Man I wish I could understand only 5% of the economics behind this. It seems so interesting.
Economics? Bitcoin has no intrinsic value and it's propped up by speculation. It's ridiculous.
U.S. Launches Criminal Probe into Bitcoin Price Manipulation
181–190 of 228 posts
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#182Earlier quoted context omitted.
No, not necessarily. Ponzi schemes can survive redemptions for years or even decades; they blow up when there's finally a run.
You're confusing a Ponzi scheme and fractional reserve. Two very different systems.
A fractional reserve bank is a bank where:
Cash on hand Cash on hand + Investments > Outstanding liabilities (Deposits).
A ponzi scheme is where:
Cash on hand + Investments A fractional reserve bank doesn't have the cash to let 100% of its depositors withdraw their accounts tomorrow. It does have the assets to let 100% of its depositors withdraw their accounts once its investments mature, or if they are sold at market value.
A ponzi scheme can't do either of the above. It's a pure scam.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#183Earlier quoted context omitted.
If there was a problem redeeming Tether for USD, you'd expect that the market price distortion of Tether. But it hasn't[1] https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD >they've created 2.8 BILLION USDT Absolute numbers are meaningless and less eye catching when they're compared to the entire market. 2.8 ~ ~ Billion ~ ~ USDT is only 0.5%-0.8% of the market. Do you really think that a 300-500 billion doll…
The mechanics are probably this: suppose someone goes to Bitfinex to redeem 10million USDT into USD. Since Bitfinex is behaving fraudulently, they don't actually have the 10million USD they promised they would hold to back the USDT. But they do have the ability to issue new unbacked USDT. So they issue 11million unbacked USDT and use it to buy bitcoin. They sell the bitcoin for 10million USD on one of the exchanges t…
Well, I could see how the government might not like people printing their own money without going through the central bank.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#184Earlier quoted context omitted.
But you can easily buy BTC using USDT and then sell the BTC somewhere for real USD. Where are the reports of people stuck with USDT?
Nobody will be stuck with USDT until the Ponzi scheme is finally revealed in the form of an indictment. Until then, investors don’t hesitate to hold a few USDT now and then, because the likelihood of being stuck with them when it all goes to hell is small.
> investors don’t hesitate to hold a few USDT now and then
But it is not "now and then". It is 2.8 billion all the time! Maybe they are hold by different people at different times. Yet, they have to be held somewhere by someone all the time, who think that it is a good idea to have USDT instead of USD or BTC.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#185Earlier quoted context omitted.
They mint Tether during market crashes because that's when there is the highest volume on USDT pairs, and when Tether needs to create tokens to maintain the exchange rate around $1. Have you read their whitepaper? Further, there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds: https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether-addendum-new-finan…
> there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds There is no way Bitfinex has $2.2 billion in bank accounts. If a bank handles U.S. dollars, they are under U.S. jurisdiction. Bitfinex cannot show who own Tether; that makes beneficial ownership tracing, rules surrounding which became stronger twelve days ago, impossible. Had they picked any other curr…
>>If a bank handles U.S. dollars, they are under U.S. jurisdiction.
I've always thought of Tether as the loose cryptocurrency equivalent of a eurodollar[1] facility. If the eurodollar was Bitfinex's original inspiration, then Bitfinex probably thought that keeping their USD deposits (which allegedly back Tethers 1:1) in custody of foreign banks (i.e. non-US domiciled banks) would place them outside of US jurisdiction.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#186Earlier quoted context omitted.
Crypto/Fiat transactions are much more expensive than Crpyto/Crypto transactions. Why impact your bottom line if you don't need to?
In addition, it's more "liquid" too. It's easier to turn tether into pretty much any altcoin on most exchanges vs turning USD back into altcoins. There's still a belief in some circles too that a crypto/crypto transaction isn't a taxable event, which isn't true anymore. Regardless, some either believe this or know it's not true but find it easier to tax-evade this way.
which isn't true anymore
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#187Earlier quoted context omitted.
https://tinyurl.com/Special-Pleading
What principle is not being universally applied? Or do I misunderstand?
Many of the ostensible characteristics of Bitcoin you've provided also apply to special-edition 1990s Marvel comics. The idea that a good needs to be "divisible" to be valuable is nowhere supported by evidence and easily rebutted by counterexample. Your argument is essentially handwaving: all sorts of terrible investments are "great for people with low time preference", in that they will have no value in the immediacy, and their only hope of profitable redemption is to hold until some unspecified, unpredictable future date.
Illiquidity is a bad thing, not an generally an indicator that something is an especially good investment.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#188Earlier quoted context omitted.
Bitcoin is traceable by nature. Anyone who makes claims of anonymity either doesn't understand how it works or has a system in place that provides uncertainty (ie tumbling).
If you buy them with cash and use them in a way that can't be traced back to you, you can stay fairly anonymous, but you still have to be very very careful.
Unless your cash-bitcoin counterparty is the mole.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#189Earlier quoted context omitted.
Bitcoin is traceable by nature. Anyone who makes claims of anonymity either doesn't understand how it works or has a system in place that provides uncertainty (ie tumbling).
Tumbling is plagued by a horrible tragedy of the commons problem: the more tainted your coins are, the more you want to tumble them. People who legitimately acquired their bitcoins don't need to tumble them, so chances are you are just getting other tainted coins in return. People seem to think that coins are 'clean' after tumbling, but I think its much more likely that you'll get back more suspicious coins: superlat…
Isn't the whole goal of tumbling to provide plausible deniability? The goal is to avoid tying the coins earned or used in an illicit activity with the the people involved in those activities.
If a drug dealer gets an assassin's coins and vice versa then the goal is still accomplished even though all the coins involved are tainted. The drug dealer's possession of the assassin's coins don't help in building a case against his or her drug dealing operation.
Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation
#190Earlier quoted context omitted.
I think it's only postponing the inevitable. If any cryptocoin manages to become "the new dollar" the incentives to micro-optimize the mining will be tremendous. Even assuming that they manage to create an algo (or change it often enough) to make custom ASIC pointless it just means that it's CPU vendors who have the edge. Intel, AMD and friends could sell their first batches of new and improved CPUs for a primer duri…
I think you're missing some context on the difference between CPUs and ASICs in terms of PoW algo design and hardware cost&distribution. Again with monero because it's pertinent to your point, I would encourage you to read up on its design goals, and the discussions around the recent PoW algo change on github or Reddit.
Monero changing its mining algorithm doesn't change how most of the supply was produced and given away nearly for free to the dev team and early users.
The math behind it equates to existing capital wealth being used to generate the supply which is amplified by several magnitude for the first users to show up and run the software. Future production costs increase, and the relative newly produced supply decreases.
Old users rely on the gullibility of new users to exchange real world value for these easy to produce database-tokens.