Why the ‘Big Short’ Guys Think Bitcoin Is a Bubble(nymag.com)
nymag.com
Why the ‘Big Short’ Guys Think Bitcoin Is a Bubble
https://nymag.com/intelligencer/2021/10/why-the-big-short-guys-think-bitcoin-is-a-bubble.html
226 comments
When btc becomes overleveraged, we simply see a -25% flashcrash. They happen every couple months.
Maybe. I'm just an armchair economist. I don't have quantitative evidence, but you can imagine that the overall degree of leveraging can affect the local-in-time price dynamics and push them into a phase change from a flash crash regime to a `bigger problems` regime. The saving grace to date has been that Bitcoin is a fundamentally financialization-resistant technology, but it still lives in and interacts with the real world, which is financialized. That has crept in.
Things feel different this time (and there is good reason to believe it could be so), is all I'm saying.
When in the past the cute phrase was, "I knew when to pull out because my shoeshine boy was giving me advice" maybe now it's, "I knew when to pull out because George Soros is in" (as an indicator of leverage participation)
When in the past the cute phrase was, "I knew when to pull out because my shoeshine boy was giving me advice" maybe now it's, "I knew when to pull out because George Soros is in" (as an indicator of leverage participation)
I'm qualitatively in agreement -- I had day-traded bitcoin many years ago and sold off my last small holdings over the weekend.
I had a forcing function that made the sale timely, but $62k/BTC was close-enough to my ~$100k/BTC target that it seemed silly to try to squeak out the remaining ~50% gain given the downside risk. It is strange no longer holding any cryptocurrency, but it is harder to see the future of crypto, as an investment, now than it was back at $30.
Blockchains are here to stay and the underlying technology is proven, but as a fraction of M1, it is harder to know where the prices might go and which crypto will emerge as the ultimate winner. Alternatively, if crypto is to go through a "First they ignore you, then they laugh at you, then they fight you, then you win" experience, I believe we're just beginning the "then they fight you" stage, which may be challenging for investors.
Over all of this is my feeling that, looking with a logarithmic perspective (the only way one should view Bitcoin), there is now a lot more distance for prices, especially of any one currency, to fall than there is for prices to rise. I asked myself the perpetual question, "If markets were to close for the next five years, would I be happier holding BTC or USD at the present price?" The answer was no longer emphatically BTC.
I had a forcing function that made the sale timely, but $62k/BTC was close-enough to my ~$100k/BTC target that it seemed silly to try to squeak out the remaining ~50% gain given the downside risk. It is strange no longer holding any cryptocurrency, but it is harder to see the future of crypto, as an investment, now than it was back at $30.
Blockchains are here to stay and the underlying technology is proven, but as a fraction of M1, it is harder to know where the prices might go and which crypto will emerge as the ultimate winner. Alternatively, if crypto is to go through a "First they ignore you, then they laugh at you, then they fight you, then you win" experience, I believe we're just beginning the "then they fight you" stage, which may be challenging for investors.
Over all of this is my feeling that, looking with a logarithmic perspective (the only way one should view Bitcoin), there is now a lot more distance for prices, especially of any one currency, to fall than there is for prices to rise. I asked myself the perpetual question, "If markets were to close for the next five years, would I be happier holding BTC or USD at the present price?" The answer was no longer emphatically BTC.
Should disclose my broader views: I would not be surprised if we saw BTC 100k, soon. I am more optimistic now than I ever was that there is an endgame where BTC (or something) is some sort of international reserve currency, but I still think the likelihood is low. I am hoping for an economic system that stops stealing from the poor to give to the rich (I think taxation is about as effective way to redistribute wealth as a band-aid is to stop the bleed of a severe hemmhorage), and Bitcoin could have been (and may still be, with low likelihood) that. Generally pessimistic on "Blockchain tech" that isn't a cryptocurrency, unless a private postgres table with a progressively hashed column is a "Blockchain".
Congrats on getting out in the money. I am not far behind you, let's see if I wind up okay or wind up pulling a Newton
Congrats on getting out in the money. I am not far behind you, let's see if I wind up okay or wind up pulling a Newton
Bitcoin just creates a new class of rich people. It's still the using same mechanisms but it is happening faster. Asset has no holding fee and gets more expensive? People speculate with it at the expense of those who will have to acquire it later (the poor).
I'm not arguing to abolish rich people, I'm just saying we should stop stealing from the poor.
In what way are you saying we steal from the poor? How does bitcoin steal less?
https://www.npr.org/sections/money/2010/08/26/129451895/how-...
the fed creates 1.25 trillion and makes the assets that the poor seeks more expensive than it would have been if their price were allowed to fall. This is not nominally stealing from the poor, but it's activity like this that steals the value from the earnings of the poor, and steals their economic potential. It's stealing because it's not a voluntary contract and it's a one-sided power move, not a "natural consequence of the universe", like "inflation resulting from an earthquake" would be.
In this case, I am, of course, arguing against my interest, since this activity is propping up the price of the house I bought this year. But the fed does a whole lot of damage otherwise, mostly by printing money and giving it to the banks.
the fed creates 1.25 trillion and makes the assets that the poor seeks more expensive than it would have been if their price were allowed to fall. This is not nominally stealing from the poor, but it's activity like this that steals the value from the earnings of the poor, and steals their economic potential. It's stealing because it's not a voluntary contract and it's a one-sided power move, not a "natural consequence of the universe", like "inflation resulting from an earthquake" would be.
In this case, I am, of course, arguing against my interest, since this activity is propping up the price of the house I bought this year. But the fed does a whole lot of damage otherwise, mostly by printing money and giving it to the banks.
I'm of the same opinion on the inflated assets, somehow the USG (or the Fed?) figured out a way to inject tons of borrowed and printed liquidity into the markets without hyper-inflating the CPI, but inflating assets like equity, real estate, crypto, etc etc some of which (like real estate) can hurt real people - especially the ones whose wage went from $15 to $15 in the last 10+ years.
However, this does not seem like some unforeseen accident or an unfortunate side effect of fiat money, it seems to be a deliberate policy that will not quietly go away if Bitcoin becomes more fashionable. In addition to outright bans (like the ban on gold from '30s to 70s), there are tons of more subtle ways to either suffocate daily Bitcoin adoption if it becomes a threat, or find ways to control it such as KYC, tax reporting, etc at the main exchanges. Also, even if Bitcoin does replace fiat as the medium, the lending regulation will still remain - to lend money to you, anyone needs to first know who you are, calculate your risk, and charge you an APR for that risk, and that will probably remain regulated no matter what is used to move the actual transactions.
However, this does not seem like some unforeseen accident or an unfortunate side effect of fiat money, it seems to be a deliberate policy that will not quietly go away if Bitcoin becomes more fashionable. In addition to outright bans (like the ban on gold from '30s to 70s), there are tons of more subtle ways to either suffocate daily Bitcoin adoption if it becomes a threat, or find ways to control it such as KYC, tax reporting, etc at the main exchanges. Also, even if Bitcoin does replace fiat as the medium, the lending regulation will still remain - to lend money to you, anyone needs to first know who you are, calculate your risk, and charge you an APR for that risk, and that will probably remain regulated no matter what is used to move the actual transactions.
I'm pretty agreed on the latter point -- I do expect that we'll see real regulatory pushback, especially in the US, if the dollar's status as a reserve-currency is ever in question.
-25% flash crash when there is a minor economic event (if even that). What happens when there is a major 2008 style economic event? What happens when billions in BTC need to be sold in a day because a large entity needs to cover their margin call? Crypto has no floor.
Coinbase has the most active USD trading against BTC. Total volume runs from $300 million to about $1 billion.
And that’s both buying and selling, it isn’t liquidation.
So yes, good question indeed. $27 million in selling is expected to drop the price by 2% says Coinmarketcap
https://coinmarketcap.com/exchanges/coinbase-exchange/
And that’s both buying and selling, it isn’t liquidation.
So yes, good question indeed. $27 million in selling is expected to drop the price by 2% says Coinmarketcap
https://coinmarketcap.com/exchanges/coinbase-exchange/
Is that before or after the 95% wash trade ratio?
We saw that in March of 2020, didn’t we? It crashed along with everything else.
The crash at the beginning of last year wasn't as dramatic as people think it was. Most of the actual damage was caused by people overreacting to what could happen, which caused a lot of damage itself. (ie. car manufacturers cancelling chip orders because they thought the won't need it).
The real economic crash is still in our future. (For example, when debt protection measures stop and people become homeless or default on their debt)
Yep crypto is not at all independent from the stock market. Too many hedge funds are playing in it.
> What distinguishes a bubble from a mania is the high degree of leverage underlying the price support.
This is not historically correct. Consider the South Sea Bubble, which the cryptocurrency bubble is most similar to.
This is not historically correct. Consider the South Sea Bubble, which the cryptocurrency bubble is most similar to.
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Michael Burry was also famously (and vocally) short TSLA for many years until he finally folded and closed his positions recently. I'm not crazy bullish on crypto myself, but it is pointless to hold the opinion of a few analysts/fund managers above the rest just because they made some good bets in the past. The one thing that the market has shown is that no one knows which way any security will go tomorrow – not Buffett, not Burry and not you or me.
I don't think that's a sign of Burry being wrong, it very well could mean he couldn't stay solvent in that position longer than the irrationality of the market.
That's what I keep telling myself too. I've shorted TSLA way before Bury, and already made my peace with the losses.
The truth is that if you get squeezed out of a short you were wrong. The result is all that matters.
This kind of stuff is why most investors do not ever short anything at all (best example: Buffett & Munger), as you can be "right" and still lose. On the long side you cannot be squeezed out of a position. Traders, market makers and other "technical" participants such as HFTs - that's a different story, their use of shorting is kind of more sensible.
The truth is that if you get squeezed out of a short you were wrong. The result is all that matters.
This kind of stuff is why most investors do not ever short anything at all (best example: Buffett & Munger), as you can be "right" and still lose. On the long side you cannot be squeezed out of a position. Traders, market makers and other "technical" participants such as HFTs - that's a different story, their use of shorting is kind of more sensible.
The "irrationality of the market" is most of the time just blaming everyone else for your own mistake.
"I was right, it's just that the whole market keeps being wrong". Denial at its finest.
"I was right, it's just that the whole market keeps being wrong". Denial at its finest.
Not if it eventually crashes, you had given a mechanism, and the mechanism was indeed the causal factor in the eventual crash.
The market always eventually crashes. The question is whether it will be tomorrow or 20 years from now. Unless your prediction also comes with a specific date it is useless.
Sure, but you can definitely lose a lot of money, give up, and watch the asset crash a few weeks after you called it.
That is true. But most of the time when I see it used, it's "it will eventually crash just wait and see.... wait for it.... wait for it ..."
> irrationality of the market
The idea that the market can be irrational presumes some sort of external correctness, but it can become a circular definition: either Burry is right or the market is irrational, there is no space to say that he's wrong.
It's useful to remember that all models, including looking at fundamentals and value based investing, made to approximate reality, not reality itself.
The idea that the market can be irrational presumes some sort of external correctness, but it can become a circular definition: either Burry is right or the market is irrational, there is no space to say that he's wrong.
It's useful to remember that all models, including looking at fundamentals and value based investing, made to approximate reality, not reality itself.
It has honestly surprised me that a bunch of people I thought were smart really think NFTs are a good long term investment. It clearly has no value beyond speculation and the bubble will pop.
> It has honestly surprised me that a bunch of people I thought were smart...
Nobody is universally brilliant. Newton spent as much time on alchemy as he did physics. Maybe NFTs are just the modern alchemy, as they do seem to turn random items into digital gold.
Nobody is universally brilliant. Newton spent as much time on alchemy as he did physics. Maybe NFTs are just the modern alchemy, as they do seem to turn random items into digital gold.
>Newton spent as much time on alchemy as he did physics
I don't think that was an act of unbrilliance. It just didn't happen to work out.
