[HN Gopher] $3B in Bitcoin was sold in a last-ditch attempt to s...
___________________________________________________________________
$3B in Bitcoin was sold in a last-ditch attempt to save UST from
collapse
Author : SirLJ
Score : 300 points
Date : 2022-05-16 14:52 UTC (8 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| joosters wrote:
| "Sold"
|
| It's hard to show that they really sold these coins. Certainly,
| the LFG transferred the coins to some different exchanges. But
| did they truly sell them?
|
| If I was running a dodgy ponzi scheme and saw it collapsing
| catastrophically, I don't think I'd be throwing good money after
| bad trying to futilely patch it up. Much better to stash the
| remaining assets away somewhere and personally cash out later on.
|
| Also, _"In a sense, the market is going to take that as kind of
| bullish."_ - a.k.a. the standard 'this is good for bitcoin'
| quote, applicable whatever the news is!
| DonHopkins wrote:
| >In a sense, the market is going to take that as kind of
| bullish.
|
| The Levenshtein distance from bullish to bullshit is only 3.
| j245 wrote:
| And the distance between love and glove is only 1.. who cares
| ?
| GaylordTuring wrote:
| The fact that this comment has been downvoted is a
| testament to how Hacker News has a collective CDS
| (Cryptocurrency Derangement Syndrome). If you somehow think
| that an argument saying that two words are spelled almost
| the same way and therefore should say something about
| reality is a good argument, then I'm afraid you've totally
| lost it when it comes to this topic.
| DonHopkins wrote:
| The glove is losing its touch!
|
| https://www.youtube.com/watch?v=ih4auGvzw4A
| hypertele-Xii wrote:
| This is actually a decent joke, buried under a dismissal.
| sangnoir wrote:
| A dark joke, with perhaps a hint of OJ Simpson, but a
| solid nerd joke nonetheless.
| kgwxd wrote:
| I thought maybe a message about using protection.
| jeffwass wrote:
| A reference to this classic perhaps? https://en.wikipedia
| .org/wiki/The_Chaser_(The_Twilight_Zone)
| mcv wrote:
| Honestly, that was what I read at first. Only when I read
| your comment, did I realise it said "bullish".
|
| I'm not sure my initial reading was really incorrect, though.
| [deleted]
| gjvc wrote:
| >Also, "In a sense, the market is going to take that as kind of
| bullish." - a.k.a. the standard 'this is good for bitcoin'
| quote, applicable whatever the news is!
|
| Good observation. I may not be Warren Buffet, but it angers me
| greatly to see this kind of moronic chatter masquerading as
| informed opinion on finance or market dynamics.
| lizknope wrote:
| I just assumed that 99% of the people saying "this is good
| for bitcoin" are using the phrase as a meme mocking bitcoin
| and cryptocurrency in general.
| zeven7 wrote:
| That's true, but then the price does go up on cue anyway. I
| see it as a way to express frustration that you know it
| will go up anyway
| vmception wrote:
| Sure, it's a commodity and trades like a commodity.
|
| Anything that stops a supply from overwhelming demand results
| in an increase in price.
|
| Commodities traders accept the seasonality of their assets,
| and arent perma-bulls, with the exception of metals traders.
| Bitcoin inherits a mixture of stock traders and metals
| traders sentiment, where perma-bulls mentality of "number go
| up forever" is present but less warranted.
|
| There are obvious periodic supply and demand movements in
| bitcoin, just like there is in oil, natural gas, and other
| commodities.
| gjvc wrote:
| to what are you replying?
| TomSwirly wrote:
| Oil and gas are vitally useful. They have actual value to
| make things and move things and power things.
| vmception wrote:
| > Oil and gas are vitally useful. They have actual value
| to make things and move things and power things.
|
| And what was the point of that copypasta?
|
| Analogies compare dissimilar things in the ways that they
| are alike, not the ways they are not alike. The trading
| patterns and supply and demand pressures are the ways
| they are alike, whether you respect _why_ such pressures
| exist or not.
| ChaseMeAway wrote:
| "Weak analogy
|
| Definition: Many arguments rely on an analogy between two
| or more objects, ideas, or situations. If the two things
| that are being compared aren't really alike in the
| relevant respects, the analogy is a weak one, and the
| argument that relies on it commits the fallacy of weak
| analogy.
|
| Tip: Identify what properties are important to the claim
| you're making, and see whether the two things you're
| comparing both share those properties."[1]
|
| [1]https://writingcenter.unc.edu/tips-and-
| tools/fallacies/
|
| I suspect the poster you are responding to disagrees that
| it is a relevant comparison, since commodities, their
| value, and subsequently the way in which they are traded
| is in some way influenced by their "vital" civilizational
| importance.
|
| The implication here is that crypto does not share that
| crucial (for the analogy) property of vital importance,
| and as such the trading patterns/market forces are not
| comparable.
|
| In this case is it reasonable to point out that the
| analogy is weak, we do not have to ignore how the two
| candidate comparables are different if they differ in
| fundamental ways.
| vmception wrote:
| The trading patterns have been identified twice now. I'm
| sure its been insightful to someone.
| this_user wrote:
| There certainly seemed to be a lot of selling pressure on BTC
| at the time that pushed the price below $30k that has since
| abated. It is not implausible that this had something to do
| with LFG's supposed activities.
| Nuzzerino wrote:
| I would hope that there would be some kind of evidence that can
| corroborate this. A sudden movement of 3B is a lot to hide on a
| public ledger, exchanges or no. Someone will certainly be
| connecting the dots.
| exdsq wrote:
| I saw a twitter thread that this was a sell off to repay
| investment whales at a better rate than the real one - it was
| some big twitter guy in the space but I couldn't find it if I
| tried. If anyone knows the one I mean, please comment it
| here!
| Nuzzerino wrote:
| I'm sure it will come up if it's backed by evidence and
| newsworthy, but don't hold your breath.
| vmception wrote:
| > Also, "In a sense, the market is going to take that as kind
| of bullish." - a.k.a. the standard 'this is good for bitcoin'
| quote, applicable whatever the news is!
|
| Yes all weekend I had been wondering and cautious based on how
| much bitcoin was left to sell! Its just a commodity, supply can
| be faster than demand, specifically when one whale is expected
| to flood the market
|
| Terra Luna rallied 500x (50,000%) off the lows. Minting many
| millionaires that bought that dip. The rumors were that the
| recovery plan involved a bunch of the bitcoin collateral. I
| couldn't verify that well.
|
| Knowing its all gone (or the selling pressure is done, whether
| you believe it was sold or not) is very helpful
|
| Terra Luna resumes its crash too
| NovemberWhiskey wrote:
| > _Terra Luna rallied 500x (50,000%) off the lows._
|
| The patient is alive! There may no longer be a head attached
| to the body; but - look! - the little finger is twitching.
| vmception wrote:
| Right, there is no takeaway, retail was making it a meme
| coin for the lulz and this is about volatile fun trading
| opportunities from people like me that have no care for the
| name of any asset or ticker.
|
| A buy the dip trade fueled by unverifiable rumors of a
| recovery plan.
| NovemberWhiskey wrote:
| "dead cat bounce" is what we call it in trad fi.
| vmception wrote:
| Yep, never seen a bounce with that amplitude and speed
| before, personally.
|
| I love how crypto can have so many exchanges accessible
| simultaneously. Prices all over the place. Chart and
| price aggregators all over the place. Massive information
| asymmetries. Better to make your own pricing tools and
| have better information than others, the bar is quite low
| so its easy to get an advantage here than in tradfi.
| ordinaryradical wrote:
| Where is this rally you reference? All the charts I can find
| sink to zero with no significant movement after that point.
| zyemuzu wrote:
| I saw people verifiably 5x catching the bottom, I have seen
| nothing of 500x at all.
| [deleted]
| vmception wrote:
| Kucoin and Binance
|
| But other people are more willing to explain it
| javert wrote:
| There are lots of scenarios where the Luna becomes somewhat
| valuable again. A truly major crypto coin like Luna has never
| truly disappeared. Probably someone will make a fork like
| "Luna Classic." There are lots of these things (ETH classic,
| Bitcoin Cash, Bitcoin SV) that have zero rationale for
| existing, but are still traded with a high valuation.
|
| tl;dr people will attempt to reflate their bags; some
| moderate success cannot be ruled out.
| skinnymuch wrote:
| Eth classic is a good one to exist to remind people about
| what decentralization means these days and what trust the
| contracts/code really means.
| jandrese wrote:
| Huh?
|
| https://coinmarketcap.com/currencies/terra-luna/
| jcranmer wrote:
| The absolute low appears to be ~2e-5, and the (very
| temporary) high after that is 6e-3, which is a ~300x rally.
| However, the 6e-3 high was very temporary, with 4e-4 being
| the more durable high, with current prices running ~1-2e-4.
|
| ...I'm finding it easier to refer to the prices here in
| scientific notation, and to look at the price graph in log
| scale. That gives you an idea of how far the price has
| gone.
| vmception wrote:
| Yeah, 300x, 500x, overnight, eventually we'll be talking
| some significant money
| vmception wrote:
| You would be better off using a spreadsheet updated with
| your own data points than price aggregators.
|
| But that very website says the 24 hour low was $0.00001675
| and the current price of $.00016 is 10x higher
|
| The reality is that the lows on specific exchanges had more
| zeroes than that
| skinnymuch wrote:
| Sure but how much legit volume did those specific
| exchanges do at those price points allowing more than 50x
| or 100x returns?
| vmception wrote:
| Amongst all volume I was not particularly amused by the
| 15minute bars, it would have been hard to move 7 figures
| usd, but they could eat a 6-figure market order easily.
| The rest would need just a little patience.
|
| No need for me to move the goal post to legit vs not real
| volume, there were some AMMs that had the same liquidity
| depth.
| skinnymuch wrote:
| Yeah I was just curious and was on a phone so couldn't
| dig deeper.
|
| Of course for a chump like me, 100x'ing anything like $1K
| would be moderately life changing (mostly short term
| easing of career and life pressure)
| vmception wrote:
| Yeah I was watching it closely and should have dropped
| $5k in
|
| I love buying the dip, I just didnt like the infinite
| inflation. I do my dip buys when there is a better
| information asymmetry that I perceive because the market
| cant code. I'm not good at these retail meme coin
| rallies.
| jandrese wrote:
| I mean this is penny stock trading at this point. It's
| easy to show huge theoretical returns when you don't
| actually have money in there distorting the market.
| NelsonMinar wrote:
| I'm sure we'll have an orderly audit and accounting for the
| loss of funds as adjudicated by the appropriate courts!
| vmception wrote:
| By 2032?
|
| We need new songs, "you just got Do Kwon'd" instead of "Mt
| Goxxed"
| vkou wrote:
| Just as a reminder about how Mt Gox played out - it looks
| like all the people who lost money on it will receive 1:1
| fiat-denominated compensation for their losses, Mark
| Karpeles won't serve a day in prison, and is likely to walk
| away with ~3 billion worth of BTC[1].
|
| Who'd have thought that failing to operate a bitcoin
| exchange is a thousand times more lucrative than actually
| operating one!
|
| [1] If Mark owed you a bitcoin back in 2014, you're not
| going to get that bitcoin back. You're going to get
| somewhere between ~$200 and ~$600 back. He's going to keep
| the other $30,000.
| rglullis wrote:
| That is assuming that the whole "we got hacked" is a
| complete fabrication. It is possible, but isn't it
| completely short sighted?
|
| I mean, who would change places with him? His head has a
| price, and he will never be able to hide anywhere in the
| world or spend any of that money. He is going to live the
| rest of his life being watched by authorities all around
| the world and he will have thousands of people believing
| he is holding the stash.
| vmception wrote:
| The US government indicted the BTC-E founder, that
| indictment details the hack of many exchanges including
| Mt Gox.
|
| Gox was fractional before Karpeles even bought it, due to
| this hack of bitcoin.
| dayvid wrote:
| Edit: Looked deeper into it. It's a really weird story,
| where it looks like they got hacked (https://www.theguard
| ian.com/technology/2017/jul/27/russian-c...), he tried to
| fake financial data to make it look like they had money,
| and he got caught. In the end, he's making more money off
| of lying and the original investors are screwed. That's
| really lame.
|
| It's also unfortunate, because a lot of the vibe I get
| from crypto people I run into (more online than in-
| person), is survival of the cleverest, and anything is
| cool if you can get away with it. People I knew outside
| of crypto who are into it (more on the eng-side), are
| pretty cool, though and usually don't only trust Bitcoin
| and see most alt-coins as scams.
| vmception wrote:
| Nobody got paid yet. This is going to drag out for a long
| long time.
|
| I also think the BTC-E issue is bigger and gives me
| reason to think Mark Karpeles wrongfully served jail time
| in Japan (for the reason that he served time, there could
| be other reasons if people like that kind of
| consequence).
| newguynewphone wrote:
| Every crypto nut I have interacted with, will call you
| all sort of derogatory terms if you don't agree that web3
| is the future and if a scam happens on any exchange, its
| because the user were stupid to trust them. Zero
| accountability for the scammers and fraudsters, it's
| always the "stupid" users fault.
| adastra22 wrote:
| This information is out of date. The creditors took over
| the distribution process and are going to distribute the
| remaining bitcoin pro rata to creditors. Mark Karpales
| served about 2 years in prison.
| runarb wrote:
| > Mark Karpales served about 2 years in prison.
