Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Crypto crash deepens, stocks slip

reuters.com

Post reply on HN
Print view View original

591–600 of 688 posts

Re: Crypto crash deepens, stocks slip

#591

Post by jasonlaramburu »

inter_netuser wrote: post #566
jasonlaramburu wrote: post #526

Earlier quoted context omitted.

Except it's not zero sum. It's turning out to be one of the most leveraged assets out there. If I borrow money (or print tether) to buy BTC at $50k and then the price drops to $35k that money is gone.

tether as absolved of all charges, and is under continuous monitoring and audit by NY AG - who would love to jail to advance their careers. Imagine how impressive "jailed 100 BILLION dollar fraudsters" sounds on the resume. Nope, not a fraud. Print, lol. They are just a prime money market fund, setup exactly the same way the funds your parents kept in their 401k. Surprise, commercial banks that lend to you, like mort…

>Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed.

In the US commercial banks are required to maintain a certain % of cash reserves relative to all deposits. They are also FDIC insured. Tether is neither insured nor required to maintain any reserves. Their recent filings show that less than 3% of tethers are actually backed by cash, and the bulk of tether is backed by anonymous 'commercial paper,' aka IOUs. Tether also declined to disclose the credit rating of this commercial paper, or who the counter-parties are.

Once the BTC world stops trying to hide, obfuscate or otherwise cover for bad actors it will be possible to create meaningful financial innovations that scale.

Re: Crypto crash deepens, stocks slip

#592

Post by i386 »

matheusmoreira wrote: post #425
pradn wrote: post #292

Earlier quoted context omitted.

It doesn't seem like anyone believes cryptos are supposed to be currencies any more. All the talk around them is around them being a new, exciting, and potentially very lucrative investment class. If you go to Coinbase's front page, you see that you can buy and sell them, like you can with Robinhood. It's not trying to be a PayPal. The currency-ness does serve an important purpose. It helps bring in investment for th…

> It's not trying to be a PayPal. Binance already has a credit card service that lets people use their cryptocurrency holdings to buy anything.

Binance has to be the most cringeworthy term of 2021

Re: Crypto crash deepens, stocks slip

#593

Post by taylodl »

JoeAltmaier wrote: post #206
taylodl wrote: post #201

Earlier quoted context omitted.

> Cryptocurrency market is extremely volatile. This isn't that far from normal. If that's true then cryptocurrency is pretty much worthless to use as currency. A desired property of currency is to not have wild fluctuations in value on a weekly or monthly bases.

Exactly. Its not so much a currency as a tulip bulb, or a ponzi scheme, or something new that has the worst features of all those.

I don't think of it as currency but as an asset, like gold. I refer to it as digital gold. Assets are not ideal for currency because overall they inflate in value (deflation), which discourages spend. Currency is designed to deflate in value (inflation), albeit at a controlled rate, to encourage spend. That's why you don't want to keep an excess of money in the bank - you want to move that money which deflates in value to assets which inflate in value - you want to buy gold, stocks, real estate, digital gold (cryptocurrency) and stuff like that.

The confusion of treating an asset such as bitcoin as currency is it's fluidity - which is just a measure of how easy it is to convert currency into an asset and an asset into currency. Stocks, for example, have an extremely high fluidity, which also contributes somewhat to their variability. Real estate on the other hand has a very low fluidity (historically speaking anyway, today's market notwithstanding). No one thinks of purchasing goods and services with stocks, nor should you think of purchasing goods and services with bitcoin.

Viewed in that light bitcoin is actually something that's quite familiar: gold. It's digital gold. Now is it good to invest in such an asset? That's another question we can tackle on another day!

Re: Crypto crash deepens, stocks slip

#594

Post by rland »

jasonlaramburu wrote: post #494
imtringued wrote: post #474

Earlier quoted context omitted.

Maybe I wasn't clear enough. What I really mean is that we sit down in the same room. You bought the BTC for $1 in 2013. Today I give you $50k in $100 dollar bills, you send me your 1 Bitcoin. I am deliberately ignoring the current exchange rate to prove a point. What happened is that I overpaid by $15k, I immediately lost $15k on this transaction. You got a bargain and gained $15k on top of the $35k you would have g…

I suspect this thought experiment is overly simplistic to the point of not being useful. Person A has $50k worth of BTC. Person B has $50k worth of cash (some % of which they got from the stimulus). So now 'the room' has $100k in assets. A and B exchange their assets. A+B still equals $100k. $BTC drops by $15k. A+B=$85k. There is now $85k in assets in the room. $15k was lost.

The room includes all buyers and sellers.

Re: Crypto crash deepens, stocks slip

#595

Post by Balantio »

8note wrote: post #284
Balantio wrote: post #103

Earlier quoted context omitted.

