you?
| gruez wrote:
| Can't you say the same for bitcoin? Anyone can make a
| bitcoin clone, just like anyone can code a ridesharing
| app in a hackathon, but your clone isn't going to be the
| one recognized by everyone.
| shrimpx wrote:
| But crypto clones are much easier to create and have
| adopted than a company with real infra. The phenomenon of
| "this coin is too expensive let's buy this new one hoping
| it'll moon" is very real in crypto and encourages the
| creation of clones. Then miners then trivially shift
| their hash power to whatever clone gets the crowd
| interested.
| RestlessMind wrote:
| > But crypto clones are much easier to create
|
| Agreed.
|
| > and have adopted than a company with real infra
|
| Disagreed. Cloning is super-easy, adoption is super-hard.
| 908087 wrote:
| No, it's actually nothing like that.
| aabbcc1241 wrote:
| And that's how dogecoin was "born"
| Hamuko wrote:
| Yeah, the only magic sauce behind Bitcoin seems to be that it
| was the first one and has the most valuable brand.
| paulpauper wrote:
| That would only be true if bitcoin technology were protected by
| IP, which it is not. new coins effectively dilute existing
| holders of btc
| dogman144 wrote:
| As the supply is fixed, this is a very illogical take.
| paulpauper wrote:
| alt coins. BTC dominace used to be 90%+. now way lower .
| BTC holders get no royalties from blockchain being copied
| thebean11 wrote:
| how can you possibly make the claim that BTC was diluted
| vs the market cap of other coins being net new value?
| echelon wrote:
| Opportunity cost and choice.
|
| Dogecoin means more to me than BTC. Good luck convincing
| me, or those that share my belief, otherwise
|
| If I put $500 into either, it'd be Doge.
| thebean11 wrote:
| That's fine, I don't think you have any evidence for your
| position though. You could easily make the opposite
| argument that Doge is basically a marketing campaign for
| BTC and will bring in more investment dollars than it
| sucks away. It's not zero sum.
| Swenrekcah wrote:
| Why would BTC need a marketing campaign? Isn't it a value
| store? Or was it a currency? Or is it perhaps a bubble of
| nothingness that actually would need a marketing
| campaign?
|
| I have put about $1000 into various cryptos as a hedge,
| but I fully expect to lose it all and the day can't come
| soon enough.
| onemoresoop wrote:
| > how can you possibly make the claim that BTC was
| diluted vs the market cap of other coins being net new
| value?
|
| It makes some sense to me. When BTC was smaller in
| capitalization it was easier to double your money. Now
| smaller coins attract dollars that otherwise would have
| pumped up BTC so growth stagnates. BTC was considered the
| most stable of them all and I now find those claims
| somewhat dubious, they're all extremely volatile
| thebean11 wrote:
| > When BTC was smaller in capitalization it was easier to
| double your money.
|
| Do you mean perceptually, or in actuality?
| onemoresoop wrote:
| Perception plays a big part in this. Remember most of
| this is based on irrational decisions
| NationalPark wrote:
| The argument is that crypto has little to no intrinsic
| value and the price is being moved by speculation. In
| that case, the value comes from how many other
| speculators are willing to speculate in your currency -
| more options means fewer dollars buying bitcoin. The fact
| that pretty much every crypto of non-trivial float trades
| in lock step with BTC definitely supports the "no
| intrinsic value" theory.
| thebean11 wrote:
| Sounds like two separate arguments, I don't really see
| the through line. The value of BTC comes from the mining
| security, and you cannot mine multiple chains at once
| with the same hardware.
|
| > The fact that pretty much every crypto of non-trivial
| float trades in lock step with BTC definitely supports
| the "no intrinsic value" theory.
|
| They are highly correlated but certainly not lock step,
| see the 1 month ETH/BTC chart. Assets on the stock market
| are also highly correlated to each other, so I don't
| quite follow.
| NationalPark wrote:
| Sure, I mean you're just describing the opposite
| position, that the price of cryptocurrencies is
| reflecting some intrinsic value and that speculators have
| a negligible impact on the price. In that case market
| forces should eventually reveal some stable winners and
| all the deflationary stuff that lead us down this rabbit
| hole applies again.
| thebean11 wrote:
| No I don't see the relationship. Let's assume no
| intrinsic value for the sake of argument. How do you get
| from there to "additional coins steal market cap from
| existing coins"?
|
| Seems easy to craft some counterexample, like "Doge acts
| as a marketing campaign for crypto as a whole and will
| lead to net-inflows to the BTC market".
| NationalPark wrote:
| I'm just describing the plausible argument that the
| original commenter said didn't exist - to that end, it
| should be obvious that a bullish investor, who believes
| crypto is the future of finance, holding a balanced
| basket of crypto investments, might invest less in any
| individual coin as more potential successes appear that
| must be hedged against.
| thebean11 wrote:
| > balanced basket of crypto investments
|
| That's fair, but I doubt it would deviate very much from
| the top 5-10, and that each of them would have
| significant differences from each other (ie not carbon
| copy clones). I would argue that most of the value in
| those top 5-10 was net-new and not a dilution of Bitcoin.
|
| The notion I'm arguing against is that me creating
| MyCoolCoinX on the fourth page of coinmarketcap is
| somehow diluting BTC, any more than some new pink sheet
| penny stock is diluting AMZN.
|
| Doge is an interesting case, in that it is the same tech
| as BTC with just some parameter tweaks. My guess is that
| most Doge investors are newer to the market, and wouldn't
| have otherwise invested but I could be wrong.
| thehappypm wrote:
| Everyone who is buying Dogecoin right now is not buying
| BTC. That reduces the value of BTC.
| thebean11 wrote:
| Everyone who is buying x is not buying y. That reduces
| the value of y.
| mam3 wrote:
| 1/ a lot of people really DO believe in decentralized currency
|
| 2/ a lot of people are acutally using it as a store of value /
| currency: from drug dealers to people in states with failed
| economy such as venezuela or turkey, to chinese people wnating
| to somehow escape the system.
|
| 3/ btc is a gateway currency to other more useful currencies
| surch as eth / monero / zcash
|
| 4/ How is the "no profits / revenue" makes any sense for
| pricing a financial object in 2021 where amazon for example
| literally never ever gave a dividend to the shareholder,
| meaning, whatever you say, that people holding amazon stock are
| doing it ONLY for speculation of the "perceived value" of the
| price ?
|
| In the end, btc is not that much more a "baseless asset" than
| most of the stock market currently.
| thehappypm wrote:
| The drug dealer argument is the only actual use for bitcoin
| out there. How exactly does a dirt-poor Venezuelan acquire
| BTC to trade?
| voldacar wrote:
| While you have a point regarding fixed supply, I think bitcoin
| is more than just a KBC. The ability to do _uncensorable_ (or
| at least uncensorable without truly absurd computing power)
| global financial transactions is a really amazing thing and I
| think it definitely has "intrinsic" value, insofar as any
| value is "intrinsic" and not the result of social interaction.
|
| The energy consumption is definitely bothersome but overall I
| am glad that bitcoin exists.
| afavour wrote:
| Isn't Bitcoin absolutely terrible at transactions, though?
| It's too slow to ever be used as a cash alternative. Why
| wouldn't an alternative cryptocurrency fill that void then
| leave Bitcoin with no actual value at all?
| voldacar wrote:
| My comment was more referring to cryptocurrency and the
| blockchain concept in general, I probably should have been
| more clear.
|
| You are right that BTC isn't that useful as cash. I don't
| think BTC will be dominant forever, there are already
| superior cryptocurrencies for use as actual normal
| currency. If/when another crypto really does fill that void
| and achieves major adoption, I think BTC will probably
| retain some value, for speculative reasons and also just
| because it has the oldest chain.
| johnwheeler wrote:
| To me, the argument that fixed supply is a good thing has
| always been worrisome. People just parrot that viewpoint
| without asking whether some amount of Keynesian economics is
| useful, because you know, government is evil. It got us out of
| the Great Recession and it's been 12 years. Maybe the
| consequences haven't fully manifest, but another Great
| Depression would have been guaranteed hell.
| notsureaboutpg wrote:
| >People just parrot that viewpoint without asking whether
| some amount of Keynesian economics is useful, because you
| know, government is evil.
|
| This just isn't an accurate portrayal of any of the serious
| criticisms of Keynesian economics.
|
| >It got us out of the Great Recession and it's been 12 years.
| Maybe the consequences haven't fully manifest, but another
| Great Depression would have been guaranteed hell.
|
| It feels like an unfair argument you're having because of
| course the opponents' whole argument is that the consequences
| haven't manifested AND that they would be far more dire than
| a continuation of the Great Recession / another Great
| Depression. As wealth gaps widen, as inflation rises, as our
| debt grows, it's possible to see a worse future ahead than
| one where we continued into a depression.
|
| In hindsight, we all know the problems which led to the fall
| of various empires (Roman, Mughal, etc.) but if you lived at
| the time, this same argument could be made against you for
| sounding the alarm: "Yeah, maybe it's better to not
| constantly expand our Empire and rely on mercenary soldiers
| who have little loyalty to a place they've never even been
| to, but can you imagine the hell if we lost the war against
| the Gauls??" (forgive me if I mangled the history there).
| imtringued wrote:
| >As wealth gaps widen, as inflation rises, as our debt
| grows,
|
| I will take this opportunity to throw this link up:
| https://fredblog.stlouisfed.org/2018/11/how-expensive-is-
| it-...
| imtringued wrote:
| Actually, the problem right now is the complete lack of
| Keynesian style fiscal stimulus. China and USA already did
| their part and they will do more.
|
| I am mostly talking about Europe. The Eurozone basically
| makes fiscal stimulus impractical even though keeping it
| alive absolutely requires it.
|
| Every time I hear people talk about Keynesian economics
| ruining everything I am thinking "no such thing happened". QE
| fills bank reserves, interest rates drop on their own, banks
| never lend out money, stock market goes up without any actual
| investment, there is unemployment caused by the macroeconomic
| structure of the economy, investors are flooding governments
| with their money by buying bonds, inflation remains
| stubbornly low, trump cuts corporate taxes.
|
| The fact that things are reversing in the US is a good sign
| for the US economy as a whole. Biden is actually doing the
| fiscal stimulus that the economy was asking for decades.
| There may be a short term crash in the future but it's only
| going to get rid of the unproductive part of the economy to
| make everything ready for more long term growth.
|
| Meanwhile Europe will be stuck forever if the Eurozone
| doesn't resolve its structural problems.
| icyfox wrote:
| Keynesian economics got us out of the actual Great Depression
| as well, if you consider FDR's decision to get off the gold
| standard and start trading dollars as a floating currency on
| the market.
|
| Fixed monetary supply might be one thing in theory, but fixed
| credit supply is the death knell to an economy. And the two
| are usually complimentary. Monetary supply can fill in the
| potholes of weakening credit supply when the latter contracts
| - and it inevitably will when the private issuers that
| generate those debt contracts pull back in a recession. If
| you have your hands tied to some constrained supply like gold
| or bitcoin, like what happened to the central banks after
| World War I and into the Great Depression, you end up backed
| up against a wall.
|
| That said there is certainly something that's personally
| appealing about an asset that's guaranteed to maintain the
| supply side of the equilibrium. As an investor you only have
| to consider demand. But for any kind of widely used currency
| that backs an economy it's going to be problematic.
| imtringued wrote:
| >That said there is certainly something that's personally
| appealing about an asset that's guaranteed to maintain the
| supply side of the equilibrium.
|
| It's appealing because it keeps politicians honest, but if
| you have honest politicians it is just a thought
| experiment.
| joshuahaglund wrote:
| Please explain how exactly a constrained monetary supply
| keeps politicians honest? Seems to me that is pretty much
| entirely dependent on an informed and participatory
| electorate.
|
| I think a constrained monetary supply just means the
| politicians we elect have less influence over the economy
| than the people with the most wealth. In either scenario,
| there will be untrustworthy politicians who need to be
| out voted or voted out.
| icyfox wrote:
| Blessing and a curse. With a flexible monetary supply,
| politicians can help ease the pains of boom bust cycles.
| They also can print currency and inflate their debt away.
| With a static monetary supply, they can't dampen the
| pain. But they also can't leverage the financial system
| for their short-term gains.
|
| The last 60 years on a macro level have largely proved
| the Keynesian model. I think we're right to put faith in
| politicians in general. The solution might just be
| holding currency from another nation instead of your own.
| [deleted]
| max_ wrote:
| Everyone trying to exit a burning building through a tiny door.
| lurkerasdfh8 wrote:
| maybe off-topic but: interesting how any cryptocurrencies
| discussion have tons of comments repeating the same (flawed imo)
| arguments, while the older ones are both downvoted and argued
| against, but new ones keep popping up.
|
| look anywhere in this thread. there will be a comment 1h ago, and
| 4+ others further down with the _exact same argument_ both
| downvoted and with a few dozen replies explaining why the
| argument is bogus. You might need to enable the option to see
| dead comments to get the full picture.
| kdragon wrote:
| I feel like the HN community, who are more tech literate, should
| have a better understanding of Bitcoin and crypto. I don't like
| all the ignorant comments that focus purely on the financials. Is
| cryptocurrency space not full of technological marvel?
|
| Bitcoin has always been an application for demonstrating the
| engineering achievements behind it (solving byzantine faults,
| fungibility of data), so we can build even greater tools like
| smart contracts, programmable money, trust-less p2p networks, etc
| so many things. I think labeling bitcoin as a scam is a huge
| insult to those engineers involved. Engineers like Hal Finney who
| dedicated his life trying to make a brighter future for everyone,
| I don't think it is fair to call his and others work an elaborate
| ponzi scheme.
|
| The bitcoin space has so much history, a lot of battles have been
| fought on bitcointalk, over mailing lists and pull requests, etc.
| I feel that as developers we should focus less on financial
| markets and more technical discussion. Bitcoin has a lot of new
| things to talk about with the Taproot activation, like schnorr
| signatures and private lightning transactions. I'd like to see
| those discussions more on HN but that's just my opinion.
| UncleMeat wrote:
| > Bitcoin has always been an application for demonstrating the
| engineering achievements behind it (solving byzantine faults,
| fungibility of data), so we can build even greater tools like
| smart contracts, programmable money, trust-less p2p networks,
| etc so many things.
|
| If you were to categorize all discussions about BTC between
| live humans into two buckets: discussions about the price of
| BTC and discussions about applications build on the bitcoin
| blockchain, which one do you think would win? I'd wager that
| >99% of all discussions are about the price. Yet the price is
| completely irrelevant to the applications built on the
| blockchain. They work just as well if the price of BTC is
| 1/10,000th the current price.
|
| So it becomes very hard for people to buy the claim that
| actually this is all about technology and not about getting
| rich.
| kdragon wrote:
| I don't think it's fair to base a topic on the loudest voices
| in the room. That is a road to madness.
|
| I still wish to see more interest in technical discussion of
| Bitcoin here. Like the new BIP proposal expanding the
| scripting capability of the protocol. I don't know what
| percentage of BTC discussions on HN are in either bucket, but
| I hope at the very least it would be 50/50. Don't you agree?
| aazaa wrote:
| > Global stocks slipped and cryptocurrencies sank deeper on
| Wednesday as a threat of unwanted inflation had investors shy
| away from assets seen as vulnerable to any removal of monetary
| stimulus.
|
| The full title of this article is worth noting: "Crypto crash
| deepens, stocks slip". For some reason, that was changed for this
| posting.
|
| Bitcoin is increasingly being seen as a barometer for market
| liquidity. As Bitcoin goes, so go the markets. That's the real
| story here.
|
| We may not be there yet, but at some point, Bitcoin will drive
| broader market liquidity (stocks, bonds, gold, real estate),
| rather than feeding on its table scraps.
|
| Regarding the volatility, this is nothing new. Anyone involved
| for more that four years has seen this before and worse. What is
| new is the sheer number of people involved. Bitcoin's user base
| doubles roughly once every 1.5 years. That means that at any
| particular moment in time about half of the participants have
| been at it for one year or less. When they see their first fierce
| selloff, predictably accompanied by a vague announcement from
| China, it can be very unsettling.
|
| When this was happening with a small user base of mostly computer
| nerds and libertarians, it was easy to write off. When the user
| base includes respected financial institutions (as it now does),
| things get interesting.
| [deleted]
| javier10e6 wrote:
| Crypto is DE-CENTRALIZED. As long as there are people out there
| that rather trust a ledger produced by a collection of de-
| centralized computers than a ledger held by a private
| institution/government (closed) its value will remain
| useful/practical.
| woeirua wrote:
| Really because some outrageous percentage of the mining power
| is centralized in China.
| nemo44x wrote:
| Interesting that this is occurring right as taxes were due. I
| wonder how much selling was for paying taxes?
| stephc_int13 wrote:
| I don't know why, it is probably highly irrational, but I always
| rejoice when the Bitcoin crashes.
| almost_usual wrote:
| It's not irrational it's a step towards not wasting tremendous
| energy.
| ArkanExplorer wrote:
| And also freeing up computer chip manufacturing capacity to
| go towards actual productive use. I look forward to buying a
| new GPU!
| matheusmoreira wrote:
| It's not even 1% of the world's energy consumption. If you
| want to stop wasting tremendous amounts of energy, all you
| have to do is stop trading with China.
| almost_usual wrote:
| All you have to do is end global trade and possibly spark
| WW3. Ok.
| matheusmoreira wrote:
| Actually changing the world for the better is hard, isn't
| it? Much easier to zero in on bitcoin's inconsequential
| energy usage I guess.
| [deleted]
| [deleted]
| BenoitEssiambre wrote:
| I mean the technology is highly damaging to society in a whole
| bunch of ways, damaging the environment, supporting fraud and
| ransomware, used for money laundering, funding crime, and if it
| gets integrated into the financial system like some want it to
| be, it could even destroy human civilization:
| https://benoitessiambre.com/specter.html (even Douglas Adams
| tried to warn us 40 years ago).
|
| So it's a relief when it looks more like it's going away or at
| least staying contained.
| broighbrobroigh wrote:
| It's already integrated into the financial system. I'm sorry
| you live your life in terror of a poorly supported hyperbolic
| hypothesis.
| zaptrem wrote:
| As a crypto miner/holder/user since 2011, that article was
| really great.
|
| I think blockchains (esp. programmable ones) have or will
| have significant real value in making markets more efficient
| and transactions lower friction, but right now blind
| speculation is driving 99% of the market. IMO while this
| brings lots of useful funding to speed along development, it
| could also endanger the true purpose of the tech.
| cesarb wrote:
| The usefulness of Bitcoin does not depend on its price, but its
| power usage does depend on its price (it's bounded by how much
| power can be bought with the block rewards and transaction
| fees), so it's a good thing when the Bitcoin price goes down.
| twox2 wrote:
| It's not irrational, it's an opportunity to buy more for cheap!
| fartcannon wrote:
| Thats kind of sick? What an absolutely repugnant thing to do.
| Do you rejoice at war and animal abuse too?
| domano wrote:
| Well clearly those things are not of the same quality.
| thecopy wrote:
| Care to elaborate?
| dougmwne wrote:
| BTC is a climate armageddon? I cheer too.
| swader999 wrote:
| Naw, it's mostly fueled by and helps make green energy
| viable.
| jasonladuke0311 wrote:
| That is the type of bizarre connection only made by zealots.
| metacritic12 wrote:
| People are envious generally and when something they don't
| understand does well, they're confused. When that thing goes
| down, they feel relieved and their worldview makes more
| sense.
|
| Schadenfreude in general.
| isoskeles wrote:
| The assumption that people who don't want to buy crypto
| must not "understand" crypto is a cliche among that
| community, and it reeks of the kind of hubris that makes me
| okay with seeing this kind of crash.
| 52-6F-62 wrote:
| It strikes me as similar to the reasons I see people
| rejoice when artists or the like struggle to make it. It
| validates one's life choices like giving up on dreams to
| take up a dull job that keeps the lights just barely on.
|
| Crabs in a bucket mentality. I for one would be happy if
| the kids find a better way forward that leaves fewer people
| in the dust (without instituting a new ecological drain,
| please). That's not happening yet, but some of the thought
| work shows progress to me, even if the execution isn't
| final and still lacking.
| frankbreetz wrote:
| He probably got told "have fun staying poor" too many times.
| stephc_int13 wrote:
| This is probably some remnants of Christianity and disgust
| about easy money. (I think there is no such thing)
|
| But also, I really don't like Bitcoin as an alternative
| currency, on many levels it is worse than what it was
| engineered to replace.
|
| There is value behind behind the ideas of blockchain
| algorithms, and I believe the future of currency is digital,
| but not necessarily decentralized in the way that Bitcoin is
| decentralized.
|
| We're not there yet, and because of that, Bitcoin is as close
| to a scam as tulips bulbs were.
