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

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

#531

Post by nl » Thu, May 19, 2022, 5:11 AM UTC

Nursie wrote: post #530

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.

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!…

> 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.

Sure, within the exchange that's true. The instance the BTC leaves the exchange as a loan or withdrawl it is no longer possible for that BTC.

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

I don't think this was the case, unless you can show me otherwise.

In particular, they had "BTC ATMs" where people could withdraw cash. Note that this is not loaning BTC.

And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy.

Notably there is a precise accounting of the BTC that was lost because there is a public ledger of it. Quadriga CX didn't produce any more BTC - they just lost their customer's BTC.

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

#532

Post by Karunamon » Thu, May 19, 2022, 6:04 AM UTC

NovemberWhiskey wrote: post #494

Karunamon wrote: post #485

Earlier quoted context omitted.

That still is not the same thing. Coins in an exchange can only be traded for other coins in the same exchange - it's effectively KrakenBTC or BinanceBTC or [...]. Unlike fiat money in a bank, these exchange balances exist only in their walled gardens and cannot be exchanged for goods or services, effectively decoupling them from the total supply. The total supply of bitcoin is the sum of all unspent transaction outp…

> Unlike fiat money in a bank, these exchange balances exist only in their walled gardens and cannot be exchanged for goods or services, effectively decoupling them from the total supply. These are demand deposits with the exchanges/shadow-banks. You can (at least with some products; others look more like time deposits) withdraw your deposit at any time. This seems basically the same as a bank account where you can w…

You have to convert your Exchange!BTC into BTC to spend it on goods or services. In other words, it has to hit the blockchain. If it is not on the blockchain, then what is being transacted is BTC in name only.

You need not convert your bank balance into cash to spend it on goods or services. The balance itself can be used directly.

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

#533

Post by netheril96 » Thu, May 19, 2022, 8:46 AM UTC

ImPostingOnHN wrote: post #528

netheril96 wrote: post #438

Earlier quoted context omitted.

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,…

The effect of supply and demand on price come from people bidding on the free market, not from anyone on the market knowing the global supply and demand.

If people have to know supply and demand to determine prices, how can free market work for thousands of years before the basic principle of economics is established?

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

#534

Post by wallacoloo » Thu, May 19, 2022, 11:55 AM UTC

ImPostingOnHN wrote: post #528

netheril96 wrote: post #438

Earlier quoted context omitted.

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,…

say BTC rises from $30,000 to $300,000. two scenarios:

1. 10% of all BTC holders want to cash out. nobody lost their keys, so 2M BTC hit the “supply side” of the market.

2. 10% of all BTC holders want to cash out. half of them lost their keys, so only 1M BTC hit the supply side of the market.

this is the way it makes a difference. in the latter scenario, BTC spot price would likely reach a higher value.

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

#535

Post by eric_cc » Thu, May 19, 2022, 1:56 PM UTC

hw wrote: post #463

eric_cc wrote: post #75

Earlier quoted context omitted.

> Doesn't the first line answer the second? To be clear, you're suggesting: "because people are uneducated about bitcoin and crypto, when one project fails they will incorrectly connect it to bitcoin. And that's bad for Bitcoin." These events are great opportunities to educate ignorant people. > 0 such ignorant people will learn more about bitcoin and why it's not like crypto like Luna. Greater education is extremely…

So you’re saying, because bitcoin does not have a monopoly on crypto, people are not forced to only buy bitcoin and as bitcoin holders you obviously want that Would also be nice if the only stock in the stock market was AAPL and no other shit stock with no profit.

> So you’re saying

Mind quoting me? I’m confident I said no such thing.

If you look at the top 2,000 projects on CoinMarketCap, the vast majority are shitcoins at best or just blatant scams. But I do not believe bitcoin should have a monopoly and, in fact, the competition is healthy.

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

#536

Post by gjvc » Thu, May 19, 2022, 4:26 PM UTC

lizknope wrote: post #44

gjvc wrote: post #19

Earlier quoted context omitted.

>Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is! Good observation. I may not be Warren Buffet, but it angers me greatly to see this kind of moronic chatter masquerading as informed opinion on finance or market dynamics.

