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It can all go to zero

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Re: It can all go to zero

#211

Post by specialist »

saas_co_de wrote: post #143
hbosch wrote: post #76

Earlier quoted context omitted.

The trend of 15-20% swings is well documented in Bitcoin history, no doubts about that. Crypto is a young economy in general, and it's been thrilling for me (on the outside, as I don't speculate or hold) to watch. But I don't know. If you play with the zoom levels on price tracking sites, the $20k peak onward has been a pretty steady downward trend. BTC is down 20% over three days, down nearly 23% over a week. Is tha…

The interesting thing is that this is what a real free market looks like. This is what any market would look like without being rigged by governments and government backed institutions. Bitcoin may be the best proof yet of how deeply flawed the libertarian free market ideology really is.

Which markets exist without the protections provided by governments?

Protections in the form of contract law, fair and impartial judiciary, notions of property (ownership)...

Re: It can all go to zero

#212

Post by Robotbeat »

ufo wrote: post #204
ejanus wrote: post #160

Earlier quoted context omitted.

Not only cryptography coins,even traditional banking,e-commerce,and our modern society would go down. Quantum for all.

I think modern society going down is a bit of a stretch here. There are quantum-resistant cryptographic algorithms that would be safe even against quantum computers.

However, EVERYTHING has to switch over before it happens. Everyone has to change all their passwords and security questions and private keys.

Additionally, anything sent over the Internet via ANY of the standardized public key encryption algorithms can be skimmed and stored right now and decrypted once quantum computers are available. Social security numbers, bank account numbers, credit card numbers, security question answers, tax returns, trade secrets, personal details, Signal messages between elected officials and/or dissidents, informants, etc... All in clear text to anyone with forethought to start storing it right now.

Changing to a quantum resistant algorithm doesn't change the past; it doesn't change data that has already been archived.

That's why Quantum Jubilee is going to be such a big deal. Not only do you have the usual slowness in deploying new encryption standards (thus likely exposing industrial equipment, etc), but everything being sent right now is already at risk.

And we don't know when it'll happen. Could be 5 years from now, could be 15. Could have already happened in secret (unlikely, but still possible).

Re: It can all go to zero

#213

Post by stcredzero »

rlucas wrote: post #190
stcredzero wrote: post #29

Earlier quoted context omitted.

and there's no way they'll all decline or default at once. This is where Credit Default Swaps came in. What is the cryptocurrency equivalent of a Credit Default Swap?

It wouldn't be a CDS, it would just be a swap (like a currency swap). A bitcoin isn't a credit instrument, so there's no possibility of default. (Although it's also true that swaps usually anticipate a currency's local interest rate -- what's that for bitcoins?) And, you probably wouldn't use a swap for hedging bitcoin currency exchange risk, unless you were doing an actual useful transaction where the sources and us…

But what's analogous to CDS for Bitcoin isn't just a Swap. It's any mechanism which could cause a cascade of loss between the various cryptocurrencies.

Re: It can all go to zero

#214

Post by twblalock »

adamnemecek wrote: post #59
JumpCrisscross wrote: post #58

Earlier quoted context omitted.

> Can you talk more about your failure case then? The classic one. Nobody wants to pay more than a token amount for Bitcoin. Maybe central banks jacked up rates or we went into a recession or something newer and shinier came about. Value crashes, miners find it more valuable to sell their equipment than keep mining or confirming transactions, the entire ecosystem compresses to where it was when it was more about tink…

Are we talking about Bitcoin or all crypto?

It applies to any kind of asset that derives 100% of its price from network effects rather than intrinsic value.

Re: It can all go to zero

#215

Post by mial »

sillysaurus3 wrote: post #199
NathanKP wrote: post #145

Earlier quoted context omitted.

