[HN Gopher] Evidence that no one cares about crypto-denominated ...
___________________________________________________________________
Evidence that no one cares about crypto-denominated wealth
Author : kmod
Score : 73 points
Date : 2022-03-01 18:40 UTC (4 hours ago)
(HTM) web link (blog.kevmod.com)
(TXT) w3m dump (blog.kevmod.com)
| fleddr wrote:
| This article makes a point that doesn't need to be made, it's
| stating the obvious. Quite obviously most crypto
| traders/investors use the dominant fiat currency to track their
| wealth. Even a deep believer in crypto does so, as a frame of
| reference. The chart is BTC/USD, and that is what everybody is
| looking at, nobody stated otherwise.
|
| USD denominated wealth is also a requirement for managing taxes
| and USD equivalents like stablecoins are used to survive deep
| dips and progressively take profit on the way up...so that you
| have "dry powder" to buy the next dip.
|
| There is however a sizable group that does denominate their
| wealth in crypto: those that dollar-cost-average. For Bitcoin,
| also called "stacking sats". They express their progress in
| crypto, not in USD, as the USD input is fixed.
| pjkundert wrote:
| Those who aren't paying attention, anyway...
|
| In Canada, we just went through a 10-day period where, in an
| _afternoon_ , the government casually made it retroactively
| illegal to have supported a peaceful cause -- and began locking
| up peaceful, law-abiding citizens' bank accounts.
|
| In Russia, citizens have been instantly locked out of
| international financial transactions, and non-local currencies
| have become unavailable. It is likely that further, dramatic
| interventions in ingress/egress of wealth are forthcoming.
|
| In China, random decisions regarding the legality of
| Cryptocurrencies are regularly enacted. Huge businesses doing
| legal, ethical mining are one day accepted, and the next -- made
| illegal.
|
| Sorry, but anyone who doesn't find this worrisome is ... naive,
| for lack of a more charitable term.
| isodev wrote:
| These are good examples of crypto tech trying to find a problem
| it can solve.
|
| There are much more sustainable ways to deal with situations
| like the ones you quote... none of which require a complicated
| use case misusing technology to create the illusion of
| independence or decentralization.
|
| For example, the peaceful cause you're mentioning can be
| mitigated by providing better education and access to
| information for people in underdeveloped regions (e.g., clearly
| misunderstanding how medicine works or how to stage a peaceful
| protest).
| boc wrote:
| I actually disagree. I think that democratic society should
| have the tools to wage economic warfare in the same way that
| they can wage kinetic warfare. Saying that it's "too bad" that
| Russian citizens are locked out of international financial
| transactions misses the point that they received that
| punishment _because_ their nation invaded another nation.
|
| The social contract that citizens sign with their government
| doesn't guarantee them the right to untraceable global wealth.
| You have to use the currency of your nation to pay taxes and
| support your society.
|
| The Russian oligarchs that have profited from decades of
| draining wealth from the Russian people are potentially able to
| move their money via crypto, and you see efforts to stop that
| as "worrisome"?
|
| A world where currency isn't under the influence of nations is
| one where warfare is more likely to be waged by the oligarchs
| who feel none of the consequences.
| Teever wrote:
| > The social contract that citizens sign with their
| government doesn't guarantee them the right to untraceable
| global wealth. You have to use the currency of your nation to
| pay taxes and support your society.
|
| Actually up until recently the social contract has anyone
| could put an anonymous coin into a newspaper box and pick up
| a news paper to read as much as they want without anyone
| knowing which articles they read and what they thought about
| them.
|
| Now we live in a world where the very basic act of consuming
| media is meticulously analyzed by hundreds of entities and
| logged for all time and that massive and that obsessive
| stalking behaviour is making its way into all of our
| transactions as we switch to digital payments.
|
| This wasn't the social contract I was born into and that goes
| the same for the current majority. I'm all for regulations
| that and actual enforcement of existing regulations against
| wealth people but don't try and tell me that the extension of
| digital surveillance to everyday little people transactions
| is anything more than a blatant power grab of unprecedented
| levels.
| cheriot wrote:
| > law-abiding citizens
|
| While I wildly disagree with this description I do think
| international sanctions on Russia are an interesting test case
| for cryptocurrencies. Will normal people start using them when
| they're locked out of normal financial tools? Or are there more
| barriers to a wide use of crypto than boosters make it sound
| like?
