I wonder what will happen to DeFi and the entire Ethereum network, because Tether is largely used in DeFi transactions.
The Bit Short: Inside Crypto’s Doomsday Machine
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Re: The Bit Short: Inside Crypto’s Doomsday Machine
#112Is there any way to "short" bitcoin? I don't really trust any of the fly-by-night cryptocurrency exchanges, but is there a real derivatives market somewhere?
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#113Earlier quoted context omitted.
The argument basically is tether has been inflating the price of bitcoins. If tether collapses bitcoins will still be there but may trade at $3000/coin rather than $38000. Comparing with gold it's like the price has been inflated by people buying it with forged dollar bills. That said the author seems a bit new to this all with his shock at finding Bob is likely being scammed. Bitcoin has been linked with scams almos…
Sidenote: It currently costs miners ~$10K to produce 1 BTC.
This is only relevant because if the price of BTC drops below this, many miners may shut down their hardware.
The amount of money & electricty wasted to generate a BTC is otherwise unrelated to the price of BTC in dollars or other assets.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#114It seems that this guy decided to go heavily into Bitcoin because of a mistaken belief that seems all too common: "At the time, I saw a market dislocation and the likelihood of significant dollar inflation due to the US Government’s likely response to the unfolding pandemic." He thought that government responses to severe crises that inject lots of money into the economy will cause "significant dollar inflation". In…
People often don't understand the implications of an elastic monetary system that is also decentralized because of the way that the Fed and member banks are structured.
There are things the Fed or the government could do to frogmarch devaluation (like, for example, encouraging banks to pay people to carry credit card balances through negative interest rate policy or encouraging no-doc/no-credit check loans of all kinds) but that is not their prerogative.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#115Is there any way to "short" bitcoin? I don't really trust any of the fly-by-night cryptocurrency exchanges, but is there a real derivatives market somewhere?
See if someone will loan you Bitcoin, paid back in Bitcoin. Then you sell the Bitcoin, wait for the price to go down, and buy some to pay back the loan.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#116Really good article, recommended read for anyone interested in crypto. For me, it's almost 100% aligned with what I've felt was going on with Tether in the last 2 years. Also, it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. Answer: easy, they never had to establish proper on and off ramps to the traditional banking system and lured…
> it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. ... No, Binance didn't get big because of Tether or leverage. It was already eating most of the crypto-only exchanges volume when altcoins were almost exclusively paired with BTC and before it acquired its perpetual futures business. The main reason they managed to attract so many us…
> and pioneering exchange coins with the securities/utility token mash-up called BNB.
To be fair there were other exchanges that tried this 'invest in the house' gambit, but Binance made it stick.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#117Hi, I'm the author. Using a throwaway for all the obvious reasons.
I'll try to dive into this thread over the next few hours to answer any questions folks may have about this. Please feel free to ask.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#118It seems that this guy decided to go heavily into Bitcoin because of a mistaken belief that seems all too common: "At the time, I saw a market dislocation and the likelihood of significant dollar inflation due to the US Government’s likely response to the unfolding pandemic." He thought that government responses to severe crises that inject lots of money into the economy will cause "significant dollar inflation". In…
People often don't understand the implications of an elastic monetary system that is also decentralized because of the way that the Fed and member banks are structured. There are things the Fed or the government could do to frogmarch devaluation (like, for example, encouraging banks to pay people to carry credit card balances through negative interest rate policy or encouraging no-doc/no-credit check loans of all kin…
People also don’t realize that moderate inflation is a good thing. You want a gentle inbuilt mechanism to encourage consumption. And we have good tools to combat inflation whereas we don’t really have any tools to combat deflation.
There’s a reason nobody spends Bitcoin and it’s mostly not about fees or block size.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#119Today, January 15th is the court-ordered disclosure date for Tether. So soon we should know how big the Tether bubble is.
Clearly, it's time to get out of USDT. There's no upside potential, and there's a big downside potential.
Re: The Bit Short: Inside Crypto’s Doomsday Machine
#120Really good article, recommended read for anyone interested in crypto. For me, it's almost 100% aligned with what I've felt was going on with Tether in the last 2 years. Also, it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. Answer: easy, they never had to establish proper on and off ramps to the traditional banking system and lured…
> it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows. This seems to be one constant of BTC: "events" which you might expect to have a negative effect on the price often don't.
...because Tether has been there to ensure that.