| uncomputation wrote:
| You're not alone. Seeing the comments flooded with "buy the
| dip" or, God, "diamond hands" makes me cringe every time. They
| get so offended when you call cryptocurrency a cult or Ponzi
| scheme but they make it extremely difficult not to. This is
| from someone with financial interest in a few coins but I'm not
| ready to die on any hill for bragging rights. I wish they would
| just admit they want capital gain and call it a day
| celticninja wrote:
| That's probably the worst aspect of crypto communities. Early
| in BTC the talk was about the tech and possibilities,
| trading/selling goods for BTC.
|
| Those sort of comments you mention started creeping in, but
| now that is the mainstay, in every individual crypto
| community. I dont care that they are speculation vehicles,
| but pretending you are changing the world just grates. And
| the constant calls to HODL, which used to be humourous, are
| now just so much propaganda.
| thehappypm wrote:
| So true. I wish that the Bitcoin community had seen that
| fundamentally BTC would only become inequitable as it grew.
| If early adopters knew that it would eventually reach
| $50,000, they would be billionaires, and that it would be
| used far more as a Ponzi scheme / bubble than for anything
| useful, I think they'd be more horrified than happy.
| matheusmoreira wrote:
| > Early in BTC the talk was about the tech and
| possibilities
|
| People who care about that have already moved on. Bitcoin
| has failed in that aspect, only speculators still care
| about it. The fact it's still the number one coin despite
| the existence of coins with better fundamentals like Monero
| and Ethereum is proof of how irrational this market is.
| lottin wrote:
| Me too. I have never seen a group of people so ignorant and so
| arrogant as crypto-currency fans. I can't help but rejoice at
| their misfortunes.
| rvz wrote:
| Exactly. I remember the last time I rejoiced about BTC
| dropping. [0] At that time, I bought it at <$8,000 and bought
| it again in March 2020 and held it.
|
| And now I am laughing at the ones who bought BTC at >$60K who
| are now bag-hodling around and have to wait again.
|
| [0] https://news.ycombinator.com/item?id=21606212
| mumblemumble wrote:
| My rational take is that Bitcoin's carbon footprint is more-or-
| less a direct function of its price. The market forces are such
| that you can expect mining to expand until, on average, each
| miner's expected reward is only a little bit higher than their
| electricity bill and hardware costs.
|
| If prices come down, that is going to encourage some miners to
| take capacity offline, which is probably great for anyone who's
| interested in keeping Amsterdam dry.
| cheaprentalyeti wrote:
| And you think China's going to shut down their coal plants
| and dismantle the train tracks carrying coal there just
| because the price of bitcoin drops? Or are they just going to
| use the pollution for something else?
| Swenrekcah wrote:
| Basically yeah. There are time lags, but crypto mining has
| been causing new power plants to be built everywhere and
| when it goes away that pressure will stop.
|
| However the world always needs more energy so the plants
| built will unfortunately continue operating in some other
| capacity for a while, but the sooner the mining stops, the
| sooner they will be replaced by renewables.
| mumblemumble wrote:
| Market forces affect the energy industry as well. They
| aren't burning coal for fun; they're burning it to make
| money and/or satisfy a demand. If electricity consumption
| drops, then plants will produce less electricity, and
| construction of new plants will slow down or stop.
| AnIdiotOnTheNet wrote:
| So they use their pollution for something else, as opposed
| to using it for that _and_ mining BTC. Still a net-win.
| RivieraKid wrote:
| Same. I hate the arrogant stupidity of the crypto cult.
| kjakm wrote:
| As someone with no real opinion on crypto the arrogant
| stupidity of the anti-crypto crowd (really prevalent on HN)
| is also quite tiring.
| halfmatthalfcat wrote:
| For me, it's because the hype isn't around the technology
| (which is the interesting part and for the most part, why
| we're on HN), it's around the speculation. From the
| outside, looks like a bunch of gamblers constantly getting
| each other off on whether their bets will make them
| millionares.
|
| It's just...sad...at a level.
| kjakm wrote:
| A fair opinion to have. I feel every HN thread on crypto
| now though dissolves to negativity (without any
| substance) + toxicity really quickly.
| AnIdiotOnTheNet wrote:
| It is hard not to be negative about something with such a
| huge environmental impact that doesn't seem to do
| anything but let gamblers gamble.
| [deleted]
| 52-6F-62 wrote:
| I agree.
|
| But also try taking a step back: why are they gambling?
| Sure, greed is ever-present in human history--that's a
| given. But also listen to the doubt in the present
| establishment. I know what it's like to be poor and what
| the banks do to you in that state. It doesn't surprise me
| in the slightest that there's so much being thrown at it.
| The chances of and potential returns are almost
| guaranteed better than a savings account. That's a
| problem, isn't it?
| halfmatthalfcat wrote:
| Almost guaranteed? If one put all that money into S&P
| indexes instead of coin, they'd be up 20% versus betting
| on crazy coin returns.
|
| Most people aren't equipped to handle the volatility of
| the coin market and most people don't understand that you
| don't actually lose until you realize losses. Therein
| creates almost more guaranteed stress than actually
| making money, as we're seeing now with all the bag
| holders from the past couple months getting destroyed.
| 52-6F-62 wrote:
| Traditionally, poor people did not have the means or
| access to invest money in an index like S&P.
|
| Most people also aren't equipped to see their savings
| reduce in real value every month. This is a global
| phenomenon, not one isolated to first-world subdivisions.
|
| You seem to be mistaking my seeking the reason why people
| might do what appears [to you and many others] to be such
| a wildly irrational thing to do. I'm arguing it's not
| irrational in their case, but one of the most rational
| things one can do as someone without much means when
| faced with the ready alternatives. It becomes no
| surprise.
| tippytippytango wrote:
| If crypto dies you will have to find a new group of
| people to feel superior to to feed your ego.
| halfmatthalfcat wrote:
| So feeling pity for the bag holders because they're
| gambling in a highly speculative market, of which most
| have no idea what they're buying, is now egotistical.
| Gotcha.
| robjan wrote:
| A very common saying in the crypto world to "no coiners"
| is "have fun being poor". They are eating their words.
| argvargc wrote:
| And so, it seems, will you.
| argvargc wrote:
| Yes. And I'd add the "hype" around speculation works both
| ways, coming from mainly from two camps:
|
| - those who care only about making money
|
| - those who care only about seeing crypto fail
|
| OTOH, the excitement and bustling activity around the
| actual technology is largely ignored by the mainstream
| media, and seems also conspicuously-absent here.
|
| Many are not aware such a vibrant developmental ecosystem
| - with altruistic and exploratory goals far removed from
| a demented push to "make money" - even exists.
| stephc_int13 wrote:
| I've tried to follow the scene, but I still don't
| understand the value behind the tech.
|
| In my opinion, states and currencies are almost the same
| thing.
|
| As an ex-anarchist I think that it is unreasonable to
| completely remove centralized states or currencies.
|
| Because the alternative is worse.
|
| People might have altruistic intentions, it does not
| matter.
| zepto wrote:
| It may be arrogant sounding, but it's not stupid. It is in
| the financial interest of Bitcoin holders to talk up Bitcoin
| and defend it to the death.
|
| The senior management of regular banks in many countries are
| often required by law to deny that the bank is in jeopardy
| right up until the moment they close the doors, as a way to
| prevent bank runs.
|
| Because crypto is distributed, every holder is a bank
| manager, and must deny or minimize problems with the currency
| in order to maintain sentiment and prevent runs.
|
| This for me is one of the biggest problems with Bitcoin - it
| incentivizes the holders to become engines of disinformation.
| inter_netuser wrote:
| Luckily, it's ledger is open for everyone to see, unlike
| banks' ledgers.
| zepto wrote:
| Unfortunately that is irrelevant to preventing runs.
| inter_netuser wrote:
| runs on bitcoin?
| zepto wrote:
| Yes.
| stephc_int13 wrote:
| What would happen if a significant fraction of the
| population was holding crypto?
| zepto wrote:
| Depends on the currency. Not all crypto is the same as
| Bitcoin. I'm pretty positive about cryptocurrency in the
| long term, once we have a design that incentivizes
| positive externalities.
|
| Seems like if a large part of the population of the US
| held Bitcoin, and 51% of the hash power remains in China,
| there will be some nasty geopolitical consequences.
| intotheabyss wrote:
| I hate the arrogant stupidity of people that dismiss crypto
| as a cult.
| Tycho wrote:
| I love the sour grapes of the conventional investors. It must
| really grind their gears when BTC hits a new all time high
| after each of these draw-downs.
| fybs wrote:
| "The bitcoin flow picture continues to deteriorate and is
| pointing to continued retrenchment by institutional investors,"
|
| Quotes like that, in my experience, always turned out to be a
| buying opportunity.
| gher-shyu3i wrote:
| Attention seeking headline. Stocks are down as well. From the
| very first sentence:
|
| > Global stocks slipped and cryptocurrencies sank deeper on
| Wednesday as a threat of unwanted inflation had investors shy
| away from assets seen as vulnerable to any removal of monetary
| stimulus
|
| This whole fiasco is because of money printing at will.
| bethecloud wrote:
| time to buy
| dvfjsdhgfv wrote:
| It's _cryptocurrency_ crash, cryptography is more or less the
| same as it was yesterday.
| tubbyjr wrote:
| So much nocoiner butthurt in here lmao. Yes, it's down 50%, yet
| I'm still a multi-millionaire thanks to holding, from a small
| mining stint a couple years back, $0 invested directly aside from
| mining machines (GPUs I would have bought anyways for gaming).
|
| With how it's progressed, I never have to sell. My employment
| income is zero, and I can't get any mortgages cuz of this... no
| problem, I can literally use crypto to sythnetically underwrite
| my own mortgages.
| symlinkk wrote:
| A lot of people here can't separate emotion from logic. They
| love Element / Matrix because it's decentralized. They love
| Apple because of their focus on privacy. But they hate Bitcoin:
| a private, decentralized currency.
|
| They say it's because of "volatility" or "power consumption",
| but when these problems are fixed they move the goalposts (see
| the ETH proof of stake thread).
|
| The truth is, they missed out on the bull run, and whether they
| consciously realize it or not they're letting their emotions
| cloud their judgement.
| jondwillis wrote:
| What have you used to synthetically underwrite your own
| mortgage?
| AzzieElbab wrote:
| Crypto is climbing back up. Sticks not so much
| Havoc wrote:
| I mean anyone sane was expecting a trace back at some stage after
| the wild couple of months we just had. Predicting crashes isn't
| hard. Predicting the timing thereof on the other hand...
| matheusmoreira wrote:
| Yeah. I was expecting a correction too but not so soon. Looks
| like Musk's greenwashing tweets started it...
| drcode wrote:
| Exactly- I was enjoying the upward price trajectory, but the
| whole time I was thinking "This next bubble pop is going to be
| epic"
|
| Frankly, this is an underwhelming drop so far.
| zionic wrote:
| HN when crypto pops: This is off topic/irrelevant
|
| HN when crypto retraces some of those gains: Pop open the
| champaign! Lets all talk about how great this is! Front page!
| Trasmatta wrote:
| Is there anyone actually saying this is off topic / irrelevant?
| Mc_Big_G wrote:
| It's funny how everyone here worships YC and YC has invested in
| multiple crypto companies and yet everyone here hates crypto and
| everyone involved in crypto. How do you justify that? Is it
| because you think YC is just clever to cash in on the
| speculation, the same way Trump is clever to not pay any taxes,
| but you hate all the little guys that cash in on the speculation?
| jmacd wrote:
| As an outside observer, who has no crypto holdings at all, but is
| very deeply invested in the public stock market with a heavy
| weight on technology stocks... this doesn't look like a crash to
| me at all. It just looks like some steam being let off and old
| investors cash out and new investors get more comfortable with
| how much and where to invest.
|
| I consider crypto currency as it is to be an elaborate Ponzi
| scheme (personal view), but even with that cynicism nothing about
| this dip looks unhealthy to me. (I have views on what ultimately
| happens, but I will hold back on that)
| paulpauper wrote:
| 30% decline in a day is a crash by any definition
| onemoresoop wrote:
| If it bounces back within the same day is it still considered
| a crash? It seems like BTC is now down by around 7 percent
| and recovering somewhat. When it starts growing again the
| amnesia will take over with a general euphoria and the cycles
| continue. I've been following cryptos for a while now and
| this doesn't seem like something extremely uncommon.
| [deleted]
| unyttigfjelltol wrote:
| It's worse than a Ponzi. Crypto lost its marginal USD buyers,
| which were victims of ransomware extortion schemes. The
| correlation now is exposed for everyone to see.
| cjohnson318 wrote:
| Honest question: why do you think it's a Ponzi scheme? In the
| energy sector, when a well doesn't perform well enough to cover
| its costs, exploration companies try to get more money from
| their investors to drill another well that will "totally put
| them back in the black". I don't see this kind of dynamic in
| BTC.
|
| Full disclosure: I don't own any crypto myself, I'm just
| "crypto-curious".
| Grim-444 wrote:
| For context:
|
| - The stock market crash of 1929 was a ~25% crash - The dot com
| bubble crash was also roughly a ~25% drop - The 2008 market
| crash was a roughly 20-30% drop
|
| Various coins have now lost 10-30% of their value in the course
| of a couple of days. But it's just steam being let off? No big
| deal? Business as usual? If the same thing happened to the
| actual markets it would be another historic event.
| [deleted]
| zild3d wrote:
| For additional context though: BTC price was $9426 a year ago
| today. It's down 30-40% on a month view, but up 400% on a
| year view
|
| The stock market 4Xing in a year would be quite historic
| thefounder wrote:
| You may find out that the stocks you hold dear will crash just
| as bitcoin. If you think bitcoin is a ponzy scheme think about
| the stock market as well. The stocks(most of them) are not
| traded on roi anymore. Long gone is that period.
| inter_netuser wrote:
| What happens ultimately? Regulated out of existance? Attacked
| and destroyed by the NSA? Banned?
| tippytippytango wrote:
| Stocks are a big Ponzi scheme too. Most people buying stocks
| aren't interested in buying cash flow like stocks were meant to
| provide. People want capital gains. You only get capital gains
| when there's a greater fool.
|
| I'm not against owning stocks. I'm just as concentrated as you.
| But, let's not confuse luck and genius. We are just hoping to
| be the one that gets out before the music stops.
| eldaisfish wrote:
| Please don't "both sides" this.
|
| Stocks are not a Ponzi scheme because funds from early
| investors are not flowing to fresh investors. There is the
| actual value created by a company together with its future
| prospects and assets that combine to determine a stock price.
|
| Crypto meanwhile has the backing of whom and what assets?
| broighbrobroigh wrote:
| Actual value is a true Scotsman.
| intotheabyss wrote:
| That's strange. I own crypto assets that are also capital
| assets and I receive fees based on transaction volumes and
| loans. Seems like there's real value there.
| JohnJamesRambo wrote:
| And I consider the current stock market and money printing the
| greatest ponzi propagated in the history of mankind. That's why
| I crypto.
| loeg wrote:
| Totally agree. The S&P500 is at the lowest it's been ... since
| one week ago (quite literally: May 12). And before that, April.
| A 1.5% decline isn't a crash.
| paulpauper wrote:
| yup. why do so many people in personal finance recommend
| index funds? because being down 1.5% in a week sure beats
| being down 30% in a day
| onemoresoop wrote:
| But when other vehicles give you 2x in a week while the
| index a mere .5% the angle changes. It really depends on
| what the appetite for risk really is.
| paulpauper wrote:
| bitcoin never went up 2x in a week except before 2013 .
| bitcoin hardly done much since jan 2018.
| onemoresoop wrote:
| BTC was was 10k last fall. It grew 6x till a month ago.
| That is 6x. Now after the drop it's still 4x from that
| 10k figure. I didn't claim it doubled in a week, other
| coins with a smaller cap did and not one or two, a whole
| lot of them. Lots of people made fortunes of this hype.
| Sure, a lot of people also lost a lot and that makes
| volatile markets very dangerous if you don't know what
| you're doing.
| bogota wrote:
| You can criticize crypto currency's for a lot but I still have
| never seen a good argument for it being a ponzi scheme. Can
| someone further this argument to one that wouldn't cover every
| investment asset?
| lapetitejort wrote:
| Dividends and voting rights, off the top of my head. That's
| not universal to every stock, but fairly common.
| notahacker wrote:
| If no speculators want to pay you for your stock, you'd have
| a stake in a stream of future profits or asset sales that
| company made simply from hanging onto it. If no speculators
| are interested in your bonds, the issuer is obliged to pay
| you coupon payments until it matures simply because you hang
| onto it. If nobody speculated on your property, there's a lot
| you can do with the land whilst hanging onto it. Even a
| dubious investment propped up by a lot of marketing hype like
| gold can make shiny things.
|
| With Bitcoin, you have a cryptographic string. You can't make
| anything with it, it's not interesting to look at, it doesn't
| pay dividends or coupons and you almost certainly don't have
| any debt denominated in it. The only reason to hold it is the
| hope someone else will buy it from you for a greater price in
| future, and the only reason to believe they might want to do
| that is a claim that it's a "store of value" based entirely
| on the profits earlier holders made selling it to new ones.
|
| It may not literally be a Ponzi scheme, but the dynamics are
| the same.
| vekker wrote:
| This discussion has no value if you were the only one
| participating. Facebook has no value if there are no
| "friends" to interact with.
|
| My point is, the same kind of network effects that make
| social media valuable, are also inherent to
| cryptocurrencies like BTC. Metcalfe's law applies. Just
| like fiat currencies, actually.
|
| So yes, new entrants are obviously important to achieve an
| increase in value (and therefore, price). But does that
| necessarily make it a Ponzi scheme? I don't think so,
| because a Ponzi is fraud, a scam, by definition. It needs
| to be done with the malicious intent of stealing the money
| of new entrants. That's not the case here. Of course new
| entrants might be convinced by speculators seeking profit
| to buy in when BTC is actually highly overvalued, but, the
| same applies to any other investment really (look at what's
| happening to TSLA).
| notahacker wrote:
| It's not the "same kind of network effects" though. It'd
| be the same kind of network effects if the only reason
| people had Facebook (or telecoms) accounts is because
| they thought someone else might buy their account off
| them for more money. And if a social network came along
| with that value proposition - "sure, it doesn't actually
| _do_ anything but the fact I sold some to this other
| sucker at a higher price than I bought it proves it 's a
| store of value" - nobody would hesitate to call it a
| pyramid scheme.
| Theodores wrote:
| Abductive reasoning:
|
| https://en.wikipedia.org/wiki/Duck_test
|
| So you have the non-existent assets, bag holding, difficulty
| getting out and the promise of above average returns.
|
| If I put my money into my saving account then I can get out
| at a clearly stated time, there is no expectation apart from
| very little interest and I am reasonably sure that the
| government will bail out the bank if the bank fails.
|
| In between there are a spectrum of investment options,
| property is a good investment asset and you actually have a
| property made from things like bricks and glass as the 'store
| of wealth'. Yes it might be difficult to get out if there is
| a property crash. But it is not a ponzi scheme even if it has
| some characteristics of one.
| celticninja wrote:
| But you can get out of bitcoin at any time by selling it so
| it fails that test.
| andrewaylett wrote:
| But selling Bitcoin is _exactly_ an older investor being
| paid out by a newer investor.
|
| IMO it's Bitcoin in combination with Tether that's the
| actual Ponzi. Unfortunately unlikely to unwind until and
| unless people start needing to redeem Tether rather than
| selling it on.
| 35fbe7d3d5b9 wrote:
| > IMO it's Bitcoin in combination with Tether that's the
| actual Ponzi.
|
| Bingo.
|
| The problem is, the big players have no interest in
| unwinding the scheme. As long as exchanges can wash trade
| USDT:BTC to drive the inflow of retail investment, things
| keep going.
|
| What'll be interesting is if BTC continues to fall. I
| think the low $30k is a support level; if it crashes
| below that, I bet we're going to see more outflow from
| undercapitalized exchanges and things will adjust _hard_.
| inter_netuser wrote:
| undercapitalized exchanges? you think they are running on
| fractional reserve?
| celticninja wrote:
| That is pretty much the accusation against tether. Most
| exchanges use it, so rather than the exchanges being
| knowingly undercapitalized, they are by virtue of using
| tether. Which is supposed to be 1=1 backed with the $.
| Which it isnt, and it is not clear how backed it actually
| is.
| inter_netuser wrote:
| They are under regular audit by NY AG. Do you not think
| they'd be jail by now for fraud?
|
| They don't disclose details, yes. but neither does your
| bank, really.
|
| Finance tends to be tight-lipped.
| celticninja wrote:
| They always claimed it was backed 1:1 with the US dollar.
| Then they paid a fine to the NY AG because it was not
| backed 1:1, and as part of that they had to produce
| quarterly reports about how it was backed.
|
| https://www.google.com/amp/s/amp.ft.com/content/529eb4e6-
| 796...
