[HN Gopher] Temporary pause of Bitcoin withdrawals on Binance
___________________________________________________________________
Temporary pause of Bitcoin withdrawals on Binance
Author : tosh
Score : 476 points
Date : 2022-06-13 12:12 UTC (10 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| shmatt wrote:
| Imagine if this was some Oceans 11 type heist where the BTC owner
| (Binance, not you plebs holding coins in someone else's wallet)
| thinks one thing is happening, all while someone unauthorized got
| a hold of some hot wallet keys and is draining them
|
| 30 minutes have come and passed, BTC still not in sight
| kirbypineapple wrote:
| The only thing that comes to mind here is that there was a fee
| spike [1] and they've got too many unspents stuck in the mempool
| and can't initiate further withdrawals because their wallet is
| effectively "spent" until those pending transactions complete and
| they receive their change. I find this a bit hard to believe
| though...wallet management isn't simple when it comes to the
| scale that Binance handles, however I'd be shocked if they didn't
| have code written to trigger CPFP (Child Pays For Parent) [2].
|
| [1] https://jochen-hoenicke.de/queue/#BTC,30d,weight
|
| [2] https://bitcoinops.org/en/topics/cpfp/
| skohan wrote:
| I can think of many of exchanges pausing withdrawals in times
| of extreme volatility - either close to peaks or during massive
| selloffs.
|
| I think Binance probably doesn't have enough liquidity to cover
| their withdrawals and you probably don't need to look much
| farther to find an explanation.
| sergiotapia wrote:
| I just liquidated my entire BTC position. Crypto failed and will
| never be anything but a grift.
|
| I'm out.
| m348e912 wrote:
| I have two buying/selling indicators for crypto.
|
| 1. When my mom or other people who have no business in
| investing in crypto ask me how much bitcoin they should buy.
| (selling indicator)
|
| 2. When people start liquidating their positions and call
| crypto a grift. (buying indicator)
| hectorlorenzo wrote:
| What do you do when both are happening at the same time?
| 7steps2much wrote:
| Develop split personality disorder and begin trading with
| yourself
| newobj wrote:
| DeCeNTraLiZEd
| basedgod wrote:
| actually, this is good for Bitcoin
| Tade0 wrote:
| > Funds are SAFU
|
| I like how they embraced this term, even though it was originally
| a typo that went on to live a life of its own.
| eftychis wrote:
| a) Think we are overreacting on the particular comment. It is
| like gmail or github saying service is down/issue in Binance. b)
| As other people commented to people's comments: unusual days is
| when bugs manifest c) The whole stock and bond market is down.
| Everything is down. It is the "reddest" state we have been. Feel
| free to check.
|
| We are watching the whole world economy going down. We can of
| course carry on burying Crypto, but let us not kid ourselves that
| the practices do not exist in the rest of the commodity space. Or
| that the world is booming meanwhile crypto is just getting what
| it deserves. Now if that is bad and scary, I agree. Good luck.
| danlugo92 wrote:
| Lightning fixes this.
| 999900000999 wrote:
| This really looks like a Bitcoin bank run.
|
| I reckon if the tide really goes out, the money isn't really
| there.
|
| We have FDIC insurance for a reason.
|
| Luckily this happened before Crypto became mainstream. Normal
| people aren't likely to lose their life savings.
| redm wrote:
| Withdrawals resumed.
| https://www.binance.com/en/support/announcement/d312178e0fce...
| wesapien wrote:
| They are moving from cold to hot wallet.
| hatware wrote:
| I see we didn't learn our lesson from MT Gox.
| jstx1 wrote:
| > due to a stuck transaction causing a backlog
|
| How convenient for a transaction to get stuck on such a bad day
| for crypto prices.
| dubswithus wrote:
| Half the days are bad days. The volatility is wild. So why
| don't they have more issues if they are committing fraud is the
| question?
| spywaregorilla wrote:
| Not this bad
| edf13 wrote:
| Didn't read his next message?
|
| > This is only impacting the Bitcoin network. You can still
| withdraw Bitcoin on other networks like BEP-20.
| shawabawa3 wrote:
| But BTCB (Bitcoin on BSC/BEP-20) is not Bitcoin
|
| To actually withdraw Bitcoin like this, you'd have to bridge
| your BTCB to WBTC on Ethereum, and from there bridge it back
| to BTC (using a custodial bridge, AFAIK there are no WBTC/BTC
| decentralised bridges)
|
| You'd eat 2 sets of fees along the way plus gas, probably
| costing you 0.3% or more
| JCharante wrote:
| If you want to withdraw to protect yourself against binance
| mtgox'ing, WBTC is probably safe enough.
| TrapLord_Rhodo wrote:
| Binance has DEX's, why would you trade it for WBTC -> BTC?
| mhluongo wrote:
| dhsysusbsjsi wrote:
| Which is also not Bitcoin
| coryfklein wrote:
| Days like today, when price volatility - and thus transaction
| volume - is high, are exactly the kind of days you'd expect
| systems issues to manifest. As opposed to some random Thursday
| where no price action is happening.
| wfhordie wrote:
| So what exactly is the point of holding BTC if it can be held
| hostage like this? Crypto continues to fail at its most basic
| premises.
| vishnugupta wrote:
| You need to hold the keys in your own wallet. Holding it in a
| centralized exchanges like Binance, Coinbase etc is at best
| just DB entries.
| shawabawa3 wrote:
| You should be asking "what exactly is the point of holding BTC
| on Binance"
| ParksNet wrote:
| We should be asking "what exactly is the point of holding
| BTC"
| SkyMarshal wrote:
| Holding BTC for the long term has historically been a
| lucrative investment. Just not holding it on one of the
| many centralized exchanges that always seem to get hacked
| or go bust.
| onlyrealcuzzo wrote:
| Holding tulips in the long term was historically a good
| investment, too, until it wasn't.
| doliveira wrote:
| Prices went up exactly because of these centralized
| exchanges.
| once_inc wrote:
| [citation needed]
| Night_Thastus wrote:
| It's not a "lucrative investment". It's a bigger fool
| scam. The only way to make money in BTC is for someone
| else to buy in for more than you did originally. It makes
| it appear as if BTC's price is always going up, but in
| reality the number of fools is limited - especially with
| the buy-in getting higher and higher.
|
| Sure, the price will always go up in the long run. But it
| will become less and less liquid, and at some point those
| who are left will have hundreds of thousands or millions
| of theoretical money that's completely unspendable,
| because no-one else will buy in for more than they did.
| tasuki wrote:
| The person you're replying to was very careful to say
| "has historically been a lucrative investment". They have
| not claimed it to be a lucrative investment right now.
| jonathanstrange wrote:
| > _The only way to make money in BTC is for someone else
| to buy in for more than you did originally. It makes it
| appear as if BTC 's price is always going up_
|
| I'm not a crypto expert but that statement seems
| incorrect to me, since as far as I know BTC has deflation
| built into it. The more is mined the harder it is to mine
| more. So as long as investors are keeping _some_ trust in
| it and are not selling at large scale, the BTC value
| should continue to go up in the long run (ignoring
| smaller fluctuations). That 's why people have been
| flocking to it in the first place.
| pram wrote:
| Just because something has a limited amount doesn't mean
| its value automatically goes up.
| msbarnett wrote:
| Investing with Bernie Madoff was historically a lucrative
| investment, right up until it wasn't anymore.
| coldpie wrote:
| People like gambling. It's a fact of humanity that's never
| going away.
| namaria wrote:
| People like free money. They get addicted to gambling
| because of that.
| once_inc wrote:
| I can list a number of valid, real-world use cases. Bitcoin
| can be easily held either online or offline, in a number of
| solutions ranging between paper wallets, through hardware
| wallets, to dedicated laptops.
|
| Holding bitcoin on exchange is like giving people the keys
| to your safe because it is easier if they can open the safe
| for you while you gamble.
| [deleted]
| twox2 wrote:
| Correct, there is no point in holding crypto on an exchange. If
| you hold your own crypto, you don't have this problem.
| shadowgovt wrote:
| So crypto is fine for transactions that I can wait a few tens
| of minutes to a few hours to resolve, but not ones that I
| want to make at the rate of every fiat currency I hold.
|
| I can see how other people would have that use-case.
| twox2 wrote:
| I don't see how this relates to my comment above at all.
| shadowgovt wrote:
| Exchanges allow for sub-second resolution of a
| transaction because the resolution is actually pushing
| numbers around in the exchange's own internal tables (or
| between trusted exchanges). Banks offer similar service
| when trading fiat currency (either because they can
| resolve an internal account-to-account transaction or
| because they'll float the risk of fraud until they can
| resolve a cross-firm transaction). But if you want to
| have the Bitcoin network agree on a transaction, it has
| to get buried several blocks deep in the chain, and that
| takes time.
| twox2 wrote:
| Ah, yes I don't disagree. IMO, I don't think the use case
| for crypto is to replace fiat, but I can see how those
| that operate from that assumption/desire would experience
| friction.
| koonsolo wrote:
| There are cryptocurrencies with sub second transactions and
| zero or almost zero transaction fees. Welcome to the world
| of Proof of Stake.
| polygamous_bat wrote:
| You do understand that proof of stake has absolutely
| nothing to do with transaction speed or fees -- speed
| depends on how many nodes you want to agree on any
| transaction (decentralization) while the fees depend on
| how congested the network gets in an open pricing model
| for fees?
|
| Unless you are a crypto expert in it for the technology,
| that you happened to learn from random shiller YouTube
| videos.
| koonsolo wrote:
| Sorry, I classified DAG under PoS, my mistake.
| [deleted]
| naraga wrote:
| not your keys not your coins. nothing to see here
| colpabar wrote:
| "real crypto has never been tried"
| brezelgoring wrote:
| I wonder if BTC will use the communism excuses, given the
| space is a hyper-capitalist space where everything is made
| of money.
|
| I'll be looking with great attention to the near future.
| byyll wrote:
| It has been tried, it's on my computer right now and is
| irrelevant whether some exchange has paused withdrawals or
| not.
| [deleted]
| caslon wrote:
| I dislike cryptocurrency, generally, but plenty of people
| hold their own keys. It's rarer, now, but that's because
| mass consumers are generally stupid, not because the
| technology is flawed. If you _can_ do the correct thing,
| and you choose not to (or just are ignorant enough to not
| do the correct thing), it 's kind of your fault.
|
| I still think we should legislate it, but let's be honest:
| Most people who lose, here, kind of deserve it, for not
| doing the _bare minimum_ of research.
| viraptor wrote:
| This doesn't have much to do with people being stupid. If
| you want to trade more than once a month, you pretty much
| have to keep the funds on an exchange. Otherwise transfer
| fees would kill any profit you made. If you're not
| trading often, you may still want to take the risk due to
| free in-exchange transfers.
| naraga wrote:
| so, either trade on exchanges with Lighntning or pick the
| one at least in jurisdiction that gives you some kind of
| protection like if you held money for any other service /
| broker.
| caslon wrote:
| Sounds like the problem's with trading, rather than using
| it like currency. I've used it for legal, in-person
| transactions just fine. There are also decentralized
| exchanges, but the peanut gallery and the incompetent
| masses would hardly know about them.
|
| Shockingly, "get rich quick" schemes are a bad idea. Who
| would have thought? Oh, wait. Everyone.
|
| I still think most cryptocurrencies should be highly
| legislated, because most adults in society are more or
| less children who can't be trusted around shiny objects,
| but we should really stop pretending the problem is with
| the technology. It's with the users, trying to shoehorn
| it into a use-case it's unsuited for (get rich quick
| schemes).
| viraptor wrote:
| > Sounds like the problem's with trading, rather than
| using it like currency.
|
| The context here is an exchange limiting withdrawals,
| so... Yes, exactly?
|
| Decentralised exchanges have massive fees in practice. If
| you want to buy in and cash out after a year, sure. But
| show me one that takes <0.1% for the whole transaction
| including transfer/signing fees and supports BTC.
| caslon wrote:
| That doesn't mean people aren't stupid, in contrast to
| what you implied in another comment. Unwittingly _day-
| trading_ cryptocurrency is stupid, and the people who
| desire to do it are not very smart.
|
| That said, I do know a decentralized exchange that fits
| your criteria. I'm not going to mention it, because I
| refuse to enable such incredibly harmful behavior.
| koonsolo wrote:
| Once Ethereum goes to PoS, let's hope those transfers
| become cheap enough to compete with centralised
| exchanges.
| naraga wrote:
| PoS has nothing to do with fees being high or low.
| viraptor wrote:
| For competeness, there's also another change planned
| after pos - sharing. And that one is expected to lower
| the fees.
| naraga wrote:
| i believe eth (just like bitcoin before) has chosen 2nd
| layers as a primary scaling solution. which obviously
| affects compatibility of code across different 2nd
| layers. basically we are talking about futures years
| ahead.
| [deleted]
| cloutchaser wrote:
| I'm still waiting for the actual bitcoin infrastructure or
| algorithm to break. It's been 10 years and a trillion
| dollar network.
|
| Just because exchanges fail, and there are shitloads of
| scams, doesn't mean the underlying technology isn't super
| interesting and can actually grow into something amazing in
| a few decades.
| [deleted]
| kspacewalk2 wrote:
| A few decades from now, the underlying technology will
| still be super interesting and will still have the
| potential to actually grow into something amazing in a
| few more decades.
| cesarb wrote:
| > I'm still waiting for the actual bitcoin infrastructure
| or algorithm to break.
|
| It already happened:
| https://en.bitcoin.it/wiki/Value_overflow_incident
| naraga wrote:
| real crypto works just fine for millions. it is not problem
| of crypto that there are people falling for ponzis (not
| refering to Binance now). also, even quality of cefi
| exchanges like binance, coinbase, kraken, bitfinex has been
| outstanding in recent years so really, not sure what are we
| even talking about here. you get much more often blocked by
| credit card company or bank because of suspicious nonsense
| they dont explain.
| ausbah wrote:
| sure they aren't the problem of crypto because they're a
| feature of the surrounding ecosystem not the underlying
| implementation, but when the ecosystem gains the
| reputation of a scam filled hellscape and most of the
| value and "use cases" is tied up in artificial hype -
| that has to pose some amount of worry in terms of future
| regulation and adoption does it not?
| naraga wrote:
| i really hate this analogy but if you want to avoid scams
| avoid internet. crypto, for whatever reason is treated as
| special while most are commited with all sorts of hacks
| or social engineering. on the other hand i do recognize
| this is an issue but imo the only thing you can do is
| education. crypto has valid unique amazing usecases and
| it enables things that were not possible before.
| ausbah wrote:
| crypto is just like banking, which is an already
| regulated industry
| wfhordie wrote:
| Crypto is user hostile then? Got it
| rvz wrote:
| Nope.
|
| The point is you store your crypto on a non-custodial
| software wallet (Metamask) or a hardware wallet (Ledger
| Nano) and not on an exchange, so it cannot be _' held
| hostage'_.
|
| It is not your keys, not your coins if it is on an exchange
| which uses custodial wallets, but doesn't apply if it is on
| a non-custodial wallet.
| lvturner wrote:
| This is great if I want to store it, or spend it on
| places that accept Bitcoin (or other coins) but what if I
| want to exchange it for another currency? Seems to me
| only two options, an exchange or a face to face trade?
| barnabee wrote:
| You can use something like https://bisq.network/
| woodpanel wrote:
| Thanks for highlighting the bad UX of crypto currencies,
| as it provides a nice segue into the financial danger
| that UX causes, as it creates customer-demand for
| simplifications that exchanges provide - so every time an
| exchange does something rugpull-ish we're actually
| testing how much of crypto's market-cap is based on maybe
| not-so-sturdy confidence of retail investors...
| dhsysusbsjsi wrote:
| This statement bugs me because it is a large source of
| confusion for new people.
|
| Your funds are spendable by your private key. Your
| private key is stored on Metamask, Ledger or a piece of
| paper.
|
| It's an important distinction to make. Your hardware
| wallet is just a custodian of your private key.
| benjaminwootton wrote:
| That bugs me too.
|
| Almost every document out there talks about storing coins
| in your wallet. It's actually a private key in there.
|
| Maybe with the right language, more people might be
| tempted to hold their own keys and eschew centralised
| exchanges.
| namaria wrote:
| You either have a healthy ecosystem or you don't.
| kmac_ wrote:
| "Always has been."
| mrkramer wrote:
| Speaking of Bitcoin;
|
| Satoshi was an excellent C++ programmer but s/he wasn't
| quite good at creating GUI and "Crypto" consumer apps
| that's why s/he open sourced it and left it to the
| community to build upon it and expand the Bitcoin
| ecosystem.
|
| Btw at the time Bitcoin was in the experimental phase and
| Satoshi left the Bitcoin community pretty early that's why
| "Crypto" was user hostile and maybe still is.
| mempko wrote:
| Satosh was NOT an excellent C++ programmer. As someone
| who heavily dug into bitcoin code, the whole thing was a
| mess from the beginning. Poorly architected. Insane
| amount of global variables. It was just a huge mess and
| still is.
