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Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

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Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#101
post #13
post #4

Earlier quoted context omitted.

When an asset class increases in value for a long enough period of time there is no shortage of explanations for why it's different this time. Real estate, commodities, tech companies, it makes no difference, It's always the same.

Real estate is an outlier in your examples due to there being limited supply and people need shelter.

Most bubbles start based on some fundamental value rationale. For real estate, the ebb and flow of supply and demand are what sparks the initial price increase.

A bubble occurs when speculators pile into that investment vehicle and drive up demand even further. This becomes a reinforcing phenomenon until the number of new speculators dries up and it suddenly whipsaws the other way.

Nothing is immune from a bubble, but housing is particularly prone to it based on the lag between demand and available supply. It also means the hangover is often decades long while it clears the backlog.

Yes, people need houses. But people don't need 4 or 5 houses as speculative investment vehicles that "pay for themselves" by renting out while they hold it for a couple years before flipping. That's the demand that crashes hard when markets turn.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#102
post #3

> A cryptocurrency lender backed by Peter Thiel and Coinbase Global Inc. suspended withdrawals, trading and deposits on its platform, citing volatile market conditions and financial difficulties facing key business partners. > The platform, Vauld, said Monday that it froze the operations after users pulled almost $200 million over the last three weeks. A sharp decline in cryptocurrency prices that began with the coll…

Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current crypto crisis as a repeat of the 2008 financial crisis. Every single problem that cryptocurrencies face are extremely well known and studied phenomena in traditional economics. It is all very predictable.

This doesn’t make a lot of sense. Bitcoin and ethereum are still up and processing blocks with little regard to what is happening in the financial system.

Those lending companies closing down are basically centralized platforms very much like the legacy financial system. This take is the same type of uneducated comment that someone does while attributing actions done by say Coinbase to crypto as a system.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#103

Earlier quoted context omitted.

Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current crypto crisis as a repeat of the 2008 financial crisis. Every single problem that cryptocurrencies face are extremely well known and studied phenomena in traditional economics. It is all very predictable.

It's like crypto enthusiasts honestly believe that the problem with the financial system is that the buildings have the word "Bank" on them. Then they turn around and offer to take your money promising absurdly high interest rates. Surprise! The only way to do that is to invest in risky assets, except this time there is no FDIC insurance, no capital requirements, no regulations whatsoever to protect your money.

Wrong. What “crypto enthusiasts” refer as the problem is the trust on a third party, banking or watherver. Therefore people who got burned trusting centralized lending castle of cards cannot be referred as crypto enthusiasts.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#105

Earlier quoted context omitted.

Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current crypto crisis as a repeat of the 2008 financial crisis. Every single problem that cryptocurrencies face are extremely well known and studied phenomena in traditional economics. It is all very predictable.

In the ashes of cryptolibertarianism, Krugman is right again.

This Krugman?

https://www.nytimes.com/2020/11/19/opinion/joe-biden-economy...

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#106

Earlier quoted context omitted.

It's like crypto enthusiasts honestly believe that the problem with the financial system is that the buildings have the word "Bank" on them. Then they turn around and offer to take your money promising absurdly high interest rates. Surprise! The only way to do that is to invest in risky assets, except this time there is no FDIC insurance, no capital requirements, no regulations whatsoever to protect your money.

Wrong. What “crypto enthusiasts” refer as the problem is the trust on a third party, banking or watherver. Therefore people who got burned trusting centralized lending castle of cards cannot be referred as crypto enthusiasts.

Classic no true scottsman.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#107
post #104

I'm a crypto enthusiast and I don't share the common view here that blockchain is useless, however ... how do you offer 12% interest on a stable coin? Where is that money even supposed to be coming from?

Maybe from "investments" in shitcoins?

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#108

Earlier quoted context omitted.

Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current crypto crisis as a repeat of the 2008 financial crisis. Every single problem that cryptocurrencies face are extremely well known and studied phenomena in traditional economics. It is all very predictable.

This doesn’t make a lot of sense. Bitcoin and ethereum are still up and processing blocks with little regard to what is happening in the financial system. Those lending companies closing down are basically centralized platforms very much like the legacy financial system. This take is the same type of uneducated comment that someone does while attributing actions done by say Coinbase to crypto as a system.

>Bitcoin and ethereum are still up and processing blocks with little regard to what is happening in the financial system.

Those are internal database tasks. I'm sure the IT staff at Lehman Brothers could have run defrag jobs and swapped backup tapes until the Sun went out. That wasn't the problem at Lehman.

The bitcoin network can process blocks when a bitcoin is worth $10,000 or $1 or $0.00001. The problem is that in the last two cases, economically, nobody would care if bitcoin is still processing blocks.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#109
post #104

I'm a crypto enthusiast and I don't share the common view here that blockchain is useless, however ... how do you offer 12% interest on a stable coin? Where is that money even supposed to be coming from?

When new people invest, you can take their money and use it to pay the people who were already invested.
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