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Crypto Market Roiled by New Allegations Against Tether, Bitfinex

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Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#171

Post by for_i_in_range »

keyle wrote: post #129
peterlk wrote: post #8

It's almost like unregulated financial institutions have a tendency to screw over their customers... No one could have predicted this in the consistently solvent, regulated, and trustworthy cryptocurrency market. It's too bad bitfinex got ripped off by a surely unrelated entity. /s Have we learned our lesson yet?

Greed begets greed. The sad part, really, is that the ideology of cryptocurrency at the start was never about greed.

Pretty sure it was. A demented genius needed a way to sell drugs on the dark web. He was annoued with merchant accounts shutting him down. He needed a better way to funnel drug money to his pockets. Satoshi bounced the second Gavin Andresen mentioned the word CIA.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#172

Post by novok »

iav wrote: post #146
nostrademons wrote: post #65

Earlier quoted context omitted.

Tether functions as sort of the reserve currency of crypto. Many exchanges don't even offer fiat money or banking connections - to use them, you have to send Bitcoin in from another exchange or a personal wallet, then you can convert it into Tether or other altcoins. People who are "getting out of crypto" by selling Bitcoins because they think the price is gonna drop oftentimes are actually buying Tethers. When 80% o…

US government has the power to tax the entire US economy, providing financial backing to the US dollar. This is why fiat currencies weaken with their national economies, and vice versa

I really want to underline this. This is the real power of fiat currency, the ability of a government to tax people in it's region.

And tax means the ability to force people to give the governmental organization a portion of their productive economic activity.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#173

Post by nostrademons »

marvinalone wrote: post #128
nostrademons wrote: post #116

Earlier quoted context omitted.

By the same token, cryptocurrencies are backed by the computing networks underlying them, the potential future usage of these computing networks, and by your ability to buy guns, drugs, and hacks with them. This is also not gold (although you can buy gold-backed cryptocurrency: see Digix), but not nothing either. That's why cryptocurrency evangelists harp on adoption and new use-cases: the value of any currency is pr…

USD is backed (among other things) by the government accepting taxes in it. If you don't pay, they will come to your house with guns and take you away. This creates a demand for USD that is completely unlike any demand for crypto.

...the same way that Bitcoin could, in theory, be backed by hired goons (or drones) that come to your house with guns and take you away. It wouldn't surprise me if that's how people in the underground Bitcoin economy (drugs, gambling, sex trafficking, arms dealing) actually operate, though I try to stay away from those peoples so I wouldn't actually know. There is certainly a difference in degree - the U.S. military is orders of magnitude more powerful than whatever goons you can hire with Bitcoin - but not a difference in kind.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#175

Post by JumpCrisscross »

ShorsHammer wrote: post #145
Scoundreller wrote: post #81

Earlier quoted context omitted.

You fail to understand how bank reserves work. > your bank is backed by about $0.10 for every dollar they owe savers. And the bank has the other $0.90 in long-term assets. While no bank can survive every depositor wanting every dollar out of their chequing account on the same day, there is something auditable backing each dollar of deposit.

No bank can survive 20% of depositors wanting their money over 3 months. Those long-term assets (aka loans) aren't guaranteed, realisable to pay creditors nor of fixed value.

> Those long-term assets (aka loans) aren't guaranteed

They can be sold to the Federal Reserve at its discount window. That's a founding reason for the Fed's existence. Ensuring liquidity crises don't prompt solvency ones.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#176

Post by JumpCrisscross »

nonbel wrote: post #165
JumpCrisscross wrote: post #157

Earlier quoted context omitted.

> The FDIC is more a feel-good measure No, it isn't. If the FDIC busts, the government would step in to back it up. Moreover, the FDIC's oversight keeps bank failures to a tiny fraction of the alternative, which we can now measure in the massive rates of fraud and failure around cryptocurrencies.

The FDIC and other schemes to intervene in the case of bad banks allows banks to get so huge they can't be allowed to fail. Then everyone needs to pay for the idiots who put their money into bad banks. In fact, it becomes smart to put your money in these poorly run banks since they will make more money on riskier activities but get bailed out when the same fail... Many people are dissatisfied with this situation.

> Many people are dissatisfied with this situation

As am I. But the carnage in cryptocurrencies is a reminder that the status quo beats anarchy or random stabs in the dark.