|
| I do not think ha actually did serve any time. "he was
| sentenced to 30 months in prison, suspended for four
| years, meaning he will serve no time unless he commits
| additional offenses over the next four years." according
| to https://en.wikipedia.org/wiki/Mark_Karpel%C3%A8s .
| vmception wrote:
| Because they took so long that the remaining assets value
| when up 300x ($100 - $30000)
|
| Any way, believe it when I see it
| joecool1029 wrote:
| I remember getting Zhou Tong'd. I think that was the first
| song trend: Example:
| https://www.youtube.com/watch?v=NG1qooBzE2w
| Melting_Harps wrote:
| Wrong track, this is the one you're looking for:
|
| https://www.youtube.com/watch?v=-z9Jwp2x86o
|
| I saw them live, but was too lost in conversation during
| 95% of their performance, which is a shame because they
| went dark not longer after that. Still, ZT was a solid
| part of the history back then.
|
| And for a more relevant track for the current sentiment:
|
| https://www.youtube.com/watch?v=lEBP9dpVM70
| nullc wrote:
| I think it's a simpler explanation to assume that they would
| have robbed it by taking their huge stashes of luna and
| exploiting their 'buying'... it would hold up much better under
| scrutiny and they could still manage to transfer a significant
| fraction of the value into their pockets.
| eric_cc wrote:
| > 'this is good for bitcoin'
|
| A total ponzi scam coin crashed. This IS good for Bitcoin.
| Bitcoin is not Luna nor is it one of the thousands of other
| garbage scam coins. The faster those coins are proven scams the
| better.
|
| Too many people falsely equate "Bitcoin === Crypto".. or "a fan
| of bitcoin is a fan of all crypto".
|
| So I'd bounce this back to you: How is Luna's Ponzi crash NOT
| good for bitcoin?
| shkkmo wrote:
| > Too many people falsely equate "Bitcoin === Crypto".. or "a
| fan of bitcoin is a fan of all crypto".
|
| > So I'd bounce this back to you: How is Luna's Ponzi crash
| NOT good for bitcoin?
|
| Doesn't the first line answer the second?
| eric_cc wrote:
| > Doesn't the first line answer the second?
|
| To be clear, you're suggesting: "because people are
| uneducated about bitcoin and crypto, when one project fails
| they will incorrectly connect it to bitcoin. And that's bad
| for Bitcoin."
|
| These events are great opportunities to educate ignorant
| people. > 0 such ignorant people will learn more about
| bitcoin and why it's not like crypto like Luna. Greater
| education is extremely good for Bitcoin and bad for scam
| coins - which rely on ignorance.
| emerongi wrote:
| Most people investing in crypto just want to put in $1
| and take out $2. Trying to educate people about
| cryptocoins is practically a waste of time at this point
| - they just don't care. Events like these _are_ bad for
| Bitcoin on a pure value basis, for anyone invested in
| Bitcoin.
|
| That's just my opinion, though.
| minsc_and_boo wrote:
| It's worse than that.
|
| Every dollar taken out of crypto is at the expense of
| someone else. Those coiners trying to change $1->$2 are
| heavily incentivized to lie, manipulate, and convince the
| naive in the public to put their $1 in.
|
| You could say this is everything with a public market,
| but with stocks or bonds you also have a legally binding
| contract to organizational assets that have _value_.
| Buybacks, issuing new units, dividends, etc. provide
| other avenues for cash injection to get your $2 out.
|
| BTC doesn't even have the bare minimum regulation to
| prevent bad actors from exploiting the public, which is
| why it's _worse_ since the public only sees coiners
| trying to whitewash an inefficient database.
| eric_cc wrote:
| You're thinking about short term traders who want to
| accumulate more $USD. And sure, they are one actor in the
| bitcoin eco. Others use bitcoin as their primary
| currency. And still others would prefer BTC as their
| currency but, due to tax laws and infrastructure, are
| hindered from doing so.
|
| You're judging all current btc owners by bucketing them
| into one easy-to-consume cliche. Not all btc users give a
| shit about more fiat. Considering the buying power of
| fiat is a perpetual dip, it's not exactly the best thing
| to accumulate.
| minsc_and_boo wrote:
| >Others use bitcoin as their primary currency.
|
| No, not really.
|
| While some crypto-enthusiasts are using BTC as hobby
| money (in which most payment processors convert to USD
| right away anyway) the vast majority of people using BTC
| are speculators.
| ethanbond wrote:
| If these are good opportunities to bolster the
| credibility of BTC et al., the community must just do a
| very poor job of capitalizing on those opportunities. It
| is strictly a bad look to have headline after headline
| affiliating this entire economic sector with fraud, and
| frankly the shills' reactions just make the headlines
| even more unflattering.
| eric_cc wrote:
| > headline after headline
|
| This has more to do with media and social media thought
| bubbles. This is no different than any other topic in the
| news. There are highly intelligent takes out there. But
| click bait, trolling, and confirmation bias bs rises to
| the top in certain areas of media and social media.
| tromp wrote:
| Next you will be suggesting that Tether crashing will be good
| for bitcoin...
| Ancapistani wrote:
| It will be, on a long enough time scale.
|
| I have USD sitting in an account waiting for that to
| happen, in fact.
| jabits wrote:
| Agree. Unfortunately your USD (and mine) are currently
| losing about 8% of their value (annualized)...
| snovv_crash wrote:
| Tell me, what assets exactly are backing BTC which stop it
| from crashing just like Luna?
| GaylordTuring wrote:
| Nothing, but I guess I don't have to tell you that, since
| your question seems rhetorical in Nature. However, what
| keeps BTC from crashing is the same psychological effect
| that keeps Twitter, Facebook, Nike, or Coca-Cola from
| crashing: Brand awareness.
|
| Bitcoin sucks compared to many other cryptocurrencies,
| still it's the most popular one because it was the first,
| because people know about it, and because people know that
| other people know about it.
|
| Even if you could fork Twitter and put it behind a
| different domain name, for example , Twutter, and you would
| add some functionality that everybody would like to have
| (let's say an edit button), most people would still go to
| Twitter.
|
| If you could sell the rights to use the name Coca-Cola or
| Nike, even if you had to make it clear to the customer that
| the new product that you sold had nothing to do what so
| ever with old product, the names alone would be worth a
| couple of fortunes.
|
| So what's stopping Bitcoin from crashing is the brain virus
| (or meme if you want) that has infected hundreds of people
| around the globe and made them believe that other people
| will know about and believe that Bitcoin is valuable.
|
| And since Bitcoin isn't hooked up to a doomsday device like
| Luna and UST was, it can't destroy itself.
| paxys wrote:
| Nothing is stopping BTC from crashing to zero, so why is it
| not crashing to zero?
| postalrat wrote:
| "Nothing is stopping BTC from crashing to zero" isn't
| true. Although it can still crash to zero.
| rednerrus wrote:
| Because they continue to print Tether to prop the price
| up? Am I doing this right?
| eric_cc wrote:
| LUNA minted trillions of brand new tokens within the span
| of a day or so rendering the token worthless. This is due
| to the way LUNA was tied to the algorithmic stablecoin UST.
| It was a true ponzi.
|
| BTC's max supply is capped and the release schedule of new
| coins is fixed and predictable. There is no possible way
| that trillions of new bitcoins could suddenly be created.
| matheusmoreira wrote:
| > There is no possible way that trillions of new bitcoins
| could suddenly be created.
|
| There absolutely is: fractional reserve banking.
| Exchanges are already operating that way. They offer
| loans, savings accounts and everything.
| chaostheory wrote:
| Not a fan of Bitcoin, but you're confusing Robinhood
| synthetic IOUs with Bitcoin. They are not the same thing.
| eric_cc wrote:
| > There absolutely is
|
| Banks and/or exchanges cannot create more bitcoin.
| matheusmoreira wrote:
| Sure they can. You deposit 1 BTC, they loan it out to
| someone else. Boom, 2 BTC.
| eric_cc wrote:
| No. There is still 1 BTC in this scenerio. When you
| choose to deposit your 1 BTC you've lost custody of it
| and somebody else has gained possession of it. All you
| have is a promise that you'll get it back - which is not
| === BTC.
| winkeltripel wrote:
| If it is close enough for a real bank in USD, it's
| probably okay for an exchange in bitcoins, right? If the
| bank/exchange maintains a 5% reserve, every unit of
| currency can produce a multiplier/velocity of 20. Bank
| loans substantially increase the ability of businesses to
| fund activity.
| matheusmoreira wrote:
| You said what happened to Luna can't happen to BTC
| because the BTC supply is capped. It's not. The inability
| to mine new BTC doesn't actually matter. The pseudobanks
| we call exchanges are still able to introduce numberless
| BTC into circulation through loans. The result is
| inflation and possibly market crashes in case of
| defaults. Really no different from what Tether and every
| other bank is doing.
|
| I've written more detailed posts about this:
|
| https://news.ycombinator.com/item?id=31375366
| MadcapJake wrote:
| Laymen here: How can they introduce numberless BTC? I
| thought that was the crux of what makes this different
| from fiat: you can only transact from one address to
| another, no institution in between.
| eric_cc wrote:
| > BTC supply is capped. It's not.
|
| Yes, it is. They are not introducing BTC into
| circulation. This is verifiable via the blockchain.
|
| Banks creating IOU's or derivatives or whatever other
| abstraction they can come up with never generates new
| BTC. You'd hope that people foolish enough to work with
| such financial institutions would know the risk of
| possessing nothing but an instrument created by the bank.
| If you're unwilling to take custody of your own bitcoin,
| you better damn well do some good research on third party
| custodians.
| matheusmoreira wrote:
| How much BTC exists in the blockchain is ultimately
| irrelevant. What matters is the amount of BTC actively
| circulating.
|
| If you deposit 1 BTC on Binance, then I can get your BTC
| in the form of a loan. I can even withdraw your BTC.
| Meanwhile, Binance records still say you have 1 BTC, they
| even allow you to trade with it. So there's really 2 BTC
| in circulation. That BTC is duplicated, it's in multiple
| places simultaneously.
| snovv_crash wrote:
| And of course, the music keeps playing as long as Binance
| has liquidity.
| codehalo wrote:
| Still doesn't have anything to do with Bitcoin, or the
| bitcoin supply.
| warkdarrior wrote:
| That is correct. And, fundamentally, this is possible
| because the Bitcoin chain is not the only ledger out
| there tracking BTC. Each (centralized) exchange has its
| own internal ledger, tracking how much BTC its customers
| have.
| TomSwirly wrote:
| > There is still 1 BTC in this scenerio.
|
| You simply do not understand finance. Consider
| Eurodollars as another example:
| https://www.investopedia.com/terms/e/eurodollar.asp
| gardenhedge wrote:
| > You deposit 1 BTC, they loan it out to someone else.
| Boom, 2 BTC.
|
| Do you mean "they" purchase a second bitcoin with the
| second person's loan money? if not, where does the second
| bitcoin come from? (Hint: think about the blockchain)
| kemotep wrote:
| Bitcoin is fungible. That Bitcoin doesn't have to be
| *exactly* yours but they update their ledger and loan 1
| BTC to someone after you deposit your 1 BTC into the bank
| account. Based on the interest rate of that loan, the
| bank is giving you a cut in Satoshis. If you choose to
| withdraw the 1 BTC before the other person's loan is pid
| back, they must provide you 1 BTC. They can choose to
| take that 1 BTC from someone else's account or use the
| profits they make in loans and other financial
| transactions to provide you that 1 BTC.
|
| On the blockchain, there only exists the 1 you deposited,
| the 1 that was loaned, and the 1 that was generated as
| profit by the bank. The blockchain tracks these
| transactions. The bank only has to settle these
| transactions when someone withdraws and when someone is
| depositing. Internally, there can be as many or as little
| transactions are as necessary.
| NovemberWhiskey wrote:
| You'll have to explain how that's usefully different from
| the fiat context.
| eric_cc wrote:
| First you'll have to explain to me why you would give
| somebody your bitcoin and allow them to give it to
| somebody else!
| NovemberWhiskey wrote:
| ... because they promise to give you back one BTC plus
| something else of value?
| TomSwirly wrote:
| https://www.bankrate.com/glossary/r/repurchase-agreement-
| rep...
|
| Every single day it's Economics 101 here.
| matheusmoreira wrote:
| Interest. Right now Binance is offering 5% APY for BTC
| savings. If you give them your BTC, you'll stack sats
| automatically.
| alecbz wrote:
| You really don't need to explain why; it's enough to
| observe that people do it.
| Karunamon wrote:
| Because there's no such thing as unbacked BTC. You either
| have the UTXOs pointing at an address you hold the keys
| for, or you do not.
|
| If someone loans you BTC, the supply of BTC has not
| increased.
| matheusmoreira wrote:
| > If someone loans you BTC, the supply of BTC has not
| increased.
|
| True when _someone_ does it, false when a fractional
| reserve bank does it.
|
| When someone loans money to someone else, money
| physically changes hands and there is no concept of a
| reserve. Banks are able to maintain the illusion of full
| reserves even though they operate in a state of perpetual
| insolvency.
| NovemberWhiskey wrote:
| So is Binance a bank, when it offers 5% APY Bitcoin
| savings accounts? Or is it perhaps a shadow bank, which
| is to say an entity that creates money supply through
| credit without regulation?
| Karunamon wrote:
| Please explain the mechanism by which a "bank" is able to
| transfer to you an amount of BTC that they do not have
| wallet control over?