I don't think that was an act of unbrilliance. It just didn't happen to work out.
> It just didn't happen to work out.
Nobody is privy to the full content of Newton's mind and his mental processes. One could also argue that his metaphysical preoccupations positively influenced his scientific accomplishments. Heck, at a meta level, is not Newtonian Physics intellectual 'Gold' end result of processing the 'Lead' in his head? That's alchemy.
Nobody is privy to the full content of Newton's mind and his mental processes. One could also argue that his metaphysical preoccupations positively influenced his scientific accomplishments. Heck, at a meta level, is not Newtonian Physics intellectual 'Gold' end result of processing the 'Lead' in his head? That's alchemy.
I mean splitting and fusing atomic nuclei is something that happens all the time. Hard to claim he was wrong, just a few orders of magnitude off on the energy required to do it.
He also tried his hand at investing, without much success:
https://www.businessinsider.com/isaac-newton-lost-a-fortune-...
https://www.businessinsider.com/isaac-newton-lost-a-fortune-...
Newton also lost huge sums of money investing poorly. Which is quite literally the same thing as now.
Was it really alchemy or proto-chemistry? After all Newton lived in time when chemistry was only starting to be defined. And it took quite a while to come up with proper ideas.
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Oh but NFTs have a very clear value proposition: money laundering.
They literally have no value other than what is attributed to them, so if you want to clean up some money you just have to buy an NFT with legit money for X, then sell it to yourself using less-than-legit money.
Now you own all legit money, and have only spent some minor transaction fees.
They literally have no value other than what is attributed to them, so if you want to clean up some money you just have to buy an NFT with legit money for X, then sell it to yourself using less-than-legit money.
Now you own all legit money, and have only spent some minor transaction fees.
Will that really work long run? It seems too obvious.
But thank you, that’s the most concise explanation I’ve seen for exactly how people could use NFTs to launder money.
If this is happening, would you expect to see a bunch of NFTs go from nothing, then sell for a large amount, then not move again?
Oh also I think you’d also have to declare capital gains tax to do it properly, but that’s better than laundering money via income.
But thank you, that’s the most concise explanation I’ve seen for exactly how people could use NFTs to launder money.
If this is happening, would you expect to see a bunch of NFTs go from nothing, then sell for a large amount, then not move again?
Oh also I think you’d also have to declare capital gains tax to do it properly, but that’s better than laundering money via income.
> Will that really work long run? It seems too obvious.
it is supposedly something that happens often with physical art, and there have been a lot of attempts to prevent it via regulation, e.g. the AML Standards for Art Market Operators[0].
In crypto space as usual we're at the "frontier" state where lack of regulations allow shady behaviours, and they will until the authorities catch up and crypto becomes "normalized".
[0] "Once purchased, the art can disappear from view for years, even decades." https://www.moneylaunderingnews.com/2019/03/art-and-money-la...
it is supposedly something that happens often with physical art, and there have been a lot of attempts to prevent it via regulation, e.g. the AML Standards for Art Market Operators[0].
In crypto space as usual we're at the "frontier" state where lack of regulations allow shady behaviours, and they will until the authorities catch up and crypto becomes "normalized".
[0] "Once purchased, the art can disappear from view for years, even decades." https://www.moneylaunderingnews.com/2019/03/art-and-money-la...
Wow that means OpenSea is like the Silk Road of money laundering.
I became convinced that NFTs are worth something after understanding that there is little difference between an outrageously expensive watch and a rare NFT.
One shows off your wealth in person, the other will let you show it off online.
One shows off your wealth in person, the other will let you show it off online.
How? You can't see if I own any NFTs right now. You can't see it in gmail. You can't see it on facebook. You don't get ads saying "rich NFT holders in your area!". No one knows or cares if you own an NFT.
You can see what people own by their wallet address.
The watch example is apt, similar to a Richard Mille being a flex that 99% of people won’t ever notice or understand it conveys status.
The watch example is apt, similar to a Richard Mille being a flex that 99% of people won’t ever notice or understand it conveys status.
People are going to flash their wallet addresses at bars or at business meetings?
We already have strong social taboos about flashing bank accounts. The whole point of status good is they convey wealth rather than tactlessly showing a total.
We already have strong social taboos about flashing bank accounts. The whole point of status good is they convey wealth rather than tactlessly showing a total.
You've never seen where these brags occur?
See if this feels familiar:
Paris Hilton buys NFT of Hello Kitty! creator's DNA, says "crypto is the future"
See if this feels familiar:
Paris Hilton buys NFT of Hello Kitty! creator's DNA, says "crypto is the future"
Paris Hilton is possibly the world's richest and best known idiot. The flex here is having a news article written about you. Paris Hilton bought an NFT to stay relevant. Not to become relevant.
The fancy watch market is much much broader than celebrities
"Trust me this watch makes me very cool!"
That’s only because the infrastructure for it isn’t there yet. Doesn’t mean it won’t eventually happen
Twitter is adding ownership verification for NFT profile pictures.
> Twitter is adding ownership verification for NFT profile pictures.
Twitter seems to have too many engineers.
Twitter seems to have too many engineers.
> Twitter is adding ownership verification for NFT profile pictures.
Then what if someone mints new NFTs based on (say) the same images used for the cryptopunks cartoons?
You could get your extremely online bragging rights for an affordable price.
Then what if someone mints new NFTs based on (say) the same images used for the cryptopunks cartoons?
You could get your extremely online bragging rights for an affordable price.
Except you can't, practically speaking--as the price is baked into the "brand".
But you’d get twitter verification. Or will twitter only recognize one chain for NFTs?
How do you handle someone minting multiple nfts of the same image on different chains?
How do you handle someone minting multiple nfts of the same image on different chains?
Twitter, if they build their verification correctly, should determine NFT's sovereignty via the smart contracts, not the chains. Thus, CryptoPunks will only exist on one chain & one smart contract.
But what stops someone from minting the same jpegs elsewhere? Possible there is some mechanism I’m unaware of
My thesis on this revolves around the idea of "brands." I wrote about it more in depth here: https://www.robertchung.me/people-dont-understand-nfts
> I became convinced that NFTs are worth something after understanding that there is little difference between an outrageously expensive watch and a rare NFT.
> One shows off your wealth in person, the other will let you show it off online.
That's some pretty faulty logic, there. You're looking at it from the wrong end: it doesn't matter if you can imagine an object could be used as a wealth-status symbol, what actually matters is if it's actually recognized as one by a community with enough power for their recognition to matter.
Also, expensive status-bauble watches are stupid, too.
> One shows off your wealth in person, the other will let you show it off online.
That's some pretty faulty logic, there. You're looking at it from the wrong end: it doesn't matter if you can imagine an object could be used as a wealth-status symbol, what actually matters is if it's actually recognized as one by a community with enough power for their recognition to matter.
Also, expensive status-bauble watches are stupid, too.
They are stupid, but rich people sometimes wear them for a reason, if they ever get stranded in a messy situation and their wealth is confiscated, they can still sell their watches and other miscellaneous items to bootstrap themselves outta poverty zone.
> They are stupid, but rich people sometimes wear them for a reason, if they ever get stranded in a messy situation and their wealth is confiscated, they can still sell their watches and other miscellaneous items to bootstrap themselves outta poverty zone.
Huh? That doesn't make any sense.
1. "if they ever get stranded in a messy situation": I'm interpreting that as a situation where they need to barter the watch or use it as a bribe. However there's hard limits on how much they could realistically get for a watch due to the seller's desperation and the buyer's risk (I'm guessing a few thousand dollars), even if they paid tens of thousands or more for it. The cheapest gold Rolex you can find (or maybe even a knock off) makes far more sense for this use case than some elite status watch.
2. "if ... their wealth is confiscated": anyone confiscating their "wealth" to the point where they're in the "poverty zone" more than likely will confiscate valuables like $100k watches, jewelry, art, etc. Planning for that to be your "back up wealth" is about as dumb as planning on living in your garage if you ever lose your home.
Huh? That doesn't make any sense.
1. "if they ever get stranded in a messy situation": I'm interpreting that as a situation where they need to barter the watch or use it as a bribe. However there's hard limits on how much they could realistically get for a watch due to the seller's desperation and the buyer's risk (I'm guessing a few thousand dollars), even if they paid tens of thousands or more for it. The cheapest gold Rolex you can find (or maybe even a knock off) makes far more sense for this use case than some elite status watch.
2. "if ... their wealth is confiscated": anyone confiscating their "wealth" to the point where they're in the "poverty zone" more than likely will confiscate valuables like $100k watches, jewelry, art, etc. Planning for that to be your "back up wealth" is about as dumb as planning on living in your garage if you ever lose your home.
Expensive watches are supply limited (both by the brand’s intention and the availability of watchmakers).
Besides, expensive watches look really pretty and shiny. NFT is not.
Besides, expensive watches look really pretty and shiny. NFT is not.
> Expensive watches are supply limited
Exactly like NFTs. Not defending NTFt's just pointing out your argument isn't making much sense as presented.
Exactly like NFTs. Not defending NTFt's just pointing out your argument isn't making much sense as presented.
The thing that is attached to NFTs is generally not supply limited though (in the sense that is much easier to create a digital thing, whether that is game item, art or some kind of record than a watch).
I can create some trillions digital bits, then mint trillions NFTs for each of them.
I can create some trillions digital bits, then mint trillions NFTs for each of them.
Can't you sign a lot of time the same hash? Just use another initialization vector, salt, hashing algorithm, and you get a new nft.
One of the key aspect of blockchains is the fact that they're - by construction - timestamped.
But who cares? I mean outside of crypto enthousiast folks.
This would make sense if collectors weren't hiding behind pseudonyms such as "@crypto888crypto" and "@7Surfer7Silver7".
Hint: it's not about status. It's about pumping the price of eth.
Hint: it's not about status. It's about pumping the price of eth.
The exact same thing happened with Ethereum (and crypto in general) in 2017. But look how much it's rebounded after that crash. I still don't think it's a good long term investment, but it's been an amazing way for some people to make life-changing money. Sadly, I'm not one of them.
It's a good investment dude. I'm not trying to shill or anything here but Ethereum is literally the "internet" of finance. It democratizes and brings access to basic financial building blocks like we've never before seen in history and truly anything can be built on it. Unironically it's the future of finance. Don't listen to the Luddites and cynics here. Do the research yourself and try it out for yourself and it becomes glaringly obvious.
Using defi is how I would imagine typing in a chatroom or accessing a website felt back when the web was just in its infancy.
Using defi is how I would imagine typing in a chatroom or accessing a website felt back when the web was just in its infancy.
You are 100% right, and also downvoted.
Welcome to HackerNews, a place that should think startup-like progressive, but really is technology conservative.
Welcome to HackerNews, a place that should think startup-like progressive, but really is technology conservative.
I love defi simply for the fact that I hold the keys to my money, not banks or a central entity.
the problem with crypto is that people see it and treat it as an investment and a commodity, not an actual currency. People horde crypto and don't spend it.
Ethereum?
Or Ethereum2?
Or Ethereum2?
>It has honestly surprised me that a bunch of people I thought were smart really think NFTs are a good long term investment.
How is this relevant to a Bitcoin conversation?
How is this relevant to a Bitcoin conversation?
What surprises me is the constant negative drum beat against Bitcoin on Hackernews. Mostly based on speculation.
> What surprises me is the constant negative drum beat against Bitcoin on Hackernews.
Why does that surprise you? As the article from this discussion shows, there is strong evidence supporting the idea that crypto in general "it's just a big scheme".
Why does that surprise you? As the article from this discussion shows, there is strong evidence supporting the idea that crypto in general "it's just a big scheme".
Those of us who have been here for a long time heard this story plenty of times before.
Ah, but this time it's different?
Distributed technology eats everything.
Ah, but this time it's different?
Distributed technology eats everything.
> Those of us who have been here for a long time heard this story plenty of times before.