| dragontamer wrote:
| Meanwhile, MLRS systems are leveling entire neighborhoods in
| eastern Ukraine. Hospitals are collapsing as rockets bombard
| their foundations, cluster munitions deployed and thermobaric
| warheads causing the 2nd largest explosions known to man (only
| 2nd largest compared to nukes).
|
| Yes. We, as a society, have decided (rather quickly too) to use
| our financial resources to do what we can to fight back against
| these war crimes. That's not a bad thing at all.
|
| The only other thing that may serve as a deterrence is a proper
| and full war. If you've got other ideas for a deterance, now is
| the time to issue suggestions.
|
| Complaining that we've found a non-war way to deter Russia and
| their actions is callous, when compared to the millions of
| lives who suddenly had their lives upended last week.
|
| ------
|
| > Sorry, but anyone who doesn't find this worrisome is ...
| naive, for lack of a more charitable term.
|
| Of course its worrisome that we have to deploy offensive tools
| (albeit financial tools rather than actual bombs). But what
| other choice do we have? Are you saying that Russia shouldn't
| have to pay for what they did? Are you saying that we should
| just forget about Ukraine's pains? Etc. etc.
|
| Money is a social construct. That's a good thing, for times
| like this. No, we don't want to live in these times and wish
| that things were more peaceful. But if someone hits you or
| someone else... you have to respond and deter them from
| striking yet again. Basic diplomacy.
| panarky wrote:
| It's curious how advocates promote how crypto helps an
| aggressor nation evade sanctions, and how it helps purveyors of
| health disinfo to block bridges.
|
| Seems like these harmful and destructive use cases make most
| people hate crypto and despise its advocates.
|
| Wouldn't it be better for avocates to demonstrate the good
| crypto can do instead of how it enables ignorance and
| catastrophe?
|
| For example, how about crowdfunding bounties for Russian
| soldiers to surrender?
|
| Since rubles are becoming toilet paper, how about one full
| bitcoin to each soldier who turns in his vehicle and weapons.
|
| That might actually do some good and give crypto a more
| positive image among most people.
| epgui wrote:
| I'm sorry, but comparing what happened in Canada to what
| happened in the other two is stupid, charitably speaking.
| claudiulodro wrote:
| Paying no mind to the "charitable" brush you're painting these
| situations with, it seems you're making a great argument for,
| like, a stash of gold coins more than for crypto. That'll
| outlast any government or online-network changes!
| pjkundert wrote:
| Yup, fractional gold and silver coinage is probably wise to
| have on hand.
|
| That, and systems that solve the "network partition" failure
| mode endemic to Global Consensus cryptocurrency systems:
| https://holo.host.
|
| In the mean time -- create and fund a _personal_
| Cryptocurrency wallet with _secure_ and _reliable_ SLIP-39
| backup Mnemonics: https://slip39.kundert.ca/macos
| the_other wrote:
| The problem isn't fiat currency it's shitty government. If you
| have good government you wont have shitty fiat currency.
|
| Crypto is better on government getting worse whilst
| simultaneously absolving yourself of the responsibility of
| doing anything about it.
| dghlsakjg wrote:
| > In Canada, we just went through a 10-day period where, in an
| afternoon, the government casually made it retroactively
| illegal to have supported a peaceful cause -- and began locking
| up peaceful, law-abiding citizens' bank accounts.
|
| No donor accounts were frozen according to the RCMP. And no
| verifiable information proving otherwise has arisen (tweets are
| not verifiable info). There were around 210 accounts frozen,
| belonging to less than 200 people. The majority of which were
| unfrozen after less than a week. The accounts belonged to those
| that were organizing or materially supporting a protest that
| had been deemed unlawful, or participating unlawfully in that
| protest.
|
| In other words the Canadian government briefly seized accounts
| that were being used to support a protest that was judged at
| least partially illegal by the courts system. Those affected by
| seizure are now allowed to request compensation under the same
| law that was used to seize the accounts.
|
| https://thehill.com/policy/international/595526-freeze-lifte...
| kelnos wrote:
| I do find it worrisome, but probably not quite the way you do.
| I think having this sort of power is scary, because power
| always ends up getting abused, as we see in Canada and China.
|
| But I can't really shed many tears for the situation in Russia
| right now, with the caveat that I hate that regular Russian
| people (many of whom are against the Ukraine invasion) are
| getting hurt by this stuff as well.
|
| Money isn't (and IMO shouldn't be) just something you have, for
| often arbitrary reasons, something that allows you to do
| whatever you want without repercussion. Russia's leadership
| should not have access to the world's financial markets after
| the actions they've taken. Cryptocurrencies could help enable
| their bad behavior in this case. Yes, crypto can also help
| insulate regular people from the bad behaviors of their
| governments. But it's not all positives.