|
| This is a critical difference. A bank can loan you fiat
| money that they do not physically have, with the almost
| always correct assumption that most people won't want to
| convert that database entry into cash at the same time.
|
| This is not possible with bitcoin. Either the bank has
| the coins in wallets they control to send to a wallet you
| control, or they do not and can't.
| NovemberWhiskey wrote:
| > _Please explain the mechanism by which a "bank" is able
| to transfer to you an amount of BTC that they do not have
| wallet control over?_
|
| BTC that's in an offline wallet is like cash under the
| bed; and you're right that no-one is lending money that
| they have under the bed.
|
| However, a significant number of BTC owners don't keep
| their money in their own wallets - they keep it at an
| exchange, which almost certainly commingles it with other
| owners in shared wallets.
|
| You can certainly take a maximalist position here and
| assert that the exchange is the real owner, because they
| have the private keys. The fact of the matter is that the
| real world includes a difference between legal and
| beneficial ownership; and has done since well before the
| existence of fiat currencies - because it's useful.
| NovemberWhiskey wrote:
| All bitcoin is "unbacked". There's no intrinsically
| useful asset behind bitcoin. Your private key is just a
| bundle of bits. Bits are so abundant as to be worthless.
| eric_cc wrote:
| Same with paper fiat currency.
| snovv_crash wrote:
| Actually paper fiat currency is accepted by a government
| to pay property tax. In this way you need it to keep
| possession of land, so the entire land value of the
| linked country, and all the infrastructure built on it,
| is the backing for 'fiat' currency.
| datadata wrote:
| Accepting some form of unbacked currency does not give
| the currency intrinsic value and therefore make it
| backed. El Salvador made bitcoin legal tender, which
| means that USD or Bitcoin could be used to pay property
| taxes there, that doesn't mean that suddenly Bitcoin is
| backed by El Salvador property.
| peyton wrote:
| I think I responded to your other comment, but I don't
| think this is true. Do you have any further reading?
|
| A currency is not backed by land value. It's usually
| "backed" by a combination of sovereign debt obligations
| and its status as legal tender.
| NovemberWhiskey wrote:
| I think that's right - fiat currency is not asset backed;
| in the case of the USD, it's backed by "the full faith
| and credit" of the U.S. government.
| NovemberWhiskey wrote:
| I know? The point is: neither bitcoin nor fiat currencies
| are asset-backed. In both cases, there are commercial
| entities that offer accounts where you can deposit the
| "thing", and the "thing" is then loaned to someone else,
| and this is done for some kind of valuable inducement.
|
| The question is: why is one called fractional reserve
| banking, a behavior that is acknowledged to increase the
| money supply, and the other one called "oh no this is
| definitely not increase of the money supply, it's just
| you relinquishing custody of your bitcoin and why would
| you do that, there's no reason you'd ever do that".
| Karunamon wrote:
| You know good and well what was meant, and that isn't it.
| Stop it.
| NovemberWhiskey wrote:
| Actually, no, I literally have no idea what you meant -
| by all means, please amplify!
| overtonwhy wrote:
| If a majority of the miner pool decides to make a change
| the change is made. That's how decentralized concensus
| works right?
| meowkit wrote:
| Well, not quite.
|
| If a majority of miners fork their clients away from the
| bitcoin code repo by removing the coin cap, they would be
| creating a "new bitcoin". If the inter-subjective
| consensus of users also decide to use this new bitcoin it
| will be the defacto. Otherwise it will just be another
| fork (call it Bitcoin NoCap) like bitcoin cash, bitcoin
| diamond, bitcoin gold, etc.
|
| The original "bitcoin" network (before the cap removal)
| would still propagate by whoever has the chain history.
|
| The reality is that any attempts to split the chain to a
| state without a cap, at least with the current cultural
| consensus at this time, will result in a dead chain after
| a short period as people sell off the coins on the new
| fork.
|
| https://www.investopedia.com/tech/history-bitcoin-hard-
| forks...
| snovv_crash wrote:
| Luna crashed because people lost trust in it. The only
| reason people have trust in BTC is because other people
| have trust in it. If that ever changed, there is no
| actual use for a BTC, and they are thus intrinsically
| worthless.
|
| Fiat currency has the backing of a government. The
| government demands certain payments of this currency in
| order to own land, and also for some extra rights like
| mineral extraction, fishing licenses etc. Thus, as long
| as the government is viable and can confiscate the land
| of those who don't pay, there will be demand for the
| currency, and it will be proportional to the value the
| government assigns to the property and the rate of tax.
|
| Thus, the currency is stable, because you know at the end
| of the day, there will always be a buyer who needs to pay
| their taxes.
| peyton wrote:
| I don't understand your argument. What happens during
| hyperinflationary periods or other currency collapses?
| The government stops demanding payments?
| Strom wrote:
| Bitcoin also has the backing of a government - El
| Salvador.
|
| I would rather argue though that even government backed
| currencies are fully dependant on trust, not government
| usage of it. Just check out any government currency
| hyperinflation event.
| dmitrygr wrote:
| yup... https://www.datacenterdynamics.com/en/news/el-
| salvador-risks...
| nradov wrote:
| El Salvador is a failed state about to default on its
| national debt. It's not a real "government" in the way
| that most of us would define the term.
| samatman wrote:
| To be perfectly clear, you're claiming with a straight
| face that government issued currencies are stable because
| there will always be a buyer who needs to pay taxes?
|
| Any reasonable definition of stability precludes
| hyperinflation, we agree on that right?
| eric_cc wrote:
| > Luna crashed because people lost trust in it.
|
| No. It crashed because trillions of tokens were created
| rendering each token worthless.
| snovv_crash wrote:
| Then why did the total Luna market cap go down? Surely if
| people still had trust it should have just diluted the
| token values?
| orangepurple wrote:
| Both can be true
| kristopolous wrote:
| That's not the point here. It's behaviorist.
|
| Prices stay changed because the beliefs change.
|
| If people had thought this was a sane and reasonable move
| that didn't really affect things the price would quickly
| return despite the quantity increasing.
|
| The believed durability of the token changed
|
| No matter what strategy is to be used to try to repeg it,
| it will only work if there's faith in the price.
|
| Price isn't a thing it's a relationship between people
| about a thing
| seoaeu wrote:
| You have it backwards. The trillions of tokens were
| created _because_ people lost trust in it. Specifically,
| the loss of trust instigated the price drop from $1 to
| ~98C/. That 's what started the collapse. Only afterwards
| did the "death spiral" of minting of more tokens, which
| degraded trust, which decreased the price, which drove
| more minting, etc. happen
| nwiswell wrote:
| It's chicken and egg.
|
| People lost trust because they knew people losing trust
| would cause a death spiral, and they wanted to get out
| before everyone else.
|
| It was a fire in a crowded theater. Bitcoin depends on
| trust, yes, but there's no Damoclean sword like there was
| for Luna. Some people losing confidence does not
| necessarily lead to others losing confidence.
| stickfigure wrote:
| There were two coins involved; the overprinting of Luna
| corresponded with lost confidence in UST. The obvious
| conclusion is that "algorithmic" stablecoins are
| bullshit.
|
| Whatever fate lies ahead for Bitcoin, it doesn't have
| this particular weakness. It's not "leveraged" in the
| same way as Luna/UST.
| lfmunoz4 wrote:
| namdnay wrote:
| You have the chronology wrong. The tokens were created
| because the price kept slipping, and the more the price
| slipped the more tokens were printed, the more people
| panicked etc
| rubyfan wrote:
| A better argument might be fiat currency is stable
| because governments hold a monopoly on violence.
|
| But governments can be poorly run so I suppose "stable"
| is not the right word.
| pirate787 wrote:
| No assets though-- the only thing backing bitcoin are
| "greater fools"
| eric_cc wrote:
| Same fiat paper currency.
| moistly wrote:
| Wow. Talk about destroying any credibility you'd hoped to
| hold onto. Total foot-gun action.
| snovv_crash wrote:
| As I said on the other thread, there is a government with
| a police force backing fiat. They also guarantee they
| will buy the fiat currency and in exchange give you the
| continued use of the land you own. This is why it is
| called 'fiat', which means backed by law or authority.
| [deleted]
| vageli wrote:
| Governments have demonstrated that they do not have to
| accept their own currency [0] and have demonstrated a
| willingness to drive the value of their currency down.
| [1]
|
| [0]: https://en.wikipedia.org/wiki/2016_Indian_banknote_d
| emonetis... [1]: https://en.wikipedia.org/wiki/2018%E2%80
| %932022_Turkish_curr...
| throwanem wrote:
| Fortunately, one side effect of being long BTC is that
| the owner of the position becomes immune to bullets,
| batons, liens, and civil actions.
| mejutoco wrote:
| You can pay your taxes with it at the very least.
| thehappypm wrote:
| Not really. You get to keep your property if you pay fiat
| to your local government every year. That is backstopping
| its value.
| romeros wrote:
| Polycat finance only had 3 Million Tokens. That's the max
| supply. There will never be more than 3 Million Tokens.
| And yet the price tanked and will never ever recover. It
| traded at $60 a piece. Now it is trading in cents.
|
| Quant has only 12 Million Tokens. No new tokens will ever
| be created. It topped at $400 a piece. Now it is trading
| at $72. It could go down all the way to fractions of
| cents.
|
| Reality doesn't matter. Perception of reality is all that
| matters. Likewise, Bitcoin could only ever have a 21 M
| supply cap and it could end up trading in fractions of
| cents just like the above two coins in the future.
| jtaft wrote:
| Do you think the value of Bitcoin will go to zero due to
| lost private keys?
| eric_cc wrote:
| I think it would sooner be rendered obsolete for another
| reason before this scenario.
|
| It would take a long, long time for this to play out.
| thedudeabides5 wrote:
| BTC is not pegged, that's the diff.
|
| When you don't claim a value, you don't need a 'backstop.'
| NovemberWhiskey wrote:
| There were two pieces of this particular crypto asset
| framework. The first part was Luna, which was a generic
| coin with no pegging mechanism or backing assets. The
| second part was Terra, which was a USD-pegged stable
| coin.
|
| The novelty was a guaranteed mint/burn mechanism across
| the two which was intended to maintain the peg on Terra.
|
| As the prior poster correctly asserts, Luna was never
| pegged.
| snovv_crash wrote:
| You always need a backstop, otherwise you only have
| scarcity and not intrinsic value. Scarcity gives value in
| a bull market when people want in, but only a backstop
| gives real intrinsic value in a bear market when people
| want out.
|
| It isn't like you can reverse the mining process and get
| back the electricity which was used to mint your BTC or
| something.
| loceng wrote:
| What functionality was different between Bitcoin and Luna?
|
| Is Luna not run off of Bitcoin?
|
| So if Luna could function as a Ponzi scheme, why doesn't
| Bitcoin inherently have that same capability or function
| embedded into it? Or is there something preventing that from
| happening with Bitcoin?
|
| Confused.
| eric_cc wrote:
| Terra (token LUNA) is its own chain. Trillions of brand new
| LUNA tokens were minted within the span of a day or so
| rendering the token worthless. This is due to the way LUNA
| was tied to the algorithmic stablecoin UST. It was a true
| ponzi.
|
| BTC's max supply is capped and the release schedule of new
| coins is fixed and predictable. There is no possible way
| that trillions of new bitcoins could suddenly be created.
| loceng wrote:
| So I don't think this point proves they're different
| functionality - other than the single factor of with more
| controllers then "printing" a bunch of coins wiping out
| the value decided by the market isn't easily possible?
|
| It's this single point of failure ("one" controller vs.
| distributed to diversify risk) that you're stating is
| what makes it a true Ponzi vs. Bitcoin?
| NovemberWhiskey wrote:
| > _There is no possible way that trillions of new
| bitcoins could suddenly be created._
|
| That's a slightly strong perspective; it is not
| impossible; it is merely extremely hard.
| eric_cc wrote:
| > it is merely extremely hard.
|
| Care to elaborate how it could be done?
|
| Even if it were to happen, which it could not, the chain
| would fork from the moment before the hack and continue
| on without the hack.
| NovemberWhiskey wrote:
| Change to Bitcoin Core; hard fork; majority of miners and
| nodes move to new fork.
|
| The only reason we're not calling "Bitcoin Cash" by the
| name "Bitcoin" is that the last part didn't happen,
| right?
| eric_cc wrote:
| Consensus. Why would the majority people adopt broken
| bitcoin?
| NovemberWhiskey wrote:
| You asserted it was impossible; it isn't. It's merely, as
| I said, extremely hard.
| anothernewdude wrote:
| Bitcoin already faces this problem.
| sha255 wrote:
| It's interesting how cryptocurrency advocacy makes
| otherwise intelligent people discard all principles of
| engineering with forceful statements like "it's
| impossible," when the only thing realistically standing
| between someone and as much Bitcoin as they want is SHA-2
| compromise. I'm amazed with the money in play that it
| hasn't happened yet. It speaks to the strength of the
| SHA-2 suite (and, complicatedly for me, the NSA) that
| it's survived this well with a giant target on its back
| thanks to cryptocurrency.
|
| Even here, you've assumed such an event would be a hack.
| Sure, one is not going to introduce trillions of coins,
| but a fast way to design a desired SHA-2 solution is a
| lot of cryptocurrencies' factorization heel and played
| correctly could slowly make one incredibly wealthy
| (played poorly, it'd just collapse the entire currency
| and probably the whole idea).