A human tendency with inefficient systems is to throw out the baby with the bathwater. There are reasonable discussions to be had around reforming and renewing the FDIC to be more friendly to new entrants.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#177

Post by nostrademons »

abakker wrote: post #131
nostrademons wrote: post #116

Earlier quoted context omitted.

By the same token, cryptocurrencies are backed by the computing networks underlying them, the potential future usage of these computing networks, and by your ability to buy guns, drugs, and hacks with them. This is also not gold (although you can buy gold-backed cryptocurrency: see Digix), but not nothing either. That's why cryptocurrency evangelists harp on adoption and new use-cases: the value of any currency is pr…

That's an interesting analysis. I hadn't thought of it that way before, simply because I wouldn't really value any other currency that way. I.e. I would not consider the growth in the ability to use euros in additional countries to have much impact on their value. I guess my thinking is that as long as there are exchanges, you can buy anything with bitcoin just like you can buy anything with dollars. What sets that e…

Over the long term currency prices do track with currency use, where "use" is investment in securities denominated in the currency + a country's net exports. As the country's export economy grow, a foreigner can buy more things with the country's currency. The free-market value of the currency should rise. If it does not rise, then goods from that country will be underpriced relative to their true value, which means they will be overly competitive in the market, which causes a flood of cash into the country (a current-account surplus). Eventually the market rebalances as the currency becomes un-pegged and starts to float freely.

This is what has happened with the U.S. and China over the last 3 decades. As Chinese goods became more competitive on the global market, American export dollars started to flow into China. China refused to remove the USD/RMB peg, which created a long-term current account deficit in the US and made American goods & labor non-competitive with China. When they finally did remove the peg (after significant political pressure from the US), the value of the RMB rose significantly: it was 1:8 a decade ago, it's now 1:6.73.

Over the short term there are a lot of conflating factors - pegs, speculation, interest rates, wars, creditworthiness, etc. But over the long term, the "backing" for any currency is what you can buy with it.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#178

Post by nonbel »

JumpCrisscross wrote: post #176
nonbel wrote: post #165

Earlier quoted context omitted.

The FDIC and other schemes to intervene in the case of bad banks allows banks to get so huge they can't be allowed to fail. Then everyone needs to pay for the idiots who put their money into bad banks. In fact, it becomes smart to put your money in these poorly run banks since they will make more money on riskier activities but get bailed out when the same fail... Many people are dissatisfied with this situation.

> Many people are dissatisfied with this situation As am I. But the carnage in cryptocurrencies is a reminder that the status quo beats anarchy or random stabs in the dark. A human tendency with inefficient systems is to throw out the baby with the bathwater. There are reasonable discussions to be had around reforming and renewing the FDIC to be more friendly to new entrants.

>"As am I. But the carnage in cryptocurrencies is a reminder that the status quo beats anarchy or random stabs in the dark."

The situation with bad cryptocurrency exchanges failing does not remind me of that at all. It is far superior since only the people who leave their money in the bad exchanges get punished.

Under your preferred system I get held hostage even though I can see clearly something is wrong.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#179

Post by h1d »

atomical wrote: post #159
themagician wrote: post #71

Earlier quoted context omitted.

The lesson will never be learned. The Ponzi scheme is as old as money itself. It’s never gone away. The one thing that crypto currency truly has revolutionized is the Ponzi scheme. You can do it any number of ways, add any number of twists, and do it over and over again. With crypto you don’t even have to be subtle. When the pot gets big enough you just outright steal it. It’s possible that Satoshi himself will try t…

It's safe to say Satoshi is dead. https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist...

McAfee seems to know /s

https://www.bloomberg.com/news/articles/2019-04-23/john-mcaf...

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#180

Post by h1d »

orblivion wrote: post #72
peterlk wrote: post #8

It's almost like unregulated financial institutions have a tendency to screw over their customers... No one could have predicted this in the consistently solvent, regulated, and trustworthy cryptocurrency market. It's too bad bitfinex got ripped off by a surely unrelated entity. /s Have we learned our lesson yet?

No way. This stuff was created to be the wild west. Let it keep failing until people come to actually understand the risks and learn the appropriate amount of trust, and then for companies find ways to become trustable.

It's funny people complain about regulation until they get screwed over.
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