BlockFi files for bankruptcy as FTX fallout spreads • Hacker News Board

Re: BlockFi files for bankruptcy as FTX fallout spreads

#541

Post by christiangenco » Thu, Dec 01, 2022, 5:34 PM UTC

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?

Blockfi was promising ~2-4% annual returns for storing your crypto with them—it wasn't an exchange to buy and sell.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#542

Post by lottin » Thu, Dec 01, 2022, 5:37 PM UTC

halpmeh wrote: post #523

lottin wrote: post #479

Earlier quoted context omitted.

Because this only happens once the IOU has been put in circulation. In my example, the paper money I created was not put in circulation, consequently no redistribution effect took place. The analogy is solid and appropriate.

Ok, so what would be involved in putting it into circulation? In your original analogy, you simply you said you wrote an IOU. Unless putting it into circulation is trivial, then your analogy is neither solid nor appropriate. A substantial amount of work goes into providing a stable currency. Just being perfectly honest here, I think your position has been shown to be logically inconsistent in multiple ways. 1. We sta…

You put the IOU in circulation by selling it or by giving it away. (I don't know what's so hard about that.) The point is that the act of writing the IOU doesn't create any new cars. And likewise the act of destroying the IOU, at any point in time, and regardless who's holding it, doesn't destroy any cars either. This simple example shows that no actual resources (i.e. capital) are destroyed as a consequence of IOUs being destroyed. If you still don't understand why this is the case, I don't know what else to say to you.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#543

Post by 7e » Sat, Dec 03, 2022, 7:46 AM UTC

alxmng wrote: post #491

7e wrote: post #487

Earlier quoted context omitted.

It prints money, that money flows into institutions and chases returns. Much of it flows to VC, guaranteed. That’s what the Fed was literally created to do.

New money is created through bank loans, or monetizing government spending, or emergency asset purchases by the Fed – none of which are the typical source of VC funds.

From https://hackernoon.com/the-macroeconomics-of-venture-capital...: "when the Fed engages in quantitative easing, it goes a step further and attempts to keep returns for longer-term bonds down as well. In the United States, this meant the purchasing of mortgage-backed securities and government bonds. (In Japan, central bankers have had to utilize even more extreme measures, going so far as directly buying not only government bonds but also stocks on the public market). By bidding up the prices of long-term bonds through quantitative easing, the Fed forces investors to seek returns in even riskier assets, such as equities.

As investors flow into the equity market, stock prices are bid up to the point at which expected returns for stocks also become unattractive. At this point, the logical next move for global, institutional investors is to move to more risky investment options such as private equity and venture capital. This is exactly what we’ve seen."

Re: BlockFi files for bankruptcy as FTX fallout spreads

#544

Post by edem » Sun, Dec 04, 2022, 9:23 AM UTC

riknos314 wrote: post #443

edem wrote: post #135

Earlier quoted context omitted.

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…

That's probably because you've never used any of those.