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Cryptocurrency in the 2020s

blog.coinbase.com

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Re: Cryptocurrency in the 2020s

#101

Post by jacobsenscott »

v64 wrote: post #94
ianferrel wrote: post #29

Earlier quoted context omitted.

Seriously. The risk adjusted return on whatever that crazy contraption is is almost certainly negative, and probably incalculably so. The idea that any sane financial instrument could increase its return by two points by the holders of it voting to do so is... I haven't the words.

> The idea that any sane financial instrument could increase its return by two points by the holders of it voting to do so is... I haven't the words. Raising the savings rate will also raise the interest rate that those holding loans must pay. If a loan holder doesn't agree with the new interest rate, they are free to close out their loan.

I'm not familiar with this product. How do you "close out" one of these loans? If you mean pay it off, nobody would take a loan they can just pay off at anytime, or where the interest rate can be just arbitrarily voted up.

Re: Cryptocurrency in the 2020s

#102

Post by moralsupply »

asdfasgasdgasdg wrote: post #7

Consider the source, right? How many people without a large vested interest in the propagation and uptake of cryptocurrency consider further growth likely? My guess is that governments will more and more realize that the main utility of blockchains is money laundering and speculation. As has been remarked over and over again, they don't solve any above board problem more efficiently or with lower expense than existin…

> the main utility of blockchains is money laundering and speculation

Where did you get the data that justifies that assertion?

In any case, don't bother with cryptocurrencies. I'd recommend that you keep all your wealth anchored in US Dollars for the next 3-5 years.

Re: Cryptocurrency in the 2020s

#103

Post by v64 »

jacobsenscott wrote: post #101
v64 wrote: post #94

Earlier quoted context omitted.

> The idea that any sane financial instrument could increase its return by two points by the holders of it voting to do so is... I haven't the words. Raising the savings rate will also raise the interest rate that those holding loans must pay. If a loan holder doesn't agree with the new interest rate, they are free to close out their loan.

I'm not familiar with this product. How do you "close out" one of these loans? If you mean pay it off, nobody would take a loan they can just pay off at anytime, or where the interest rate can be just arbitrarily voted up.

> If you mean pay it off, nobody would take a loan they can just pay off at anytime, or where the interest rate can be just arbitrarily voted up.

It's true that the interest rate can be arbitrarily voted up. Despite this, 1.46% of all existing Ether (currently valued at $210,036,816) is staked as collateral in the system, so it's not accurate to say nobody would do this.

Re: Cryptocurrency in the 2020s

#104

Post by v64 »

TylerE wrote: post #99
v64 wrote: post #82

Earlier quoted context omitted.

Those with loans in the system will have to pay a 6% interest rate. Since not all holders of Dai have savings accounts, this allows for the system to use the interest charged to loan holders to pay out the savings rate while accumulating a surplus. A 6% interest rate on USD would be a red flag, but Dai isn't USD. As far as I know, no banks allow you to use Ether as collateral for a USD loan, so the comparison isn't a…

Who eats the cost when one of these borrowers defaults?

If a borrower defaults, their account is flagged and their Ether collateral is eligible to be auctioned off to pay off their debt. The mechanism is designed so that a loan is closed at a point where auctioning the collateral will cover the debt.

In the event that the value of their collateral doesn't cover the debt, the Maker system has a surplus account that would cover the difference. In the event that the surplus can't cover the remainder of the debt, MKR token is created and auctioned off to to cover it.

Since this devalues MKR, holders of MKR token are incentivized to ensure that the system always runs at a sufficient surplus to cover these events and that loans are liquidated early enough to prevent having to dip into the surplus.

In addition to this, interest on loans are paid in MKR token and destroyed when the loan is closed, which also incentivizes holding MKR.

