[HN Gopher] Three Arrows Capital reportedly facing insolvency, c...
___________________________________________________________________
Three Arrows Capital reportedly facing insolvency, crypto bubble is
bursting
Author : paulpauper
Score : 198 points
Date : 2022-06-17 21:28 UTC (1 hours ago)
(HTM) web link (www.fxstreet.com)
(TXT) w3m dump (www.fxstreet.com)
| kosyblysk666 wrote:
| bulish !!!
| gjvc wrote:
| good news!
| LookAtThatBacon wrote:
| For anyone wondering why 3AC becoming insolvent is such a big
| deal, this Twitter thread does a fair job of summarizing:
|
| https://twitter.com/hodlKRYPTONITE/status/153690211554074214...
|
| Basically, they're a large crypto fund that has borrowed from
| almost every major crypto lender, and if they can't cover their
| margin calls (which is expected if they're insolvent), the risk
| of the debt is then transferred to the lenders themselves.
| onlyrealcuzzo wrote:
| I'm out of the loop on crypto.
|
| Are the loans denominated in crypto or dollars? Does this mean
| the lenders will have to sell crypto when they realize the
| loss?
| kersplody wrote:
| The answer is probably yes for both questions. These crypto
| and loan contracts are typically very complex and involve
| many classes of crypto and physical assets involving many 3rd
| parties. Therefore it's going to take awhile to untangle
| things to the point where each party knows their precise risk
| exposure and ability to take loans out against this
| exposure/loss.
| anonymoushn wrote:
| The situation is not entirely clear because some lenders may
| not loudly announce that they have liquidity issues as early
| as possible. It seems like a large part of the forced selling
| by 3AC and counterparties is already over, and it seems like
| many counterparties don't actually have any collateral from
| 3AC to sell and must eat the loss.
| [deleted]
| josh2600 wrote:
| 3AC isn't just large. 3AC is the largest trader by volume in
| the world for like 4 years. Them going bankrupt is like long
| term capital management going bankrupt.
| 3327 wrote:
| sillysaurusx wrote:
| Mt Gox says hello.
|
| We've been here before, we'll be here again, a bunch of
| people will lose money and the cycle will repeat. It'll all
| work out.
| minsc_and_boo wrote:
| Mt. Gox happened when crypto was a small fraction of what
| it is today, in terms of capital, transactions, even # of
| players.
| arcticbull wrote:
| Hopefully this time, we get some regulator action so we're
| never back here again. Each time the cycle gets bigger, the
| tendrils work their way into traditional finance - and more
| people get hurt. This time, the Quebec public servants are
| getting rekt on their investment into Celsius [1]. Now it's
| hurting pensioners, not just a bunch of degenerate gamblers
| and moonbois.
|
| It's fine for a bunch of pokemon card traders to get rekt -
| but by the time you get to 3AC scale, it's time for
| regulators to put the kibosh on the whole space. They're
| securities. They either get registered or you go to Club
| Fed.
|
| With all due respect, fingers crossed, this time it does
| not work out.
|
| [1] https://www.cdpq.com/en/news/pressreleases/celsius-
| network-a...
| ycta2022061715 wrote:
| Question: what is the point of crypto if it becomes
| regulated like traditional financial assets? Crypto
| doesn't have any actual use-value like stocks or real
| estate, and its entire selling point was that it's
| decentralized and unregulated.
| arcticbull wrote:
| Exactly.
| peyton wrote:
| Simplifies and modernizes cross-border flows. Try buying
| shares in a firm listed on the Indonesia Stock Exchange--
| you'll spend days to weeks dealing with middlemen. Should
| be a couple clicks to submit to a public ledger.
|
| I don't see where lack of regulation is a selling point--
| it greatly limits invested capital.
| astrange wrote:
| Isn't the reason buying international shares is slow that
| they don't want you to do it and therefore have regulated
| it?
|
| There's no technical merit in crypto that actually makes
| things fast, it's just a regulation dodge. It's
| necessarily slower and more expensive than TransferWise.
| btilly wrote:
| As far as I can see, https://wise.com/us/ is in all ways
| a better way to simplify cross-border flows than crypto.
| When working with overseas teams, it is literally how
| they ask to be paid.
| codehalo wrote:
| Any advice for those getting rekt in the traditional
| markets, or are you hoping that doesn't work out too?
| tyrfing wrote:
| > Now it's hurting pensioners, not just a bunch of
| degenerate gamblers and moonbois.
|
| No, that's your public institution making degenerate
| gambles on late-stage startups. The largest venture
| capital investor in Canada isn't some poor victim, they
| are the perpetrators, the _owners_. It 's completely
| laughable to paint them as a victim of some crypto-
| ecosystem heist.
| arcticbull wrote:
| The pensioners are the victims of both the fund and
| Celsius.
|
| Neither should the fund be allowed to invest in Ponzi
| schemes, nor should the so-called investments be
| permitted to run them in the open.
|
| [edit] I'd have the same criticism of both if they'd
| invested in Bernard L. Madoff Investment Securities LLC.
| workingon wrote:
| None of it has ever happened before during a recession.
| Crypto basically didn't exist the last time the world had
| one. Being religious and so sure about the way something is
| going to turn out should be a warning sign to the self.
| ryanSrich wrote:
| > None of it has ever happened before during a recession
|
| We are not currently in a recession.
|
| If we get into a recession in the next quarter or two,
| there's no harm done to crypto. The market is headed into
| bear territory regardless of the macro economic climate.
|
| I swear no one remembers 2017. Thousands of projects that
| raised billions of dollars died. No one cares. The market
| rebuilds itself every 3-5 years. This is absolutely no
| different.
| fourstar wrote:
| So if it didn't exist how can _you_ be so sure about
| dismissing it? It literally _is_ a new paradigm.
| workingon wrote:
| I'm not. Bitcoin could still MOON. I'm just saying you
| shouldn't be so sure either way with so much uncertainty.
