One Tether Trader Didn't Cause the Bitcoin Bubble(bloomberg.com)
bloomberg.com
One Tether Trader Didn't Cause the Bitcoin Bubble
https://www.bloomberg.com/opinion/articles/2019-11-05/did-the-bitcoin-bubble-come-from-one-bitfinex-tether-trader
134 comments
Bitcoin has smart contracts, and has for many years now. Ethereum's marketing for the phrase is kind of misleading.
Why the downvoting? Apparently a number of people haven't heard of Bitcoin Script, or are upset I pointed out this very factual item about Bitcoin? Seems somewhat odd.
Why the downvoting? Apparently a number of people haven't heard of Bitcoin Script, or are upset I pointed out this very factual item about Bitcoin? Seems somewhat odd.
Ethereum's smart contracts are obviously more developer friendly and easier to implement. Ethereum smart contracts are the go-to for dapps, despite having a significantly smaller userbase and market cap than bitcoin.
To say Bitcoin smart contracts are equal to Ethereum smart contracts would be akin to comparing Myspace to Facebook.
To say Bitcoin smart contracts are equal to Ethereum smart contracts would be akin to comparing Myspace to Facebook.
Bitcoin originated smart contracts, but they were severely limited due to a filter that was imposed. Arbitrary scrypt execution was seen as a security risk (despite not being Turing-complete), so a set of scrypt templates were whitelisted. I think all clients would accept blocks with any scrypt in them, but most pools would only accept transactions with the fixed templates.
Bitcoin does have enough flexibility to do trustless cross-chain trading though, so it's possible to do dapp logic in Eth and manipulate BTC funds indirectly. (IIRC)
Bitcoin does have enough flexibility to do trustless cross-chain trading though, so it's possible to do dapp logic in Eth and manipulate BTC funds indirectly. (IIRC)
And MySpace was better all around in objective terms, but facebook was dumbed down for mass appeal so it won out?
This is a false narrative.
Facebook better optimized for the fact that most people are too stupid to avoid using full-page background images and auto-playing music.
Facebook better optimized for the fact that most people are too stupid to avoid using full-page background images and auto-playing music.
I thought it was a lot cooler back then. People got their own customized little places about themselves, maybe with some fun media playing. Now it's all boring and sterilized.
It was a blessing and a curse.
The internet in general is probably "better designed" now, but also way more homogenized and boring.
The internet in general is probably "better designed" now, but also way more homogenized and boring.
>was dumbed down for mass appeal so it won out?
thats usually how it works
thats usually how it works
Yes, I just don't think the analogy worked very well.
Discreet-log contracts are a miracle, but in the same way that a dancing bear is a miracle. There's no way they can compete with smart contracts on a platform designed with smart contracts in mind, at least on a technical level. (Maybe we'll all end up using discrete-log contracts and their descendants due to network effects, but I doubt it. Or maybe some richer zero-knowledge contract-enforcement scheme can be devised on bitcoin... Maybe.)
Ethereum as a platform has made many bad design decisions. It's not really suitable for a lot of things; including, well, things it was marketed for (unstoppable, uncensorable, scalable applications).
I'm sure something better for those design goals than Ethereum will come along, but I seriously doubt it's going to be Bitcoin.
Cardano, although still not ready for primetime, seems like a likely candidate.
EDIT : I do work for IOHK and I am biased.
Surely you haven't heard of Simplicity then. A potential replacement for Bitcoin's current scripting language.
https://blockstream.com/2018/11/28/en-simplicity-github/
https://blockstream.com/2018/11/28/en-simplicity-github/
Bitcoin was literally designed with contracts (programs deciding transactions) in mind from its inception. Ethereum is just script kiddies piling JavaScript onto blockchain and calling it the greatest invention in human history.
They're an afterthought in Bitcoin. Its main goal was to be a decentralized payments system.
They're absolutely not an afterthought in Bitcoin, and in fact some of the functionality of Bitcoin Script was disabled to prevent some of the disasters that have occurred due to poor engineering decisions in Ethereum.
https://en.bitcoin.it/wiki/Script
https://en.bitcoin.it/wiki/Script
Ethereum was responsible for the 2017 bubble, but not because it is useful or smart contracts are useful or blockchain is useful. It was ICOs/scams running on Ethereum. Everyone saw their friends getting rich from Bitcoin and wanted in on one of the supposedly Next Bitcoins.
Blockchain is just a database, a slow and expensive one at that. “Legacy” tech (like a RDBMS) is much more efficient, reliable, and cutting-edge than blockchain. The only benefit of a blockchain is censorship-resistance—not needing to rely on government or centralized third-parties because a swarm maintains consensus (the longest Merkle tree). Financial markets operate in broad daylight with real identities enforced by judges and men with guns. There is absolutely no use case for censorship-resistance in that space. It is a lose/lose. How is it even supposed to work? Bankers pay miners to secure a log of their transactions? Ok, say someone robs a bank. A banker calls in to report the loss; a block gets mined showing that money is lost. Why did you need a blockchain? Why not just trust the banker to update a RDBMS cluster since you're trusting the banker's word anyway? Blockchain only works for purely digital things...like Bitcoin.
Smart contracts also do not need censorship resistance. People get along fine with the current legal system at least for civil lawsuits.
You need a blockchain iff:
- The data you are representing are other data in the same tree, not entities outside the data structure (much less entities irl).
- You need censorship-resistance because you're Silk Road or Wikileaks or trying to overthrow your government.
- The data is publicly/www world accessible by parties who do not trust each other.
TL;DR A blockchain is a domain-specific data structure internal to the Bitcoin project circa 2009.
Blockchain is just a database, a slow and expensive one at that. “Legacy” tech (like a RDBMS) is much more efficient, reliable, and cutting-edge than blockchain. The only benefit of a blockchain is censorship-resistance—not needing to rely on government or centralized third-parties because a swarm maintains consensus (the longest Merkle tree). Financial markets operate in broad daylight with real identities enforced by judges and men with guns. There is absolutely no use case for censorship-resistance in that space. It is a lose/lose. How is it even supposed to work? Bankers pay miners to secure a log of their transactions? Ok, say someone robs a bank. A banker calls in to report the loss; a block gets mined showing that money is lost. Why did you need a blockchain? Why not just trust the banker to update a RDBMS cluster since you're trusting the banker's word anyway? Blockchain only works for purely digital things...like Bitcoin.
