The exchanges never go down when the crypto price rises, only when it falls. Further, an honest exchange makes money on people’s trades. Going down when volume is high means giving up peak profits. Equivalent of amazon reliably going down on black friday.
This has occasionally been mentioned elsewhere about some of the sketchier exchanges. I have never seen it mentioned with any of the exchanges I use - is there any non-anecdotal confirmation of this phenomena?
Do you think we will forever be organized and segregated by governments? Do you ever think a human being can be a sovereign individual in his own right, without owing fealty, taxes and morality to a government in some future? The current financial system is not all software. When i pay in crypto, i give you my money. When i pay in the current financial system I am giving you every bit of information to rob me blind a…
> Do you think we will forever be organized and segregated by governments? > Do you ever think a human being can be a sovereign individual in his own right, without owing fealty, taxes and morality to a government in some future? Without governments, how are social strictures enforced? How are externalities, positive or negative, accounted for? How does a government-less world not look like Somalia? (Or are you sugge…
Large yields on stablecoins, inability to bank on KYC exchanges, desire to gamble on leveraged exchanges like Binance. In each case no one believes it will collapse while they hold.
Can you elaborate on how a stablecoin gives the holder any yields? I thought the whole idea is that it doesn’t appreciate or depreciate.
You can lend them to centralized lending platforms such as Celsius, or on Defi platforms, for 9+% APR.
This is a highly risky activity pitched as not risky.
Is there any short form version of something someone can read to get a sense of the value you’re seeing? I followed this conversation with interest, but still find myself unenlightened as to what there is I haven’t understood yet about the space. Whenever I talk to a proponent it seems very theoretical. There are often analogies to the early internet, but I was alive then and remember some of the early, tangible use…
I think two of the coming applications that has me most excited (of which there are many others on the horizon), are permission-less stock markets where shares are fully accounted for at all times in real-time (an actually transparent financial market), and proper third party markets for digital goods whereby goods bought online can essentially be treated like you do physical goods. Both are applications of NFTs and…
I’m much more interested in something already happening, now. Crypto is full of “wait and see, this is the future” but the early internet had immediate utility.
What can I do, today that should make me want to buy the crypto to do a thing with crypto. Rather than buy crypto to hope for an increase in value.
You do realize that the publisher of this is very far from a neutral party here, right?
I assume you're referring to the author, not publisher, since the credibility of the publisher of the article is irrelevant to the content of the article. An economist coming to a conclusion that is different from the establishment's, or yours, doesn't make them not neutral. I don't know of any conflicts of interest they have that would make them not neutral.
The author is employed by the Cato institute which has the stated aim of publishing research and policy papers that advocate for the removal of regulations.
While I don’t know that they have a conflict of interest per se, it’s absolutely reasonable to suspect their writing to be mission driven, not pure research.
I’ve been shorting a few bitcoin-related public companies on the theory that in a run on Tether they will have to liquidate large bitcoin holdings and bring down the rest of the market. It’s not as direct, but I’m less worried about counterparty risk. I wrote up my thesis here: https://paulbutler.org/2021/betting-against-bitcoin/
Really interesting article. Thanks for sharing. I was going to ask which tickers you short so I could continue learning, but I see it's RIOT and MARA. Just curious: is it intentional not to mention them in the article?
Thanks. Yes, I wanted the underlying message of the article to be “you’re not stupid for avoiding bitcoin” rather than “yolo into this short with me” :).
> The really smart money with large crypto stashes could borrow USDT with crypto as collateral, and trade the USDT for greenbacks. Have you looked into the mechanics of this trade? The crypto loans I'm aware of are all significantly overcollateralized. You would have to pledge say 1m BTC to get 0.8m BTC worth of USDT which you could then sell for dollars. If you succeeded USDT tanks, everyone who holds USDT would be…
> So you succeed in losing 20% of your money on the initial USDT trade Presumably the value of Tether would drop much farther than the value of other crypto. If USDT drops 90% and BTC drops 50% in USD terms, the BTC would gain value in USDT terms and your loan would be even more overcollateralized. Then you could pay back your loan with USDT at ten cents on the dollar and make an absolute killing.
In this scenario, if USDT drops low enough, might you not have trouble actually procuring enough USDT to payback and unlock your BTC? It would seem like a sudden collapse of USDT might cause a complete stop in all trading of USDT pairs, no? I suppose you could counteract that a bit by continuing to hold a certain amount of USDT, but would the loan instrument still accept USDT as repayment if USDT becomes worthless?
Can you elaborate on how a stablecoin gives the holder any yields? I thought the whole idea is that it doesn’t appreciate or depreciate.
You can lend them to centralized lending platforms such as Celsius, or on Defi platforms, for 9+% APR. This is a highly risky activity pitched as not risky.
Ah, thank you for explaining. I assume the idea here is that the borrower of the stablecoin is then using it to make a bet on the continued price appreciation of some other currency, making it a leveraged bet. Crazy risky. Who is supposed to enforce the terms of the borrowing? Or is it done programmatically somehow?
Really interesting article. Thanks for sharing. I was going to ask which tickers you short so I could continue learning, but I see it's RIOT and MARA. Just curious: is it intentional not to mention them in the article?
Thanks. Yes, I wanted the underlying message of the article to be “you’re not stupid for avoiding bitcoin” rather than “yolo into this short with me” :). I did create a synthetic tracking portfolio to keep myself accountable to the bet over time, though: https://twitter.com/paulgb/status/1453111218374389763
> But Tether's been around more than seven years, more than enough time for the "smart money" to profit by obliterating them. How would the smart money profit from obliterating them? If you’re referring to a Soros/GBP style trade, how would one borrow enough USDT to pull it off?
Somebody holds large chunks of the $70.5 billion in USDT. Presumably, people who hold hundreds of millions of the stuff are well aware of every accusation made against Tether. If they wanted to, they could trade their USDT for actual US fiat on a 1:1 basis if they thought USD was worth more than USDT. The really smart money with large crypto stashes could borrow USDT with crypto as collateral, and trade the USDT for…
> Somebody holds large chunks of the $70.5 billion in USDT.
Personally I'm really really confused about who holds all that Tether. Just who is it? I can't come up with any good idea. Is it the exchanges? But if so then why would they?