| arcticbull wrote:
| Investment fraud is not a new paradigm. Selling bags of
| nothing is not a new paradigm. Goes all the way back to
| the South Sea Company in 1711 [1].
|
| I recommend reading Extraordinary Popular Delusions and
| the Madness of Crowds published originally in 1841 [2].
|
| [1] https://en.wikipedia.org/wiki/South_Sea_Company
|
| [2] https://www.amazon.com/Extraordinary-Popular-
| Delusions-Madne...
| mumblemumble wrote:
| Extraordinary Popular Conclusions is also available for
| free from Gutenberg:
| https://www.gutenberg.org/ebooks/24518
| rr808 wrote:
| Its nothing like LTCM, its much worse because when LTCM the
| fed and SEC cleaned up by reducing interest rates and helping
| GS take over the positions. Crypto is "free" from govt
| interference like this.
| kelseyfrog wrote:
| If crypto bubble bursting is what precipitates the next
| recession I'm going to be beyond upset. Getting burned by
| something I purposefully stayed out of is nothing short of
| enraging. I'd legislate it out of existence out of spite at
| that point.
| jvanderbot wrote:
| What's happening here isn't causing the recession, it's
| indicating it, for the most part. Crypto was never really
| disconnected from the public markets, not like it claimed
| it was.
| StayTrue wrote:
| Without loginwall:
|
| https://nitter.net/hodlKRYPTONITE/status/1536902115540742144
| rinze wrote:
| The sad thing is that a new crop of suckers will appear in a few
| months / years, and we'll repeat the blues again.
| lurker616 wrote:
| Yes. When the generation finishing high school and entering uni
| right now, are finally graduating and start getting disposable
| income. That's when crypto will rise up again. They are too
| young rn to understand the greater fool game going on, and
| learn from losses. That's why there's a 4-year cycle. People
| already in undergrad right now wouldn't really fall for it
| again.
| adam_arthur wrote:
| I tend to think that after enough cycles people will begin to
| write off crypto entirely.
|
| A USD CBDC will kill it either way
| Krasnol wrote:
| Somehow I doubt it.
|
| It's just too easy to participate.
|
| Also: are you interested in my brand new Krasnol-NFT?
| rinze wrote:
| People still "invest" in multi-level marketing stuff, so I'm
| not an optimist.
|
| Have you seen this new coin? Have you read the white paper?
| It's a completely new scam^Wthing!
| adam_arthur wrote:
| By "kill", I mean that it won't likely go mainstream mania,
| featured on CNBC etc. Not that it won't exist at all.
|
| There's definitely another fool born every day
| KptMarchewa wrote:
| MLM never was any close to being this mainstream. Maybe in
| 1997 in Albania.
| minsc_and_boo wrote:
| Herbalife, Amway, Avon, etc. all became pretty big, it
| just doesn't seem like that to most people in tech bc
| it's a different target market.
| dubswithus wrote:
| My understanding is CBDC's are for banks and not retail. So
| it won't kill it.
| babypuncher wrote:
| I don't think crypto actually serves much of a purpose at
| retail. As a customer, what reason do I have to pay for my
| groceries with bitcoin instead of my debit card?
| adam_arthur wrote:
| Hmm what would the advantage be then? The Fed is already
| linked up with US Banks
| wollsmoth wrote:
| Will they though? If this really crashes spectacularly we might
| see some people trading it but most people are going to steer
| clear of this mess.
| davidcbc wrote:
| I thought the same thing after 2017, but so far there has
| been an endless supply of new people ready to get scammed.
| dylkil wrote:
| people think this every crash and then get more cynical as
| price goes up in the next bubble
| [deleted]
| KptMarchewa wrote:
| Crypto was mainstream now. Anyone gullible enough and with cash
| (or credit score) was into crypto now.
| Allower wrote:
| potatolicious wrote:
| I'm just pissed that we wasted all of this time and money on
| this crap.
|
| IMO the past ~10 years of the VC industry has been one of the
| biggest collective wastes of time and resources in the history
| of computing. We came into this with the goal of creating the
| next Google or the next Apple, and we exited with... what
| exactly?
|
| Investors of every stripe collectively lost their gourds and
| poured hundreds of billions into unsustainable companies that
| have never found their unit economics (and likely never will)
| like WeWork, Uber, and Lyft. After that whole scheme started
| unwinding they then collectively poured more hundreds of
| billions into something _even worse_ - rather than simply
| losing money on useful products, they decided to simply _lose
| money_ without even bothering with the product part of it. The
| result is years of tulip-mania that just set an unholy amount
| of money on fire and fleeced innumerable retail investors '
| savings.
|
| What if we poured that collective funding into producing...
| well, actual businesses? Delivering products that actually
| improved people's lives? Delivering products that _at least
| make money_?
|
| All I see from the past 10 years of the industry is the missed
| opportunity and what could have been. How many groundbreaking
| products would we have today if we put the money into... well,
| not _this_?
|
| I suppose it's not all bad - there have been some promising
| companies that actually deliver products for profit that came
| out of this era (see: Shopify, Stripe) but I can't help but
| wonder where we'd be without this entire misadventure.
| daydream wrote:
| You could've said almost the same exact thing in 2001, after
| the dot com bubble well and truly burst. Pets.com was a
| laughing stock. So was that stupid Super Bowl commercial
| where they shot a hamster out of a cannon.
|
| Turns out those companies weren't wrong. They were just 20
| years too early. And one or two of them even survived and
| thrived. (Amazon.) Also we got a lot of fiber laid that
| turned out to be useful.
|
| I think it's a similar situation here. If we knew a priori
| which uses cases and companies would work out we'd only fund
| those. But we don't. So boom, bust, repeat. Humanity moves
| forward. Of course, as you said there is collateral damage.
| And externalities.