|
| It still isn't backed 1:1 based in their own admission.
| This isn't about being tight lipped, this is willfully
| misleading customers.
| inter_netuser wrote:
| that's just 3% in cash.
|
| the fed requirement for reserves today is literally zero
| percent.
|
| they are just an offshore bank, none of which have
| insurance and very different reserve requirements. Hold
| trilions of dollars.
|
| Just clickbait articles farming eyeballs.
| eingaeKaiy8ujie wrote:
| There are no promises of returns.
| chewz wrote:
| I agree (and I am also Btc-neutral).
|
| This looks more like rapid forced positions liquidation then
| crypto crahs - as it spilled over to other recent hedge funds
| favourites (like CO2 ETS).
|
| Another Archegos perhaps?
| ericwooley wrote:
| Read up on what a ponzi scheme actually is. https://www.investo
| pedia.com/terms/p/ponzischeme.asp#:~:text....
|
| I'm so tired of people saying crypto is a ponzi scheme.
|
| Maybe you think it's nonsense, or a bad investment, but it is
| not a ponzi scheme.
|
| > A Ponzi scheme is an investment fraud in which clients are
| promised a large profit at little to no risk. Companies that
| engage in a Ponzi scheme focus all of their energy into
| attracting new clients to make investments. This new income is
| used to pay original investors their returns, marked as a
| profit from a legitimate transaction.
| sashimi-houdini wrote:
| Naturally occurring Ponzi scheme is the term of art:
|
| https://openknowledge.worldbank.org/handle/10986/19358
| imtringued wrote:
| Well, it's not a ponzi scheme. It's a MLM/pyramid style
| scheme. The idea over the long term is that there are more
| future investors than past investors and therefore there will
| be more money in the future than in the past. However,
| returns only last until growth limits have been reached. The
| problem is that everyone who buys Bitcoin wants those gains
| but they are exclusionary/rivalrous by definition.
| trompetenaccoun wrote:
| By that definition any stock that doesn't pay a dividend is
| a pyramid scheme. Of course, if you believe it has no value
| whatsoever, then anything can be seen as a pyramid scheme.
| sadfasf122 wrote:
| Exactly. You might think crypto is worthless or a fad or
| whatever.
|
| But it is by definition not a "ponzi scheme" or "scam".
| Animats wrote:
| _This doesn 't look like a crash to me at all._
|
| Yes, this just looks like normal volatility. The price of
| Bitcoin is still 4x what it was a year ago.
|
| The DJIA is down to where it was last month. Big deal. That's
| more driven by macroeconomic policy and the real world.
| Stubb wrote:
| Crypto isn't a Ponzi scheme. A Ponzi scheme is form of fraud
| where funds from recent investors are used to pay (fictitious)
| profits to earlier investors. Say the ringleader claims a 10%
| profit. An early investor had deposited $100 and wants their
| $100. The ringleader had blown that investor's $100 on coke and
| hookers and gives him $110 from new investors.
|
| Crypto is more accurately a pyramid scheme. But then so are
| precious metals and fiat currency.
| mumblemumble wrote:
| It's neither. A defining feature of both pyramid schemes and
| Ponzi schemes is centralized control of the ledger and who is
| allowed to participate. And a defining feature of
| cryptocurrencies is, at least theoretically, the lack of such
| centralized control.
|
| I understand that people feel like there's something
| fraudulent going on with crypto. Given the sheer density of
| fraud and scamming surrounding crypto, it's hard to argue
| with that. But trying to make one's argument seem more
| concrete by picking the name of some well-known class of
| fraud and blithely using it to describe crypto in general is
| counterproductive. It muddies the waters, and makes it more
| difficult to have an organized discussion by removing clarity
| from the language we have to discuss these things.
|
| The urge to do so should be resisted for the same reason that
| we should resist the urge to try and make arguments involving
| statistics seem more authoritative by just guessing at
| numbers when we're not sure of them. False precision is,
| well, false.
| coldcode wrote:
| But at least gold has some inherent value, crypto is just
| math that is worth whatever the buyers/sellers think it
| should be. Stock in a company that stays in business will
| never go to zero as the company always has some value due to
| having revenue, but crypto has no real world floor (though
| unlikely to actually get to zero since someone will always
| buy).
| phist_mcgee wrote:
| Silly comparison. Crypto holds value for its utility. Why
| do you seem to think that its utility will just vanish?
| imtringued wrote:
| >Crypto holds value for its utility.
|
| You mean ETH and the ability to bypass capital controls?
| Sure, I'll accept that these things exist but that
| doesn't mean I can accept needless power consumption.
| Bitcoin bubbles don't meaningfully contribute to avoiding
| capital controls.
| lottin wrote:
| Because the only utility it has is that it appreciates
| over time. Of course, until it no longer does, then
| becomes worthless.
| phist_mcgee wrote:
| And that I can send money worldwide to anyone at any time
| with no middleman.
| nikanj wrote:
| No, you can send arbitrary hashes to anyone at any time.
| It's just a mutual agreement that those hashes are worth
| anything at all.
| phist_mcgee wrote:
| And so is our physical money a shared belief that those
| pieces of plastic are worth something as well. Really
| though man, this argument has been hashed out in so many
| places on the internet innumerable times. Stop the
| downvoting and let's agree to disagree.
| lanstin wrote:
| D5CF5A343CEE5CF02556B7790D24C950495E04B9 Really a reply
| to the sibling.
| imtringued wrote:
| This mostly matters for avoiding capital controls. Those
| shouldn't exist in the first place.
| camgunz wrote:
| Cryptocurrencies do have a couple of extra utilities:
|
| - they can be pumped and dumped without state oversight
|
| - with the use of a tumbler, you can launder money pretty
| effectively (in fact we should stop calling them tumblers
| and start calling them money launderers, that's exactly
| what they are)
|
| It's pretty obvious that this is bad for society. In
| addition, the transactions are extremely slow and wildly
| expensive--even without factoring in externalities like
| carbon burn. The price is extremely volatile. It's highly
| unavailable (ex: good luck getting your money if Coinbase
| goes down). The governing structures don't inspire
| confidence (look at ETH's PoW -> PoS, or BTC's block size
| debate).
|
| Things don't have value simply because people decide they
| have value. This is a weird kind of tautology or circular
| reasoning based on a deep misunderstanding of markets.
| It's clearer to say that people price things based on a
| perception of value. Crypto seems like it does--a lot of
| people go around saying so--but unless you're a comic
| book villain, it doesn't.
|
| However, things like gold or oil do! You can make
| electrical contacts out of gold. You can refine oil into
| fuel. Commodities have _physical_ utility. BTC doesn 't.
|
| State-backed currencies also do! You can get pretty much
| anything for USD. You can get a great pint for GBP. This
| is because the states and entities producing those goods
| price them in currencies they can get other goods for,
| reliably. You can't reliably use BTC to get other goods,
| and you can't reliably say your BTC will hold the same
| value even minute to minute. Further, it's very likely
| your transaction fees will be more than the purchases you
| make.
| inter_netuser wrote:
| Sounds so great, what can I get for my rapidly
| depreciating Turkish Lira nobody wants to take?
|
| BTC seems a lot more accessible than the great and
| amazing US or EU banks, who have nearly failed and had to
| be bailed out barely a decade ago. Doesn't inspire
| confidence, tbh.
| camgunz wrote:
| I think it'd be more productive if you engaged with the
| substance of what I wrote, rather than engaging in
| whataboutism with USD/Euro/etc. I'll try and do that here
| with what you wrote.
|
| > What can I get for my rapidly depreciating Turkish Lira
| nobody wants to take?
|
| A couple of things about this:
|
| - You can get Dollars/Euros/GBP/RMB.
|
| - Crypto cannot solve the "so you're born in an
| oppressive or poorly-run state" problem. You've gotta
| trade the currency you have for crypto, and if that
| currency isn't good, crypto doesn't help you at all.
|
| - There's really no examples of crypto helping people in
| oppressive or poorly-run states (Venezuela still has
| horrendous problems, for example).
|
| - The transaction fees are bad enough in USD, but valued
| in (say) Bolivars they're prohibitive.
|
| - In particular, Bitcoin is super bad for the planet, and
| people in oppressive or poorly run states are
| disproportionately susceptible to ecological disasters
| and climate change.
|
| > BTC seems a lot more accessible than the great and
| amazing US or EU banks, who have nearly failed and had to
| be bailed out barely a decade ago. Doesn't inspire
| confidence, tbh.
|
| I think you don't mean "accessible", but rather you're
| saying because banks need bailouts that fiat currency is
| unworkable? My counterpoint here is mostly what I wrote
| in my previous post; fiat is superior to crypto in every
| way, unless you're a criminal.
|
| Furthermore, cryptocurrency systems are vulnerable to a
| whole class of problems central banking isn't, i.e.
| someone lost the keys, Sybil attacks, developers making
| changes that destroy your stake/economy.
|
| There is no recourse for this. Are heads of state
| supposed to join a Discord channel or w/e and lobby
| crypto devs?
| inter_netuser wrote:
| Sadly, you are absolutely uninformed.
|
| 1. no, you cant get FX. capital controls.
|
| 2. USDC stablecoin actually has explicit sanction
| exemptions from US Govt to help people in Venezuela. They
| aren't easy to get at all, but I guess according to USDC
| does absolutely nothing in Venezuela, so it must've been
| a waste of effort.
|
| 3. transaction fees are measured in milli-cents on
| Lightning Network. They are also instant. Still Bitcoin,
| with the same security budget.
|
| 4. Why is using renewables super bad for the planet?
| Either renewables can power the planet and our industries
| - or they just don't work. Make up your mind.
|
| If you think proof of work is waste and you need to lobby
| devs - you have literally everything upside down. very
| unfortunately it's a common situation on this board.
|
| a. Proof of Work exists to remove any subjectivity from
| consensus. Longest _valid_ chain with most work, period.
| Subjectivity = politics, and everything that comes with
| it.
|
| b. devs do not have anywhere as much control as you
| think, and the ecosystem can trivially eject malicious
| devs. happened a number of times.
|
| The entire point of Bitcoin is that it is objective and
| transparent.
|
| As for "criminal" - people commit on average 3 felonies
| per day: https://ips-dc.org/three-felonies-day/
|
| Everyone is a criminal.
|
| Especially Turks, Venezuelans and Nigerians seeking to
| escape their broken systems and banks. Must be some savvy
| criminals - recording their crimes on a globally
| replicated open ledger, visible to the entire world.
| Stubb wrote:
| The value of crypto is the access to the underlying
| network, which lets the users of that network transfer a
| known supply of tokens in a manner that's not forgeable,
| repudiable, confiscable, etc. or reliant on the permission
| of outside authorities. Final settlement takes an hour.
| It's worth whatever people will pay for that access.
| sendbitcoins wrote:
| More precise way of expressing this is: gold has industrial
| uses not "inherent value".
| inter_netuser wrote:
| Gold's monetary premium dwarfs its industrial value.
| Something like 90%+ is purely monetary usage.
| onemoresoop wrote:
| And that consists of taking gold out of the ground and
| putting it back under the ground - in vaults and adding
| an extra dash on paper. That's a lot of energy
| expenditure with destruction of the environment as well
| (cyanide is still used in gold mining).
|
| What we need is a more efficient digital currency and
| stores of value. Gold is not the answer either.
| inter_netuser wrote:
| Yes. That currency/store of value is Bitcoin.
|
| No cyanides, no blown up mountains, and can be powered by
| clean energy.
|
| Everyone thinks it will boil the oceans, for some reason.
| If renewables cannot provide power - then we have to
| either improve renewables, or accept that nuclear is the
| answer and move on.
| arcticbull wrote:
| Roughly 0.1% of the entire world's gold output is used to
| make bitcoin miners.
| fny wrote:
| Gold does not have inherent value either. It's price is
| determined purely by a market and there are no other
| pricing mechanisms.
|
| You can't use discounted cash flow. You can't use
| comparables. You can use raw materials. It's a straight up
| rock that people price.
| imtringued wrote:
| I can buy overly expensive shiny rings made out of gold.
| The utility is purely cosmetic but it exists.
|
| The worst thing that could happen to your gold is that it
| gets turned into jewelry at a fraction of its original
| purchasing price.
| lanstin wrote:
| Only in the same sense that nothing has inherent value.
| Gold is pretty and durable and people like it. That gives
| it value in the system of exchanging stuff amongst
| humans.
| twic wrote:
| Wheat has value because you can eat it. Dollars have
| value because you can pay your taxes in them.
|
| Gold does have craft and industrial uses, but not enough
| to explain its value.
| SavantIdiot wrote:
| Well, gold is a better conductor in electronic circuits
| than bitcoin, so it has SOME intrinsic value. ;-)
| XorNot wrote:
| It's still an actual rock though.
|
| Cryptocurrency is _less then that_. Cryptocurrency is
| expended energy. You can 't use a cryptohash for
| _anything_. Whereas I can melt down gold and make earings
| with it.
| symlinkk wrote:
| What a bizarre opinion to have on an IT website.
| "Software is worthless, it's just expended energy, you
| can't use it for anything, whereas I can melt down gold
| and make earrings with it"
| broighbrobroigh wrote:
| A failure of imagination to do something useful with
| crystalized math is more a commentary on the failure of
| imagination vs. the utility of math.
|
| If you compare any esoteric financial instrument against
| the melted rock utility test that you mention, the laity
| will err on the side of melted rocks.
| jerf wrote:
| "A failure of imagination to do something useful with
| crystalized math"
|
| I don't think I could possibly describe BitCoin as
| "crystallized math". It's not like it is somehow
| convertible into some useful solution to some other math
| problem. It's a solution to a math problem that is
| essentially _designed_ to not be useful for anything else
| on the grounds that said "utility" would be a potential
| mechanism for cracking the hash algorithm. (e.g., if you
| built a "hash function" that also provided a solution to
| some isomorphic bin packing problem, your hash function
| would have the weakness that the correspondence would
| reveal a lot a lot of theoretical bits about what was
| hashed.)
|
| Besides, even if it is "crystallized math" than said math
| is independent of BitCoin's utility itself. If it were
| that useful you could go compute hashes until they have
| large numbers of zeros on the front all by yourself,
| without having to be involved with BitCoin. Since nobody
| has any conceivable use for such a thing as evidenced by
| the complete failure to do so, I have no idea what you
| think you're saying here. Merely working really hard at
| some computation does not make that computation useful
| for any _other_ purpose.
| MR4D wrote:
| A stock market crash is usually defined as a drop > 10 %.
|
| We've just seen a 20% (or worse) drop in cryptos in a single 24
| hour period.
|
| So to me, calling this a "crash" makes perfect sense.
|
| Will it come back? Yes, but it's still a crash.
| zpeti wrote:
| My personal take:
|
| There might well be ponzi schemes on top of the bitcoin
| infrastructure, but the technology behind bitcoin is not a
| ponzi scheme.
|
| It might well be that a lot of people are crazed over it and
| want to buy bitcoin and push up the price, but that's because
| there is something here with cryptocurrency. It definitely is a
| new way of accounting, and it could potentially be a hedge
| against the fiat system.
|
| There's a lot of IFs, but I still think it is revolutionary
| technology that may well revolutionise things in 5-10 or 50
| years, who knows.
| Retric wrote:
| At the purely technical level, Bitcoin's current transactions
| per minute heavily limit it's utility. The original goal was
| solving micro transactions which crypto coins could do, they
| just need to scale to ~100 Billion transactions a day +/-
| orders of magnitude.
|
| Unfortunately, miners benefit from the current artificial
| limitations. Which demonstrates an inherent issue with crypto
| currency, miners and users have very different goals yet only
| miners get a vote.
| inter_netuser wrote:
| base layer tps is low because it is designed for survival
| in most adversarial of conditions. It is a heavy duty tank,
| not a sport bike.
|
| Would you take M1 Abrams tank to race at Nurburgring? They
| have a different function.
|
| Lightninig/Payment channels, backed by the same baselayer
| security guarantees, can operate at literally unlimited
| tps. The only ceiling is how fast you can send packets back
| and forth.
|
| Miners do not vote, they are nothing but security guards
| paid by the network users. Miners do not get paid if they
| produce a block with rules not accepted by the rest
| network.
|
| Counterintuitive, but that is the reality.
| mellavora wrote:
| Well, to be snarky, if that M1 could take out the other
| cars, then it wouldn't have to be the fastest to win.
| Only the fastest which is still capable of motion...
| deschutes wrote:
| What's stopping your adversaries from seizing hardware?
| Nothing? So the system relies folks playing nice in the
| physical world? The whole thing is a ridiculous fantasy
| with an asinine threat model.
| inter_netuser wrote:
| The same that stops people from invading your house,
| caging you, and confiscating everything you own.
| Violence.
|
| Either monopoly on violence in the state under whose
| protection miners operate, or private security for
| smaller threats.
|
| Miners in China, Russia and Iran are essentially
| absolutely immune to threats from the West. and vice
| versa.
|
| It's not designed to gamble and make a quick buck, but to
| survive even a nuclear war. Just like TCP/IP wasn't
| designed for streaming porn.
| [deleted]
| Retric wrote:
| Compromising hardware doesn't require compromising
| countries.
|
| If you're servers are worth X Billion Dollars that's
| attractive to the same sorts of criminals that rob banks.
| Hell governments have a long history of running drugs and
| state sanctioned piracy etc. An attractive enough target
| needs serious security.
| gruez wrote:
| Because there's threat models with less threat than "US
| sending a fleet of aircraft carriers to go after you".
| inter_netuser wrote:
| Even that would not work very well against miners in
| China, Russia, Iran, Venezuela...
| [deleted]
| greg7mdp wrote:
| Ethereum will solve both issues, removing miners and the
| energy use by moving to Proof of Stake at the end on this
| year, and increasing the transaction throughput by 100x
| factors with level 2 solutions.
| [deleted]
| ulzeraj wrote:
| How does PoS solves anything when people will just stake
| on exchanges so that it literally replicates the current
| financial system with central banks and permissioned
| cartels?
|
| How new PoS coins will be generated and distributed? The
| stock has to be generated somehow right? How does this
| not resemble a central bank?
|
| This is an honest question. It looks like PoS is a full
| circle towards the same centralized system we have today.
| Please correct me if I'm wrong.
| AlexandrB wrote:
| The history of cryptocurrency seems to be the re-
| discovery of why the global economy is structured the way
| it is from first principles.
| inter_netuser wrote:
| You are exactly correct.
|
| It is plutocracy, but with emojis.
| doomroot wrote:
| I think the layer approach seems to make the most sense.
| Much like our current system now. The difference comes from
| building from a strong sound money base.
| intotheabyss wrote:
| This might be shocking to people, but there are people in
| crypto that own zero Bitcoin. You can dislike Bitcoin and
| still be bullish on crypto.
| UncleMeat wrote:
| I'm not sure it is possible to be bullish of crypto in
| general. Surely at most a small number of tokens will win
| and the rest will drop to zero. Owning the entire
| ecosystem isn't diversification like investing in many
| companies.
| [deleted]
| intotheabyss wrote:
| Oh I absolutely agree. I think cryptos will be top heavy
| from a market perspective, where the top cryptos will
| have something like >80% of the total marketcap by the
| end of the decade.
| enkid wrote:
| How do you differentiate the infrastructure from the
| technology? The technology drives the infrastructure.
| lottin wrote:
| The technology has no use outside the scope of crypto-
| currencies.
| greg7mdp wrote:
| Have you heard of DEFI (decentralized finance)?
| lottin wrote:
| Ah, yes, it's taking over traditional finance except they
| still haven't figured out how to make loans, but never
| mind that.
| intotheabyss wrote:
| There are undercollaterized / no collateral loans on
| Ethereum. You can build a credit score using
| decentralized identities. But yeah, keep dismissing it.
| You'll eventually use Ethereum or something like it
| whether you want to or not.
| Faaak wrote:
| undercollaterized loans are valid for one transaction
| only. You should research what you preach before
| dismissing others
| intotheabyss wrote:
| Uh no, Aave has credit delegation for no collateral loans
| and it uses OpenLaw contracts to secure a credit line.
| And there's also TrueFi https://truefi.io/. And a bunch
| of others. You can get loans based on credit on Ethereum.
| lottin wrote:
| I can buy a car on credit using DeFi right now, is that
| what you're saying?
| intotheabyss wrote:
| No, what I'm saying is that right now if you have a
| product on Ethereum with consistent cashflows, you can
| borrow money on credit from DAOs with large treasuries
| willing to lend them out using OpenLaw contracts as
| arbitration. The goal for these protocols is to expand
| this using decentralized identities and onchain credit
| scores.
| inter_netuser wrote:
| can you point to these OpenLaw contracts? Curious to
| read.
|
| tia.
| intotheabyss wrote:
| Here's a link to the OpenLaw documentation
| https://docs.openlaw.io/getting-started-
| overview/#javascript...
