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Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

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Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#111

Post by WanderPanda »

grey-area wrote: post #105
moltar wrote: post #68

Earlier quoted context omitted.

We take credit cards for granted. Look into when and how they were invented, if you are really curious about technology. Credit cards have a really peculiar, fascinating and turbulent history. The original credit card was nothing like what we have today. Yet here we are. I can easily see everyone rolling their eyes at and being dismissive of the original credit card idea. Can crypto follow the same path? What will it…

Bitcoin is a terrible replacement for our current payment systems and credit cards on every metric.

How are credit cards not the most terrible thing ever? Some random number with an expiry date and an additional number is the key to your wealth (subject to a lot of terms and conditions)? I would rather go with a cryptography based solution, where all the terms and conditions are open source code, all day

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#112

Post by drdeca »

fastball wrote: post #93
daenz wrote: post #34

Earlier quoted context omitted.

I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.

Cryptos have intrinsic value because they drive efficiency of value exchange. Specifically they allow for trustless exchange of value, which in an increasingly globalized world has become appealing for various reasons. Some cryptos have value beyond that, like ETH, because the Ethereum network itself has intrinsic value, and ETH is the only thing you can use to pay the Gas fees if you want a program running on the ne…

Hm, is there a theory of pricing ease-of-transfer ? Of course, it would have to depend on the preferences and whatnot, but still, seems like something that there should be some good theory of, but I haven’t heard of one.

Side note: Aren’t there tokens that sort of have a kind of stored gas? Like, you can cash it in to get a refund of some of the gas cost of the transaction?

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#113

Post by WanderPanda »

daenz wrote: post #34
knowaveragejoe wrote: post #22

Earlier quoted context omitted.

I've heard "it's a scam" a lot recently, but nobody can articulate how in a way that is similar to any real, provable scam in the past. It's a giant, distributed scam?

I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.

Wow it is really amazing how gold, the biggest scam of all times, is still finding people to scam nowadays. Or is there some value to limited goods?

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#114

Post by zapdrive »

nodesocket wrote: post #36
TacticalCoder wrote: post #16

Earlier quoted context omitted.

> Remember, Tether has no upside. There is no reason to ever hold Tether for any length of time. It looks like USDC, issued by a company co-owned by Coinbase (YC incubated right?) and Circle, is quickly replacing tether. One year ago there were about 1/10th of USDC compared to tether, now it's half. Apparently USDC are really fully backed by real USD and the smart contract for USDC can block any address containing US…

I hold a decent sized block of USDC via BlockFi and earn 8.6% APY. I realize there is inherent risk (after all, I am earning 8.6%) but compare that to 0.5% earned at Goldman Sachs or traditional FDIC insured bank accounts and it's a risk I am willing to take. By default, BlockFi issues GUSD as their stablecoin of choice, but Gemini (GUSD) market cap is only $145m, whereas USDC market cap is 22 with a B billion. Ultim…

Have you looked into decentralised alternatives like aave? I tried using blockfi, nexo and celcius. All three made withdrawing such a hassle. Repeat identity verification, mandatory 24 hour waiting period etc. I got fed up and turned to aave.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#115

Post by WanderPanda »

fastball wrote: post #93
daenz wrote: post #34

Earlier quoted context omitted.

I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.

Cryptos have intrinsic value because they drive efficiency of value exchange. Specifically they allow for trustless exchange of value, which in an increasingly globalized world has become appealing for various reasons. Some cryptos have value beyond that, like ETH, because the Ethereum network itself has intrinsic value, and ETH is the only thing you can use to pay the Gas fees if you want a program running on the ne…

I think the most valuable thing that makes bitcoin efficient for transactions is its cheap verifiability in comparison to gold where there is a long history of counterfeiting. Additionally Bitcoin is easier to transfer (in most cases) and harder to confiscate

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#116

Post by WanderPanda »

duxup wrote: post #25
lurkerasdfh8 wrote: post #9

Earlier quoted context omitted.

honestly, anyone with half a brain do not see that cryptocurrencies are re-hashing (heh) every single scam from the unregulated investment market times? every single one of them. Many times over. I think everyone knows, because, c'mon. But everyone thinks they are the smarter one and will be the ones fooling others and making money. Which makes this article, and yours, pointless, because, everyone already knows that.

Cryptocurrency is a long lesson about why things are the way they are.

Quite poetic! Can thou elaborate?

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#117

Post by issa »

55555 wrote: post #79
issa wrote: post #27

I think the most important thing to keep in mind is that EVERYONE knows Tether is a complete farce and this is already priced into the market.

Tether trades at $1. How is your statement true?

I mean priced into the crypto market writ large.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#118

Post by [deleted] »

WanderPanda wrote: post #111
grey-area wrote: post #105

Earlier quoted context omitted.

Bitcoin is a terrible replacement for our current payment systems and credit cards on every metric.

How are credit cards not the most terrible thing ever? Some random number with an expiry date and an additional number is the key to your wealth (subject to a lot of terms and conditions)? I would rather go with a cryptography based solution, where all the terms and conditions are open source code, all day

[deleted]

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#119

Post by issa »

redisman wrote: post #42
issa wrote: post #27

I think the most important thing to keep in mind is that EVERYONE knows Tether is a complete farce and this is already priced into the market.

Priced in how and to what? Definitely not to tether

One of the more common "bitcoin implosion scenarios" keeping people up at night has been Tether collapsing. Certainly that must be priced into crypto by now. The accusations and suspicions that it is not backed by hard currency have been around for years.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#120

Post by cturner »

matheusmoreira wrote: post #53
Animats wrote: post #10

I keep thinking of Madoff's fund. It was once called "the Jewish T-bill". It worked just fine until there was a significant net outflow. Then, total crash, because the backing assets were not there. Tether is way too much like that. Remember, Tether has no upside . There is no reason to ever hold Tether for any length of time. [1] https://www.timesofisrael.com/before-dying-bernie-madoff-lif...

Honestly Tether doesn't really to be that much different compared to fractional reserve banking. The biggest difference is the government protects banks from bank runs while Tether enjoys no such privilege.

There are complex and strict rules around commercial banks that direct to their loan to value ratios, capitalisation and auditing arrangements (Basel accords). Tether is not subject to this.

The biggest difference you highlight is a big difference. On youtube, you can watch a series of documentaries by Milton Friedman, Free to Choose. In an early episode of this, he explains how the Great Depression was triggered by the fed failing to lend liquidity to a legitimate commercial bank that needed it.

As you point out, there is no equivalent liquidity safety net for Tether. It may be that in a tether crisis the fed would feel compelled to step in and bailout anyway to prevent systemic problems. The Long Term Capital Management bailout had this character. It was not the fed’s responsibility to bail it out, but there was noone else to do it, and if they had not then it would have created a systemic crisis comparable to the start of the great depression.

This will not happen in 2021. Crypto is not systemically important now. But as it becomes integrated, Tether becomes a larger problem.

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