|
| You know how we're all terrified of fast factorization
| and its implications for cryptography? Do you really
| think with the basically five minutes of research the
| industry has into quantum computing that SHA-2 is good
| enough for the entire life of a currency? We've already
| shown that coins can't fork to change stupid shit, so I
| mean, good luck with an owned hash. So, hard, not
| impossible. Just don't forget: once upon a time we
| thought MD5 was awesome and you've never heard of MD4.
| eric_cc wrote:
| "It's impossible" - I agree it's almost always too
| strong.
|
| However, remember we're discussing the creation of
| trillions of bitcoin. Even if it occurred, do you really
| believe the chain would remain? It would be forked. I
| just can't imagine a chain being totally compromised and
| its users being okay with it - both would need to be
| true.
| solveit wrote:
| A smart attacker wouldn't create trillions of bitcoin,
| they would create a steady trickle of bitcoin
| indistinguishable from a medium-sized private mining
| operation that is too small to be noticed for a good
| while but large enough to make the attacker very very
| rich. It won't be noticed for months or even years and
| you _cannot_ erase years of history. There will be no
| fix, only damage control.
|
| That said, SHA-2 being broken is not very high up on my
| list of cryptocurrency failure modes if only because
| there are much more immediate concerns... and I suspect
| most other people implicitly feel the same way.
| deadbunny wrote:
| That not how bitcoins are created. You don't just make a
| few extra. The block reward is fixed, if someone made a
| block with more than the block award it'd be rejected by
| the network.
| 0110101001 wrote:
| It's certainly debatable whether Bitcoin has any real
| worth as a currency or as an investment, or if it's just
| another giant speculative bubble waiting to fall apart.
|
| But it's definitely looking like "anonymously drop a
| protocol and disappear" was a smart move.
|
| All these Ethereum-based token coins seem like they're
| trying to answer the question "what if Bitcoin had a
| central banker, but it's a kid in his 20s with a CS
| degree?"
| parkingrift wrote:
| If people react to the Luna ponzi by exiting crypto or not
| entering crypto, the price will continue to fall.
|
| ...hey, wait... that also sounds like a ponzi.
| matheusmoreira wrote:
| > Too many people falsely equate "Bitcoin === Crypto".. or "a
| fan of bitcoin is a fan of all crypto".
|
| It pretty much is. I can open the price graph for any coin
| and assume the bitcoin movements are similar. Small dip in
| bitcoin price? Alts get destroyed. Even ethereum gets
| destroyed.
| eric_cc wrote:
| Sure price movements are in sync during general risk on/off
| pressures.
|
| Same can be said about categories of companies in the stock
| market. e.g. SAAS companies, oil companies, etc move
| together..
| lamontcg wrote:
| > "In a sense, the market is going to take that as kind of
| bullish."
|
| I mean everything is a bit oversold right now on negative
| emotions, both in the crypto space and in the stock markets.
|
| There's probably going to be a positive bounce just because
| markets don't move in straight lines.
|
| There is always the chance that something else explodes due to
| stress tomorrow and hits the headlines and crypto and/or stocks
| start melting down again (nothing is ever a sure bet), but it
| feels like we're closer to hitting a point of selling
| exhaustion and an inflection point of negative sentiment.
| gjvc wrote:
| > I mean everything is a bit oversold right now
|
| you ain't seen nuthin' yet
| 300bps wrote:
| _I mean everything is a bit oversold right now_
|
| Everythinig was way overbought when considering the money for
| those past purchases came from an accommodative Fed that
| flooded the economy with $9 trillion that currently sits on
| its balance sheet, lowered interest rates to literally 0 and
| the government sending out stimulus like it was candy.
|
| All of which are either done or ending.
|
| So I think a better way to phrase it is that the market is
| repricing with the new information, it isn't oversold.
| everybodyknows wrote:
| Hmm, it does seem the balance sheet has reached a plateau,
| but the curve only rounded to it around March:
|
| https://fred.stlouisfed.org/series/WALCL
|
| Funny how debt is ignored by big media and the short fiat
| rates get all the attention.
|
| Edit: Fed balance sheet relative to GDP, 2003 to present:
|
| https://fred.stlouisfed.org/graph/?g=Pvii
| Jabbles wrote:
| > There's probably going to be a positive bounce just because
| markets don't move in straight lines.
|
| To emphasize the uncertainty in your "probably", I will point
| out that Luna didn't bounce:
| https://coinmarketcap.com/currencies/terra-luna/
| everfree wrote:
| Luna's supply hyperinflated (from 100 million Luna to 6
| trillion Luna) to try to save UST's backing, as designed.
| That's why its price got rammed irreversibly into the
| ground.
|
| Cryptocurrencies in general, and shares of stocks, do not
| hyperinflate.
| pcthrowaway wrote:
| Oh, it absolutely did, it crashed down to 4 zeros, then
| bounced back up to 3, roughly a +300%-1000% price movement
| over the course of a day. Of course, liquidity may have
| been incredibly low, but there were reports of people
| turning $40 into $400 in the aftermath of all this.
|
| Obviously, it crashed so much, the "bottom" was anyone's
| guess (well.. zero is the only one that makes sense now).
| But there are bounces all the way down. If you drop a
| bouncy ball down an infinite staircase it doesn't take a
| straight line down.
| throwaway743 wrote:
| Saw 6 decimal places for several candles (a close, open,
| and lows) on 1h timeframe the other day on one exchange.
| Then back up to 3-4 places.
| Enginerrrd wrote:
| >I mean everything is a bit oversold right now on negative
| emotions, both in the crypto space and in the stock markets.
|
| ...Things have corrected SLIGHTLY from an absolutely historic
| bubble and you think it's OVER sold?
|
| Meanwhile, we have significant inflation, rising interest
| rates, supply shocks that still haven't been sorted out and
| signs of economic slowdown.
|
| Prices have been out of touch with reality for a long time.
| We aint anywhere near a bottom yet IMO.
| izzydata wrote:
| Stock prices are back around where they were before the
| pandemic. It may have already been overvalued at that time,
| but perhaps it is a level of overvalue that people are
| comfortable with as we were already there before the system
| got flooded with money.
| mcguire wrote:
| Wilshire 5000 / US GDP:
| https://fred.stlouisfed.org/graph/?g=qLC
|
| That is normalized to 1 in late 2007. At the end of 2021,
| it was 2.53; at the end of the first quarter of this year
| it's at 2.37. In 1Q 2020, it was 1.80. Stock prices have
| been increasingly disconnected from the economy
| 2014-2015.
| [deleted]
| actionablefiber wrote:
| > Stock prices are back around where they were before the
| pandemic.
|
| This is not true, at least not for the U.S. stock market.
| Market indices are still up 20-30% over pre-pandemic
| levels.
| arcticbull wrote:
| Cool, and that was 2 years ago, during which many index
| components grew 20-30% year over year. Folks lose
| perspective on just how good these companies are at
| growing their revenues.
|
| GOOG for instance, was making a trailing $160B per year
| going into COVID. Now it's making a trailing $270B per
| year. [1]
|
| The S&P 500 P/E ratio is down to 20 from 25 on January 1,
| 2020, so the S&P 500 at least is 17% cheaper now than
| before COVID. [2]
|
| And looking at mid-cap tech? Shopify is trading at a
| lower ticker price than at the bottom of the COVID drop
| on March 19, 2020 - despite having tripled their revenue
| since then.
|
| A lot of companies are _really_ cheap right now.
|
| [1] https://www.macrotrends.net/stocks/charts/GOOG/alphab
| et/reve...
|
| [2] https://www.multpl.com/s-p-500-pe-ratio/table/by-year
| devoutsalsa wrote:
| As I've been learning about value investing and growth
| stocks, it feels like we're in a weird middle. Stocks aren't
| cheap enough to attract the people who want to buy at a
| discount, and they're not sexy enough to rally on the hype
| train. I don't know what's going to happen in the short term,
| and I wouldn't really want to pretend that I do.
| lkrubner wrote:
| "everything is a bit oversold right now on negative emotions"
|
| No!!!
|
| The Fed is raising rates. That is reality. That is not an
| emotion. That is absolute economic fact. Inflation is high
| and will remain high for at least a year (maybe longer). The
| period from 2008 to 2022 is going to be remembered as an
| abnormal period when we experienced abnormally low rates. The
| low rates fueled speculation, and bid up certain stocks and
| assets.
|
| The era of low rates is over. It is possible that you might
| live another 100 years and never again see a 14 year stretch
| where rates average as low as they did from 2008 to 2022.
|
| Emotions? No. These are not emotions. Rising rates are a
| material fact that people need to adjust to.
| zippergz wrote:
| The emotion is the entirely predictable market overreaction
| to rate changes we all knew would eventually be coming.
| Market swings are drastically out of proportion to the
| actual impact these rate changes will have on the
| underlying businesses. In both directions. It's ALL
| emotion.
| echelon wrote:
| > The era of low rates is over. It is possible that you
| might live another 100 years and never again see a 14 year
| stretch where rates average as low as they did from 2008 to
| 2022.
|
| Goodness, I hope not. The amount of progress we've seen in
| these years has been astounding. Deep learning, SpaceX,
| smart phones. I felt like things had gotten stagnant, then
| we truly started hitting our stride.
| ryathal wrote:
| I think there are going to be two periods remembered in
| 2008-2022. The 2008-2012-15 where interest rates were made
| low to prevent a depression and it worked. The the
| 2012-15-2022 period where interest rates were kept
| abnormally low because politicians didn't want to be blamed
| for hurting the stock market causing a bubble that pops
| when interest rates are forced to rise.
| spywaregorilla wrote:
| > The era of low rates is over. It is possible that you
| might live another 100 years and never again see a 14 year
| stretch where rates average as low as they did from 2008 to
| 2022.
|
| The interest rate is currently at 1%. In the 80s it hit
| 20%. I expect it'll go negative in the next 20 years.
| mcguire wrote:
| The inflation rate also hit 13.55% in 1980 and didn't go
| much below 6% between 1973-1982.
| arcticbull wrote:
| > Inflation is high and will remain high for at least a
| year (maybe longer).
|
| Is it? Month over month inflation numbers are only slightly
| elevated, in the annualized 3% range. This isn't
| particularly high - the high inflation already happened,
| it's over.
|
| CPI and PPI numbers both came in good. PPI of particular
| note, services were up 0% month over month, and commodities
| 1.3% for a blended 0.56% (in line with expectations).
| Commodities of course are likely to correct hard and fast
| once the geopolitical situation resolves.
|
| The market is forward looking, so don't get stuck on a dead
| narrative!
|
| > The era of low rates is over.
|
| I'm not sure we know this either. If the hikes play out,
| we'll land around what, 2-3% for the fed funds rate? That's
| low, historically. And that's a big if, IMO, since
| inflation is showing signs of being quite well controlled
| again, and the Fed's goal isn't to achieve a specific funds
| rate - just low inflation and high employment. High funds
| rate hurts the employment goal.
|
| It's fun to speculate but important to remember, you're
| just speculating. So am I. There's no certainty here, and
| it's pretty easy to construct a compelling counter-
| narrative.
|
| All we know for sure right now is the Fed funds rate is 1%.
| mcguire wrote:
| " _If the hikes play out, we 'll land around what, 2-3%
| for the fed funds rate? That's low, historically._"
|
| But it's not the 0.1% that drove money out of other asset
| classes (i.e. bonds) because they couldn't generate any
| returns.
| arcticbull wrote:
| Do you really see folks broadly moving from risk assets
| to a 2-3% interest savings account in a 3.x% inflationary
| environment?
| acchow wrote:
| How does anyone determine what oversold is?
|
| S&P has only retraced to March 2021. Nasdaq to Oct 2020. A
| bunch of COVID plays like Zoom, Peloton, etc only back to
| summer 2019 levels. That's only 3 years back.
|
| If you look at the dot-com boom, S&P bottomed out in 2002
| back to 1997 levels. That's a 5 year retracement. Currently
| S&P has barely gone back 14 months.
|
| The GFC was worse - bottomed in Dec 2008 hitting 1996 levels
| - a 12 year retracement. I'd say going back beyond an entire
| economic cycle is probably _actually_ oversold.
| foobiekr wrote:
| By what metric are things oversold? Valuations are still
| crazy by most perspectives, price/earnings, debt/revenue,
| etc. etc. etc.
|
| Expect more losses.
| slv77 wrote:
| Even if nobody is bullish on the fundamentals there will
| still be short sellers looking to cover short positions
| which can drive markets up.
|
| One of the benefits of allowing shorting of stocks is that
| it provides liquidity even in the worst of times.
| lumost wrote:
| The fact that crypto is correlated with tech stock valuations
| should be raising eyebrows. Flash back a few years and the
| hypothesis that bitcoin would hedge inflation/fiat
| depreciation was standard. If BTC is correlated with
| equities, why not just hold productive equities?
| ascendantlogic wrote:
| You mean flash back a few years to the pre-pandemic era? I
| think its safe to say the ripples of that particular
| boulder hitting global financial markets will be felt for
| decades to come.
| jliptzin wrote:
| I never understood the argument why crypto was a good store
| of value. Sure, it's an ingenious new transactional system,
| making global payments mostly frictionless, etc, but that's
| true whether the value of 1 Bitcoin is $1 or $50,000. If
| everyone's just converting back to fiat anyway, only
| keeping enough BTC transiently to settle transactions, why
| hold it long term?
