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$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

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Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#391
post #342

Earlier quoted context omitted.

> I never understood the argument why crypto was a good store of value. Its digital gold thats it, its no more a store of value than antique's, rare cars, fine arts etc etc and unsurprisingly those markets can also see the bottom drop out of them for decades. Ultimately its people en masse who decide what something is worth, but big players can manipulate those markets with resources, laws, taxation, media sentiment…

Gold can be used for corrosion-resistant electrical contacts, infrared reflectors for space telescopes, decoration in gaudy penthouses, and more even if everyone decided it was useless as a currency. An antique desk that loses all value in the open market can still be used as a desk or at least firewood. A rare car can still be used to transport yourself, as a prop in a movie, or scrap for other projects. A "worthles…

> Crypto that loses its value has no other underlying utility over and above the output of /dev/random. That's a MASSIVE difference and more clearly demarcates BTC as a money laundering/Ponzi scheme rather than "digital gold" or a viable currency.

Its a decentralised currency, its not backed up by a country and their nuclear arsenal rammed down people's throats as we will possibly be seeing with Ukraine.

Notes/currency only has value where the threat of violence extends to prevent any counterfeiting attempts, so just like you see matches or cigarettes used as currency in a prison, it still has value. Its value went up when the Greeks had their financial crisis because the Greek banks stopped money leaving the country and this is the important thing, crypto is the thing that helps people move money out of a country fast across borders in a crisis. If you tried to move gold in or out of Switzerland you'll get stopped at the border, they are hot on that sort of stuff but it also shows their level of intelligence in world affairs. Crypto if done properly has a level of privacy affordable to anyone, not just the super rich but also a level of transparency to maintain its integrity from counterfeiting by criminals or the central bank.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#392
post #335

Earlier quoted context omitted.

Bitcoin also has the backing of a government - El Salvador. I would rather argue though that even government backed currencies are fully dependant on trust, not government usage of it. Just check out any government currency hyperinflation event.

yup... https://www.datacenterdynamics.com/en/news/el-salvador-risks...

From the article, El Salvador has been cut off from financial markets by two of the ratings agencies that played a pivotal role in the corruption that caused the 2008 GFC to happen. Their reason for cutting El Salvador off is because their debt to GDP is approaching 87% (a fraction of what other countries have run up, especially due to COVID).

The IMF (International Monetary Fund) which typically steps in to offer predatory financing terms, already outlined their demands: drop Bitcoin support.

So El Salvador really must have gone all into Bitcoin, right? Yes, somewhere between 25million to 73million dollars worth (in contrast to their 800million dollar bond or the ~6billion dollars they raise in taxes each year [1]).

Oh the horror. There is definitely no geopolitical maneuverings here. /s

[1] Government Revenues in El Salvador increased to 6037.70 USD Million in 2021 from 4894.30 USD Million in 2020 https://tradingeconomics.com/el-salvador/government-revenues....

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#393

Earlier quoted context omitted.

Luna crashed because people lost trust in it. The only reason people have trust in BTC is because other people have trust in it. If that ever changed, there is no actual use for a BTC, and they are thus intrinsically worthless. Fiat currency has the backing of a government. The government demands certain payments of this currency in order to own land, and also for some extra rights like mineral extraction, fishing li…

A better argument might be fiat currency is stable because governments hold a monopoly on violence. But governments can be poorly run so I suppose “stable” is not the right word.

An ad-hoc system of local warlords who take power isn't more stable, even with a blockchain.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#394

Earlier quoted context omitted.

No. There is still 1 BTC in this scenerio. When you choose to deposit your 1 BTC you've lost custody of it and somebody else has gained possession of it. All you have is a promise that you'll get it back - which is not === BTC.

You said what happened to Luna can't happen to BTC because the BTC supply is capped. It's not. The inability to mine new BTC doesn't actually matter. The pseudobanks we call exchanges are still able to introduce numberless BTC into circulation through loans. The result is inflation and possibly market crashes in case of defaults. Really no different from what Tether and every other bank is doing. I've written more de…

In the non-blockchain space this is called "credit creation" and it absolutely is something that happens there.

But this doesn't happen with Bitcoin.

It's true that there are a number of DeFi apps that will loan BTC.

However if you look at the loan mechanism it is different to how it is done in traditional finance.

A BTC loan is done in one of two ways:

1) The original owner of the BTC is given an IOU in the form of a different token (lets call it "Wrapped BTC" or wBTC) and the original BTC token is given to the person taking the loan, OR

2) The person taking the loan is given another token ("wBTC"). This is more common.