Smart contracts also do not need censorship resistance. People get along fine with the current legal system at least for civil lawsuits.
You need a blockchain iff:
- The data you are representing are other data in the same tree, not entities outside the data structure (much less entities irl).
- You need censorship-resistance because you're Silk Road or Wikileaks or trying to overthrow your government.
- The data is publicly/www world accessible by parties who do not trust each other.
TL;DR A blockchain is a domain-specific data structure internal to the Bitcoin project circa 2009.
>Smart contracts also do not need censorship resistance. People get along fine with the current legal system at least for civil lawsuits.
Really? How can a financially censored person access financial services? If you aren't allowed a bank account then you are immediately cut off from services which smart contracts could substitute for.
A coinbase account can be closed but an exchange built out of smart contracts like UniSwap can't censor its users.
You may not be able to access credit without a bank but you can get a loan on a smart contract money market like compound. You can even use a smart contract to lend money to yourself (Maker).
You may not have a bank account but you can use a smart contract wallet to give yourself bank-like protections such as withdrawal limits.
And so on.
Really? How can a financially censored person access financial services? If you aren't allowed a bank account then you are immediately cut off from services which smart contracts could substitute for.
A coinbase account can be closed but an exchange built out of smart contracts like UniSwap can't censor its users.
You may not be able to access credit without a bank but you can get a loan on a smart contract money market like compound. You can even use a smart contract to lend money to yourself (Maker).
You may not have a bank account but you can use a smart contract wallet to give yourself bank-like protections such as withdrawal limits.
And so on.
I created an account just to respond to you.
You're too focused on the trees, you can't see the forest.
https://thedefiant.substack.com/p/ether-is-the-best-model-fo...
You're too focused on the trees, you can't see the forest.
https://thedefiant.substack.com/p/ether-is-the-best-model-fo...
> I created an account just to respond to you.
Honored. Thank you.
I read the article. It seems Ethereum 2.0 will double down on its wildly successful model of collecting rent from all the ponzis that live on it. Good strategy. It's still not useful though.
The litany of already-existing financial services the Ethereum community aims to replicate just proves my point--these use cases for crypto are already solved problems. It would be one thing if it's 10x better than the incumbent, but it's not even 1x better. A version of something that already exists "but with crypto" is actually a worse, slower, more expensive version of that thing. There has to be some hurdle uniquely overcome by decentralization that would justify the increased costs of this horrible implementation…like censorship by armed thugs. Who is censoring your ability to open a CD? A retirement account is the most boring thing in the world.
I feel for the people in Iran and Venezuela who cannot (easily) access foreign banks, but these people are better served by using cryptography in other ways (e.g. TOR; E2E encryption/DHKE) to access back channels to funnel money overseas to a free country's financial services. People living under totalitarian states sanctioned by the U.S. will always be a superminority (let alone of the population with real money to invest). The answer to their problems isn't to blanket adopt a new currency with performance characteristics so poor they would only be feasible if we in fact lived under a totalitarian state also.
Product-market-fit for Ethereum is designed for a dystopia where banking services are illegal; lending is illegal (and borrowers are required to over-collateralize their loans (?!!)); financial markets are inaccessible (stocks and businesses do not exist in this world, only lone wandering merchants with Trezors); every other currency is defunct or so volatile that somehow ETHEREUM is the best choice as a stable settlement layer; and you can't move because every country in the world is like this (yet somehow Ethereum coexists with global totalitarianism).
Reimplementing financial services "but with ETH" is also very certainly not innovation.
> You're too focused on the trees, you can't see the forest.
Don't get me wrong--buy Ethereum. It is completely useless, but the price has nothing to do with its usefulness or anything I said above. It could be worth $100k without any use case because humans.
Honored. Thank you.
I read the article. It seems Ethereum 2.0 will double down on its wildly successful model of collecting rent from all the ponzis that live on it. Good strategy. It's still not useful though.
The litany of already-existing financial services the Ethereum community aims to replicate just proves my point--these use cases for crypto are already solved problems. It would be one thing if it's 10x better than the incumbent, but it's not even 1x better. A version of something that already exists "but with crypto" is actually a worse, slower, more expensive version of that thing. There has to be some hurdle uniquely overcome by decentralization that would justify the increased costs of this horrible implementation…like censorship by armed thugs. Who is censoring your ability to open a CD? A retirement account is the most boring thing in the world.
I feel for the people in Iran and Venezuela who cannot (easily) access foreign banks, but these people are better served by using cryptography in other ways (e.g. TOR; E2E encryption/DHKE) to access back channels to funnel money overseas to a free country's financial services. People living under totalitarian states sanctioned by the U.S. will always be a superminority (let alone of the population with real money to invest). The answer to their problems isn't to blanket adopt a new currency with performance characteristics so poor they would only be feasible if we in fact lived under a totalitarian state also.
Product-market-fit for Ethereum is designed for a dystopia where banking services are illegal; lending is illegal (and borrowers are required to over-collateralize their loans (?!!)); financial markets are inaccessible (stocks and businesses do not exist in this world, only lone wandering merchants with Trezors); every other currency is defunct or so volatile that somehow ETHEREUM is the best choice as a stable settlement layer; and you can't move because every country in the world is like this (yet somehow Ethereum coexists with global totalitarianism).
Reimplementing financial services "but with ETH" is also very certainly not innovation.
> You're too focused on the trees, you can't see the forest.
Don't get me wrong--buy Ethereum. It is completely useless, but the price has nothing to do with its usefulness or anything I said above. It could be worth $100k without any use case because humans.
You've clearly never tried to use "a free country's financial services" in this context. Even as a US citizen it is prohibitively difficult to open even the simplest of checking accounts from overseas.
There is no global, trans-national solution for financial services better suited for solving these issues than crypto. Your position of privilege in a first world country blinds you to the disruption available to bringing financial services to the 2nd/3rd worlds, though you are right -- it is the slowest moving gold rush we've seen from tech.