|
| Financial system access is a lever that can be used to
| influence behavior. On the scale of current Russia-Western
| relations, there are not many viable levers. One of them is
| armed conflict. I would much rather we mess with Russia's
| financial system than start sending NATO troops into Ukraine,
| and risk starting WWIII.
| dragontamer wrote:
| > But I can't really shed many tears for the situation in
| Russia right now, with the caveat that I hate that regular
| Russian people (many of whom are against the Ukraine
| invasion) are getting hurt by this stuff as well.
|
| I still shed a tear, even for the Russian soldiers.
|
| The poor Russian soldier who was killed had his text messages
| (to his mom in Russia) read out to the UN. He didn't know why
| they were attacking Ukraine, is "only following orders" kinda
| setup. He was flabbergasted at how much the Ukrainians were
| angry at him.
|
| And then he died in battle.
|
| ---------
|
| That doesn't mean that Ukraine should stop attacking the
| Russian soldiers. It is clear that they are being forced into
| this as much as everyone else. If Russia simply pulls back
| their troops to the Russian border, then this war is over.
| But as long as they're in Ukraine, the world has to use every
| means necessary to try to help the Ukrainians out.
|
| Even if it means killing Russian soldiers. I don't think they
| "deserve" to die, but what choice does Ukraine have?
| [deleted]
| gowld wrote:
| > locking up peaceful, law-abiding citizens' bank accounts.
|
| Did this happen, except in unsubtantiated tweets?
| gruez wrote:
| 1. AFAIK only a few dozen (I vaguely remember 70?)
| individuals were actually affected
|
| 2. that said, in the initial news reports, the criteria for
| who to freeze was quite vague. One source said
|
| >The emergency orders require virtually every participant in
| the Canadian financial system -- banks, investment firms,
| credit unions, loan companies, securities dealers,
| fundraising platforms and payment and clearing services -- to
| determine whether they possess or control property of a
| person who is attending an illegal protest or providing
| supplies to demonstrators. If they find such a person in
| their customer list, they must freeze their accounts and
| report it to the RCMP or Canada's intelligence service, the
| regulations say.
|
| https://nationalpost.com/news/politics/emergencies-act-
| debat...
|
| That understandably made some people concerned.
|
| 3. regardless of whether they're actually "peaceful, law-
| abiding citizens" or not, that's for the courts to decide,
| not the executive branch.
| fleddr wrote:
| I think your comment raises a very good conceptual point which
| is completely missed by those responding.
|
| People should forget for a moment whether they agree with a
| protest/sanction or not, that's not the point at all. The
| larger conceptual point that people should think about is the
| extreme fragility of digital/online money.
|
| I'm old enough to have lived in a largely cash-based society,
| and I'm still only middle aged. In such a society, it is
| extremely impractical and difficult for any entity (government
| or business) to seize or freeze your assets.
|
| Now we have a dramatically different situation where with the
| push of a button, your fortune is gone. Could be because you
| joined the wrong protest. Or because you were born a Russian.
| Or because you live in China and didn't live up to social
| standards.
|
| The reasons will vary but in any case it's an extreme power
| grab by authorities. The assumption that you're a great person
| living in a stable country so it won't happen to you is naive.
|
| I'm under no illusion that it will not continue, but at the
| very least I think there should be laws protecting individuals
| against the arbitrary seizure of assets.
| dwater wrote:
| > In Canada, we just went through a 10-day period where, in an
| afternoon, the government casually made it retroactively
| illegal to have supported a peaceful cause -- and began locking
| up peaceful, law-abiding citizens' bank accounts.
|
| My understanding is that those citizens were using their money
| to support people who were intentionally blocking one of the
| main functions of a national government (regulating
| international trade).
|
| > In Russia, citizens have been instantly locked out of
| international financial transactions, and non-local currencies
| have become unavailable. It is likely that further, dramatic
| interventions in ingress/egress of wealth are forthcoming.
|
| Russians have no right to perform transactions using US
| Dollars, and as an American citizen I have no right to perform
| transactions in Rubles. Our governments regulate that (again,
| international trade).
|
| > In China, random decisions regarding the legality of
| Cryptocurrencies are regularly enacted. Huge businesses doing
| legal, ethical mining are one day accepted, and the next --
| made illegal.