|
| IMO it was initially written by someone deep in
| government (but I have no proof, just my opinion from
| looking at the code).
| mrkramer wrote:
| >Satoshi was NOT an excellent C++ programmer.
|
| I'm not a programmer but that is what Gavin Andresen
| said[1]; he said something like this "Satoshi was an
| excellent C++ programmer but he wasn't a cryptographer"
| and "Satoshi wasn't familiar with Cryptography 101" in a
| sense that Satoshi was sometimes mixing up basic
| cryptographic concepts.
|
| And yea I know Bitcoin had plenty of bugs I heard of
| notorious Value overflow incident[2].
|
| >IMO it was initially written by someone deep in
| government (but I have no proof, just my opinion from
| looking at the code).
|
| My assumption is someone from the academia e.g.
| university professor. Maybe someone who was teaching
| freshmen basics of Computer Science and basic C++
| programming then your point might be valid that Bitcoin's
| codebase was poorly written looking from the practical
| and from the professional point of view.
|
| [1] https://www.youtube.com/watch?v=rQ3e1Pzu7iI
|
| [2] https://en.bitcoin.it/wiki/Value_overflow_incident
| koonsolo wrote:
| So is command line, but that doesn't mean it has no value.
| matt_s wrote:
| Holding crypto on an exchange is like giving money to a guy on
| the corner who knows a broker to put in the stock market and
| telling them you don't need the account numbers, you trust
| them.
|
| If you're going to do crypto, get a wallet setup where you have
| the keys to it.
| yunohn wrote:
| > Holding crypto on an exchange is like giving money to a guy
| on the corner
|
| I'm sorry, what?
|
| A CEX /should/ be comparable to a brokerage like Charles
| Schwab or even Robinhood. This comes with legal protections -
| they can't gamble with my unused money or invested stocks.
|
| Also, and this is the most disingenuous part - how do you buy
| crypto with fiat? Literally everyone I know uses a CEX to
| on/off-ramp, and sadly this is widely seen as an acceptable
| evil.
| matt_s wrote:
| Are there really legal protections for crypto exchanges?
|
| Use an exchange to on/off ramp it, then put it into your
| own wallet for holding.
| seanw444 wrote:
| Apparently that's too hard for the layman. Even though there
| are wallet apps that literally walk you through it...
| SilverBirch wrote:
| There's two counter points to this. The first is that in
| terms of day to day likelihood of losing the bitcoin, you're
| probably generally safer with an exchange than holding the
| crypto yourself. Secondly, if the exchanges actually do
| collapse, then whilst you won't lose your BTC if you're not
| on the exchange, your BTC are probably going to be worth a
| lot less anyway, so you're still exposed to the risk of
| exchanges collapsing. If you're the average joe who has
| bitcoin (you probably shouldn't have bitcoin) but using an
| exchange isn't crazy.
| matt_s wrote:
| Use exchanges for just that, exchanging it, but don't let a
| central exchange hold it in their wallet.
| Petersipoi wrote:
| This reply completely ignores everything GP said. You
| didn't address either of the (seemingly very valid)
| points they made.
| matt_s wrote:
| Generally safer with an exchange I would disagree with,
| you're at the whim of whatever is in the TOS for that
| exchange, it's not a bank or securities broker. If you're
| relatively good with keeping secrets/passwords then
| setting up your own wallet should be easy.
|
| It seems like exchanges kind of are counterintuitive for
| a decentralized financial product (for holding your
| crypto). One could argue that exchanges that fail when
| people are selling off a lot of volume might not have a
| good business model. My naive brain thinks an exchange
| will make money on transactions so it shouldn't matter if
| the exchange from crypto_bucks to USD is different. If
| volume falls drastically then maybe your operating costs
| are too high?
| jonathanstrange wrote:
| It is surely seems crazy to me as long as these exchanges
| can withhold your money - which brings me to the question
| how this practice could possibly by legal. Is it in the
| contract of these pseudo-banking services that they can
| withhold their clients' money whenever and as long as they
| wish? Why would anybody agree to such a contract?
| spicybright wrote:
| Because people aren't reading the fine print. They just
| assume it's a better bank until this happens.
|
| While this might change in the future, I would guess
| bitcoin isn't technically money. It's more like a gift
| card some people will exchange for real money.
|
| But even a gift card has more protection than crypto lol
| skohan wrote:
| So it's not safe to keep in an exchange and not safe to
| keep outside of an exchange. Future of finance alright.
| wcfields wrote:
| Future of finance: Your own mattress (cold wallet) or a
| bookie incorporated in a tax-haven (exchange)
| tasuki wrote:
| > if the exchanges actually do collapse, then whilst you
| won't lose your BTC if you're not on the exchange, your BTC
| are probably going to be worth a lot less anyway
|
| I hear this repeated often. Very short term, sure. But long
| term, shouldn't your slice of magical internet money pot be
| worth more simply because there's now less of it in total?
| oneoff786 wrote:
| > The first is that in terms of day to day likelihood of
| losing the bitcoin, you're probably generally safer with an
| exchange than holding the crypto yourself.
|
| The word you're looking for is bank
| woah wrote:
| > Secondly, if the exchanges actually do collapse, then
| whilst you won't lose your BTC if you're not on the
| exchange, your BTC are probably going to be worth a lot
| less anyway
|
| This is nonsense. Hundreds of Bitcoin exchanges have
| collapsed over the last 10 years.
| lxgr wrote:
| Where do you initially buy that crypto, then? And where would
| you sell it, in case you need other currencies?
| yunohn wrote:
| throwaaay103948 wrote:
| throwaaay103948 wrote:
| Work for Bitcoin (wage)
|
| Sell goods and/or services for Bitcoin
|
| Trade Bitcoin on P2P platforms (Local Bitcoins, Bisq, etc.)
| chinathrow wrote:
| > Work for Bitcoin (wage)
|
| Haha, yeah, right. Seriously: don't do this.
| Lionga wrote:
| 30 Minutes mentioned now passed twice, no update. Well Not your
| keys, not your coins (not that they will be worth much soon
| anyway...)
| throw03172019 wrote:
| It's my understanding this is not effecting selling BTC? It would
| effect people buying BTC but not being able to send it to their
| own wallet?
|
| If they were preventing deposits of BTC, it would prevent people
| from selling.
| duttonw wrote:
| if you left crypto on an exchange, you took a risk, this is the
| wild wild west.
| throwaway4good wrote:
| "stuck transaction causing a backlog"
|
| Can someone explain the mechanism here? What is going on? (Is it
| something interally at Binance or something to do with the
| Bitcoin network.)
| cool_dude85 wrote:
| You know how the internet is a series of tubes? Well someone
| clogged the bitcoin tube over at Binance.
| DonHopkins wrote:
| rasz wrote:
| more like https://www.youtube.com/watch?v=DJklHwoYgBQ
| seanw444 wrote:
| It all makes sense now.
| rocqua wrote:
| Two guesses:
|
| Guess one, they made a big transaction with most of their hot
| wallet, partially paying out to someone who withdrew, with the
| rest going back to the hot wallet. This transaction is in the
| queue but not finalized yet. The network won't accept any other
| spends of that money. Because that would be a double spend. So
| until that transaction is finalized (or it gets to old) that
| bitcoin is 'stuck'.
|
| Or alternatively their hot wallet is empty and they have an
| outstanding transaction to refill it from their cold wallet.
| (They have the cash, but they have to wait until they can get
| it from their 'vault', and there is a traffic jam on the way to
| the vault).
|
| I am not sure the first guess actually still works this way, I
| vaguely recall there are now mechanisms for one transaction to
| 'override' another non-confirmed transaction.
| jonahbenton wrote:
| Excellent hypotheses, it should be possible to see these
| transactions if they are out there. That's why it's a public
| blockchain.
| lovingCranberry wrote:
| You are right about your first guess.
|
| Childs can pay fees for their parent now.
| throwaway4good wrote:
| What queue? Is there a queue in the bitcoin network?
|
| I thought it was a question of paying a high enough
| transaction fee and you would get your transaction done
| faster / within 10 minutes.
| rocqua wrote:
| It's a queue, but not a first-come first serve one. The
| problem I imagine is that, once you set your transaction
| fee, and it turns out to be too low, it is hard to
| retroactively pay more fee. Just because the system doesn't
| allow two spends of the same output in the mempool at the
| same time, and canceling a transaction is hard.
| gruez wrote:
| > What queue? Is there a queue in the bitcoin network?
|
| Yes, that's what the mempool is.
|
| >I thought it was a question of paying a high enough
| transaction fee and you would get your transaction done
| faster / within 10 minutes.
|
| that's broadly true, but if transaction volume spikes then
| your initial fee estimate might be too low. there are ways
| around this (RBF, CPFP), but it's unknown whether their
| wallet software handles it.
| throwaway4good wrote:
| How would this be an excuse for Binance to block outgoing
| transactions?
|
| Unless somehow all of Binance's bitcoin was stuck in the
| mempool ...
| rcxdude wrote:
| They just described a situation where most of their
| readily available bitcoin (exchanges do not keep more
| than a minimum of their available cryptocurrencies in a
| programmatrically available wallet) could be stuck in the
| mempool.
| rocqua wrote:
| It wouldn't need to be all their bitcoin, just their hot-
| wallets. Moving bitcoin out of cold wallets should
| generally be a slow process.
| lxgr wrote:
| > there are now mechanisms for one transaction to 'override'
| another non-confirmed transaction.
|
| There's at least two, "child pays for parent" and replace-by-
| fee. It's pretty hard to get regular transactions really
| "stuck", these days.
| rocqua wrote:
| Ah ofcourse child pays for parent essentially always works.
| If I recall correctly replace-by-fee requires wallet
| support perhaps even at the time of creating the original
| transaction. But child pays for parent is just universal
| because it doesn't need to replace the transaction in the
| mempool, it just pays the miners to move it out of the
| mempool.
| ISL wrote:
| Bitcoin is off ~20% against USD in the last two days, ~13% in
| last day.
|
| That much movement is bound to drive transaction and redemption
| volumes way up at any exchange.
| thehumanmeat wrote:
| Doubt it's that. They ran out of reserve for their fractional
| reserve. Crypto on exchange wallets has already been dwindling
| the past few months.
| LightG wrote:
| Bro's!
|
| They're blocking us from our rights!!
|
| Our ... our ... FREEEEEEEEEEDOMMMM!!!!
| fredgrott wrote:
| CryptoCurrency
|
| Not only an oxymoron but not a safe investment in any fashion AND
| that was by DESIGN.
| bluedino wrote:
| How does a transaction get "stuck"?
|
| Internal system thing, right?
| buzzin_ wrote:
| There is an informational asymmetry, so rogue exchanges can lie
| all they want without you knowing for sure, and those that do
| not want to give you your money for whatever reason always do
| (lie that is).
|
| This happened with MtGox and permanent withdrawal problems,
| both with USD and BTC.
|
| With USD, it was "Oh, no, its the banks, they are limiting us
| to $50.000 per day, it's not us".
|
| With BTC, it was "Oh, no, Bitcoin network has a bug, we cannot
| process withdrawals, it's not us".
| Ekaros wrote:
| Basically you bid for someone to deliver a packet for you. They
| promise to deliver it as soon as your bid is high enough to get
| into bunch of deliveries they are going to do. If others pay
| more they might end up never delivering your packet...
| pavlov wrote:
| Bitcoin is getting close to its Dec 2017 peak. That may be when
| the real crash starts.
| agilob wrote:
| When I'm not sure I always google "bitcoin meme graph" and it's
| always correct, it's actually crazy how all major coins follow
| this pattern. Welcome to "capitulation" stage
|
| https://www.kraken.com/en-gb/prices/eth-ethereum-price-chart...
|
| https://www.google.com/search?tbm=isch&q=bitcoin%20meme%20gr...
| atlasunshrugged wrote:
| In other news: Celsius Network pausing withdrawals as well
|
| https://www.barrons.com/articles/celsius-network-pauses-with....
| ceejayoz wrote:
| Ongoing discussion of that at
| https://news.ycombinator.com/item?id=31723286.
| circa wrote:
| https://celsius.network/ is doing this too. Not good.
| jtode wrote:
| woodpanel wrote:
| Sweethaert, don't waste your popcorn watching that dumpster
| fire. The real show starts once Tether "de-re-pegs".
| xwdv wrote:
| Agreed, that's the one domino I'm waiting for to fall. Once
| tether collapses it's instantly going to take about 25% of
| Bitcoins price down with it, and a whole other series of
| events will probably set in motion. Everything will start
| trending to zero.
| woodpanel wrote:
| I'm wondering if it's just going to be 25%.
|
| How many investors actually understand the technology? Who
| (even here at HN) has read a whitepaper? I've read some,
| and have to say it became a personal running gag of how
| many pages it would take until the authors completely
| descend into fogging the reader with a mumbo-jumbo of made
| up words ("The Tangle").
|
| But more specifically Tether stands at half the marketcap
| of Etheruem [0] and represents the largest trade volume (ie
| that of Bitcoin and Etherium combined) [1]
|
| [0] Marketcap ETH: 147 Bn USD, USDT: 72 Bn USD
|
| [1] Volume BTC: 63 Bn USD, ETH: 42 Bn USD, USDT: 103 Bn USD
| cryptoanon wrote:
| I love how cocksure people are of Tether's decline. Do
| you believe reading a bitcoin (or IOTA) whitepaper is
| sufficient to understanding market structure because I
| get the sense that you do not understand it.
|
| If you are so sure, feel free to short Tether.
| josephlord wrote:
| 1. Shorting practicalities for Tether not clear. 2. Need
| confidence 3rd party will pay out. 3. Market can stay
| irrational longer than I can stay solvent. 4. Especially
| high risks when dealing with an entity which for the
| moment can print money to manipulate markets.
|
| In short, I'm confident it will fail and fairly
| spectacularly but I don't know when and I'm also not sure
| how to go about shorting it.
| woodpanel wrote:
| USDT ticks all the checkboxes of prior Ponzi's I've
| experienced but please, enlighten me.
|
| Stablecoins in principle face the issue of pegging
| against something that dillutes at will.
|
| But specifically USDT: How is Tether's peg supposed to
| work if it's alledged backing assets consist of _other
| crypto assets_ ?! Shouldn 't they seek less crypto
| exposure for stability?
|
| Assets which are BTW unsatisfactory disclosed considering
| a) comparison with established equity markets and b) that
| such disclosure only exists at all due to law-
| enforcement.
| rspeele wrote:
| Is there a place one can short Tether, that can also be
| trusted to pay out on a short position in the event of a
| catastrophic Tether collapse? I.e. not a crypto exchange?
| SV_BubbleTime wrote:
| See how tech savvy your local bookie is?
| [deleted]
| twawaaay wrote:
| I am so happy about this. I hope this is going to sour crypto for
| "investors". I use quotes, because they really are not --
| investing should be reserved for fronting cash to create some
| value (like buying stock to infuse capital into a corporation).
| As it is all crypto trading is purely speculation.
|
| The world would be so much better if money tended to be exchanged
| in good faith, to improve something rather than just to exploit
| market instability.
| rmbyrro wrote:
| Technically, only direct stock offerings "infuse capital into a
| corporation".
|
| The rest (which is probably 99% of the market volume) is also
| just "speculation".
| twawaaay wrote:
| The stock market isn't speculation (though there is a lot of
| speculation on stock market -- these two sentences are not in
| conflict).
|
| Speculation is something that happens when you start buying
| and selling for reasons that are not at all connected to the
| performance of the company.
|
| There is a lot of useful, value-creating reasons for people
| to be able to sell their share they bought at initial stock
| offering.
|
| And think about how useful/worthwhile a share would be if you
| could never sell it. Remember, there isn't selling if there
| isn't buying. If you want to sell your share there must be
| somebody ready to buy from you.
| dubswithus wrote:
| Being happy about retail investors losing money is immoral. I
| hope you realize that.
|
| We have a lot of investments in the US that do nothing except
| force people to grind even harder. Look at the housing market.
| Why should housing be an investment when we absolutely need it
| to live and there are other investment vehicles that do just as
| well if not better?
| twawaaay wrote:
| > Being happy about retail investors losing money is immoral.
| I hope you realize that.
|
| No, it is not immoral. Retail "investors" should know better
| than "invest" into things with very shaky connection to
| reality where it is predicted value next Wednesday can be
| anywhere between zero and infinity. If they loose all your
| money on crypto that is purely their fault for "investing"
| into something which has no real value and can loose its
| virtual value in no time.
|
| They wanted their chance at huge profits on an extremely
| volatile market and extreme volatility is what they got.
| dubswithus wrote:
| So someone made a mistake? And the correct moral approach
| is to laugh and gloat?
| twawaaay wrote:
| I am not getting how laughing at stupid people doing
| stupid things is immoral. Got any bitcoin that it got you
| so wound up?