| clpm4j wrote:
| Yeah, but buying things online and having it shipped to
| your house was so very obviously useful and something that
| should exist, and you didn't have to be a PhD to realize it
| then. Pets.com was clearly not a bad idea. But I haven't
| yet heard of a crypto use-case that is obvious, at all.
| rvz wrote:
| > We came into this with the goal of creating the next Google
| or the next Apple, and we exited with... what exactly?
|
| The free software activists would like to have a word with
| that and the VCs really don't care other than making money.
| So it is futile to believe that they would ever change or
| even when after 37 years the free software movement has been
| hijacked by 'open-source' which the same companies like
| Google and Apple getting away with that.
|
| Generally they failed to stop closed-source software and
| systems from proliferating and existing and the fact that
| some of these engineers who were formerly part of this
| movement jumped ship to Google, Microsoft and Facebook tells
| us that it hasn't gone the way they envisioned.
|
| Just like how the free software movement failed to stop
| closed-source software, the anti-crypto folks will also
| suffer the same fate and will realise that it's futile to try
| to 'destroy' all cryptocurrencies and their projects. That
| view to even think of trying to destroy all of it is just as
| delusional as the pro-crypto maxis thinking that it will take
| over the current system, even post regulations. Co-existence
| is most likely outcome from this.
|
| > I suppose it's not all bad - there have been some promising
| companies that actually deliver products for profit that came
| out of this era (see: Shopify, Stripe) but I can't help but
| wonder where we'd be without this entire misadventure.
|
| The fact that Stripe, Checkout.com, Shopify and MoneyGram are
| using cryptocurrencies not only have legitimised _some_ of
| them of having a valid use-case, it says that they are going
| to be still around for a long time. Not all these crypto
| projects or companies will survive, but only a compliant few
| will still be around; almost the same outcome as the dotcom
| bubble with a wipeout of many frivolous companies and a
| remaining few surviving.
| KerrAvon wrote:
| But this isn't really new; this is what the managerial class
| of the 1970's and their deregulation enablers in the Reagan
| era wrought, multiplied. What if nearly every large American
| industrial corporation hadn't been financially engineered
| into oblivion in the 80's and 90's? What if private equity
| hadn't been allowed to turn healthy brick and mortar
| retailers into debt-riddled zombies over the past four
| decades?
| encryptluks2 wrote:
| Hopefully there will be a bunch of descent GPUs dirt cheap so
| at least we got that.
| version_five wrote:
| Does anyone have a view on how "contained" crypto is? I.e. do
| these failures lead to anything other than pretend value going
| back to zero? Is there anything real that somehow depends on
| crypto (like what happened with mortgages)?
| perardi wrote:
| Matt Levine got into this earlier this week.
|
| https://www.bloomberg.com/opinion/articles/2022-06-15/crypto...
|
| I just want to block quote the second paragraph, but instead,
| just the first sentence.
|
| "The deeper problem, always, is when you add leverage. Someone
| who gambled $40,000 on Bitcoin now has $20,000, fine. But
| someone who bought a Bitcoin with $20,000 of their own money
| and $20,000 borrowed from someone else now has roughly nothing,
| which is worse."
| iLoveOncall wrote:
| The global crypto market cap is $893B, it's completely
| insignificant and will have no impact on anything.
| [deleted]
| adventured wrote:
| Definitely close to meaningless next to the implosion going
| on in other major assets (and the damage that is about to hit
| housing as well).
|
| Just the five US big tech companies (AAPL, MSFT, META, AMZN,
| GOOGL) are down a combined ~$3.4 trillion so far from the
| highs.
| howlin wrote:
| Seems like the entire capitalization of crypto is around $1
| trillion. The total value of housing in the USA is a bit over
| $40 trillion. So that should give you some sense of scale of
| the crypto market versus other markets that pose systematic
| risks.
| slongfield wrote:
| The housing market is somewhat different than the crypto
| market in that people need a place to live.
| nostrademons wrote:
| Note that the dot-com bubble lost about $1.7T [edited from B]
| in market cap, off a total of roughly $3T for the sector:
|
| https://money.cnn.com/2000/11/09/technology/overview/
|
| In the grand scheme of things crypto is still relatively
| small, another dot-com bubble or not even that. It's going to
| be a sideshow for the bloodbath that happens in the public
| equity and corporate debt markets (and eventually, the
| housing market), which is just getting started.
| nybble41 wrote:
| > Note that the dot-com bubble lost about $1.7T ...
|
| ... in 2000. That would be $2.85T today, going by the
| official CPI inflation calculator.[0]
|
| [0] https://data.bls.gov/cgi-
| bin/cpicalc.pl?cost1=1.7&year1=2000...
| anonymoushn wrote:
| $1.7T isn't it
| nostrademons wrote:
| Fixed, thanks.
| anonymoushn wrote:
| Crypto in general contains a lot less uncollateralized debt,
| surprising chains of counterparty risk, and so on than
| traditional finance. This is because those defi protocols and
| exchanges that want to survive have process margin calls and
| liquidations quickly or be wiped out. 3AC may leave some
| counterparties in bad situations, but those counterparties are
| totally insignificant compared to the entities one hears about
| in traditional finance.
| pcj-github wrote:
| Turns out that tightly wrapping a small kernel of nothing with
| many layers of leverage can turn into a bomb that will blow up in
| your face.
| [deleted]
| EarthLaunch wrote:
| I think it's funny this could be said about fiat and debt just
| as easily as crypto. Maybe there _are_ some similarities.
| nice_one wrote:
| Is there any downside to this? Seems to me this is a positive
| outcome if it encourages speculators to leave the cryptocurrency
| space.
|
| Crypto was never intended to be used (and abused) in such a way,
| and is a considerable deviation from Satoshi's original vision
| regarding Bitcoin. Perhaps it's time to get back to basics.
| bb88 wrote:
| There's a non zero amount of people who put their life saving
| into crypto because it was going to go "to the moon."