You also drastically underestimate the utility the global economy associates with tax avoidance -- disregarding the moral and legal implications, because that's what rich people do.
There is no global, trans-national solution for financial services better suited for solving these issues than crypto. Your position of privilege in a first world country blinds you to the disruption available to bringing financial services to the 2nd/3rd worlds, though you are right -- it is the slowest moving gold rush we've seen from tech.
You also drastically underestimate the utility the global economy associates with tax avoidance -- disregarding the moral and legal implications, because that's what rich people do.
Blockchain is raw garbage. The bitcoin network ALONE undid every single bit of good we achieved in terrestrial-used solar energy over 40 years, literally every gain from that wiped straight out in less than two years. Ethereum was #2 as far as energy usage goes.
We had this back in the 70s, FWIW. It failed as a miserable hunk of garbage then, it's failing as a miserable hunk of garbage now by all metrics except how efficiently it parts fools from their money.
We had this back in the 70s, FWIW. It failed as a miserable hunk of garbage then, it's failing as a miserable hunk of garbage now by all metrics except how efficiently it parts fools from their money.
> We had this back in the 70s, FWIW
Sorry, what?
Sorry, what?
We had permissionless distributed databases (that's all blockchain is) in the 70s. They failed because they are hugely inefficient and extremely resource intensive with each added node.
What's old is new again. I'm old enough to have used one of these in the early 80s, learned about from a BBS I was frequenting.
What's old is new again. I'm old enough to have used one of these in the early 80s, learned about from a BBS I was frequenting.
Blockchain is raw garbage.
That's the problem though - blockchains aren't garbage. They're useful.
The actual problem is that currency speculation is garbage. If people were using BTC for its intended purpose (transferring money to and from people they don't trust) it'd be brilliant and it'd have a much more minimal environmental impact.
That's the problem though - blockchains aren't garbage. They're useful.
The actual problem is that currency speculation is garbage. If people were using BTC for its intended purpose (transferring money to and from people they don't trust) it'd be brilliant and it'd have a much more minimal environmental impact.
> blockchains aren't garbage. They're useful.
If they were useful, all these corporate pilot programs would be raging successes by now. Instead they quietly fizzle.
I personally haven't seen an application that isn't better implemented with pre-existing technologies.
If they were useful, all these corporate pilot programs would be raging successes by now. Instead they quietly fizzle.
I personally haven't seen an application that isn't better implemented with pre-existing technologies.
They are not useful at all, or else when we first had permissionless distributed databases in the 70s we'd freaking keep using them to this day. Regular databases like we have now are more robust and reliable, don't eat up a ton of energy like distributed permissionless databases (Bitcoin eats up an estimated 34TWh per year and growing as of 2017, there's no other database on the planet that consumes so much yet does so little) and regular databases don't need fucktons of environmentally-wasteful hardware to operate.
We figured this out in the 70s. That some idiot resurrected the idea in the '00s and got a bunch of people to buy into it tells much about the state of "technology enthusiasts" on the internet.
We figured this out in the 70s. That some idiot resurrected the idea in the '00s and got a bunch of people to buy into it tells much about the state of "technology enthusiasts" on the internet.
The thing is transferring money with guarantees is a solved problem. All you need is banks and laws and judges and police. We have those. Also transferring funds isn't enough to make a viable currency, it has to also act as a store of value.
Microlending ventures clearly demonstrate the existence of under served markets.
Also, I think instead of "solved problem" you mean "solved for white people in rich countries"
Also, I think instead of "solved problem" you mean "solved for white people in rich countries"
>All you need is banks and laws and judges and police.
Wow that's all? Seems so much easier than just having a crypto wallet and sending anything to anyone at any time.
Wow that's all? Seems so much easier than just having a crypto wallet and sending anything to anyone at any time.
Oh yeah, why don't I just sue the scammer from a third world country who charged back his PayPal payment instead of using cryptocurrency that makes it impossible. I'm sure small claims court will be happy to get me my money back.
The problem is that cryptocurrencies still require laws and judges and police. The only thing they replace is banks, and they do that bit pretty poorly.
> If people were using BTC for its intended purpose (transferring money to and from people they don't trust) it'd be brilliant and it'd have a much more minimal environmental impact.
Making BTC transactions is the very thing that costs electricity in the BTC network. If no one made any BTC transactions today, then no blocks would be added and every miner and node would be idle.
Making BTC transactions is the very thing that costs electricity in the BTC network. If no one made any BTC transactions today, then no blocks would be added and every miner and node would be idle.
BTC doesn't scam people. People scam people.
Maybe the scamming is the problem - and you're not going to solve that with technology.
Maybe the scamming is the problem - and you're not going to solve that with technology.
Some great alternatives Tether and Bitfinex are MakerDAO and Uniswap. The first one offers a decentralised & transparent stable-coin called DAI. The second one is a decentralized exchange that is also 100% transparent.
These are transparent because they're running as programs on top of of a blockchain (Ethereum). Each and every state change is recorded and the systems can be audited in real-time.
The Maker DAI stablecoin currency is backed by collateral (Ether), and it's currently overcollateralized by about 350%. The system has been remarkably stable, even in the face of the bear market, which resulted on some crazy swings in the price of Ether.
DAI also has a few fiat on-ramps, including Coinbase and Kraken. You can also mint DAI yourself - there's a tutorial on Coinbase where they give you $20 DAI for free, https://www.coinbase.com/earn
What's more is that since these systems are essentially programs (they can be used and called by other programs as "library" ) which means that they can be used as lego bricks to build new things. Some examples are "Pool Together - https://www.pooltogether.us", which is a no-loss lottery system. It combines MakerDao's DAI coin and a decentralized lending system called "Compound".
Please be mindful that all the above projects are still considered experiments and cutting-edge stuff. It will probably still take a few years to mature - however, a lot of new opportunities seem to be opening up in this area.
These are transparent because they're running as programs on top of of a blockchain (Ethereum). Each and every state change is recorded and the systems can be audited in real-time.