I just assumed that 99% of the people saying "this is good for bitcoin" are using the phrase as a meme mocking bitcoin and cryptocurrency in general.

the danger is that some surprisingly high percentage of people interested in bitcoin will take such things as an unassailable truth.

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

#537

Post by mcguire » Thu, May 19, 2022, 6:26 PM UTC

arcticbull wrote: post #331

mcguire wrote: post #323

Earlier quoted context omitted.

" If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically. " But it's not the 0.1% that drove money out of other asset classes (i.e. bonds) because they couldn't generate any returns.

Do you really see folks broadly moving from risk assets to a 2-3% interest savings account in a 3.x% inflationary environment?

Yes. But think institutional investors of various flavors rather than personal, individual accounts.

The 2-3% is the Fed funds rate; actual rates on government and commercial bonds will be somewhat higher. (A friend recently pointed out the current 6% advertised rate on lower-grade commercial bonds.) Couple that with much lower risks (on things that aren't those 6% bonds) and it becomes a good third option for anyone whose previous choice was between -3% inflationary return on cash and stock market risks.

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

#538

Post by Nursie » Fri, May 20, 2022, 4:20 AM UTC

nl wrote: post #531

Nursie wrote: post #530

Earlier quoted context omitted.

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!…

> 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. Sure, within the exchange that's true. The instance the BTC leaves the exchange as a loan or withdrawl it is no longer possible for that…

> I don't think this was the case, unless you can show me otherwise.

Quadriga CX showed their users having BTC in their accounts.

In reality, the guy running the show had already gambled those away on other exchanges.

It all held together, ish, until he died and the music stopped.

> In particular, they had "BTC ATMs" where people could withdraw cash.

This is news to me and hasn't featured in any write-up of QCX I've ever seen.

> And when the CEO died, the BTC could not be retrieved. There was no magic second exchange-issued BTC around - it was gone because there is only one copy.

Yes, this is exactly what we're talking about - we have no real idea how much BTC is in peoples accounts on exchanges, because they are a black box and may be creating it out of thin air. While they don't try to move too much of it and the exchange remains operational, the ecosystem functions as if those balances are correct.

> Quadriga CX didn't produce any more BTC - they just lost their customer's BTC.

While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more.

Until they weren't.

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

#539

Post by nl » Fri, May 20, 2022, 7:42 AM UTC

Nursie wrote: post #538

nl wrote: post #531

Earlier quoted context omitted.

> 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. Sure, within the exchange that's true. The instance the BTC leaves the exchange as a loan or withdrawl it is no longer possible for that…

> I don't think this was the case, unless you can show me otherwise. Quadriga CX showed their users having BTC in their accounts. In reality, the guy running the show had already gambled those away on other exchanges. It all held together, ish, until he died and the music stopped. > In particular, they had "BTC ATMs" where people could withdraw cash. This is news to me and hasn't featured in any write-up of QCX I've…

> While they were still solvent it behaved as if there were more BTC present. Sure, they didn't create more on the blockchain, but they were able to operate as if there was more.

So as I said - they can't lend more than 100% of the BTC they have. They can make up anything want within their own exchange of course.

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

#540

Post by ipython » Sun, May 22, 2022, 3:19 PM UTC

Spivak wrote: post #460

ipython wrote: post #402

Earlier quoted context omitted.

So for that bitcoin fee, I get fraud protection too? So as a consumer I can challenge a fraudulent charge? And the money, it doesn’t leave my account until I say so? Oh wait no? I get none of those guarantees? Just a “good luck! Buyer beware!” No thank you. I’ll stick with my credit card. If I want to pay for something semi anonymously I’ll use cash.

No and you know that. Bitcoin is semi-anonymous cash and it and it’s ilk are basically the only cash you can send digitally. You should stick with your credit card, that was literally always allowed.

Right but the comment I responded to was comparing transaction fees. I pay zero transaction fees for using cash. I am willing to pay some small percentage to help protect me from fraud (and I have used that protection). Why would I pay a fee AND assume all the risk?