Bitcoin Fall Extends to 25% as Fears of Crackdown Linger • Hacker News Board

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#321

Post by slyzmud » Wed, Jan 17, 2018, 11:49 AM UTC

Jtsummers wrote: post #114

komali2 wrote: post #94

Earlier quoted context omitted.

I love bitcoin and cryptocurrency as potential solutions to problems with gov-controlled currencies (I've used crypto to buy drugs, for example). But I'm still confused why people refer to purchasing currency as an "investment." Obviously the rates are going up now, but doesn't everyone expect them to just come back down? I don't convert my USD to Yen and call it an "investment."

Well, there is actual forex investing (speculating). For instance, the value of the USD versus the Argentine Peso (ARS) is something I track (my girlfriend lives there and long term I would consider moving there, current plan is for her to move here). The USD to ARS conversion is increasingly favorable for the USD, the buying power of ARS hasn't dropped significantly (in country) but the USD is worth more ARS now tha…

I live in Argentina. I want to add that we don't invest in dollars, we save in dollars. We don't expect to have more money after some time, we just expect not to loose money by inflation.

Although it might seem that buying dollars have a return of 20% or more in a year, by the time you sell it everything cost more in ARS because most prices are tied to US dollars. So you end up having the same. If you have saved in ARS, with the same money you could buy a lot less things

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#322

Post by bandrami » Wed, Jan 17, 2018, 11:50 AM UTC

mancerayder wrote: post #268

jstanley wrote: post #234

Earlier quoted context omitted.

No, by buying some cryptocurrency you're not investing in the company behind the tech (if there even is one) at all . If the currency does well but the company does badly, you still win. If the currency does badly but the company does well, you still lose. You're exposed to the fluctuations of the currency, and completely unexposed to the valuation of the company.

Sure, there's that aspect. But the angle here is that they can take some of the capital transferred to them via crypto currency purchases to then use to directly invest in, and one thinks that by doing so they could well choose to invest in the ventures or areas that might increase the likelihood of the potential success of the currency. Which theoretically goes back to you. I'm not trying to sugar-coat or rationaliz…

It depends on the currency in question, but for most of them, specifically no: they aren't "issued" by the company in question or even really related to them in any way. They're only in a position to gain from a coin purchase if they happen to have done the mining themselves (which they generally don't). All these ICOs are just blockchains branded by a certain company.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#323

Post by pjc50 » Wed, Jan 17, 2018, 11:53 AM UTC

defertoreptar wrote: post #183

agorabinary wrote: post #101

Earlier quoted context omitted.

This is naive of Buffet when his only evidence of a "bad ending" is the existence of a massive rally. The entire near-future automated economy depends on programmable money. There is literally nothing interesting happening in FinTech right now apart from the crypto space.

Why should Bitcoin cost so much just because the future may depend on it? That's a good case for why it will continue to exist, but it could also exist and do it's job at $1.00 / btc. I think it's a couple of things that Buffett is looking at. First, like gold, Bitcoin is not a business and does not produce earnings. Second, people seem to be buying it for no other reason than that they think it'll keep going up. Tha…

What people are overlooking is that it's really easy to start a new cryptocurrency. There's no reason why the first mover should remain dominant for ever, or even that there needs to be a single dominant global cryptocurrency for all purposes.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#324

Post by [deleted] » Wed, Jan 17, 2018, 11:53 AM UTC

joering2 wrote: post #265

rconti wrote: post #246

Earlier quoted context omitted.

Sure, if you cherry pick. What ever happened to the supposed value of "hot" domain names? Right, we got search, and got used to typing in weird strings, and stopped caring about owning car.com or whatever.

If you own car.com i would gladly pay $500,000, maybe more. Please DM me.

[deleted]

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#325

Post by bandrami » Wed, Jan 17, 2018, 12:08 PM UTC

jmkni wrote: post #318

ErikAugust wrote: post #111

The whole Tethers thing scares me the most: https://twitter.com/Bitfinexed/status/953398351889944576 There's $5B worth.

Can somebody ELI5 this?

Bitfinex is a company that produces a cryptocurrency called Tether. Tether is in terms of the tech just like any other cryptocurrency; the big difference is that Bitfinex has pegged its value to the US dollar.

