We will not pursue the potential acquisition of FTX • Hacker News Board

Re: We will not pursue the potential acquisition of FTX

#401

Post by sgerenser » Thu, Nov 10, 2022, 1:16 PM UTC

CyanBird wrote: post #105

matai_kolila wrote: post #80

Earlier quoted context omitted.

No, that's not the same thing at all. For every other example of currency besides the government's currency, there's a tangible thing backing that unit. Crypto still doesn't have that, and that matters. To what degree is up for debate, but it does matter. Only governments apparently can get away with the unbacked currency, because they otherwise back it with enforced societal rules (a.k.a. laws).

> No, that's not the same thing at all. Per Mark Blyth Money, to be useful is what Economists call three things; ♦ A Unit of Account ♦ A Unit of Exchange ♦ A Store of Value: A hedge against uncertainty Crypto is not money, so what is it? Is what the Chinese Central Bank characterized three years ago as Digital Gambling Asset

Since when does HN allow emoji!?

Re: We will not pursue the potential acquisition of FTX

#402

Post by sgerenser » Thu, Nov 10, 2022, 1:18 PM UTC

oldgradstudent wrote: post #161

jeffreyrogers wrote: post #141

Earlier quoted context omitted.

LTCM actually was doing a lot of the risk management people later said they should do. Their problem was the trades they were doing were more crowded than the realized and they couldn't unwind them cheaply because everyone else was doing the same thing. Plus once people realized they were struggling other market participants started betting against them. There have been other similar situations since then. In August…

That's the point. Their models showed their strategies to be safe, while in reality, their strategy was risky enough to bankrupt the fund, and scare the entire financial system. > In August 2007 most of the big quant funds lost double digit percentages in a few days when someone had to unwind a portfolio and statarb strategies stopped working. If your strategy works for years and then a single event erases all the hi…

See for example, ARKK.

Re: We will not pursue the potential acquisition of FTX

#403

Post by chii » Thu, Nov 10, 2022, 2:02 PM UTC

patrickthebold wrote: post #400

arcticbull wrote: post #379

Earlier quoted context omitted.

When you bring money to a bank, that money is treated as both a liability (to you) and also as collateral against which the bank can lend money to others. When a bank lends money to you, it's net neutral. A $100,000 mortgage creates a -$100,000 position on the bank's liabilities list and a $100,000 deposit in your bank account. They create $100K in new money to fund this loan collateralized by both the reserves on de…

Not gp but I've so many questions! We'll I'll just ask two: Suppose to buy my house the seller wants cash. I take out my cash and give it to the seller. Ok fine, but the bank is creating money out of thin air, where does the cash come from if lots of people do the same? Follow up: more realistically, I wire money to the seller, what actually happens between the banks? It seems like bank A creates money from nothing a…

> where does the cash come from if lots of people do the same?

the cash comes from the gov't printing it. It's a mere fraction of all spendable money. Banks store some amount of it, just for such cases where you wish to withdraw it.

If everyone demands their deposit as cash, the bank would run out of physical notes very quickly. They would, in all likelihood, ask the central bank to print the cash (in exchange for the reserves they hold at the CB), in order to fulfill the withdrawal. This might take days, weeks even, depending on how many notes are to be printed. Note that this isn't printing new money - it's merely transforming digitally stored money into physical paper.

> I wire money to the seller

Bank A would have an account within Bank B, and vice versa. At the end of the day, these banks "settle" their accounts; aka, if there's more money in Account A (in Bank B), it means Bank A has sent more money to Bank B, and Bank B needs to owe Bank A. This is basically how international transfers work. For local banks, it's likely that the Central Bank would clear these transfers up (aka, Central Banks are the banks for banks).

> what is stopping bank A from sending out an infinite amount of money to other banks?

The same reason why a bank cannot just create infinite money and spend it on hookers and blow. They are creating money only via lending, and there are laws regarding how much they're allowed to lend out (called reserve requirements).

Re: We will not pursue the potential acquisition of FTX

#404

Post by saberdancer » Thu, Nov 10, 2022, 2:27 PM UTC

PaulWaldman wrote: post #42

mumbisChungo wrote: post #23

The silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Similarly, Sam's fund Alameda was delta-neutral until some time in 2021, which is something that also could have profitably continued in perpetuity, but they got greedy and started making directional bets with leverage.

>The silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Where were their profits derived? Was it from taking their slice of every transaction? Or selling their freshly minted coins? If it was the latter, that only works for so long, just ask the Fed.

What always surprises me why does anyone feel the need to steal from users when you are literally "the house" - you are taking a fee on every transaction. Just like in poker - if you are the house, you don't need to take risk by playing at the tables.

FTX was probably hugely profitable before they started stealing.