| lottin wrote:
| If I can't buy a car on credit with DeFi it means DeFi
| can't do loans. And if it can't do loans it can't do
| finance. Maybe it can do a semblance of finance, maybe we
| can call it crippled finance, but it's not finance.
| Pretending that DeFi is going to turn everything upside
| down when it is unable to even make a simple loan is
| ridiculous. Nobody can take this seriously.
| AnIdiotOnTheNet wrote:
| Ok, if that's the case why should we start using it now?
| What's the advantage other than fomo-driven speculatory
| gambling?
| intotheabyss wrote:
| The advantage eventually will be easier ways to get
| funding for startups or businesses of all kinds. You need
| highly liquid markets in order to facilitate global
| finance at scale so that's where it's starting today.
| Rebuilding all of the financial primitives onchain. Why?
| Because composability of contracts onchain results in
| higher velocities of money; higher than whats possible in
| traditional finance. Imagine a world where you can list
| ownership of a stock and have that be immediately
| accessible by millions of people around the world
| regardless of jurisdiction 24/7 in highly liquid markets,
| all from a browser app. That's where this is going in my
| opinion.
| [deleted]
| lottin wrote:
| None of this makes any sense at all. Composability of
| contracts leads to higher velocity of money? Where do you
| get this from? And why do we want higher velocity of
| money? The only people who care about velocity of money
| are macroeconomists. Velocity of money has literally zero
| impact on businesses and individuals.
| inter_netuser wrote:
| Don't, might make money on accident.
| SavantIdiot wrote:
| > I still think it is revolutionary technology that may well
| revolutionise things in 5-10 or 50 years, who knows.
|
| If there's one thing I love most about the technology behind
| bitcoin, it is the permanent, public, unalterable ledger of
| every purchase I've ever made and every purchase I'll every
| make, and who I gave the money to. I'm super excited about
| the complete lack of personal financial privacy that
| Bitcoin's blockchain enables! /s
| Ar-Curunir wrote:
| That's not an inherent feature of decentralized ledgers;
| you can have protocols like Zerocash which hide the sender,
| receiver, amount completely, via the use of zero knowledge
| proofs
| icoder wrote:
| It's a bit more nuanced isn't it (or am I mistaken)? All
| you see in the ledgers is the (hopefully single use)
| addresses the money is sent to, plus all addresses that
| come after it. There's not much in the system itself that
| links people / organisations to addresses, right? You'll
| have to get that information from outside the system: you
| know yourself, and maybe the receiver as a person, but
| where it then ends up requires you to obtain knowledge
| that's not readily available.
|
| Sure there's a lot stored, which does bring privacy
| concerns that are quite different from our current
| financial system, I'm not debating that, but it's not as
| obvious as you put it, as far as I understood it.
| SavantIdiot wrote:
| "We've killed people based on metadata" - Former USA CIA
| director. [1]
|
| It really isn't that nuanced at all for Bitcoin. If I
| know your wallet I can see all of your transactions.
| Period. And if you want to trade money with me, you need
| to give me your wallet. Once I find it, thought, it is
| game over. [2]
|
| There are "tumblers" that attempt to obfuscate the chain
| by turning one transaction into millions of little ones,
| but it is just a matter of tree search to reconstruct.
|
| [1] https://www.rt.com/usa/158460-cia-director-metadata-
| kill-peo...
|
| [2] https://www.blockchain.com/explorer
| acdha wrote:
| The problem is that it's global and irrevocable: mistakes
| and intentional linkages act as a ratchet increasingly
| deanonymizing the network over time. If it started to
| have real usage, you'd quickly see the equivalent of the
| credit card / scoring companies, Google, etc. paying
| merchants for transaction details and building a web of
| user information.
| SavantIdiot wrote:
| Ooof. That is a great second-order observation: agencies
| profiling you and making lifer harder or easier based on
| your blockchain history. Not like this is new, as you
| point out, just even more difficult to expunge: there's
| no "blockchain" to expunge your blockchain habits!
| (yet??? I think I have a new startup idea for blockchain
| ... /bangsheadagainstwall/)
| acdha wrote:
| Sadly, these days my threat model for anything new is
| basically "how will Google/Facebook use this for ad
| targeting?" -- it's good for both a realistic level of
| risk (most of us are not targeted by the CIA/Mossad/FSB)
| and a sober assessment of the level of resources
| available to the attacker.
|
| For blockchains in particular I think we tend
| underestimate the amount of information which someone
| with that kind of analytic capacity could derive,
| especially if they also have other data sources -- for
| example, I would be quite surprised if the various
| anonymity schemes are less effective when evaluated as
| part of a full system against someone who has a lot of
| visibility into web activity (Google Analytics, Facebook
| beacons), DNS, email, etc.
| fsflover wrote:
| If you care about privacy, then consider Monero.
| paulpauper wrote:
| i love when ppl say this. you realize that turning monero
| into usable cash will at some point req. revealing your
| identity?
| SavantIdiot wrote:
| But then the argument is: why would I turn it into usable
| cash if everyone used it. And by the time you reach that
| point in the discussion, back slowly away...
| jiminymcmoogley wrote:
| the only identifiers i can think of are my height, gait,
| voice and clothing. Though i get your point and it does
| seem to be getting harder and harder to find local
| dealers willing to transact without seeing photo ID. I
| still think it can be much more private than cash-only
| purchases, depending on how careful you are about it
| matheusmoreira wrote:
| Monero does not have this problem. It's what bitcoin should
| have been.
| serverholic wrote:
| There are technologies people are working on to solve that.
| One is called ZK-SNARKS and ethereum is working to
| integrate the tech. Another is Monero, which is a privacy
| focused crypto.
| SavantIdiot wrote:
| Right, I was talking about Bitcoin only. mimblewimble and
| zcash also both have shielded transactions. I believe
| they use an ECDH secret for each transaction so that only
| the two people involved in the transaction can decode it.
| paulpauper wrote:
| there is no tech though. it is just math
| ArtWomb wrote:
| It's unfortunate that the space has attracted "pump & dump"
| opportunists. But if one is a student of technology and
| networks and markets, Decentralized Finance (DeFi) is
| fascinating. Two recent innovations to check out: Uniswap,
| the decentralized exchange protocol, and Bitclout, a social
| blockchain that just went open source last nite
|
| https://uniswap.org/docs/v2/protocol-overview/how-uniswap-
| wo...
|
| https://github.com/bitclout/core
| ddeyar wrote:
| If you're not aware of https://tezos.com/ then it is
| definitely worth to look into it. It's PoS since 2017, has
| smart contracts since 2018. It's a self amending protocol.
| A lot of improvements are already injected and a lot in the
| pipeline. For more information about the recent upgrade:
| http://doc.tzalpha.net/protocols/009_florence.html
|
| Lots of defi products are already live on mainnet.
| https://better-call.dev/dapps/list
| Balantio wrote:
| Technology can be revolutionising without investing in a very
| specific cryptocurrency like bitcoin.
|
| I'm betting my ass of that cryptocurrency in a different way
| might be the future of fiat BUT from the countries themselfs.
|
| I'm not sure why anyone in the long run would trust a system
| which is controlled by some totally unknown and new
| individuals who invested in some cryptocurrencies.
|
| There is no need at all to assume that the crypto technology
| is limited to btc and other current cryptocurrencies.
| 8note wrote:
| Countries can just use a database and do the same stuff as
| crypto incredibly efficiently by comparison
| Balantio wrote:
| I just don't know how it works in detail on the bacnking
| side as i havenot worked with it.
|
| My thought was that a crypto based system could replace
| perhaps a sea of different approaches and alignment
| efforts across banking systems and if a central
| bank/banks are just need to approve a block, instead of
| mining it, the basic idea of a transparent cryptosigned
| blockchain might be useful.
|
| But yes i don't think they need something like this as
| the current system seems to be very trustworthy. I have
| never heard of a bank creating money out of thin air.
| bronzeage wrote:
| It's not a Ponzi scheme because in ponzi scheme you
| deliberately use late investors money to pay early investors.
|
| What happens in cryptocurrency is fake-exchange scheme. Tether
| is a fake currency printed in unlimited way by bitfinex which
| is also an exchange. By pretending tethers are real dollars you
| create the appearance of a stronger market for cryptocurrency
| than actually exists. It all rests on increasing the number of
| tether in circulation. It will fail when there is a run-on-the-
| bank on tether.
| ramijames wrote:
| Except that during crashes like this one, what you see is
| everyone moving their crypto holdings to stablecoins. The
| intent is to wait things out and then buy back in and profit
| during the next cycle.
| delecti wrote:
| "Everyone" can't move from crypto. One person has to buy
| for another to sell.
| notyourday wrote:
| So trading pink seashells for grey seashells?
| Grustaf wrote:
| Sea shells have intrinsic value, cryptos don't.
| gruez wrote:
| What's the difference between:
|
| * seashell (intrinsic value: $0.01, market value:
| $100.00)
|
| * seashell token (intrinsic value: $0.00, market value:
| $99.99)
| notyourday wrote:
| When no one wants to pay you anything for your seashells,
| you are stuck with the seashells.
| Grustaf wrote:
| I take seashells every time. You can't decorate your hut
| with ethereum.
| celticninja wrote:
| They move to stable coins because most of those exchanges
| do not have dollar trading, rather you have to have a
| stablecoin as a middleman between fiat and crypto.
| krrrh wrote:
| The move to stablecoins instead of cash is a reflection of
| major exchanges not being able to maintain banking
| relationships.
| coolspot wrote:
| Also tax avoidance. My friend exchanged all his ETH to
| DAI at the top, doesn't have to report that to IRS.
| AlexandrB wrote:
| As someone else on here pointed out, the IRS would
| consider this selling ETH and buying an equivalent value
| in DAI. Selling the ETH is taxable as capital gains.
| Whether the IRS catches your friend or not is a different
| matter.
| coolspot wrote:
| Point is, if you sell ETH for USD on Coinbase, they will
| report you to IRS.
|
| But if you convert ETH to DAI, no one will get a report
| for that.
| sashimi-houdini wrote:
| The term you're looking for is "naturally occurring Ponzi
| scheme"
|
| https://openknowledge.worldbank.org/handle/10986/19358
| chii wrote:
| Very interesting paper.
| thorwasdfasdf wrote:
| if crypto is a ponzi scheme, then isn't cash also a ponzi
| scheme? cash can become just as worthless, when no one believes
| in it anymore, just ask zimbabwae.
|
| personally, if i'm going to be in a ponzi scheme, at the very
| least I want something with a limited supply.
|
| Also, what other option do we have for store of value? Equities
| are way overvalued beyond reason. Fixed income/cash are
| becoming worthless very quickly. real estate is hard, very hard
| (just ask anyone that's bought in the last year). What else is
| there? put everything in gold?(the supply there is
| manipulated).
|
| yes, crypto has some environmental cost. but, there's huge need
| for store of value. if you've been working your entire life and
| have 200K stored up. Losing 10K per year to inflation, year
| after year is not acceptable.
| imtringued wrote:
| >if crypto is a ponzi scheme, then isn't cash also a ponzi
| scheme? cash can become just as worthless, when no one
| believes in it anymore, just ask zimbabwae.
|
| That's not how it works. You need to destroy the local
| economy first. For example, repossessing land of productive
| farmers and shutting farms down causes famines. If the local
| economy wasn't destroyed people would rush and start
| exporting their local products to markets that actually value
| them. You would end up with a lot of inflation but not
| Zimbabwe levels.
|
| I recently read up on Venezuelan capital controls and
| honestly the only thing that came to my mind is that the
| politicians there want to destroy the currency as much as
| possible as if a functioning currency were the spawn of Satan
| that must be prevented at all costs. I'm personally surprised
| it takes that much to destroy a currency. You pretty much
| have to be actively evil to get to Venezuela levels.
|
| Given enough care currencies can recover from pretty much
| anything as long as the local economy stays alive and
| relationships with foreign countries are being maintained.
| The only thing that cannot be recovered is the lost potential
| and time of all the individuals that make up the country.
| codyb wrote:
| How're you getting to 5% loss YoY due to inflation? Estimates
| on inflation for the USD rarely top 3% for years during the
| last few decades [0]. Certainly there might be an uptick this
| year but extrapolating that to "You'll lose 10k a year if you
| just hold 200k" doesn't really make sense. And certainly
| you'd hold that money in index funds which have pretty decent
| returns or even bonds which don't pay out so much these days
| but have some returns I believe.
|
| https://www.macrotrends.net/2497/historical-inflation-
| rate-b...
| thorwasdfasdf wrote:
| For the last 20 years: - case shiller shows housing has
| gone up 4% every year on average - Big mac index also 4%
| per year for the last 20 years - Gas (tax was not inflation
| adjusted, so gas prices appear to be only 2.5%) but the
| underlying cost is going up faster than that. - cars, one
| of the lowest inflation categories according to the CPI
| (real actual inflation is 2.7% for the last 20 years)->
| pick your favorite car and see for yourself. those quality
| adjustments aren't worth nearly what the cpi boys say they
| are.
|
| So, we've already got 3-4% inflation for the last 20 years.
| Now with the official CPI almost 2% higher than last year,
| it means real inflation is probably 2% higher as well. 3% +
| 2% = 5%
|
| Treasuries are at about 1 - 2% and unless you hold the
| actual treasury, you're taking a pretty big risk if you're
| going into the TLT right now with very little upside gain.
|
| European bonds are negative.
|
| The highest yielding bonds, aka junk bonds are returning
| 3-5% but those will dip nearly as hard as stocks when
| things get ugly (look at the last two crashes 2020, 2018),
| so you might as well hold stocks.
|
| Stocks are at record high valuations according to the
| warren buffet indicator.
| diabeticApe wrote:
| While i agree that this is not really a crash as much as a long
| overdue correction, i have to respectfully disagree with your
| point about cryptos being little more than a ponzi scheme.
| Unfortunately the ones that have been getting most attention
| (Bitcoin, Doge, Ether) have been a poor representation of what
| the crypto space has been brewing thse past couple of years. I
| would highly recommend looking into DeFi projects such as AAVE
| or maybe a better representation of whats possible with Smart
| contracta on Cardano or Solana. There are a lot of "shitcoins"
| but there are also a few innovative gems that are going to make
| a major difference over the next decade imo.
| devmunchies wrote:
| > whats possible with Smart contracts on Cardano
|
| nothing? (yet)
| kllrnohj wrote:
| Bitcoin & Ether are both down -40% from a week to a month ago.
| Both of those are, in theory, large enough that investors
| "letting off some steam" shouldn't move them that much.
|
| If $SPY dropped 40% we'd all call it a crash. This isn't that
| different.
|
| Also unlike the stock market, crypto is under the delusion of
| being a viable currency. If USD or Euro dropped even 20% we'd
| start questioning if it's a recession, much less 40%.
| sakopov wrote:
| I don't care what $SPY does. Crypto market isn't the stock
| market. 40% crash in crypto -- even in bull markets --
| doesn't mean shit.
| nikanj wrote:
| Imagine one person moving $SPY or USD tens of percentage
| points by tweeting a meme or two. The volatility in crypto is
| quite something.
| inter_netuser wrote:
| That's because Bitcoin is very tightly held, and the amount
| of tradeable float is very very small compared to holdings.
|
| This results in outsized volatility, as it is still a
| developing market. 1T for a global currency is very small.
|
| We'll see how it behaves at 10T.
| arcticbull wrote:
| > That's because Bitcoin is very tightly held, and the
| amount of tradeable float is very very small compared to
| holdings.
|
| By the diamond-est of hands: those who lost their keys.
| inter_netuser wrote:
| I see you often comment on Bitcoin negatively, curious
| why?
| arcticbull wrote:
| It's a substantially-manipulated negative-sum distributed
| Ponzi scheme. The most blatant example of a naked emperor
| I've seen in my lifetime. And it consumes the energy of
| Argentina to achieve as much work as a Raspberry Pi.
| midhhhthrow wrote:
| Where else should people invest their money?
|
| Stocks are extremely overvalued According to the buffet
| ratio
|
| And bonds/cash will soon be completely worthless by the
| time the gov and feds of the world are done with them
|
| Real estate is extremely difficult to buy and sell.
| Execution is hard.
|
| There's a desperate need for a store of value, now more
| than ever (gov of the world are abandoning their
| obligation of providing a stable fiat)
|
| Do you see any better solution than crypto?
| Grustaf wrote:
| It's really hard to imagine a WORSE store of value than
| crypto.
| inter_netuser wrote:
| only went up 400% this year. Terrible.
|
| Everyone is wiping their tears with dollar bills right
| now, very bittersweet.
| arcticbull wrote:
| Personally, volatility aside, I don't invest in non-
| productive assets (be it gold, or other precious metals).
|
| I have a risk appetite so I keep my IRA in this [1].
| Then, for taxed investments, I have a core portfolio of
| the stock from companies I've worked at, against which I
| sell covered calls. I sell futures options for passive
| income (not all the time, I'm sitting this move out, for
| instance). I carved out a chunk for my financial advisor
| to manage more conservatively.
|
| NFA, of course.
|
| [1]
| https://www.bogleheads.org/forum/viewtopic.php?t=272007
| imtringued wrote:
| > Where else should people invest their money?
|
| Pretty much any low volatility/world ETF or streak based
| ETFs (paying out an increasing dividend). If you trust
| nobody except yourself then get gold.
|
| >And bonds/cash will soon be completely worthless by the
| time the gov and feds of the world are done with them
|
| Actually, the worst thing that could happen to the US
| economy is that the USD goes up in value.
|
| >There's a desperate need for a store of value, now more
| than ever (gov of the world are abandoning their
| obligation of providing a stable fiat)
|
| Why would anyone want to buy a "store of value" that is
| extremely volatile? You put in $1000 and you aren't
| unlikely to get $1000 back out, either you make a big
| loss or big gain. People love shouting that assets going
| up is inflation but when they go down nobody thinks
| "hyperdeflation".
|
| >Do you see any better solution than crypto?
|
| Even gold is better at the "store of value" meme than
| Bitcoin. People buy Bitcoin because it goes up, that's
| all there is to it.
| xyzzyz wrote:
| Buy gold then, it is much less energy intensive to
| produce and hold.
| midhhhthrow wrote:
| Put everything in gold/ precious metals with no other
| diversification?
|
| Gold has some funny business with its paper holdings
| because of the way governments lend it out.
| megameter wrote:
| OK, but who/what will the top holders of BTC exit to? In
| what scenario will the price go to zero?
|
| "Bans" are not going to do it. It was designed toward
| censorship resistance. That moves it to an underground,
| at best.
|
| The top holders are not going to dump it - they've
| committed book value assets; mining companies, exchanges
| - they aren't going to exit.
|
| For their continued existence to make sense they want
| more things to be traded in crypto, so they invent stuff
| like "NFT" and "DeFi". Half of it is crap, but I have
| been around long enough to remember when Wall Street was
| bullish on "3D Television". Investors always want angles
| to make their current holdings more valuable, and as of
| this moment there are far too many crypto projects to be
| aware of them all. The re-investment rate is huge. Far
| different from when a penny pumper puts out the "good
| news" that they have put their logo on a race car and
| have t-shirts available.
|
| So as I see it, it's either not a Ponzi or everything is.
| celticninja wrote:
| Missed a couple of early opportunities to buy eh? Don't
| worry about, expending your energy is going to get you
| nothing. Even if it all implodes tomorrow all you can do
| is say "I told you so". And you may feel superior to
| others, but no one will care. And if it doesn't implode
| you are here expending energy unnecessarily, which, we
| have already gathered, is an activity that you don't
| appreciate.
| arcticbull wrote:
| Classic coiner arguments. "Have fun staying poor!"
|
| For the record I:
|
| (1) Bought during the 2017 run-up, and sold around
| $17,000 in early 2018, and parlayed that into various
| other investments that have done quite well. I've posted
| to that effect here in the past.
|
| (2) Shorted CME futures at $56,000, and a bunch of
| Coinbase and a bunch of Tesla. That's roughly $100,000
| USD per contract in profit - deposited directly into my
| SIPC insured FINRA regulated account with zero counter-
| party risk, 60% long term capital gains. Not bad for two
| weeks work.
|
| You worry about your account, leave mine to me :) I'm
| talking about crypto on its merits, not its price. The
| merits of course inform my investment decisions.
|
| There are tons of ways to make money on this planet,
| HODLing crypto is just one among them. I was addressing
| the question directly: why do I hate bitcoin? Asked, and
| answered.
|
| But to supplement: the thing I hate most about crypto are
| the touts and the community.
| celticninja wrote:
| I wasn't asking for a breakdown of you wealth, the fact
| you felt the need to provide it to me indicates that you
| are someone who puts great store in their ability to
| accumulate wealth. So, as much as you may dislike the
| implication that part of your dislike is rooted in having
| missed an opportunity, you are certainly not
| strengthening your case for the opposite.
