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Worries Grow That the Price of Bitcoin Is Being Propped Up

nytimes.com

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Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#241

Post by spookthesunset »

sciyoshi wrote: post #149
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

> They're literally making up money as they see fit. I'm playing devil's advocate here (I agree that the whole Tether situation is concerning), but also genuinely curious - is this any different than what banks have been doing for forever with fractional reserve? Even if Bitfinex is overcommitted and there's more USDT in circulation than they have in USD reserves, is there a problem unless a lot of people try to conv…

> is this any different than what banks have been doing for forever with fractional reserve

No. They are different. The bank turns liquid cash into much less liquid assets (houses, cars, boats, new businesses) by way of loaning out the money. All of the banks liabilities (the depositors) are backed by the banks assets (loans for stuff).

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#242

Post by conanbatt »

seanhunter wrote: post #200
conanbatt wrote: post #160

Earlier quoted context omitted.

I like to compare Bitcoin to Land. When people migrated over to america, land was basically worthless: there was too much of it and too few people. As the more fertile and better located land was taken, prices started to rise. As land supply is inelastic, the price can only tend to go up as long as the demographics expand. Bitcoin has a limited amount and even more has a diminishing supply (as coins get lost, stolen,…

The problem with this argument is that while supply of bitcoin itself is inelastic, anyone who wants to do so can create an altcoin, meaning the supply of altcoins in general is infinite, and since they are functionally extremely similar to each other if people can't buy bitcoin at an attractive price, they can simply buy something else that works the same way.

You need inelastic demand as well.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#243

Post by MarkMc »

rst wrote: post #234
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

"Of course maybe they're not actually crooks and they do have the money." Well then, an audit by competent third parties, inspecting where they got their funds, how much they actually have on hand, and whether it covers all potential liabilities (including calls on the supposedly dollar-backed tethers) would go a long way to clearing up the matter. Bitfinex announced an audit with great fanfare early last year. They…

To me this is very strong evidence that Tether is a scam. So why is anyone willing to pay $1 for a Tether?

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#244

Post by 282883392 »

cocktailpeanuts wrote: post #156
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

> Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfeited, their actual value is relatively easy to influence. This is because the only usage Bitcoin has left is a lottery ticket. Bitcoin used to actually have utility value (payment) but now with that gone, it is easy to manipulate the price because its value is built on people's perception only. If Bitcoin was still bei…

>If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there.

Bitcoin had all those things - not that long ago. You need volume to ensure stability, not utility.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#245

Post by conanbatt »

s73ver_ wrote: post #239
conanbatt wrote: post #232

Earlier quoted context omitted.

I disagree vehemently to this proposition. I have never agreed or voted to get those regulations in place. They are not voluntary. But anyone falling for tether today is making an individual decision.

Just because you personally weren't consulted on those regulations doesn't mean that they weren't come to by people who were democratically elected. And you agreed to abide by the laws of a jurisdiction by living there. Otherwise, what's to stop you from saying, "I never agreed not to kill people"?

> And you agreed to abide by the laws of a jurisdiction by living there. Otherwise, what's to stop you from saying, "I never agreed not to kill people"?

Nobody agreed to not kill people either. Thats why killing is also legal in many circumstances. Also arguing that we all agreed to the rules there in would mean that if slavery were legal it would be ok, becase we all agreed to it. But thats another topic.

The point is that if I believe in an institution without regulation the option between me and that institution is severed by an unrelated third party. I dont want to ask the SEC any permission to buy tethers.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#246

Post by JohnJamesRambo »

lawlessone wrote: post #53
JohnJamesRambo wrote: post #5

If you haven't already, I recommend getting out of Bitcoin and into Ethereum immediately. There is a transfer of dominance rapidly happening. Market Cap Bitcoin $158,149,902,894 Ethereum $106,632,442,880

Market cap is a terrible measure. If i make a my on crypto coin mine 100 of them and convince one person to buy one for 1000 euro, my coins market cap is suddenly 100,000 euros.

It's terrible but it's all we have and the market moves by it. Ignore that at your own peril. Just a little bit more and it will rapidly close the gap due to FOMO.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#247

Post by conanbatt »

freeone3000 wrote: post #240
conanbatt wrote: post #231

Earlier quoted context omitted.

> First and foremost, land has intrinsic value. You can grow food, build shelter and have access to water. If you’re very lucky there might even be oil below it. On the other hand, Bitcoin won’t help you survive very long. Thats the inelastic demand I'm talking about: if bitcion finds a use case where it shines above all else, even if it is something like sending money overseas, the demand will be inelastic and with…

Sending money overseas with bitcoin doesn't exhaust the supply of bitcoin. The bitcoin isn't consumed - it's converted from useful money to bitcoin at one end, and bitcoin to useful money at the other. While a limited supply of bitcoin would limit the throughput, the ledger calculation already does that, and at a much lower rate. So it's not as if any utility immediately lends bitcoin value.

It does because transfering that money takes blocks of operations to happen, which means you cant transfer infinite amounts of bitcoin in a finite amount of time. You have a limit of how much btc you can move between addresses.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#248

Post by Slansitartop »

acct1771 wrote: post #164
monktastic1 wrote: post #151

Earlier quoted context omitted.

You could say that humanity has repeatedly and organically come to a solution broadly known as government and regulation.

Worked great in 2008.

>> You could say that humanity has repeatedly and organically come to a solution broadly known as government and regulation.

> Worked great in 2008.

Wasn't 2008 at least partially the result of having banking regulations withdrawn/weakened over the prior decades?

If so, isn't it pretty bogus and misleading judge the effectiveness of financial regulation from that event? It's like saying airbags don't help in a crashes, because yours was removed and you smacked your face against the steering wheel in a crash.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#249

Post by Vraxx »

JumpCrisscross wrote: post #81

Bitfinex/Tether follow the classic investment fraud story arc. The big frauds don't start with bad intentions. A self-proclaimed genius seeds an operation, gets traction, attracts money, hits a snag, fudges the numbers and keeps doubling down, intending to pay it back, and then (a) collapses, (b) gets caught or (c) rolls the scheme over until (a) or (b). The terminal phase is inevitable given the non-linear difficult…

Hmmm.. I think your first link is to the wrong hack. If everything were as you claim, the hack would need to precede the bank freeze in order for it to be in any way causal. I was originally writing this reply to refute your claim on that basis, but while investigating it I found that there was indeed another hack where bitcoin was stolen from bitfinex rather than Tether being stolen by Tether. Your article 2 cites the bitfinex hack as well. Furthermore, the IOU issued wasn't Tether, but rather some other token "worth" $1 called BFX. The rest of the story seems plausible, but it seems you have a mixup in your buildup and snag phases of the hypothesis (I'm not saying that it is outright wrong because of this though)

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#250

Post by dang »

FiveSquared wrote: post #94
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

Preach brotha! Preach!

You've been posting a bunch of unsubstantive comments. We actually ban accounts that do that because HN is trying for a higher quality level. Trying and failing, often, but we need to keep trying. So could you please not do that in comment threads here?

https://news.ycombinator.com/newsguidelines.html

https://news.ycombinator.com/newswelcome.html

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