| eatsyourtacos wrote:
| >investing should be reserved for fronting cash to create some
| value (like buying stock to infuse capital into a corporation).
| As it is all crypto trading is purely speculation.
|
| Ok but let's be real- buying a stock is not really "creating
| value". The stock already exists. Company A has issued 100
| shares. People are buying/selling it in the market.. no one is
| creating value there. Sure they may be arbitrarily driving the
| value up, but that's not creating real value.
|
| If you want to argue that an IPO is "creating value" because
| people basically front the money to give capital.. ok fine. But
| let's not pretend you as a random person buying and selling
| google shares that already exist is creating value.
|
| Also, I would say the people sitting here buying and selling
| stocks are most of the time 99% pure speculation. They have
| zero control over what actually happens in the company. Sure
| they can do "research" and guess what might happen.. but it's
| still nearly all gambling.
|
| Investing is the horrible word for how nearly the entire
| financial system works. People have created gambling as a way
| of life, and convinced everyone else that they must gamble
| their money to make more. Which, surprise surprise, nearly
| always benefits the rich. Guaranteed pension/good social
| security? Nah, throw your money into our 401k so we can prop up
| the rest of the market arbitrarily and continue to drive up
| everything the rich own so they are richer! And you've all
| fallen for it.
| karpierz wrote:
| > Ok but let's be real- buying a stock is not really
| "creating value". The stock already exists. Company A has
| issued 100 shares. People are buying/selling it in the
| market.. no one is creating value there. Sure they may be
| arbitrarily driving the value up, but that's not creating
| real value.
|
| If it wasn't possible to resell stocks, capital acquired via
| stock issuance would be much more expensive. The stock market
| allows stocks to function as a means of seeding capital.
|
| It's like saying "paying back your mortgage doesn't get buy
| you a house." The mortgage only exists because it gets paid
| back.
|
| > Also, I would say the people sitting here buying and
| selling stocks are most of the time 99% pure speculation.
| They have zero control over what actually happens in the
| company. Sure they can do "research" and guess what might
| happen.. but it's still nearly all gambling.
|
| Yes, which general advice is to spread your capital across
| the whole market. It used to be that you had to spend your
| capital building up your own business, which is even worse
| than trying to pick your own stocks. Now you can diversify
| your risk world-wide, as to avoid any sort of local
| calamities.
| misslibby wrote:
| By buying existing stock you help create a functioning
| market, which in turn helps other people make investments.
| That they can sell their stock in the future factors into
| investment decisions. Therefore imp it is incorrect to say
| buying existing stocks doesn't create value.
| twawaaay wrote:
| The difference between speculation and investing isn't in
| that you want to earn money (everybody who buys stock want to
| increase their wealth). The reason is for why you pick this
| particular instrument.
|
| When I buy stock (or when Berkshire Hathaway does it) I buy
| into business that I hope has sound fundaments and is going
| to grow and create more value over time. I spend considerable
| effort trying to understand the situation the business is in,
| do they have dangers ahead of them, do they have sound
| leadership, etc. This is investing -- buying things that you
| hope are going to increase in value over long time.
|
| Speculation is when you buy things for reasons that are not
| at all connected with the thing you are buying. For example
| you noticed people are buying crypto, the price is going up,
| so why not jump in on the wagon and get your cut of the
| profit. This is speculation because it totally ignores what
| is it that you are buying, and the only thing that you care
| is that the price is going up.
| dubswithus wrote:
| Unless you have an equity position you haven't given the
| company anything for the shares when you buy Berkshire
| stock. You are essentially riding off of Buffett's success
| and making money without doing any work.
| twawaaay wrote:
| toomuchtodo wrote:
| Pensions invest in the capital markets. Social security
| invests in US treasuries. It's productive activity allocation
| all the way down.
| danuker wrote:
| > As it is all crypto trading is purely speculation.
|
| The reason I stay invested is the supply-side economics.
|
| The supply is well-known in advance, and is advantageous to
| Bitcoin. US M2 money supply grew 8.04% in the past year [0],
| while Bitcoin's grew ~1.75% [1].
|
| Yes, demand has its 80% ups and downs, but each crash was to a
| level higher than the previous.
|
| [0] - https://ycharts.com/indicators/us_m2_money_supply_yoy
|
| [1] - https://charts.woobull.com/bitcoin-inflation/
| potatoz2 wrote:
| There are many many things in the world that grow slower than
| US money supply but nonetheless see their price go down or
| plateau.
| dehrmann wrote:
| > Yes, demand has its 80% ups and downs, but each crash was
| to a level higher than the previous.
|
| You're actually looking at demand more than supply. You're
| right that supply isn't going up much, but you have no
| evidence or theory about why people will be more interested
| in Bitcoin in 5 years than they are now. You really have to
| look at both.
| SantalBlush wrote:
| The supply of my toenail clippings has grown by less than
| either of these over the past year. If you'd like to apply
| your supply-side economics and invest, send me a DM.
| danuker wrote:
| Call me when they reach $100B in market cap.
| legulere wrote:
| What when demand goes to 0, when people realize that bitcoins
| aren't useful for anything legal?
| danuker wrote:
| Then I incur a 100% loss and move on.
|
| But so far, this crash has stayed above the 2017 top. So it
| looks like I'm holding the S&P at 4x leverage, but with no
| margin calls.
| UkrainianJew wrote:
| >investing should be reserved for fronting cash to create some
| value (like buying stock to infuse capital into a corporation).
|
| Low interest rates have killed this cause. If corporations can
| get cash from the banks at near zero rates, the only remaining
| use case for investments is heavy speculation. In a sense, the
| post-2008 monetary policy was about making things look good on
| paper, while hollowing out the economy with bullshit jobs,
| bullshit stocks and bullshit business models.
|
| As bad as the spiraling inflation could be, I hope the shock
| coming from it will bring the economy back to the common sense.
| misslibby wrote:
| I really don't get why people are happy about Bitcoin crashing.
| It is the only hope for freedom.
|
| What do you mean by "exchanging money in good faith"? So being
| able to prove transactions are valid is a bad thing in your
| opinion?
|
| You think it is a good thing that the FED can make the whole
| economy tumble by playing with their interest rates?
| mmastrac wrote:
| > It is the only hope for freedom.
|
| I... am not sure how to reply to something like this. Does
| this not strike people as a bit cult-like?
| TrapLord_Rhodo wrote:
| >Does this not strike people as a bit cult-like?
|
| Crypto is not a technology, it's a religion. The reason
| behind this is that it takes faith to believe that today
| does not represent tomorrow.
|
| There is more nuance behind crypto besides its
| technological innovation like AMM's ,ZK-proofs &
| distributed computing. It's the idea that you can be a
| self-soverign individual, owing fealty to no nation.
|
| It's often brought along at the disillusionment of the
| current united states world order. We see rampant
| corruption, an absolutely ancient leadership completely out
| of touch with the current generation and an economy that
| seems to forever favor the rich. There is no light at the
| end of the tunnel in the current economic system for a
| large majority of the population.
|
| Bitcoin promises(ed?) the ability to transact with anyone
| on the planet outside the vieew of the current regime.
| Bitcoin promised "Proof of work" over "Proof of violence".
| It has allowed us to create "ad-hoc governance" like neveer
| before. it gave an entire generation of people light at the
| end of the tunnel.
|
| I am not saying that any of these things are correct, or
| 'Right'. Simply stating how i've seen the community evolve
| and why.
| trts wrote:
| I don't agree with GP but there are legitimate reasons why
| people are sympathetic to this.
|
| One reason would be the increased difficulty of a
| government to seize or freeze assets for people who are
| determined to be politically problematic (see: e-CNY and
| SWIFT).
|
| Another would be the accelerating debasement of currencies
| which provides opportunity for the rich to become richer in
| wealth & assets, while wages for the working class are
| diminished by inflation.
| misslibby wrote:
| Do you disagree that the monetary policies of the FED
| messed up the economy? How is that OK?
|
| The point of Bitcoin is literally decentralization.
| Centralization is control and anti-freedom.
| tomcat27 wrote:
| It's not in the spirit of decentralization to stop withdrawals
| dragontamer wrote:
| It actually is.
|
| Smaller banks are vulnerable to bank runs. So a lot of banks
| during crisis (before FDIC / Centralized Banking in the USA)
| would close up to stop bank runs.
|
| Closing up shop during a bank run only made people angrier, and
| exacerbated the problem. What was invoked as a solution, was
| for every bank in the nation to be FDIC insured by the central
| bank.
|
| The smaller and more decentralized banks are, the more
| frequently the bank-runs are, forcing the small banks to close
| to protect themselves.
| tomcat27 wrote:
| They are not banks. They are forex traders.
| mig39 wrote:
| Looks like they've resumed:
|
| https://www.binance.com/en/support/announcement/d312178e0fce...
| doomroot wrote:
| Reposting from the other thread:
|
| I would like to provide some context to people unfamiliar with
| how the bitcoin mempool works and what you can do to avoid
| getting your transaction stuck. The mempool is all of the
| transactions that have ben gossiped about but have not yet been
| mined (finalized) into a block. Each node has their own mempool.
| You can see [1] that there are roughly 6 hrs worth of
| transactions in this node's mempool (everyone should have a
| similar mempool, though not identical). So Binance's claims of
| network congestion are "true" on the surface, however there are a
| few interesting points that lead me to believe that they are
| acting fishy.
|
| 1. Why does Binance not have RBF enabled on their withdrawal
| transactions? RBF mean "replace by fee" and it's
| a way you can mark an unconfirmed transaction as replaceable by a
| similar transaction that pays higher fees. This is extremely
| useful when you need to ram a transaction into a block by
| increasing the fee you're willing to pay miners to mine your
| transaction. I highly recommend you only use a wallet that allows
| you to use RBF & to have RBF enabled by default. Of course
| Binance knows about RBF so why aren't they using it?
|
| 2. Why does Binance not use 'Child Pays for Parent'? CPFP is a
| little hard to understand if you don't understand that bitcoin
| transactions are linked together in a graph structure. In short,
| a bitcoin transaction is a data structure that points to previous
| transactions to spend. CPFP is when you make a new transaction
| that spends from your previous unconfirmed transaction (un-mined
| transaction in the mempool) and over pay in fees to cover the
| cost of both transactions. This incentivizes miners to include
| BOTH transaction in the same block. Once again Binance should be
| doing this. An ideal way to do this would be to batch a bunch of
| customer withdrawals in a single transaction. This would save a
| lot on network fees. They would make this big transaction payout
| a _large_ amount back to themselves so that they could CPFP this
| batched withdrawal transaction.
|
| 3. Binance has their own mining pool with 11% of the network
| hash[2]. Binance could easily prioritize their "stuck" withdrawal
| transaction in their pool's blocks. Of course if they didn't
| subsidize their miners for this they risk them switching to
| another pool. One would think that halting withdrawals is an
| existential risk to their business so temporarily paying their
| miners to ram transactions through should be worth it?
|
| So what is the take away from all of this? There are numerous
| tools at Binance's disposal. Why did they not work/why are they
| not using them? My hunch is that they don't have all of their
| ducks in a row & are running a fractional reserve. (this is pure
| speculation on my part) They likely had a lot of (your) bitcoin
| tied up in "risk-free" interest accounts (Celsius) and are
| scrambling to get ahold of bitcoin to give back to customers.
|
| [1] https://mempool.space/ [2]
| https://mempool.space/mining/pool/binancepool
| johntony678 wrote:
| once_inc wrote:
| ?!
| jmoak3 wrote:
| You really cannot make this up. As usual crypto in practice is
| the opposite of decentralized because people. Will. Not. Run.
| Their. Servers.
|
| Moxie nailed it
| sgt101 wrote:
| I think it's because bitcoin trading can't actually use the
| network - it's too slow and expensive.
|
| So the exchanges and the stable coins are used as a proxy which
| then means that they are disconnected from the actual currency.
| This means that there is an amplifier (leverage) on the way up,
| leading to spectacular bull runs.
|
| Also...
| FabHK wrote:
| > bitcoin trading can't actually use the network
|
| Crypto trading on exchanges never uses the network. You send
| your crypto to an exchange on-chain, and all trading
| happening on the exchange then is off-chain: just adjustment
| of a few positions in the exchange's databank (as it should
| be: quick and efficient, within a centralised trusted
| institution).
| misslibby wrote:
| Decentralized exchanges exist, but they can't trade with fiat
| money. One of the reasons why stablecoins exist.
| optimiz3 wrote:
| Case in point: was an early adopter of Eth, mined many of the
| very early blocks. Sold it all back in February. One of the
| reasons? The whole Eth 2.0 upgrade requires both a base level
| node (Ethererum sanctioned) and a "2.0 validator node" where
| one is supposed to trust a 3rd party implementation with
| minimally 10s of thousands of dollars per stake. At least with
| a 1st party node the Ethereum Foundation stood behind it but
| now there is no official release backing the future of the
| project, only a spec.
|
| How is anyone sane supposed to run their own servers in this
| case?
| faangiq wrote:
| Also ETH is nonsense with no use case.
| kybernetyk wrote:
| They have a use case: roll backs when something goes
| """"wrong"""" ;)
| optimiz3 wrote:
| Wouldn't go that far - the programmable aspects were at
| release were certainly unique and value added.
| coldpie wrote:
| Wait till this guy hears about stored procedures.
| RC_ITR wrote:
| To do what? (Other than enable financial engineering)
| aasasd wrote:
| Put in one buck, take out two bucks. The American Dream.
| fddhjjj wrote:
| Why would programmable money be useful for anything
| beyond financial engineering. It's literally engineering
| + finance.
|
| Why is financial engineering inherently universally
| without qualification bad? I have a mortgage, an index
| fund, and an ATM card. I :heart: financial engineering.
| freemint wrote:
| > Why is financial engineering inherently universally
| without qualification bad?
|
| Yeah because it takes up engineering time and produces no
| tangible good but to widen inequality.
| fddhjjj wrote:
| I cited three examples of financial engineering. Just to
| be clear you oppose mortgages, index funds, and ATM
| machines?
|
| I agree all of these or at least mortgages and index
| funds probably increase inequality especially given
| uneven access. As far as tangible goods -- home
| ownership, retirement savings, and less time spent
| waiting at the bank.
| RC_ITR wrote:
| You did _not_ cite 3 examples of "financial
| engineering," you cited examples of "financial services."
|
| If crypto made it meaningfully easier to borrow capital
| to invest in utility assets, then I'd :heart: it too.
| (Mortgages)
|
| If crypto made it meaningfully easier to own equity
| capital in assets priced by utility, then I'd :heart: it
| too. (ETFS)
|
| If crypto made it meaningfully easier to transact for
| utility goods/services with my capital, then I'd :heart:
| it too (ATMS)
|
| Crypto dos none of these things.
|
| What it does do, is it allows me to arb trade against
| misinformed retail liquidity providers who foolishly put
| their capital into DEX's.
| fddhjjj wrote:
| Can you provide a decision rule that distinguishes
| financial services from financial engineering?
|
| I do not feel as confident as you seem that the group of
| things called "crypto" will not be useful for financial
| services.
| RC_ITR wrote:
| My definition: Financial engineering is the quantitative
| isolation and amplification of financial risk/reward,
| usually through leveraged/synthetic derivative products.
| There's no perfect source, but you can see similar
| definitions here [0] [1] [2]
|
| To give you a crypto example of this, Aave is financial
| engineering, because it allows users to make a bet that
| they can execute high-volume short-duration trades that
| yield more than Aave lending fees.
|
| In terms of what is financial services, my definition is:
| Any action taken that allows capital holders to better
| deploy their capital into the real (read: goods and
| services) economy. Again, no prefect source, but [3] [4]
| [5]
|
| Again the key nuance here is _financial services
| primarily focus on supporting the real economy, while
| financial engineering is primarily focused on risk
| /reward_
|
| And to be frank, I would absolutely love it if
| cryptocurrencies supported the real economy in literally
| any way shape or form. I would get "BTC4Life" tattooed on
| my forehead, I would dedicate my life to working for the
| innovators in the space, but unless you've got some
| secret, I don't think you can give me an example of
| literally anything cryptocurrency does to support the
| real economy that a centralized solution couldn't also
| do.
|
| [0] https://en.wikipedia.org/wiki/Financial_engineering
|
| [1] https://www.investopedia.com/terms/f/financialenginee
| ring.as....
|
| [2] https://www.iaqf.org/what-is-financial-engineering
|
| [3] https://www.imf.org/external/pubs/ft/fandd/2011/03/ba
| sics.ht...
|
| [4] https://www.cisa.gov/financial-services-sector
|
| [5] https://www.law.cornell.edu/definitions/uscode.php?wi
| dth=840...
| fddhjjj wrote:
| Strong parallels between your definition with "isolation"
| and that offered by freemint in terms of decomposition
| into elements.
|
| The nuance makes sense on its face. Although I don't
| trust my own judgement of what impacts the real economy
| and what is just shuffling of decomposed elements of risk
| and reward.