| mgfist wrote:
| Well it's actually a pretty bad transactional currency
| because it costs so much to transfer btc. So it's kinda
| the opposite, where people mostly hold it instead of
| transacting. The argument for a store of value is that of
| gold but easier to store and transfer, better security
| etc.. Whether it's a good one is for you to judge.
| mrb wrote:
| "costs so much to transfer btc"
|
| That's not true. The typical credit card processing fee
| ranges from about 1.3% to 3.5%. Average international
| remittance fees are about 7%. For comparison the average
| Bitcoin fee is about $1 right now, so 1% on a $100
| transaction. So Bitcoin compares favorably to its
| competitors.
| mdorazio wrote:
| 1) why are you comparing to credit cards? The average ACH
| transfer costs zero dollars.
|
| 2) why did you pick $100 as your basis? If I try to buy a
| $5 sandwich in Bitcoin and have to pay 20% transaction
| fee that is not a good platform for transactions.
|
| I like some parts of crypto, but transaction fees on most
| coins right now are not one of those parts.
| brazzy wrote:
| Greed.
| Terry_Roll wrote:
| > I never understood the argument why crypto was a good
| store of value.
|
| Its digital gold thats it, its no more a store of value
| than antique's, rare cars, fine arts etc etc and
| unsurprisingly those markets can also see the bottom drop
| out of them for decades. Ultimately its people en masse
| who decide what something is worth, but big players can
| manipulate those markets with resources, laws, taxation,
| media sentiment and its easy to spook people when they
| value something, so dont get attached to anything if you
| dont want to be manipulated.
|
| The other thing to note is, it only takes a few hundred
| million PS on the Asian market to get the GBP to drop
| against the USD in time for European markets. So there
| are very few entities who can cause the crypto market to
| fall like this. Think about that.
| ttfkam wrote:
| Gold can be used for corrosion-resistant electrical
| contacts, infrared reflectors for space telescopes,
| decoration in gaudy penthouses, and more even if everyone
| decided it was useless as a currency.
|
| An antique desk that loses all value in the open market
| can still be used as a desk or at least firewood.
|
| A rare car can still be used to transport yourself, as a
| prop in a movie, or scrap for other projects.
|
| A "worthless" painting can still inspire, liven up a
| room, or gifted as a gag.
|
| Crypto that loses its value has no other underlying
| utility over and above the output of /dev/random. That's
| a MASSIVE difference and more clearly demarcates BTC as a
| money laundering/Ponzi scheme rather than "digital gold"
| or a viable currency.
| sfblah wrote:
| That's not totally true. The value of a Bitcoin does
| relate to how much effort miners put in. So, $1 might be
| low enough to allow some sort of attack on the network.
| vel0city wrote:
| > The value of a Bitcoin does relate to how much effort
| miners put in.
|
| It looks like you have the causal relationship there
| backwards. A bitcoin currently has value, so there's a
| lot of effort miners put in to get the block rewards +
| fees. But the amount of effort a miner puts in doesn't
| make the price go up, the price can move independently to
| hashrate.
| nickff wrote:
| If the transient use of a cryptocurrency is increasing,
| the demand for it will be, and the price will follow. If
| the price is increasing fast enough, it could be worth
| holding. The same is true of any money or asset used for
| payments/settling debts (like gold or silver).
| Barrin92 wrote:
| this doesn't work super well because if a currency
| appreciates in value due to usage and you start to hold
| it, that means there's less of an incentive to spend it
| in the first place. That's one of the reasons why we're
| not trading in gold coins any more, it's almost
| exclusively turned into an appreciating store of value.
|
| Deflationary currency is undesirable as a means of
| exchange because you don't want to use it, and that is
| also one of the reasons why central banks target low
| inflation rates.
| richardwhiuk wrote:
| Only if people hold it for the transaction for a
| significant length of time. If people want to get out
| ASAP, then the faster that transactions happen, the less
| demand for bitcoin there will be.
| jjtheblunt wrote:
| > mostly frictionless
|
| isn't the prohibitive electric bill to reconcile the
| distributed ledger the ultimate showstopping friction?
| meetups323 wrote:
| This is why IMO blockchains should be designed to be
| inflationary. On one hand it just makes sense that as
| more compute is added transactions should be able to
| process faster and tokens should be minted more rapidly,
| such that by "mining" you are producing real value
| (allowing the chain to process more transactions per
| second and more people to acquire tokens), on the other
| very few people use crypto for anything besides
| speculation so such a coin would never be widely adopted.
| wonnage wrote:
| I think this is why the fiat system is inflationary (low
| level inflation is seen as healthy). Assuming that
| productive projects exist, you never want lack of capital
| to be the reason that they're not done. The free market
| is never going to _perfectly_ allocate capital, therefore
| there should be some extra money in the system to allow
| for errors. The errors would cause inflation (money
| supply increased, but productive output did not), but
| this is better than being overly cautious.
|
| Incidentally this is why austerity in debt-laden
| countries is kind of a terrible idea. You're taking a
| broken economy and removing what little slack remains in
| the system. And if the economy was broken due to
| corruption or incompetent government, you're kind of just
| betting on regime change at this point, which (apart from
| the human toll) won't be great economically either.
| lbotos wrote:
| > If everyone's just converting back to fiat anyway, only
| keeping enough BTC transiently to settle transactions,
| why hold it long term?
|
| People _aren 't_ doing this now though.
|
| They are buying bitcoin and _holding_ (hodl) or they are
| trading that bitcoin for other crypto.
|
| I think most people aren't using it as a currency, more
| so speculation
| dstroot wrote:
| Eyebrows raised. What this is showing is that both tech
| stocks and crypto were being propped up by the same
| investors/behavior (speculation) and are highly correlated.
| I thought this was a good test regarding crypto being a
| "store or value" since inflation devalues fiat currency,
| one hypothesis was crypto would rise with market turmoil
| and high inflation as "digital gold". I guess that
| hypothesis was incorrect.
| twox2 wrote:
| IMO, this hypothesis hasn't been adequately tested. By
| all accounts inflation is bad, but not THAT bad. However,
| I'm sure Bitcoin and most Cryptocurrency is looking
| pretty stable with respect to Venezuela's 2,00,00%
| inflation. Bitcoin as a hedge against economic turmoil
| requires real economic turmoil.
| lumost wrote:
| A Venezuelan could also own dollar/euro denominated
| assets or commodities. BTC would need to be better and
| more stable than those for someone to view it as an
| effective hedge.
|
| If US or EU inflation hit 2000% there would be global
| consequences. There is no reserve asset currently large
| enough to redenominate US denominated assets, aid
| payments would collapse, and currencies pegged to the
| dollar would collapse. Betting on BTC for such a world is
| reasonable, as there would be a reasonable chance your
| gold reserves would be become inaccessible, seized, or
| both. However ammunition might be a more effective
| financial hedge in this situation.
| FabHK wrote:
| > A Venezuelan could also own dollar/euro denominated
| assets or commodities.
|
| If they're allowed to. Which underscores that the true
| innovation of Bitcoin is to circumvent rules and
| regulations.
| caffeine wrote:
| > The fact that crypto is correlated with tech stock
| valuations should be raising eyebrows
|
| Because fiat volatility in inflation/rate hikes
| respectively (ie the NPV of a USD) completely dominates the
| other factors.
|
| The volatile leg here is the fiat dollar, and everything
| denominated in it is whipsawing around as its value
| changes.
| mdoms wrote:
| Unlike volatility in crypto markets?
| simonh wrote:
| Yes, unlike crypto markets which don't move anything else
| no matter how volatile they are, because they are
| economically irrelevant.
| mstipetic wrote:
| What else should it be correlated to? It's not like there's
| anything to support it's underlying value
| twofornone wrote:
| It's a shame, a couple years ago BTC was anticorrelated
| with markets. Then institutional investors started playing
| and since then crypto largely just tracks the markets. I
| wonder, where do these investors park their cash when they
| sell holdings during downturns?
| throwaway743 wrote:
| Likely due in part to many people thinking crypto markets
| trade only between 9-4 on weekdays and crypto being tech
| related.
| ascendantlogic wrote:
| > I mean everything is a bit oversold right now on negative
| emotions, both in the crypto space and in the stock markets.
|
| I like your optimism but we are still well above what most
| people would consider reasonable valuations. That said there
| are trillions of new dollars out there that won't want to sit
| on the sidelines decaying at an 8% clip forever. It will be
| interesting to see how it plays out.
| djantje wrote:
| I don't understand, if $3B in bitcoin is sold to save UST we
| should also be able to see a equivalent of that $3B in
| Terra/Luna/UST buys?
|
| I don't understand crypto, and or how the Luna/UST works, but if
| you supported/buy something this should be visible, not only in
| vanished bitcoins, or am I mistaken?
| jallen_dot_dev wrote:
| Do we not? Volume of trades was in the billions during the
| collapse.
| px43 wrote:
| It was supposed to be quicker, and automatic, to prevent the
| collapse, but it's a relatively new system and still under
| manual control. In theory some set of humans have been tasked
| with slowly buying more and more UST to build up confidence,
| and restore the peg. This can't really happen because LUNA is
| worth basically zero now, but who knows.
| djantje wrote:
| Ah, yes, this part I can understand: to late with support and
| then the UST holders started selling, taking their loss, and
| in the proces devaluating UST
|
| But the backing of UST(or Luna?) should be visible in soms
| large/or a lot of transaction in a small time window
| somewhere, if they started buying/supporting it with $3B, I
| would think
| netheril96 wrote:
| The volume of UST and Luna are huge for the past few days. Way
| more than several billions.
| ck2 wrote:
| So in other news, people saw enough value in bitcoin to buy $3
| billion's worth
|
| I mean that's not a trivial amount by any explanation right?
| kwertyoowiyop wrote:
| Seems like they just used magic beans to buy other magic beans.
| hitovst wrote:
| Sooner or later people are going to have to actually understand
| Bitcoin, and will then see that 99% of the rest of crypto are
| scams.
|
| If you don't understand that freedom is the most relevant part of
| Bitcoin/crypto, you probably also don't understand that the few
| good things you take for granted if life are due to the remaining
| residue of freedom.. and why you didn't care when slavers
| eliminated it.
|
| Figure it out soon, and save yourself things even more important
| than wealth.
| lubesGordi wrote:
| It'd be funny if a crypto crash acted as a contraction in money
| supply thereby helping out inflation. Finally a use for crypto!
| low_tech_love wrote:
| "Analysis from the company shows that 52,189 bitcoins were moved
| to a single account at crypto exchange Gemini"
|
| Oh yeah sure they saw their coin going to s*%t and thought "yeah
| let's just throw away a couple billion dollars just so people
| won't think we are scammers". Sure. The Vatican has started a
| process to canonize these saints.
| vmception wrote:
| uh yes exactly? thats the only reason they bought the bitcoin
| in the first place
|
| Terra Luna was already stupid enough, its stupid to make this
| part controversial because that was the purpose of this
| collateral, just as its stupid to not believe the bitcoin was
| sold after transfer to the exchanges (many people believe that
| its still owned, or was given to some whales to bail just them
| out, or the founder keeps it for himself)
|
| https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-...
|
| https://www.bloomberg.com/news/newsletters/2022-04-19/crypto...
| stingraycharles wrote:
| I know that it's the plan, do they have any evidence (like
| transaction ids) that it actually happened?
|
| I haven't followed this a lot but from what I gathered
| there's not a lot of transparency around this. If so, why
| not?
| vmception wrote:
| There are transaction IDs to the exchanges
|
| There wont be transaction IDs after that because its not
| onchain
|
| You and the community could ask for an audit by an
| accounting firm like Deloitte, like the rest of the
| business world uses, itll come out a quarter or two from
| now leaving us all in exactly the same spot for now. The
| transparency expectations make almost no sense or lack
| inspiration.
| jtbayly wrote:
| Please explain _why_ I should believe that the money was
| used for this purpose in a field where every other
| example I can find is a scam.
|
| It seems incredibly unreasonable to assume that these
| particular people are goodies, when everybody they are
| with are baddies.
| 1vuio0pswjnm7 wrote:
| There was a peer-to-peer network solution that was associated
| with this "Luna" cryptocurrency that has been discussed on HN
| several times. The network did not have any ostensible connection
| to a cryptocurrency, it looked like just another p2p software
| project on the surface, but if one read all the documentation one
| could discover the connection to "Luna". Wondering if anyone
| remembers the name.
| vmception wrote:
| I mean that was the expected outcome and now people are like
| "proof of the expected outcome!?!"
|
| Following months of outcry about the unsustainable nature of
| Terra Luna, Do Kwon through his foundation tried to partially
| collateralize the stablecoin with bitcoin, with a goal of buying
| up to $10bn of bitcoin. He got $3-5bn (at the time, price changed
| a lot), and this prolonged the confidence system for _one
| additional month_.
|
| And then it imploded and sold the collateral, of course it was
| partial collateral so it failed to do anything in a bank run.
|
| So it doesnt matter whether we get records from exchanges or not.
| Nothing different would happen. People want to see Do Kwon have
| more reasons to have charges against him, but there's no need to
| attribute it to malice, everything can be explained by
| incompetence already.
| vkou wrote:
| The guy was running a blatant Ponzi scheme (20% risk free yoy
| return for anyone investing in a 'stable' coin is a Ponzi), and
| it's the fourth time he's tried this (it's the first time it
| grew to multiple billions).
|
| He's not stupid, he's just a predator, and just like any other
| predator, belongs in prison.