Technology can be revolutionising without investing in a very specific cryptocurrency like bitcoin. I'm betting my ass of that cryptocurrency in a different way might be the future of fiat BUT from the countries themselfs. I'm not sure why anyone in the long run would trust a system which is controlled by some totally unknown and new individuals who invested in some cryptocurrencies. There is no need at all to assume…

Countries can just use a database and do the same stuff as crypto incredibly efficiently by comparison

I just don't know how it works in detail on the bacnking side as i havenot worked with it.

My thought was that a crypto based system could replace perhaps a sea of different approaches and alignment efforts across banking systems and if a central bank/banks are just need to approve a block, instead of mining it, the basic idea of a transparent cryptosigned blockchain might be useful.

But yes i don't think they need something like this as the current system seems to be very trustworthy. I have never heard of a bank creating money out of thin air.

Re: Crypto crash deepens, stocks slip

#596

Post by zepto »

inter_netuser wrote: post #577
zepto wrote: post #125

Earlier quoted context omitted.

It may be arrogant sounding, but it’s not stupid. It is in the financial interest of Bitcoin holders to talk up Bitcoin and defend it to the death. The senior management of regular banks in many countries are often required by law to deny that the bank is in jeopardy right up until the moment they close the doors, as a way to prevent bank runs. Because crypto is distributed, every holder is a bank manager, and must d…

Luckily, it's ledger is open for everyone to see, unlike banks' ledgers.

Unfortunately that is irrelevant to preventing runs.

Re: Crypto crash deepens, stocks slip

#597

Post by megameter »

arcticbull wrote: post #217
inter_netuser wrote: post #190

Earlier quoted context omitted.

I see you often comment on Bitcoin negatively, curious why?

It's a substantially-manipulated negative-sum distributed Ponzi scheme. The most blatant example of a naked emperor I've seen in my lifetime. And it consumes the energy of Argentina to achieve as much work as a Raspberry Pi.

OK, but who/what will the top holders of BTC exit to? In what scenario will the price go to zero?

"Bans" are not going to do it. It was designed toward censorship resistance. That moves it to an underground, at best.

The top holders are not going to dump it - they've committed book value assets; mining companies, exchanges - they aren't going to exit.

For their continued existence to make sense they want more things to be traded in crypto, so they invent stuff like "NFT" and "DeFi". Half of it is crap, but I have been around long enough to remember when Wall Street was bullish on "3D Television". Investors always want angles to make their current holdings more valuable, and as of this moment there are far too many crypto projects to be aware of them all. The re-investment rate is huge. Far different from when a penny pumper puts out the "good news" that they have put their logo on a race car and have t-shirts available.

So as I see it, it's either not a Ponzi or everything is.

Re: Crypto crash deepens, stocks slip

#598

Post by lottin »

intotheabyss wrote: post #360
AnIdiotOnTheNet wrote: post #221

Earlier quoted context omitted.

Ok, if that's the case why should we start using it now? What's the advantage other than fomo-driven speculatory gambling?

The advantage eventually will be easier ways to get funding for startups or businesses of all kinds. You need highly liquid markets in order to facilitate global finance at scale so that's where it's starting today. Rebuilding all of the financial primitives onchain. Why? Because composability of contracts onchain results in higher velocities of money; higher than whats possible in traditional finance. Imagine a worl…

None of this makes any sense at all. Composability of contracts leads to higher velocity of money? Where do you get this from? And why do we want higher velocity of money? The only people who care about velocity of money are macroeconomists. Velocity of money has literally zero impact on businesses and individuals.

Re: Crypto crash deepens, stocks slip

#599

Post by matheusmoreira »

i386 wrote: post #592
matheusmoreira wrote: post #425

Earlier quoted context omitted.

> It's not trying to be a PayPal. Binance already has a credit card service that lets people use their cryptocurrency holdings to buy anything.

Binance has to be the most cringeworthy term of 2021

What? Binance isn't a term, it's a cryptocurrency exchange.

Re: Crypto crash deepens, stocks slip

#600

Post by jasonlaramburu »

rland wrote: post #594
jasonlaramburu wrote: post #494

Earlier quoted context omitted.

I suspect this thought experiment is overly simplistic to the point of not being useful. Person A has $50k worth of BTC. Person B has $50k worth of cash (some % of which they got from the stimulus). So now 'the room' has $100k in assets. A and B exchange their assets. A+B still equals $100k. $BTC drops by $15k. A+B=$85k. There is now $85k in assets in the room. $15k was lost.

The room includes all buyers and sellers.

>The room includes all buyers and sellers.

You can expand the model to include all BTC buyers and sellers. It doesn't change the fact that US currency was devalued to generate an economic stimulus. A meaningful % of that stimulus was spent into 'the room.' The value of certain assets in the room was massively overstated and crashed. The stimulus money cannot be recovered, but Americans must live with the inflation and other impacts for many years.

Post reply on HN