Actually Bitcoin has transaction fees for exactly this purpose. The idea is that once all the coins are mined the primary way that miners make money is from the fees that people pay to miners to get their transactions recorded in the blockchain. For reference a lot of times you currently have to pay a fee of >$10 to get your transaction recorded in the blockchain, and estimates of around $10 million a day in transact…

Yes, miners will receive transaction fees. But have you run the numbers on how much those transaction fees would have to be to match the current block reward? The endgame seems completely untenable. No one is going to pay a huge amount per BTC transfer. So what do you think will happen to all those miners, with all their mining equipment? We currently have a monstrous block reward every 10 minutes, and yet tx fees ar…

If I understood the system correctly, at that point mining would become much less profitable so a lot of miners would stop their operations. In that case, difficulty would automatically decrease at the same rate as miners quit, and at some point it would become somehow profitable for the remaining miners to subsist on transaction fees.

Re: It can all go to zero

#216

Post by adamnemecek »

virgilp wrote: post #191
adamnemecek wrote: post #51

Earlier quoted context omitted.

Ok can you talk more about your failure case then? What are the conditions like what exactly is the end result. There are 0 exchanges?

Let me tell you a story. My parents, before I was born, worked as teachers in Africa. They were sent via an agreement of our (communist) state with the Belgian government and were paid "expat" money. Only problem is, they knew that when they came back the government would take all their money (coerce them to exchange it at shit exchange rate, for a currency that was basically worthless). So they invested - they bough…

Let me preface this story by saying that your parents did a shit thing and I'm glad they were duly punished. Fuck ivory. But I'm getting distracted.

Bitcoin is unlike your situation as with ivory you have to have physical contact with the shady person. With BTC you don't. People online don't care as much about dealing with shady people. It's also kinda hard to tell who's a shady person online.

Re: It can all go to zero

#217

Post by adamnemecek »

bradleybuda wrote: post #208
adamnemecek wrote: post #51

Earlier quoted context omitted.

Ok can you talk more about your failure case then? What are the conditions like what exactly is the end result. There are 0 exchanges?

This way: https://www.ebay.com/itm/3-Zimbabwe-banknotes-1-x-10-20-50-B...

Its good that you are bringing this up. Bitcoin is entirely resistant to this, which can be demonstrated by the fact that Bitcoin is supposed to be popular in Zimbabwe.

Re: It can all go to zero

#219

Post by specialist »

api wrote: post #121
aitrean wrote: post #33

Time for the monthly cryptocurrency panic thread. While I fully agree that most cryptocurrencies are grossly overvalued, these articles always pretend a 20% selloff is the beginning of the end, when, in crypto land, 20% selloffs are a pretty standard bad day for the market.

People who see and call out bubbles are always wrong N-1 times where N is the number of times a prediction is made. Look at the fundamentals. What we have here is a bad currency (volatile and deflationary) whose utility is diminishing as its price increases. There aren't a lot of value investors in cryptocurrency at this point. The vast majority of the people who hold it are holding it on the theory that it will cont…

If I'm reading you right...

I agree that bitcoin et al are escrows vs currencies.

That their current valuation is a combination of money laundering and typical bubble hype (FOMO, castles in the sky, gambling).

Re: It can all go to zero

#220

Post by bunderbunder »

bradleybuda wrote: post #208
adamnemecek wrote: post #51

Earlier quoted context omitted.

Ok can you talk more about your failure case then? What are the conditions like what exactly is the end result. There are 0 exchanges?

This way: https://www.ebay.com/itm/3-Zimbabwe-banknotes-1-x-10-20-50-B...

That particular way seems extremely unlikely, at least in the case of Bitcoin. It was specifically designed so that it should be impossible to dilute the currency like that. Nobody is supposed to be able to directly control the supply of BTC, and the rate at which new BTC is created is steadily decreasing toward zero.

So going to zero in that particular way would presume that there's a vulnerability in the protocol that makes it possible to manufacture effectively unlimited bitcoin outside the normal channels, and that nobody is able to figure out a way to defend against it.

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