| dlubarov wrote:
| The 20% interest was just a short-term user acquisition
| scheme, funded by some of the initial LUNA tokens. I don't
| think anyone claimed that it was sustainable.
|
| A Ponzi would be if Anchor used users' deposits to pay out
| the 20% rewards, which isn't what happened here.
| tempnow987 wrote:
| A ponzi is if there is not actual asset backing the ponzi
| "values". Ie, the "stablecoin" will not actually hold
| value.
|
| Wasn't Cashberry or something like this? Russian based?
| Ultimately no assets behind it, so when the music stopped
| they couldn't redeem the values.
| gamblor956 wrote:
| No, a ponzi scheme is very specifically defined as an
| "investment fraud that pays existing investors with funds
| collected from new investors."
| (https://www.investor.gov/introduction-
| investing/investing-ba...)
|
| A common part of the scheme is to promise high returns
| with little to no risk.
| vkou wrote:
| > funded by some of the initial LUNA tokens.
|
| Which were bought by users in a zero sum-game.
|
| A ponzi is a zero-sum game where new entrants finance old
| exits. Just because the funding for the ponzi is done in a
| different currency doesn't mean it's not one.
|
| You can't create a closed system that generates wealth, and
| when you're growth hacking with your users' money, you are
| running a fraud.
| dlubarov wrote:
| Anchor protocol always retained the full amount of each
| UST deposit, plus additional rewards (whose funding was
| external to Anchor), so clearly Anchor is not a Ponzi, as
| I thought you were implying originally.
|
| Would you assert that any undercollateralized currency is
| a Ponzi? (Seems like stretching the definition to me.) Or
| that any system with unsustainable rewards is a Ponzi,
| even if there was no expectation that they were
| sustainable?
| vkou wrote:
| You have the look at the system as whole, not just the
| UST side of it. The system as a whole was not doing
| anything that generated value, and could only pay yield
| as long as people were paying money into it.
|
| This was the major innovation of UST. A ponzi that's
| sufficiently obfuscated that if you look at any part of
| the system in isolation, it seems fine.
|
| You can have an uncollateralized currency - like baseball
| cards, but that's not what UST was. It made additional
| promices (like being a stablecoin, and offering yield).
|
| You maybe even theoretically can create an
| uncollateralized stablecoin (that remains stable) but
| you're not going to attract $XY billion into your
| stablecoin without dangling a carrot to convince the
| greedy to invest. Investing into a stablecoin is
| stupid[1], because its price can't go up - so in this
| case, the carrot was fraudulent yield.
|
| UST only had value because it was backed by Luna, and it
| only had demand for it because of the promises of yield.
| Luna was backed by nothing but speculation, driven by
| demand for UST. Once net money stopped flowing into the
| Luna ecosystem, the whole thing collapsed.
|
| Any system that only works as long as net value flows
| into it, but produces no value of its own, but promises
| yields is a ponzi.
|
| [1] Yes, there are use cases for it that don't involve
| speculation, but those use cases aren't going to see the
| market cap explode at the rate Tera/Luna did.
| seoaeu wrote:
| The details of the protocol are just obfuscation. The
| 10,000 ft view is that people converted USD to tokens so
| they could earn 20% interest. As the dust settles, we can
| see the outcome looks exactly like a Ponzi:
|
| (1) The folks running the scheme walked away with a
| couple billion dollars
|
| (2) Those who cashed out early got back their original
| investment plus interest
|
| (3) Everyone else lost all/most of their investment
|
| Notably, all the extra money received by groups (1) and
| (2) came from (3).
| aqme28 wrote:
| > People want to see Do Kwon have more reasons to have charges
| against him, but there's no need to attribute it to malice,
| everything can be explained by incompetence already.
|
| Does there need to be malice rather than incompetence, for
| charges to be filed?
| lvass wrote:
| >So it doesnt matter whether we get records from exchanges
|
| It matters a lot. The rumor mill has it LFG directly rescued a
| few whales in the first sign of crisis. This is a very serious
| accusation I'd urge no one proclaim without definite proof.
|
| If they concentrated their usage of the reserves to keep the
| peg earlier, possibly anyone selling below $1 would take an
| immediate loss and no noticeable depeg would even happen. The
| way it was handled is extremely useful information to markets
| and particularly to market makers.
| [deleted]
| nradov wrote:
| What's the point? There was never a real "market" in any
| meaningful sense. Since the beginning it was always a fake
| scam to separate suckers from their real (fiat) money. A
| combination of Ponzi scheme and shell game.
| vmception wrote:
| > Nothing different would happen. People want to see Do Kwon
| have more reasons to have charges against him
| zrail wrote:
| > The rumor mill has it LFG directly rescued a few whales in
| the first sign of crisis. This is a very serious accusation
| I'd urge no one proclaim without definite proof.
|
| What would it change to have that information? Afaict none of
| this is regulated in any regard so if that happened, would
| there be any impact what so ever?
| lvass wrote:
| In Singapore? Maybe that's not where some relevant parties
| are. I'm not a lawyer. I'm sure there are more things in
| this world that can cause impact besides existing
| regulation though.
| [deleted]
| throwaway92394 wrote:
| > Afaict none of this is regulated in any regard
|
| I'm not saying they're applicable here - but off the top of
| my head, money laundering, taxes, and fraud regulations
| still apply to crypto (at least in the US). The
| moneylaundering/taxes are rather explicitly stated, the
| fraud regulations apply regardless of what the thing is.
| PragmaticPulp wrote:
| > Afaict none of this is regulated in any regard so if that
| happened, would there be any impact what so ever?
|
| Many laws and regulations that were written before
| cryptocurrency existed still apply to cryptocurrency.
|
| People can't do an end-run around existing laws by wrapping
| crimes in cryptocurrencies and pretending laws don't apply
| to them.
| simmerup wrote:
| Apply but aren't enforced
| sakopov wrote:
| What's everyone's thoughts on Gemini dollar? Gemini claims [1]
| that GUSD is FDIC insured up to $250K and audited [2] by a third
| party called BMP [3]. I also remember reading that Gemini is used
| by a number of IRA custodians, so I'd assume that they're pretty
| heavily regulated.
|
| [1] https://www.gemini.com/dollar
|
| [2]
| https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq...
|
| [3] https://www.bpm.com/
| rollcat wrote:
| From [1]:
|
| > GUSD is an Ethereum ERC-20 token
|
| Last time I checked (EVERY time I checked), Ethereum was still
| based on proof of waste.
|
| My thoughts are the same as they've been for many years
| straight, on everything crypto-"currency": it's a massive scam
| at best; more realistically, along with everything else in the
| proof of waste category, somewhere on the top 10 list of things
| most harmful to all life on Earth.
|
| I don't understand how anyone even tries to mis-represent it as
| anything else.
| hacker_newz wrote:
| This really doesn't add to the discussion. Can you provide a
| more nuanced take other than 'crypto is a scam'?
| once_inc wrote:
| I agree on your points about Ethereum and all alt-coins.
| Bitcoin is another matter though, because it has the majority
| hash rate. Please note that bitcoin mining is a fraction of a
| fraction of all energy use in the world, and as an industry,
| well ahead of its peers in terms of green energy usage. Using
| electricity is not a problem; carbon emission are, and there
| a a very substantial number of other industries that are in
| orders of magnitude worse to our environment (among which is
| gold mining, clothes dying and disposable plastics). Using
| electricity to separate money and state is well worth the
| cost to me.
|
| edit: bring forth thy downvotes, HN.
| rollcat wrote:
| > Please note that bitcoin mining is a fraction of a
| fraction of all energy use in the world
|
| A fraction of a fraction is still a fraction. If you're
| going to make an argument about actual energy usage, please
| quote actual numbers.
|
| > [...] as an industry, well ahead of its peers in terms of
| green energy usage.
|
| Bitcoin is not an industry. An industry has a product or
| service. Bitcoin's "service" is subsidising greed and
| speculation using natural resources - at the expense of
| everyone else. Blockchain, as a data structure, is a
| solution in search of a problem. So far the only "value"
| I'm seeing is runaway speculation.
|
| It does not matter which source of energy Bitcoin is using,
| it's fundamentally still based on the premise of proof of
| waste. It doesn't matter that it's "green", the same green
| energy could have been used to burn less coal elsewhere; or
| we could've avoided building the power plants to begin
| with. Ethereum is at least trying to move to proof of
| stake, although they're consistently under-delivering.
|
| > [...] there a a very substantial number of other
| industries that are in orders of magnitude worse to our
| environment [...]
|
| This is very true. But what is also true, is that another
| actor being worse doesn't justify your endeavor's own
| crimes. Just because your neighbor is beating their
| partner, doesn't mean you can kick a stray cat.
|
| > Using electricity to separate money and state is well
| worth the cost to me.
|
| And that's exactly what is wrong with proof of waste: it's
| worth the cost to *you*. You've never asked *me*, if it's
| OK for you to destroy the planet that *I* am also living
| on, let alone if I share your views on how noble the goal
| is.
|
| Separating money and state sounds like a bold wish.
| https://news.ycombinator.com/item?id=29322172#29323906
|
| Please don't take this comment as an attempt at a personal
| attack - I have no way of knowing your actual stake, what
| I'm trying to protest is the game itself.
|
| > edit: bring forth thy downvotes, HN.
|
| Don't worry, they're coming to both sides. I would always
| prefer to see arguments rather than downvotes, so thank you
| for taking a stance.
| mdoms wrote:
| Is it a cryptocurrency? Then it's a scam.
| everfree wrote:
| It's a completely different ball game from UST.
|
| UST didn't even claim to be fully backed, whereas Gemini's
| third-party auditing accounting firm attests to GUSD being
| fully backed, under the scrutiny of the New York State
| Department Of Financial Services.
| sakopov wrote:
| I wasn't claiming they're same. Was just wondering what the
| thoughts are on another stablecoin which claims to be fully
| backed by USD and how valid those claims actually are. Not
| sure why I'm getting downvoted.
| everfree wrote:
| I didn't assume that you were claiming that, and I didn't
| downvote you.
|
| If I had to guess, people here are pretty sensitive to any
| crypto project being mentioned in the comments out of the
| blue, so that may be part of the reason for downvotes.
| latchkey wrote:
| I'm kind of amazed that the Bitcoin price wasn't affected more
| given this event as well as the larger macro events with the
| stock markets, Fed and inflation.
| throwaway1777 wrote:
| A lot of speculation that not all of this btc was actually
| sold. Sure it was transferred to an exchange but know one
| really knows what happened after that.
| zekrioca wrote:
| In the above sentence, I think the first "know" should really
| be "no" :)
| paulpauper wrote:
| it dropped 20% over the past week and keeps falling now.
| fullstop wrote:
| Netflix has dropped 45% over the last month, Amazon 27%, TSLA
| 27%, Disney 17%, BTCUSD 26%.
|
| I'm definitely not sold on Bitcoin, but it tracks along with
| tech stocks for some reason.
| ChrisClark wrote:
| Yeah, the previous crashes have been a lot more violent. The
| current bubble is definitely over though. Bubbles come like
| clockwork every 4 years (due to the 50% supply cuts every 4
| years) it would be interesting to see if it happens again.
|
| Though an earlier bubble could be kicked off when ethereum cuts
| it's supply by 90%.
| datalopers wrote:
| > The current bubble is definitely over though
|
| Why do you say "over"? I see BTC reaching $20k this summer
| and then falling to <$10k as miners fold.
| onlyrealcuzzo wrote:
| Why would miners folding cause Bitcoin to drop in value?
|
| The same amount of Bitcoin will be mined no matter what.
| ItsMonkk wrote:
| Not quite. Bitcoin difficulty adjusts every 2000 blocks,
| which typically happens every two weeks. If the hashrate
| drops, those blocks happen less often, so the adjustment
| happens less often.
|
| These past years the Bitcoin ASICs have been tremendously
| profitable, and as a result the demand for the hardware
| goes up, leading to huge profits for the hardware makers.
| These past few months have seen a drop in Bitcoin, which
| drops the profit for miners, but as it is still above
| electricity prices, only results in cheaper hardware.
|
| If Bitcoin drops below the electricity line, you will see
| miners all over the world start to turn off their
| devices. And once that happens, block time will rise, and
| that will start making the entire network less trusting.
| This will cause a spike of people selling their coins,
| and with less blocks this means a packed exit. With the
| packed exit, you would think this would incentivize
| mining as transaction fees go way up, but those fees come
| directly from the value of the coin, so once this starts
| the value of the coin is going to drop heavily.
|
| With mining profitability dropping the further this goes,
| the longer block times, the more the price of Bitcoin
| goes down. If Bitcoin goes below 10k quick enough, it
| won't ever see another difficulty adjustment, and the
| entire chain dies. The developers might chose to hard-
| fork and change the difficulty changes algorithm, but as
| we've seen with Bitcoin Cash, these changes are political
| and don't tend to end well.
| latchkey wrote:
| This all sounds good on paper, except for the fact that
| large miners don't sell their bitcoin. Even when they do,
| it isn't on the open markets and happens in ways that
| don't affect the price (OTC) and by selling options.
| tromp wrote:
| > Bitcoin difficulty adjusts every 2000 blocks
|
| It's 6*24*7*2 = 2016 blocks, the number of 10 min
| intervals in 2 weeks.
| postalrat wrote:
| If mining becomes a major expense because the price of
| bitcoin is too low to recoup the cost of electricity how
| long would it take for the difficult to adjust?