Getting into a pyramid scheme early does not grant anyone any special insight onto how it is not a pyramid scheme. All they get is the benefits from getting in early, confirmation bias, and an irrational belief that not only past performance guarantees future results but also there is absolutely no growth ceiling.
Getting into a pyramid scheme early does not grant anyone any special insight onto how it is not a pyramid scheme. All they get is the benefits from getting in early, confirmation bias, and an irrational belief that not only past performance guarantees future results but also there is absolutely no growth ceiling.
I would love to be in a pyramid scheme where people keep sending me money.
But that is not the case with crypto is it.
Maybe take a look what pyramid schemes really look like. Here is the wikipedia article: https://en.wikipedia.org/wiki/Pyramid_scheme
But that is not the case with crypto is it.
Maybe take a look what pyramid schemes really look like. Here is the wikipedia article: https://en.wikipedia.org/wiki/Pyramid_scheme
You are just looking at one specific type of pyramid scheme. See for example:
> Matrix schemes use the same fraudulent, unsustainable system as a pyramid; here, the participants pay to join a waiting list for a desirable product, which only a fraction of them can ever receive.
You pay dollars expecting to get a lot of dollars in the future. This is why most pay for bitcoin, and since it is impossible for everyone to make money it is a pyramid scheme. The future payoff can only happen if a lot of other people pay more dollars, which will be used to pay you. And since the system constantly extracts money to pay for all the hashing it is impossible for everyone to even break even, people will lose a ton of money in the end.
This is different from normal currency trading. When you buy dollars you are betting on the US government and the US market to be strong so the dollar gains value. Bitcoin however doesn't have any backing like that, it is a negative sum game.
Edit: The core concept of pyramid schemes is this, basically it is a business model which requires infinite new entrants to be sustainable. Bitcoin is like that, it only works as long as bitcoin enthusiasts continue to recruit new people to invest in bitcoin. Hence bitcoin is a pyramid scheme, even if there isn't any tax on sub transactions.
> Pyramid schemes are based on network marketing, where each person in the pyramid is tasked with bringing in their own subordinates and in turn profiting from their sales or recruitments. This fails because it essentially requires an infinite number of people to join the company.
> Matrix schemes use the same fraudulent, unsustainable system as a pyramid; here, the participants pay to join a waiting list for a desirable product, which only a fraction of them can ever receive.
You pay dollars expecting to get a lot of dollars in the future. This is why most pay for bitcoin, and since it is impossible for everyone to make money it is a pyramid scheme. The future payoff can only happen if a lot of other people pay more dollars, which will be used to pay you. And since the system constantly extracts money to pay for all the hashing it is impossible for everyone to even break even, people will lose a ton of money in the end.
This is different from normal currency trading. When you buy dollars you are betting on the US government and the US market to be strong so the dollar gains value. Bitcoin however doesn't have any backing like that, it is a negative sum game.
Edit: The core concept of pyramid schemes is this, basically it is a business model which requires infinite new entrants to be sustainable. Bitcoin is like that, it only works as long as bitcoin enthusiasts continue to recruit new people to invest in bitcoin. Hence bitcoin is a pyramid scheme, even if there isn't any tax on sub transactions.
> Pyramid schemes are based on network marketing, where each person in the pyramid is tasked with bringing in their own subordinates and in turn profiting from their sales or recruitments. This fails because it essentially requires an infinite number of people to join the company.
First of all, I didn't have to go into a waiting list to buy crypto.
Second of all, I didn't buy crypto because it will give me an infinite supply of money given to me by subordinates.
I buy crypto when I think it's undervalued. I sell when I think it's overvalued. Doesn't everyone????
I'm also not recruiting any subordinates. So sorry, but your pyramid scheme theory falls short.
Second of all, I didn't buy crypto because it will give me an infinite supply of money given to me by subordinates.
I buy crypto when I think it's undervalued. I sell when I think it's overvalued. Doesn't everyone????
I'm also not recruiting any subordinates. So sorry, but your pyramid scheme theory falls short.
> "it's just a big scheme".
Who's doing the scheming, I wonder?
Who's doing the scheming, I wonder?
> Who's doing the scheming, I wonder?
As with all pump-and-dump schemes, obviously those who pump it.
Let's put it differently: what concrete, real-world, tangible value is there driving crypto speculation? Is there any at all?
It boggles the mind how crypto proponents try to frame crypto in general and their own investments in particular as something that has this sky-high intrinsic value based only on potential popularity and a belief that they can pump them up indefinitely.
As with all pump-and-dump schemes, obviously those who pump it.
Let's put it differently: what concrete, real-world, tangible value is there driving crypto speculation? Is there any at all?
It boggles the mind how crypto proponents try to frame crypto in general and their own investments in particular as something that has this sky-high intrinsic value based only on potential popularity and a belief that they can pump them up indefinitely.
> what concrete, real-world, tangible value is there driving crypto speculation?
For a possible answer, please read my other post in this thread.
For a possible answer, please read my other post in this thread.
> For a possible answer, please read my other post in this thread.
You've posted an awful lot of messages, but the only one remotely related to crypto's intrinsic value was the following post which makes no relevant point at all.
https://news.ycombinator.com/item?id=28902307
In it, your main thesis is that you allege that crypto offers a way to "completely shield value", which is outright and patently false.
Even so, trying to portray crypto in general and BTC in particular as serving as a store of value is an absurd notion from the start, as it's renowned for being highly volatile and so prone to crashes that halve it's value that crypto's hardline proponents already invented the concept of periodic corrections.
You've posted an awful lot of messages, but the only one remotely related to crypto's intrinsic value was the following post which makes no relevant point at all.
https://news.ycombinator.com/item?id=28902307
In it, your main thesis is that you allege that crypto offers a way to "completely shield value", which is outright and patently false.
Even so, trying to portray crypto in general and BTC in particular as serving as a store of value is an absurd notion from the start, as it's renowned for being highly volatile and so prone to crashes that halve it's value that crypto's hardline proponents already invented the concept of periodic corrections.
[deleted]
> It clearly has no value beyond speculation and the bubble will pop.
Many things have actually no intrinsic value (like art) yet don't lose value over time that much.
Many things have actually no intrinsic value (like art) yet don't lose value over time that much.
Depends on what art we are talking about. Plenty of it has lost value over time. Ofc, what is popular and big name keeps being popular. But outside that group there is lot of examples that aren't as valuable as it was at one point.
Art has value as a money laundering scheme and so do NFT’s.
Although I’m hopeful maybe someone will find a decent use case for them.
Although I’m hopeful maybe someone will find a decent use case for them.
> Art has value as a money laundering scheme
That's IMO a very reductive view. While - true - art is used to launder money, that's not the only thing that lends it value.
If that wasn't the case, there wouldn't be any brick and mortar museums left in the world and you could buy the original Mona Lisa for a dime - since everyone else would have a 16k x 16k reproduction of it, essentially identical to the original.
Somehow, that does not happen.
That's IMO a very reductive view. While - true - art is used to launder money, that's not the only thing that lends it value.
If that wasn't the case, there wouldn't be any brick and mortar museums left in the world and you could buy the original Mona Lisa for a dime - since everyone else would have a 16k x 16k reproduction of it, essentially identical to the original.
Somehow, that does not happen.
Tether is a fraud and everyone knows it. More than half of all crypto trades involve tether so the fraud is pervasive.
But the most damning aspect of all is the fact that despite common knowledge of the pervasive fraud, USDT maintains it's peg.
This indicates collusion by the market making exchanges in perpetrating this widespread, pervasive fraud. This essentially makes the entire crypto marketplace as we know it one big huge fraud.
But the most damning aspect of all is the fact that despite common knowledge of the pervasive fraud, USDT maintains it's peg.
This indicates collusion by the market making exchanges in perpetrating this widespread, pervasive fraud. This essentially makes the entire crypto marketplace as we know it one big huge fraud.
Tether can temporarily keep the peg to $1 so long as a lot of people don't cash out at once. Given that they have cash reserves, they can buy back tethers that cost less than $1 themselves to keep the peg afloat. If they are legit, (lol) this would make great business sense since you are literally given a dollar and only have to pay back 99 cents. Everyone would love to be in the business of paying back loans for less than the principal amount.
Or they could easily just forget all that and selectively refuse to cash out anyone that is not a favored inside participant in the fraud --- as per their revised TOS.
> so long as a lot of people don't cash out at once
A lot of people can’t cash out at once. Teather isn’t obligated to redeem to USD, it’s not just a scam (them not having backing), it’s just overall an absurd situation. “Give me your money and I’ll give you a note that says I have your money, and then I’ll never give you the money back, but perhaps you can exchange the note to others for money?”
A lot of people can’t cash out at once. Teather isn’t obligated to redeem to USD, it’s not just a scam (them not having backing), it’s just overall an absurd situation. “Give me your money and I’ll give you a note that says I have your money, and then I’ll never give you the money back, but perhaps you can exchange the note to others for money?”
It's not obligated to redeem your USDT but it is obligated to redeem it for its customers (exchanges mainly). At least on paper it works like this:
1)exchanges need Tether so they get it from the Tether inc. while depositing equal amount of USD with them
2)if they don't need some of it anymore they can redeem it
We know depositing USD part never happens. It's likely some shady paper or more likely some promises are deposited instead.
It's also very likely they buy BTC with freshly printed Tether (not directly but through some of their other entities) causing constant buying pressure for BTC and other cryptocurrencies. This may just work if enough people FOMO into crypto seeing the skyrocketing price as then the gang can sell their BTC for real USD.
1)exchanges need Tether so they get it from the Tether inc. while depositing equal amount of USD with them
2)if they don't need some of it anymore they can redeem it
We know depositing USD part never happens. It's likely some shady paper or more likely some promises are deposited instead.
It's also very likely they buy BTC with freshly printed Tether (not directly but through some of their other entities) causing constant buying pressure for BTC and other cryptocurrencies. This may just work if enough people FOMO into crypto seeing the skyrocketing price as then the gang can sell their BTC for real USD.
We know depositing USD part never happens.
Therein lies the fraud and the collusion between Tether and the exchanges in perpetrating it.
The grand fallacy of the crypto market is the idea that the exchanges are honest brokers and market makers just like in regulated markets --- despite the complete lack of oversight or regulation requiring as much.
Therein lies the fraud and the collusion between Tether and the exchanges in perpetrating it.
The grand fallacy of the crypto market is the idea that the exchanges are honest brokers and market makers just like in regulated markets --- despite the complete lack of oversight or regulation requiring as much.
Sadly I don't think everyone knows it. My experience talking to people who describe themselves as somewhat involved in crypto trading is that many of them don't realize there is very solid evidence for Tether being a fraud. It being run by known scammers and proven lies about USD backing being the most damning. What I usually hear is: "yeah but they were talking about it being fraud for years now and it's still there" or "the FED is a fraud as well". The former is caused by successful "fud" skeptic shaming campaign while the latter is caused by the widespread ignorance about how financial system works. Both are very common even among otherwise intelligent people.
I'm involved in crypto and I really don't care about Tether.
Currently, people are coming in with their own USD and willing to buy Bitcoin at a price of 60K. That has nothing to do with Tether. It has everything to do with people willing to pay that price.
I don't own Tether, so I really don't care.
Currently, people are coming in with their own USD and willing to buy Bitcoin at a price of 60K. That has nothing to do with Tether. It has everything to do with people willing to pay that price.
I don't own Tether, so I really don't care.
That has nothing to do with Tether. It has everything to do with people willing to pay that price.
It has everything to do with Tether.
Tether is being minted with an illusionary value of $1USD and "loaned" to favored insiders which use it to buy Bitcoin and inflate the price.
The fact that Bitcoin trades for $60k is the result of this being done in the past. The reason new investors pay $60k is their expectation it will continue into the future.
More than half of all Bitcoin trades involve Tether. The two are inextricably linked whether you realize it or not.
