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The Bit Short: Inside Crypto’s Doomsday Machine

crypto-anonymous-2021.medium.com

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

#251

Post by mikewarot »

dnp100 wrote: post #224
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…

Deflation is a wonderful thing. It means more people can buy more stuff. It should be one of the primary goals of our civilization.

>Deflation is a wonderful thing. It means more people can buy more stuff.

The problem is if you know your money is going up in value, why would you buy stuff with it? You'd hold on to it even harder... thus increasing the deflation, as people lose their jobs, homes, and society falls apart... but hey... your hoard is going up in value.

Deflationary spirals kill people.

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

#252

Post by mikewarot »

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.

Long ago I spent $100 on a graphics card, and mined 1 Bitcoin over the course of a year... then lost it on MtGox... that was a cheap lesson compared to what appears set to happen.

Thanks for taking the time and effort to put this together. I'm sure it'll help some people avoid a costly lesson.

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

#253

Post by [deleted] »

ForHackernews wrote: post #231
ric2b wrote: post #216

Earlier quoted context omitted.

> The amount of money & electricty wasted to generate a BTC is otherwise unrelated to the price of BTC in dollars or other assets. Isn't it _directly_ related? If I'm a miner and the BTC I'm mining doubles in value I can afford to spend 2x as much money on hardware/energy and still make a profit.

You've reversed the directionality: price drives mining activity, but mining activity doesn't determine the price. Miners spending more on hardware & energy won't produce more bitcoins (it just means the difficulty will increase and more CO2 will be released). I'm saying the fact that you have to waste $10,000 worth of electricity calculating redundant hashes in order to make a bitcoin doesn't mean that bitcoin someh…

[deleted]

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

#254

Post by dnp100 »

mikewarot wrote: post #251
dnp100 wrote: post #224

Earlier quoted context omitted.

Deflation is a wonderful thing. It means more people can buy more stuff. It should be one of the primary goals of our civilization.

>Deflation is a wonderful thing. It means more people can buy more stuff. The problem is if you know your money is going up in value, why would you buy stuff with it? You'd hold on to it even harder... thus increasing the deflation, as people lose their jobs, homes, and society falls apart... but hey... your hoard is going up in value. Deflationary spirals kill people.

Sure, if we're driving 100mph in one direction and suddenly place the car in reverse, there will be damage. But yes, if we weren't artificially spiking the system with inflation there will be an increase in savings, which is not a bad thing (yes! *gasp*).

It's pointless driving the economy in circles wasting fuel, which is akin to the 'spending is automatically good' mantra. We should be using the car efficiently to get to our destination faster. This means allowing the economy to be more geared towards essentials, which we all must spend on, making them immune from deflationary spirals. And essentials are not only toilet paper, they also include things like medicine and other vital technologies.

When spending power is more concentrated to these economic categories, the competition will increase to produce better versions. Companies will also be incentivised to get a bigger slice of a currency that increases in value over time. Through society's greater savings rates, the banks will have more capital to lend to producers. Innovation, including the move towards (hopefully human-values-aligned) AI and nanotech, will continue because companies without these technologies will eventually vanish.

Finally, if we accept that the environment is dying (or something like that), the real inconvenient truth is because ultimately there are too many consumers. Regardless of how carbon neutral we become, we can never get to zero and no (pre-superintelligent AI) strategy is a match for an exponentially growing population. Therefore, unbridled growth can become a destructive force of its own.

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

#255

Post by daviroo »

ur-whale wrote: post #108
piva00 wrote: post #95

Earlier quoted context omitted.

I prefer to support Swedish's society and just pay my due taxes, thank you. The beast here is responsible for a lot of the quality of life we enjoy, public services included.

[flagged]

Can I ask where you choose to live right now that isn’t a socialist society or on the way to one? Genuine question because I am thinking of emigrating after this pandemic is over and that would definitely make my shortlist.

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

#256

Post by piva00 »

ur-whale wrote: post #108
piva00 wrote: post #95

Earlier quoted context omitted.

I prefer to support Swedish's society and just pay my due taxes, thank you. The beast here is responsible for a lot of the quality of life we enjoy, public services included.

[flagged]

Sweden isn't socialist (quite far from it, one of the freest markets in the world), and I wasn't born nor raised here.

So the two core assumptions of your comment are dead in the water.

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

#257

Post by musiciangames »

phyalow wrote: post #219
soneca wrote: post #68

Earlier quoted context omitted.

> ” you can hold a bitcoin future going short for the next year less than a coffee per / $1k” Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps. How can I short BTC?

Buy put options on deribit, or short USDT-BTC on FTX

Put options on deribit appear to settle in BTC, no? To short the ecosystem requires something that settles in USD

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

#258

Post by optimiz3 »

throwawaypali wrote: post #198
optimiz3 wrote: post #195

Earlier quoted context omitted.

My favorite way to short the dollar is to use fixed-rate debt to buy productive assets (real-estate, etc.). Double whammy. Assets in general should keep pace with inflation and fixed-rate debt gets inflated away.

Does this actually work if you're being paid a salary in USD that wont likely rise with inflation?

Not to be flippant, but it's on you to negotiate better salary terms if that's how you get paid.

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

#259

Post by tim333 »

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…

>their goal is to keep things stable

But they've only got a few levers and there are a lot of things. The priority is to keep the real economy ticking along and retail inflation reasonable but if people are not spending much on things some of the easy money ends up going into financial assets which is one reason we have record stock and crypto prices. It's an unwanted side effect.

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

#260

Post by tim333 »

gomox wrote: post #76
leppr wrote: post #46

Earlier quoted context omitted.

> 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…

Also Binance is quite simply a better exchange. It works flawlessly even when the market is hot. The quality of what they've developed and the speed at which they did it makes the average silicon valley team look like 7 year olds.

I think you can attribute a lot to the founders background. Previously he'd built trading systems for the Tokyo stock exchange, Bloomberg and

>In 2005, he moved to Shanghai where he founded Fusion Systems, known for "some of the fastest high-frequency trading systems for brokers." (wikipedia)

He presumably knew his stuff.

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