| Everything was coming up Milhouse... until it wasn't.
|
| So those people are probably going to rely upon taxpayers for
| help. And so when homeless hodlers appear on the streets
| looking for the government handout, that's gonna piss off
| liberals and conservatives alike.
| clpm4j wrote:
| Non-zero, yes... But the practical # of 'homeless hodlers'
| will be a tiny fraction of the larger homeless population, so
| effectively zero.
| monodeldiablo wrote:
| The original vision has some questionable assumptions. Being
| deflationary by design practically guarantees speculation and
| undermines any utility as a currency.
|
| If broad adoption was an actual goal, cryptocurrencies wouldn't
| be fundamentally structured like ponzi schemes.
| kersplody wrote:
| The problem is that the people at the bottom of the pyramid
| have no idea how crypto works or the risks involved. Seems to
| me that defining crypto as an Unregulated Security would be a
| good first step, allowing only "Accredited Investors" to
| participate in crypto trading directly.
| Eji1700 wrote:
| I think there's some % chance that this collapse will hit
| outside the crypto world. I'm not going to be shocked when we
| find out through some stupid chain pensions were invested and
| the like.
|
| Could wind up with major governmental oversight moving forward,
| basically making damn sure it's barely ever adopted. Everyone
| always talks about "satoshi's vision" and what not, but crypto
| isn't going to be worth shit if you are forced to make trades
| in black market scenarios because it shit the bed so bad it
| took down serious stuff with it.
|
| Granted this is probably worst case which i'd put at very low
| odds.
| bb88 wrote:
| > Could wind up with major governmental oversight moving
| forward, basically making damn sure it's barely ever adopted.
|
| I'm basically of two minds about this.
|
| One is that as long as people understand they're buying
| nothing of real value, it's fine if they want to "gamble".
| It's like a lottery ticket in this regard.
|
| The other is if or perhaps when taxpayers will need to bail
| out crypto companies. At this point, I'll be extremely angry,
| and want the strictest government regulation possible.
| anonymoushn wrote:
| We recently got to hear that some Canadian pensions had
| invested in Celsius, but not very much.
| wpietri wrote:
| I appreciate the feeling, but the problem is that Bitcoin just
| isn't very useful for the original vision, "a purely peer-to-
| peer version of electronic cash". [1] It's fine for a little
| light crime, where people are willing to put up with slow
| transactions, high costs, inconvenience, and significant risks
| to e.g., buy some mail-order LSD. But when you compare it with
| things like debit cards, Venmo, and M-Pesa, it's just not
| competitive.
|
| I think Bitcoin was a really interesting idea in the pre-iPhone
| era, but for a variety of reasons it just didn't pan out. Which
| is why the space was so readily colonized by scammers,
| grifters, criminals, fraudsters, speculators, and loons.
|
| [1] https://bitcoin.org/bitcoin.pdf
| geuis wrote:
| What do you mean "pre-iPhone era"? Bitcoin was released in
| 2009.
| fooey wrote:
| Yeah, the original vision was never plausible. BTC has
| absolutely never been viable as a currency and never will be.
| runnr_az wrote:
| Totally. Why would I want anyone I pay to know exactly how
| much I've spent on all my other transactions?
| kersplody wrote:
| It was supposed to be cash without the burden of nation state
| oversight. Instead, it turned into a giant casino ecosystem
| of unregulated securities involving more and more layers of
| abstraction (exchanges, stable-coins, NFTs, bundled
| transactions, hedges, subchains, ...)
| ftlio wrote:
| > I think Bitcoin was a really interesting idea in the pre-
| iPhone era, but for a variety of reasons it just didn't pan
| out.
|
| It's panning out just fine. Everyone who thinks Bitcoin is
| old news presupposes that you can do something like Bitcoin,
| but better. There's no evidence of this in any non-Bitcoin
| cryptocurrency.
|
| This also ignores that Bitcoin is improving every year. Tools
| like Liquid and Lightning are incredibly sophisticated, first
| principles based approaches to real problems in finance,
| banking, and fungibility. That fly by night securities called
| "cryptocurrencies" with shallow liquidity claim that they can
| do better, but always fail to deliver, hasn't undermined
| anything about Bitcoin.
|
| I agree with the parent post. This is great for crypto. Maybe
| all the web developers who think they can do cryptography
| better than cryptographers can go do something else now.
| mumblemumble wrote:
| > Everyone who thinks Bitcoin is old news presupposes that
| you can do something like Bitcoin, but better.
|
| For most people's everyday purposes, all those things the
| parent mentioned _are_ doing something like Bitcoin, but
| better.
|
| The one technical problem that cryptocurrency
| unquestionably handles better than any other technology is
| solve a problem that is only experienced by people who
| choose to use cryptocurrency.
| sbf501 wrote:
| Homomorphic encryption without financialization will be the
| final form of cryptocurrency, and only for things like escrow
| and transfers between banks (probably replacing commercial
| paper). It'll take a decade and people will probably never see
| anything but their native currency in their banks. Part of the
| slow adoption will probably be due to it making Olde-Timey
| forms of corruption no longer possible. (But I'm sure new kinds
| will arise.) It was never meant to be an investment, just like
| you said.
| greatpostman wrote:
| Dudes who started this don't even look like credentialed hedge
| fund managers. How did they get so big
| anonymoushn wrote:
| What credentials do you believe are required to start and
| manage a hedge fund?
| Ferrotin wrote:
| Especially considering one of the most famous hedge funds was
| founded by an MD.
| notahacker wrote:
| The ability to persuade very rich people to give you money,
| or a lot of money of your own. Expensive suit helps. Cartoons
| about "the only way is up" a more unconventional route to the
| same end.
| woodruffw wrote:
| It's the oldest story in finance: easy money, hubris, a lack of
| regulation, and a sense of entitlement ("it's all a scam, so
| there's nothing wrong being one more scam").