In both these cases no new BTC is actually created. It's possible to create more of this other token though. In the specific case of wBTC[1] they say it is 1:1 backed with BTC, but other tokens might not have the same backing.

I don't have a strong opinion on the utility of BTC, but I think it is worth being accurate in our discussion.

[1] https://wbtc.network/

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#395

Earlier quoted context omitted.

A smart attacker wouldn't create trillions of bitcoin, they would create a steady trickle of bitcoin indistinguishable from a medium-sized private mining operation that is too small to be noticed for a good while but large enough to make the attacker very very rich. It won't be noticed for months or even years and you cannot erase years of history. There will be no fix, only damage control. That said, SHA-2 being bro…

That not how bitcoins are created. You don't just make a few extra. The block reward is fixed, if someone made a block with more than the block award it'd be rejected by the network.

No need to create net new coins, if you can crack SHA you can start moving around somebody else's existing bitcoins. Choose your target carefully (lots of dormant and/or hacked BTC out there) and nobody will twig on for a long, long time.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#396
post #350
post #312

Earlier quoted context omitted.

A Venezuelan could also own dollar/euro denominated assets or commodities. BTC would need to be better and more stable than those for someone to view it as an effective hedge. If US or EU inflation hit 2000% there would be global consequences. There is no reserve asset currently large enough to redenominate US denominated assets, aid payments would collapse, and currencies pegged to the dollar would collapse. Betting…

> A Venezuelan could also own dollar/euro denominated assets or commodities. If they're allowed to. Which underscores that the true innovation of Bitcoin is to circumvent rules and regulations.

Why would they be allowed to own BTC but not USD?

How are they going to buy groceries with their BTC? Pay rent? Taxes?

Go to the local black market and exchange it for local currency? You can do that just fine with USD, too.

Does doing black-market deals in BTC somehow make you immune to arrest, prosecution, and execution?

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#397

Earlier quoted context omitted.

Luna crashed because people lost trust in it. The only reason people have trust in BTC is because other people have trust in it. If that ever changed, there is no actual use for a BTC, and they are thus intrinsically worthless. Fiat currency has the backing of a government. The government demands certain payments of this currency in order to own land, and also for some extra rights like mineral extraction, fishing li…

A better argument might be fiat currency is stable because governments hold a monopoly on violence. But governments can be poorly run so I suppose “stable” is not the right word.

[deleted]

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#398

Earlier quoted context omitted.

Tell me, what assets exactly are backing BTC which stop it from crashing just like Luna?

Nothing, but I guess I don’t have to tell you that, since your question seems rhetorical in Nature. However, what keeps BTC from crashing is the same psychological effect that keeps Twitter, Facebook, Nike, or Coca-Cola from crashing: Brand awareness. Bitcoin sucks compared to many other cryptocurrencies, still it’s the most popular one because it was the first, because people know about it, and because people know t…

> And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself.

I think you undersell that point: Bitcoin has proven itself. A lot of currencies have come and crashed, had backdoors, hacks, hard forks etc.; Bitcoin is simple-ish and stable. It also the longest surviving crypto currency. So it wields a lot of trust and market power.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#399
post #90

Earlier quoted context omitted.

LUNA minted trillions of brand new tokens within the span of a day or so rendering the token worthless. This is due to the way LUNA was tied to the algorithmic stablecoin UST. It was a true ponzi. BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.

Luna crashed because people lost trust in it. The only reason people have trust in BTC is because other people have trust in it. If that ever changed, there is no actual use for a BTC, and they are thus intrinsically worthless. Fiat currency has the backing of a government. The government demands certain payments of this currency in order to own land, and also for some extra rights like mineral extraction, fishing li…

Fiat currency does not actually have the backing of a government. What could the UK do when the pound peg broke? Nothing but lose enormous amounts of money trying to hold it.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#400
post #42

I mean that was the expected outcome and now people are like “proof of the expected outcome!?!” Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional mo…

>So it doesnt matter whether we get records from exchanges It matters a lot. The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof. If they concentrated their usage of the reserves to keep the peg earlier, possibly anyone selling below $1 would take an immediate loss and no noticeable depeg would even happ…

This argument (rescued whales, could have rescued the coin) is just naive people failing to face they were scammed.

There's no way they could've saved it.

Crypto is supposed to be an anti central bank currency.

This is the worst central bank any type of currency could ever have.

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