What you have described is an aspect of most classic financial fraud schemes --- an influx of new investors is required to keep the scheme going. While it continues, everyone is happy. But when the music stops (as it always does) someone is inevitably left without a chair at the table.
It has everything to do with Tether.
Tether is being minted with an illusionary value of $1USD and "loaned" to favored insiders which use it to buy Bitcoin and inflate the price.
The fact that Bitcoin trades for $60k is the result of this being done in the past. The reason new investors pay $60k is their expectation it will continue into the future.
More than half of all Bitcoin trades involve Tether. The two are inextricably linked whether you realize it or not.
What you have described is an aspect of most classic financial fraud schemes --- an influx of new investors is required to keep the scheme going. While it continues, everyone is happy. But when the music stops (as it always does) someone is inevitably left without a chair at the table.
Ok, so please enlighten me.
> More than half of all Bitcoin trades involve Tether
So how much of this Tether is fake money?
When I buy crypto, I do that with fiat coming from a fractional reserve bank. So basically 1% is money the bank has now, and 99% is lended and "should be available at some point".
This all seems like a system that just begs for a cryptocurrency solution :p. Tether is part of the fiat system, not cryptocurrency. I would love to see someone making Bitcoins or Ethereum out of thin air. Because if Tether is creating dollars out of thin air as you say, that's a serious flaw in the fiat system.
> More than half of all Bitcoin trades involve Tether
So how much of this Tether is fake money?
When I buy crypto, I do that with fiat coming from a fractional reserve bank. So basically 1% is money the bank has now, and 99% is lended and "should be available at some point".
This all seems like a system that just begs for a cryptocurrency solution :p. Tether is part of the fiat system, not cryptocurrency. I would love to see someone making Bitcoins or Ethereum out of thin air. Because if Tether is creating dollars out of thin air as you say, that's a serious flaw in the fiat system.
Tether is part of the fiat system, not cryptocurrency.
LOL!
Tether has no role in the fiat system other than it's fictitious claims of relative value.
LOL!
Tether has no role in the fiat system other than it's fictitious claims of relative value.
As long as they have >1% backed by cash, they are doing better than any fractional reserve bank ;p.
"Better" for themselves --- no doubt. "Better" for others --- no way.
To do "better", submit to an audit to show their cash backing. Instead they claim 100% backed by "something" that is not even clearly defined and has changed over time. And the exchanges play along and collude to keep the "market" price at $1USD.
To do "better", submit to an audit to show their cash backing. Instead they claim 100% backed by "something" that is not even clearly defined and has changed over time. And the exchanges play along and collude to keep the "market" price at $1USD.
I remember the big bank bailout of 2008. Tether... fiat... they are not that different.
Like I said before: problems that cryptocurrency fixes :D.
Like I said before: problems that cryptocurrency fixes :D.
Next to my other comment here, let me do a quick calculation then, if you are correct.
BTC = 60K * (0.4 USD + 0.6 USDT)
Now let's say USDT is only backed by USD at 50%, that would make:
BTC = 60K * (0.4 USD + 0.3 USD) -> 0.7 USD, which would put the price of BTC at 42K USD.
I can live with that :D.
BTC = 60K * (0.4 USD + 0.6 USDT)
Now let's say USDT is only backed by USD at 50%, that would make:
BTC = 60K * (0.4 USD + 0.3 USD) -> 0.7 USD, which would put the price of BTC at 42K USD.
I can live with that :D.
USD being backed at 50% is a fairy fantasy less likely than a pink unicorn coming down to Earth and solving climate warming.
They weren't even backed at 50% a few years ago when their market cap like 10+x smaller in comparison to what is now. 5% is an optimistic estimation for how it it is today.
Ok, so let's say bitcoin is half priced then... still ok for me :D
Besides, not being backed by real USD doesn't mean people didn't pour in real money. So in the end only the Tethers that were created out of thin air count towards the price inflation. So the ones people paid money for are still 'legit' in that sense.
So worst case still seems OK for me.
Besides, not being backed by real USD doesn't mean people didn't pour in real money. So in the end only the Tethers that were created out of thin air count towards the price inflation. So the ones people paid money for are still 'legit' in that sense.
So worst case still seems OK for me.
People are not willing to pay 60k because they think Bitcoin is somehow worth 60k based on their analysis. They trust the market to be somewhat efficient and they want to get involved. if 60k is a current fair price let's be it.
The problem is that the price is propped up by Tether printing tokens which are then used to buy BTC. This is like the NFT fraud where you pass your NFT around your wallets to create an illusion of artificial demand and the price going up. There is a reason wash trading is illegal. "People are coming with their own USD to buy" isn't an excuse in such case.
The problem is that the price is propped up by Tether printing tokens which are then used to buy BTC. This is like the NFT fraud where you pass your NFT around your wallets to create an illusion of artificial demand and the price going up. There is a reason wash trading is illegal. "People are coming with their own USD to buy" isn't an excuse in such case.
SRTP(1)
As fraudulent as being able to lend at an arbitrary multiple of your reserves.
A run the bank would bring it all down.
Just like in real life.
A run the bank would bring it all down.
Just like in real life.
Transferring money through banks is such a pain in the ass versus crypto. It really feels like we’re at a tipping point where ACH and wire transfers become the equivalent of writing a check.
What do you mean? I regularly transfer money to people from my phone using my net bank, and more often still just using mobile payments. The money is instantly in their accounts and it takes a couple of seconds to type out details.
Compare that to crypto, where buying a cup of coffee takes 3 days, and even failed the last time I tried, where I ended up having to borrow credit from a local. The Cafe only “took crypto” but since transferring such a pain, they actually had a piece of paper with credit/debt notes that people would settle once a month.
How is that shit-fest in any way preferable?
Compare that to crypto, where buying a cup of coffee takes 3 days, and even failed the last time I tried, where I ended up having to borrow credit from a local. The Cafe only “took crypto” but since transferring such a pain, they actually had a piece of paper with credit/debt notes that people would settle once a month.
How is that shit-fest in any way preferable?
I’m talking about transferring tens of thousands of dollars. Takes days with a bank, minutes with crypto. Also between services I need to transfer through the bank, I can’t go directly from service to service.
Are you american? You have a pretty garbage bank transfer system. Europe’s transfer usability matches or beat’s cryptos for transfers within the system.
I’m Canadian. I just tried transferring my free Coinbase crypto to another wallet to withdraw and the process was slower than had I done a transfer between my two bank accounts. And much more fraught!
I’m Canadian. I just tried transferring my free Coinbase crypto to another wallet to withdraw and the process was slower than had I done a transfer between my two bank accounts. And much more fraught!
Crypto is a system that works national/international doesn’t matter. Transfer money in minutes. No banks have to be involved, not because banks are bad it’s just an unnecessary step.
> I just tried transferring my free Coinbase
That's not a wallet to wallet crypto transfer.
That's a Coinbase transfer.
Coinbase is awful as are the majority of other onramps.
That's not a wallet to wallet crypto transfer.
That's a Coinbase transfer.
Coinbase is awful as are the majority of other onramps.
Ok walk me through these wallet to wallet transfers and how they’re easier than bank transfers outside of the US. Like in Canada or Europe.
In 10 seconds I can my friend’s account and they can use that money to pay online with debit, instantly. Or, spend an extra $100 on their credit card, instantly, knowing their checking account has the room to pay it on bill date.
Tell me how a wallet transfer beats that.
In 10 seconds I can my friend’s account and they can use that money to pay online with debit, instantly. Or, spend an extra $100 on their credit card, instantly, knowing their checking account has the room to pay it on bill date.
Tell me how a wallet transfer beats that.
Venmo, PayPal, etc.. but these are closed ecosystems. It is difficult to transfer money between services or even to/from yourself without a bank intermediary. Especially for larger amounts of money things take a lot longer.
As European I feel SEPA is better and more secure than crypto. I still have to ask for account number, but after that I just log in to my bank insert number, name, date, amount and message. Press accept, then accept any outstanding payments.
With crypto I need to keep care of my keys and the address of receiver might change lot more. Where as bank account number is static for years...
With crypto I need to keep care of my keys and the address of receiver might change lot more. Where as bank account number is static for years...
First with crypto you don’t need to go through a bank at all. You can hold and send your own money wherever. Crypto is also 100% international. If we wanted to send each other money right now, crypto would be the best way to do it.
What do you mean? For international transfers, I just write the account number and it's done for a small fee. It's also reversible.
For national payments I can use the account number, the phone number, or simply the name of the person using an app (vipps). Everyone has it,also elderly people, and it's actually instant and verified transactions for real.
For national payments I can use the account number, the phone number, or simply the name of the person using an app (vipps). Everyone has it,also elderly people, and it's actually instant and verified transactions for real.
That’s great for you. Where I am I’m waiting for days for money to get into my account and days for money to leave my account. I’m also limited to how much I can send at once. What I’m saying is that crypto has this problem solved right now for the entire world.
Perhaps the entire world, but far from the entire population.
I assume you live in the US, which may be quite primitive in this department. In India, and also many parts of Africa, all you need to transfer money from one account to another is to know their phone number. And the transfer is instantaneous.
Yes America has many services like that. I’m talking about moving large amounts of money between accounts held at various businesses.
I disagree. my grandma, my mum, my gf and most of my friends understand the concepts and processes of personal banking. crypto is complex and unforgiving and not very userfriendly for that reason. i doubt that they would ever be able to use it in a safe way.
Finally, normal people want service. I got scammed online while purchasing a leather good. My bank helped me to charge my money back. Paypal does that, too, here. Alone this feature makes cryptos a nightmare for regular users.
Finally, normal people want service. I got scammed online while purchasing a leather good. My bank helped me to charge my money back. Paypal does that, too, here. Alone this feature makes cryptos a nightmare for regular users.
No reason your family still can’t use banks. If the banks use stable coins to send and clear transfers then win win. In terms of getting money back from scams even today it’s best practice to use a credit card for that.
ACH replaced real clearing houses. Some banks have implemented rapid low-fee transactions, but not all. It's not unreasonable to assume that banks will widely implement an ACH replacement that makes this advantage of cryptocurrency exchange irrelevant.
What about sending money between services that aren’t even banks? Crypto removes the need to have money transfers go through any intermediaries. Which saves time and hassle.
Those "pain in the ass" parts are there for reasons like consumer protection and anti-money laundering. If you don't like them that's OK, but suggesting no one should have them seems a little presumptuous.
No it’s a pain in the ass because the technology is antiquated.
No, it is exactly as that guy said. Those transactions are illegal, you can't transfer money across borders without notifying authorities in most countries, and I am pretty sure you aren't notifying them when you do. If bitcoin ever becomes popular as a currency rather than just investment scheme then governments will come down hard on this and all transactions will get banned or made as inconvenient as bank transfers.
Have you been asleep because people are absolutely using crypto to move money internationally and legitimately. Governments, exchanges and banks have been working together to update the rules so that reporting is done correctly, that’s why we have things like KYC. Unless there’s a law that says ‘money must be transferred through banks’, please let me know
So do you tell your exchange the identity of everyone you send bitcoins to and receive bitcoins from? If not you are committing a crime and can face huge fines and jail time, since your exchange don't know who the user is of every bitcoin wallet. And if you do tell them that then I don't see the point of bitcoins, as then it becomes even more centralized and controlled than bank transactions, and you can still face fines and jail time if they think you gave them the wrong information about the person you sent stuff to.
You should probably learn the rules yourself before trying to scare people with 'fines and jail time'. This isn't complicated. Reporting requirements are easy to follow and are pretty much the same as they've always been -
https://www.irs.gov/individuals/international-taxpayers/freq...
The government can't even raise the debt ceiling or collect taxes from people who are flagrantly not declaring income. Crypto skeptics always have this image in their mind where the government finally steps up and stops the country from going full Snow Crash.