| [deleted]
| klodolph wrote:
| Funny to talk about credentials. As far as I can tell, the
| purpose of credentials when hiring hedge fund managers is so
| that when the hedge fund loses money, you can say, "Look, we
| did our best, we hired the best people." Then you can swap in a
| new set of hedge fund managers with the same credentials and
| repeat.
|
| (Edit: Hedge funds naturally lose money some of the time, and
| investors naturally get angry when that happens and look for
| someone to blame, and hiring someone who has good credentials
| lets you pass the blame, instead of having to explain to your
| investors that hedge funds just sometimes lose money. I'm not
| trying to tie this to the discussion about whether hedge funds
| work or not, just talking about _how they operate_.)
| jrumbut wrote:
| Coming soon to the crypto world at this rate.
| kareemsabri wrote:
| Do you have any evidence for this theory that credentials are
| just for show and misdirection? For example hedge funds
| trying to fall back on the credentials of their employees in
| the event of failure?
| nowherebeen wrote:
| Why would he/she need evidence? It's an observation which
| you may disagree with. Asking him/her to provide evidence
| is just silly. He/she is not here to prove anything to you.
| kareemsabri wrote:
| This comment is silly. It's not an observation, it's an
| assertion. If it was an observation it would contain
| evidence. He/she is here to have a discussion,
| presumably.
| klodolph wrote:
| No, the parent comment is spot-on.
|
| The idea that observations "contain evidence" is an idea
| that I'm unfamiliar with. I'm not sure what point you're
| making about observations or assertions, or how the
| distinction between the terms is germane (not talking
| about the distinction between the concepts).
|
| Asking for evidence is confrontational and a bit gauche.
| Better to ask someone to elaborate, or ask them what the
| reasoning is. That's a good way to continue the
| discussion because it doesn't frame the discussion as an
| argument.
| kareemsabri wrote:
| Happy to clarify. If I say "I remember when Craptastic
| Hedge Fund failed and used their traders credentials to
| distract from their incompetent trades" (LTCM might fit
| the bill here) that would be an observation. An
| observation is evidence. If I just say, "Hedge Funds use
| credentials to hide their incompetent trades" that's an
| assertion. It doesn't contain any evidence, I'm just
| stating something I believe to be true.
|
| It's germane because the OP (and you) seem to think it's
| inappropriate to ask if you have any examples (maybe
| "example" would have been less "gauche" than "evidence")
|
| It's not really important, you've clarified, and even
| added in some advice on manners.
| klodolph wrote:
| 1. Look at the rate at which hedge funds hire people from
| ivy-league schools, compared to the rate at which other
| businesses hire from ivy-league schools. What explanations
| do we have for these different rates? (There's a long
| discussion here which I'm omitting. There's more than one
| explanation, but the basic hypothesis is that hedge funds
| value ivy-league _credentials_ more than other industries,
| because ivy-league credentials are more valuable to hedge
| funds, and if they were just after skills, they would
| probably make different hiring decisions.)
|
| 2. Look at what happens when a hedge fund fails. What kind
| of business decisions are scrutinized (and which are not)?
| How are decisions justified? Are those justifications
| founded? (Another long discussion which I'm omitting. The
| basic theory is that you need to CYA for the inevitable
| failures. If you CYA and then the fund fails, investors may
| give you another shot. If you don't CYA, you get replaced.)
|
| I only save citations about a subject if I'm writing an
| article. If I were writing an article, I would post from my
| other account.
| kareemsabri wrote:
| I didn't mean citations so much as examples, since I
| assumed you had observed this in the real world to form
| your opinion.
|
| I'm not sure I agree with 1, but appreciate the
| clarification regardless.
| [deleted]
| chrisseaton wrote:
| What does a credentialed hedge fund manager look like? What do
| you want, a Patagonia vest?
| [deleted]
| [deleted]
| Flatcircle wrote:
| Someone on twitter succinctly described the situation by saying,
| " I think a lot of stadiums are gonna have to change their names
| over the next few years."
| thriftwy wrote:
| Explanation corps help requested.
| myth_drannon wrote:
| LA's Staples Center renamed Crypto.com Arena
| HideousKojima wrote:
| The Staples Center in L.A. Is being renamed the Crypto.com
| Arena or something like that, I'm not aware of any other
| crypto companies paying to have sports stadiums named after
| them though.
| clpm4j wrote:
| FTX Arena in Miami
| [deleted]
| avrionov wrote:
| Crypto companies put their names on stadiums. If they go
| bankrupt the names will have to change.
| wmf wrote:
| A startup named Crypto.com bought naming rights to the
| Staples Center in Los Angeles and renamed it to Crypto.com
| Arena. If Crypto.com goes out of business maybe the building
| will get renamed again.
| mikeyouse wrote:
| Coinbase also had their name/logo all over the NBA Finals -
| both in TV ads as well as branding and logos physically on
| the courts. Millions of dollars in ad spend while they are
| laying off swaths of their staff..
| mbreese wrote:
| It looks bad now, but really, when those contracts were
| signed (and paid for), layoffs seemed like an
| impossibility. And once those were deals are finalized,
| it's not something that you can really pull back from.
| Sadly, all it serves to do now is remind potential
| customers of how bad things are right now for Crypto.
|
| It a bad look, and I feel for everyone affected by the
| layoffs. But this isn't a decision Coinbase made two
| weeks ago.
| crankyeggplant wrote:
| There's also FTX Arena, which is where the Miami Heat of the
| NBA play.
| [deleted]
| arcticbull wrote:
| Washington Nationals Park is plastered in Terra/Luna
| collateral. [1]
|
| [1] https://www.bloomberg.com/news/newsletters/2022-05-19/ter
| ra-...
| reaperducer wrote:
| I've got an Enron Field hat around here somewhere.
| moffkalast wrote:
| Zing
| _jal wrote:
| Did anyone ever "mint" any Beanie Baby NFTs?
