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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

#521

Post by Nursie »

nl wrote: post #518
Nursie wrote: post #475

Earlier quoted context omitted.

> But this doesn't happen with Bitcoin. It doesn't happen on the bitcoin blockchain. Exchanges are black boxes though, we don't always know what's going on in there.

No, that makes no difference. If you think otherwise explain the mechanism you think is happening.

Exchange has all customer deposits intermingled. Exchange offers crypto loans. Exchange shows positive balances across all users that exceed deposits (though may or may not balance out with negative balances).

Everything keeps functioning because the exchange is a black box and not everyone wants to move their BTC at the same time. More people can 'own' BTC on paper than there is BTC in existence on the blockchain.

In the same way that most BTC transactions don't involve the blockchain either, they take place entirely within exchanges.

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

#522

Post by lottin »

jimmydorry wrote: post #520
lottin wrote: post #481

Earlier quoted context omitted.

> One of their largest industries (up there with tourism) is remittance processing What percentage of El Salvador's GDP does remittance processing represent?

As I mentioned in my comment above (from the article) ~23%.

Sorry, I didn't see it. 23% of GDP is the value of the remittances that enter the country. This does not mean that remittance processing (which is an economic activity) represents 23% of GDP. Remittance processing is likely a tiny fraction of GDP, since it's a low value added activity.

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

#523

Post by nl »

Nursie wrote: post #521
nl wrote: post #518

Earlier quoted context omitted.

No, that makes no difference. If you think otherwise explain the mechanism you think is happening.

Exchange has all customer deposits intermingled. Exchange offers crypto loans. Exchange shows positive balances across all users that exceed deposits (though may or may not balance out with negative balances). Everything keeps functioning because the exchange is a black box and not everyone wants to move their BTC at the same time. More people can 'own' BTC on paper than there is BTC in existence on the blockchain. I…

It's true this is how it would work if you are treating BTC as a traditional asset and creating dollars by loaning the same deposits out multiple times.

But for BTC you can't do this. If they have 100 BTC deposited from all their users and then try to loan out 101 that 101st transaction is impossible because the bitcoin isn't there.

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

#524

Post by matheusmoreira »

tasuki wrote: post #511
matheusmoreira wrote: post #404

Earlier quoted context omitted.

I've written more detailed posts here: https://news.ycombinator.com/item?id=31375366 Accounting tricks, basically. They say you have BTC in your account when in fact your deposit is tied up in investments, loans.

This still doesn't change how many BTC are in circulation. When the fractional-reserve imaginary bitcoin implodes, it might even increase the price of actual bitcoin?

> This still doesn't change how many BTC are in circulation.

It absolutely does. I can get a loan at an exchange while the original owners of those BTC still have it listed under their accounts. So multiple people can trade with the same coins, as if they had been copied.

> When the fractional-reserve imaginary bitcoin implodes, it might even increase the price of actual bitcoin?

Unknown. Perhaps.

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

#525

Post by matheusmoreira »

nl wrote: post #523
Nursie wrote: post #521

Earlier quoted context omitted.

Exchange has all customer deposits intermingled. Exchange offers crypto loans. Exchange shows positive balances across all users that exceed deposits (though may or may not balance out with negative balances). Everything keeps functioning because the exchange is a black box and not everyone wants to move their BTC at the same time. More people can 'own' BTC on paper than there is BTC in existence on the blockchain. I…

It's true this is how it would work if you are treating BTC as a traditional asset and creating dollars by loaning the same deposits out multiple times. But for BTC you can't do this. If they have 100 BTC deposited from all their users and then try to loan out 101 that 101st transaction is impossible because the bitcoin isn't there.

> that 101st transaction is impossible because the bitcoin isn't there.

The exchange's BTC reserves only matter when customers try to withdraw their coins. Until then, the coins are nothing but digits in their database. They can inflate that number as much as they want.

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

#526

Post by jcpham2 »

0110101001 wrote: post #174
eric_cc wrote: post #92

Earlier quoted context omitted.

Terra (token LUNA) is its own chain. Trillions of brand new LUNA tokens were minted 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.