Let's say Biden tomorrow actually came out and said "enough malarkey, we're banning crypto". What do you think are the actual chances of Congress passing that legislation of the GOP-dominated SCOTUS from upholding those laws. At least half the politicians in this country actively want to see the federal government go through a financial crisis (particularly when the opposite team holds the White House.)
Crypto skeptics point to Executive Order 6102 but ignore the fact that Biden is no FDR. If we actually had a strong executive, like LBJ, Nixon or even GWB post-9/11 I'd agree. Crypto's playing loose with the rules and basically taunting the US Treasury to play whack-a-mole. But this country's so polarized and dysfunctional that we'll never have a strong executive again in our lifetime.
Let's say Biden tomorrow actually came out and said "enough malarkey, we're banning crypto". What do you think are the actual chances of Congress passing that legislation of the GOP-dominated SCOTUS from upholding those laws. At least half the politicians in this country actively want to see the federal government go through a financial crisis (particularly when the opposite team holds the White House.)
Crypto skeptics point to Executive Order 6102 but ignore the fact that Biden is no FDR. If we actually had a strong executive, like LBJ, Nixon or even GWB post-9/11 I'd agree. Crypto's playing loose with the rules and basically taunting the US Treasury to play whack-a-mole. But this country's so polarized and dysfunctional that we'll never have a strong executive again in our lifetime.
Crypto has never gone through a major economic crisis and when there were short term panics it always dropped significantly. Being without a central bank also means there is no limit to how far it can drop.
> never gone through a major economic crisis
COVID and the massive supply of dollars since last year is not one?
COVID and the massive supply of dollars since last year is not one?
No, those two things go in opposite directions. During the march 2020 plunge crypto fell more than the S and P I think
In a general recession with declining asset values crypto would likely fall more than general assets, and also risks simply having a massive plunge if Tether breaks at the same time.
In a general recession with declining asset values crypto would likely fall more than general assets, and also risks simply having a massive plunge if Tether breaks at the same time.
Whatever actual assets there are in Tether they have on the record said is in speculative assets. In a crisis tether goes up in smoke.
No
Intervention by the Central Bank is not a good thing. There are a few economist who are warning against the lack of moral hazard currently pervasive in the Traditional Finance sector. Crypto will be the refuge from aggressive monetary policy going tits up. Aka like in 2008.
My sense is that crypto would also go tits up. I don't disagree about problems with traditional finance, but I think that asset valuations, including crypto, benefit from those problems.
Many decades of economic growth speaks for the current economic model.
A saying goes: pessimists get to be right, optimists get to be rich.
A saying goes: pessimists get to be right, optimists get to be rich.
Another saying goes: Past performance is not indicative of future growth.
YMMV...
YMMV...
To be fair, as regularly seen in smaller economies - regular money also tends to show no limit to how far it can drop during economic crisis.
Crypto is a speculative asset. It was made and promoted itself as money but failed completely in that aspect.
Except Monero. Funnily enough, Monero is the crypto that failed as speculative asset.
It's a similar story with Nano, and it de-masks the true nature of this mania
On paper, it's a perfect crypto. Really fast and fee-less transactions, proof of stake avoids the environmental impacts, completely pre-mined, distributed as equitably as you reasonably can, and truly decentralized.
But it has one major flaw - no way to get rich quick. No celebrity hyping it up. Nobody is "in it for the tech", it's all a glorified game of chicken
On paper, it's a perfect crypto. Really fast and fee-less transactions, proof of stake avoids the environmental impacts, completely pre-mined, distributed as equitably as you reasonably can, and truly decentralized.
But it has one major flaw - no way to get rich quick. No celebrity hyping it up. Nobody is "in it for the tech", it's all a glorified game of chicken
Couldn't you get rich off Nano the same way you get rich off bitcoin? By buying some and then convincing others to spend more on it then you did?
Freicoin was invented earlier and died faster than any other cryptocurrency. In my opinion the idea of an anti speculation cryptocurrency failing is exposing the entire cryptocurrency space for what it is: gambling.
How has it failed?
A useful currency requires at least some reasonable level of price stability. How popular is crypto becoming as a payment mechanism? From what I see it is actually becoming less popular with time. I saw options to pay with crypto way more a few years ago.
It's less useful as money because so many people use it as a speculative asset.
Do you mean there haven't been major economic crisis related cryptocurrencies or we don't know what happens to cryptos if (and when) a major, general economic crisis happens in the world? I'm interested in what would happen in the latter case. Probably cryptos would crash even harder but are there cases where people would trust cryptos more than cash in crisis?
In a general one. In a general crash everything tends to drop because everyone is selling assets to cover debts. I can't see crypto doing anything other than drop more than anything has ever dropped.
It would recover later probably if investor confidence is not completely destroyed. Because as we all know, the entire space is still completely without any real world use case and entirely useless other than speculation.
It would recover later probably if investor confidence is not completely destroyed. Because as we all know, the entire space is still completely without any real world use case and entirely useless other than speculation.
A bubble in terms of what? If we continue to print money at this rate it won't make sense to short almost anything. Even with highly leveraged assets, if they drop they will only face a temporal correction. I agree with Zhu Fu in saying that by Burry defining himself as a bear, he hasn't achieved anything but underperform the market.
The problem with shorting in bubbles is you don’t know when they will pop. As Maynard Keynes famously said, markets can remain irrational much longer than you can remain solvent.
And given enough time for irrational price levitation, something else can fill the bubble void and the price justifiable at some level. Maybe you short BTC at $30k. It then goes to $300k. You’re licking your wounds but anticipating the drop back down to 0. Except somehow price snaps back to $45k and you’re still a loser.
And given enough time for irrational price levitation, something else can fill the bubble void and the price justifiable at some level. Maybe you short BTC at $30k. It then goes to $300k. You’re licking your wounds but anticipating the drop back down to 0. Except somehow price snaps back to $45k and you’re still a loser.
Bitcoin is the Rorschach test of the investment class.
Today's NFT is nothing; it has no value except for its speculated price. I hope that a good company can take advantage of this craze to have some functionalities related to cryptocurrency and NFTs.
I'm really amazed at these comments.
Every time Bitcoin goes through a major move, the "bubble" crowd comes out of the woodwork, while having done absolutely no effort in understanding what Bitcoin is.
Every time Bitcoin goes through a major move, the "bubble" crowd comes out of the woodwork, while having done absolutely no effort in understanding what Bitcoin is.
I mean, what is it if not a worse gold? All assets can be roughly divided into few categories: currency, debt, equity, derivatives/bets, collectibles. It's not an equity or debt instrument, it's not a derivative, and it's not a currency as nobody settles transactions in it. It's a collectible (like gold or paintings), with a short history (unlike gold), that delivers zero value for the holder in the meantime (unlike paintings).
(And please spare the tech; people really do understand it, at least to the level that matters)
(And please spare the tech; people really do understand it, at least to the level that matters)
> All assets can be roughly divided into few categories: currency, debt, equity, derivatives/bets, collectibles.
Says who? Your Econ. 101 book?
You flippantly decide that no new class of asset can ever come into being and decide to present it as one of the fundamental laws of nature?
Says who? Your Econ. 101 book?
You flippantly decide that no new class of asset can ever come into being and decide to present it as one of the fundamental laws of nature?
Essentially, yes, except that: 1) this is a rough categorization, there's a lot of things out there that do not fit into any single one of the categories (a convertible bond is debt, equity, derivative? a little bit of all), 2) there could be something genuinely new, outside of all the previously known categories, but it hasn't appeared so far in thousands of years (yes, I mean thousands).
Also see this video: https://www.youtube.com/watch?v=8iNeXCAM_Ik
Just to be clear: bitcoin (or some other existing or future crypto) could become for example a currency one day. But it clearly isn't one now.
Also see this video: https://www.youtube.com/watch?v=8iNeXCAM_Ik
Just to be clear: bitcoin (or some other existing or future crypto) could become for example a currency one day. But it clearly isn't one now.
How do you classify gold using your categories?
Gold is a collectible, with a marginal use as a commodity. A commodity is an input to industrial processes, not really an asset though you can call commodities assets too if you want to.
It used to be a currency quite a while ago - people would actually use it in contracts, most importantly long term debt contracts (long term contracts is where the value/acceptance of the currency really shows; imagine taking or issuing a 30yr mortgage in Bitcoin, as in the homeowner is obliged to pay fixed X Bitcoin per month, lol). A big part of the great depression fighting/relief was to make debt contracts denominated in gold unenforceable.
It used to be a currency quite a while ago - people would actually use it in contracts, most importantly long term debt contracts (long term contracts is where the value/acceptance of the currency really shows; imagine taking or issuing a 30yr mortgage in Bitcoin, as in the homeowner is obliged to pay fixed X Bitcoin per month, lol). A big part of the great depression fighting/relief was to make debt contracts denominated in gold unenforceable.
> understanding what Bitcoin is
A digital trading card that's used for speculating and buying drugs?
I understand what fundamentally motivates people to trade it and that they tell themselves all sorts of stories about a "new financial system" because it feels better than saying they invest in Charizards. I also know not to touch it.
To Bitcoin's credit, it made a lot of people think about what makes something a currency, the differences between investing and speculation, consequences of deflation, etc.
A digital trading card that's used for speculating and buying drugs?
I understand what fundamentally motivates people to trade it and that they tell themselves all sorts of stories about a "new financial system" because it feels better than saying they invest in Charizards. I also know not to touch it.
To Bitcoin's credit, it made a lot of people think about what makes something a currency, the differences between investing and speculation, consequences of deflation, etc.
> having done absolutely no effort in understanding what Bitcoin is
To see its value, I don't need to make an effort to understand what a pear is, or a bar of gold, or a house.
I and others have looked at Bitcoin, and its trillion dollar market cap (which means Bitcoins are worth more than JP Morgan Chase and Johnson and Johnson put together) and realized it has absolutely no value.
At least subprime mortgages, 1999 dot-bomb stocks and the like had some value. Bitcoin has no value. On the next market contraction like 2008 or 2000 or the like Bitcoin value will collapse. Maybe even before that.
To see its value, I don't need to make an effort to understand what a pear is, or a bar of gold, or a house.
I and others have looked at Bitcoin, and its trillion dollar market cap (which means Bitcoins are worth more than JP Morgan Chase and Johnson and Johnson put together) and realized it has absolutely no value.
At least subprime mortgages, 1999 dot-bomb stocks and the like had some value. Bitcoin has no value. On the next market contraction like 2008 or 2000 or the like Bitcoin value will collapse. Maybe even before that.
> "realized it has absolutely no value."
I wonder how long ago that "realization" occurred, and if you have since then "realized" how much the market has disagreed with your conclusion, or if you've "realized" the size of the opportunity loss?
I wonder how long ago that "realization" occurred, and if you have since then "realized" how much the market has disagreed with your conclusion, or if you've "realized" the size of the opportunity loss?
The market also said 14 years ago that subprime mortgages were worth over $1 trillion. This year it says Bitcoins are worth $1 trillion.
There is a language of such bubbles - not, here is why it has value, like a loaf of bread or chair or bar of gold, but think about FOMO and that type of thing. There have been fly by night scams since Ponzi's postal reply coupons, or Dutch tulip bulbs and before that - I don't worry too much on missing out on the latest scam.
There is a language of such bubbles - not, here is why it has value, like a loaf of bread or chair or bar of gold, but think about FOMO and that type of thing. There have been fly by night scams since Ponzi's postal reply coupons, or Dutch tulip bulbs and before that - I don't worry too much on missing out on the latest scam.
You use the word "value" in this comment to mean something different than the market price, but the definition isn't obvious to me. Maybe it's your personal values?
It's called utility and it's the reason why we buy anything.
> it's the reason why we buy anything
You say it's 'the reason' which I'm not sure means 'the only reason' or 'a reason'.
If it's the former: How will crypto, let alone any collectable or sentimental item fit into this framework?
If it's the later, then yes, but utility varies by recipient and then there are other factors which play into price, especially in the short term.