|
| If miners and shutting down during that time I'd expect
| the time between blocks to increase.
| manquer wrote:
| Miners are also large holders of Bitcoin in addition to
| mining and those bitcoins are likely leverage then to buy
| equipment.
|
| As the bitcoin price drops , they will have more margin
| calls and new coins are not that profitable. You can
| expect lot of mining sales to happen and orders get
| fullfilled as selling the equipment becomes more
| attractive.
|
| Some of the smaller/more leveraged ones will definitely
| fail at long term prices of say 20k or less .
| ChrisClark wrote:
| I mean it's not going back up to $60k. The bubble is over,
| but it's only the start of a longer bear market, so yeah,
| it can go much lower.
| eric_cc wrote:
| > I mean it's not going back up to $60k.
|
| Oh man. I'll have fun poking you next year about how
| embarrassingly wrong you were.
| ChrisClark wrote:
| I wouldn't say next year, but by 2025 I think there will
| be a new ATH. But I'm just very conservatives in my
| predictions.
| TomSwirly wrote:
| Cool! Can I see what sort of mathematical model you use?
| What inputs, what outputs?
|
| What are the fundamentals?
|
| I know you don't have any such thing, just a "hunch" that
| you believe is authoritative.
| Melting_Harps wrote:
| > But I'm just very conservatives in my predictions
|
| Which were ultimately based on what exactly? See, TA in
| this space is the demarcation of those who know exactly
| nothing, but feel the need to contribute their
| misinformed opinion: short of being a whale who can make
| the market move (Bearwhale) I doubt you really have
| anything of substance to base your opinion.
|
| And even then it's literally impossible to call a high,
| I've been in this for over 10 years and the 'price
| discovery' mechanism is really just not there. And most
| of the innovative stuff happens during times when the
| price is low.
|
| Consider two things: Mining/Hashing power is at ATH, and
| we just 2x the amount of nations who have adopted its a
| national currency--with more expressing interest and are
| meeting with the President of El Salvador as we speak.
|
| And yet we are sub 30k... again, I think no one knows
| anything about what the price will do, but that doesn't
| stop people for relying on conjecture to explain x, y, z
| event in this space.
|
| Tether was a joke, and Luna was a scam... what this has
| to do with BTC is entirely lost on anyone with any
| semblance of knowledge: they dumped BTC, sure, but that
| is like conflating what Pellaton's stock price drop means
| for Apple's long term viability.
| eric_cc wrote:
| Ah fair enough. I misunderstood your comment. I thought
| you were suggesting 60k was the ALL TIME high bitcoin
| will ever achieve.
|
| As for timelines - that's anybody's guess.
| datalopers wrote:
| Oh, yeah we're in the same page, I misinterpreted your
| original comment.
| jonnydubowsky wrote:
| There have been massive advancements in the use of
| various options, futures and other structured products
| specifically designed to increase optionality for Bitcoin
| miners to weather bear markets without closing up shop.
|
| This is definitely a proving ground and only those mining
| operations with the most resilient strategies will
| survive.
|
| Many will continue to thrive.
|
| The future outlook on the crypto markets enters a new era
| towards the end of this year.
|
| Fidelity is introducing cryptocurrency investment
| services to all of its 401K investors, every company
| 401k, across the $2.4 trillion in 401(k) assets they
| represent (in 2020, or more than a third of the market at
| the time).
|
| They will allow individuals to allocate up to 20% of
| their portfolio to cryptocurrency, for those who
| participate.
| latchkey wrote:
| Just to confirm, you don't feel it'll ever go to 60k?
| ChrisClark wrote:
| Not at all what I said or think. I only mentioned this
| current bubble is over. I'm not talking about the next
| one.
|
| It most likely won't hit $60k this year, but there is a
| new bubble like clockwork every 4 years. And like I said,
| another bubble could be kicked off earlier when the
| ethereum emission drops 90%. That could drag bitcoin up a
| bit and trigger an early start to the next bubble.
| id wrote:
| Even if it goes below $10k, that would be normal price
| action for Bitcoin. It would start to get interesting if it
| goes below $1k.
| paulpauper wrote:
| that would be worse than 2018
| TomSwirly wrote:
| Better, rather.
| fsckboy wrote:
| > _The current bubble is definitely over though_
|
| with bitcoin hovering ~$30K, still seems like there's air in
| the bubble. a 50% drop (from $60K) is pretty normal for
| bitcoin. It could drop a lot more without shaking the
| confidence of the hodlers
| ChrisClark wrote:
| Yeah, I mean the bubble is over, it's not going to $60k. It
| still can drop a lot further.
|
| Am I using the word bubble wrong? Another responded in the
| same way.
|
| I mean it's now definitely a bear market, and going down,
| not up.
| [deleted]
| ptudan wrote:
| Unweathered protocols on eth failing shouldn't affect bitcoin.
| They're only related insofar as they are both crypto. The $3B
| in bitcoin sold could have been anything.
| carnitine wrote:
| A 3bn fire sale is going to have a price effect no matter the
| reasoning behind it.
| firloop wrote:
| Minor nit but Terra isn't a protocol on Ethereum, Terra is
| its own L1 that competes directly with Ethereum.
| ptudan wrote:
| Lol duh, I totally knew this. Thanks for the correction
| idkyall wrote:
| Well, the value that collapsed was the exchange rate of BTC to
| LUNA, which is now at fractional cents per coin after
| hyperinflation... They kind of gave a $3B liquidity exit for
| holders to dump their LUNA tokens into via the LUNA/BTC pairs
| that they were market making
| muttantt wrote:
| "stablecoins", NFTs, etc. are just HYIPs reimagined.
| gruez wrote:
| NFTs maybe, but stablecoins? How are they comparable to "HYIPs"
| (high yield investment program)? Specifically, where are the
| "high yields"?
| ericsoderstrom wrote:
| 20% APY for staking UST
| davidw wrote:
| patio11's twitter commentary has been extra spicy lately.
| snotrockets wrote:
| Calling it short is underselling it (lame pun not intended). This
| was allowing friends & family to cash out, leaving the rest of
| the public high and dry.
| gizmo686 wrote:
| I'm confused. I understand wanting to have a reserve fund to help
| maintain a peg. National currencies do this as well, including
| selling their reserves to prop up their own currency when needed.
|
| However, why would a stablecoin put its reserved in Bitcoin; an
| asset that is highly correlated with the entire crypto ecosystem,
| and highly volatile relative to the asset against which they want
| to maintain a peg.
| rory wrote:
| They had a small amount of other "stablecoins" as well [0]. I'm
| guessing it was some mix of an ideological opposition to
| holding actual USD and a desire to speculate on the ecosystem,
| which the market allowed for a time.
|
| [0] https://twitter.com/LFG_org/status/1526126703046582272
| stjohnswarts wrote:
| sounds like they're throwing good crypto after bad crypto...
| nikolay wrote:
| A lot of desperation like Elon Musks' "send me your crypto and I
| will double it", which screams "buy as much crypto as you can to
| double it so that we can fix my problem with losing billions".
| quasse wrote:
| I am extremely out of the loop on the latest crypto developments
| / schemes, but
|
| * Where did this foundation get $3B to buy Bitcoin?
|
| * Is there any proof at all that they traded it to a counterparty
| who actually attempted to prop up UST and didn't just run off
| with them?
| folli wrote:
| * From Crypto Bros putting cash in Luna, hoping it will reach
| the moon, as the name implies. The foundation bought BTC as
| hedge in case Luna/Terra goes haywire.
|
| * No, there's no proof.
| Traster wrote:
| That's where it gets incredibly funny. They persuaded
| everyone that UST was worth $10Bn dollars and then went and
| bought $3Bn of BTC with the profits. At which point the
| obvious question is "Hey - isn't this asset by definition
| worth $3Bn"? And the answer is "Oh, no, by the time it drops
| from $10Bn to $7Bn we've burned all our collateral and it's
| worth 0".
| seoaeu wrote:
| The even funnier aspect is that that instead of trying to
| stabilize the token or just liquidating all UST at 30C/ on
| the dollar, the creators decided to abscond with all the
| collateral and leave UST holders with nothing
| woodruffw wrote:
| > Is there any proof at all that they traded it to a
| counterparty who actually attempted to prop up UST and didn't
| just run off with them?
|
| This brings up an exceedingly funny point: blockchains excel at
| making every transaction public (a property that nearly nobody
| actually wants) and _simultaneously_ offering complete privacy
| to institutional actors.
|
| In other words: privacy for me, but not for thee.
| rchaud wrote:
| Reminds me of the Peruvian general Oscar Benavides: "For my
| friends, everything; for my enemies, the law."
|
| The whales got a bailout, while retail got market forces.
| juanci_to wrote:
| Peron said a more radical version of this on camera[0]: "To
| friends, everything; to the enemy, not even justice"
|
| "Al amigo, todo; al enemigo, ni justicia."
|
| [0]: https://www.youtube.com/watch?v=WDh9M9aty4U
| thebean11 wrote:
| Why can't non-institutional actors achieve the same level of
| privacy? Seems like it would be much, much easier for smaller
| actors since they are dealing in much smaller amounts..
| woodruffw wrote:
| > Why can't non-institutional actors achieve the same level
| of privacy?
|
| Non-institutional actors are transacting over an immutable
| public ledger. Institutional actors are transacting via
| backchannels. In other words: the cryptocurrency
| transaction space is "schizophrenic": the traffic that
| supports high valuations is not settled on the chain
| itself, but via gentlemen's agreements. Non-institutional
| actors could do the same thing (and get the same privacy),
| but then it's just normal money laundering instead of
| "decentralized finance."
| thebean11 wrote:
| > Institutional actors are transacting via backchannels.
|
| As in, they are keeping funds on centralized exchanges?
| Users can do the exact same thing if they want, not sure
| I get your point.
| woodruffw wrote:
| See the original comment: the point is that there's no
| actual way to verify the central claim ("$3B in Bitcoin
| was sold [...]"). We're expected to take everyone's word
| for it. This is in marked contrast to how two arbitrary
| users are expected to transact via a blockchain.
| thebean11 wrote:
| How would you verify that something was sold outside of a
| blockchain? The receiver of the item would need to prove
| it's in their possession, which is pretty easy on BTC.
|
| I guess I'm not sure how you get from that to privacy
| only being achievable by institutions?
| woodruffw wrote:
| I didn't. That's not a property I want in a financial
| system; it's one I want in a legal system.
|
| The only points being made are that (1) virtually nobody
| _actually_ wants their entire life 's transactions
| recorded on an immutable public ledger, and (2) the
| people whose economic activity currently backs the
| speculate value of these coins play by a different
| rulebook entirely.
| thebean11 wrote:
| > the people whose economic activity currently backs the
| speculate value of these coins play by a different
| rulebook entirely
|
| I guess this is where I don't know what you mean,
| specifically
| [deleted]
| Traster wrote:
| On the second point, to be fair you can look at the UST graph
| and see that someone did indeed burn a tonne of Luna to support
| UST. It's probably impossible to really prove that every penny
| went to supporting it, and it's probably impossible/unlikely
| that Do Kwon really bankrupted himself for this, but at the
| very least we can say someone decided they were going down with
| the ship and set a lot of money on fire. Difficult to see who
| would've done that other than LFG.
| seoaeu wrote:
| Burning Luna (which can be created out of thin air) and
| burning USD/Bitcoin are entirely different things.
| Traster wrote:
| The point is that UST had significant rallies- that
| indicates a massive effort to support it that failed.
| skinnymuch wrote:
| It's impossible Do Kwon bankrupted himself. No one is going
| to do something no one believes any one in crypto or Wall
| Street would do and keep quiet about it: be selfless, stick
| to your previous words that critics never believed, and not
| be keeping a good chunk of money for yourself.
|
| If this happened, we will be seeing massive PR about this. Do
| Kwon would become a huge symbol and become a millionaire
| again if he actually did that and opened his life and books
| to scrutiny to prove everything as much as possible.
| georgeecollins wrote:
| This is a dry run of the Tether (USDT) collapse.
| nathanvanfleet wrote:
| "Dry" in what way exactly? It seemed rather wet with the
| enormous amount of loss?
| seattle_spring wrote:
| I think you're getting Terra and Tether mixed up. Parent was
| saying the Terra explosion was a dry run for the forthcoming
| Tether implosion.
| helsinkiandrew wrote:
| Tether is atleast supported with real world assets (USD/bonds
| etc). The amount and quality of the assets might be debatable
| but it can't go into a death spiral to zero like Luna and UST.
| georgeecollins wrote:
| That's another way of saying it is a more legitimate scam
| which is why it has lasted longer. You are correct.
| calbruin wrote:
| It can go into a death spiral. If confidence in Tether wanes,
| AND Tether is holding underperforming "cash equivalents",
| Tether can go to zero overnight.
| caymanjim wrote:
| Says who? Serious question. Is there any auditing of Tether's
| claims, by a reputable real-economy firm? Is there any legal
| or regulatory authority involved at all?
| onlyrealcuzzo wrote:
| Only 3.87% of Tether was backed by dollars:
| https://siliconangle.com/2021/05/13/tether-releases-
| reserve-...
|
| So it could drop pretty far.
| celestialcheese wrote:
| That's a bit old -
| https://tether.to/en/transparency/#reports
|
| Closer to 50% tbills and cash.
|
| All caveated with if you trust MHA Cayman auditors.