| freemint wrote:
| The first Master of Financial Engineering degree programs
| were set up in the early 1990s. The earliest financial
| engineers (under a different name) might have started
| around in the late 1970s. [Wikipedia - Financial
| engineering]
|
| Mortgages were invented way earlier. ATMs are an earlier
| invention. If you use todays categories they would have
| been invented by automation engineers.
|
| While index funds are a financial product they were
| invented before financial engineering became a thing.
| Financial engineers are not needed to run index funds.
| They are employed to out perform them.
|
| "Financial engineering plays a key role in the customer-
| driven derivatives business -- delivering bespoke OTC-
| contracts and "exotics", and implementing various
| structured products -- which encompasses quantitative
| modelling, quantitative programming and risk managing
| financial products in compliance with the regulations and
| Basel capital/liquidity requirements."
|
| And i am not alone with my distain.
|
| "The financial innovation often associated with financial
| engineers was mocked by former chairman of the Federal
| Reserve Paul Volcker in 2009 when he said it was a code
| word for risky securities, that brought no benefits to
| society. For most people, he said, the advent of the ATM
| was more crucial than any asset-backed bond."
|
| As for definition of financial engineering, i takes those
| from http://www.wirtschaftslexikon24.com/d/financial-
| engineering-...
|
| The term financial engineering is also used insofar as it
| is about the use of innovative financing and risk hedging
| instruments. In this sense, financial securities are
| first broken down into their basic elements, e.g.
| interest, repayment, currency, maturity, security,
| additional rights (>>stripping<<) in order to be able to
| evaluate them (individually) better. Based on this, new,
| optimal financial titles are created during
| >>Replicating<<, in which the modules are optimally
| combined according to the respective financing case.
|
| The concept of financial engineering can be seen in
| summary as the design, development and implementation of
| innovative financial instruments and processes as well as
| the realization of creative, tailor-made solutions for
| investors and buyers
| fddhjjj wrote:
| Super interesting and over my head but to oversimplif:
| automation and old financial "tools" (mortgages, index
| funds) good but (excessively?) "innovative financial
| instruments" is a bridge too far.
|
| Still hard for people not deep in it -- me -- to see
| clearly that crypto doesn't contain the seeds of a better
| index fund or a cheaper mortgage.
| JustFinishedBSG wrote:
| I don't see any value in the ability to program a very
| very limited Ti-89 for hundreds of dollars per hours (
| and matching ecological impact )
| dehrmann wrote:
| I found this to be a very interesting feature, but yes,
| it's woefully inefficient, competes with efficient tech,
| and I'm not convinced it'll follow a Moore's Law trend
| and be a viable 286 replacement in 2035.
| ALittleLight wrote:
| Are there any useful programs that aren't about creating
| or moving tokens or "play to earn" style games? (Which,
| to be clear, I do not consider useful)
| bouncycastle wrote:
| Ethereum sanctioned, you mean Geth? Geth does not go away in
| 2.0. You will still need it, as it's still the main software
| that executes the transactions.
|
| "2.0 validator" is not a node, it's more like a client that
| talks to the PoS chain nodes (Beacon).
| optimiz3 wrote:
| Until there's an Ethereum Foundation backed validator, a
| huge number of people are going to stay away.
|
| The Ethereum Foundation can do things like roll back a
| broken DAO. A 3rd party offering a potentially broken
| validator cannot force a fork to fix things.
|
| It's also super weird the foundation is not building the
| validation code into Geth and making it a baseline part of
| a reference node as PoW certainly is.
| mumblemumble wrote:
| > As usual crypto in practice is the opposite of decentralized
| because people. Will. Not. Run. Their. Servers.
|
| "My theory would be perfect if only I could convince humans to
| stop acting like humans," is the original sin of bad economics.
|
| I would submit that it is approximately impossible to have a
| cryptocurrency that is simultaneously popularly successful, and
| has even a significant minority of its users owning their own
| wallets. Because only a fraction of a percent of the general
| public has both the skill and the inclination to do something
| like that.
| FerociousTimes wrote:
| "My theory would be perfect if only I could convince humans
| to stop acting like humans," is the original sin of bad
| economics.
|
| In other words, the is-ought problem as viewed by David Hume.
| readthenotes1 wrote:
| Or is it the ought-is, the opposite?
| FerociousTimes wrote:
| Ah The Tomahto-Tomayto problem
| tclancy wrote:
| I thought this was about potatoes.
| FerociousTimes wrote:
| or maybe you're just being hungry
| Izkata wrote:
| The potato-tomato problem.
| namaria wrote:
| There is no cryptocurrency. Only potato.
| ethbr0 wrote:
| > "My [product] would be perfect if only I could convince
| humans to stop acting like humans," is the original sin of
| bad [technologists]
|
| fixed that
| SantalBlush wrote:
| There was recently an article posted to HN [0] about a
| startup founder doing this very thing, blaming his
| customers for behaving like humans.
|
| >I was fighting human nature and losing.
|
| >Everyone swears they will eat right and exercise, but most
| don't. Everyone agrees they need to spend less to be
| financially secure later, but most won't. Our users were
| telling us they would use ContractBeast to achieve those
| long-term benefits, but most weren't.
|
| >When I looked at the contracts the users were creating, I
| found most of them were ones in which a particular feature
| provided a clear and immediate benefit. Usually involving
| contract review and approval.
|
| >Human nature sucks.
|
| [0] https://news.ycombinator.com/item?id=11866868
| rat9988 wrote:
| >here was recently an article posted to HN [0] about a
| startup founder doing this very thing, blaming his
| customers for behaving like humans.
|
| He did it the opposit. He blamed his product for going
| against human nature.This is misquoting him.
| [deleted]
| namaria wrote:
| Selling sugar is one of the biggest businesses out there.
| Has been for centuries...
| jiveturkey wrote:
| Is that a failure of implementation though? I ask because you
| also said "impossible".
|
| Computers themselves were impossibly unfriendly for so long.
| What if someone created a UX friendly cryptocurrency. Like
| any computer, deep down it could be insanely complex, but is
| it a requirement that the UX reflect that complexity?
| achenet wrote:
| that is kind of what the exchanges do.
|
| The thing is user friendly UX _usually_ creates user
| friendliness by removing the user 's ability to control the
| product. For example, macOS vs BSD. The GUI makes it much
| more user friendly, but at the cost of limiting the user a
| bit more. Then again, perhaps there are exceptions.
| jiveturkey wrote:
| > that is kind of what the exchanges do.
|
| Well not really. the parent I replied to specifically
| qualified it as users holding their own wallets. I agree
| that is a critical component. Exchanges are a bit of a
| farce from the perspective of "not your wallet, not your
| coins".
|
| Like you say, exchanges that abstract this too much, for
| their benefit not yours, are probably distorting the
| original intent of a cryptocurrency. macOS doesn't _have
| to_ hide all the knobs; they could have an advanced
| interface, which they do for some things. Why can 't
| there be a wallet hardware/software that does the same?
| Is there something inherent that prevents this, making it
| "impossible"? Or is there just no business model around
| it, that can overcome the gravity of the kind of
| exchanges we have today.
|
| For example, are wallet addresses inherently
| unmanageable?
| baby wrote:
| That's why ultra light clients are important. See Plumo and
| Mina where you don't need to run a node to interact with the
| blockchain in a secure way (you get cryptographic proofs of the
| latest state)
| artemonster wrote:
| What is moxie?
| theIV wrote:
| Moxie is a who. Probably referencing this blogpost,
| https://moxie.org/2022/01/07/web3-first-impressions.html.
| a4isms wrote:
| Who is Moxie? Moxie Marlingspike.
|
| What is Moxie? A regional beverage that is the origin of
| the word, now the official soft drink of the state of
| Maine: https://en.wikipedia.org/wiki/Moxie
| lgvld wrote:
| Thank you for replying to the question. ;-)
| voidfunc wrote:
| Moxie and a Fluffernutter sandwich. Doesn't get any more
| New England than that.
| daniel-thompson wrote:
| Moxie Marlinspike is a widely-respected security hacker and
| parent's comment is referring to this post of his ->
| https://moxie.org/2022/01/07/web3-first-impressions.html
| colesantiago wrote:
| I wonder if he told that he was also part of a
| cryptocurrency pump-and-dump scam as well? [0]
|
| After learning this I just lost respect for him.
|
| [0] https://amycastor.com/2021/04/07/signal-adopts-
| mobilecoin-a-...
| px43 wrote:
| Eh, look at the full timeline. When MobileCoin stuff was
| happening, when Moxie left Signal, and when he posted the
| Web3 criticisms.
|
| I've been using Bitcoin since 2009, and
| RedPhone/TxtSecure (Now called Signal) since 2010, and I
| still have zero clue how I'm even supposed to obtain
| MobileCoin. It's really a toy project at this point with
| no real adoption.
|
| Being able to send money via a secure chat network is a
| super important utility that is currently under-served in
| a big way, but MobileCoin itself is basically a
| whitepaper and a bunch of toy code that has a novel re-
| implementation (in rust) of Monero as a stableishcoin,
| which, last I checked makes it completely incompatible
| with the rest of the blockchain ecosystem.
|
| They are making zero effort to shill, or push MobileCoin
| in any way, and neither Moxie nor anyone on the team
| stands to profit greatly from massive MobileCoin
| adoption.
| colesantiago wrote:
| It does not matter. We know it is another scam coin, the
| fact is the crypto wallet is still in the Signal app. If
| it is a 'toy' project why didn't they remove it already
| after years of developing it in the first place?
|
| The CEO of MobileCoin already admitted to using
| MobileCoin to fund Signal [0] and Moxie being the
| original CTO and paid advisor of the coin as mentioned in
| the article; also meaning he was a paid shill and part of
| the scam.
|
| They already made the effort to create, shill, and then
| dump the tokens as soon as it was listed on the
| exchanges. The fact that Signal already accepted the
| tokens in the first place tells us that they were most
| certainly involved from the beginning and were part of
| the pump-and-dump scheme of the token.
|
| Since MobileCoin was pre-allocated with them owning over
| 50% of the supply with that being the only supported
| token on Signal tells you that both Signal, Moxie and
| MobileCoin are all complicit in the scam.
|
| [0] https://news.ycombinator.com/item?id=26726246
| hestefisk wrote:
| The person behind Signal.
| ekianjo wrote:
| It's guy that promised you private chats by asking you to
| register with a phone number.
| 0daystock wrote:
| Don't forget they now offer their own cryptocurrency ... to
| make us more secure and private, I guess.
| Klonoar wrote:
| This is confusing privacy and anonymity. He 100% delivered
| on the former; the latter was the trade off.
| ekianjo wrote:
| there was no need for the trade off in the first place
| brewmarche wrote:
| > Moxie nailed it
|
| His talk[0]/article[1] typically gets a lot of flack on HN
| whenever it is posted but it was really eye-opening to me.
|
| [0] https://www.youtube.com/watch?v=Nj3YFprqAr8 [1]
| https://signal.org/blog/the-ecosystem-is-moving/
| menzoic wrote:
| > As usual crypto in practice is the opposite of decentralized
|
| Binance is a centralized exchange. There are both centralized
| and decentralized exchanges.
|
| > people. Will. Not. Run. Their. Servers. Moxie nailed it
|
| People don't need to run their own servers. They just need to
| use a light client which is even light even for mobile and
| browser extensions https://eth.wiki/concepts/light-client-
| protocol Light clients existed before Moxie's post
|
| The only problem is adoption of secure practices by popular
| publishers, like Metamask.
|
| Side note: Opensea isn't decentralized either, its a
| centralized NFT exchange.
| ricardobayes wrote:
| Good luck getting people to use even a semi-updated web
| browser, let alone deal with an extension
| api wrote:
| "Not wanting to run your own server" is not the primary issue.
| People might run their own servers if it was as easy as running
| a Mac or a smart phone.
|
| People hate manual IT and system administration. They will
| sacrifice money, freedom, privacy, control, even ownership of
| their own works to avoid having to futz around with that stuff.
| They hate it that much.
|
| (There are a small number of people this doesn't apply to.
| These are called enthusiasts. There are also car enthusiasts
| who like to change their own oil or even rebuild their own
| engines. We are talking about 99% of the market here though.
| Enthusiasts are a small niche.)
|
| It's easy to understand why if you count time as money. Lets
| say you value your time at $60/hour, which is probably on the
| low side for people here but lets be conservative. Now lets say
| you have to spend three hours a month messing with your
| servers. That means it's costing you $180/month or $2,160/year.
| That doesn't count the additional cognitive load of having to
| worry about it or the inconvenience of something going down and
| needing attention at an inopportune time.
|
| If those issues were addressed, you would see more people
| running their own servers. Unfortunately the "ease of use is
| for stupid people" meme goes _way_ back in tech culture:
|
| http://catb.org/jargon/html/P/point-and-drool-interface.html
|
| ^^^ This is why FOSS has never crossed the chasm. It's a
| cultural problem.
|
| Another contributing factor is the love that some developers
| have for complexity. They see complexity as a sign of
| intelligence. It's not. Simple systems are far more difficult
| and require much more intelligence than complex systems.
| mritchie712 wrote:
| there are products headed in the right direction with simple
| self-custody:
|
| https://www.coinbase.com/wallet
| colesantiago wrote:
| It is known for years that centralised exchanges can do this
| with custodial wallets. Not exactly the discovery of the
| century.
|
| Cryptocurrencies can be held in offline wallets i.e non-
| custodial hardware or software wallets, like Metamask, Trust
| Wallet, Ledger Nano, Tezos etc.
|
| But no, let's rush into the comments section and scream our
| heads off and create panic that it is 'exchanges === all crypto
| is scam'.
|
| When it is really a case of what happens when you store your
| crypto on an exchange rather than a non-custodial wallet.
| JustLurking2022 wrote:
| The only reason the price went into the stratosphere was the
| millions of speculators using custodial wallets. So it seems
| that many (likely most?) users didn't actually care about the
| "feature" of being able to self-host - what they actually
| wanted was a higher yielding bank account. Hence the reason
| so many people don't really believe it has much of a future
| as a fiat replacement.
| anuraaga wrote:
| > When it is really a case of what happens when you store you
| crypto on an exchange rather than a non-custodial wallet.
|
| In this case, what would happen would likely be pay extremely
| high gas fees or wait very long for the transaction to be
| picked up, isn't it?
|
| I think what gets people making these comments is there
| really is no crypto free lunch yet that includes stable UX
| and fees.
| dgfitz wrote:
| seanw444 wrote:
| Now _that_ is hyperbole. There are still good actors out
| there. Monero is doing its job dutifully. Don 't know much
| about Zcash, but it seems to be doing well.
| JohnHaugeland wrote:
| > There are still good actors out there. Monero is doing
| its job dutifully.
|
| I don't crypto, but, isn't monero the coin whose primary
| intended use case is enabling illegal transactions by
| rendering them untraceable even to the police?
|
| Are ... we calling that a good actor? Or do I just
| misunderstand what they're for?
|
| .
|
| > Now that is hyperbole.
|
| No, it's not. Hyperbole doesn't mean "thing I don't agree
| with" or "thing I believe is wrong."
|
| The person speaking very clearly wasn't exaggerating and
| very clearly meant themselves to be taken literally.
|
| As I see it, if any crypto wasn't a scam, crypto fans
| would have long since agreed to give that thing as an
| example. The fact that the entire "industry" can't come
| up with a single compelling example, a decade and a half
| and twenty billion dollars in, is about as clear and
| obvious a proof as is actually possible.
| dgfitz wrote:
| > Monero is doing its job dutifully.
|
| What is its job? How often do you think goods and
| services are paid for with Monero? How often do you think
| the coin is used purely as a speculative asset?
| pcthrowaway wrote:
| To be fair, there are probably more goods bought and sold
| with monero than any other crypto (outside of _maybe_
| BTC)
|
| Although those goods are predominantly illegal drugs.
| seanw444 wrote:
| Being what Bitcoin was supposed to be. Minimal
| transaction fees, maximum privacy, no need for extra
| layers.
|
| It's certainly used far less often for small-scale,
| personal transactions. Businesses mostly don't support it
| yet. I'm hoping that will change. The only company I do
| business with that supports Monero is Mullvad, and that
| was only a recent addition. The media is certainly doing
| a good job of pinning the "Monero = bad guy naughty
| money" connotation to it. That connotation means it's
| doing its job though. If organized crime thinks it's
| secure and private enough, then it's definitely good
| enough for me.
|
| I honestly can't answer the speculative asset usage part
| with any empirical evidence, but it seems to be used
| speculatively no where near as much as Bitcoin and
| Ethereum. I don't see crypto hype-guys chanting "MO-
| NER-O!" at all really in comparison to the other two.
| amelius wrote:
| Perhaps this is how to phrase it better:
|
| When a cryptocurrency is mainly used for speculation
| rather than payment, it's a scam.
| seanw444 wrote:
| That I can agree with.