You say it's 'the reason' which I'm not sure means 'the only reason' or 'a reason'.
If it's the former: How will crypto, let alone any collectable or sentimental item fit into this framework?
If it's the later, then yes, but utility varies by recipient and then there are other factors which play into price, especially in the short term.
What's the utility of paper money?
Overall, the experts cited in this article make weak points. There are legitimate concerns with crypto (which I would be happy to discuss if anyone wants to have sane dialogue), none of where really covered in depth.
> “My view is that bitcoin will ultimately end up going to zero. And I think we are in the final stages right now.”
Bitcoin's market value will never go to zero. Let me explain - bitcoin was borne out some internet guy's (we call him / her "Satoshi Nakamoto") idea of what money could be and how to implement it on the internet. It was not theorized in a white paper by PhD economists from MIT or U-Chicago. It proved itself in the internet's black market, and made its way to the main stream. It is fundamentally a bottom up proven technology, it did not come from the top down like the modern fiat dollar. In the event that bitcoin does not have value in the main stream, it will always have some value in the internet's dark market, and it won't be zero.
> “And the U.S. dollar is backed by the full faith of the United States. Does bitcoin have an army?”
Money does not need an army. The army gets paid in money, the money does not make the army. Humans traded in coinage before organized nation states or even city states. Contemplate this - what good is an army when they do not know who the anonymous holders of the internet money are? Who do they attack? And when the fiat money gets in inflated to zero, who protects the civilian government from a hungry and angry army that has all the guns?
> “Nothing is priced in bitcoin"
Bricks of cocaine are priced in bitcoin. So is fiat currency. I could go to a local bitcoin meetup and trade bitcoin for dollar bills, no KYC. I can do the same on the dark web, and have USPO deliver me dollars. That makes my bitcoin as good as cash, and everything is priced in cash. By the transitive property, bitcoin is cash.
> Despite a steep sell-off in May and the growing certainty that the Securities and Exchange Commission, the U.S. Treasury, and even the Department of Justice are getting ready to clamp down on the cryptocurrency world, retail and institutional investors alike have kept buying. When China announced on September 24 that it would ban all cryptocurrency activities, bitcoin fell less than 6 percent.
Fun fact - chairman of the SEC teaches courses on blockchain and crypto at MIT.[1] Doubtful that the US will go the way of China. And if it does, so what? The Chinese ban was a non-event. And if you think you can ban bitcoin, you do not understand bitcoin.
> “As I dug into the actual underpinnings, it just became very clear that what was actually going on was cultlike behavior with no real understanding of the asset or the economic implications for the model that it was proposing,” he says.
This is a better description for fiat currency than bitcoin.
> “What a crazy concept this is that we as a country embrace so many bright, young, talented people to come up with a replacement for our reserve currency,” he said at the Economic Club of Chicago.
..."so many smart, bright, young, talented people"...I think this quote speaks for itself.
> Bitcoin, its critics like to say, is nothing but electricity. “To tell me that something that’s constructed as a computer program, where you engage in some process of sitting there in front of your computer and, after a period of time and the expenditure of a bunch of electricity, a message appears on your screen that you have created something, that’s ridiculous,” Singer said on an investment podcast earlier this year. “It’s nothing.”
Yes, this how the bitcoin protocol defines the value of coins, but so does the fiat denomination that people are willing to pay for bitcoin. It's a traded market now, and that's where most of the value is coming from.
> As Roubini put it in the Goldman report, “Bitcoin and other cryptocurrencies have no income or utility, so there’s just no way to arrive at a fundamental value.”
Yes there is - go on a bitcoin exchange, see the fiat exchange rate for bitcoin, that's the fundamental value.
> He also scoffs at those who call it digital gold. “Bitcoin could disappear one day, but gold won’t.”
Highly unlikely that a globally distributed electronic ledger that can fit on like 500gb hhard drive would ever disappear. SMH, these people need to do more research on the subject of crypto.
> Green estimates that 40 percent of bitcoin’s real-world transactions are still criminal in nature (don’t forget, the first killer app was black-market bazaar Silk Road), including recent ransomware hackings. Bulls argue that the real number is a lot lower. A report by industry firm Chainalysis pegged it at less than one percent in 2020 — less than than comparable figures for cash.
Mr Green is lying and ignorant on the subject of bitcoin.
> “I would broadly describe what’s going on with El Salvador as they’re trying to make money-laundering the national business,” says Green, who contends that El Salvador is at risk of becoming a narco state.
Holding morality, legality, and potential human suffering aside, what El Salvador is going to be good for the value of bitcoin. Sad but true.
> hedge-fund mogul Ray Dalio of Bridgewater Associates, who dabbles in cryptocurrencies, said he believed regulators would “kill” bitcoin if it became too successful.
Again, if you think you can ban bitcoin, you do not understand bitcoin.
> “I can see why governments need to fight this thing. They are probably going to shut it down at some point.”
The fact that governments already see it as a threat (China, especially) signals the vulnerability they see in the legacy fiat system.
> Beyond all the specific arguments and counterarguments, the fact remains that those from the “big short” set making the case against bitcoin are generally not making the same kind of real-life short bets that made them so much money in 2008.
Face palm Speaks for itself.
> “You can’t be short it in scale,” agrees the short seller. Like some of the others who fundamentally dislike it, he even has a small position in bitcoin. “If it goes up, I’ll make a little bit of money. If it goes to zero, I’ll be so happy, I will gladly lose the money.”
Hubris and schadenfreude - these do not mix well for the incumbents in a legacy, obsolete system.
*Fundamentally, bitcoin and the mechanics of crypto are challenging how people think about money - what it is and how it fits into our lives. That is a good thing.*
[1] https://ocw.mit.edu/courses/sloan-school-of-management/15-s1...
> “My view is that bitcoin will ultimately end up going to zero. And I think we are in the final stages right now.”
Bitcoin's market value will never go to zero. Let me explain - bitcoin was borne out some internet guy's (we call him / her "Satoshi Nakamoto") idea of what money could be and how to implement it on the internet. It was not theorized in a white paper by PhD economists from MIT or U-Chicago. It proved itself in the internet's black market, and made its way to the main stream. It is fundamentally a bottom up proven technology, it did not come from the top down like the modern fiat dollar. In the event that bitcoin does not have value in the main stream, it will always have some value in the internet's dark market, and it won't be zero.
> “And the U.S. dollar is backed by the full faith of the United States. Does bitcoin have an army?”
Money does not need an army. The army gets paid in money, the money does not make the army. Humans traded in coinage before organized nation states or even city states. Contemplate this - what good is an army when they do not know who the anonymous holders of the internet money are? Who do they attack? And when the fiat money gets in inflated to zero, who protects the civilian government from a hungry and angry army that has all the guns?
> “Nothing is priced in bitcoin"
Bricks of cocaine are priced in bitcoin. So is fiat currency. I could go to a local bitcoin meetup and trade bitcoin for dollar bills, no KYC. I can do the same on the dark web, and have USPO deliver me dollars. That makes my bitcoin as good as cash, and everything is priced in cash. By the transitive property, bitcoin is cash.
> Despite a steep sell-off in May and the growing certainty that the Securities and Exchange Commission, the U.S. Treasury, and even the Department of Justice are getting ready to clamp down on the cryptocurrency world, retail and institutional investors alike have kept buying. When China announced on September 24 that it would ban all cryptocurrency activities, bitcoin fell less than 6 percent.
Fun fact - chairman of the SEC teaches courses on blockchain and crypto at MIT.[1] Doubtful that the US will go the way of China. And if it does, so what? The Chinese ban was a non-event. And if you think you can ban bitcoin, you do not understand bitcoin.
> “As I dug into the actual underpinnings, it just became very clear that what was actually going on was cultlike behavior with no real understanding of the asset or the economic implications for the model that it was proposing,” he says.
This is a better description for fiat currency than bitcoin.
> “What a crazy concept this is that we as a country embrace so many bright, young, talented people to come up with a replacement for our reserve currency,” he said at the Economic Club of Chicago.
..."so many smart, bright, young, talented people"...I think this quote speaks for itself.
> Bitcoin, its critics like to say, is nothing but electricity. “To tell me that something that’s constructed as a computer program, where you engage in some process of sitting there in front of your computer and, after a period of time and the expenditure of a bunch of electricity, a message appears on your screen that you have created something, that’s ridiculous,” Singer said on an investment podcast earlier this year. “It’s nothing.”
Yes, this how the bitcoin protocol defines the value of coins, but so does the fiat denomination that people are willing to pay for bitcoin. It's a traded market now, and that's where most of the value is coming from.
> As Roubini put it in the Goldman report, “Bitcoin and other cryptocurrencies have no income or utility, so there’s just no way to arrive at a fundamental value.”
Yes there is - go on a bitcoin exchange, see the fiat exchange rate for bitcoin, that's the fundamental value.
> He also scoffs at those who call it digital gold. “Bitcoin could disappear one day, but gold won’t.”
Highly unlikely that a globally distributed electronic ledger that can fit on like 500gb hhard drive would ever disappear. SMH, these people need to do more research on the subject of crypto.
> Green estimates that 40 percent of bitcoin’s real-world transactions are still criminal in nature (don’t forget, the first killer app was black-market bazaar Silk Road), including recent ransomware hackings. Bulls argue that the real number is a lot lower. A report by industry firm Chainalysis pegged it at less than one percent in 2020 — less than than comparable figures for cash.
Mr Green is lying and ignorant on the subject of bitcoin.
> “I would broadly describe what’s going on with El Salvador as they’re trying to make money-laundering the national business,” says Green, who contends that El Salvador is at risk of becoming a narco state.
Holding morality, legality, and potential human suffering aside, what El Salvador is going to be good for the value of bitcoin. Sad but true.
> hedge-fund mogul Ray Dalio of Bridgewater Associates, who dabbles in cryptocurrencies, said he believed regulators would “kill” bitcoin if it became too successful.
Again, if you think you can ban bitcoin, you do not understand bitcoin.
> “I can see why governments need to fight this thing. They are probably going to shut it down at some point.”
The fact that governments already see it as a threat (China, especially) signals the vulnerability they see in the legacy fiat system.
> Beyond all the specific arguments and counterarguments, the fact remains that those from the “big short” set making the case against bitcoin are generally not making the same kind of real-life short bets that made them so much money in 2008.
Face palm Speaks for itself.
> “You can’t be short it in scale,” agrees the short seller. Like some of the others who fundamentally dislike it, he even has a small position in bitcoin. “If it goes up, I’ll make a little bit of money. If it goes to zero, I’ll be so happy, I will gladly lose the money.”
Hubris and schadenfreude - these do not mix well for the incumbents in a legacy, obsolete system.
*Fundamentally, bitcoin and the mechanics of crypto are challenging how people think about money - what it is and how it fits into our lives. That is a good thing.*
[1] https://ocw.mit.edu/courses/sloan-school-of-management/15-s1...
You're one of the best people to ask, probably:
Direct effects of USA/EUR making private wallets illegal?
Direct effects of USA/EUR making private wallets illegal?
Is it really a bubble or is it driven by market demands as more and more applications and use-cases emerge?
In the end, a lot of the blockchain infrastructure relies on bitcoin hence it moves in sync.
China's real estate market is a bubble because there is a excess of 500 million dwellings that are not needed.
Almost none of the blockchain infrastructure of other crypto projects relies on Bitcoin directly beyond it being an investment in the same general sector.
I'm not really in the crypto scene so it's hard for me to tell. But of everyone I know in bitcoin, they just use it as an investment. Sell when it gets too high. Buy when it crashes. Sell it when they need to buy a new car. That's pretty much it.
Maybe they're the minority. But if they aren't, I think there's eventually going to be a rude awakening.
Maybe they're the minority. But if they aren't, I think there's eventually going to be a rude awakening.
> In the end, a lot of the blockchain infrastructure relies on bitcoin hence it moves in sync.