|
| My point is more that people who are always on the
| lookout to bash something they don't like usually have an
| underlying (often irrational) reason for disliking it. To
| go out of your way to expend that energy, when you do not
| have to.
|
| I dislike Tik~Tok, I don't get involved in discussions
| about it, I don't share links to it. I dont even think
| about it, or the power it uses or even the harm it is
| doing to its users. But here you are on another thread
| about cryptocurrencies about to blow a blood vessel. Just
| an observation. Take a break from it.
| arcticbull wrote:
| > Missed a couple of early opportunities to buy eh?
|
| I was referring to the above. You are incorrect. I'm
| thoroughly enjoying myself, and this particular advocacy
| is making the world a better place.
| inter_netuser wrote:
| making the world a better place = deny billions access to
| any financial lifeline they may have.
|
| Those silly Zimbabweans, Venezuelans and Turks, why are
| they losing their life savings?
|
| Can't they just do smart things like you, and login to an
| SIPC insured account to short Bitcoin right at the top
| without any counter-party risk, while their financial
| advisors manage the rest of their portfolios? Duh.
|
| It finally makes sense, you are from the "let them eat
| cake" camp.
| bigfudge wrote:
| This is different to hating tiltok though. Ponzi schemes
| actually hurt real people when they collapse. I think
| it's reason able to think that pointing out the emperor's
| lack of clothes is public spirited.
| celticninja wrote:
| Honestly 'its a Ponzi' has been debated a million times,
| it isn't, except in a really loose description into which
| any currency or asset could fall. They all rely on
| someone else wanting to pay more for an asset that you
| did. That's it.
| usrusr wrote:
| Which effectively make the total amount of live tokens
| (the rough equivalent of share count or money supply in
| stocks or currencies) more deflatory than useful for any
| application outside of pyramid games. All projections of
| market cap that include the dead tokens are even more
| worthless than other market cap projections.
|
| Problem is: there's no way to tell the dead from the
| merely sleeping. The bigger the share of dark addresses,
| the bigger the impact of some "old god" dark address
| lighting up again. And the longer a "darkening deflation"
| goes on, the higher the impact of some old darknes wake-
| up would be.
| usrusr wrote:
| PS: makes me wonder if we might eventually see something
| like "tokens not transferred since ${some generous date
| horizon} will get blacklisted starting ${some era switch
| date reasonably far into the near future for living
| address to create a lifesign transcribe}" merged into
| mainline. Or even "get reissued to miners". If that ever
| happened it would be at a time when total supply
| uncertainty would already noticeably influence price
| (basically: if you use it as a value store you need to
| hedge against possible old god address revival), and most
| buying/selling during the runup would be bets about the
| amount of dark addresses lighting up in time.
|
| PPS: obviously I have no idea about governance of the
| code, but I do acknowledge that very few changes have
| ever been accepted (as evidenced by the high number of
| long running forks). I wouldn't expect any of this to
| happen before the known alive amount of tokens has become
| a tiny fraction of the dark parts.
| inter_netuser wrote:
| Blacklists will be incredibly contentious and will likely
| never get merged. Even if they do - a fork is guaranteed
| to happen.
| usrusr wrote:
| Undoubtedly. But my guess is that the threshold for
| blacklisting stale addresses would be noticeably lower
| than the threshold for any blacklisting based on, well,
| "governance".
|
| You could even conjure up an argument based on block
| chain "balance of hashrate" security, which I presume is
| the best type of argument with that audience: "what if,
| after mining rewards have run out, everybody is just
| doing value store? No transaction fees for those selfless
| miners! (will they still be called miners?) One by one
| they will close their datacenters, difficulty goes down
| and suddenly the gates are wide open for 51%. Quick!
| Introduce mandatory keepalive ping transactions or we are
| doomed!"
|
| Not that I expect this to happen, but I find these
| musings far more entertaining than the ups and downs of
| the market.
| gruez wrote:
| But surely most of the coins were lost when they were
| cheap rather than now? If that's the case most of the
| deflation stemming from lost coins already happened and
| isn't going to happen in the future, so it's not really a
| big issue.
| usrusr wrote:
| Unless they were only presumed lost. Imagine someone had
| the power to suddenly activate whatever fraction of the
| contemporary USD supply their family had in 1800,
| proportionally scaled to the amount of USD circulating
| now. And in the deflatory bitcoin world, the amount of
| tokens in circulation might eventually end up being
| merely a tiny fraction of what some presumably dead
| addresses hold. An address like that lightning up would
| be as if the Fed suddenly announced that they just issued
| a multitude of the USD previously in circulation. Not to
| banks, as credit, but to _some guy_ (unnamed). "Nice
| currency you have there, world economy, I have the other
| half of it. Let's be friends shall we?"
|
| Of course these are more hypothetical end game states
| than immediate threats (I think, I have no idea what
| fraction could currently be considered dark), but we
| can't just ignore theoreticals like that.
| playingchanges wrote:
| While we do call them crypto currencies I don't think crypto
| market is really comparable to the currency market. Maybe
| more like a precious metals etf or something.
| devmunchies wrote:
| at ~$2,700 (current), ETH is where it was on april 30th,
| which was only 19 days ago.
|
| Would you consider being reduced to last month's price a
| crash?
| virgilp wrote:
| If SPY dropped to the level where it was at the start of the
| year, would we call it a crash?
|
| Also, maybe BTC is not like SPY but more like TSLA.
| arcticbull wrote:
| Honestly, if SPY returned to 368, a 13% draw-down from the
| near-term peak, the financial press would lose their damn
| minds. That's half way between correction and bear market
| territory.
| redisman wrote:
| Look at the full chart for 2021 though. Crypto went
| completely bonkers for no apparent reason this year so a
| correction isn't too surprising.
| tastyfreeze wrote:
| I can think of about $9 trillion reasons that crypto
| markets, and other financials, are going bonkers.
| lfxyz wrote:
| If SPY dropped 40% I'd suggest that it's gone on sale.
| pradn wrote:
| It doesn't seem like anyone believes cryptos are supposed to
| be currencies any more. All the talk around them is around
| them being a new, exciting, and potentially very lucrative
| investment class. If you go to Coinbase's front page, you see
| that you can buy and sell them, like you can with Robinhood.
| It's not trying to be a PayPal. The currency-ness does serve
| an important purpose. It helps bring in investment for the
| nebulous future where using them as currencies will have
| advantages.
| divs1210 wrote:
| I have used crypto (LTC, BUSD, XLM, XMR) to pay internet
| strangers so many times I've lost count. Looks like you
| just haven't tried it yet.
| mousepilot wrote:
| yeah Ima have to update your file buddy
| nroets wrote:
| It's a fad[1]. It won't last.
|
| [1]: https://Bitcoin.IsNot.Money
| aparsons wrote:
| Not sure why you're downvoted
| cm2187 wrote:
| Perhaps he doesn't consume the same sort of products than
| you!
| vmception wrote:
| USDC, DAI, USDT are all used more than ever, orders of
| magnitude more
|
| People dont have to talk about them as currencies because
| they just work
|
| No different than cellular reception in an underground
| subway, you dont have to think about it anymore
| kllrnohj wrote:
| > People dont have to talk about them as currencies
| because they just work
|
| Well that's not really true, it was headline news when
| Tesla started accepting crypto payments (and then
| headline news when they stopped).
|
| Stores accepting crypto still makes the news, it's not
| common and not something that "just works." But what you
| can do is at least semi-reliably convert between crypto &
| things that stores do accept using the various
| conversions you listed. But you still do have to convert
| from crypto to a traditional currency to use it as a
| currency.
| vmception wrote:
| There have been debit cards loaded with crypto for almost
| a decade now
|
| Your fictional higher standard of currency would say that
| the euro is not a currency because my transferwise debit
| card converts it to dollars when I spend in the US
|
| The peer to peer payment mechanism works and all crypto
| assets inherit that
| [deleted]
| cableshaft wrote:
| Yep, used USDC just last night to buy a new computer,
| just before this big crash happened, thankfully (since I
| converted some crypto to do it). Actually using that for
| its intended purpose.
| zaphar wrote:
| That's like saying I payed for my new house with stocks.
| Which is not the same thing as stocks being a currency.
| What actually happened is that you liquidated some crypto
| and used the proceeds to buy your new computer. You even
| say that directly in your parenthetical. (since I
| converted some crypto to do it)
| cableshaft wrote:
| I converted from one form of cryptocurrency to another
| cryptocurrency (USDC is USDCoin, a Stablecoin).
|
| I was paying on NewEgg using their BitPay method, which
| supports payment with only the following
| cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum,
| Wrapped Bitcoin, Dogecoin, and 5 stablecoins (GUSD, USDC,
| PAX, DAI, and BUSD).
|
| I have Bitcoin and could have paid directly with that,
| but I wanted to keep holding it and pay with Litecoin. So
| I converted that to USDC (for free, but I will have to
| pay taxes on the gains next year since every conversion
| or purchase is a taxable event in crypto in the US), and
| then sent that to Bitpay.
|
| So yes, I still maintain I used USDC for its intended
| purpose.
|
| I did, however, do what you said and liquidated some
| Ethereum to fiat several years ago (right at the previous
| bull run's top, by happenstance, got super lucky then) to
| pay for the downpayment on my home. I would have paid
| with it directly if I could but there was just no
| mechanism for it, at least not back then.
| vmception wrote:
| No didn't you read all the other comments, that didn't
| happen because nobody uses them as currencies, or it
| didnt happen because either the payment processor,
| merchant, or their daycare provider eventually converted
| to the state's local fiat currency so your experience is
| invalid /s
| marcusverus wrote:
| > USDC, DAI, USDT are all used more than ever, orders of
| magnitude more
|
| Even these cryptos aren't being used as currencies per
| se. They're popular, sure, but they're popular because A)
| they allow traders to move funds between crypto
| 'investments' without converting to fiat (i.e. without
| triggering cap gains), and B) They allow investors to
| "avoid market volatility" (but in a manner far riskier
| than fiat, given that even DAI or USDT could go to zero
| tomorrow).
|
| ...but they're still not currencies. Nobody is buying a
| hamburger with DAI.
| nostrademons wrote:
| If the trader is being honest, converting
| cryptocurrencies to stablecoins is a taxable event
| triggering capital gains. The IRS considers any exchange
| of one cryptocurrency for another to be a sale of a
| capital asset and purchase of another.
| erosenbe0 wrote:
| Yes. They are assets and you must pay tax every time you
| swap them or even use them to make a purchase. It's like
| making a purchase with Apple stock or swapping Apple
| stock for Google stock. Pay tax.
| tastyfreeze wrote:
| Like-kind exchange doesn't apply to cryptocurrencies.
| Exchanging BTC for a stablecoin does trigger capital
| gains as does selling a stablecoin for fiat. In the BTC-
| USDC scenario it is a little trickier to calculate the
| basis in USD but capital gains taxes still apply.
| vmception wrote:
| It isnt tricker at all. Very simple math.
| tastyfreeze wrote:
| Yes, if you record the USD value of both sides at the
| time of trade. If you only record the execution price of
| your BTC/USDT trade you will need to later find the price
| of BTC/USD and USDT/USD at the time of execution.
|
| Trickier in the sense that it requires more attention
| than simply recording the execution price and fees of a
| BTC/USD trade.
| nikanj wrote:
| I'd be very surprised if your tax agency agrees that
| moving via USDT does not trigger capital gains.
|
| Then again, I'm operating under the impression most
| people cheat on their taxes w.r.t cryptos
| koonsolo wrote:
| US only. It seems even Puerto Rico doesn't ask capital
| gains on crypto.
| waych wrote:
| IRS considers cryptocurrency as property, and exchanging
| one for another is a taxable event.
|
| See "Q16. Will I recognize a gain or loss if I exchange
| my virtual currency for other property?" [1]:
| A16. Yes. If you exchange virtual currency held as a
| capital asset for other property, including for goods or
| for another virtual currency, you will recognize a
| capital gain or loss. For more information on capital
| gains and capital losses, see Publication 544, Sales and
| Other Dispositions of Assets.
|
| [1]: https://www.irs.gov/individuals/international-
| taxpayers/freq...
| vmception wrote:
| I've paid many people with stablecoins, even make in-kind
| investments (not like-kind)
|
| You dont have a way of quantify if people are tax cheats
| (as what you described does not prevent capital gains
| liability), stores of value, or buying hamburgers
| Animats wrote:
| USDT is a concern, because it probably can't survive a
| big net outflow. Right now, dumping Bitcoin and buying,
| say, yuan is something a hedge fund might do. Or may have
| been doing over the last few weeks. What happens when
| some trader cashes out a few billion dollars in USDT to
| buy yuan? Coinbase has to wire transfer out that cash.
| matheusmoreira wrote:
| > It's not trying to be a PayPal.
|
| Binance already has a credit card service that lets people
| use their cryptocurrency holdings to buy anything.
| i386 wrote:
| Binance has to be the most cringeworthy term of 2021
| arthurcolle wrote:
| Binance is an exchange
| matheusmoreira wrote:
| What? Binance isn't a term, it's a cryptocurrency
| exchange.
| remolacha wrote:
| Not all crypto assets are crypto currencies. Many DeFi
| tokens (ex. UNI, SUSHI, AAVE) govern projects with real
| cash flows and are poised to become more like equities on
| the blockchain
| lurkerasdfh8 wrote:
| > real cash flows
|
| you keep using that word...
| ilaksh wrote:
| Well.. yes and no. A lot of people unfortunately never
| really understood the real concept of a cryptocurrency as a
| payment mechanism and instead believe they are for getting
| rich quick.
|
| That's the business Coinbase is in.
|
| Now, if you are using cryptocurrency for payments you don't
| need Coinbase.
|
| PayPal, since you mention it, knows that cryptocurrency is
| going to make it's business model obsolete as soon as it is
| widely deployed. That is why they pretend to allow you to
| keep and use Bitcoin on their platform.
| asjdflakjsdf wrote:
| Doge is picking up steam in that regard. It has so many
| problems though
| 908087 wrote:
| Yes. The core problem being that it's a combination of an
| MLM and pump and dump scheme built on top of a joke.
| earnesti wrote:
| I use Bitcoin as payment for products and services all the
| time. I dont talk about it though, why would I? It is
| boring. I dont talk about how I use paypal or bank accounts
| to pay for stuff either.
|
| There are certain segments eg. travel where bitcoin/crypto
| has worked well for years.
|
| When I talk with friends about BTC, it is about price
| because that is the interesting part. The fact that I used
| it to pay for something is just not interesting.
| sashimi-houdini wrote:
| It used to be that enthusiasts could claim "currency of the
| future", but a lot of time has passed and that future
| simply hasn't come. In fact, Bitcoin's top utility is
| already far behind us.
|
| Dropping "currency of the future" does come with the
| challenge of coming up with a new supposed benefit, which
| is where "store of value" comes in. Problem is: there is no
| inherent value in bitcoin.
| gverrilla wrote:
| >a lot of time
|
| not really
| stjohnswarts wrote:
| Yeah it's a value store. The only way it's not is if a
| nation state creates it and ties it to their currency. It's
| going to continue to go up and down forever.
| shrimpx wrote:
| The comparison to SPY is unfair since it's so diversified. A
| comparison to a correlated sector of stocks -- like EV
| stocks, which can dip 10-25% in a week in unison -- would be
| more fair.
| lhorie wrote:
| > If $SPY dropped 40% we'd all call it a crash
|
| SPY is highly diversified though. The crypto market is known
| to move in tandem w/ BTC swings.
|
| A 40% swing may seem large compared to SPY's usual 1-2%
| swings, but consider that other crypto coins _frequently_
| swing by 10-50%. For example, MATIC was up some 47% just
| yesterday. The reality is that crypto is highly volatile; it
| doesn 't make sense to compare its volatility to ETFs or
| REITs or other conservative vehicles.
|
| Some analysts were even expecting a correction, saying that a
| BTC drop to 30k would still be within expectations...
| serial_dev wrote:
| > If $SPY dropped 40% we'd all call it a crash. This isn't
| that different.
|
| Hmm, yes it is different. Cryptocurrencies are very-very
| volatile. In the last weeks, it wasn't uncommon to have 25%
| change in either direction within 24 hours for most top
| currencies. Stocks are less volatile.
|
| With that said, the current nose-dive isn't over yet, so I'm
| not saying there won't be a crash, I'm just saying that
| comparing stocks and cryptos sounds to me like comparing
| apples to oranges.
| calimac wrote:
| Perspective: BTC and crypto in general retraced to January
| 2021 levels. Since the article was printed we have recovered
| 25% of that correction.
|
| The perspective is volatility.
| afterburner wrote:
| Regular stock markets have circuit breakers in place and
| don't even operate 24/7. There are plenty of things that slow
| down price movement there. If they didn't have circuit
| breakers and did operate 24/7, I'd imagine we would have seen
| far greater record price movements over history, maybe even
| as bad as the absolute worst crypto swings.
| JoeAltmaier wrote:
| Is this a condemnation of crypto markets then? Because you
| put most of that stuff in place, you probably lose the
| 'value' of crypto (anonymity, lack of central governance
| etc).
| quickthrowman wrote:
| Index futures trade 23/5, close enough for me to 24/7
| tadzik_ wrote:
| > If $SPY dropped 40% we'd all call it a crash. This isn't
| that different
|
| If $SPY was 40% up since last month, would that be normal?
| ETH is still currently higher than its value from April 19th.
|
| Cryptocurrency market is extremely volatile. This isn't that
| far from normal.
| paulpauper wrote:
| In terms of risk-adjusted returns, Bitcoin worse than index
| funds. You can get smoother returns using 3x ETFs like TQQQ
| and TECL compared to bitcoin and about the same absolute
| returns. Nasdaq 100 has much better sharpe ratio compared
| to bitcoin. Same for FAAMG portfolio
| kwere wrote:
| leveraged etf arent an investiment veihicle
| DennisP wrote:
| When I google "Bitcoin Sharpe ratio," every article that
| comes up shows its ratio to be quite high.
|
| Here's a chart comparing various assets' Sharpe ratios
| over time, always for the previous four years. Bitcoin's
| is at top of the chart, staying over 2 and sometimes over
| 3: http://charts.woobull.com/bitcoin-risk-adjusted-
| return/
|
| The lowest I've found is in this article, calculating
| over the past five years a Sharpe ratio of 1.6:
| https://www.forbes.com/sites/baldwin/2021/03/02/how-
| bitcoin-...
|
| According to this, from 2007 to 2021 the Sharpe ratio of
| the Nasdaq 100 was 0.97:
| https://backtest.curvo.eu/portfolio/nasdaq-100--
| NoIgcghgzgJh...
|
| And this gives a FAANG portfolio Sharpe ratio of 1.25:
| https://medium.datadriveninvestor.com/3-ways-to-evaluate-
| the...
|
| In terms of absolute returns, TQQQ has done well but not
| so well as Bitcoin. Since 2016 TQQQ has done 12X,
| compared to Bitcoin's 85X. Since April 2013 (as far back
| as Coingecko goes) TQQQ has gone up 37X, compared to a
| Bitcoin's 272X.
|
| As a bonus, Bitcoin has a long-term correlation with the
| S&P500 of only 0.01, according to the Forbes article
| linked above.
| cableshaft wrote:
| If you're holding as long as most people do index funds
| (i.e. 5-10+ years), historically you would have been way
| better off putting that money into bitcoin. Even taking
| this crash into account, I'm way up on crypto compared to
| my 401k. Not going to stop putting money into my 401k
| though, for the sake of diversification.
| paulpauper wrote:
| The bulk of btc gains were from 2010-2013. The cagr of
| BTC from early 2018 onwards is not that great.
| ric2b wrote:
| Up 20x since 2018 is not that great?
| SavantIdiot wrote:
| SPY is up 50% since 2019 (pre covid crash). As someone
| partially invested in index ETFs, this worries me. Index
| funds aren't supposed to be nitro, they are supposed to be
| slow and plodding, and 10% annual is supposed to be huge. I
| think major indices should be nice, slow, inertial gains
| from ~6-7% annual, tops. Why? When at any point as an
| engineer or a scientist have you observed large exponential
| growth to be sustainable in any context???
|
| EDIT: Ooops It is ~50% (258 in Jan 2019 * 1.50 = 380)
| arcticbull wrote:
| There are nitro versions of all the index funds but you
| usually have to buy them separately, and they come with
| their own fat stack of disclosures haha.
|
| For SPY see UPRO, for QQQ see TQQQ.
| hexedpackets wrote:
| 10% annual is not huge at all, it would actually be on
| the lower end of a year that had positive gains. 10%
| average is what you should expect for the SP500 - and
| that tends to be driven by lumps, years with returns
| >20%.
|
| 50% is high from a historical perspective but there are
| plausible explanations for why it's not absurd.