The Maker DAI stablecoin currency is backed by collateral (Ether), and it's currently overcollateralized by about 350%. The system has been remarkably stable, even in the face of the bear market, which resulted on some crazy swings in the price of Ether.
DAI also has a few fiat on-ramps, including Coinbase and Kraken. You can also mint DAI yourself - there's a tutorial on Coinbase where they give you $20 DAI for free, https://www.coinbase.com/earn
What's more is that since these systems are essentially programs (they can be used and called by other programs as "library" ) which means that they can be used as lego bricks to build new things. Some examples are "Pool Together - https://www.pooltogether.us", which is a no-loss lottery system. It combines MakerDao's DAI coin and a decentralized lending system called "Compound".
Please be mindful that all the above projects are still considered experiments and cutting-edge stuff. It will probably still take a few years to mature - however, a lot of new opportunities seem to be opening up in this area.
Are you saying Tether isn't run on a blockchain? Because it most certainly is.
The SEC crypto tsar recently had quite negative comments about MakerDAO at SWSX, as in they may be in breach of securities law. Something to note.
The decentralized nature still makes it far less riskier to the end consumer.
The SEC crypto tsar recently had quite negative comments about MakerDAO at SWSX, as in they may be in breach of securities law. Something to note.
The decentralized nature still makes it far less riskier to the end consumer.
Well the Tether transactions are run on a centralized blockchain, but the underlying value of Tether is based entirely on trust in Bitfinex backing it with actual dollars.
As for Maker, I really don't know how the SEC would begin to shut it down if it wanted to. It's entirely smart contract driven and it's live on the Ethereum blockchain, which is truly decentralized. Surely we need to update securities law for the 21st century as I'm not sure the Howey test had blockchain era in mind.
As for Maker, I really don't know how the SEC would begin to shut it down if it wanted to. It's entirely smart contract driven and it's live on the Ethereum blockchain, which is truly decentralized. Surely we need to update securities law for the 21st century as I'm not sure the Howey test had blockchain era in mind.
Can't speak for the centralisation of Omni, you have any more info on that? Know little about them, it's a word thrown around quite readily in the cryptoworld for various reasons. They present themselves as decentralised and were in the first wave of layer 2 cryptocurrencies. Tether tx's are anchored into the bitcoin blockchain somewhere along the line.
RE: Maker, certainly agree, just stating the situation. There's no chance of laws being able to keep up, it's a game of asking for forgiveness later for most. If something blew up quick enough and got mainstream adaption the law would bend for it (ie. Uber, AirBnb).
https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-b...
RE: Maker, certainly agree, just stating the situation. There's no chance of laws being able to keep up, it's a game of asking for forgiveness later for most. If something blew up quick enough and got mainstream adaption the law would bend for it (ie. Uber, AirBnb).
https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-b...
Well the exchanges that participate in the Tether blockchain each run a node or nodes. The transactions are cryptographically verified, so there's a common ledger between all these participating exchanges. But Tether has a couple theoretical weaknesses due to this setup. A quorum of exchanges could theoretically collude to manipulate transaction history or shut out other exchanges. And Bitfinex itself is the centralized holder of the USD backing Tether, so that makes it very vulnerable to any shortcomings in Bitfinex's accounting. Ultimately to cash out Tether the exchanges have to go to Bitfinex and request a fund transfer so they are a single point of failure for the Tether chain.
There are certainly some trust issues with Tether, but in this case I don't think that exchanges could easily roll back Omni transactions unless they were to fork the Omni protocol. Omni transactions happen on the Bitcoin blockchain - they are effected by extra data in otherwise normal bitcoin transactions. In order to roll back the Omni transactions you would have to either (1) roll back the underlying bitcoin transactions or (2) convince everyone who runs Omni nodes to update their software to your branch which discards the transactions you wish to roll back.
Option (2) has already happened. Tether got hacked and someone issued/transferred lots of coins to themselves. In response, the whole omni network was upgraded to blacklist these stolen coins!
Maker is run on a centralized blockchain. Ethereum is pretty admittedly centralized on the Infura node-as-a-service platform, which in of itself is hosted on AWS.
https://www.coindesk.com/the-race-is-on-to-replace-ethereums...
https://www.coindesk.com/the-race-is-on-to-replace-ethereums...
If Infura was compromised tomorrow, it could cause a bunch of damage to Ethereum ecosystem, it wouldn't even remotely be structural. You act like Infura owns 50% of the mining power. It's just one aspect of Ethereum layers which is dominated by Infura.
But if you keep creating these arbitrarily created measures, you can just as easily say "Bitcoin is centralized because bitcoin domain names and subreddits are owned by a single entity" (and this single entity managed to dominate the block size debate).
If Chinese firewall goes up tomorrow, bitcoin would suffer a big damage. If Congress passes FATCA/FBAR reporting regulations for crypto, sanctions on China, bitcoin would suffer a big damage. But the idea is that none of these things would kill Bitcoin, and that's the main thing.
You're calling Ethereum a 'centralized blockchain' because you're trying to cognitively justify against the vastly superior feature set of a competing blockchain.
Ethereum fanboys do the same when they've to argue against scalability of TRON/EOS etc or other chains.
But if you keep creating these arbitrarily created measures, you can just as easily say "Bitcoin is centralized because bitcoin domain names and subreddits are owned by a single entity" (and this single entity managed to dominate the block size debate).
If Chinese firewall goes up tomorrow, bitcoin would suffer a big damage. If Congress passes FATCA/FBAR reporting regulations for crypto, sanctions on China, bitcoin would suffer a big damage. But the idea is that none of these things would kill Bitcoin, and that's the main thing.
You're calling Ethereum a 'centralized blockchain' because you're trying to cognitively justify against the vastly superior feature set of a competing blockchain.
Ethereum fanboys do the same when they've to argue against scalability of TRON/EOS etc or other chains.
Controlling node consensus is the most important "layer". Nodes enforce protocol rules. If most "dapps" are using Infura, then Infura can easily force changes upon not only the dapps themselves but the entire network.
Ethereum's engineering decisions have absolutely led to this, as well. Arbitrary "dapps" do not need a blockchain. Having all of this unnecessary data "on the blockchain" makes it bloated and impossible to validate, leading to entities like Infura.