| colesantiago wrote:
| What does this mean? Stripe Crypto is a scam because they
| happen to be using cryptocurrencies?
|
| Maybe Stripe should stop their crypto endeavors because
| they have a crypto offering which means it's a scam.
| tirpen wrote:
| > Maybe Stripe stop their crypto endeavors
|
| They probably should, yes. It makes them look sketchy and
| less trustworthy by association.
| dgfitz wrote:
| I have no idea how you made this mental leap. I don't
| understand the question.
| colesantiago wrote:
| Not a mental leap.
|
| If you are saying 'ALL crypto is a scam' this also
| includes all and any crypto offerings by any company.
| Stripe, Coinbase, FTX, Binance, Moneygram etc are
| included. Not to mention the 'DeFi' space as well.
| postalrat wrote:
| Those companies aren't immune from getting suckered in to
| a scam.
| colesantiago wrote:
| They are merely facilitating, participating and offering
| the services in the crypto scam no?
|
| Stripe went in to Bitcoin, exited Bitcoin, then invested
| into a shitcoin called 'Stellar' and went back into
| crypto again supporting crypto exchanges like FTX, NFTs
| and offering crypto payments with 'Polygon'.
|
| That is hardly getting 'suckered in'. I would argue that
| they are 100% fully complicit in the crypto scam.
|
| Since we agree that 'crypto is all a scam', it should
| mean that Stripe, Coinbase and all the other companies
| that have crypto operations should be called out for
| their participation in the scam and they should
| immediately shut down their operations since 'all crypto
| is a scam' right?
| [deleted]
| postalrat wrote:
| The reality is that all crypto are shitcoins. And when
| everything is a shitcoin then the term doesn't mean
| anything.
| dgfitz wrote:
| Stripe and Moneygram have a business model that can exist
| outside of crypto. The others you listed enable people to
| be scammed. I won't go so far as to call them a scam
| company themselves.
| colesantiago wrote:
| We both know that Stripe are actually fully involved in
| the crypto scam.
|
| They have a crypto division that will be used for crypto
| payments and NFTs. They also invested into a crypto token
| called 'Stellar' back in 2014 and said nothing since on
| the matter.
|
| Plus the CEO of Stripe advises Stellar. [0] Moneygram is
| also working on the scam as well with this Stellar token.
|
| I don't know about you but it seems that both Stripe and
| Moneygram are complicit in the crypto scam the same way
| that the crypto exchanges are.
|
| Also you said 'ALL' by the way so this means no
| exceptions.
|
| [0] https://stellar.org/foundation/team
| dgfitz wrote:
| You have me thoroughly confused. Are you now agreeing
| that crypto is a scam or no?
| colesantiago wrote:
| > Stripe and Moneygram have a business model that can
| exist outside of crypto...I won't go so far as to call
| them a scam company themselves.
|
| Contradicts:
|
| > All crypto is a scam.
|
| As you are trying to legitimise both of them of having a
| 'use-case' for their crypto offerings, holdings, etc
| which regardless of their business models and what they
| do as companies, it is still all a scam.
|
| If we agree that both Stripe and Moneygram are fully
| involved in the scam by having heavy involvement in
| crypto offerings, holdings, etc, Then yes. They are a
| scam as well as everything they are offering is as well.
| No exceptions.
| dgfitz wrote:
| No it doesn't. You're making a lot of mental leaps that
| I'm not able to follow. Those companies existed and were
| profitable BEFORE crypto. They don't NEED crypto. They're
| NOT CRYPTO COMPANIES.
|
| I'm going to politely bow out of this debate, this isn't
| a productive use of time.
| colesantiago wrote:
| It's actually quite simple.
|
| In case you forgotten, you said: _' All crypto is a
| scam.'_ [0]
|
| That means everything including anyone who is using it,
| or has holdings or are insiders which includes Stripe,
| Moneygram, Square (now Block) and especially Signal who
| are still directly involved in the entire scam. All the
| ones I've listed either got no backlash or did have some
| but never removed their crypto products, which certainly
| still makes them fully involved in the entire crypto scam
| as they continue to offer it.
|
| Trying to give exceptions to companies like Moneygram and
| Stripe, Square, etc is legitimising their crypto
| offerings as a 'use-case' which contradicts what you said
| with it all being a scam, since we both know what they
| are offering is nothing but still a scam which they are
| all involved in.
|
| There is no mental leaps here, No exceptions or any use-
| cases with that statement. If another commenter got the
| point straightaway [1], it is not hard to recognise that.
|
| [0] https://news.ycombinator.com/item?id=31725260
|
| [1] https://news.ycombinator.com/item?id=31725426
| _aavaa_ wrote:
| > Cryptocurrencies can be held in offline wallets i.e non-
| custodial hardware or software wallets, like Metamask, Trust
| Wallet, Ledger Nano, Tezos etc.
|
| They can, but if you'd like to convert that into fiat (I know
| a dirty word) you will most likely need an exchange.
| PinguTS wrote:
| Not only fiat. You need them also to convert it into any
| other crypto.
| rglullis wrote:
| Here you go, a whole list of decentralized crypto
| exchanges: https://www.coingecko.com/en/dex
| PinguTS wrote:
| You mean a list of distributed exchanges.
|
| Its like a list of all the small shop money exchanges
| that exists. But it doesn't mean its decentralized. It
| also means you always need a trusted third party for the
| exchange.
|
| Wasn't crypto about going rid of those trusted third
| parties?
| rglullis wrote:
| No, I mean _actual_ decentralized exchanges. They are
| applications running on the blockchain. There is no
| owner, no physical location, no entity controlling
| access. All you need to do is have a crypto wallet and
| execute the contracts.
| throwaway2048 wrote:
| no automatic blockchain contract can provide you with USD
| rglullis wrote:
| That was not what OP was asking for.
| FabHK wrote:
| Can you trade BTC/USDC or BTC/ETH on any of them?
| rglullis wrote:
| Yes. You can trade one of the many ERC-20 tokens that
| wrap bitcoin (e.g, WBTC, renBTC) and later you can swap
| these tokens for "real" BTC, also just by executing the
| smart contracts from the wrappers.
| FabHK wrote:
| Thanks. Do you have some good link to explain the
| mechanics, particularly the "unwrapping" of eg. WBTC?
| That involves a trusted third party, doesn't it?
| rglullis wrote:
| > That involves a trusted third party, doesn't it?
|
| For most cases, yes. Binance, Gemini and some others
| provide a version of their token that can run in multiple
| chains. It's supposed to be 1:1 backed by BTC, but you
| have to trust them fully.
|
| It's a little bit better for WBTC [0]. WBTC is a
| consortium of 30+ crypto projects who keep the BTC under
| their control through a multi-sig wallet, and that can be
| audited on-chain. In this case, the majority of the
| signers would have to conspire in order to steal the
| funds or do anything malicious.
|
| renBTC is even more decentralized. It is part of the ren
| "network" [1], which provides inter-blockchain
| applications. I haven't looked yet how it works exactly,
| but my understanding is custody of BTC happens though a
| proper dapp. Last year I wanted to get rid of all my BTC,
| and I did it though ren. It was BTC -> renBTC -> DAI.
|
| [0]: https://wbtc.network
|
| [1]: https://renproject.io
| doodles33 wrote:
| Atomic swaps exist
| [deleted]
| tatertots1234 wrote:
| meanwhile anybody who has their own keys is able to transact
| with it as per usual. "not your keys not your coin." holding
| keys are not trivial but far simpler than running a server,
| better analogy might be to do with people not wanting to stake
| with a validator because it's easier to use a centralized
| staking service.
| TheHypnotist wrote:
| I wonder if that's even a majority of bitcoin owners. I use
| the term owners loosely.
| tatertots1234 wrote:
| amount of BTC on exchanges is something like < 14% of its
| total circulating supply.
| TheHypnotist wrote:
| I read somewhere that a not so insignificant sum is held
| by accounts that just hold.
| saurik wrote:
| Does it even matter? What is interesting and actually-
| important is that it is even possible. Just because most
| people do something dumb doesn't mean we should throw up
| our hands in defeat and build systems where it isn't even
| possible to do something smart.
| TheHypnotist wrote:
| It matters very much who the owner is of the currency you
| are saying can be transacted. If a large chunk of bitcoin
| adopters don't own the currency, can't transact, and
| can't withdraw into fiat, what do you have exactly? Just
| a theory that this could work if just everyone played by
| a very specific set of rules.
| rglover wrote:
| This is the greatest comment I've read on HN in years.
| DebtDeflation wrote:
| Transacting with it is one thing, withdrawing into fiat is
| quite another. Let's not pretend that most people holding BTC
| are holding it to buy goods and services rather than as a
| speculative vehicle.
| nytesky wrote:
| Oh sorry I repeated you!
| tatertots1234 wrote:
| Sure. many of those speculators will be forced to wait for
| Binance to resume BTC orders, or use another centralized
| exchange, or use a bridge to swap BTC to another crypto
| asset..
|
| Edit: swapping BTC needs a centralized bridge as child
| commenter notes
| renonce wrote:
| Unfortunately there is no decentralized exchange for BTC.
| There is no smart contracts on BTC so you have to somehow
| bridge it to something like Ethereum before you can swap
| it. And to bridge it you have to rely on some centralized
| party, such as WBTC. (I know renBTC but it's unclear who
| their validators are so I'd just assume it's centralized)
| Blahah wrote:
| > Unfortunately there is no decentralized exchange for
| BTC
|
| Localbitcoins, localmonero... Two of many.
| TrapLord_Rhodo wrote:
| >There is no smart contracts on BTC
|
| Not true, BTC does have smart contracts. They called it
| op-code and most people don't use it anymore, but me and
| my friends built a poker game and we play every Thursday.
|
| The original wallet download also had a poker game, but
| they decided to take it out after a while to ensure btc
| wasn't labeled as "Gambling"
| throwaaay103948 wrote:
| Bisq is a P2P Decentralized exchange for Bitcoin:
| https://bisq.network
| kkielhofner wrote:
| There is a very real calculation to be done here:
|
| Leave it on an exchange and have access to customer support,
| etc in the event you get locked out of your account or
| whatever.
|
| -OR-
|
| Be the next news story of the person who messed up the
| transfer, forget their seed, etc. The entire blockchain
| ecosystem is still so incredibly difficult to use with bad
| UI/UX on top of it that this is the more likely outcome for
| the vast majority of people.
| DonHopkins wrote:
| Making you dig through a garbage dump is what I consider
| bad UI/UX.
|
| Richard & Gilfoyle At Landfill Site Talking ICO Crypto
| currency Idea To Russ:
|
| https://www.youtube.com/watch?v=GrEjaZw95kI
| FabHK wrote:
| "Again, Richard: The math is sound." - brilliant.
| kkielhofner wrote:
| From memory (didn't watch the clip):
|
| "THUMB DRIVE, that's a thumb"
| nytesky wrote:
| If all the exchanges lock users out, you can "transact" with
| BTC But can you convert it into US dollars? Where does one
| spend BTC these days, buy some furniture off overstock?
| swamp40 wrote:
| Where does one spend gold these days?
| giaour wrote:
| Pawn shop? Or maybe at a supervillain's lair, where
| sellers are known to accept briefcases full of gold.
|
| Usually you need to convert your gold to a legal tender
| currency in order to be able to spend it. You normally
| lose money on the conversion at a retail volume, though.
| tatertots1234 wrote:
| there will always be some method of exchange. one exchange
| goes down, another will take its place.
| zitterbewegung wrote:
| For many crypto devs people will use infura instead of running
| their own node so lots of the devs are centralized to infura.
| lxgr wrote:
| Alternatively: Many people will not pass an opportunity of a
| "risk-free" 20% APY. (Not sure if Binance in particular is
| paying interest on deposits, but many exchanges do, as far as I
| know.)
|
| Also, how are wallets the same thing as servers? That analogy
| seems a bit stretched.
| woodpanel wrote:
| > _Also, how are wallets the same thing as servers? That
| analogy seems a bit stretched._
|
| It's a stretch but I think we can agree of the underlying
| statement: People. Aren't. Nerds.
|
| The learning curve to understand the technology of wallets is
| comparable to that of understanding the technology of running
| servers.
|
| PS: After writing this out loud I'm tending towards more
| people understanding how servers work than how wallets work.
| pjc50 wrote:
| It's the usability of gpg, but with a cost of losing all
| your money if you make a mistake with the user interface.
| bombcar wrote:
| If people spend the time I think you could learn the
| "details" - but even knowing the difference between running
| a node and a miner and server and what a wallet is and the
| keys associated with it, etc, even knowing and _doing_ all
| that - it 's still a hassle _and_ more expensive! If you
| "trade" bitcoin inside an exchange and not on-chain, they
| don't have to pay the chain fees and therefore don't have
| to charge you to cover them.
|
| It's the same with email - it's actually _relatively_ easy
| to run an email server even with all the issues; but the
| spam and deliverability issues are enough that basically
| nobody except the "true nerds" bother. I suspect most
| people on HN _could_ run their own email server on a $5
| node, but don 't bother.
| bmurphy1976 wrote:
| Anybody who thinks 20% crypto APY is _risk free_ is asking
| for trouble.
| zitterbewegung wrote:
| Anybody who thinks 20% APY is risk free is asking for
| trouble. S&P gives you an average of 6% a year so getting
| to 10% is hard and 20 and above is probably a scam or has
| extreme risk.
| renonce wrote:
| Of course they are not. What the author means here is that
| people create wallets without owning servers, so they are in
| fact delegating chain verification to thrid parties like
| Etherscan, rather than by themselves. This is effectively
| centralizing the crypto on a few entities.
| jmoak3 wrote:
| Exactly, thank you. Generally, wallets need to connect to
| nodes, and nodes are servers. People do not run their own
| nodes, they connect to existing ones.
|
| Nobody wants to download the blockchain on a desktop, start
| up a node, write their keys in a note pad, and configure
| their phone's wallet app to point to their new locally
| hosted node.
|
| God help you if you didn't even compile your node and
| wallet app yourself.
|
| Anything less than that involves _trust_
|
| At least with Fiat if someone running my local Chase Bank
| branch siphons money out of my account, I can _trust_ that
| a guy with a shiny badge will walk over with a baton to
| beat them up.
| bombcar wrote:
| And more importantly there's a whole procedure for Chase
| to make you whole, and if Chase itself fails, FDIC steps
| up, and if _they_ fail, the Fed steps up, and if _they_
| fail, the US will nuke someone.
| tmpz22 wrote:
| Even Bernie Madoff only promised ~13%
| alephxyz wrote:
| 20% interest paid out in a shitcoin whose nominal value
| will be down 90% by the end of the year
| whatever1 wrote:
| Bernie was paying for 20years straight
| l33t2328 wrote:
| I've only heard of this mythical "risk free 20%" after the
| crash.
|
| I never heard anyone advertising that rate before.
| rco8786 wrote:
| Tons of alt coins offering triple digit APYs over the last
| few years.
| belltaco wrote:
| Only a few months earlier in HN threads I read some
| comments saying that 10 to 13% interest rates on crypto are
| a good reason to invest in crypto.
| lxgr wrote:
| https://medium.com/dare-to-be-better/anchor-protocol-
| insane-...
|
| And that's only the first Google result that hasn't been
| unpublished in the meanwhile...
| faangiq wrote:
| Must not know any crypto punters. They were all in on this.
| paulgb wrote:
| Not quite 20%, but I got slapped around on crypto Twitter
| by a blue check account for suggesting that supposed 15%
| returns were not risk-free.
| https://twitter.com/ErikVoorhees/status/1466802265956577283
| yunohn wrote:
| You're kidding right? Anchor was famous for 20% APY - I
| know people who got very rich off this Ponzi.
|
| Source: https://www.coindesk.com/markets/2022/03/25/anchor-
| protocol-...
| The-Bus wrote:
| I saw a finance TikTok of someone advertising how they were
| able to afford a $1M+ home by essentially having crypto
| interest cover payments. This video was taken down a few
| weeks ago (lol).
| achenet wrote:
| Were they also offering a simple 3 day training course to
| teach you how to do it, for only $999?
| gardenhedge wrote:
| Can you explain your comment a bit more? How does Binances'
| actions affect Bitcoin users who don't use Binance? And how do
| you arrive at your comment from this tweet? It doesn't say or
| imply how many people are using Binance.
|
| Futhermore, people who use Binance might also use a number of
| other options.
| jmoak3 wrote:
| Sure thing - once again people were unable to move around
| their coins due to depending on a tool hosted on someone
| else's computer.
|
| We've seen this many times, and it's a shame because letting
| another party manage your wallet or run a node for you
| defeats what I find attractive about bitcoin - the ability to
| be a peer in a decentralized peer-to-peer system.
|
| If Binance went under in that time, people would have simply
| been screwed and lost their coins Mt.Gox-style.
|
| Bitcoin only achieves it's decentralized promise if everyone
| hosts their own node and connects their wallet to it, and I'm
| personally not seeing that.