|
| That would have been funny.
| SV_BubbleTime wrote:
| I'm sure there are some Tulips out there somewhere.
| optimalsolver wrote:
| Satoshi, we need you. Come back and save us from the likes of
| Blockstream's Adam Back who are ruining your vision.
| ISL wrote:
| Satoshi's vision is still playing out. A possible goal was to
| demonstrate the notion of a distributed neutral-to-deflationary
| currency that could serve as both a store of value and a medium
| of exchange.
|
| Bitcoin remains volatile, but also valuable (~$0.3T). There is
| now a global network of miners and it is possible to transact
| in BTC at any moment of the day with anyone else who also has a
| wallet.
|
| The speculative bubble surely exists, and plenty of people will
| lose their shirts in this deflagration, but Satoshi's idea will
| live on in some form for the foreseeable future.
|
| (Requisite disclaimer: I have held BTC for long periods in the
| past but no longer. The market and overall direction of the
| sector is too difficult to predict.)
| AnimalMuppet wrote:
| > A possible goal was to demonstrate the notion of a
| distributed neutral-to-deflationary currency that could serve
| as both a store of value and a medium of exchange.
|
| Distributed? Check.
|
| Neutral-to-deflationary? Mostly true.
|
| Store of value? That hasn't held up so well over the last
| three months.
|
| Medium of exchange? In theory, it is, but in practice, it is
| _almost never_ used that way.
| dubswithus wrote:
| What does Adam Back have to do with 3AC? The guy only holds
| bitcoin, right? His portfolio looks nothing like 3AC.
| abriosi wrote:
| Adam Back the author of hashcash a.k.a proof of work?
|
| http://www.hashcash.org/
| verisimi wrote:
| BSV? (Bitcoin Satoshi Vision)
| [deleted]
| mmastrac wrote:
| Are we finally allowed to use the Tulip bulb analogy?
| saalweachter wrote:
| Not until people begin cooking and eating their crypto.
| woodruffw wrote:
| My understanding of Dutch history (which isn't great) is that
| nobody ate tulip bulbs after the Tulip Mania ended. The
| famous instance of that occurring (to my knowledge) was
| during and immediately after WWII.
| the_third_wave wrote:
| To be more precise, some Dutch from above the rivers (i.e.
| to the north of the "Waal" and "Nederrijn" rivers which
| divided the liberated south from the still occupied
| northern half of the country), especially the western part
| ate boiled tulip bulbs during the "hongerwinter" [1]
| (hunger-winter) of 1944-1945 when the Germans blocked food
| imports to that region in retaliation for the Dutch efforts
| (e.g. the national railway strike) to assist the allies in
| the liberation efforts.
|
| The effects of the famine are still visible in the
| generation which grew up during that period and those which
| came after [2].
|
| Source: I'm Dutch, my parents lived in this region and had
| their share of tulip bulbs.
|
| [1] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%8
| 0%931...
|
| [2] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%8
| 0%931...
| [deleted]
| berberous wrote:
| Whatever your view on the Tulip bulb analogy, that has no
| relevance to this story. This is a story of traders with bad
| risk management who blew themselves up with leverage. That is a
| story that has played out plenty of times in the past on every
| other type of asset (housing, stocks, FX) as well.
| 1970-01-01 wrote:
| Still 6 orders of magnitude away, I'm afraid.
|
| 1 BTC = 20k USD
|
| When 1 BTC = 0.009 USD, go ahead.
| bee_rider wrote:
| I don't really know economics, but I believe they are quite
| different -- cryptocurrencies value is 100% speculative. Tulips
| at least have an inherent value as a decorative object. Even
| fiat currency can be used as toiletpaper in a pinch.
| giaour wrote:
| Given how many hands your average bill has passed through,
| that sounds extremely unhygienic. I'd rather use a tulip!
| kareemsabri wrote:
| I think it's difficult to call something 100% speculative or
| 100% not. Some individuals may buy something for speculation,
| while others may desire the utility. You can speculate on the
| price of soy beans (many do), but people also buy soy beans
| to use.
|
| There are individuals who get some utility out of bitcoin
| (international money transfers etc.)
| melenaboija wrote:
| > There are individuals who get some utility out of bitcoin
| (international money transfers etc.)
|
| What do you mean with money transfers?
| kareemsabri wrote:
| I mean that when I've asked people what utility they get
| out of blockchain they mention the ability to send BTC
| overseas quickly and easily, to countries in which it's
| difficult to send money. I assume they're not lying about
| that use case.
| melenaboija wrote:
| They send nothing as BTC is not located anywhere. They
| buy and sell btc with fiat currencies, that is all.
| [deleted]
| baal80spam wrote:
| > Even fiat currency can be used as toiletpaper in a pinch.
|
| Hmm - but actually can it? Isn't destruction of bills
| forbidden? It certainly is in my home country.
| bee_rider wrote:
| Technically you are right, but I think it would have to be
| a really widespread issue before the government tried to do
| anything about it.
| el-salvador wrote:
| > Even fiat currency can be used as toiletpaper in a pinch
|
| Even as origami sculptures, like the Venezuelan bolivar:
|
| https://www.vozdeamerica.com/a/figuras-de-origami-hechas-
| con...
|
| That 4 meter long cobra origami figure looks so cool (check
| picture 4).
| egypturnash wrote:
| Damn, that's some astounding modular origami work.
| it_citizen wrote:
| It might help propagate a story that did not really happen the
| way people think it happened:
|
| > Research into tulip mania since then, especially by
| proponents of the efficient-market hypothesis,[17] suggests
| that his story was incomplete and inaccurate. In her 2007
| scholarly analysis Tulipmania, Anne Goldgar states that the
| phenomenon was limited to "a fairly small group", and that most
| accounts from the period "are based on one or two contemporary
| pieces of propaganda and a prodigious amount of
| plagiarism".[11] Peter Garber argues that the trade in common
| bulbs "was no more than a meaningless winter drinking game,
| played by a plague-ridden population that made use of the
| vibrant tulip market."