| mahogany wrote:
| I remember 7% being the historic average that all the
| classic investing books said. I think it's after
| adjusting for inflation and dividends. How are you
| calculating 10%?
| waheoo wrote:
| 7% is adjusted for inflation. 10% is the nominal average.
| An up year is commonly 10-15% with down years being more
| severe but less frequent.
| SuoDuanDao wrote:
| By my understanding, 7% is average for any given year.
| Average for a year with positive gains would have to be
| quite a bit more to balance out even the occasional
| negative year.
| JMTQp8lwXL wrote:
| Considering how much the money supply was increased, and
| the pending inflationary effects, the 50% up creates a
| "looks good on paper" sentiment the Fed is eyeing for to
| keep the economy moving: people spending money, taking on
| debt, etc. But the real increase (adjusted for inflation)
| will be less impressive. The on-paper increases pop
| sentiments, though, which is exactly what's needed in a
| potential economic crisis spawned by a pandemic.
| cinntaile wrote:
| The stock market doesn't behave in an average way on a
| yearly basis. Some years it goes up 40-50% and some years
| it goes down 40-50%.
| http://amarginofsafety.com/2015/01/19/the-market-return-
| hist...
| sigstoat wrote:
| > When at any point as an engineer or a scientist have
| you observed large exponential growth to be sustainable
| in any context???
|
| what on _earth_ do you think 6-7% a year is? that's
| exponential growth.
|
| > SPY is up 50% since 2019 (pre covid crash). [...] Index
| funds aren't supposed to be nitro, they are supposed to
| be slow and plodding, and 10% annual is supposed to be
| huge. I think major indices should be nice, slow,
| inertial gains from ~6-7% annual, tops.
|
| you've confused long-term averages with short term
| behavior.
|
| the market gets its 6-10% annual by going up a lot when
| it does, to make up for the years where it goes down, or
| just moves sideways.
| SavantIdiot wrote:
| I think you assume I don't know what I'm talking about
| because you are intellectually insecure and didn't bother
| to read my post, as demonstrated by your man-splaining.
| Rock on, bruh.
| Grustaf wrote:
| > > When at any point as an engineer or a scientist have
| you observed large exponential growth to be sustainable
| in any context???
|
| > what on _earth_ do you think 6-7% a year is? that's
| exponential growth.
|
| It's not "large" exponential growth, it's inline with the
| revenue growth of many large companies, so it's
| sustainable for quite some time.
| boringg wrote:
| Human population growths, mosquito populations growths.
| Sustainable for a certain amount of time. You need to
| time bound your question. Nothing is sustainability on an
| endless time scales - the stars burn out and collapse on
| themselves.
| allendoerfer wrote:
| The universe is pretty big. It also has 3 useful
| dimensions. Earth has basically only two and one very
| narrow one.
|
| I think we can keep going for quite some time.
| ncallaway wrote:
| These last two comments and replies really have a
| _strong_ The Last Question vibe.
|
| https://templatetraining.princeton.edu/sites/training/fil
| es/...
|
| Really great short story
| SilasX wrote:
| >SPY is up 100% since 2019 (pre covid crash).
|
| Wait, what? I don't see SPY below 250 for all of 2019. A
| 100% gain would be 500, but it's 406 now. (Its 2020 nadir
| was ~228, but it's still not up 100% from that.)
|
| https://www.google.com/finance/quote/SPY:NYSEARCA?window=
| 5Y
| SavantIdiot wrote:
| Ah sh^t, you are right: I was looking at $258 and said
| 258 * 1.5 = ~400, and that is ~50%... but not 100%.
| Edited! Thanks!
| taylodl wrote:
| > _Cryptocurrency market is extremely volatile. This isn 't
| that far from normal._
|
| If that's true then cryptocurrency is pretty much worthless
| to use as currency. A desired property of currency is to
| not have wild fluctuations in value on a weekly or monthly
| bases.
| Communitivity wrote:
| Currency is a broad term, like service. Like many broad
| terms, it is often misused and that leads to the broader
| meaning. Currency can be used for different things. In
| one meaning, currency is a tradable and stable store of
| value. This used to mean it was backed by some recognized
| valuable commodity, such as gold, but that is no longer
| the case. In another meaning, currency is a thing that is
| traded and has an expectation of growing value over time.
| The more proper term for that is an investment property.
| Bitcoin is not (yet) the first type of currency, it is
| the second type.
|
| It's an investment. Detractors cite electricity usage,
| but overall it uses much less electricity than the
| traditional banking system. Also, the value of the second
| type of currency is only the value that people believe it
| has in their transactions, which is no different than the
| US Dollar. Since we went off the gold standard, the US
| dollar only has the value we believe it has. Part of that
| belief is that the US Dollar is rightly a bit more stable
| because it is artificially manipulated by the FED to
| control inflation.
| cool_dude85 wrote:
| >In another meaning, currency is a thing that is traded
| and has an expectation of growing value over time.
|
| What? A painting is currency? A house is currency? No.
| IMTDb wrote:
| > Detractors cite electricity usage, but overall it uses
| much less electricity than the traditional banking system
|
| The traditional banking handles thousands of transfer per
| seconds, and many many _many_ more assets and assets
| types than bitcoin. All things that bitcoin is not able -
| nor designed to - handle.
|
| It's like saying that F1 engine are consuming less gas
| than trucks. It's only valid if you only look at it from
| a very specific angle. Sure, in total trucks are
| consuming more than F1, but both in consumption per km
| _and_ in versatility, trucks win. F1 engines are not
| ready - nor designed to - be a suitable replacement for
| trucks engines.
|
| Bitcoin and cryptos consume order of magnitude more
| electricity than the traditional banking system if you
| put them in equal terms. It's only logical since one is
| supposed to work in zero-trust environments while the
| other doesn't.
| NovemberWhiskey wrote:
| > _Currency is a broad term, like service. Like many
| broad terms, it is often misused and that leads to the
| broader meaning. Currency can be used for different
| things._
|
| No? A currency is a medium of exchange for goods and
| services.
|
| The secondary meaning that you're attempting to allocate
| to "currency" is already amply described by the word
| "asset".
|
| The two are not the same, and assets are not meaningfully
| regarded as proto-currencies in the way you suggest.
| koonsolo wrote:
| Crypto has a few stable coins
| JoeAltmaier wrote:
| Exactly. Its not so much a currency as a tulip bulb, or a
| ponzi scheme, or something new that has the worst
| features of all those.
| taylodl wrote:
| I don't think of it as currency but as an asset, like
| gold. I refer to it as digital gold. Assets are not ideal
| for currency because overall they inflate in value
| (deflation), which discourages spend. Currency is
| _designed_ to deflate in value (inflation), albeit at a
| controlled rate, to encourage spend. That 's why you
| don't want to keep an excess of money in the bank - you
| want to move that money which deflates in value to assets
| which inflate in value - you want to buy gold, stocks,
| real estate, digital gold (cryptocurrency) and stuff like
| that.
|
| The confusion of treating an asset such as bitcoin as
| currency is it's _fluidity_ - which is just a measure of
| how easy it is to convert currency into an asset and an
| asset into currency. Stocks, for example, have an
| extremely high fluidity, which also contributes somewhat
| to their variability. Real estate on the other hand has a
| very low fluidity (historically speaking anyway, today 's
| market notwithstanding). No one thinks of purchasing
| goods and services with stocks, nor should you think of
| purchasing goods and services with bitcoin.
|
| Viewed in that light bitcoin is actually something that's
| quite familiar: gold. It's digital gold. Now is it good
| to invest in such an asset? That's another question we
| can tackle on another day!
| MomoXenosaga wrote:
| As a Dutch person I can attest tulips have an actual
| purpose. And worth- the flower business is worth billions
| every year.
| broighbrobroigh wrote:
| The tulip bulb mania story is an incredibly persistent
| but inaccurate myth.
| hedora wrote:
| The "debunking" of Tulip Mania has, itself, been
| thoroughly debunked:
|
| https://fee.org/articles/tulip-mania-not-a-myth/
|
| Plenty of financial records still exist from back then.
| Tulip bulb mania actually happened.
| Morvan wrote:
| That article doesn't debunk anything lol Goldgar's points
| are still just as valid.
| cromka wrote:
| > Cryptocurrency market is extremely volatile. This isn't
| that far from normal.
|
| I think you inadvertently confirm OPs point.
| Cryptocurrencies with their volatility cannot replace
| regular currencies.
| inter_netuser wrote:
| 650B is a small market cap for a global currency.
|
| Gold is 12T. Once Bitcoin gets to 10T, volatility should
| drop.
| scsilver wrote:
| Thats the thing, they arent currencies, they are assets
| that can act like currencies when convenient.
| not_jd_salinger wrote:
| > hey arent currencies, they are assets
|
| The irony here of course is that the only way that Crypto
| currencies would meet any standard definition of an asset
| would be if they were functioning currencies.
|
| Going with Investopedia's straightforward definition "An
| asset is a resource with economic value", how is a non-
| currency crypto coin in any way a resource or possess
| economic value?
| scsilver wrote:
| If someone is willing to pay me interest to use my
| belongings to generate loans, then those belongings have
| a value. If you think that banking has value, then banks
| who use the blockchain ecosystem to provide banking
| services are generating value, correct? The question I
| would then ask, on the spectrum of risk, value generated,
| and trust, do these blockchain based financial
| institutions offer a complementary or competing product
| vs traditional banking. As of thus year, I would say
| yeah. I am close to converting a chunk of savings to
| stable coin abd putting it with a insurance backed
| blockchain financial institution, and am looking to ear a
| much higher apy than a traditional bank.
| diabeticApe wrote:
| Simple. Gold is an asset that is not used as currency but
| provides the holder with certain desired benefits and the
| asset can be liquidated if needed. Crypto is similar in
| that it prodives a financial vehicle that posesses
| certain properties. Im not saying they should all be
| thought of as digital gold but that lile gold, they
| provide value not only in thier price tag but in some
| inherent property that provides value to the user (this
| property varies wildly from crypto to crypto and is what
| makes each project distinct and unique.
| sashimi-houdini wrote:
| Let's shift this one level up:
|
| Simple. Bitcoin is an asset that is not used as currency
| but provides the holder with certain desired benefits and
| the asset can be liquidated if needed. Skepticoin is
| similar in that it provides a financial vehicle that
| possesses certain properties. I'm not saying it should be
| thought of as digital bitcoin but that it's like bitcoin,
| it provides value not only in its price tag but in some
| inherent property that provides value to the user.
| thecrash wrote:
| Presumably your complaint is that cryptocurrencies don't
| have "economic value", but what theory of value are you
| using to decide that?
|
| Exchange theory of value says that a commodity has two
| values: a use value (what it can do for you outside of
| the market) and an exchange value (what others will give
| you for it in the market).
|
| I think it'd be correct to say that cryptocurrency has no
| use value, but it obviously does have economic value. And
| it's far from the only asset with these characteristics.
| intotheabyss wrote:
| Cryptocurrency is a misnomer. Most cryptos aren't trying
| to be currencies in the traditional sense. For example,
| RAI is a stablecoin on Ethereum that's not pegged to any
| fiat currencies. You can think of RAI as a stable form of
| ETH.
| echelon wrote:
| What does that even mean?
| intotheabyss wrote:
| It means that ETH which is a decentralized cryptocurrency
| can be used as a collateral for an algorithmic stablecoin
| called RAI that adjusts its price based on the price of
| ETH from a Uniswap price feed and a PID controller and
| arbitrage. To mint RAI you need to deposit ETH. The goal
| of RAI is to create a stablecoin which dampens the price
| movements of ETH over long periods of time.
| jakeva wrote:
| The fact the community felt the need to invent a
| "stablecoin" isn't terribly reassuring
| diabeticApe wrote:
| Why not? Its a new asset, what is wrong with improvement?
| I mean using that logic does it also disturb you that
| somebody invented the seat belt? Would you prefer they
| didnt invent seat belts? Would that have been more
| reassuring of the relative safety of the vehicle if they
| never admitted that you could die in a car crash? The
| point of stable coins is really only apparent if you're
| trading crypto just like the importance of seat belts
| might make more sense to somebody that drives daily.
| miracle2k wrote:
| On the contrary, decentralized stablecoins are some of
| the most exciting things in the space. The MakerDAO
| system, which issues the DAI stablecoin, is earning 2.5
| million every year, distributed to token holders. It has
| survived multiple market crashes. Algorithmic stablecoins
| attempt the same thing w/o collateral, and seem to have
| done well in this drawdown as well.
| bhk wrote:
| Are you talking about the RAI that traded at $0.0186 a
| few days ago and that you can now sell for $0.00022 ?
| That's a "stablecoin"?
|
| https://atomars.com/trading/RAIUSDT
| intotheabyss wrote:
| No, that's not the RAI I'm talking about. This is
| https://www.coingecko.com/en/coins/rai
| Mc_Big_G wrote:
| This makes no sense. 1 BTC still equals 1 BTC.
| randomsearch wrote:
| Currencies are used to purchase things. If the purchasing
| power of 1 BTC changes dramatically, it matters.
| Mc_Big_G wrote:
| You're assuming I care how much something costs in
| dollars.
| imtringued wrote:
| If you are a US citizen you will have to pay taxes in
| dollars.
| ric2b wrote:
| Dollars are one of the easiest things to buy with
| Bitcoin, so how is that a problem?
|
| I also need water to live my life, but that doesn't make
| me feel the need to price everything in gallons of water.
| cableshaft wrote:
| Yeah, because websites won't adjust the price in crypto
| for goods and services if its price relative to dollars
| drops.
|
| I'm long on crypto myself, but come on. This crash still
| affects the prices of goods and services, unless all
| you're buying is other crypto and nothing else. We are
| nowhere near the point where shops don't assume they have
| to check the bitcoin/usd cost every few minutes to adjust
| their pricing.
| optimuspaul wrote:
| Do you care how many chickens or how many beers you can
| get with BTC?
| klyrs wrote:
| This makes me wonder how you pay for basic living
| expenses like rent/mortgage, food, clothes, etc
| Grustaf wrote:
| Unless you're a Buddhist monk living on donated food, you
| have to.
| garmaine wrote:
| If you 40% crash is back to where you were a week or a month
| ago, it is the rise not the crash that was anomalous.
| elif wrote:
| Wrong.. ether is up 30% on the month.
|
| They are only both massively down if you cherry-pick the
| absolute peak as your point of comparison.
| cm2187 wrote:
| As far as I can tell, the Fed is still pumping cash, so I agree
| that it's unlikely we see a large stock selloff.
|
| https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
| paulpan wrote:
| Conspiracy theories aside, one thing to keep in mind is that
| cryptocurrency market is largely unregulated. This means that
| it can be and does get manipulated by the major players (aka
| "whales").
|
| The likes of Goldman Sachs, hedge funds, etc. are still able to
| manipulate the fiat and equity markets despite all the
| regulation - just imagine what happens on the unregulated
| cryptocurrency end. An example is that Coinbase was fined a
| couple of months ago for wash trading:
| https://www.cftc.gov/PressRoom/PressReleases/8369-21
|
| It looks like prices for Bitcoin and Ethereum have rebounded
| from the low this morning by 20%+. So this was perhaps a flash
| crash, though the cryptocurrency market is always highly
| volatile.
| stjohnswarts wrote:
| You're not really going out on a limb here. It has happened
| multiple times before. The numbers are bigger but the pattern
| is the same.
| jasonlaramburu wrote:
| I wonder what % of our Economic stimulus was used to buy
| crypto, and how much of that money has simply disappeared over
| the past 24 hours.
| fsagx wrote:
| Does it matter? The economic stimulus money "simply appeared"
| when checks were printed or payments were direct deposited.
| Grustaf wrote:
| No, if it's spent buying stuff in the US it stimulates the
| economy.
| jasonlaramburu wrote:
| Yes, we will struggle with the inflation and currency
| devaluation caused by the stimulus for years to come. If
| that money actually made its way into the US economy it
| might not matter, but some nonzero percentage was used to
| buy crypto at a peak, the value of which is now gone.
| Scarblac wrote:
| But the $ money is still there, it went to whoever had
| the bitcoin before it was bought.
| distances wrote:
| It wouldn't disappear, money is just changing hands. Bitcoin
| doesn't add or destroy any value, it's just a speculative way
| of zero-sum trade. When you buy bitcoin, someone else gets
| your money.
| jasonlaramburu wrote:
| Except it's not zero sum. It's turning out to be one of the
| most leveraged assets out there. If I borrow money (or
| print tether) to buy BTC at $50k and then the price drops
| to $35k that money is gone.
| inter_netuser wrote:
| tether as absolved of all charges, and is under
| continuous monitoring and audit by NY AG - who would love
| to jail to advance their careers. Imagine how impressive
| "jailed 100 BILLION dollar fraudsters" sounds on the
| resume.
|
| Nope, not a fraud.
|
| Print, lol. They are just a prime money market fund,
| setup exactly the same way the funds your parents kept in
| their 401k.
|
| Surprise, commercial banks that lend to you, like
| mortgage or car lease are actually creating money out of
| thin air. Unlike tether which is fully backed.
| jasonlaramburu wrote:
| >Surprise, commercial banks that lend to you, like
| mortgage or car lease are actually creating money out of
| thin air. Unlike tether which is fully backed.
|
| In the US commercial banks are required to maintain a
| certain % of cash reserves relative to all deposits. They
| are also FDIC insured. Tether is neither insured nor
| required to maintain any reserves. Their recent filings
| show that less than 3% of tethers are actually backed by
| cash, and the bulk of tether is backed by anonymous
| 'commercial paper,' aka IOUs. Tether also declined to
| disclose the credit rating of this commercial paper, or
| who the counter-parties are.
|
| Once the BTC world stops trying to hide, obfuscate or
| otherwise cover for bad actors it will be possible to
| create meaningful financial innovations that scale.
| inter_netuser wrote:
| It's backed better than your bank. Currently the required
| cash reserve by the Fed is __zero percent__.
|
| Yes, ZERO. Please check with your own eyes: https://www.f
| ederalreserve.gov/monetarypolicy/reservereq.htm
|
| Please observe that 3% is actually much higher than 0%.
|
| The rest of bank's book is usually assorted IOUs as well:
| commercial paper (aka bonds issued by companies) and
| mortgages. All of these assets that the Fed buys whenever
| any bank is in trouble, you can look this up in any news
| source.
|
| Tether is simply just another offshore bank.
|
| None of offshore USD deposits are insured by the FDIC.
| Yet, offshore banks hold trillions of dollars. They also
| have higher than zero reserves, just like Tether does.
|
| There is nothing going on, just clickbaity nonsense media
| churns out for ads.
| vadansky wrote:
| In this case wouldn't it be like the stimulus went to
| Chinese mining farms (if that was the case)?
| jasonlaramburu wrote:
| When the price crashes money disappears.
| imtringued wrote:
| >When the price crashes money disappears.
|
| Thought experiment. I buy 1 BTC and pay you $50k. The
| current market price is $35k. Where did the $15k go?
| jakeva wrote:
| That depends, doesn't it? Where did I get that BTC? Did I
| mine it in 2010, or did I buy it last month for $64k?
| imtringued wrote:
| Maybe I wasn't clear enough.
|
| What I really mean is that we sit down in the same room.
| You bought the BTC for $1 in 2013. Today I give you $50k
| in $100 dollar bills, you send me your 1 Bitcoin. I am
| deliberately ignoring the current exchange rate to prove
| a point. What happened is that I overpaid by $15k, I
| immediately lost $15k on this transaction. You got a
| bargain and gained $15k on top of the $35k you would have
| gotten from simply holding onto your Bitcoin in this
| transaction.
|
| jasonlaramburu says "When the price crashes money
| disappears." but there are still 500 $100 dollar bills in
| the room. The price "crashed" by $15k the moment I
| purchased the BTC but the money I gave you didn't
| disappear, it just changed hands in a very unfair manner.
| jasonlaramburu wrote:
| I suspect this thought experiment is overly simplistic to
| the point of not being useful. Person A has $50k worth of
| BTC. Person B has $50k worth of cash (some % of which
| they got from the stimulus). So now 'the room' has $100k
| in assets. A and B exchange their assets. A+B still
| equals $100k. $BTC drops by $15k. A+B=$85k. There is now
| $85k in assets in the room. $15k was lost.
| rland wrote:
| The room includes all buyers and sellers.
| jasonlaramburu wrote:
| >The room includes all buyers and sellers.
|
| You can expand the model to include all BTC buyers and
| sellers. It doesn't change the fact that US currency was
| devalued to generate an economic stimulus. A meaningful %
| of that stimulus was spent into 'the room.' The value of
| certain assets in the room was massively overstated and
| crashed. The stimulus money cannot be recovered, but
| Americans must live with the inflation and other impacts
| for many years.