Re: Cryptocurrency in the 2020s

#105

Post by pixelperfect »

JohnJamesRambo wrote: post #91
aazaa wrote: post #72

The trouble with this article is that the author doesn't seem to know what Bitcoin is for. Notice the vague treatment of actual cryptocurrency applications. There are lots of predictions about startup activity, "flippenings" and venture capital, but little about the goods and services customers will actually be buying, or what specifically startups will be building. It's this kind of thinking that leads people into t…

I find it hilarious you think Coinbase CEO Brian Armstrong doesn't "know what Bitcoin is for." Maybe you don't know what it is for. People that are sane like Mr. Armstrong and Satoshi Nakamoto intended it to be used as a currency. If Satoshi is still alive I'm sure he was quite disappointed when Bitcoin decided to not scale past its blistering 7 transactions per second. "Bitcoin can already scale much larger than tha…

Bitcoin is continuing to scale, but it's doing so with the Lightning Network instead of by increasing block size.

I'm not super familiar with Bitcoin's tech, but that seems sensible to me. The blockchain is already 250 GB at 7 transactions per second. If you multiplied that by 100, you still have orders of magnitude less transactions per second than credit card processors, but the hardware requirements are now high enough that few individuals could afford to run full nodes.

Re: Cryptocurrency in the 2020s

#107

Post by jerry1979 »

chii wrote: post #62
nordsieck wrote: post #55

Earlier quoted context omitted.

> Dilution / inflation is a feature not a bug. Money should be put to work doing productive stuff in the economy, not hoarded. There are few people who are interested in crypto-currency and have not heard this argument in many forms. Crypto-currency fans generally either don't care or don't think it's true.

whether crypto fans think or believe it to be false (or not care) is irrelevant. Crypto has only shown the characteristics of a speculative commodity (like gold), and the laws of economics are as universal as any other law - bitcoins cannot become a currency unless it is done by fiat (like how china is exploring doing so right now, but with their own version of a crypto-currency where they control the chain).

If crypto's legacy plateaus at "digital gold" I'll feel satisfied.

Re: Cryptocurrency in the 2020s

#108

Post by etrabroline »

asdfasgasdgasdg wrote: post #75
thenewnewguy wrote: post #45

Earlier quoted context omitted.

> Except for light financial crime (ransomware, money laundering, gambling, theft, etc), it has no demonstrated advantage over alternative technologies. Slight nitpick: Cryptocurrencies have demonstrable advantages over existing solutions (pseudo-anonymity, decentralization, inflation-proof, etc) but consumers don't care about these advantages enough to make the switch.

> but consumers don't care about these advantages enough to make the switch. And, more importantly, governments see those attributes as a downside, and would no doubt clamp down hard on crypto on-ramps in the event that they ever started getting significant uptake.

Your view of government is highly authoritarian. If Bitcoin becomes legitimately popular, no government that needs the support of the people to rule can ban it.

Uber broke every taxi law on the books until popular support made those monopolistic laws unenforceable. The political actors working against Bitcoin own quite similar and quite unpopular state-backed monopolies of their own.

Re: Cryptocurrency in the 2020s

#109

Post by vinniejames »

jacobsenscott wrote: post #101
v64 wrote: post #94

Earlier quoted context omitted.

> The idea that any sane financial instrument could increase its return by two points by the holders of it voting to do so is... I haven't the words. Raising the savings rate will also raise the interest rate that those holding loans must pay. If a loan holder doesn't agree with the new interest rate, they are free to close out their loan.

I'm not familiar with this product. How do you "close out" one of these loans? If you mean pay it off, nobody would take a loan they can just pay off at anytime, or where the interest rate can be just arbitrarily voted up.

The loans are mostly used for leveraged trading or liquidity while maintaining a long position. Each loan is fully collateralized with the Ethereum token by the borrower

Re: Cryptocurrency in the 2020s

#110

Post by vinniejames »

TylerE wrote: post #99
v64 wrote: post #82

Earlier quoted context omitted.

Those with loans in the system will have to pay a 6% interest rate. Since not all holders of Dai have savings accounts, this allows for the system to use the interest charged to loan holders to pay out the savings rate while accumulating a surplus. A 6% interest rate on USD would be a red flag, but Dai isn't USD. As far as I know, no banks allow you to use Ether as collateral for a USD loan, so the comparison isn't a…

Who eats the cost when one of these borrowers defaults?

A default is not possible. The loans are fully secured by Ethereum. If collateral dips below an acceptable threshold, the collateral is liquidated and the debt is payed back to the system in full
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