|
| In China, many government decisions are like that. Like when
| they overnight decided to restrict vehicle access to Beijing to
| try to reduce pollution leading up to the 2008 Olympics. I
| doubt actions like these come as a surprise to Chinese
| citizens. And, again, it's largely related to international
| trade.
|
| In our modern world of nation states, the individual citizen
| does not have unfettered access to all the world markets. Our
| governments place restrictions on trade, and they will do the
| same with cryptocurrency. You can try to evade it, either
| through bitcoin or gold bullion, but it is not your right.
| bmmayer1 wrote:
| Whether a government _can_ do something is a different
| question of whether a government _ought_ to do something...in
| any event you seem to be proving OP 's point, which is that
| the ability of a government to do something is concerning _in
| and of itself_ , regardless of whether one might feel an
| action is justified.
| dragontamer wrote:
| Lets just call the debate in terms of their actual terms.
|
| Is it a good, or bad, thing that we removed Russia from our
| collective financial systems?
|
| That's really all there is to it. If its a good thing, you
| need to be happy with the power to do so (and you must keep
| and protect the power during times of peace).
|
| If its a bad thing, then I'm curious why anyone would take
| Russia's side on this particular conflict. Its clear to me
| that the Russian economy is already getting pretty hampered
| due to these sanctions, so no one can really argue against
| their efficacy anymore.
| pjkundert wrote:
| So, the "collective punishment" of the civilian populace
| of an aggressor is what you're proposing as a good thing?
|
| This does nothing to harm the "oligarchs". They have
| plenty of wealth stashed in non-extradition
| jurisdictions.
| dragontamer wrote:
| > This does nothing to harm the "oligarchs"
|
| As long as the Moscow Stock Market is closed due to these
| events, your suggestion is laughable. We're already
| seeing those oligarchs cave to pressure and start talking
| about peace. They're clearly hurting from this.
|
| We hit Russia where they hurt: their economy. Oligarchs,
| the literal business leaders of Russia, care about their
| money, flow of business, their stock exchange, etc. etc.
|
| Yes, its a shame that the Russian people are also getting
| hit over this. But not as much as the shame as the
| countless Ukrainian neighborhoods that literally don't
| exist anymore. I'm sure Russian troops don't want to
| "harm civilians" either, but their actions have
| consequences. And the counter-actions also have
| consequences.
|
| --------
|
| The only way you change my mind over this, is if YOU
| explain what kind of deterrence works __better__. I know
| there were talks about actual military action (no fly
| zones, US troops, etc. etc.), but presumably direct
| military action is also off the table, as its a dramatic
| escalation upwards from simple financial sanctions.
|
| ----------
|
| EDIT: Case in point, Russian Oligarch Vagit Alekperov has
| lost 60% of his networth in the past week. Are you
| seriously trying to tell me that doesn't hurt him?
| pjkundert wrote:
| > My understanding is that those citizens were using their
| money to support people who were intentionally blocking one
| of the main functions of a national government (regulating
| international trade).
|
| Yes, peacefully. A large fraction of the hundreds of
| thousands who supported these truckers have, themselves, been
| blocked from employment, international travel, etc., because
| they refused an experimental medical treatment. Which,
| apparently, they felt strongly about. Strongly enough to
| demonstrate that blocking civilians from trade and employment
| is ... distressing.
|
| Are you proposing that only _ineffective_ peaceful blockages
| should be allowed? Or, that only those whose politics and
| beliefs you _agree_ with should be allowed to resist (even
| violently and destructively -- so long as you agree with
| them)?
|
| As for "it is not your right" as a citizen to access world
| markets. A government that prevents its citizenry from
| _surviving_ by blocking access to viable money and trade
| should rightfully expect to be resisted -- to whatever level
| of intensity is required to protect its innocent citizenry.
| Wouldn 't you agree?
| JumpCrisscross wrote:
| > _peacefully_
|
| Blocking a bridge isn't violent. But it isn't peaceful
| protest either.
|
| Overseeing international trade routes is one of a
| government's core responsibilities. Deploying its monopoly
| on violence is justified. Peaceful protest (including
| striking) doesn't shut down critical infrastructure.
|
| If a government lets random hooligans repeatedly shut down
| large sections of the economy, it's an ineffective
| government. In the long run, ineffective governments get
| replaced by more effective (read: less democratic) ones.
| All that said, I do think the Canadian government went a
| bit far. Peacefully dispersing the protests would have been
| more than enough.