|
| Why don't people run their own nodes and connect their
| wallets to their nodes exclusively? Because it's a pain, and
| nobody wants to host their own servers. They'll pick gmail
| over a mail server 99% of the time, and that is bad for the
| promise of bitcoin.
|
| I would wager most/all cryptocurrencies have similar
| problems.
|
| Moxie's web3 blog touched on this, and he nailed it.
| gardenhedge wrote:
| How do you know many (or too many) people are doing it this
| way?
| jmoak3 wrote:
| There are ~16k total reachable bitcoin nodes out there,
| which means there are plenty of users are trusting 3rd
| party nodes.
|
| https://bitnodes.io/
|
| Having your own keys and using a wallet application that
| connects to someone else's node is better than keeping
| your coins on an exchange, but you're still relying on
| someone else's node to not screw you.
|
| Compare the meager 16k nodes people trust with the 100
| million who claim to own bitcoin.
|
| https://www.wsj.com/articles/bitcoins-one-percent-
| controls-l...
|
| (no paywall:
| https://archive.ph/73vR1#selection-4213.0-4213.97)
|
| I have no data on this but if history is any indication,
| I'd wager 90% of user's wallets point to the same 100
| nodes.
|
| All of crypto looks like PayPal with extra steps.
|
| If I'm incorrect someone please educate me on this.
| olalonde wrote:
| > You really cannot make this up.
|
| Not only you can make this up but it's literally happened
| hundreds of times in the history of cryptocurrency. So much
| that there is even a catchphrase for it: "Not your keys, not
| your Bitcoin". MtGox being the most infamous example.
|
| > As usual crypto in practice is the opposite of decentralized
| because people. Will. Not. Run. Their. Servers.
|
| 1) Only a small percentage of the total Bitcoin supply is held
| on Binance.
|
| 2) Self-custody doesn't require running your own server.
|
| Why is this the top comment? I don't know (but I have my
| suspicions).
| jmoak3 wrote:
| > MtGox being the most infamous example.
|
| I was there for it. I mined my first coins in late 2011.
|
| Few people want to run their local node (server), few people
| want to point their wallet at their own node, and fewer
| people want to run code they've compiled themselves. If you
| aren't running your own node you are relying on someone
| else's.
|
| As a mass adoption decentralized trust-less technology for
| transacting, bitcoin has failed.
|
| That people are still getting burned by trusting major
| exchanges is hard to believe, and why you really can't make
| this up. It's stranger than fiction.
|
| >(but I have my suspicions).
|
| Yes, it is me. Jamie Dimon. Warren Buffett and George Soros
| are here next to me too. Bill Gates is on the way, and he's
| bringing chips and guac. We're all out to get those pesky
| crypto entrepreneurs.
| olalonde wrote:
| I'd say you have a more black-and-white vision than me.
|
| While it's not perfectly decentralized, e.g. some users do
| delegate their trust to centralized services for
| convenience or security, it is still more decentralized
| than fiat where (digital) self-custody is simply not
| possible. Decentralization and trust are a spectrum, not a
| binary. Even compiling the software yourself wouldn't get
| you 100% there [0].
|
| I also feel that it's a bit early to call Bitcoin a failure
| but I do agree that it has a long way to go for mass
| atoption. Bitcoin is not disrupting the taxi or the hotel
| industry. It is disrupting the most entrenched and powerful
| "status quo" there is on Earth. We're talking about global
| banking, global finance, powerful governments, etc. Most
| people have no conception of what money really is or even
| that it could be different.
|
| > That people are still getting burned by trusting major
| exchanges is hard to believe, and why you really can't make
| this up. It's stranger than fiction.
|
| Surely you knew that Binance existed prior to this tweet?
|
| > Yes, it is me. Jamie Dimon. Warren Buffett and George
| Soros are here next to me too. Bill Gates is on the way,
| and he's bringing chips and guac. We're all out to get
| those pesky crypto entrepreneurs.
|
| My suspicion was simply that many HNers tend to reflexively
| upvote any comment that paints crypto in a bad light.
|
| [0] https://www.cs.cmu.edu/~rdriley/487/papers/Thompson_198
| 4_Ref...
| jmoak3 wrote:
| >I'd say you have a more black-and-white vision than me.
|
| I definitely do. If a part of bitcoin's chain of usage
| requires enough trust to ask the government to intervene
| to protect me, why not just trust the government?
|
| >My suspicion was simply that many HNers tend to
| reflexively upvote any comment that paints crypto in a
| bad light.
|
| I think that many people agree with me, and that it's not
| some reflex, fud, or deception.
| olalonde wrote:
| > I definitely do. If a part of bitcoin's chain of usage
| requires enough trust to ask the government to intervene
| to protect me, why not just trust the government?
|
| I am not sure I understand the question, Bitcoin does not
| require trust or intervention from the government.
|
| Your original comment is objectively incorrect in two
| different ways. It's not even remotely a surprising
| event[0] and most importantly, self-custody does not
| require running a server. Therefore I maintain my
| suspicion but enjoy your upvotes.
|
| [0] "You can't make this up": used to express great
| surprise.
| https://dictionary.cambridge.org/dictionary/english/you-
| coul...
| jmoak3 wrote:
| >self-custody does not require running a server.
|
| I disagree and have made my case elsewhere. Anymore and I
| think we'd be going in circles.
|
| >You can't make this up": used to express great surprise.
|
| I think I used it correctly, but agree to disagree on
| this as well.
|
| Sorry for confusing your suspicions with something more
| conspiratorial.
| namaria wrote:
| >It is disrupting the most entrenched and powerful
| "status quo" there is on Earth. We're talking about
| global banking, global finance, powerful governments,
| etc.
|
| Quite the opposite. It's getting disrupted by rich,
| powerful people, who are rocking it as hard as they can
| to disabuse common people of the notion that they have
| any alternative.
| [deleted]
| fortran77 wrote:
| > Why is this the top comment? I don't know (but I have my
| suspicions)
|
| It's because many people clicked the up arrow. There's no
| Vast Conspiracy.
| olalonde wrote:
| I don't think there is, see my reply here:
| https://news.ycombinator.com/item?id=31727483
| ekianjo wrote:
| > As usual crypto in practice is the opposite of decentralized
| because people. Will. Not. Run. Their. Servers.
|
| Nope, you just don't own any crypto assets if they are not
| stored on your own means. That's not hard to understand.
| ricardobayes wrote:
| How is this any better than the current banking system?
| Mvandenbergh wrote:
| Conceptually it is very simple to understand.
|
| The point that Moxie was making at the time was that,
| pragmatically, most users would end up not doing this. Just
| as most people share their thoughts on Facebook or Twitter
| and not on their own blogs, and if they do have their own
| blogs they don't run their own server, and if they do it's a
| virtual machine on Amazon's hardware.
|
| So something can be theoretically capable of enabling
| enormous decentralisation but actually not have that effect
| at all.
| throw_nbvc1234 wrote:
| People look at decentralization as an ideology rather then
| a threat model. The security you might implement to protect
| $100 vs $100k vs $100 million is different. Running your
| blog on AWS is running your own server in a decentralized
| sense; but if your threat model includes Amazon shutting
| you down or something like the US Govt/public compelling
| Amazon to shut you down then it might not be good enough.
| Which is why Target, Walmart, Parler (assuming that's still
| true) don't run on AWS. Any threat model is about
| mitigation and acceptance of risk. Easiest way to secure a
| database/system is to isolate it from the internet and let
| nobody read/write from it; probably wouldn't be a very
| useful system for most usecases but something you might do
| for the nuclear weapons arsenal.
|
| Centralization vs Decentralization is a similar concept to
| closed source vs open source. Just because the code is open
| source doesn't mean that people are going to download the
| source code and compile it themselves. The option to fork
| the codebase is also there. Neither of those options are
| possible for a closed source project. And to your point,
| the fact that a project is open source might not "actually
| have any effect at all". Doesn't mean the concept is
| inherently bad.
| warkdarrior wrote:
| > The security you might implement to protect $100 vs
| $100k vs $100 million is different.
|
| This almost makes sense, except that you have to take
| into the relative value of that amount, in particular
| relative to one's total net worth. If I want to protect
| $100, and that is all the money I have, I'll worry about
| security a lot. If I have $1,000,000, protecting $100 is
| not a priority.
|
| The general assumption is that people put all of their
| money in one place, which is not true for anyone I know
| -- poor, middle class, or rich. Everyone has cash, bank
| accounts, various physical valuables, stock, etc.
| throw_nbvc1234 wrote:
| It could be absolute and/or relative depending on the
| mechanisms. Relying on FDIC insurance to protect $1
| million in a bank account is probably not a good idea.
| mmastrac wrote:
| If you cannot trust a single third party to hold your money,
| it's no better than cash under the mattress.
|
| We have guard rails in banking for a reason.
| ekianjo wrote:
| banking is for fiat currencies whose value halves ever
| dozens of years. you dont have to worry about bank robbers.
| inflation does the same thing.
| rco8786 wrote:
| > whose value halves ever dozens of years
|
| This seems demonstrably better than halving over 6
| months...
| jonnycomputer wrote:
| Or six hours.
|
| Looking at you not-stable coin.
| rco8786 wrote:
| If this is true, crypto is dead in the water and always has
| been. It's not hard to understand that people are simply not
| going to go through that trouble in order to own something.
| ekianjo wrote:
| People go thru a lot more trouble to ensure the value of
| their savings does not go to zero.
| rco8786 wrote:
| They absolutely do not. They put their savings in an
| account held by a centralized 3rd party (bank) with the
| backing of government-guaranteed insurance (FDIC).
|
| Maybe some people store cash or gold in a secret place
| but that is the exception.
| 0daystock wrote:
| All monetary systems are built on trust. You can say the same
| thing about a run on traditional banks, which only have a
| fraction of reserves to cover deposits and would result in
| similar price depression.
| nradov wrote:
| False. Fiat monetary systems are built on a state monopoly on
| violence. Trust is merely a byproduct. You are required to
| pay taxes in the local fiat currency, and if you fail to pay
| then the government will eventually seize your assets by
| force, or perhaps put you in jail. This is a feature, not a
| bug, and it generally works fairly well in practice as long
| as the government is at least minimally competent.
| achenet wrote:
| This. The original purpose of money is to enable to
| government to quantify precisely how much of your stuff it
| will take each tax season.
| namaria wrote:
| The original purpose of money is seignorage, the
| difference between face value and actual value of the
| currency. It doesn't get better then printing hundred
| dollar bills that get out of circulation - almost pure
| profit.
|
| Taxing in kind is way better, it's inflation proof.
| Consultant32452 wrote:
| "generally works fairly well" - I agree with this, but I
| doubt we would agree at what it does fairly well. In the
| fiat systems the people with the most coins can issue
| themselves more coins on a whim, thereby devaluing all the
| other coins held by the poor. This too is a feature, not a
| bug, and it works really well for all the people with the
| most coins. They get to slowly and consistently extract
| wealth from the poor without having to do any work.
| nradov wrote:
| Poor people don't hold coins (or really any significant
| assets), by definition. They live paycheck to paycheck.
| We should find ways to increase economic mobility for
| poor people, but cryptocurrency isn't going to help.
| Consultant32452 wrote:
| Do you think constantly applying downward pressure on
| their wages and whatever minimal savings they might
| acquire through inflation could have something to do with
| economic mobility? The Fed Chairman recently complained
| that workers had too much power in the market (because
| they were demanding higher wages) and stated openly that
| he was going to create policy to stop that.
|
| I really encourage you to think about what that means,
| and if you didn't know he said that, what it means about
| the places you get your news from. Why would it not be
| one of the biggest news stories of the year that one of
| the most powerful men in the world stated he was going to
| reduce the power of the worker?
| nradov wrote:
| No I don't think that moderate fiat monetary inflation
| has any negative impact on the economic mobility of poor
| people. Rather the opposite. Poor people don't really
| have enough savings in the first place for inflation to
| make a difference one way or another. Their "assets" are
| generally in the form of job skills and social capital,
| plus possibly a car or family home purchased on credit.
| None of those things are devalued by money printing.
|
| I don't think you've actually thought this through at all
| and you don't understand even the basics of how it really
| works.
| johntony678 wrote:
| santialbo wrote:
| I'm seeing people removing the laser eyes from their twitter
| avatars.
| shrubble wrote:
| The goldbugs' saying that 'if you don't hold it, you don't own
| it' seems to apply...
| once_inc wrote:
| Bitcoiners saying that 'if you don't hold it, you don't own it'
| also applies.
| trompetenaccoun wrote:
| While I somewhat agree, there's likely some irony in the
| upvotes since this is a mantra more often said than done. How
| many here self custody their gold?
|
| The problem is exactly the same as in crypto, where they also
| say "not your keys, not your coins": You can self custody and
| it's 100% yours, until someone takes it off you and then it
| isn't. Trusting third parties is a risk, but so is taking care
| of your own security. In reality it depends a lot on the
| situation, you have to weigh the pros and cons of different
| strategies. As always, it's a lot more important that people
| are informed, not that everyone follow the same advice. A
| computer illiterate person who has no idea what a private key
| is better just leave their coins on a reputable exchange
| (obviously not Binance). And if I had no place to safely store
| my gold, I'd not take the risk of self custody with any
| substantial amounts.
| HideousKojima wrote:
| >How many here self custody their gold?
|
| I'll have you know I keep all 1 ounces of silver that I own
| in my physical possession
| Symbiote wrote:
| > This is due to an earlier batch of transactions getting stuck
| from low transaction fees submitted and hence, resulting in a
| backlog of Bitcoin (BTC) network withdrawals. The Binance team is
| working on a solution to resume Bitcoin (BTC) network withdrawals
| soon.
|
| https://www.binance.com/en/support/announcement/8437dfd1c7bf...
| Ekaros wrote:
| So they were too cheap? And now their customers can't
| rightfully get their "money" out... Truly currency of future...
| lumost wrote:
| I recently watched some traditional cable and was shocked by the
| number of crypto ads bombarding viewers. I have to imagine that
| this market was goosed up by retail investors trading on coinbase
| and binance just as the e-betting market was. The only difference
| between crypto and e-betting is that everyone got to be a winner
| on the crypto markets for a while. As users lose out, and
| exchanges stop ad campaigns - how long will that last?
|
| Crypto needed a tangible market/reason d'etre to be valuable.
| This required lower transaction fees, cheap audits, and a
| reasonable degree of price stability. We haven't seen any of that
| materialize except for cheap auditing. Cheap auditing isn't much
| use if there isn't anything of interest to audit.
|
| I'd doubt BTC will go to zero, but I wouldn't be surprised if the
| entire covid rally gets wiped out and we see BTC 6k again.
| winternett wrote:
| I was bored and had $100 lying around when BTC was at ~$39k so
| I dropped it in the machine and have watched the investment go
| all the way up to $150... Checking my investment today, it's
| around $50...
|
| It's not that bad for risking tiny amounts of money if you're
| into losing cash.
|
| If you're into losing vast amounts of money, I highly recommend
| dumping your life savings into BTC.
|
| So many large companies have their hands in creating the
| BTC/Crypto cookie jar that it's guaranteed to fail, it's
| promoted in every setting because it is their drinking money
| generator. The factor (they didn't account for) that added a
| ton of volatility was that independent (whale) investors like
| Elon would jump in and screw up the entire works with tweets
| and strategic buying and dumps... Meanwhile, it's all the small
| people who saw the commercials and though it was legit that
| totally got hosed.
|
| It's literally the rich and corporations robbing the poor, and
| on top of that in one of the most dire economic points in time
| ever... It's the pits of humanity I tell you.
| vkou wrote:
| > Crypto needed a tangible market/reason d'etre to be valuable.
|
| The reason, as we have been reminded so many times, is that
| it's an inflation-resistant store of value.
|
| Pay no attention to BTC tanking right after _actual_ inflation
| started.
|
| It's weird how, as an inflation-resistant store of value, it
| only seems to work when we have asset-inflation, but stops
| working when we have main-street-grocery-prices-inflation.
|
| Perhaps it's some web 3.0 financial wizardry that I'm just not
| smart enough to understand, but it seems to me that the only
| reason it was going up in price was because printed money (USD
| or USDT) was chasing yield.
| achenet wrote:
| no, it's to buy drugs on the internet.
| Consultant32452 wrote:
| Both are very important functions for a currency or store
| of value.
| mmastrac wrote:
| I recall walking through an airport this year and seeing Crypto
| ads everywhere. That was my shoeshine boy moment (1)
|
| (1) https://www.businessinsider.com/how-to-spot-stock-market-
| bub...
| ProjectArcturis wrote:
| I had a similar moment at the peak in 2017 when my non-
| financial friends asked me if I owned Bitcoin.
| nicbou wrote:
| I had a few different moments, since I was always very
| skeptical of crypto.
|
| However being pitched crypto by an old bartender in Stuttgart
| was probably the most obvious one.
|
| Generally, crypto was not promoted to me by people who would
| understand either computer science or economics.
