Bitcoin’s reliance on stablecoins harks back to the Wild West of finance • Hacker News Board

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

#151

Post by wcoenen » Sat, Jun 05, 2021, 8:45 AM UTC

droffel wrote: post #61

nodesocket wrote: post #36

Earlier quoted context omitted.

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…

At 8.6% APY, would you say you believe you have a sub-8.6% chance of the funds disappearing in a given year? Considering that it would take over a decade to return the original capital in value, I feel that the compensation is low relative to the risk of loss. Ten years is a lot of time for a company to bungle your funds, especially in the cryptocurrency world.

> Considering that it would take over a decade to return the original capital in value

I think only 8.4 years, because that's the doubling period for 8.6% (1.086^8.4 ≈ 2).

Edit: but I guess it's indeed over a decade if you take tax into account

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

#152

Post by davidgerard » Sat, Jun 05, 2021, 9:06 AM UTC

superkuh wrote: post #38

Bitcoin's reliance on Stablecoins? I think the wsj is confused and has this backwards. Additionally, like all mainstream media sources, they cannot seem to understand that Bitcoin is what happens on the blockchain and that 99% of the breathless hype about trading and finance bro stuff is completely off chain and only tangentially related to Bitcoin.

> Bitcoin is what happens on the blockchain

If this was true, nobody would be talking about bitcoin.

Here in the real world, bitcoin is the whole system of people, institutions, and the actual money that every aspect of bitcoin is denominated in.

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

#153

Post by Marazan » Sat, Jun 05, 2021, 9:11 AM UTC

lvs wrote: post #72

superkuh wrote: post #38

Bitcoin's reliance on Stablecoins? I think the wsj is confused and has this backwards. Additionally, like all mainstream media sources, they cannot seem to understand that Bitcoin is what happens on the blockchain and that 99% of the breathless hype about trading and finance bro stuff is completely off chain and only tangentially related to Bitcoin.

Not to mention that it's worth only a tiny fraction of bitcoin + all the other cryptos.

How much trading volume does tether have compared to "bitcoin + all the other cryptos"?

Answer: a lot, Tether is the unit of account. If something happens to it the crypto space explodes as the volume of real dollar trades in crypto is a fraction of Tether trades.

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

#154

Post by tluyben2 » Sat, Jun 05, 2021, 9:13 AM UTC

jamesrom wrote: post #139

tluyben2 wrote: post #137

Earlier quoted context omitted.

I find it weird that any person 'hodls' any crypto. I pick the rallies (like the one last night) and ride them, then sell. I cannot, besides stress, understand why anyone would hold crypto currencies at this point. It is too young and Wild West. That's why riding waves is easy and if you trade half decent you can make fortunes. But it can be gone tomorrow; for instance if Tether gets called on it's bluff.

I find it weird that people can't see how that attitude is exactly why it's a rollercoaster...

Yep, but I am not holding the burning bag of poo. So yes I know that but I am not going to be that religious person that does that first and I do not get why anyone would.

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

#155

Post by lvs » Sat, Jun 05, 2021, 9:19 AM UTC

mortehu wrote: post #77

lvs wrote: post #72

Earlier quoted context omitted.

Not to mention that it's worth only a tiny fraction of bitcoin + all the other cryptos.

It costs $1 to increase the market cap of a fiat pegged stable coin by $1, while changing the market cap of Bitcoin is a lot cheaper because there's no safe way for a market maker to provide substantial liquidity for it. At any time this dynamic can start working in the other direction, and the market cap of Bitcoin can fall below the net value converted to it.

I don't really know what you're saying. It's not much less safe to provide liquidity to bitcoin than to do so for any of the trillions in securities priced vastly in excess of the book value of their underlying assets.

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

#156

Post by fyzix » Sat, Jun 05, 2021, 9:28 AM UTC

paulpauper wrote: post #66

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…

all stable coins can blacklist except DAI

Dai is 60% backed by USDC

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

#157

Post by anonytrary » Sat, Jun 05, 2021, 9:35 AM UTC

Havoc wrote: post #3

Honestly stablecoins - specifically tether - is about the only thing about crypto that genuinely frightens me. Crypto rollercoaster - up down sideways and in circles - sure I'm game. Tether that is stable until it implodes...hell no. Even without direct exposure the blast radius worries me.

The frightening things are the most transformative. Decentralized stablecoins represent a huge class of use-cases for blockchain. You don't have to tether the value of a stablecoin to a fiat currency necessarily.

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

#158

Post by fyzix » Sat, Jun 05, 2021, 9:35 AM UTC

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…

The SP500 has an avg of 13% return over the last 10 years and is considerably safer.

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

#159

Post by fyzix » Sat, Jun 05, 2021, 9:37 AM UTC

Clewza313 wrote: post #85

Animats wrote: post #83

Earlier quoted context omitted.

BlockFi says they are lending at 4.5% and accepting deposits at 8.5%. What's wrong with this picture?

Let me get this straight: you can lend from BlockFi, deposit it straight back, and make a 4% profit?

No, you don't earn interest on the collateral.

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

#160

Post by JohnJamesRambo » Sat, Jun 05, 2021, 9:48 AM UTC

Load the Tether fud. It’s like clockwork every time Bitcoin goes down haha. WSJ does their overlords’ bidding. Now we are comparing it to pre civil war money. They are running out of angles.