|
| Source: Wikipedia - tulip mania
| turzmo wrote:
| "was no more than a meaningless winter drinking game, played
| by a plague-ridden population that made use of the vibrant
| tulip market."
|
| Exaggerated or not, I think we can still use this line!
| bombcar wrote:
| The South Sea companies are a much better, and more
| documented example.
| ArtWomb wrote:
| Tulip analogies are always apt & forever welcome. But looking
| at those ancient Dutch trading charts, there appears to be a
| single 99% crash, that occured in a single trading session I
| believe. BTCUSD has collapsed 70%+ at least 7 times.
|
| It's global. There's always a new pool of money coming new.
|
| And tulip bulbs are really only good for one thing. Extremely
| perishable, fungible, analog and centralized stores of value ;)
| FabHK wrote:
| > There's always a new pool of money coming new.
|
| FTFY: There's always been a new pool of money coming in, so
| far.
| aaaaaaaaata wrote:
| In 8 months, revisit.
| gcbafaksjdfj wrote:
| watch the "extra credit history" 5+ episodes about it. You will
| be shocked how wrong we all are about the tulip thing.
| literallyWTF wrote:
| This is good for Bitcoin.
| mjmsmith wrote:
| Bitcoin is the new John McCain.
| fourseventy wrote:
| After all the ads and pop ups loaded on this website I could only
| see about three lines of text on my phone. Cancerous website.
| ravmachre wrote:
| I've been using Speedreader (shipped by default on Brave) and
| this page loaded as pure text without any JS Elements/Ads for
| me. I'd definitely recommend Brave solely for this feature:
| https://support.brave.com/hc/en-us/articles/360045031392-Wha...
| [deleted]
| frostwarrior wrote:
| If you are on mobile you should check Bromite. It's a fork of
| Chromium with an ad blocker and better privacy (and not bs
| privacy like Brave)
| gcbafaksjdfj wrote:
| > some random fly-by-night chrome fork
|
| you people will be remembered as the folks who installed a
| dozen shaddy tool bars on internet explorer in the 90s.
|
| Just use Firefox and uBlockOrigin. jeez.
| moneywoes wrote:
| Anything on IOS?
| ImaCake wrote:
| Reader mode gets me most of the way. Otherwise I just
| don't bother with the website as they don't deserve to be
| read.
| the_third_wave wrote:
| While I use Firefox as my main browser on all systems (i.e.
| Linux and Android and occasionally MacOS (only for testing
| purposes)) I also have Bromite around for those sites which
| just refuse to work in Firefox/Gecko and to test whether
| things work as intended on the Blink engine. I keep my own
| blocklist to feed to Bromite, based on the same lists as I
| use in uBlock on Firefox.
| Frotag wrote:
| Firefox mobile also allows adblocker extensions. With the
| nightly version you can even install userscripts.
| coolspot wrote:
| Not on iOS
| markus_zhang wrote:
| Finalement we have our first large shadow currency event (to echo
| the shadow banking collapse in 08/09)
| TheBlight wrote:
| You can set your watch by the periodicity of crypto FUD and it
| being labeled dead.
| vkou wrote:
| You can also set your watch by the rugpulls, collapses, and by
| how often people lose their shirt in it.
|
| Which would be fine if it produced useful products where dumb
| investments get burned, but the industry doesn't produce
| _anything_ useful. It 's just money flowing from suckers to
| grifters.
| eldenwrong wrote:
| Explain to me how you can take your money out of Russia,
| Iran, Lebanon, Ukraine or Venezuela without Bitcoin. I'll
| wait
| metalliqaz wrote:
| Every time these stories pop up, I'm amazed at how much
| infrastructure has built up around crypto. Entire websites with
| reporters that do nothing but cover crypto stories. Layers upon
| layers of derivatives built on top of coins I've never heard of,
| which themselves are built upon structures on top of ETH or BTC.
| Hedge funds. Analysts. Exchanges. Fintech. So much money swirling
| around a Greater Fool scam.
|
| Wall Street is bad enough. This is insanity.
| ptmcc wrote:
| The Wall Street guys have piled in running schemes that they
| are unable to do in the normal banking world because it is
| regulated & insured.
|
| Most of the regulations have come from centuries of banking
| history, which the crypto world seems to be speed-running
| through right now, learning the hard way.
|
| There is plenty to criticize about the banking world, but
| crypto is indefensible at this point.
| gfodor wrote:
| Crypto is speed running it because it is trying to get to the
| terminal state of finance, but regulated through software and
| cryptography instead of centralized governments that have a
| monopoly on violence. Time will tell if this is possible. Too
| many people seem certain it is, or isn't. I think DeFi is
| insanely cool, if it manages to work.
| wpietri wrote:
| You're right, but I think this also means that we should take
| another look at the similar encrustations around real
| economies. Part of the reason the cryptocurrency thing took off
| so thoroughly is that a lot of financialization was already in
| extremely tenuous contact with reality. It was easy enough to
| sever the link entirely and focus on pure dreams of digital
| gold.
|
| We need look no further than the 2008 financial crash for
| evidence of that; The Economist was reporting for years that
| there was clearly a lot of risk being shuffled around such that
| nobody was quite sure where it was. We all found out, but not
| until after a lot of the shufflers made their money and got
| out.
| wollsmoth wrote:
| it is amazing, but not surprising. So many major VC funds built
| around Crypto. Really interesting if it all crashes.
| clpm4j wrote:
| I'd love to see some analysis (probably impossible at this
| point) of VCs on Twitter who added "crypto/web3" into their
| bios over the course of late 2021 through early 2022, and how
| many of them have deleted any reference to it since then.