| jasonlaramburu wrote:
| Aaand it's gone (the $15k). My point is that the Fed
| effectively devalued the world's reserve currency in
| order to stimulate the American economy. But some,
| perhaps significant, percentage of people instead blew
| that stimulus on a risky, volatile investment that does
| nothing to boost our productivity. And now the gains have
| been erased.
| imtringued wrote:
| By "destroying" are you saying that the seller is
| stockpiling the USD as if he is Scrooge McDuck? If so,
| what motivates the seller to hold onto USD despite 4%
| inflation?
| pilingual wrote:
| Thank you for the disinterested take! It's refreshing to see
| this as a top comment when so often I see "Crypto makes me
| sick" which offers zero information and doesn't belong on HN.
|
| A few points to the repetitive comments I keep seeing:
|
| 1. Bitcoin is not a Ponzi scheme. Various cryptocurrencies
| operate in such a manner, but Bitcoin and Ethereum have value
| propositions: settlement and programmable money respectively.
| Crucially, these projects are _still in a growth phase_. More
| projects are being built on Bitcoin (e.g. Avanti Bank) and
| Ethereum (e.g. Uniswap) and more institutions like Tesla,
| MassMutual, and Square have a position in it. Banking
| institutions are working on supporting Bitcoin.
|
| 2. Bitcoin pricing is on a log scale. Dropping to $36k from
| $50k is not a concern on this scale. If it drops below $10k,
| there might be some nervousness but Bitcoin's fluctuations have
| almost never deviated significantly in its 11 year history.
|
| 3. Bitcoin is _not_ a currency. How do we know? You can 't
| price the components of a Big Mac in Bitcoin. Again, it is in a
| growth phase which is what people like Taleb don't understand.
| When you can price a Big Mac in Bitcoin then maybe it is in
| some form a currency (not directly, but perhaps indirectly
| using Lightning or another L2).
|
| 4. A lot of smart people are invested in crypto: a16z, USV,
| Paradigm. These aren't greedy VCs -- it's their job to make
| returns for institutional investors who are often pension funds
| or charitable endowments, so if it a "Ponzi" then they are
| fools. I do not understand how every time cryptocurrency comes
| up armchair HN users come along and comment when they, very
| apparently, have almost no understanding of the topic. It's
| like coming in and starting to discuss how L1 cache works when
| you aren't a computer engineer or don't have an active day-to-
| day interest in the matter. Why waste people's time with your
| vacuous comments? It's like some kind of therapy. "Crypto
| sucks!" Reinforcing feel-good Circle-upvote is all it is.
| Ologn wrote:
| > A lot of smart people are invested in crypto: a16z, USV,
| Paradigm. These aren't greedy VCs -- it's their job to make
| returns for institutional investors who are often pension
| funds or charitable endowments, so if it a "Ponzi" then they
| are fools.
|
| (I wanted to say back in 1999) - a lot of smart people are
| invested in dot-com startups: Kleiner Perkins, Sequoia,
| Hummer Winblad. These aren't greedy VCs -- it's their job to
| make returns for institutional investors who are often
| pension funds or charitable endowments, so if it a "Ponzi"
| then they are fools. I'm sure Hummer Winblad's investment in
| Pets.com will work out great.
| okareaman wrote:
| The vibe is the same: I worked at dotcom pre-crash and the
| owner used to give noob internet investors (like the "Small
| Plane Pilots Association" or some such) a tour of the
| company and say something like "Look at all those people
| creating value on the internet! The internet is changing
| the world"
| NovemberWhiskey wrote:
| > _Bitcoin pricing is on a log scale. Dropping to $36k from
| $50k is not a concern on this scale._
|
| What is that even supposed to mean?
| imtringued wrote:
| It means people don't care if it is a store of value
| because they don't care if their savings are locked up
| until the next bubble, they can afford to wait because they
| have savings somewhere else.
| quickthrowman wrote:
| The poster you replied to is confused, I think they're
| saying they chart Bitcoin with a logarithmic scale, which
| as we both know has _nothing_ to do with how Bitcoin is
| priced, only how the price action is displayed on a chart.
| __jem wrote:
| This has to be one of the funniest financial things I've
| heard. "Uhhh, you know when your account dropped 50%?
| Actually that is only like 10% if you pretend it's a log
| scale."
|
| Unfortunately for them, USD is not on a log scale and
| they'll be disappointed to discover that when they try to
| cash out.
| pilingual wrote:
| I'm not discussing trading here, in which case you would
| be absolutely right. Trading using a log chart would be
| absurd.
|
| I'm talking about long term positions. Cost averaging
| over time means you are immune to such a massive swing.
| ideamotor wrote:
| You're talking out of your ass.
| anyfoo wrote:
| You just decided that "Bitcoin pricing is on a log
| scale"? Because it sounds cool to talk about logarithms?
| What does cost averaging have to do with it?
| Nursie wrote:
| > I do not understand how every time cryptocurrency comes up
| armchair HN users come along and comment when they, very
| apparently, have almost no understanding of the topic
|
| This in itself is a meme - "All criticism is ignorance!"
|
| Bitcoin is not a ponzi or a pyramid scheme, that's true, but
| it has aspects of both, with its declining emission and
| stacked rewards for early adopters.
|
| And Bitcoin is for settlement now is it?
|
| That's interesting, and a massive deviation from its original
| intent (see the white paper) as well as all the other
| purposes it's been ascribed over the years.
|
| The truth is that bitcoin is an instrument of speculation.
| Little else.
| matheusmoreira wrote:
| > The truth is that bitcoin is an instrument of
| speculation. Little else.
|
| I actually agree. Bitcoin has failed. It's useless as a
| coin. New coins have been created to address its
| shortcomings. Monero seems to be the closest one to the
| original cryptocurrency dream of decentralized and private
| currency. Despite this, bitcoin is still king and there
| seems to be no way to dethrone it.
| Retric wrote:
| Bitcoin "dies" like bubbles do, after a peak it can't
| recover from people stop thinking of it as an investment.
|
| Tulip mania didn't kill off Tulip farming, and even a
| 99.9% crash won't kill Bitcoin. It simply returned things
| to the fundamental value proposition amid significant
| competition. In theory Bitcoin could win in a direct head
| to head competition, though it seems unlikely that the
| first coin got everything correct and was never improved
| upon.
| [deleted]
| ZephyrBlu wrote:
| > _The truth is that bitcoin is an instrument of
| speculation. Little else_
|
| Right now it is because it's experiencing tremendous
| growth. When it becomes less volatile it may yet become
| more currency-like.
| krrrh wrote:
| > The Nakamoto Scheme is an automated hybrid of a Ponzi
| scheme and a pyramid scheme which has, from the perspective
| of operating a criminal enterprise, the strengths of both
| and (currently) the weaknesses of neither.
|
| https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
| okareaman wrote:
| Good article, but it could also be seen as a global poker
| game, with holders "bluffing" people to buy while they
| hold, looking for a top to sell at.
| pilingual wrote:
| > This in itself is a meme - "All criticism is ignorance!"
|
| No, as I pointed out to the OP I was appreciative of his
| reasoned criticism because for years the top comments say
| things like, "Bitcoin is a ponzi; bitcoin is used only for
| illegal activity; Bitcoin failed." All wrong, and the only
| way I learned those were wrong was by understanding it and
| learning from smart people who are involved in the
| industry.
|
| > The truth is that bitcoin is an instrument of
| speculation.
|
| Public companies have no business speculating except for
| R&D. By claiming it is an "instrument of speculation" you
| are claiming they are not living up to their fiduciary
| duties? And what sort of speculation has gone on for 11
| years?
|
| > And Bitcoin is for settlement now is it?
|
| Yep. That's where it is currently headed. Could change,
| never know (edit: what I mean here is Bitcoin devs/miners
| could change/adopt the software so it works more like a
| currency). Brian Chesky, CEO of AirBnB, insisted breakfast
| be served at all AirBnBs. He was wrong. Didn't matter. Some
| original Bitcoin adopters, particularly Hal Finney, noted
| early on that Bitcoin could end up being more of a store of
| value than currency. Even if buying a coffee with Bitcoin
| directly doesn't make sense, the spirit of the original
| paper in wake of the 2008 crisis is still alive and well.
| abrahamepton wrote:
| There are serious, devastating critiques of Bitcoin.
| There are no serious rebuttals to those critiques, but
| plenty of people "involved in the industry" are making a
| lot of money from BTC, so it's no surprise they've
| convinced themselves it's fine. I guess they suckered you
| in too.
| matmatmatmat wrote:
| Could you link a few of these? Genuinely interested in
| reading. Thanks in advance.
| [deleted]
| splithalf wrote:
| "Why waste people's time with your vacuous comments?"
|
| Because my opinions are not vacuous to me.
| sashimi-houdini wrote:
| 1.The term you're looking for is "naturally occurring Ponzi
| scheme"
| https://openknowledge.worldbank.org/handle/10986/19358
|
| 2. I literally don't know what this means. If it drops below
| 10, and you bought at 50k, you have an 80% loss. This might
| indeed induce "some nervousness".
|
| 3. Bitcoin is, per the title of the whitepaper, "A Peer-to-
| Peer Electronic Cash System". You don't have to read very far
| into the whitepaper to understand that being a currency is
| 100% the stated objective. As you pointed out: it has failed
| miserably at that.
|
| 4. No... if this is a "Ponzi", then _on average_ there are
| more fools than smart people. Smart (or lucky) people are in
| fact a requirement of a successful Ponzi scheme... where else
| would the money go?
| kingaillas wrote:
| >2. Bitcoin pricing is on a log scale.
|
| Time to report bitcoin pricing with decibels?
|
| I suppose another logarithmic scale would work here as well:
| Richter scale; scaled so these "corrections" are in the
| middle of the scale. Then we could about a "magnitude 5 on
| the bitcoin Richter scale" correction, etc.
| throwaway894345 wrote:
| > I consider crypto currency as it is to be an elaborate Ponzi
| scheme (personal view)
|
| Off topic, but as someone with very little understanding of
| economics and no stake in cryptocurrency, I don't understand
| where "legitimate currency" ends and "Ponzi scheme" begins. I
| get that a Ponzi scheme is one which produces little or no
| value, and the majority of "earnings" are just wealth
| redistribution from the bottom of the "pyramid" to the top (and
| yes, I understand that pyramid schemes and ponzi schemes are
| different); however, I don't understand what legitimate value
| ordinary currency produces. Can anyone help me understand?
| eropple wrote:
| _> I don 't understand what legitimate value ordinary
| currency produces. Can anyone help me understand?_
|
| I'm not sure what "legitimate value" means in this context,
| but the most terse way I can think of to answer what I think
| is the spirit of your question is that currencies can be used
| to pay taxes and so there is an inherent demand, if
| geographically limited, for them; since you have to pay
| taxes, it makes sense to settle debts denominated in that
| currency because you have a use case for it going forward.
| This inherent demand creates stability--and yes, everyone
| loves to talk about hyperinflation but at the same time
| hyperinflating currencies are usually those of governments
| who are not long for this world!
|
| If you want to go further, I would submit that a _modern_
| currency is one where the supply of it can be controlled in
| response to other economic factors, and my personal position
| is that that control turns crashes and depressions into dips
| and recessions. But this is an opinion, and reasonable people
| could disagree. (Though candidly--in my experience, few who
| do, are.)
|
| Cryptocurrencies instead function more as commodities, and as
| they have few enough actual _uses_ that are not by and large
| self-contained ones that require a certain amount of willing
| participation for them to have value at all (whereas gold is
| pretty and doesn 't corrode, you can eat wheat, etc.) they
| are functionally inherently speculative vehicles. They lack
| any sort of external stabilizing factor because _nobody needs
| them_ and so as a "legitimate currency" I can't see why
| anyone would ever tack on the phrase "legitimate currency" to
| that sort of virtual porkbelly.
| Macha wrote:
| Ultimately, fiat currency is backed by the fact that the
| people with guns who expect taxes to be paid to them expect
| said taxes to be paid in fiat currency.
|
| The goldbugs believe that is insufficient as a basis and we
| should all go back to gold standard where it was backed by a
| promise of a government to give you an amount of gold (or
| further back, was just made out of that gold).
|
| The crypto people believe even that is more basis than
| needed, and as long as people can agree it has value, and
| they all agree with each other that bitcoin has value, then
| it can be a currency.
| imtringued wrote:
| >I don't understand what legitimate value ordinary currency
| produces.
|
| You can exchange your local government currency for services
| and goods. With Bitcoin you first have to convert them into a
| local government currency and then buy services and goods.
| This only works because those local government currencies
| exist in the first place. I'll pull this out of nowhere and
| say that 95% of the value of Bitcoin is derived from
| government currencies by that I mean the reason Bitcoin is
| valuable is that you can exchange it for government
| currencies.
|
| The other 5% are services and products that you can purchase
| with Bitcoin directly. That portion needs to grow if Bitcoin
| wants to become a "legitimate currency" but if everyone
| abuses the currency by hoarding it and doing nothing with it
| then it might as well not exist.
| throwaway894345 wrote:
| > You can exchange your local government currency for
| services and goods. With Bitcoin you first have to convert
| them into a local government currency and then buy services
| and goods. This only works because those local government
| currencies exist in the first place. I'll pull this out of
| nowhere and say that 95% of the value of Bitcoin is derived
| from government currencies by that I mean the reason
| Bitcoin is valuable is that you can exchange it for
| government currencies.
|
| So to be clear, bitcoin becomes "legitimate" when some
| critical mass of vendors accept it? This seems to imply
| that once the ponzi scheme becomes big enough it becomes
| legitimate (provided of course that we accept that btc is a
| ponzi scheme), which feels counterintuitive?
| suifbwish wrote:
| Bill Gates is getting divorced. I think that is bigger news
| than Elon Musk not accepting crypto for Tesla's
| onemoresoop wrote:
| Bill Gates divorcing is not as big of a story as Bill Gates'
| connection to Epstein coming out recently. In my eyes he
| dropped more than the cryptos did
| suifbwish wrote:
| Wait please tell me more on this. This is news
| onemoresoop wrote:
| Just google/duckduckgo "Bill Gates Epstein"
| ourcat wrote:
| Surely this is also very much related to the recent announcement
| in China [1], banning financial institutions and payment
| companies from providing services related to cryptocurrencies?
|
| [1 : https://www.reuters.com/world/china/what-beijings-new-
| crackd... ]
| knowaveragejoe wrote:
| This quote made me laugh:
|
| "Hong Kong's Bitcoin Association said in a tweet in response to
| China's reiterated ban: "For those new to bitcoin, it is
| customary for the People's Bank of China to ban bitcoin at
| least once in a bull cycle."
| davesque wrote:
| Was gonna say. I feel like I hear the same set of news
| stories once every 3-5 years.
| rawtxapp wrote:
| Just like the last cycle when they flip flopped on banning it
| every other week.
| ipv6ipv4 wrote:
| This still seems to leave open the ability for Chinese
| nationals to covertly convert yuan to foreign currencies
| without limits - buying compute with yuan which converts to BTC
| which can then be converted into anything. I wonder what the
| BTC/USD break even point is for that to make financial sense.
| shiado wrote:
| Looks like the liquidations are stopping. Funding rates are
| finally negative
|
| https://www.bybt.com/FundingRate
|
| I would expect the exchanges to have 'problems' while the big
| boys load back up for cheap.
|
| BIG shorts are closing.
|
| https://www.tradingview.com/symbols/BTCUSDSHORTS/
| jk7tarYZAQNpTQa wrote:
| ELI5?
| shiado wrote:
| Perpetual swaps are most of the crypto market by volume. Here
| is a guide explaining them
|
| https://www.bitmex.com/app/perpetualContractsGuide
|
| Throughout the last week of price declines the rates have
| stayed positive meaning longs were still paying shorts,
| implying continuous buying pressure, likely by those trying
| to time a bottom. But after this mega nuke the leveraged long
| traders got liquidated. When you clear out leveraged traders
| it becomes harder to move the price as fewer will be
| liquidated accelerating price changes. To summarize, retail
| investors lose in crypto because they take big risks with
| small money with big leverage and the big boys with big money
| then flush them out and the crypto lifecycle begins again
| making the whales richer and more capable of manipulating the
| market the next time.
| hnalien wrote:
| Has anyone noticed how many Crypto rooms are currently on
| Clubhouse? Mostly led by paid clubhouse admins, trying to pump up
| crypto and who always have a extra stash to 'buy the dip'. This
| entire scenario smells of a scam led by companies like A16Z
| (investor in Clubhouse and other Crypto companies) and other
| whales like Musk, who have been playing with these coins/token
| prices since last year.
| woeirua wrote:
| Everyone should take some time now to learn about Tether, the
| high likelihood that it is in fact a Ponzi scheme, and that it
| poses a big systemic risk to the crypto exchanges and therefore
| the markets themselves [1].
|
| People have been sounding the alarm on Tether for a long time
| now, but we're finally getting some hard evidence now to back the
| allegations [2].
|
| Don't say you weren't warned.
|
| [1] https://mobile.twitter.com/smdiehl
|
| [2] https://ag.ny.gov/press-release/2021/attorney-general-
| james-...
| richyliu wrote:
| Here's the specific thread from smdiehl talking about how
| tethers are not actually worth $1 as they claim [1].
|
| [1]
| https://mobile.twitter.com/smdiehl/status/139366981222046516...
| Ekaros wrote:
| Is tether even a Ponzi scheme? My understanding is that returns
| are 0. And it's "pegged" to dollar, so you can't even make any
| money by buying it...
|
| Ponzi scheme would mean that some investors were getting
| returns...
| Androider wrote:
| A Ponzi scheme doesn't require a return. Tether is paying out
| existing investors with new investor's money, while skimming
| and investing the reserve in risky assets.
|
| Here's a good write up of the recent disclosures and the bag
| of shit that is Tether's reserves:
| https://www.mymoneyblog.com/tether-stablecoin-risk.html
|
| "Instead of 100% risk-free, short-term, liquid assets, Tether
| is less than 7% risk-free, short-term, liquid assets.
| Commercial paper? Backed by whom exactly? Fiduciary account?
| At which remote offshore bank owned by a third-party? They
| could be pointing to a half-eaten sandwich and calling it
| collateral."
| Qub3d wrote:
| Its a fraud in that the money/gold/intrinsic fiat that is
| supposed to be backing it has not been credibly proven to
| exist, at least at a value matching the current amount of
| USDT in supply.
|
| ---
|
| Let's say I decide to make NerdBucks. I offer to sell you _n_
| NerdBucks for _n_ dollars, 1-to-1, and tell you I will always
| buy those NerdBucks back at the same price. This is how
| NerdBucks get "pegged" to a dollar -- if someone will always
| buy the currency for a given rate, it will then always be
| worth at least that much.
|
| Now, you might say, "Okay, what's from stopping you from
| selling a billion NerdBucks, and when people try to sell them
| back to you, you just refuse?" Well, normally nothing
| (outside of litigation, but that is a rabbit hole I'm not
| going to talk about here). In theory, though, I could have a
| bank account that I publish the amount of inside it, to show
| you I am _prepared_ to buy every single NerdBuck back in a
| worst-case scenario.
|
| ---
|
| Going back to Tether: The issuing body of Tether has
| suggested they are holding reserves of USD equivalent to USDT
| in circulation. If you look at some of the other articles
| linked in this thread [0] you can find deep-dives that
| suggest they are lying, and in fact have been using USDT as a
| way to print money.
|
| They are relying on the hope that more people will buy USDT
| than come calling to cash in. That is fundamentally the same
| hope that a Ponzi scheme relies on.
|
| [0]:https://medium.com/@bitfinexed/bitfinex-and-tether-is-
| unaudi...
| Ekaros wrote:
| I'm not oppose to calling it fraud or scam.
|
| I'm in general just against using Ponzi scheme to describe
| things that are not systems where previous investors are
| promised and paid profits with later investors money.
|
| BTC is bubble or mania. But not really Ponzi. Tether is
| even less so, it's carnival token...
| Qub3d wrote:
| Here, there is a lot of _very_ in-depth discussion on why
| Tether is specifically a Ponzi scheme at the top of HN
| right now: https://news.ycombinator.com/item?id=27214342
| Avalaxy wrote:
| As a noob who owns some bitcoin and ethereum (both stored on an
| exchange), how does tether being a scam (which I do believe in)
| affect me? I don't hold any tether myself.
| Crye wrote:
| Tether is used for the purchase of other cryptocurrency (i.e.
| creates demand). If more Tether has been created then dollars
| burned, then there has been artificial demand generated for
| cryptocurrency. Artificial demand, artificial prices. I think
| sometimes Tether's affect on the market is blown out of
| proportion, but it could have cooling effect on the
| trustworthiness of cryptocurrency and then exchanges used to
| facilitate trades.