It's certainly debatable whether Bitcoin has any real worth as a currency or as an investment, or if it's just another giant speculative bubble waiting to fall apart. But it's definitely looking like "anonymously drop a protocol and disappear" was a smart move. All these Ethereum-based token coins seem like they're trying to answer the question "what if Bitcoin had a central banker, but it's a kid in his 20s with a C…

Drop the idea and leave was the best thing anyone could've ever done in this scenario. At the end of the day the creator is the weakest link.

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

#527

Post by jcpham2 »

joecool1029 wrote: post #68
vmception wrote: post #26

Earlier quoted context omitted.

By 2032? We need new songs, “you just got Do Kwon’d” instead of “Mt Goxxed”

I remember getting Zhou Tong'd. I think that was the first song trend: Example: https://www.youtube.com/watch?v=NG1qooBzE2w

Taking me back to the golden years

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

#528

Post by ImPostingOnHN »

netheril96 wrote: post #438
ImPostingOnHN wrote: post #416

Earlier quoted context omitted.

The former relationship wouldn't play out IRL, since there's no authoritative "lost bitcoin registry" to signal to buyers that the supply has effectively decreased

The buyers do not need to know about that. The effect of supply and demand on price doesn’t depend on anyone knowing supply and demand.

the effect of supply on demand does indeed require that buyers know something about the supply

I mean, just think about it for a moment: how many bitcoins were "lost" today? Was it 0 or 100,000? Perhaps it's -100,000, because somebody gained access to 100,000 that were previously lost.

If it doesn't make a difference, then the supply isn't affecting demand

If it DOES make a difference, then demand can't be affected, because nobody knows whether it was 0 or 100,000 or -100,000

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

#529

Post by nl »

matheusmoreira wrote: post #525
nl wrote: post #523

Earlier quoted context omitted.

It's true this is how it would work if you are treating BTC as a traditional asset and creating dollars by loaning the same deposits out multiple times. But for BTC you can't do this. If they have 100 BTC deposited from all their users and then try to loan out 101 that 101st transaction is impossible because the bitcoin isn't there.

> that 101st transaction is impossible because the bitcoin isn't there. The exchange's BTC reserves only matter when customers try to withdraw their coins. Until then, the coins are nothing but digits in their database. They can inflate that number as much as they want.

This might work inside the exchange, but doesn't work if you do a loan outside of the exchange.

In DeFi apps you need an actual token to use. If you don't have a the token you can't do a transaction, and apps choose which tokens they support.

So an exchange can create its own token, say it is backed 1:1 by BTC and lend that. But it isn't BTC so apps have to specifically opt into it.

If they loan out the actual BTC they have in the exchange they can only loan out 100% of what they have (not more) because control and use of each BTC token is dictated by the public ledger which is out of their control.

You can do other things (eg use the BTC as collateral for a dollar loan), but again you aren't lending BTC.

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

#530

Post by Nursie »

nl wrote: post #523
Nursie wrote: post #521

Earlier quoted context omitted.

Exchange has all customer deposits intermingled. Exchange offers crypto loans. Exchange shows positive balances across all users that exceed deposits (though may or may not balance out with negative balances). Everything keeps functioning because the exchange is a black box and not everyone wants to move their BTC at the same time. More people can 'own' BTC on paper than there is BTC in existence on the blockchain. I…

It's true this is how it would work if you are treating BTC as a traditional asset and creating dollars by loaning the same deposits out multiple times. But for BTC you can't do this. If they have 100 BTC deposited from all their users and then try to loan out 101 that 101st transaction is impossible because the bitcoin isn't there.

I'm sorry this is just nonsense, as has been pointed out many times, exchanges are not constrained by the blockchain of any particular cryptocurrency, most of their transactions don't take place on a blockchain and their customer balances are not stored on the various blockchains.

You may as well talk about this being impossible with paper money, the bank can't give out more than it has! There are only so many notes! But it doesn't need to. People can trade within the bank and between banks so long as the reserves cover the activities.

Quadriga CX worked this way, until it didn't and everyone discovered their cryptocurrency was fictional.

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