| deckard1 wrote:
| the day they announced Crypto.com bought the naming rights to
| the Staples Center it really brought me back to the year 2000
| dot-com bubble. It's even a dot-com! But this time... it's with
| crypto. It's the over-the-top silliness of it. Super Bowl Ads.
| Macy's Thanksgiving Day parade floats. Hundred million dollar
| naming rights deals. Writing Matt Damon a blank check (I hope
| he got one because, why else would you do this Matt?? Why Matt,
| why??)
| el-salvador wrote:
| I has never heard about 3AC before. It's hard to keep up with
| so many acronyms.
|
| Can anyone recommend a paper or post that explains how it is
| linked?
| cecilpl2 wrote:
| 3AC = Three Arrows Capital, the hedge fund the article is
| about.
| anonymoushn wrote:
| 3AC is a hedge fund that actively traded shitcoins on
| centralized and decentralized exchanges and bought locked
| tokens from newish projects (like a VC).
| jiggawatts wrote:
| Reminds me of the good old days when World of Warcraft got so
| big that there was a substantial grey market for the in-game
| gold. At first, it was simple enough, forums where you could
| pay someone $10 with PayPal or whatever, and then they would
| meet you in-game and give you 1,000 game gold coins.
|
| Within just a few years there were large-scale "gold mining"
| operations set up in China, wholesalers, retailers, "forex"
| markets, etc... Nearly the entire modern economic ecosystem was
| set up around a _game_.
|
| At some point, if WoW was treated as a country, it's "currency"
| would have ranked above quite a few real countries in terms of
| forex trading. If I remember correctly, it was bigger than 70
| real nations.
|
| Crypto is the same, except times a thousand.
| asdff wrote:
| That was true for runescape too, but it seemed like its ended
| entirely when you were able to sell membership bonds for in
| game gp on the grand exchange. Now its like, why go with a
| scammer website where they will scrape your info when you can
| give jagex $8 and have 60 mill in game in a few moments?
| Brilliant way to get around the issue imo and it practically
| acts like a stimulus package for the players so they don't
| have to run flax like I did for hours 15 years ago.
| dpedu wrote:
| This is still happening, in WoW and other games, and has
| morphed into some pretty wild things - such as people in
| impoverished countries playing the games as a source of
| income.
|
| https://www.polygon.com/features/2020/5/27/21265613/runescap.
| ..
| earnesti wrote:
| No, this is great. Great, great fun. Life is too short to keep
| playing boring traditional finance, better play with crypto
| where things are always interesting.
| elwell wrote:
| I get the sentiment. Except... when you play a game of e.g.
| Monopoly it doesn't contribute to global economic collapse
| that affects real people that weren't even playing.
| FabHK wrote:
| Yes. Funny thing is, in the real world, the trading and
| analysis has some purpose (steering share prices towards their
| "true" value, thus solving the capital allocation problem;
| aggregating time preferences & determining rates, thus solving
| the investment decision problem; allowing people with certain
| exposures to hedge themselves; etc.)
|
| But in crypto land, it's a pure cargo cult - a facade of
| finance and analysis, with nothing behind it.
| [deleted]
| cersa8 wrote:
| I think every cycle has dramatic stories. To me this is just
| another downturn where I buy with confidence and wait till the
| tides shift. I maybe wrong and that's fine. But history often
| rhymes.
| ryanSrich wrote:
| The most important thing to remember in these cases is that ETH
| and BTC are likely the only top 10s to survive.
|
| Maybe Doge because it's the original meme coin, but everything
| else will die. Just like the billions of random tokens I hold
| from 100s of ICOS from 2017. They're all worthless.
|
| The casino will be back in another 3 years.
| mediaman wrote:
| Sure, but there's no intrinsic reason for crypto to have a
| given value.
|
| Assets that generate value (cash flow) will fluctuate in value
| per the moods of Mr. Market, but over their long run will hew
| to the present value of their future earnings power.
|
| There's no similar number for crypto. Might as well be tulips.
| In that case, perhaps it is true that history will rhyme.
| nequo wrote:
| Those tulips though. On some level it's understandable that
| those old Dutch NFTs were selling like that:
|
| https://commons.wikimedia.org/wiki/File:Semper_Augustus_Tuli.
| ..
| benreesman wrote:
| This is the part where a speculative bubble doesn't threaten the
| mainstream economy, doesn't harm anyone not involved, doesn't get
| a taxpayer bailout.
|
| This is way better than how it works in conventional finance.
| uejfiweun wrote:
| Here's hoping. If the federal government bails out crypto, then
| I will not be happy. I don't think it's gonna happen, because
| influential government figures have been calling it a risky,
| speculative asset class from the very beginning.
| esoterica wrote:
| It doesn't threaten the mainstream economy because everyone
| knows it's a scam and no one is creating important financial
| infrastructure that relies on it. If crypto actually had the
| widespread adoption the enthusiasts dream of, we would be
| seeing a 2008 level disaster (and corresponding required
| bailout) all over again.
| argella wrote:
| how at risk is coinbase?
| bsamuels wrote:
| afaik coinbase is just an exchange, so hopefully they didn't
| speculate on crypto derivatives with 0 risk management like 3AC
| did
| adrr wrote:
| I heard exchanges hold a bunch of the stable coins in lieu of
| holding actual real currency. Not sure if the statement is
| true or not.
| FabHK wrote:
| Sure, but if there's no more "number goes up", and people
| stop trading crypto, then Coinbase's revenue vanishes.
| cbm-vic-20 wrote:
| They get a cut in both directions.
| mertd wrote:
| That's why the parent emphasized "trading stops", as in
| there is no trading in any direction.
| dwater wrote:
| Both directions meaning buying and selling, not active
| market and dead market like the parent comment is talking
| about. What's their cut of trades on Terra today?
| dpbriggs wrote:
| Their revenue is proportional to volume. Which we can
| expect to eventually plummet as people are skittish to
| enter and happy to exit.
___________________________________________________________________
(page generated 2022-06-17 23:00 UTC)