| telotortium wrote:
| OMG don't store your coins on an exchange long-term. During a
| real crash, the exchanges have a tendency to be down just
| when you want to get your coins out. The less reputable
| exchanges (i.e., everyone but Coinbase) have a history of
| absconding with the coins during a crisis (see: "exit
| scams"). I would put your wallet on a hardware wallet, or at
| least an encrypted removable drive (this might not apply if
| you're in a dangerous area where break-ins are common).
| zaptrem wrote:
| The theory is that the market cap of BTC/Eth/Shitcoins have
| been pumped by Tether buying power that isn't actually backed
| by USD. People think Tether is printing fake money and buying
| crypto with it. If/when the world realizes this, the market
| cap of these different assets will return to their (possibly
| much lower) "real" values. This slide could cause another
| crash.
| woeirua wrote:
| It affects you directly because: 1 - many exchanges hold
| Tether as a reserve and use it extensively for various
| transactions between the exchanges, which means that if
| Tether collapses they could have huge holes in their balance
| sheets. Some exchanges (Binance especially) could become
| insolvent overnight. No money in, no money out. Read up on
| Mt. Gox if you want to see what happened the last time an
| exchange went belly up.
|
| 2 - If you believe the worst allegations, then Tether is
| artificially propping up the value of Bitcoin. In the event
| of a run on Tether, Tether may be forced to sell thousands of
| Bitcoins abruptly onto the market to get cash.
|
| 3 - The fallout of a true worst case scenario for Tether
| could lead to crypto being reclassified in order to fall
| under all the relevant financial regulations that banks and
| the traditional finance sector are subject to.
| shakezula wrote:
| As someone who lost a LOT of bitcoin in the Gox hack,
| please for the love of god, don't store your coins on an
| exchange.
| Toine wrote:
| All crypto tokens are Ponzi schemes
| Clewza313 wrote:
| Here's a good, up to date primer:
| https://www.singlelunch.com/2021/05/19/the-tether-ponzi-sche...
| briankelly wrote:
| Yoga instructor selling her house to throw it into bitcoin
| feels like the '21 spiritual successor of the Las Vegas
| stripper who owned several condos/houses that became the '08
| housing market crash meme.
|
| Wild prediction: this BTC crash pops the USDT bubble,
| cratering crypto in general. TSLA holders (frequently
| BTC/doge buyers themselves) begin to panic sell, triggering
| an ARKK bank run. ARKK implosion sparks wide selloff of big
| tech stocks (essentially their holdings) which depresses the
| S&P (where tech is the main driver of growth). Everyone is
| now forced to be conservative; cost to borrow skyrockets;
| demand chills, and coupled with supply chain disruptions and
| high commodity and materials costs, some businesses begin to
| fail. New homeowners who went for broke to buy at the top of
| their market are immediately underwater, and some of them are
| now losing their jobs. Fed is now between a rock and a hard
| place - needs to raise to interest rates but also needs to
| encourage spending - what to do?
|
| Anyway, there is my daily dose of doom-and-gloom, and I have
| a vague understanding of any of it, so enjoy.
| devops000 wrote:
| It's strange that Bitcoin has peaked exactly the day of Coinbase
| IPO
| idkwhoiam wrote:
| Wojak must have bought
| nano-erud wrote:
| It is common. Today it falls 50%, tomorrow it rises 200%. It is
| nothing unusual in the world of crypto.
| d--b wrote:
| This is supposed to be transparent, right? so who's selling?
| Theodores wrote:
| It is on its way back up. Remember to buy the dip, folks!
|
| Also interesting how BTC is now a store of wealth, not a
| currency. They should just call it a religion.
| kingaillas wrote:
| >They should just call it a religion.
|
| A Planet Money episode from a few months ago covered this
| (https://www.npr.org/2021/02/18/969182201/bitcoin-the-
| religio...) and it was an interesting episode.
|
| Basically, bitcoin is like a religion in that 1) the founder is
| shrouded in mystery, 2) he/she goes missing/vanishes/dies
| before being able to benefit (i.e. they sacrifice for the
| benefit of others), 3) thus the actual spread of the
| religion/technology is left to an inner circle of disciples, 4)
| the masses that are brought in often talk about it incessantly
| furthering its spread, and 5) it has rituals/holidays (bitcoin
| halving day, bitcoin pizza day)
|
| This changed the way I think about bitcoin adherents.
| Theodores wrote:
| Interesting point there. What is also interesting is how well
| jokes are received. HODL and 'buy the dip' or 'to the moon'
| are taunts.
|
| Note how far my comment was modded down - no room for humour
| if you have had your 'money' wiped out.
|
| You can't tease religious people either. I once sat next to a
| girl at work who was seriously Christian. I jokingly asked if
| she believed in Father Christmas one slow Friday afternoon
| and the looks I got from my colleagues who knew what I was
| doing and how morally wrong my teasing was!
|
| It is the same with the Bitcoin religion. You quickly learn
| not to question it.
|
| I also consider The War Against Terror to be a religion.
| game_the0ry wrote:
| I used to be excited to see crypto currency related threads on
| HN's front page, bc I would be excited to see the technical
| discussion about he merits and criticisms of the technology.
| Nowadays, I am just disappointed when the discourse devolves into
| politics, cultism (on both sides), and misinformation.
|
| Where could I go to see discussions about just the technology?
| abledon wrote:
| lobste.rs
| fouric wrote:
| Seconded, Lobsters is good. Now, my perception has been that
| it's beginning to have its Eternal September, including a
| significant uptick in political content, but as it stands
| it's still much more technical than HN.
| randywaterhouse wrote:
| And, as usual, Coinbase is also down at the moment [0]. Don't
| have a super-strong opinion on the crash itself (or whether we
| should call it a crash given crypto's volatility)--but it does
| seem peculiar that the exchanges in the space tend to drop when
| things get rough.
|
| [0] https://status.coinbase.com as of 13:51 UTC status was
| "intermittent downtime" and "delayed withdrawals"
| krono wrote:
| I very clearly recall Coinbase structurally having these
| outages back in 2017/2018 as well. Always when big price
| movements are about to happen, but often before the volume
| spike. Nothing but funny coincidences I'm sure.
| jondwillis wrote:
| happened back in 2013/4 as well
| jondwillis wrote:
| decentralized exchanges on EVM-compatible proof of stake chains
| are still cheap, available, and fast.
|
| e.g. xdai
| uberdru wrote:
| Did anyone else notice that the 'store of value' thesis is almost
| a verbatim rehash of Jim Rickards gold theories around the time
| of his book 'Currency Wars' (2011)?
| arisAlexis wrote:
| Since when price speculation news are relevant to this forum?
| rawtxapp wrote:
| Even though I'm very bullish on crypto longterm and even though
| this crash caused me large loses on paper, I'm happy about it. I
| think a lot of people got very greedy and way overleveraged
| themselves which is not sustainable in the long-term.
|
| For example, almost 9B$ worth of crypto got liquidated in the
| last 24hr, that's insane. People chasing quick money get burned.
|
| 1: https://www.bybt.com/LiquidationData
| fraud wrote:
| What makes you bullish about crypto and what need do you see it
| fulfilling long term?
| rawtxapp wrote:
| This is personal opinion and feel free to disagree, but I
| have zero trust in the government and I don't think central
| bankers and politicians in Washington care about me. I think
| the current financial system is highly corrupt, broken and
| fragile.
|
| So naturally, ideally, I want to completely opt-out of their
| system. So far in human history, we never had an alternative,
| but now we do. Bitcoin price in fiat may go up or down, but I
| believe the Bitcoin network will keep ticking with the same
| mathematical rules and same transparency today and in 100
| years from now.
| rewtraw wrote:
| Most of HN isn't aware of the non-BTC, non-Ponzi protocols
| and dapps being built right now.
|
| There are some very cool things like decentralized
| lending/borrowing, exchanges, cross-chain swaps, synthetics,
| etc. These protocols are revenue generating (via fees) and
| are actively used with billions in volume.
|
| 99% of crypto will die off, but the small part that survives
| could be the backbone of a very robust internet-native
| financial system.
|
| Whether these DeFi primitives will ever be plugged into
| TradFi systems remains to be seen, but if nothing else, the
| ability for these protocols to easily interop is a huge win
| over existing systems.
|
| Even if everything uses stablecoins and all "altcoins" are
| ignored, there is still value here.
| thehappypm wrote:
| You didn't ask me but I share this sentiment exactly. I think
| a digital currency is a neat idea. I think banks suck, their
| customer service sucks, their security sucks. I think the
| niche of a digital currency that's really like a more
| distributed Venmo is really cool.
| sashimi-houdini wrote:
| "This is good for bitcoin"
| indiantinker wrote:
| A Wyckoff Event just happened as he explains
| https://www.youtube.com/watch?v=rFijwQzZFuM
| karolist wrote:
| Original video here:
| https://www.youtube.com/watch?v=Lhf_2gJJS1I
| indiantinker wrote:
| Thanks
| blfr wrote:
| Coinbase is down for me.
|
| Gotta give it to BTC: it's a great store of value. You cannot
| sell it in panic, the technology is protecting you from your own
| psychology.
| [deleted]
| jeffbee wrote:
| Is it functionally different from "circuit breakers" on
| regulated exchanges?
| marban wrote:
| Just like 99% cocoa chocolate -- built-in overeating
| protection.
| creshal wrote:
| Long-term hodling of chocolate is still an unsolved problem
| in my experience. It tends to just disappear over time.
| twox2 wrote:
| Coinbase is not the only place to sell it though.
| lottin wrote:
| They have all shut down.
| djbebs wrote:
| Coinbase infrastrcture does not run on bitcoin
| papito wrote:
| But does it run on BLOCKCHAIN.
| [deleted]
| [deleted]
| mcintyre1994 wrote:
| Haha, Kraken is the one I use. They've just disabled their
| login button with no messaging, which I guess is one way to
| achieve the same while avoiding a mark on their uptime graph.
|
| If I remove the `disabled` attribute then clicking the button
| does nothing but I get a CORS error in the console.
| jk7tarYZAQNpTQa wrote:
| They're probably doing that to stop BTC from crashing even
| further. If BTC crashes, altcoins would probably follow
| (instead of taking BTC's position). Even if they don't
| follow, just BTC crashing would make exchanges lose the
| biggest chunk of their income. So shady business, but
| business as usual.
| mcintyre1994 wrote:
| I agree, it's just a bit hilarious to imagine a normal
| stock market exchange trying to get away with things like
| that.
| Infinitesimus wrote:
| Circuit breakers exist to prevent wild swings on the
| stock market as well.
| ryanlol wrote:
| NYSE does the same when there are big drops. If there was
| a 20% intraday drop in SPY they'd halt trading for the
| rest of the day.
|
| https://en.wikipedia.org/wiki/Trading_curb
| sidewndr46 wrote:
| I was skeptical of this, but I just confirmed that I can no
| longer login to Kraken either.
|
| I have no holdings there to speak of, so it is a non issue
| for me.
| rawtxapp wrote:
| Pretty much everything is down, eth decentralized exchanges are
| all clogged up too due to sky high gas fees. It's like a bank
| run.
| dcolkitt wrote:
| > You cannot sell it in panic, the technology is protecting you
| from your own psychology.
|
| I know this is tongue-in-cheek, but I honestly believe this is
| the reason owner occupied housing is a more reliable form of
| middle class wealth accumulation than liquid financial assets.
| Most of our risk aversion is psychological, rather than
| economic. We really dislike seeing red numbers, even if our
| investment horizons make day-to-day swings largely irrelevant.
| randomopining wrote:
| Diamond hands baby!
| thehappypm wrote:
| I think an important Achilles' heel of cryptocurrencies is just
| how hoarded they are. Whales -- in general, they're just early
| adopters -- own huge swathes of the total amount of crypto out
| there. If we were to actually move to a world where crypto is
| used as currency, we'd have trillionaires who "earned" their
| wealth simply by being early adopters. Government issued
| currencies can solve this through taxation or more generally
| through monetary policy.
| vocatus_gate wrote:
| One could argue they "earned" the wealth by taking an enormous
| risk and holding through crazy swings when no one else would.
| And ended up be rewarded for taking the risk, as they should.
|
| Along comes the people salty they didn't take the risk, and
| want to steal the money from the people who did take the risk.
| It's a tale as old as time.
| whenindoubtlie wrote:
| China has recently banned banks from providing cryptocurrency
| services.
| patwolf wrote:
| I've been trading Bitcoin for several years and have gone through
| the various booms and busts of that time. I'm not sure I'm ready
| to call this a crash when it's back to where it was a few months
| ago.
|
| The idea of Bitcoin and other cryptocurrencies is addictive, but
| there's always the sobering moment when you realize how limiting
| it is. I tried to transfer some a few months ago and was hit with
| $25 in transaction fees, and it took over 3 days to be confirmed.
| Clearly I should have used higher fees to expedite it, but I
| sympathize with newer investors experiencing that for the first
| time. I've also seen folks recently invest in mining rigs only to
| realize they're not as profitable as they anticipated.
|
| I'm sure in time prices will back up as the cycle will repeat
| itself--the hype will die down, Musk will tweet something that
| inspires the next generation to jump on the bandwagon, and the
| price will rise again. Maybe we'll lament not buying while it was
| under 100k.
| endisneigh wrote:
| how is 20% down _not_ a crash?
| matheusmoreira wrote:
| It's a crash on a traditional market such as stocks. On the
| cryptocurrency market, a real crash would result in figures
| in the -90% range.
| paulpauper wrote:
| MSTR is massivly leveraged. How will they not go bust if BTC
| keeps falling
| rawtxapp wrote:
| Their average buying price is in the ~20-30k range, still lots
| of way to go. And if they have losses on their coins, they can
| harvest them to offset their other incomes, etc.
| sva_ wrote:
| Haha, less than 24h after that article that hit the frontpage
| yesterday.
|
| https://etherscan.io/blocks
|
| The blocks look absolutely insane right now
| tiborsaas wrote:
| Care to explain what's insane looking to you?
| rawtxapp wrote:
| The fees, on a good day, you can pay somewhere around
| 50-100gwei for a transaction on eth, right now we are seeing
| 1500+gwei transactions.
|
| For example, to deposit into a maker vault, a 50 gwei
| transaction would cost somewhere around 100$, it now costs
| like 2-3k$ just to execute a single transaction.
| sva_ wrote:
| To make a transaction, you have to spend a certain amount of
| gas. This will then be multiplied by the constant cost of the
| transaction. But gas fluctuates based on demand. If many
| people want to make a quick transaction, gas will go up as
| the amount of transactions per block is limited. Avg gas was
| around 70 gwei yesterday. Currently there's tons of blocks
| averaging between 1000 - 1500 gwei, which is a lot.
| mikejarema wrote:
| I think the amount of fees per block is what's "insane" here.
|
| Going back a day shows that the fees were on the order of ~3
| eth per block (https://etherscan.io/blocks?p=300) whereas now
| they're averaging around ~20eth per block.
|
| In other words ETH holders are very motivated to move their
| tokens _right now_ , and the amount they're paying to do so
| reflects this.
| 52-6F-62 wrote:
| I imagine much of the traffic is likely out of China?
|
| It sounds like the CCP is moving to ban clearance and
| trading institutions in the space, stopping short of
| banning personal holdings. (something in the name of
| protecting people?
| https://www.reuters.com/technology/chinese-financial-
| payment...)
|
| A lot of people probably trying to sell off now or moving
| their holdings to exchanges located outside of China.
| SavantIdiot wrote:
| Eager to see the profitability change of ETH for today:
| https://bitinfocharts.com/comparison/price-mining_profitabil...
| smithcoin wrote:
| I hope the crypto prices keeps crashing, let's get rid of the
| speculators and posers.
| reubens wrote:
| Seeing the exchange price graphs coalesce in red like that...
| it's a sight to behold. I feel for the vulnerable recent
| converts.
| End_the_Fed wrote:
| This is what a healthy market looks like, without circuit
| breakers, without Powell stepping in, without the POTUS making
| emergency statements to contain the panic. Price discovery at its
| finest.
|
| When you buy crypto you are effectively voting with your wallet
| against the Fed and all those phony protection systems
|
| Every day more and more people are understanding the machinations
| of the Fed.
|
| BTFD
| codyb wrote:
| This is one hell of a take. Give me a stable financial system
| any day.
|
| If, by understanding, you mean, realizing that having a
| centralized entity with a mandate to keep inflation to stable
| levels so the monetary supply doesn't swing wildly in value
| from day to day, sure?
| End_the_Fed wrote:
| Stability=stasis
|
| 1:1 human relationships are unstable as it is, think about a
| 300M individuals megasocial group where everybody is
| interacting with everybody and constantly adjusting.
|
| The Fed is like the doctor who fills up the patient with
| cortisone and throws away the thermometer to avoid reading
| the temperature
|
| We need ups&downs, love&hate, forest fires and rebirths.
| Anestetyzing the whole process makes me wonder what are we
| even thinking
|
| BTC mimics nature as opposed to the Fed which mimics the
| arrogance of man.
| woeirua wrote:
| Let's see you stick to your guns when BTC loses 95% of its
| value in a week.
| rawtxapp wrote:
| It already has done that many times over (20k->3k back in
| 2017). And people who would have kept buying would be in a
| great place right now.
| sulunia wrote:
| I just wanted to be able to buy a GPU without paying exorbitant
| prices because miners.
| sva_ wrote:
| I think there's a realistic chance that you'll soon be able to
| get them at a nice discount on ebay.
| kevingadd wrote:
| Ethereum switching to PoS seems like it would definitely
| reduce the incentive to buy truckloads of gpus
| yakubin wrote:
| [deleted]
| cdiddy2 wrote:
| bitcoin doesnt use GPUs
| zionic wrote:
| BTC hasn't used GPUs to mine in 8+ years man.
| eeegnu wrote:
| Wouldn't the hundreds of other PoW currencies still be an
| incentive?
| greg7mdp wrote:
| Most GPUs are used to mine ETH. It is by far the most
| profitable. Unless another POW coin becomes as valuable
| as ETH, demand for GPUs will drop precipitously.
| sarabad2021 wrote:
| Mining prices are skyrocketing right now - Still extremely
| profitable even in a bear market
| abledon wrote:
| next 3070s are going to crippled for EtherMining so you'll be
| good.... gonna pick a 3080Ti up myself to run some Yolo4 models
|
| https://videocardz.com/newz/msi-confirms-geforce-rtx-3080-ti...
| cheaprentalyeti wrote:
| I only say this about 1% of the time I read stuff like this,
| and it's still too much:
|
| _Bitcoin doesn't use GPUs to mine with_.
|
| It's been custom ASICs for the last eight years or so. I think.
| defaultname wrote:
| Bitcoin is the high water that floats all the other boats in
| crypto. When BTC drops, they all drop. So their core point is
| certainly valid.
|
| Not to mention that BTC-specific ASICs are a big reason there
| is a chip manufacturing squeeze. Millions of completely
| useless, power gobbling devices.
| TimJRobinson wrote:
| Apps like Nicehash mine the most profitable shitcoin using
| your GPU and convert it to Bitcoin. When the market pumps
| people buy up cards and use it to make good money.
| cheaprentalyeti wrote:
| I'll have to try it on my eight-year old laptop then. Maybe
| the crash will make it suddenly efficient.
| sleepybrett wrote:
| You'll spend more in electricity than you will make.
| ses1984 wrote:
| _A bunch of other coins use GPUs to mine_.
| creshal wrote:
| ASICs have had shipping shortages for months now, there's
| probably a lot of people using GPUs for bitcoin again, on top
| of ASIC-hard "crypto""currencies" that always abuse GPUs.
| dougmwne wrote:
| ASICs presumably take up valuable chip fab capacity at a time
| where we are going through a lengthy chips shortage that has
| real-world manufacturing impact on real goods people use to
| perform useful work.
| cheaprentalyeti wrote:
| A lot of that particular shortage happened because everyone
| cancelled their preexisting contracts and now they have to
| renegotiate at a new cost basis, after the government has
| thrown trillions of new dollars into the economy.
| sva_ wrote:
| Ethereum does though
|
| e: Take a look at this https://www.reddit.com/r/EtherMining/c
| omments/nfppnv/120_rtx...
|
| There are countless people like that
| ssully wrote:
| How do people get that many cards? Myself and about 3
| friends have all been trying to get a 3060 or better for
| the last 3 months to build new computers and none of us has
| gotten a card yet. This is a mix of following discords,
| knowing site stock times (or trying their ridiculous
| lotteries), and one friend has tried bots.
| theandrewbailey wrote:
| If it was like last time (2018), prices remained higher than
| what they should have been for months after. Then Nvidia got
| the message about how much people were willing to spend on
| GPUs, and overpriced their RTX 2000 cards.
| sulunia wrote:
| Even if the big crash that kills GPU prices happen, I'll
| probably still have to go second hand, since a brand new,
| better GPU than the one I have will still go for (albeit
| less) ludicrous prices.
| christiansakai wrote:
| GPU prices going down wont' happen. Just take the hit, or
| queue.
| [deleted]
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