Does it, though? I’m on the sidelines, but it seems like all the excitement/money flowing into crypto these days is into blockchains with higher transaction throughput and more advanced smart contract interpreters. I know there are some maxis trying to build things like DeFi and NFTs on Bitcoin but it seems to have really taken a backseat in the latest crypto hype cycle.
Does it, though? I’m on the sidelines, but it seems like all the excitement/money flowing into crypto these days is into blockchains with higher transaction throughput and more advanced smart contract interpreters. I know there are some maxis trying to build things like DeFi and NFTs on Bitcoin but it seems to have really taken a backseat in the latest crypto hype cycle.
As of this past week though, the price action is all in BTC reaching its ATH again of 60k+. Financial news is all about inflation, so I assume it's related buyers liking the fixed supply of BTC.
> DeFi and NFTs on Bitcoin
There are DeFi and NFT platforms on Bitcoin? I haven’t heard of those. Are you talking about Ethereum?
There are DeFi and NFT platforms on Bitcoin? I haven’t heard of those. Are you talking about Ethereum?
There are some efforts underway to bring ETH-like smart contracts to BTC, which - if they succeed - will allow all the ETH-powered paraphernalia to happen on top of BTC. But the going is slow.
Other than that, there already are some "NFT's" embedded in the Bitcoin blockchain.
To give you an example of what I mean, consider the Genesis block, which, while its reward can't be spent still has a private key attached to it.
I'm willing to bet that the day the person who owns that key (Satoshi, assuming he's still alive) decides to put it up for auction, the bids won't be zero :)
Other than that, there already are some "NFT's" embedded in the Bitcoin blockchain.
To give you an example of what I mean, consider the Genesis block, which, while its reward can't be spent still has a private key attached to it.
I'm willing to bet that the day the person who owns that key (Satoshi, assuming he's still alive) decides to put it up for auction, the bids won't be zero :)
Stacks is an example for such services on Bitcoin
It doesn't follow from an application or use case for blockchain technology that I should pay you millions of dollars for the service of having previously owned some Bitcoins. For one thing I could transact on some cheaper altcoin, or make my own. I still have to pay for hashing power and liquidity. Those guys are smart. But their business is competitive and in the long run profits will be thin. Bitcoin's dwindling supply is a clever trick, but in reality the supply of tokens with which to make blockchain transactions is growing all the time.
For another, payments infrastructure is a problem but not a huge problem. There is a ceiling on how much it's worth to solve. And the traditional banking system remains a competitor. Not to say you can't get paid for helping me with a payments problem, but orders of magnitude profit? For such an ancillary contribution of having the currency prior to me (or my customers)? Color me skeptical.
For another, payments infrastructure is a problem but not a huge problem. There is a ceiling on how much it's worth to solve. And the traditional banking system remains a competitor. Not to say you can't get paid for helping me with a payments problem, but orders of magnitude profit? For such an ancillary contribution of having the currency prior to me (or my customers)? Color me skeptical.
We're still waiting for the first application or use case.
Who is we? Joke aside, I believe a lot of the creator economy will be build on crypto.
> there is a excess of 500 million dwellings
Do you have a reference for this?
Do you have a reference for this?
Who is actually using it? I know a lot of people that have like 100-200 € in it as an experiment and they spend 0€ .
It's 2017 all over again.
It's 2017 all over again.
I use it a bit for buying stuff (hosting, VPNs, domains, SSL certs and other stuff when I can).. but litecoin is actually more useful for this as less volatile, faster transactions and lower fees.
I'm interested in this problem, so I'll dig into it here.
500 million? From what I can see, it's 50 million here:
https://www.scmp.com/business/china-business/article/2172413...
Elsewhere I see 65 million
https://asia.nikkei.com/Spotlight/The-Big-Story/China-s-hous...
So maybe you added a zero accidentally?
Either way, the 50 million figure is supposed to be 1/5 of all urban homes. Let's see if that checks out.
64% of China is urbanized according to https://www.statista.com/statistics/270162/urbanization-in-c...
So they estimate 840 million urbanized and a fifth of that is 50 million? That means 250 million homes for the 840 million people. That would be 3.4 people per home, on average.
Statista says Chinese household size is 2.92
https://www.statista.com/statistics/278697/average-size-of-h...
So in that case, with 840m urban pop., we'd expect 288 million homes, urbanized so a fifth would be 58 million, about half-way between 50 and 68. My guess is that they did a sample and found about a fifth unoccupied, rather than trying to count all unoccupied homes.
So let's ballpark and say 60 million homes.
But if you look at the same urbanization graph from statista, it's climbing at about 1% per year (ignoring the sharp climb from 2019 to 2020). Moreover, household sizes are falling by 0.1 per year. Both of these are sources of demand for more homes -- people moving to cities and moving out of their parents homes to create smaller households.
So together, the growing demand for homes would be the 14 million people from urbanization (1%) corresponding to ~4.8 million new homes, and decreasing household sizes, corresponding to 1.6 million more homes, so 6.4 million homes per year.
But there is also a demand coming from homes being torn down. Let's say homes last for 50 years (assuming not very well built, as China was poor when the oldest homes were built). So they'd need to build ~9.6 million new homes each year just to replace the obsolete old homes.
So now ~16 million homes need to be built each year (assuming my estimates).
Let's see if we can double check that number.
From one of the housing glut articles, we see that 15 million homes are built each year
https://www.businessinsider.com/china-empty-homes-real-estat...
snaps suspenders. Seems like a good enough double-check for back of the envelope calculation. So if we need 15 million per year, a ~60 million supply of empty homes is only 4 years lead.
Let's compare that to the U.S.
We have 17 million empty homes.
https://247wallst.com/housing/2019/09/30/there-are-over-17-m...
Out of a base of 141 million
https://www.statista.com/topics/1618/residential-housing-in-...
And we're building about 300K. So the US ratios of %vacant homes and vacant/annual_production are 12% and 57.
Whereas the Chinese ratio of vacant homes/total and vacant/annual_production is 12% and 4.
Now many of the US vacant homes are vacation homes. But then why can't China also have vacation homes? In other words, it doesn't seem that the Chinese market, in terms of number of vacant homes, is really extreme. I suspect what happened is that a reporter stumbled on a statistic that said 1 out of 5 urban homes were empty, and they freaked out; then the story went viral. There's so much terrible reporting happening now.
The difference seems to boil down to the fact that Chinese use their homes not as second homes but investments, and they leave the home unfurnished (like a concrete box), in the expectation that they will sell it for more later. And if you borrowed to buy the home and are leveraged, then you may be in trouble. But if you didn't, you can turn it into a vacation home. So maybe there is a problem there, but it doesn't seem to be an enormous problem.
But this is me just googling and applying some arithmetic.
500 million? From what I can see, it's 50 million here:
https://www.scmp.com/business/china-business/article/2172413...
Elsewhere I see 65 million
https://asia.nikkei.com/Spotlight/The-Big-Story/China-s-hous...
So maybe you added a zero accidentally?
Either way, the 50 million figure is supposed to be 1/5 of all urban homes. Let's see if that checks out.
64% of China is urbanized according to https://www.statista.com/statistics/270162/urbanization-in-c...
So they estimate 840 million urbanized and a fifth of that is 50 million? That means 250 million homes for the 840 million people. That would be 3.4 people per home, on average.
Statista says Chinese household size is 2.92
https://www.statista.com/statistics/278697/average-size-of-h...
So in that case, with 840m urban pop., we'd expect 288 million homes, urbanized so a fifth would be 58 million, about half-way between 50 and 68. My guess is that they did a sample and found about a fifth unoccupied, rather than trying to count all unoccupied homes.
So let's ballpark and say 60 million homes.
But if you look at the same urbanization graph from statista, it's climbing at about 1% per year (ignoring the sharp climb from 2019 to 2020). Moreover, household sizes are falling by 0.1 per year. Both of these are sources of demand for more homes -- people moving to cities and moving out of their parents homes to create smaller households.
So together, the growing demand for homes would be the 14 million people from urbanization (1%) corresponding to ~4.8 million new homes, and decreasing household sizes, corresponding to 1.6 million more homes, so 6.4 million homes per year.
But there is also a demand coming from homes being torn down. Let's say homes last for 50 years (assuming not very well built, as China was poor when the oldest homes were built). So they'd need to build ~9.6 million new homes each year just to replace the obsolete old homes.
So now ~16 million homes need to be built each year (assuming my estimates).
Let's see if we can double check that number.
From one of the housing glut articles, we see that 15 million homes are built each year
https://www.businessinsider.com/china-empty-homes-real-estat...
snaps suspenders. Seems like a good enough double-check for back of the envelope calculation. So if we need 15 million per year, a ~60 million supply of empty homes is only 4 years lead.
Let's compare that to the U.S.
We have 17 million empty homes.
https://247wallst.com/housing/2019/09/30/there-are-over-17-m...
Out of a base of 141 million
https://www.statista.com/topics/1618/residential-housing-in-...
And we're building about 300K. So the US ratios of %vacant homes and vacant/annual_production are 12% and 57.
Whereas the Chinese ratio of vacant homes/total and vacant/annual_production is 12% and 4.
Now many of the US vacant homes are vacation homes. But then why can't China also have vacation homes? In other words, it doesn't seem that the Chinese market, in terms of number of vacant homes, is really extreme. I suspect what happened is that a reporter stumbled on a statistic that said 1 out of 5 urban homes were empty, and they freaked out; then the story went viral. There's so much terrible reporting happening now.
The difference seems to boil down to the fact that Chinese use their homes not as second homes but investments, and they leave the home unfurnished (like a concrete box), in the expectation that they will sell it for more later. And if you borrowed to buy the home and are leveraged, then you may be in trouble. But if you didn't, you can turn it into a vacation home. So maybe there is a problem there, but it doesn't seem to be an enormous problem.
But this is me just googling and applying some arithmetic.
> “You can’t be short it in scale,” agrees the short seller. Like some of the others who fundamentally dislike it, he even has a small position in bitcoin. “If it goes up, I’ll make a little bit of money. If it goes to zero, I’ll be so happy, I will gladly lose the money.”
The attitude that pervades HN in regards to crypto. This website is not a good place for discussion regarding blockchain technologies.
The attitude that pervades HN in regards to crypto. This website is not a good place for discussion regarding blockchain technologies.
I don't think that's an accurate read at all.
HN appears to me more full of people (like me) who were fired up by the initial promise of (a) blockchain technology (b) intermediary- and free-free transfer of value.
What happened instead was that the technology turned out to be one of the worst threats to global warming since farting cows (yes,yes, i know, ethereum makes it all better), the intermediary- and fee-free part never actually worked out at all (because people need accounts somewhere, sorry, wallets), and finally, bitcoin and others turned into a speculating collectors' frenzy that while technically, perhaps, not as absurd as beanie babies or dutch bulbs, is generally adjacent to such historical fancies.
Given the energy problems (yes, yes, i know ethereum makes it all better), the attitude towards blockchain itself remains remarkably positive. But the quoted position above isn't about blockchain, it's about bitcoin, and you're distorting facts and also "the HN attitude" (which doesn't really exist) by attempting to conflate the two.
HN appears to me more full of people (like me) who were fired up by the initial promise of (a) blockchain technology (b) intermediary- and free-free transfer of value.
What happened instead was that the technology turned out to be one of the worst threats to global warming since farting cows (yes,yes, i know, ethereum makes it all better), the intermediary- and fee-free part never actually worked out at all (because people need accounts somewhere, sorry, wallets), and finally, bitcoin and others turned into a speculating collectors' frenzy that while technically, perhaps, not as absurd as beanie babies or dutch bulbs, is generally adjacent to such historical fancies.
Given the energy problems (yes, yes, i know ethereum makes it all better), the attitude towards blockchain itself remains remarkably positive. But the quoted position above isn't about blockchain, it's about bitcoin, and you're distorting facts and also "the HN attitude" (which doesn't really exist) by attempting to conflate the two.