|
| The other 50% could be anything, and likely sketchy as they
| are chasing yield and extremely cagey about revealing
| anything about their holdings.
| Salgat wrote:
| I definitely don't trust their auditor, they're based out
| of the cayman islands and don't have the best reputation.
| https://www.coindesk.com/markets/2022/01/26/tethers-new-
| acco...
|
| It's funny because this is pretty trivial stuff to audit
| for a 3rd party, yet they only open their books to a
| private company of their choosing with questionable
| background. It's obvious what's going on. This is the
| biggest issue with crypto traders, they're too damn
| gullible as long as the news fits their agenda.
| qgin wrote:
| A 50% drop would trigger 99% of holders attempting to
| cash in.
| scoopertrooper wrote:
| They only promise that their treasure bills "have a
| maturity of less than 90 days". That won't help them much
| if there is a run on the Tether bank.
| onlyrealcuzzo wrote:
| Why wouldn't it?
|
| IIUC, Tbills have been quite liquid since the mid
| 1980s...
| stjohnswarts wrote:
| Nothing invokes trust like the combination of the words
| cayman and auditors.
| TheAlchemist wrote:
| It's not an auditor. They just signed an attestation,
| which is not even remotely close to an audit, saying that
| they saw the numbers Tether showed them - that's it !
|
| If my memory is good, they even specifically mention in
| the attestation that they didn't see the details (just
| the aggregated numbers) and they didn't check the process
| by which the management calculated those numbers.
|
| So yeah, it's taking much longer than most people expect,
| but the issue is certain - Tether will collapse to 0 at
| some point.
| jpmattia wrote:
| > _Only 3.87% of Tether was backed by dollars_
|
| For comparison: Citibank had only 11.73% Tier 1 capital in
| their 2021 report: https://www.citigroup.com/citi/investor/
| quarterly/2021/ar20_... Couldn't find a breakout of their
| Tier 1, but it includes high-quality credit items as well,
| so actual dollars is well below 11.73%.
|
| So in other words: SiliconAngle.com is writing clickbait
| and doesn't understand modern banking.
| dfdaffg423rag wrote:
| I don't think anyone's going around using shares of
| Citibank stock as currency, are they? Because that's one
| of the many criteria that need to be true for that
| comparison to make any sense.
|
| Blows my mind because stablecoins could be so easy-- hold
| some cash and hold some US treasuries. Pocket the
| interest. Become rich.
| jpmattia wrote:
| > hold some cash and hold some US treasuries. Pocket the
| interest. Become rich.
|
| Not getting what you're saying here: Only banks should
| have that privilege?
| dfdaffg423rag wrote:
| I'm saying, if you're making a US dollar backed
| stablecoin, you could do it with minimal risk and still
| profit handsomely by just holding US treasuries.
|
| Instead, we have stablecoins backed by all sorts of
| things like commercial paper in cryptocurrency exchanges.
| namdnay wrote:
| Who is going to put their money in a stable coin paying
| 0.2% interest when the guy next door is offering 20%?
| Answer:anyone sane, but they wouldn't be there in the
| first place
| JumpCrisscross wrote:
| > _Only banks should have that privilege?_
|
| Yes, in exchange for the privilege of money creation you
| need tight regulations and public disclosures.
|
| Banking left unregulated turns into this mess time and
| time again. You'd think people would be more disciplined
| about betting private money creators. But they aren't.
| They never are. Particularly not when their neighbor is
| showing orders of magnitudes of paper gains. This was
| true in antiquity. It was true in our era of free
| banking. It's proven true, again, in crypto.
| jpmattia wrote:
| > _Banking left unregulated turns into this mess time and
| time again._
|
| And yet, regulated banking also turns into a mess time
| and time again.
| threeseed wrote:
| Depends on your country. In Australia, our banks are
| among the most regulated and survived through the GFC
| with barely a scratch.
|
| Regulation is proven to work in the financial system. You
| just need to make sure you have enough of it which often
| the US hasn't. But in recent years that has been fixed
| up.
|
| Also it's a false comparison. There is one Tether and
| tens of thousands of banks.
| [deleted]
| mountainofdeath wrote:
| Money Market funds already do this and the collapse of
| money market funds is usually a harbinger of worse things
| to come. Money market funds are non-FDIC insured places
| to park short term cash, typically backed by some
| combination of AAA commercial paper, municipal bonds and
| various vintages of T-Bills. Some also are exclusively
| holding California and New York City bonds and are are
| totally tax free. Money market funds can do things like
| suspending redemption in case of a panic to let things
| settle.
|
| The idea behind USDC is to collateralize it 1:1 like a
| money market fund provided the underlying bonds hold.
| Tether is doing fractional reserve banking but has no
| central bank to act as a lender of last resort. Even
| then, banks pay into the FDIC which retains reserves
| itself like any other insurance.
|
| Tether works as long as the money flowing in >= money
| flowing out.
|
| A severe run on Tether would dry up liquidity very
| quickly.
| jcranmer wrote:
| Tether's latest report says that it held about $140
| million more in assets than liabilities, out of a $78
| billion liability. It also says it holds about $5 billion
| in cryptocurrencies. So a 3% fall in cryptocurrencies
| would make Tether _literally_ insolvent--or about an
| averagely bad day in cryptocurrency.
|
| Let that sink in for a minute: Tether, _by its own
| admission_ is _barely_ solvent, so barely solvent a
| single not-especially-bad day would render them
| insolvent.
|
| Now consider that this barely solvent state has persisted
| for their entire reports--they've always cited a very-
| barely-solvent state of their finances. Given that Tether
| has already admitted to lying in the past (and
| essentially cooking the books to mislead the public into
| thinking they were solvent), and that the books always
| seem to come out just perfectly not-quite-insolvent
| despite investing in very volatile assets, is it more
| likely that Tether has somehow found an investment
| strategy that just barely keeps them solvent, or that
| they are in fact insolvent and using every
| it's-technically-not-lying trick they can to get people
| not to realize it?
|
| For what it's worth, as far as I understand it, Tether's
| Tier 1 capital isn't 3.87% but... 0.0%. Nothing Tether
| has produced has indicated any capital that can be raided
| to provide extra assets in the case that assets lose
| value--note that such capital _isn 't_ a part of the
| asset/liability ratio.
| bpt3 wrote:
| Did Citibank claim that its value was one-to-one backed
| with U.S. dollar reserves until they were caught not
| doing so?
|
| If not, they're probably not a relevant comparison to
| Tether.
| jpmattia wrote:
| > _Did Citibank claim that its value was one-to-one
| backed with U.S. dollar reserves until they were caught
| not doing so? If not, they 're probably not a relevant
| comparison to Tether._
|
| I'm not getting what you're saying here: They should make
| good on their initial message from several years ago?
| They should now keep all assets in dollars and not earn
| interest?
| bpt3 wrote:
| > They should make good on their initial message from
| several years ago?
|
| Yes.
|
| > They should now keep all assets in dollars and not earn
| interest?
|
| Since that was how they initially generated interest in
| the asset, yes.
| onlyrealcuzzo wrote:
| Irrelevant because for >99% of depositors (NOTE - not
| total deposits) FDIC insurance will pay them out in the
| event of a bank run.
|
| For the vast majority of users - the difference in 1:1
| backing and FDIC insurance is irrelevant. This is the
| reason you'll almost certainly never see a global bank
| run. It's the reason why we probably will eventually see
| a Tether bank run.
| bpt3 wrote:
| We agree, the person I was responding to doesn't seem to
| grasp that.
| caymanjim wrote:
| Real banks practice fractional-reserve banking, where
| they are required to hold a percentage of assets as cash
| or central bank deposits. It's well-regulated and
| diversified. It's audited. Individual account holders'
| deposits are insured (FDIC in the US). This is all well-
| known and understood and reliable. Runs can still happen,
| shady accounting practices can still happen, and
| sometimes banks fail. Sometimes they fail
| catastrophically, and people can lose money, but it's
| about as trustworthy as things get.
|
| Tether does not claim to be a fractional-reserve bank.
| They claim that 100% of the assets are backed by US
| dollar cash deposits. It's their entire raison d'etre.
| Except no one is enforcing it. It's not even remotely the
| same thing as a fractional-reserve bank.
| jpmattia wrote:
| > _They claim that 100% of the assets are backed by US
| dollar cash deposits._
|
| Still? (ie link?)
|
| All I see is: "All Tether tokens are pegged at 1-to-1
| with a matching fiat currency and are backed 100% by
| Tether's reserves." (link here:
| https://tether.to/en/transparency/)
| albroland wrote:
| Yeah, they continuously try to rewrite history. The
| original whitepaper directly stated "Each tether issued
| into circulation will be backed in a one to one ratio
| with the equivalent amount of corresponding fiat currency
| held in reserves by Hong Kong based Tether Limited."
|
| For further reading, see the CFTC settlement
| Quinner wrote:
| In the US, the required reserve ratio has been 0% since
| March 2020. I personally wouldn't view the traditional
| financial system as about as trustworthy as things get.
| gruez wrote:
| AFAIK reserve requirements (ie. cash on hand) was dropped
| to 0%, but capital requirements (ie. assets on hand) are
| still there.
| namdnay wrote:
| When was the last time anyone lost the money in their
| checking account due to a bank failing in the US?
| jcranmer wrote:
| The ratio you're talking about is the amount that needs
| to be in the bank's account with the Federal Reserve as a
| fraction of its total liabilities. _Only_ the money in
| that bank account qualifies for that reserve ratio;
| holding on to a literal stack of dollar bills in a bank
| vault somewhere does not.
|
| That ratio is 0% because it's been judged that there are
| better ways to require solvency than doing that (chiefly,
| requiring capital buffers).
| lavezzi wrote:
| Where is the evidence it is supported with real world assets?
| NelsonMinar wrote:
| Tether itself also had a dry run of the Tether collapse. It
| seems to mostly be holding steadyish in the past few days, but
| the dip down to $0.95 is a giant screaming alarm. It's still
| only at $0.9990; before the crisis last week it was pretty much
| always at $0.9998 or above.
| id wrote:
| Similar or worse drops happened in 2016, 2017, 2018, and
| 2020. In other words, business as usual for Tether.
| georgeecollins wrote:
| Yes, and like $50b-$100b worth of trades each day are in
| USDT, with a market cap of $73b. That's according to
| coinbase, I can't verify it. When I look at people talking
| about trading crypto currency on reddit they just don't
| seem that sophisticated. I am not bashing on crypto, but
| this seems like a systemic risk people are oblivious to. It
| won't wipe everything out, but it can't be good for the
| price.
| realusername wrote:
| I'm also waiting for the USDT collapse. It was very close this
| time but I guess I'll have to wait more.
| calbruin wrote:
| Tether has never been audited. The market is about to audit
| them. Watch the tether market cap...
| wing-_-nuts wrote:
| If and when that happens (and let's be honest, it probably
| will) a whole lot of people are about to see that bitcoin has
| no clothes.
| dstroot wrote:
| Does anyone have insight to what legal exposure (if any) creator
| Do Kwon has? In an regulated market does he just walk away?
| vmception wrote:
| in a regulated market all you would simply have are some
| codified fiduciary duties and standardized disclosures
|
| Terra Luna and TerraUSD's algorithmic operations were all
| disclosed publicly and scrutinized in the open sphere
|
| Do Kwon stated publicly why he was buying the bitcoin - to
| repurchase Terra Luna and TerraUSD because its shitty broken
| product that might need to be rebought to temporarily help
| restore its peg - and Do Kwon has stated publicly now why the
| bitcoin sold - to repurchase Terra Luna and TerraUSD because
| its shitty broken product that might need to be rebought to
| temporarily help restore its peg
|
| I think in a regulated market he just walks away just like all
| investment banks and bankers do
|
| There are plenty of Exchange Traded Notes (ETNs) that obtusely
| say "this is dogshit and its going to fall to zero during a
| period of volatility" and then fall to zero during a period of
| volatility
|
| Thats exactly what Terra Luna and TerraUSD did
|
| all regulation would do is standardize the way the disclosure
| is done, really the most likely thing that comes from this is a
| regulator mandated additional sentence in a brokerage firm's 40
| page disclaimer that you surely will read after consulting your
| financial advisor.
|
| Its up to the consumer/investor, it always is.
| _fat_santa wrote:
| As of writing, CoinMarketCap values TerraUST (the stablecoin) at
| $0.09. Needless to say, that 3B didn't do a damn thing. No amount
| of cash infusions are going to save Terra, because the problem is
| trust.
| koolba wrote:
| > Needless to say, that 3B didn't do a damn thing.
|
| If it propped it up long enough for insiders to dump their
| positions it did it's served it's purpose.
| bushbaba wrote:
| Or the problem is a bank run. They threw 3B to fix an issue
| with a bank having 40B+ in assets and seeing more than 3B of
| withdraws.
| NovemberWhiskey wrote:
| A bank run is exactly a trust issue.
| Animats wrote:
| This is puzzling. What did they do with the money? Buy back UST?
| Something else?
|
| Vast numbers of LUNA were minted during the collapse. There are
| now 6 trillion LUNA outstanding, currently valued at $0.0002246
| each. Apparently the algorithm trying to support UST did so by
| minting LUNA.
|
| Does someone have a timeline of the collapse? All the data should
| be available on blockchains.
| thedangler wrote:
| Whales be Whaling.
| loeg wrote:
| UST is down another 35% today, to 11 cents on the dollar.
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