The Bit Short: Inside Crypto’s Doomsday Machine • Hacker News Board

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#131

Post by H8crilA » Fri, Jan 15, 2021, 5:32 PM UTC

ur-whale wrote: post #58

H8crilA wrote: post #5

> For the rest of 2020, my inflationary thesis looked right Just to make it clear: there's absolutely no broad inflation almost everywhere in the world, certainly not in the United States. It may still come, but inflation is not why Bitcoin is on such a tear. Look at CPI or PPI of you don't believe me. Although this does remind me of the Green Lumber Trader story from Taleb. Congrats on the trade!

>there's absolutely no broad inflation If your measuring stick is fiat, then sure there isn't any inflation. However, you're using a measuring stick whose length isn't constant. If you use Gold as your measuring stick, then things change. If you user Bitcoin as your measuring stick, things change dramatically. If you use real estate - can you still say there is no inflation ?

You confused the numerator with the denominator. To get inflation we put a basket of things in the numerator, and currency in the denominator, then compute annualized % change in the said number.

Now if you swap (in the denominator) the USD for either gold or bitcoin you'll conclude we've been in a severe deflation in 2020.

(I do not agree with the above, I am just fixing basic mistakes in your reasoning)

If you would like your basket of things (the numerator) to consist solely of Bitcoin or gold then go ahead but you may as well put baseball collectible cards there, as it doesn't relate to people's consumption needs.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#132

Post by flyinglizard » Fri, Jan 15, 2021, 5:33 PM UTC

jasonhoch wrote: post #128

qeternity wrote: post #118

Earlier quoted context omitted.

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.

Why do you want a gentle inbuilt mechanism to encourage consumption?

To create employment and growth.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#133

Post by findthewords » Fri, Jan 15, 2021, 5:34 PM UTC

saurik wrote: post #130

not2b wrote: post #110

It 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…

To verify, though: in fact, the M2 is skyrocketing in 2020, right?

Yes, but velocity of money is plummeting.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#134

Post by georgeecollins » Fri, Jan 15, 2021, 5:37 PM UTC

jasonhoch wrote: post #128

qeternity wrote: post #118

Earlier quoted context omitted.

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.

Why do you want a gentle inbuilt mechanism to encourage consumption?

Because if you made a better return by hoarding cash then by investing -- holding bonds, buying apartment buildings-- investment would stop and people would stuff cash into mattresses.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#135

Post by mlthoughts2018 » Fri, Jan 15, 2021, 5:39 PM UTC

not2b wrote: post #110

It 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…

Those inflation figures, much like unemployment figures, are not really representative. If you take a basket of good that includes consumer discretion items like cheap tech gadgets, subscription music, staple foods, then these “balance out” the much worse inflation in housing, college costs and medical care, things which have a much higher quality of life impact.

I’n not making any claim on how this dichotomy relates to cryptocurrency speculation, but I do think in general nobody should be using CPI-based figures or traditional BLS figures at all, and anyone seriously talking about US inflation needs to be starting from the given baseline fact that “real” inflation (ie, excluding discretionary consumer toys, subscription services, staple foods) is much higher than 2%, and has been for a long time.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#136

Post by DeafSquid » Fri, Jan 15, 2021, 5:42 PM UTC

ur-whale wrote: post #34

Really 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…

I got out of BTC-E shortly before they shut down. Gambled my gains on stocks and lost. Oops

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#137

Post by mlthoughts2018 » Fri, Jan 15, 2021, 5:43 PM UTC

georgeecollins wrote: post #134

jasonhoch wrote: post #128

Earlier quoted context omitted.

Why do you want a gentle inbuilt mechanism to encourage consumption?

Because if you made a better return by hoarding cash then by investing -- holding bonds, buying apartment buildings-- investment would stop and people would stuff cash into mattresses.

And in turn pollution might decrease, frivolous consumer waste might decrease, frivolous ad waste might decrease, people might turn to crafting and making their own home goods, and feel more pride and accomplishment, and the standard of return on investment to actually draw cash out of the mattresses would be higher, rather than building in a mechanism that stresses people into giving their cash over for hollow waste, and entrenching false “market demand” narratives around the whole destructive charade.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#138

Post by fuzzer37 » Fri, Jan 15, 2021, 5:53 PM UTC

georgeecollins wrote: post #134

jasonhoch wrote: post #128

Earlier quoted context omitted.

Why do you want a gentle inbuilt mechanism to encourage consumption?

Because if you made a better return by hoarding cash then by investing -- holding bonds, buying apartment buildings-- investment would stop and people would stuff cash into mattresses.

Is that necessarily a bad thing? Growth at the cost of everything doesn't seem to bode well long term. What would the potential consequences of an economy not based on continuous growth? Genuine question, not trying to be inflammatory.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#139

Post by christiansakai » Fri, Jan 15, 2021, 5:56 PM UTC

cryptoanonymous wrote: post #122

ur-whale wrote: post #34

Really 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…

Author here. I really appreciate your kind words about the post - thank you! I'm also broadly in agreement with your conclusions as to what this means for a crypto trader or holder. I've zeroed my net exposure to this ecosystem myself, both in anticipation for such an event, and out of recognition that I frankly understand it far less well than I originally thought.

I am not a Bitcoin holder, but Ethereum. I zeroed all my Ethereum except the ones locked due to staking (32 ETH, but I bought them when they were $600) because of these Tether news lately. I will wait for more clarity before jumping back in.

It is kinda sad that in this technology there are so many frauds like that.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#140

Post by ikeboy » Fri, Jan 15, 2021, 5:58 PM UTC

>What’s more, the supposed USD inputs (e.g., 401,431,056 USD in the top left transaction) are giving perfectly round Tether outputs (e.g., 400,000,000 USDT in the same transaction) in every block — regardless of the prevailing exchange rate or anything else.

You're misunderstanding. There's no USD input. They're simply looking at the exchange value of USDT and converting it into dollars. Their data source says that USDC = $1 USD, so USDC minting is in round numbers.