| 7steps2much wrote:
| > Yes, peacefully. A large fraction of the hundreds of
| thousands who supported these truckers have, themselves,
| been blocked from employment, international travel, etc.,
| because they refused an experimental medical treatment.
|
| Except Cov19 Vaccines are in fact not an experimental
| medical treatment. That aside though, whether someone
| peacefully blocks the government from doing its job or not
| doesn't really matter. If they block the government from
| doing it's job then it is only fair for the government to
| try and remove that blockade.
|
| If someone was blocking ambulances from going to
| emergencies then i wouldn't care if they do it peacefully
| or not.
| scatters wrote:
| Salis populi suprema lex. The duty on a government to
| protect public health overrides all else, and citizens who
| interfere with the discharge of that duty can well expect
| to be dealt with harshly.
| SketchySeaBeast wrote:
| > because they refused an experimental medical treatment
|
| At what point is this going to stop being a talking point?
| Billions of doses, well over a year of data, at what point
| will people be satisfied? Every day this seems less and
| less valid, and it didn't seem terribly valid when vaccines
| initially started rolling out.
| bavell wrote:
| > well over a year of data
|
| Probably when we actually know the long-term effects
| instead of just making assumptions? Maybe we'll even get
| to see the science someday [0], exciting!
|
| [0] https://www.nytimes.com/2022/02/20/health/covid-cdc-
| data.htm...
| beaned wrote:
| I dunno, I care very much about increasing the number of BTC I
| have because I believe that though the price is variable, the
| trend is up over time. I study and try to employ everything from
| dollar-cost averaging to loan platforms with interest, to
| bitcoin-backed long positions. I don't think I'm the only one who
| thinks this way.
| MaxMoney wrote:
| vagab0nd wrote:
| There are plenty out there that trade between BTC/ETH and other
| coins, in the hope to increase their BTC/ETH holdings.
|
| There are atomic trades happening on DeFi that have to be
| denominated by ETH, because of gas costs.
|
| Looking at the fiat price doesn't mean you don't care about
| crypto.
|
| Not looking at the fiat price doesn't mean you care about crypto.
|
| Personally, I don't look at the price until end of the month when
| I need to pay the bills.
| ______-_-______ wrote:
| This is a lot of theory leading up to a not-so-interesting
| conclusion. Of course USD is the dominant currency right now, and
| things tend to be priced in terms of the dominant currency. But
| that doesn't mean people "don't care" about other financial
| instruments. Imagine swapping the word "crypto" for anything
| else:
|
| > Strong evidence that no one cares about VTSAX-denominated
| wealth
|
| > So in the end the market is clear: when money is on the line,
| people value their wealth in fiat, not VTSAX.
|
| You bet I care more about the number of dollars I have than the
| number of shares of VTSAX, but that doesn't take away from the
| value of VTSAX.
| mdoms wrote:
| VTSAX has never been promoted (much less invented) as a
| currency and cash equivalent. VTSAX has never been promoted as
| the future of spending.
| Spivak wrote:
| I mean really neither is crypto at this point. When was the
| last time you saw people promoting crypto as a thing you use
| to actually buy arbitrary things instead as asset you can
| turn into $LOCAL_CURRENCY?
|
| Crypto projects all seem to be using $COIN as a token you
| must purchase in order to access some resource on the network
| (Gas/Storage) or as a currency swap / investment (Bitcoin).
|
| Edit to everyone downvoting but not commenting -- name one.
| Name a crypto of _any real success_ where the endgame is
| average joe being able to walk into starbucks and pay for his
| coffee with it.
| [deleted]
| loeg wrote:
| No one is advocating for Tesla to take payment in VTSAX shares.
| Kletiom wrote:
| It looks to me that vtsax is representing the value of
| companies who exist.
|
| I would not compare.this to crypto
| ffggvv wrote:
| i was applying for a mortgage last year and the broker told me to
| send an accounting of all my assets except crypto as it was
| worthless in getting a loan
| Animats wrote:
| "No one cares about crypto-denominated wealth" is far too strong
| a conclusion to draw from the mispricing of an obscure financial
| instrument.
|
| One big problem with derivatives in the cryptocurrency space is
| that the counterparties may not be that strong financially and/or
| may not pay up if they lose. Or, even if the hedge is enforced by
| some smart contract, the contract might not have enough staking
| behind it to survive a major price change. And there's a war on.
| So we should expect mispriced derivatives.
|
| Is there data available for cashout rates, such as USDC
| redemption and USDT being traded for USDC? That's more relevant
| here.
| throwamon wrote:
| I understood maybe 10% of what the article says. Can someone
| ELI5?