Re: We will not pursue the potential acquisition of FTX

#405

Post by JumpCrisscross » Thu, Nov 10, 2022, 3:17 PM UTC

chii wrote: post #321

JumpCrisscross wrote: post #318

Earlier quoted context omitted.

> the bank does loan you the money out of their own funds Nope. This is the toy model of money and banking taught in high school. When a bank makes a loan, it creates money. The fact that there are stabilising deposits is a fortunate convenience. This is why leveraged finance is inherently unstable. The BoE had a good paper about this.

> When a bank makes a loan, it creates money. The bank must reach some level of capital requirement to make this loan. In other words, if the bank does not have enough reserves, they cannot make this loan. The bank can use customer deposits as part of their reserves. They can also borrow from another bank (presumably, paying them interest). Lastly, i think central banks also have a reserve borrowing method (but not s…

> bank must reach some level of capital requirement to make this loan

No, they don’t. We force them to through fiat. But credit isn’t created from money—credit is money. Left to their own devices, financial systems create as much credit as the market will bear, then the market shifts, money vanishes and voila, a panic.

Re: We will not pursue the potential acquisition of FTX

#406

Post by PathOfEclipse » Thu, Nov 10, 2022, 3:24 PM UTC

mstipetic wrote: post #388

PathOfEclipse wrote: post #271

Earlier quoted context omitted.

I'd rather have wealth inequality, which is natural, especially in a world where even the poorest have only gotten richer over time, than have enforced wealth equity, which has resulted in near universal poverty nearly everywhere it's been implemented. People calling for enforced wealth equity don't have the moral high ground. They're in the moral caves and pits! https://www.investopedia.com/articles/economics/09/fin…

People like you are so annoying. Super natural to have 70 people control 50 percent of the world wealth. Ace.

At what point in the world's history has wealth not been concentrated? What, therefore, is your argument or evidence that wealth inequity isn't natural? Even in video games with an online economy and trade that resets periodically, within a week of a reset you'll see massive disparity in wealth between the top and everyone else that only grows over time. And I mean massive.

You should read "Wealth, Poverty, and Politics." It really is illuminating to learn at an academic level how wealth has been produced throughout history and some reasons why it is distributed unevenly.

https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell...

Re: We will not pursue the potential acquisition of FTX

#407

Post by bitxbitxbitcoin » Thu, Nov 10, 2022, 3:39 PM UTC

ausudhz wrote: post #281

bitxbitxbitcoin wrote: post #249

Earlier quoted context omitted.

If Binance goes, cryptocurrency is certainly coming back. Also, cryptography isn’t going anywhere.

cryptography was not invented for cryptocurrency, I don't understand why it should go anywhere lol It has many applications far beyond cryptos lol

I was lamenting that crypto means cryptocurrency instead of cryptography now.

Re: We will not pursue the potential acquisition of FTX

#408

Post by jcpham2 » Thu, Nov 10, 2022, 4:09 PM UTC

BLKNSLVR wrote: post #374

jcpham2 wrote: post #300

Earlier quoted context omitted.

Unfortunately I can echo the crypto space sentiment for as long as such an expression can exist I’ve never touched Bitfinex/FTX/Binance or any exchange that allows options or leverage. I am a US citizen. Bitstamp Gemini or Coinbase are the only ones I’ll touch And I’m pissed off that coinbase removed the BTC/USDC trading pair because it had low volume Why will I not touch them? That’s a long story but I see history r…

How about Kraken? They've weathered a few winters.

Kraken I trust but I've never used. For perspective, I've traded roughly a million dollars worth of BTC specifically. Most of that was as the knife was falling after the 2017/2018 ATH.

DCA-ing since then, selloff at the top in 2021, pull my limit sell orders, let it crash.

Doing it again now, kinda hard not to take advantage of deflationary 4-year super cycles

Re: We will not pursue the potential acquisition of FTX

#409

Post by eitland » Thu, Nov 10, 2022, 4:14 PM UTC

Godel_unicode wrote: post #338

eitland wrote: post #320

Earlier quoted context omitted.

> Banks inherently gamble with customers deposits, every loan is a gamble. I wouldn't exactly call a residential mortgage a gamble. Not the loan for my car either, the bank has first priority in both and demands I insurance them for the full value and for all eventualities.

Lehman brothers would like a word with you.

I answered to a comment that said every loan is a gamble.

Re: We will not pursue the potential acquisition of FTX

#410

Post by cmckn » Thu, Nov 10, 2022, 4:20 PM UTC

Is the “traditional” finance world this…incestuous? As a casual observer, the crypto ecosystem is almost entirely made up of folks printing Monopoly money, hyping it until it’s nominally worth something, loaning it to each other, and then gambling with the loans everyone took out.