Ethereum's engineering decisions have absolutely led to this, as well. Arbitrary "dapps" do not need a blockchain. Having all of this unnecessary data "on the blockchain" makes it bloated and impossible to validate, leading to entities like Infura.
Which securities law?
On a ski trip I took in 2017, I was in line to buy a lift ticket one cold December morning. I remember overhearing the winter bros (the ones that usually talk about gnar and their steezy tricks) talking about installing Coinbase and buying Bitcoin.
I wouldn't underestimate the amount of retail investors that speculated on Bitcoin during that time. It was on major news networks in America, but also on national networks outside the U.S. My uncles and aunts were calling me asking how to buy Bitcoin outside the USA. The FOMO was real back then. Did Tether play a part in the grand pump? I'm sure it did, but I imagine it was more of a catalyst, and not the primary driver as the original study suggested.
I wouldn't underestimate the amount of retail investors that speculated on Bitcoin during that time. It was on major news networks in America, but also on national networks outside the U.S. My uncles and aunts were calling me asking how to buy Bitcoin outside the USA. The FOMO was real back then. Did Tether play a part in the grand pump? I'm sure it did, but I imagine it was more of a catalyst, and not the primary driver as the original study suggested.
The day after our company Christmas party in 2017 I had to take an uber the next morning to go pick up my car. I was anxious mess like I had been for the last 3 weeks riding the insane wave up on a mish mosh of alt coins. Phone clasped hard in my hand I couldn't go 5 minutes without checking the market.
My uber driver, a middle aged black women cheering about her Christmas plans and whole family coming to visit, suddenly breaks off track and excitedly brings up bitcoin. Her and her husband got their account set up and were putting "all their money" into it. "I don't even know what the hell it is but people are making money left and right!" I told her that it was probably a terrible idea.
The next day I liquidated all my holdings.
I did miss the final run up, but I came out a lot better than most.
My uber driver, a middle aged black women cheering about her Christmas plans and whole family coming to visit, suddenly breaks off track and excitedly brings up bitcoin. Her and her husband got their account set up and were putting "all their money" into it. "I don't even know what the hell it is but people are making money left and right!" I told her that it was probably a terrible idea.
The next day I liquidated all my holdings.
I did miss the final run up, but I came out a lot better than most.
Years ago I took a random day off.
I remembered after breakfast I had some old stock options that were never worth much and some stock I had been buying via an employee stock plan.
I knew the company stock was doing well so I log in and find that day the stock had jumped a fair amount.
It occurred to me that "I'm never going to see a return like this any other time and I almost forgot this was even here"... so I sold it all.
The stock sold at a penny or two less than the all-time high that it would ever reach.
That was a few months before everything hit the fan with the mortgage crisis.
I like to tell that story about how calling a high or bottom in the market is pretty hard and the only time I ever did it it was because I took the day off on the right day.
I remembered after breakfast I had some old stock options that were never worth much and some stock I had been buying via an employee stock plan.
I knew the company stock was doing well so I log in and find that day the stock had jumped a fair amount.
It occurred to me that "I'm never going to see a return like this any other time and I almost forgot this was even here"... so I sold it all.
The stock sold at a penny or two less than the all-time high that it would ever reach.
That was a few months before everything hit the fan with the mortgage crisis.
I like to tell that story about how calling a high or bottom in the market is pretty hard and the only time I ever did it it was because I took the day off on the right day.
Similarly, in June 2018, I was chatting with my Uber driver and I told them I was interning as a software engineer and the driver started asking me about the AI/ML usage at my company (without me starting that discussion). Even before then, I thought AI/ML was overhyped. That interaction just confirmed it for me.
Late 2017 was nuts. I recall my brother texting me “Hey should I buy XRP?” out of the blue.
Wish I had had the presence of mind to realize it was time to get out.
Wish I had had the presence of mind to realize it was time to get out.
I can remember Bitcoin going to $200 thinking it was nuts.
I can also remember it going to $700 thinkin it was nuts.
Now it's over $9000.
So when was there really a reason to get out?
I can also remember it going to $700 thinkin it was nuts.
Now it's over $9000.
So when was there really a reason to get out?
When it hit around the $30 mark I was thinking that was going to be where it levelled off and I was actually excited for it to become a stable currency.
I was pretty wrong, both about it being a stable and a currency.
As another commenter mentioned, I'm also excited to have been here for it all and stille excited to see where it leads. Ultimately, whether you love it or hate it, Bitcoin has made its mark on history and has kind of become the giant shoulders that the next generation can stand on.
I was pretty wrong, both about it being a stable and a currency.
As another commenter mentioned, I'm also excited to have been here for it all and stille excited to see where it leads. Ultimately, whether you love it or hate it, Bitcoin has made its mark on history and has kind of become the giant shoulders that the next generation can stand on.
I still remember the first thought that went through my head when it hit $30...
"Well that shit is gonna crash tomorrow"
"Well that shit is gonna crash tomorrow"
Well, it did go from 30 to 3.
And from 1200 to 120, and from 20k to 3k, but today is 9k, so on the average year-to-year the price was always on the rise. You do know there are right now more millionaires on Earth then the total number of bitcoins that will ever be. So when bitcoin going to be all 21 millions mined, there will be not enough for all millionaires to buy one. Let that sink.
There are also more millionaires on earth right now than there ever will be of my exclusive cryptocurrency, MoonCoin. I’d be happy to sell you one for 1,000 USD
I’ll give you 50 cents for a billionth of 1 coin.
There it is. Market validation that each MoonCoin is worth $500M a piece.
> ... so on the average year-to-year the price was always on the rise.
Really? Even in 2018? It wasn't, it started at $17K (when I sold) and ended at $3k.
> So when bitcoin going to be all 21 millions mined, there will be not enough for all millionaires to buy one. Let that sink.
And? There's not enough millionaires in the world to buy more than 1 Transamerica Pyramid, either. That means absolutely nothing. There's not enough millionaires on earth to buy 1 BTC each today and it means nothing.
Really? Even in 2018? It wasn't, it started at $17K (when I sold) and ended at $3k.