|
| Or at least answer this question: Can a broke dummy like me make
| money from their observation and how?
|
| Edit: Thanks for the downvote. I didn't know asking an honest
| question to better understand a topic (which I'm sure I'm not the
| only one who's confused about) was against the rules. Or maybe my
| sense of humor flew over someone's head, who knows.
| bootwoot wrote:
| Modeling the price of this product in USD results in a higher
| price than if you model it out in BTC. This implies that
| there's a risk free arbitrage opportunity. I have no idea how
| to exploit it.
| Kranar wrote:
| I downvoted because it's a very low effort comment to ask
| people to explain out the whole thing to you in a simpler
| manner than the blog post itself. Do you want an ELI5 of
| Siegel's paradox? Do you want an ELI5 of a contango market, or
| what implied volatility is?
|
| Just blanket asking for an ELI5 without elaborating on what
| aspect you understood, or specific questions you have about the
| topic, or just demonstrating some effort on your part is low
| effort and places way too high of a burden on someone else to
| give you a good quality answer.
| IncRnd wrote:
| > I downvoted because it's a very low effort comment to ask
| people to explain out the whole thing to you in a simpler
| manner than the blog post itself. Do you want an ELI5 of
| Siegel's paradox? Do you want an ELI5 of a contango market,
| or what implied volatility is?
|
| The poster likely didn't want any of that but what he asked,
| "Can a broke dummy like me make money from their observation
| and how?" He was asking for the practicality of using the
| contents of the article.
| Kranar wrote:
| If someone who is broke is genuinely curious whether they
| can make money off of an article they have only a 10%
| understanding of, the answer is no.
|
| I really hope that isn't something people need to be told
| though.
| mywittyname wrote:
| The "broke dummy" portion of the comment was for
| rhetorical purposes. It was a humorous way of asking,
| "What are practical applications of this knowledge in
| simple layman terms." Which is a reasonable question on a
| board not dedicated to finance.
|
| See also: <Topic> for Dummies books.
| Kranar wrote:
| I never criticized the dummy part of the statement and
| there's nothing wrong with being ignorant of a topic,
| everyone has to start learning from somewhere. I
| criticized the broke part of the statement. Rhetorical or
| facetious or otherwise, someone who is broke who doesn't
| have a sufficient understanding of finance has no way of
| making money off of an article they don't understand.
| throwamon wrote:
| Thanks for the honest reply. Fair enough, I could have "shown
| more effort", but I didn't want to write more words just to
| say "I tried but failed to understand pretty much all of it".
| It's not that I don't know anything about the subject, I just
| needed to understand what problem the OP was talking about to
| begin with, then I'd be able to hook it into my current
| knowledge. Also, by being pointed to a practical application
| it becomes much easier for me to understand the theory, hence
| the way I worded it.
|
| mywittyname's reply nails my intention and thought process,
| and IncRnd's reply perfectly answers my question, so I hope
| this thread amounted to a positive contribution after all.
| IncRnd wrote:
| I imagine you could replicate their covariance calculation for
| currency pair futures, then determine which currency to use in
| purchasing the target contracts.
|
| Essentially, covariance evaluates the directional relationship
| between the returns of two assets. No two currencies are
| eternally correlated, so you can also think of using the
| correlation or lack thereof in this endeavor.
| throwamon wrote:
| Thank you for the perfectly succint answer, it's clear as day
| now.
| seu wrote:
| I think you could reach the opposite interpretation, based on
| this:
|
| > You might argue that this is a pretty lightly traded product
| these days so the evidence is weak, but this product used to be
| one of the dominant ETH products and exhibited the same behavior.
|
| If in the past this was one of the dominants products, and now it
| is not, it could be because the market now cares _more_ than
| before about crypto-denominated wealth, and therefore stopped
| investing in it. Now, there are less people than before who
| prefer fiat-denominated. What are people trading these days
| mostly, and what does _that_ instrument tell in terms which
| denomination is preferred?
| danbruc wrote:
| It is not the product itself but how it is valued that is
| indicative of the preference.
| PretzelPirate wrote:
| We will always have to pay for goods in a fiat currency, so it
| makes sense for people to value everything relative to fiat. Even
| trading on a ratio still falls back to "which will be worth more
| fiat".
|
| This doesn't mean that people don't value crypto, it means they
| live in the real world.
| pjkundert wrote:
| This will proceed -- until the daily (hourly?) re-valuation of
| fiat currencies makes it impossible to retain a mental model of
| their "worth".