This is great in theory, because transactions between two types of cryptocurrencies are (relatively) easy and cheap, and with one coin pegged to a real currency, it means the crypto ecosystem is much more liquid.

Now, the downside: you may have heard of the macroeconomic "Impossible Trinity"[1]. One outcome of that is that it means Bitfinex has to keep US dollars on hand equal to the total value of Tethers created.

Now, the real downside: over the past couple of months (and even more over the past week), Bitfinex has issued a quantity of Tethers that most people don't actually believed are backed by US dollars, meaning they are vulnerable to a "It's a Wonderful Life"-style run. And worse yet, the liquidity Bitfinex provides has been "baked in" to the price of other cryptocurrencies for a while.

At any rate, the accusation the Tweet is making is that Bitfinex is now significantly overextended, and can no longer promise to convert all the issued Tethers, meaning the Tethers (and thus all the other cryptocurrencies) are not nearly as liquid as "investors" thought they were. As many predicted[2].

Most irritatingly, this exact thing happened over, and over, and over again when countries were on the gold standard. It's why fiat currency is such a good idea.

1: https://en.wikipedia.org/wiki/Impossible_trinity

2: http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-l...

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#326

Post by snarfy » Wed, Jan 17, 2018, 12:10 PM UTC

sytelus wrote: post #167

I have been trying to figure out eventual equilibrium price of BitCoin and here is one approach: Due to wealth inequality, we assume that majority of the crypto investment would be from ultra-rich. It might become quite normal for them to invest 1% of their wealth in crypto for uncorrelated diversification. In a way this is very similar to buying art which probably doesn't have much utility except among other wealthy…

The equilibrium price ultimately boils down to energy. How much gasoline can you buy with $1? How much BitCoin can you mine using $1 worth of energy? These will eventually even out.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#327

Post by bandrami » Wed, Jan 17, 2018, 12:10 PM UTC

trhway wrote: post #154

ErikAugust wrote: post #111

The whole Tethers thing scares me the most: https://twitter.com/Bitfinexed/status/953398351889944576 There's $5B worth.

Tether performs public service of "quantitative easing" :)

It's like all the Goldbugs forget that this is what happened, over and over and over again, when countries were on the gold standard: entities would make allegedly convertible instruments that everybody knew weren't really convertible, but everybody acted like they were, until a run finally forced a suspension of convertibility.

Like, once a decade or so. At the cost of great human suffering.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#328

Post by gondo » Wed, Jan 17, 2018, 12:31 PM UTC

sytelus wrote: post #167

I have been trying to figure out eventual equilibrium price of BitCoin and here is one approach: Due to wealth inequality, we assume that majority of the crypto investment would be from ultra-rich. It might become quite normal for them to invest 1% of their wealth in crypto for uncorrelated diversification. In a way this is very similar to buying art which probably doesn't have much utility except among other wealthy…

about 25% of all bitcoins are lost and this number can only increase.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#329

Post by jjkk0101 » Wed, Jan 17, 2018, 12:32 PM UTC

seba_dos1 wrote: post #211

tomjakubowski wrote: post #161

Earlier quoted context omitted.

honest question: do you believe there's a price point where it's /not/ stupid to go into debt to invest in cryptocurrencies?

Going into dept to speculate doesn't really seem like the best idea regardless of the price.

It surely does, depending on the interest rate and risk.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#330

Post by MagnumOpus » Wed, Jan 17, 2018, 12:32 PM UTC

paulpauper wrote: post #78

jedberg wrote: post #30

If the threat of regulation drops it 25%, that's not a very good store of value or medium of exchange.

Compared to some currencies, it is. Brazil Real has lost 80% of its value relative to the dollar since 2013. I think this is overdone considered the last time Korea threatened regulation it only fell 10%.

First, BRLUSD went from 0.488 at the start of 2013 to 0.309 now, which is only a 37% depreciation.

Second, and more important, unlike crypto, BRLUSD paid 10%ish interest rates every year since then, so the total return of a US investor who invested into BRL currency forwards at the start of 2013 is +2.67%, a far cry from an 80% loss.