> So when bitcoin going to be all 21 millions mined, there will be not enough for all millionaires to buy one. Let that sink.
And? There's not enough millionaires in the world to buy more than 1 Transamerica Pyramid, either. That means absolutely nothing. There's not enough millionaires on earth to buy 1 BTC each today and it means nothing.
I thought it was nuts when BTC crossed the great Rubicon that was $1/BTC thinking how could this thing I generated on my laptop be worth more than a real dollar? I sold then bought in again after Mt Gox. I get the same vibes today it might take 10 years but nothing is different now, Bitcoin will be $100k eventually.
Well, in hindsight, $18k would have been a great time to get out.
You missed k__'s point which is that no matter what peak price you think was the best time to sell out, it has always been followed 2-3 years later by an even greater peak.
You have hindsight in the past but you are still lacking foresight into the future.
You have hindsight in the past but you are still lacking foresight into the future.
Because predicting the future based on the past has always worked well.
Well if foresight were 20/20 we'd all be rich.
To be fair it was pretty obvious if you had been in the space for a while. When random people start texting you up asking how to buy XRP and telling you why LTC is better than BTC you know it's a bubble and know it's time to get out.
Look at Charlie Lee for example. Everyone blames him for dumping his LTC at $200 or whatever it was but frankly it was extremely obvious that it was a bubble and a smart decision.
Look at Charlie Lee for example. Everyone blames him for dumping his LTC at $200 or whatever it was but frankly it was extremely obvious that it was a bubble and a smart decision.
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The market can always remain irrational longer than you can remain solvent. There were and continue to be myriad reasons to get the heck out. You can ignore them and bet on irrationality but that isn't a substitute for looking a "reason to get out" - there's boatloads.
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Back when it was $20000.
Probably when it was $19,000.
Bitcoin has a usecase that makes sense, rare, government free money.
Xrp, centralized money. Just as unreliable as government money.
To this day, alt coins seem utterly useless. (Save privacy coins)
Xrp, centralized money. Just as unreliable as government money.
To this day, alt coins seem utterly useless. (Save privacy coins)
Having been through that bubble, I'm fairly confident FOMO had a huge effect. Every single person I know was asking how to buy some. You can even see it on Google Trends[1].
It's possible that the very first initial bump was manipulated (and crypto is definitely manipulated each and every day...), but the crazy increase afterwards probably wasn't due to a single entity.
1: https://trends.google.com/trends/explore?date=today%205-y&q=...
It's possible that the very first initial bump was manipulated (and crypto is definitely manipulated each and every day...), but the crazy increase afterwards probably wasn't due to a single entity.
1: https://trends.google.com/trends/explore?date=today%205-y&q=...
Next FOMO bubble is going to be exciting: it's getting much easier to acquire Bitcoin, so the conditions seem ripe for the next bubble to be even wilder. Keep an eye out for next spring, when Bitcoin block reward halves again.
(don't invest more than you're willing to lose entirely it's very risky, but having skin in the game during a bubble is very fun in my experience and will quickly educate you in the emotionality of trading. Dollar cost averaging weekly seems like the best strategy: easy to feel dread at best entry points and greed at best sell points.)
(don't invest more than you're willing to lose entirely it's very risky, but having skin in the game during a bubble is very fun in my experience and will quickly educate you in the emotionality of trading. Dollar cost averaging weekly seems like the best strategy: easy to feel dread at best entry points and greed at best sell points.)
The way I look at it, Bitcoin is a historical experiment happening during our lifetimes and mid-May (the time of halving) will be a very interesting milestone in that experiment.
It could go up or down, but either way, it will be interesting to watch.
It could go up or down, but either way, it will be interesting to watch.
Is there any reason for it to go down because of the block halving? I've heard it might be already priced in, so would the lack of a pump be enough to cause a massive drop? Looking at the performance this year, I haven't seen any real patterns, except maybe the time Tether started printing again.
There's a lot of other reasons why it can go down and it wouldn't necessarily go down because of halving. But when a lot of people expect something to go up, it can have reverse effects.
A lot of people have this assumption that it will always go up after a halving, it very well might, but at the current price point, the average person can't even afford a single Bitcoin whereas at previous halving (in 2016) that was still doable (it was on the order of a few hundreds of dollars). At this stage, you would need big investors and probably that's what companies like Bakkt will allow.
A lot of people have this assumption that it will always go up after a halving, it very well might, but at the current price point, the average person can't even afford a single Bitcoin whereas at previous halving (in 2016) that was still doable (it was on the order of a few hundreds of dollars). At this stage, you would need big investors and probably that's what companies like Bakkt will allow.
BTC needs to move its decimal point.
Like Berkshire Hathaway:
Investors appear to like Berkshire Hathaway stock in the $60s and even the $70s more than they liked it at roughly $3500 a share.
Berkshire shareholders approved a 50-for-1 stock split of Berkshire's Class B shares yesterday. Trading began today.
The lower price is seen as an opening for small investors who couldn't afford the old four-figure price tag.
At yesterday's meeting, Warren Buffett told shareholders that the increased trading volume and liquidity for the Class B shares after the split could make it the key driver of Berkshire's market value. "The B may be the tail that wags the dog now."
https://www.cnbc.com/id/34973846
On the other hand:
https://www.investopedia.com/ask/answers/021615/why-doesnt-w...
Like Berkshire Hathaway:
Investors appear to like Berkshire Hathaway stock in the $60s and even the $70s more than they liked it at roughly $3500 a share.
Berkshire shareholders approved a 50-for-1 stock split of Berkshire's Class B shares yesterday. Trading began today.
The lower price is seen as an opening for small investors who couldn't afford the old four-figure price tag.
At yesterday's meeting, Warren Buffett told shareholders that the increased trading volume and liquidity for the Class B shares after the split could make it the key driver of Berkshire's market value. "The B may be the tail that wags the dog now."
https://www.cnbc.com/id/34973846
On the other hand:
https://www.investopedia.com/ask/answers/021615/why-doesnt-w...
When the price first went over $1000 some sites switched to using mBTC ... but then the prices went under $1000 and there were complaints about the small numbers being confusing.
You can't win.
> opening for small investors who couldn't afford the old four-figure price tag.