|
| Then, everything will be valued in terms of some more stable
| and widely available value reference.
|
| Will this be a cryptocurrency? Probably not, unless some viable
| non-Fiat "stablecoin" become popular, or ETH and BTC reach a
| more stable plateau of valuation. More likely, a widely
| available relatively stable coinage like Silver would be used.
| gowld wrote:
| > non-Fiat "stablecoin"
|
| has anyone published a whitepaper / theory describing how
| this might be possible?
|
| A stablecoin has to be denominated in _something_ -- that 's
| what it's stable in.
|
| Is that even useful? It would have to be a commodity with
| extremely stable (everywhere in the world) non-zero price in
| "real" terms. Potatocoin? Sandcoin?
| jtsiskin wrote:
| A huge basket of stable currencies, government bonds,
| commodities, real estate. It seems like it should be
| possible to create something so diverse that even black
| swan events have minimal impact.
| wmf wrote:
| You could peg to CPI-adjusted dollars or the Big Mac index
| or whatever. That's the easy part. The hard part is getting
| the peg to hold during difficult times.
| 3np wrote:
| While there are several contenders of various complexity,
| DAI is still the state of the art AFAIK.
|
| https://makerdao.com/whitepaper/White%20Paper%20-The%20Make
| r...
|
| DAI is currently pegged to the USD but the long-term goal
| is (was?) to have an asset following a more general notion
| of stability according to some international index.
|
| I wasn't able to find a source or specifics for that last
| part but I did find this overview from 2019 that I think
| looks quite good.
|
| https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op230~d57946be
| 3...
| lottin wrote:
| As far as I can tell, "stablecoins" are redeemable for the
| underlying asset, that's how they keep the peg.
| Theoretically someone could make a coin that is redeemable
| for a large basket of goods and services, and such a coin
| should be very stable, price-wise, against those goods and
| services. However, this would be a very risky business for
| the issuer of the coin.
| JumpCrisscross wrote:
| > _someone could make a coin that is redeemable for a
| large basket of goods and services_
|
| This would be necessarily centralized if any of those
| goods are physical, or services physically rendered. If
| it excludes all physical nexuses, _e.g._ an in-game
| currency, one could do away with that centralisation, but
| it 's no longer stable in any meaningful sense.
| posterboy wrote:
| hard cash is as cryptic as it gets for some sense of crypt.
| kuboble wrote:
| I think the article makes the case that nobody cares about
| exact number of btc they have - only their dollar value.
|
| Unlike say house. Which might retain the same value to me even
| if its market dollar value doubled overnight.
| nileshtrivedi wrote:
| > Unlike say house. Which might retain the same value to me
| even if its market dollar value doubled overnight.
|
| I think this needs to be thought carefully. A house, because
| it's saleable, represents an opportunity cost. If the market
| value doubles overnight, a rational actor should re-evaluate
| whether it is still the best course to continue to live in
| it, rather than sell it.
| oarsinsync wrote:
| > If the market value doubles overnight, a rational actor
| should re-evaluate whether it is still the best course to
| continue to live in it, rather than sell it.
|
| If the rational actor's home has doubled in value, does the
| actor live in an exceptional home, or have all homes
| similarly doubled in value?
|
| Does a rational actor factor in where they intend to live
| in their calculation? How does that weight against the
| dollar value of the house they own?
| bluGill wrote:
| A few rational actors are to move to some lower priced
| area and will do so. They are mostly retired people.
| Though sometimes a low cost area will target small
| business to move to them.
| RedBeetDeadpool wrote:
| Many financial news sources are already casually mentioning price
| of bitcoin alongside the nasdaq and s&p 500.
|
| Give me all the formulas and statistics you want, but if I see a
| fast car, I'm calling it a fast car.
| stjohnswarts wrote:
| I watch bloomberg TV but have almost stopped recently because
| they seem to be obsessed with crypto and have to bring it up
| with everything. Very annoying.
| cryptica wrote:
| People think in fiat terms because their incomes and their
| expenses are in fiat... But people do have a sense of how much 1
| Bitcoin is worth in terms of real-world economic value but they
| don't think about it in the same way as fiat.
|
| Although people are more familiar with the value of 1 USD at any
| given time, they instinctively (and correctly) feel that it's a
| depreciating instrument which loses value over time. On the other
| hand, when people think about 1 Bitcoin, they feel that it's an
| appreciating instrument which gains value over time. Not only do
| people instinctively (without having to do a mental conversion)
| understand that 1 Bitcoin represents a lot of real-world economic
| wealth, they understand that it represents an increasing share of
| the world's wealth.
