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BlockFi files for bankruptcy as FTX fallout spreads

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Re: BlockFi files for bankruptcy as FTX fallout spreads

#441

Post by Terretta »

MrMan wrote: post #404
Terretta wrote: post #188

Earlier quoted context omitted.

> Unbelievable the amount of destruction of value here... it's just total carnage. I don't see any other replies hypothesizing this in terms that rhyme with the dot com "bust" of 2000. In late 90s, in addition to whatever product-market-fit from their "blue ocean strategies", the dot coms generally invested in and bought services from each other. Wall St didn't look at where the dollars came from or went to the secon…

this has more in common with the S&L crisis than the .com crash. if you are going to use analogies to past events as a crutch

Less analogy, more "this has been happening" and "explains a lot".

Your example has been happening too.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#442

Post by dorkwood »

andirk wrote: post #256
largepeepee wrote: post #52

Earlier quoted context omitted.

There is value, in that a generation of moderately wealthy idiots got convinced that monkey pictures are worth something. Like a cult brainwashing, they have attached their identities to those worthless pictures and now are trapped in greedy stupidity.

NFTs are collectors items. It's as stupid as collecting anything, including fine art, photography, baseball cards, rocks. I'll admit it seems more strange because it's uninteresting, but claiming collecting is idiotic is pretty short-sighted. No, I don't collect that crap :)

I think the difference is that no one was trying to convince a generation of artists that baseball cards were the future of digital art, and that they should inject their own money into the baseball card market to "support the community".

Re: BlockFi files for bankruptcy as FTX fallout spreads

#443

Post by riknos314 »

edem wrote: post #135
RobLach wrote: post #77

The pyramid is falling. Get out if you can. Whatever thrives in the rubble will definitely be neat.

Note that none of the truly decentralized protocols failed so far.

What does it mean for a protocol to fail?

There's multiple layers to the bigger picture: the protocol itself, and the systems that use the protocol to provide value to users.

Customers don't actually care about the protocol, they care about receiving value. A protocol is only as valuable as the systems that use it to add value to consumers.

I remain unconvinced that any currently existing decentralized crypto system has a net-positive long-term value proposition, regardless of the underlying protocol.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#444

Post by halpmeh »

somewhereoutth wrote: post #425
halpmeh wrote: post #411

Earlier quoted context omitted.

Ok, so I think we’re in the same page: there is a definition of capital that includes money but is for some reason not applicable to this conversation because you’re an economist and know better. And if you burn your money in your bank account, then you’re less wealthy but that cannot be referred to as destroying [your] wealth or capital.

To help out a little - money is only a signalling protocol for resource allocation. Nothing more. Burning the money in your bank account does not destroy any resources anywhere. It does, however, rather screw with being able to get some of those resources allocated to you.

So now we're redefining "resource?"

Resource. Noun. a stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively.

Even if the commonly accepted definition of "resource" didn't explicitly state that money is a resource, the ability to acquire resources is itself a resource.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#445

Post by Nursie »

christiangenco wrote: post #349
woodruffw wrote: post #240

Earlier quoted context omitted.

I'm sorry for your hardship. My understanding (which is not a professional or legal opinion) is that individual creditors probably come near last in these kinds of bankruptcy proceedings. It's possible that after a prolonged settlement process you may receive some of your money back, but that's not an outcome that I would place substantial faith in. I say this without an ounce of judgement, explicit or implied: can y…

> can you speak to some of your motivations for putting your life savings into these kinds of vehicles? For sure. My rationale was that keeping crypto in cold storage was effectively currency speculation and didn't really do anything to add value to the world. By instead keeping it in an interest-earning account it could be earning interest independent of the exchange rate with USD and providing some value to the wor…

> providing some value to the world in the form of liquidity and loans.

I'm trying to avoid coming across as blaming or rubbing salt in the wounds, but I just wanted to say that the rates they were offering during times of such low interest rates in general, were really be a huge red flag.

However you feel about cryptocurrency in general (and it's safe to say I'm a sceptic) you have to look at that and think either that something fishy was going on or they had to have an exceptional business model.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#446

Post by soared »

christiangenco wrote: post #426
stickfigure wrote: post #423

Earlier quoted context omitted.

Not the OP, but... in the abstract, 10% in a high-risk investment seems pretty reasonable? Sounds like they're young. For someone with a multidecade investing horizion, 10% is a minor fluctuation; the S&P500 is down 17% YTD. To the OP: Why is losing 10% of your investments a pretty big blow? Almost everyone's 401K plunged by more than that this year. If you're young this won't be the last time.

OP here! Thanks for the affirmation. My wife and I are 31 so a 10% drop is definitely something we can recover from. We've already lived through this high-risk crypto part of our portfolio falling to half it's value over the last 19 months but the other half completely vanishing overnight has hit me psychologically harder. Instead of the narrative of "sure the crypto dropped in value but it's done that before and gon…

Crypto isn’t a high risk investment though, it’s in a category beyond that. You’re definitely going against traditional portfolio structure by having so much in crypto and are kind of getting what you paid for (risk wise).

Re: BlockFi files for bankruptcy as FTX fallout spreads

#447

Post by lottin »

halpmeh wrote: post #444
somewhereoutth wrote: post #425

Earlier quoted context omitted.

To help out a little - money is only a signalling protocol for resource allocation. Nothing more. Burning the money in your bank account does not destroy any resources anywhere. It does, however, rather screw with being able to get some of those resources allocated to you.

So now we're redefining "resource?" Resource. Noun. a stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively. Even if the commonly accepted definition of "resource" didn't explicitly state that money is a resource, the ability to acquire resources is itself a resource.

No, it isn't. Let's say I take a piece of paper and write:

"I will give the bearer of this piece of paper my car."

Do I have created a new car? No. The piece of paper is still a piece of paper, and there aren't any more cars in the economy than there were before. And likewise, if I proceed to destroy the piece of paper no cars will be destroyed in the process.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#448

Post by halpmeh »

lottin wrote: post #447
halpmeh wrote: post #444

Earlier quoted context omitted.

So now we're redefining "resource?" Resource. Noun. a stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively. Even if the commonly accepted definition of "resource" didn't explicitly state that money is a resource, the ability to acquire resources is itself a resource.

No, it isn't. Let's say I take a piece of paper and write: "I will give the bearer of this piece of paper my car." Do I have created a new car? No. The piece of paper is still a piece of paper, and there aren't any more cars in the economy than there were before. And likewise, if I proceed to destroy the piece of paper no cars will be destroyed in the process.

Have you created value by writing on the piece of paper? No. But if the entire world agrees that your piece of paper has value, then you would lose wealth by giving away the piece of paper and the person you gave it to would gain wealth by receiving it.

When we talked about burning money you said: "[burning your money], however, rather screw with being able to get some of those resources allocated to you." If you burn your "car IOU", does that screw with your ability to have resources allocated to you? No it doesn't. So you can see that your car IOU is not an appropriate analogy to money.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#449

Post by ransom1538 »

christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

Can someone explain to me this like I am 5 years old. Why would you leave money on the exchange? Why not take it off after you have the coins? I truly am not following. Wont there be a run on all exchanges/indexes?

Re: BlockFi files for bankruptcy as FTX fallout spreads

#450

Post by ceejayoz »

ransom1538 wrote: post #449
christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

Can someone explain to me this like I am 5 years old. Why would you leave money on the exchange? Why not take it off after you have the coins? I truly am not following. Wont there be a run on all exchanges/indexes?

> Why would you leave money on the exchange?

Because the exchanges have been promising sky-high interest rates to get you to do that.

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