That's an issue that doesn't exist for Bitcoin though-- you can purchase FAR less than one bitcoin at a time.
You can't win.
> opening for small investors who couldn't afford the old four-figure price tag.
That's an issue that doesn't exist for Bitcoin though-- you can purchase FAR less than one bitcoin at a time.
I didn’t remember the mBTC, that feels like a reasonable solution since it’s just psychology.
It’d probably go up, as a result, too. :-)
It’d probably go up, as a result, too. :-)
The problem is fragmentation, this would require upgrading thousands of apps in close proximity to avoid consumer confusion when decimal places switch across platforms
The minimum BTC purchase is far smaller than an entire Bitcoin.
Because it's expected to go up, there are probably some people waiting to sell until then. We can probably expect increased sales volume to some extent, but hard to say whether that will move price up or down.
Do you see what you've become? You're excited about people FOMO'ing into a risky investment (that you happen to hold). You have become the bad actor in this scenario, waiting for new people to hand over their money.
How do you DCA?
Pick a dollar amount and (buy|sell) that amount of Bitcoin every week on the same day at same time.
By making a 'dumb' plan, you remove the enticement to try and time the market.
Perhaps even more than wall street markets, it's hard to day trade Bitcoin successfully: most of the advice you'll read is by people who are either lying, exaggerating or got lucky. The major issue is that there is a TON of non-public information that is much more relevant to price levels than publicly available information. Many smart players who are using 'insider info' will be able to eat your lunch.
I fully expect that someone has a very accurate model of the quantity of deposits at some exchanges via address linking, and is watching inflows and outflows carefully. I also expect employees of Bitcoin exchanges are passing data to trader friends. Knowing when a big chunk of Bitcoin is about to be tradable on an exchange is a great sell indicator, and USD a great buy indicator.
By making a 'dumb' plan, you remove the enticement to try and time the market.
Perhaps even more than wall street markets, it's hard to day trade Bitcoin successfully: most of the advice you'll read is by people who are either lying, exaggerating or got lucky. The major issue is that there is a TON of non-public information that is much more relevant to price levels than publicly available information. Many smart players who are using 'insider info' will be able to eat your lunch.
I fully expect that someone has a very accurate model of the quantity of deposits at some exchanges via address linking, and is watching inflows and outflows carefully. I also expect employees of Bitcoin exchanges are passing data to trader friends. Knowing when a big chunk of Bitcoin is about to be tradable on an exchange is a great sell indicator, and USD a great buy indicator.
// parameters: $520 to invest over 1 year
for(i=1; i<=52; i++) {
buy(10 usd);
sleep(1 week);
}Yeah I know how DCA works.
Just wondering on what platform you're doing it on.
You can do that on Coinbase. There is a blog post here https://blog.coinbase.com/easier-recurring-buys-and-sells-on...
Feel like Coinbase fees are too high... even for Pro
You don't have to trade on Coinbase, you could just buy and hold on Coinbase and send it to another exchange if you want to trade.
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DCA means you invest the money as you get it. It doesn't mean you identify an existing lump sum and invest it slowly over time. Because you only DCA if you think it'll go up over time. Why would you DCA if you think it will go down over time?
So if you think it will go up over time, then if you have $x for it right now, put it all in. Don't DCA it because if you believe it will go up over time, then you're just missing out on the gains you believe will be there. If you're convincing yourself that it'll go down in the next 2 months before it goes up the 4 after that, you're just being too clever trying to predict the future.
DCA is just about what you do with additional money you get in the future, that you don't have yet. Like, if your DCA money is 0.5% of your yearly revenue, then after each paycheck, put that 0.5% of your paycheck into your investment. That's all it is. The idea is that it is to keep you from forgetting about the market and only investing when everyone's talking about it during the highs.
So if you think it will go up over time, then if you have $x for it right now, put it all in. Don't DCA it because if you believe it will go up over time, then you're just missing out on the gains you believe will be there. If you're convincing yourself that it'll go down in the next 2 months before it goes up the 4 after that, you're just being too clever trying to predict the future.
DCA is just about what you do with additional money you get in the future, that you don't have yet. Like, if your DCA money is 0.5% of your yearly revenue, then after each paycheck, put that 0.5% of your paycheck into your investment. That's all it is. The idea is that it is to keep you from forgetting about the market and only investing when everyone's talking about it during the highs.
Coinbase has an auto buy on set interval function.
When/if the price goes over 20k again, that's when animal-mode FOMO adrenaline will re-emerge. Even Nouriel Roubini will be buying. At some point, people will genuinely fear they are missing out on the next world currency, even the skeptics. That will either be the best time in the world to sell or the best time to buy, who knows.
[deleted]
Yes, some of it was organic, but towards the end of the bubble, folks were looking at tether printing and using that as a signal to buy / sell. People even during the bull run called out tether for being the biggest risk to crypto markets and understood that without this well-timed injection of cash into the crypto markets, the price would fall flat.
Given Crypto markets' propensity to scam, I'd be shocked if finex & co didn't engage in manipulation. Maybe not to the extent that the paper's authors claim - China, S. Korea, India all banned / tried to ban crypto and I think Chinese volume drying up was a major cause for the bubble popping.
Given Crypto markets' propensity to scam, I'd be shocked if finex & co didn't engage in manipulation. Maybe not to the extent that the paper's authors claim - China, S. Korea, India all banned / tried to ban crypto and I think Chinese volume drying up was a major cause for the bubble popping.
Agreed. During the 2017 run up, I had tons of non-technical folks asking me to buy Bitcoin for them. A doctor from Europe was ready to spend $100k, which is what he's making per year. A healthcare specialist from New York, with an annual salary about $40k, was ready to spend $10k. An athlete from Brazil was begging to spend his $300k on altcoins. Many people do not realize how strong FOMO can be.
Pretty much this. How could one whale pump so much money into the market?
It was a societal thing more so than an individual person. People were speculating like crazy to the point where you had grandmas giving investment advice on this new thing called 'bitcoin' for their grandkids to get rich from.
Tether's in the spotlight right now and journos will have a nice round of clickbait articles to keep the interest going. Reason will prevail!