|
| It's a bit like shares of a big corporation. How many laptop
| computers can I buy with 1 Google share? Essentially any Google
| shareholder will still need to do a conversion to USD (or their
| local currency) in their minds in order to give an answer. But
| this means nothing in terms of perceived value. The Google
| shareholder knows instinctively that GOOG is an appreciating
| instrument which gains value over time and this is what makes
| them want to hold it and not use it as a currency.
|
| The reason why Bitcoin is valuable is because Bitcoiners
| understand that the main mechanism of wealth accumulation in the
| modern fiat-based global economy has nothing to do with value
| creation. Wealth in the modern era is all about tribalism and
| social networking. Bitcoiners are confident that their tribe is
| best positioned to acquire the world's wealth in a flawed system
| founded on money printing.
|
| In a world of printed money wherein wealth is acquired primarily
| on the basis of value extraction (not value creation), wealth
| accumulation depends primarily on the size of one's tribe and the
| ability of its members to reach consensus and to conspire
| together.
|
| By the way, this conspiracy element is not unique to Bitcoin;
| it's also an intrinsic part of all big corporations... Bitcoin is
| just the most effective mechanism for taking advantage of it due
| its substantial network effects and low-friction barriers to
| entry.
|
| IMO in a world without money printing, the value of conspiring
| would be near 0 at scale because the focus (and incentive) would
| be value creation, not extraction.
| beefman wrote:
| No one cares about USD-denominated wealth either. People care
| about real wealth, which is a physical quantity. USD wins here
| because its volatility is much lower. But it's also nonzero. I'm
| shopping for a car this month, and I'll decide whether to borrow
| or pay cash by comparing the expected real cost of the loan vs
| the expected real return on cash.
|
| Regarding the apple example, the customer and grocer do not
| disagree on the value of apples. The trade takes place because of
| the marginal value of apples and the pre-existing difference in
| apple inventories between the parties.
| joe_the_user wrote:
| Well,
|
| I agree with your basic point.
|
| I'd just offer that Siegels paradox (which is interesting to
| read about)[1] applies if you have two currencies where some
| consumers price their end-consumption good in each of those
| currencies. But crypto currencies aren't something you want to
| consume later. If bitcoin has a 50% chance of doubling and 50%
| chance of halving in value, it is simply a good investment
| (expected payoff = 5/4 of investment) best held by dollar
| current dollar holders and bitcoin holders alike.
|
| So, yeah, wealth is what matters and the Siegel's argument is a
| red herring. But erudite one, ha.
|
| [1] https://en.wikipedia.org/wiki/Siegel%27s_paradox
| jonathan-adly wrote:
| This article is the classic bellcurve.jpeg meme with both ends
| saying 1 BTC = 1 BTC, and the middle IQ band sprouting out this
| non-sense.
|
| To give concrete critique, the author is using a complex
| financial instrument on an obscure exchange to make the case that
| sophisticated crypto traders would rather be paid in USD than
| Bitcoin. (with a meaningful, but overall small premium)
|
| As anyone who knows how professional Crypto markets work, its
| very nascent with a lot of arbitrage opportunity. When you see a
| 2-3% arbitrage in traditional markets, you can safely assume
| "market preference". But in Crypto land, it wasn't long ago that
| you can get a nice 20% arbitrage just by selling/buying Bitcoin
| between YEN/USD markets. It didn't mean that people had a
| preference between equal amounts of YEN/USD, it just meant an
| inefficient market with not enough professional market makers to
| arbitrage away the inefficiencies. (which how SBF of FTX made his
| money).
|
| The only reason one of the readers here won't arbitrage away that
| premium is they don't know how, or if they know how - they have
| bigger fish to go after.
| cuntlife wrote:
| paulpauper wrote:
| The dollar continues to be a safe haven
| s1artibartfast wrote:
| I think us currency alternatives got a bump. It shows the
| importance of gold reserves and integration with Chinese and
| other financial markets
| JumpCrisscross wrote:
| > _dollar continues to be a safe haven_
|
| This is true. But crypto traded like a safe asset this time. As
| equities and even gold plummeted, Treasuries and crypto
| rallied.
| ALittleLight wrote:
| "I think most people don't realize that 'IV' numbers are the
| annualized volatility of the log process, so there's a nonlinear
| conversion to non-log standard deviation."
|
| Hmmm, yes. I think most people don't realize this.
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