| boc wrote:
| Not to be flippant, but nobody who I've heard promote
| crypto has any real, deep training in economics. Computer
| science yes, totally, but not econ. There are obvious
| problems with the entire concept of decentralized money if
| you've studied economic/financial history. We already
| experienced it back in the 19th Century and it's following
| pretty much the same pattern. Wildcat banks, frontrunning,
| wash trading, bank runs, and much more.
|
| Some brilliant computer scientists created crypto and
| Dunning-Kruger'ed themselves into thinking that they were
| also experts in finance.
| username_my1 wrote:
| This article is off by 3.5 years and I bet that most FAANG
| stocks are still above their values when it was published.
|
| Tech "growth" companies has been overpriced but it made kind
| of sense as long as interest rates were negative and their
| revenue was growing... people believed in positive returns
| because they assumed the only way is up.
|
| Truth is ... in any healthy public market no company has any
| business being at a higher than 20 p/e ratio. Unless maybe
| for a transitioning period of time (market making)
| namaria wrote:
| Boom and bust seem to be the prevailing pattern for the
| development of complex systems. Happens in ecosystems, and
| in economies. I don't even think it's detrimental... That
| was how we get a lot of otherwise unthinkable
| infrastructure development. The dotcom bubble left a lot of
| very cheap fiber connections that fueled later internet
| adoption, for example.
| namaria wrote:
| About a year ago I was chilling in my bedroom and overheard
| some crypto-bro shilling just outside my window. That
| clinched my conviction that it was just a matter of time for
| it all to collapse.
| piva00 wrote:
| I visited Brazil recently (3-4 months ago), I got into
| cryptocurrency-talk or some shitcoin peddled by cashiers,
| Uber drivers, waiters in some restaurants, acquaintances that
| aren't tech-savvy at all, etc. That's when it downed on me
| how big this whole thing got outside of internet chatter, it
| downed how many vulnerable people are exposed to the fallout
| of a crypto implosion.
| DonHopkins wrote:
| It's so ironic how all those libertarian crypto-bros think
| they've got the inside track and they're so much smarter
| than everyone else, when actually they're just as gullible
| and common and deluded as random cashiers, Uber drivers,
| waiters, bartenders, used car salesmen, chiropractors,
| cosmeticians, shoeshine boys, and ordinary hoi polloi on
| the street, all being influenced by the exact same mass
| market ads and hype all over the world.
| melenaboija wrote:
| Yup, and seems to be getting worse:
|
| "Families in despair over IM Academy: 'The crypto-sect
| has kidnapped our children'"[1]
|
| https://english.elpais.com/international/2022-04-18/famil
| ies...
| FabHK wrote:
| Well, people that got in early and got out about 6m ago
| (or now, still) might have made good money. Attributing
| it to a deep understanding of the technology is almost
| certainly wrong; attributing it to a certain street-smart
| understanding of bubbles, marketing, and hype might be
| correct. Though I'm inclined to just call it luck.
| blep_ wrote:
| ("dawned")
|
| ... but yeah. It's depressing. Countries with already bad
| economic conditions (like "we literally don't have
| functioning currency" level, not the things US residents
| complain about) seem particularly susceptible to it.
| piva00 wrote:
| I really thought I had written "dawned"... I think it's
| the same issue I have when writing "ratio", I always end
| up writing "ration".
|
| Thanks for the correction.
| illwrks wrote:
| I love that phrase, 'shoeshine boy moment'.
|
| I've stayed away from crypto, but my shoeshine boy moment was
| when we went on a road trip around Wales last summer. We
| happened to wander into a small shop in a small harbour town
| in Wales, literally about 4-6 streets in total. The guy
| behind the counter had some 'pay with crypto' machine and was
| singing the praises of crypto to all of the old ladies, moms
| and dads that were ahead of us in the queue...
| smaddox wrote:
| To be fair, he was likely being paid to sing those praises.
| dehrmann wrote:
| I saw the Crypto.com Arena as a Pets.com Superbowl moment.
| golergka wrote:
| > Crypto needed a tangible market/reason d'etre to be valuable.
|
| I have recently paid $40 for a $240 SWIFT transaction that I
| made on behalf of my father, as his bank (with most Russian
| banks) have been cut of from the world's financial system.
| Crypto is fulfilling a real need felt by many people all around
| the globe; it's just most of those people don't live in first
| world nations.
| notahacker wrote:
| tbh, that example kind of underlines the lack of linkage
| between crypto assets' market value and real world use cases.
| A significant number of hitherto law-abiding, middle class
| and computer literate Russians who suddenly wanted to take
| all their money out of Russia and/or realised they needed a
| different way to continue to paying for services as their
| banks were hit with unexpected sanctions is pretty much the
| ideal real world use case for BTC.
|
| But BTC actually fell in value sharply this year instead (and
| the spike in ruble/BTC trades was surprisingly small and
| short lived), because Bitcoin's peak valuation was more or
| less entirely unlinked to its theoretically increased
| usefulness for possessors of rubles.
| mmastrac wrote:
| I'd be careful about admitting to evading financial sanctions
| in public, myself.
| jhugo wrote:
| What makes you think their father is a sanctioned person?
| It's not very likely, given the number of sanctioned
| persons vs. the number of Russians.
| renonce wrote:
| What is your nation? How the law is enforced varies greatly
| from country to country so it depends a lot.
| t_mann wrote:
| Even those users still need price stability in order for your
| use case to work. And fiat on/off-ramps (as which Binance
| functioned for many).
| rasz wrote:
| >most Russian banks have been cut of from the world's
| financial system. Crypto is fulfilling a real need felt by
| many
|
| skirting sanctions for unprovoked war targeting civilian
| population, got it
| shmatt wrote:
| That's a decent use case for real stablecoins, not for
| something that can go up and down 20% within a few hours
| pontus wrote:
| Why would one expect Bitcoin which is more-or-less trying
| to disrupt the world order to be stable at this point in
| its evolution? Maybe in 20 years it'll be stable, but now?
| Sort of like saying that there was political instability in
| US following the revolutionary or civil wars and that
| therefore the US would never be a country that could be
| depended upon for international trade.
| saurik wrote:
| The systems that execute the code for and track the values
| of stablecoins are themselves networks that only work
| because of consensus systems designed around a
| cryptocurrency incentive. So if you want to be able to send
| some large amount of USDC you need some small amount of ETH
| or MATIC or AVAX or whatever to pay for the usage of the
| shared ledger, and that's where these cryptocurrencies then
| get their underlying value.
| scoopertrooper wrote:
| I think most people would prefer for the sanctions on Russia
| to be more rigorously enforced
| golergka wrote:
| I would prefer if Europe actually put in place oil/gas
| embargo and stop giving Putin's regime billions of dollars
| to wage war instead of blocking the people who have spent
| years protesting and are now trying to flee the
| totalitarian regime, but here we are.
| FabHK wrote:
| > I have recently paid $40 for a $240 SWIFT transaction
|
| That is way more than it should be, but could easily be
| solved with traditional methods (banks & fintech) with some
| competition and sensible regulation (like SEPA transfers in
| Europe being basically free).
|
| I recently had to pay nearly 100$ for accidentally data
| roaming a few MB abroad, but the conclusion is not that the
| internet and 5G is fundamentally flawed and need to be
| replaced by web3.
|
| > Crypto is fulfilling a real need felt by many people all
| around the globe
|
| Yes, the need to circumvent regulations regarding money
| transfers.
| ohgodplsno wrote:
| So, what you're saying is that sanctions are in place and
| you're unhappy about them ? sounds exactly like what
| sanctions are for, and all crypto is good for is evading
| sanctions that a massive part of the world has agreed in.
| can16358p wrote:
| Many sanctions harm completely innocent people.
| mmastrac wrote:
| I think that there are missiles on the other side that
| are hurting people in more physical, fatal ways.
| can16358p wrote:
| Of course. But fighting against the war shouldn't involve
| creating more harm.
| mmastrac wrote:
| That's a noble, yet completely impossible sentiment.
| ohgodplsno wrote:
| That is the point yes. We have collectively decided that
| assassinating heads of state was pretty bad, and moved on
| to applying sanctions, so that if they hit hard enough
| back, said innocent people do need to get rid of the
| leader or the system that got them in such a situation.
| fartcannon wrote:
| Bitcoins reason d'etre is to permit an exchange of value
| without involving the banks/classic financial infrastructure.
| It could go down to fractions of a penny and still be able to
| do that.
| FabHK wrote:
| Indeed, providing something money-like without central
| authority (thus circumventing regulation, so far) is the only
| innovation of BTC.
| planb wrote:
| No, because energy is not free.
| DebtDeflation wrote:
| Energy expended to mine BTC in the past is a sunk cost and
| so is irrelevant to the discussion. In the future, if the
| price of energy required to mine a BTC is below the value
| of the BTC there will be an incentive to mine BTC. There is
| no equivalent incentive in the opposite direction. You can
| convert energy to BTC, you can't convert BTC to energy.
| namaria wrote:
| What happens if the value collapses bellow the point
| where it's profitable to mine it then? Wouldn't this only
| reinforce the collapse as miners flee the system? Then
| once it goes below a threshold where it would be trivial
| to attack it and take it over it's a free for all for the
| remaining market value and that would be the coup de
| grace...
| Kinrany wrote:
| So what? The value of making a transaction just needs to be
| high enough.
| achenet wrote:
| even if there is an energy cost, for some markets (illegal
| substances/darknet), it's "cheaper" to pay that energy cost
| than the cost of laundering fiat money.
| danuker wrote:
| I use it as an alternative store of value. That has gone
| badly for me in the past month. But its supply economics make
| me still want it.
| kingTug wrote:
| I predict Matt Damon's career will suffer greatly in the next
| couple years. Being the face of that crypto.com ad that played
| 5(?) times during the super bowl and regularly thereafter in
| prime time slots. I think many Baby Boomers invested last
| winter based on these ads and will forever associate Matt Damon
| with a scam that cost them dearly.
| twawaaay wrote:
| > The only difference between crypto and e-betting is that
| everyone got to be a winner on the crypto markets for a while.
|
| Is also description of a bubble or a pyramid.
| paganel wrote:
| It was the same thing for football (or soccer, as you call it
| in the US) over here in Europe, at some time late last year I
| started to notice that a lot of European clubs were advertising
| for this crypto thing, much of it related to Binance. It so
| happens that most of the tokens "released" by those clubs (yes,
| they also did that) are 90% or more bellow their peak value,
| there were a few threads about it on /r/soccer recently.
| 1270018080 wrote:
| As long as people want to buy illegal things online, I don't
| think bitcoin will go to zero. That has, and always will be,
| it's only rational use case.
| easrng wrote:
| Please please please don't use Bitcoin for crime. The tx logs
| are public so you're much more likely to get caught. Use
| Monero, or if you're cashing out a defi hack or scam or
| whatever then use Tornado Cash. Hope this helps.
| can16358p wrote:
| Wow. I just learned that all the toyally legit things I've
| done with Bitcoin are all illegal.
| 1270018080 wrote:
| By rational, I mean the only time it is better than other
| methods. Buying legal things with bitcoin is slower, more
| expensive, dramatically more environmentally harmful, and
| dangerous to the consumer (no regulation). Truly no upside
| in real life applications unless you're trying to do
| illegal things.
| can16358p wrote:
| You must be living in a perfect society with zero
| government/political corruption.
|
| Good for you.
| yunohn wrote:
| What "totally legit" things have you been doing with
| crypto? Curious to know more.
| can16358p wrote:
| Donations? Purchasing stuff?
|
| (And before you ask, NO, there were no other possible
| ways for me to do those donations to people in war or
| purchase those stuff where crypto and PayPal were the
| only way to pay and PayPal is blocked in my corrupted
| country)
| the_gastropod wrote:
| You _can_ use a helicopter to commute to work. It 's just
| not a very rational thing for most people to do.
| can16358p wrote:
| Your response has nothing to do with what I've responded
| to in the parent comment.
| ericmay wrote:
| > I'd doubt BTC will go to zero, but I wouldn't be surprised if
| the entire covid rally gets wiped out and we see BTC 6k again.
|
| I agree. We invest a small amount of money into $BTC and I feel
| pretty neutral on the topic and my comments come from an
| intention of neutral observation.
|
| I think $BTC is in a bad spot that's about to get worse in the
| short-term. It's getting hit from both ends: expensive energy,
| and high interest rates. Many believe it's supposed to be a
| hedge, and I think it still is, but it's not a hedge against a
| high interest rate environment in which the dollar and fiat
| currency (primary reserve currencies: USD, EUR, YEN, GPB, etc.)
| are still normalized and valued. It's more of a hedge against
| low interest rates and the central banks printing money in that
| environment IMO.
|
| Long-term I'm bullish because it's a deflationary asset.
| Eventually we'll get to the point where, similar to maybe Japan
| or South Korea a pack of gum costs 1000 units of fiat, which
| will necessitate $BTC being "worth" hundreds of thousands of
| dollars (or it's worthless, I don't think there is a middle
| ground here). Unless something crazy happens, deflationary
| environments in fiat currency will always be avoided, and if
| you target 2% inflation every year it's all but guaranteed that
| $BTC will simply be "worth" a lot of dollars (or $0).
|
| So I wouldn't be surprised to see $BTC hit $6,000 or even less.
| I _would_ be surprised if within, say, 15 years it 's worth
| that amount and not $0 or $1,000,000 (or something).
| yunohn wrote:
| > It's more of a hedge against low interest rates and the
| central banks printing money in that environment IMO.
|
| Could you explain how /exactly/ it functions as a hedge? I
| don't care about price, just the mechanics/logic.
| ericmay wrote:
| From what I gather, and certainly someone may come in with
| a much better explanation or refutation is that Bitcoin is
| in a sense a finite resource (let's just look at the
| mechanics right now) and if appetite for Bitcoins increases
| you can't make more of them.
|
| If a central bank is inflating a currency, it means each
| year that more of that currency exists than it did
| previously, so people can effectively bid for resources
| with more currency which increases the relative price. A
| pack of gum used to cost $.05. Now it's like $2.99 (or
| whatever). This is primarily due to inflation as far as I
| can tell.
|
| Likewise the same is true for Bitcoin, except that it has
| an additional feature in that it's transmutable into a pack
| of gum, or a share of JPMorgan stock, or a house, or a car,
| or some service. It's also transferrable - you can move it
| (again let's ignore how well it works right now) from place
| to place without having to actually ship it anywhere.
|
| So because Bitcoin is transmutable like a Euro or Dollar it
| can do similar things, except the difference is that more
| Euros and Dollars are effectively "mined" and created,
| whereas there's a limit to how many Bitcoins can ever
| exist. So as more and more Euros and Dollars are created,
| you can spend more of those to buy the same Bitcoin.
|
| Granted, this is very much at face value and some of the
| mechanics aren't quite there - it's actually very expensive
| right now to move Bitcoin around and it appears to make for
| a pretty bad currency, but I think this should at least
| touch on the mechanics or logic.
|
| tl;dr it's like gold.
| namaria wrote:
| Prices don't rise 'due to inflation'. Inflation is just
| another name for price rise. This 'transmutability' you
| speak of is called currency. Bitcoin has some but very
| little compared to cash. Also the so-called
| 'deflacionary' nature of bitcoin, supposedly caused by
| the supply cap assumes a constant or growing demand for
| it, which is far from assured. Bitcoin only needs to
| collapse once to become worthless forever, there will be
| no cold re-start. Whereas precious metals don't need one.
| That, IMHO, is the crucial difference that advocates seem
| to forget.
| ericmay wrote:
| Prices rise for more than one reason. For example marble
| is more expensive because it's more difficult to find and
| mine than it was in the past (just a contrived example).
| But prices also rise due to increases in money supply.
|
| I agree that Bitcoin is a poor currency compared to fiat
| currency, but conversely a dollar is a very poor store of
| wealth while Bitcoin is looking like it may be a good
| store of wealth. The confusion comes when you (not you
| specifically) don't recognize that you can assess the
| utility and value of these "things" across various
| traits. Gold is a decent store of wealth, but a very bad
| currency. Stocks are great at producing and storing value
| and are highly liquid but awful currencies.
|
| I'm not a Bitcoin advocate. I'm a neutral investor. You
| are correct in my view that if Bitcoin collapses it may
| become worthless forever. We have examples of this
| happening with fiat currency as well, though, so it's not
| a unique trait of Bitcoin.
|
| Diversification and asset accumulation are what I focus
| on. Bitcoin could turn out to be totally worthless. So
| could Amazon stock. So could GBP.
| namaria wrote:
| I agree with most of what you said, except that Bitcoin
| looks like a good store of wealth. It has a very short
| track record, and has shown huge volatility. How does
| that indicate a good store of wealth?
| [deleted]
| jtbayly wrote:
| It sounds to me like you've said that BTC will both go up and
| not go up in an inflationary environment.
|
| I've been wondering why a hedge wouldn't be for this exact
| environment, so can you explain your thinking a bit more?