It was a societal thing more so than an individual person. People were speculating like crazy to the point where you had grandmas giving investment advice on this new thing called 'bitcoin' for their grandkids to get rich from.
Tether's in the spotlight right now and journos will have a nice round of clickbait articles to keep the interest going. Reason will prevail!
> How could one whale pump so much money into the market?
Well, the allegation is, because they were printing it.
Well, the allegation is, because they were printing it.
It's the same as attributing the Sterling crash in '92 just to Soros. He had a large position and enough to move the market but he wasn't the only player, and probably small in comparison to all the retail investors who would have lost out late in the sell off panic.
Thank you for bringing some basic logic back to the table.
People love to imagine that odd phenomenon have simple solutions. This whole "tether was the sole cause of the bitcoin bubble" theory is completely ridiculous.
Go into a random bar in December of 2017 and you would hear people talking about btc and altcoins...
People love to imagine that odd phenomenon have simple solutions. This whole "tether was the sole cause of the bitcoin bubble" theory is completely ridiculous.
Go into a random bar in December of 2017 and you would hear people talking about btc and altcoins...
I was tired of hearing this crap!
This is when everyone finally heard about Bitcoin after the runup. And continued it until the overexuberance ran out of steam. Not like it’s the first time that happened.
This is when everyone finally heard about Bitcoin after the runup. And continued it until the overexuberance ran out of steam. Not like it’s the first time that happened.
> Perhaps the takeaway is that when banks refuse to do business with crypto traders, or when a government bans trading altogether, it doesn’t stop traders from trading. It just forces them to find creative solutions. If it were easy for crypto exchanges to use the traditional banking system, there would be no need for Tether at all.
This is a point not many seem to understand.
This is a point not many seem to understand.
The reason it's not easy is because of anti-money laundering/know your customer legislation - which directly contradicts the few currency uses Bitcoin has at this point.
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I find it difficult to defend Tether. I leave the investigation to regulators. But assume Tether team has good intention and try to do the right thing, it is easy to make mistake. Tether software may have had a bug that inflates Tether coin over reserve. This is a problem with permissioned money system. It is difficult to audit and verify transactions.
I think Libra is an improvement. They use open source software. But it is still a permissioned money system. There's room for error. Who would be responsible for the damage? I think every participants need to share the responsibility. I've advocated for a new category: decentralized and digital native crypto with constant inflation. Permissionless is a key feature. It provides many advantages over permissioned.
https://bitflate.org/post/2019/11/05/tether-problem-highligh...
I think Libra is an improvement. They use open source software. But it is still a permissioned money system. There's room for error. Who would be responsible for the damage? I think every participants need to share the responsibility. I've advocated for a new category: decentralized and digital native crypto with constant inflation. Permissionless is a key feature. It provides many advantages over permissioned.
https://bitflate.org/post/2019/11/05/tether-problem-highligh...
Tether sounds like the Federal Reserve's interface to Bitcoin.
article titles are topic suggestions to espouse pre-existing beliefs, exhibit a
yesterday had people saying “Aha! I knew it” alongside anecdotes that completely neglected the role of a crowd and media to support their fictional higher standard for a bitcoin pump over how literally any rally works
today has different people saying “yeah this makes way more sense” because of the role of actual distinct buyers. this article is just using its platform to surface that explanation higher
yesterday had people saying “Aha! I knew it” alongside anecdotes that completely neglected the role of a crowd and media to support their fictional higher standard for a bitcoin pump over how literally any rally works
today has different people saying “yeah this makes way more sense” because of the role of actual distinct buyers. this article is just using its platform to surface that explanation higher
The bitcoin "bubble" was caused by an invention in the ecosystem. Bitcoin was "stuck" for a long time around $300, because it is not much good @ 10 mins tx time.
Then a solution was published, the lightning network whitepaper. A mere 5 days later volume exploded and a period of 6 months of accumulation occurred where price was contained by large bid / ask walls. Volume dropped off after this point and the price rocketed up. The ultimate destination was the joint mcap of visa and mastercard, which it would in theory now be able to compete with at some point, which worked out at 18k per coin at the time.
The collapse afterward is due to the fact that it must be used in this way and at that tx magnitude to justify that valuation. Your basic buy the rumour sell the news variation. It might thus range around 10k for a long time.
Whether those who accumulated used bots or tethers or both to drive the price up rather than it being organic price action is debatable, and it seems difficult to prove.
What is interesting to me is how fast money went to work on this after the technical hurdle was overcome.
There was no bitcoin bubble. Bitcoin is currently 50% down from the high mark. That is not a bubble. After actual bubbles, the low mark is may be 90% or more below peak.
Is the definition of a "bubble" invalidated if the stock goes back up some time after the crash? It did drop initially from $20K to a low of $3,200, which is 84%.
Yes it is. If you had invested in the stock market at the height of the “””bubble””” in 2000 you would be off well now. In hindsight it was not a bubble. You may disagree but sadly you probably didn’t have that perspective at the time.
I prefer "boom" and "bust" cycles rather than bubble, to describe these scenarios.
Now, Ethereum is a novel innovation on blockchain tech. The smart contract hype was very real at the time. (For the record, I still think smart contracts have tremendous potential) ETH had navigated a fork, secured corporate alliances, setup several foundations to promote work and was starting to generate a lot excitement around projects like Augur, Ox, etc. Then on top of that, the ICO boom happened when several projects raised tens of millions of dollars. That caused a run on ETH.
ETH boomed and then BTC followed, at least for the 2017 boom. And then the speculators danced between altcoins, Tether, Bitcoin and ETH, trying to maximize their returns while paying little attention to fundamental adoption.
I think we've seen certain technologies take over markets very quickly in the past couple decades, like desktops and wifi and mobile and then smart phones and social media...that we've gotten used to rapid disruption in tech. However, with financial tech like blockchain and crypto, it necessitates slow adoption. Why is this? Because it's real money on the line. It's cool to move fast and break things when it's an app or a fitness tracker, but when it's significant amounts of money on the line, maturity, trust, and security are tantamount.
I still think blockchain will win in the long run against legacy tech. But it will be a slow disruption.