| lovingCranberry wrote:
| > which will necessitate $BTC being "worth" hundreds of
| thousands of dollars
|
| You'd need a two trillion dollar market cap in bitcoin to
| make each unit worth more than 100k USD.
|
| (Currently there are 19m out of 21m coins minted; two
| trillion / 19million = ~105k)
| FabHK wrote:
| > if you target 2% inflation every year it's all but
| guaranteed that $BTC will simply be "worth" a lot of dollars
| (or $0).
|
| FWIW, the BTC money supply increases at 1.7% p.a. right now
| (until the next halving).
| candiddevmike wrote:
| What does Bitcoin provide that a cheaper coin doesn't? The
| only thing pushing the price up is speculation, all digital
| coins are worth pennies as they're all completely
| interchangeable from an end user perspective.
| RestlessMind wrote:
| > What does Bitcoin provide that a cheaper coin doesn't?
|
| Longer track record than the rest. More buy-in from people.
| Just like Gold vs other shiny metals.
| lumost wrote:
| The network effect is strong, if BTC actually was to take
| over for USD then people would have to have _trust_ that
| BTC wouldn 't evaporate the next day. BTC's incentive
| model and network effect provide that.
|
| Assuming of course that BTC could outplace USD.
| RestlessMind wrote:
| I see BTC in the same class as Gold (hard assets without
| any intrinsic value and valued only because everyone else
| values it). USD is a different asset type - Fiat
| currencies which are essentially debts owed by various
| governments to the holders of those currencies.
|
| So BTC won't be replacing USD, imo.
| FabHK wrote:
| > What does Bitcoin provide that a cheaper coin doesn't?
|
| Good question, since it is trivial to clone Bitcoin.
|
| Only answer I can come up with (except for psychological
| factors): hash power.
| mumblemumble wrote:
| Long term I'm bearish because it's a deflationary asset.
| Deflationary value stores have a tendency to cause all sorts
| of social ills by encouraging hoarding. There's a reasonable
| line of thought that observes that it's no coincidence that
| the end of the age of European colonialism coincided with the
| demise of the gold standard.
|
| More concretely: if crypto is deflationary, then its value
| works similarly to how an Amway or Herbalife membership's
| value does. You get rich by getting in first and then
| convincing others to join after you.
| bombcar wrote:
| More importantly it's only "bitcoin" because it's the
| first; even if everything crypto takes off the world could
| collectively decide to use something else (Etherium being
| an obvious choice, but there could be others).
| imtringued wrote:
| In my opinion mixing the functions of medium of exchange
| and store of value has caused untold amounts of needless
| suffering. You see 2% inflation is the middle ground. Rich
| people may want to save and increase their wealth but my
| mom just wants a job to pay rent and buy groceries, she has
| no grand ambitions to become super wealthy. When you mix
| the two functions into cash, one of the two is going to
| dominate the economy and with gold it was the rich, with
| fiat it is mostly average people because having a job is
| more important than maintaining purchasing power.
| ericmay wrote:
| Maybe the issue is just that we no longer have a store of
| wealth that isn't tied to a speculative asset? Fiat
| currency is a _fantastic_ currency - even terrorists who
| hate America use dollars. But it 's a terrible store of
| wealth because it loses at least 2% of its value by
| intention (this fluctuates - just going off the stated
| Federal Reserve targets).
|
| I think this is where things like houses becoming
| collateralized assets start coming into the picture. You
| can buy stocks or index funds, but those can lose value
| and they're definitely not guaranteed to increase in
| value. Houses are a pretty "hard" asset in physical
| reality and with inflation basically they go up in value
| while also providing utility. And to buy a house you need
| fiat currency so they're somewhat liquid in that sense.
| So what do you do? Buy gold? Maybe. Bitcoin is another
| option similar in some ways to gold (in function at
| least). Other cryptocurrencies are assets in my view more
| similar to a stock with products or platforms behind
| them. I'm just not sure what to do. If you make cash
| inflation neutral or deflationary that _sounds_ ideal,
| but how do you do that? And would people be likely to
| take risk in such an environment? Do we need to? Is it
| bad that we are encouraging the use of fiat currency by
| threatening to devalue it over time? I 'm not sure.
| saalweachter wrote:
| > Maybe the issue is just that we no longer have a store
| of wealth that isn't tied to a speculative asset?
|
| You say speculative, I say productive.
|
| Is a non-productive store of value actually a thing which
| exists in nature?
|
| For most things, you can't store a thing itself: grain
| rots, chickens die, houses decay, iron rusts, water is
| fouled.
|
| If you want to have a thing in the future, you need a way
| to produce the thing: fields of grains, lineages of
| chickens, maintenance and construction of houses,
| refinement of iron, the purification of water.
|
| All investment in these future means of production is
| speculative; you have no guarantee the bet you made on
| how you will obtain a chicken in 20 years will play out.
| ericmay wrote:
| > You say speculative, I say productive.
|
| Oh I totally agree! Stocks in companies are absolutely
| productive assets. Though they _are_ still speculative. I
| guess the first thought that comes to mind is well, so
| what? Does it make sense for individuals to plow money
| into the stock market even at all-time highs? Should you
| basically have to perform an investor level due diligence
| for buying these productive assets? Sometimes I think we
| are duped by the liquidity in ways we wouldn 't be if we
| were deciding whether or not to buy a farm or a movie
| theater.
|
| > Is a non-productive store of value actually a thing
| which exists in nature?
|
| Gold is probably the closest we've ever gotten. Besides
| that I'm not sure. But then that begs the question I was
| responding to regarding savings for "regular people". Is
| it impossible to save money without buying into the stock
| market? Idk.
| saalweachter wrote:
| Gold famously doesn't decay, but why should I expect
| prices to remain constant in terms of gold? If I sell you
| a chicken today for 80 milligrams of gold, why would you
| be obligated to sell me an equivalent chicken for 80
| milligrams of gold in twenty years?
|
| Gold isn't a perfect store or value, it's just a perfect
| store of gold.
| nly wrote:
| People say gold is a good store or value because it has
| relatively inelastic (hard to ramp up) supply and
| relatively modest and stable demand (jewelry, industrial
| uses etc).
|
| The cost of chicken has actually plummeted over the last
| century, even adjusting for inflation, because we can
| battery farm them now and they produce way more meat than
| they used to due to selective breeding etc.
| ericmay wrote:
| Yea - I was just saying it's probably the closest we have
| ever gotten. The chicken example is interesting b/c what
| would you actually _compare_ gold to? Say chickens were
| commonplace today and could be had for 80 milligrams of
| gold but then some disease wiped them out and only 10,000
| could be grown and sold each year. Obviously they 'd be
| worth more than 80 milligrams of gold - but as prices for
| other things perhaps come down and become more plentiful
| (or new products/services emerge) 80 milligrams of gold
| may buy something completely different at a great price.
|
| I mostly agree with you here. Keep in mind I was
| preliminary responding to someone else w.r.t stores of
| wealth. It may even be the case that storing wealth is
| nonsensical as a matter of physics (either natural
| physics or economic physics). Perhaps what we refer to as
| wealth storage is really just scarcity of a physical
| item, whether that be a house, a collector's edition
| widget, a car or piece of art, or in your example, a
| chicken. Maybe the goal in what we would call wealth
| preservation is to find assets that either do not decay
| over time, or that decay very, very slowly over time? One
| thing that comes to mind then is how fiat currency plays
| into this decay? What would it represent?
| saalweachter wrote:
| So the question is basically "How fast does credit
| decay?"
|
| Let's switch from goods to services and favors. Let's
| suppose you're in a real bind one day, and need some help
| -- painting your house, moving cross-country, who knows
| -- and I step up and help you as a favor, and spend a
| solid week of my time.
|
| How long do I have to redeem that favor and get a week's
| worth of time out of you? How does the intervening time
| affect the answer? If I disappear for twenty years and
| show up on your doorstep expecting the favor to be repaid
| in full, is that a reasonable expectation? What if we are
| close friends for those twenty years, trading favors back
| and forth?
|
| There aren't necessarily right or wrong answers to those
| questions, but that's basically the question inflation
| answers -- it's the price for not participating. You do a
| job, you get your currency, and then you can roll your
| currency into participating in the shared risk for
| maintaining our systems of production, or you can stand
| back, and see the credit for your past contributions
| decay over time. Sometimes it decays slowly, when
| everything is going fine. Sometimes it decays quickly; if
| things begin going badly and you're not invested in the
| outcomes improving, your credit for your past
| contributions declines faster.
| jokethrowaway wrote:
| You can very well sell these goods and buy new ones
| maintaining a fixed amount and using it to back your
| currency.
|
| This would be my favourite currency.
| FabHK wrote:
| > it loses at least 2% of its value by intention
|
| How do you get "at least"? The target used to be "below,
| but close to 2%", but has been increased to around 2%
| (symmetrically). It has been less than 2.5% over the last
| 20 years (https://fred.stlouisfed.org/series/CPIAUCSL)
| including the recent spike, and has been 2.02% from Jan
| 2001 to Jan 2021, which I'd call precisely on target.
|
| Needless to say, if you parked your extra money in the
| stock or housing markets, you handily beat inflation. And
| if you don't have money to invest in the markets, then
| you don't care about inflation anyway (but rather real
| wage growth).
| jokethrowaway wrote:
| The indexes used to measure inflation are picked to stay
| under 2%.
|
| I kept track of my groceries and rent for 10 years up to
| last year and my perceived inflation was way higher than
| 2% (even allowing some margin of error). This year is
| being completely insane but it's hard for me to compare
| as I moved.
|
| Wages don't grow with inflation (the sad 1% yearly raise)
| unless you job hop.
|
| Stocks don't give you always the best window to withdraw
| your annualised 7-8% profit. If you'll need to buy a
| house or if you'll go to pension you may end up
| withdrawing at bad times.
|
| Houses have been mostly going up. Good to beat inflation,
| terrible for youngsters who need a place to live without
| paying someone else's mortgage.
| Geee wrote:
| That's a common fallacy. Hoarding, saving, preparing for
| the future is one of most fundamental human needs and the
| bedrock for a functioning economy and society. There's no
| fundamental economic principle which would indicate that an
| inflationary money would do any good to a society. It
| destroys savings, which is opposite of what is good for an
| individual and a society.
|
| Also, because you mentioned colonialism, read this to
| understand how colonialism and slave trade was enabled by
| inflation (counterfeit money):
| https://breedlove22.medium.com/masters-and-slaves-of-
| money-2...
| lolc wrote:
| Money isn't wealth. What you can get for it is. Hoarding
| casino chips does not prepare you for the future. It just
| makes the people running the casino richer with goods you
| traded for the chips.
|
| Oh you say, I can trade the chips with other people. Also
| the chips are numbered and we have an agreement to never
| accept a casino chip numbered over 1 trillion. Then we
| pay the casino one chip every time we trade. So the
| casino always has some chips to trade.
|
| The casino always wins. You're even paying their
| horrendous electricity bill.
| Geee wrote:
| Money allows optionality - instead of hoarding food and
| fuel, you can hoard money and buy the things you need in
| the future. If you know for sure that you need food and
| fuel, and hoard them in advance, they will rot and
| evaporate by the time you need them.
|
| Inflationary money is like rotting food, instead of
| canned food. It makes no sense at all to store your
| wealth in rotting and evaporating things.
| ericmay wrote:
| > Long term I'm bearish because it's a deflationary asset.
| Deflationary value stores have a tendency to cause all
| sorts of social ills by encouraging hoarding. There's a
| reasonable line of thought that observes that it's no
| coincidence that the end of the age of European colonialism
| coincided with the demise of the gold standard.
|
| It's definitely an interesting theory - any particular
| articles or books you've read on the subject? I find the
| story of money fascinating.
|
| On the other hand, however, States are no longer
| constrained by how much gold they have. In the past you
| could wage war until you ran out of gold and then that was
| that - you couldn't print money out of thin air. Now you
| can just print money and at least up until some point
| (which we don't know yet) it works. I guess you could argue
| back to your first point that this is what caused wars -
| you needed to accumulate resources in order to have wealth
| so you'd start wars and take stuff.
|
| I think deflationary economies have bad attributes - like
| why take risks when you can do nothing and the value of
| your assets goes up? On the other hand, (and someone else
| mentioned something related to this) inflation literally
| destroys wealth so how can someone working a non-high
| paying job store wealth when the value of that wealth is
| destroyed at a minimum of 2% per year?
| throw8383833jj wrote:
| Crypto is having it's DOT COM moment right now. A lot of
| companies with not much value crashed and never recovered.
| After the dot.com bust, the internet didn't go away, it only
| grew and grew. And, I don't have to tell you what happened to
| amazon, if you had invested during the dot.com bust.
| time_to_smile wrote:
| > I'd doubt BTC will go to zero
|
| I think there's some serious liquidity issues coming up ahead.
| You need a buyer at the other end to sell, and I think there's
| an unknown point where there are effectively no buyers.
|
| Right now there are still plenty of crypto-bugs out there that
| will provide some liquidity because they think things will
| eventually turn around, but even these people only have so much
| cash. There's a moment where all of these unsophisticated
| investors (people that bought crypto based on the ads you're
| describing) will panic and want to cash out (or need to for
| personal financial reasons).
|
| We may already be seeing the crypto equivalent of a bank run.
|
| So much of crypto's "value" is based on the assumption of the
| future success. A big enough of a collapse in the belief in
| this future and it will be "trading" back at the levels when
| BTC was just a hobby project for techies (because that's what
| it will become again).
| spookthesunset wrote:
| The problem is, when does bitcoin actually crash? I agree it
| is a scam and should crash in a sane rational world. But I've
| heard these exact arguments like 5 years ago. It's the scam
| that just keeps going!
|
| Eventually it has to end, right? What is the thing that makes
| it end? Or will it just fizzle out with no real implosion?
| Maybe after 10 years to most people it would be just a
| distant memory?
| vkou wrote:
| > The problem is, when does bitcoin actually crash?
|
| It's impossible to predict.
|
| > What is the thing that makes it end?
|
| Regulation, sentiment, Tether falling apart, a serious
| recession... Anything, and nothing could be the last straw.
|
| Precisely speaking, it'll end when people, on the net, will
| stop see buying it as a way to make money. When that will
| happen is anyone's guess.
| time_to_smile wrote:
| > What is the thing that makes it end?
|
| This is much easier to answer, at least in general, than
| many of the other "bubble" questions out there.
|
| The growth simply requires a larger and larger pool of new
| investors. It first started with tech enthusiasts who were
| really interested in the principles of cryptocurrency and
| people who also knew how they worked. The was a time when
| everyone in crypto had read the original Bitcoin
| whitepaper.
|
| Then it spreads to less savvy technical investors, people
| working at tech companies but not really able to understand
| it. This was the first bubble a few years back. The crypto
| boom could have ended here, relatively harmlessly.
|
| But then a ton of money started flowing into the market and
| into individuals pockets as well. Suddenly the pool of
| potential "investors" opened up and crypto also appeared to
| be much more liquid than before with the rapid rise of
| crypto exchanges. This is when you start seeing TV ads for
| crypto and hear of people on reddit, with no technical
| knowledge or skills, pouring all their surplus income into
| crypto.
|
| It ends when there aren't enough new "investors" to keep
| the illusion up, and it crashes as people start to need to
| liquidate that investment. During the artificial pandemic
| boom there was money flowing everywhere, people could throw
| tons of money into crypto and still eat and pay their
| mortgage. Very soon people are going to need to get that
| money out, or desperately want to, and then liquidity will
| be a problem because there aren't any people left to feed
| into the scheme.
|
| The faster the price drops coupled with people needing that
| money, the more likely a panic is to happen which will
| cause a sudden crash.
| spookthesunset wrote:
| I've heard this exact argument 5 or 10 years ago. Yet
| here we are.
|
| Like I said, I totally think cryptocoins are all scams.
| I'm just amazed that the bottom hasn't fallen out yet.
| time_to_smile wrote:
| > I've heard this exact argument 5 or 10 years ago. Yet
| here we are.
|
| We've had an unprecedented boom period and non-stop money
| flooding the market for the last 5-10 years so there's no
| way possible the argument could have come to it's logical
| fulfillment in that period of time.
|
| As long as money is flowing insanely anything is
| possible, there is no reality. Look at how many startups
| there are with non-sensical products, insane hiring
| practices and out of control leadership. When the money
| just pours in the top of the funnel all kinds of wacky
| stuff happens.
|
| We're starting to reality come back, and I think it may
| bite us this time.
| seanw444 wrote:
| In response to the usual comments about how "we need legislation
| on crypto, and we need it now!", can we just have _one_ thing
| that isn 't legislated to shit? Please? Yes, there are scams. If
| you fail to even do the bare minimum research, that's your fault.
| If you suck at detecting sketchy investments (or use crypto as an
| investment in general, rather than its intended purpose), that's
| your fault.
___________________________________________________________________
(page generated 2022-06-13 23:02 UTC)