> What happened instead was that the technology turned out to be one of the worst threats to global warming since farting cows (yes,yes, i know, ethereum makes it all better)
This has been overstated by critics. It's currently at something like a half a percent of world electricity usage. Which as an absolute number is really big, but as a contribution to global warming it's just not a meaningful percentage. And even ignoring something like proof of stake or Chia, it gets solved the same way as the rest of the problem -- replace generation capacity with non-carbon sources. Institute a carbon tax. Then people will mine Bitcoin using renewables and that'll be the end of it.
> the intermediary- and fee-free part never actually worked out at all (because people need accounts somewhere, sorry, wallets)
It turns out people often want this because they don't want to lose all their money if they accidentally drop their phone in a river.
The key is to make sure that it's still possible to do it without an intermediary, because that's what keeps the intermediary from becoming an abusive chokepoint for authoritarian policies, since any attempt to implement them there would only overtake the benefit of their convenience and cause people to switch to direct transactions.
> bitcoin and others turned into a speculating collectors' frenzy that while technically, perhaps, not as absurd as beanie babies or dutch bulbs, is generally adjacent to such historical fancies.
This was made significantly worse by the design of Bitcoin in particular since there is a limit to the amount of Bitcoin that will ever exist. Which makes it not only not inflationary but heavily deflationary, which promotes speculation.
It's plausible that some other cryptocurrency that limits volume only in proportion to some scarcity (whether or not it's still compute) but has no fixed maximum number of coins would be less subject to speculation and therefore less volatile. And then the lower volatility might cause it to have higher adoption in the long term.
This has been overstated by critics. It's currently at something like a half a percent of world electricity usage. Which as an absolute number is really big, but as a contribution to global warming it's just not a meaningful percentage. And even ignoring something like proof of stake or Chia, it gets solved the same way as the rest of the problem -- replace generation capacity with non-carbon sources. Institute a carbon tax. Then people will mine Bitcoin using renewables and that'll be the end of it.
> the intermediary- and fee-free part never actually worked out at all (because people need accounts somewhere, sorry, wallets)
It turns out people often want this because they don't want to lose all their money if they accidentally drop their phone in a river.
The key is to make sure that it's still possible to do it without an intermediary, because that's what keeps the intermediary from becoming an abusive chokepoint for authoritarian policies, since any attempt to implement them there would only overtake the benefit of their convenience and cause people to switch to direct transactions.
> bitcoin and others turned into a speculating collectors' frenzy that while technically, perhaps, not as absurd as beanie babies or dutch bulbs, is generally adjacent to such historical fancies.
This was made significantly worse by the design of Bitcoin in particular since there is a limit to the amount of Bitcoin that will ever exist. Which makes it not only not inflationary but heavily deflationary, which promotes speculation.
It's plausible that some other cryptocurrency that limits volume only in proportion to some scarcity (whether or not it's still compute) but has no fixed maximum number of coins would be less subject to speculation and therefore less volatile. And then the lower volatility might cause it to have higher adoption in the long term.
There ain't no such thing as a fee-free lunch.
There have to be some interest rate in fund transfer, otherwise there will be no reason to keep transaction records.
> HN attitude
There are some opinions which endorsed here and some which suppressed, for example eco-terrorists and police-hating criminals are holy cows here.
There have to be some interest rate in fund transfer, otherwise there will be no reason to keep transaction records.
> HN attitude
There are some opinions which endorsed here and some which suppressed, for example eco-terrorists and police-hating criminals are holy cows here.
> There have to be some interest rate in fund transfer, otherwise there will be no reason to keep transaction records.
Potential legal penalties often work quite well.
Potential legal penalties often work quite well.
Sure thing, gubment-regulated banking requires very formal bookkeeping. But in the imaginary fee-free crypto system how would you motivate participants to maintain verifiable records of your transactions (for purpose of proving you really paid for some e-commerce deal which in non-immediate)?
Rather balanced article, but like many fails to mention one really important aspect of Bitcoin:
There is a IMO a very tangible market demand for a financial product that allows one to completely shield value from the myriad of value-eroding propositions that have been baked into the traditional financial system to essentially bleed you dry on a long enough timeline.
For example, many of the traditional way to shield your wealth (stock market, commodities, real-estate) fail to be prone to some of the events I list above.
You may not agree that Bitcoin solves all of the above, in which case please list something that gets as close.
The fact that some of the things listed above will be viewed by some as "morally reprehensible" is irrelevant to the conversation: moral or not, the demand still exists.
And for folks who look at Bitcoin for this (shielding wealth) the fact that Bitcoin has gone parabolic in the last 10 years is kind of a nice cherry on the cake.
Yes, if you decide to use BTC to shield value, you are taking a rather big risk (volatility, BTC could be hurt by govt cracking down on it, there will be a huge "event" when Tether finally implodes, etc ...).
But again, please list something that comes any closer to solving the problem.
The above is why I believe people who claim Bitcoin has no "intrinsic value" (a term I consider to be entirely meaningless) are wrong, even using their own definition of "intrinsic value".
[1] https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
There is a IMO a very tangible market demand for a financial product that allows one to completely shield value from the myriad of value-eroding propositions that have been baked into the traditional financial system to essentially bleed you dry on a long enough timeline.
- "management" fees
- capital gain taxes
- death taxes (inheritance taxes)
- asset seizures (divorces, bankruptcy, random court decisions against you, Cyprus Bank Disaster [1], etc...)
- inflation (govt mandated or otherwise)
- etc ...
For example, many of the traditional way to shield your wealth (stock market, commodities, real-estate) fail to be prone to some of the events I list above.
You may not agree that Bitcoin solves all of the above, in which case please list something that gets as close.
The fact that some of the things listed above will be viewed by some as "morally reprehensible" is irrelevant to the conversation: moral or not, the demand still exists.
And for folks who look at Bitcoin for this (shielding wealth) the fact that Bitcoin has gone parabolic in the last 10 years is kind of a nice cherry on the cake.
Yes, if you decide to use BTC to shield value, you are taking a rather big risk (volatility, BTC could be hurt by govt cracking down on it, there will be a huge "event" when Tether finally implodes, etc ...).
But again, please list something that comes any closer to solving the problem.
The above is why I believe people who claim Bitcoin has no "intrinsic value" (a term I consider to be entirely meaningless) are wrong, even using their own definition of "intrinsic value".
[1] https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
> There is a IMO a very tangible market demand for a financial product that allows one to completely shield value from the myriad of value-eroding propositions that have been baked into the traditional financial system to essentially bleed you dry on a long enough timeline.
- "management" fees
- capital gain taxes
- death taxes (inheritance taxes)
- asset seizures (divorces, bankruptcy, random court decisions against you, Cyprus Bank Disaster [1], etc...)
- inflation (govt mandated or otherwise)
- etc ...
Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US.
0: https://www.cnbc.com/2021/02/19/do-you-owe-taxes-on-bitcoin....
Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US.
0: https://www.cnbc.com/2021/02/19/do-you-owe-taxes-on-bitcoin....
>Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US.
It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains).
Should you then decide to use your coins to directly buy - say - a house in Japan: since no actual Yen-denominated price is ever involved in the transaction, how will the US government evaluated your realized capital gains?
Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales.
It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains).
Should you then decide to use your coins to directly buy - say - a house in Japan: since no actual Yen-denominated price is ever involved in the transaction, how will the US government evaluated your realized capital gains?
Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales.
> Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales.
Many other countries are taxing bitcoin as well. In fact it's the rare exception (Google seems to indicate about a dozen) that doesn't tax bitcoin. Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people.
> It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains).
And of course capital gains only happen when you sell. That's why it's a gain (the difference between the sale price and purchase price). That's the same way selling stocks works too. You only pay the capital gains tax when you sell.
Many other countries are taxing bitcoin as well. In fact it's the rare exception (Google seems to indicate about a dozen) that doesn't tax bitcoin. Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people.
> It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains).
And of course capital gains only happen when you sell. That's why it's a gain (the difference between the sale price and purchase price). That's the same way selling stocks works too. You only pay the capital gains tax when you sell.
> Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people.
Only if they decide to sell.
Also, only if they're not willing to do what it takes (i.e. move to a jurisdiction with no taxes on realized cap. gains and toss the US passport out the window for something better).
Finally, you haven't addressed the "barter" case (trade BTC directly for goods). I'm sure the US has found a way to tax this on paper (the IRS seems to be the only functioning part of the US govt these days), the question of enforceability is a different one.
Only if they decide to sell.
Also, only if they're not willing to do what it takes (i.e. move to a jurisdiction with no taxes on realized cap. gains and toss the US passport out the window for something better).
Finally, you haven't addressed the "barter" case (trade BTC directly for goods). I'm sure the US has found a way to tax this on paper (the IRS seems to be the only functioning part of the US govt these days), the question of enforceability is a different one.
Likely the government will determine the value of the house, deem your disposition of the Bitcoin to be equivalent to that , convert to USD and send you a tax bill.
This is pretty common around the world: barter doesn't get around taxes (at least at large enough sums)
This is pretty common around the world: barter doesn't get around taxes (at least at large enough sums)
Purchases denominated in BTC are treated as realized gains or losses:
> cryptocurrency users must deal with capital gains and losses in addition to whatever sales taxes they might face at the point of sale.
> For example, let's imagine you bought $10 worth of Bitcoin two years ago and it has since appreciated to $100 in value. If you sold it on an exchange, you'd have $90 of realized long-term capital gains, just like you would with any other capital asset.
> If you instead used that same $100 worth of Bitcoin to buy groceries from the supermarket, you'd still have to pay long-term capital gains taxes on the $90 difference between appreciated value and your cost basis.
https://www.kiplinger.com/taxes/capital-gains-tax/603117/how...
> If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency.
https://www.irs.gov/pub/irs-drop/n-14-21.pdf
> cryptocurrency users must deal with capital gains and losses in addition to whatever sales taxes they might face at the point of sale.
> For example, let's imagine you bought $10 worth of Bitcoin two years ago and it has since appreciated to $100 in value. If you sold it on an exchange, you'd have $90 of realized long-term capital gains, just like you would with any other capital asset.
> If you instead used that same $100 worth of Bitcoin to buy groceries from the supermarket, you'd still have to pay long-term capital gains taxes on the $90 difference between appreciated value and your cost basis.
https://www.kiplinger.com/taxes/capital-gains-tax/603117/how...
> If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency.
https://www.irs.gov/pub/irs-drop/n-14-21.pdf
How does the "capital gain" get calculated if you directly barter Bitcoin for goods, say to buy a used car whose price was never listed?
[EDIT]: never mind someone answered this above with the whole doctrine of "fair market value".
[EDIT]: never mind someone answered this above with the whole doctrine of "fair market value".
Some of the items you listed apply to crypto assets just like regular assets. It’s just the enforcement of the laws hasn’t been as consistent as with other physical financial assets.
Specifically:
“ - capital gain taxes - death taxes (inheritance taxes) - asset seizures (divorces, bankruptcy, random court decisions against you, Cyprus Bank Disaster [1], etc...)”
And
> The fact that some of the things listed above will be viewed by some as "morally reprehensible" is irrelevant to the conversation: moral or not, the demand still exists.
Isn’t it more a legal issue than moral? Evading tax is a criminal matter I thought.
Specifically:
“ - capital gain taxes - death taxes (inheritance taxes) - asset seizures (divorces, bankruptcy, random court decisions against you, Cyprus Bank Disaster [1], etc...)”
And
> The fact that some of the things listed above will be viewed by some as "morally reprehensible" is irrelevant to the conversation: moral or not, the demand still exists.
Isn’t it more a legal issue than moral? Evading tax is a criminal matter I thought.
> Evading tax is a criminal matter I thought.
In the US it is.
Other, more humane jurisdictions view it as an infraction: if caught, you'll get fined, but you won't go to jail.
In the US it is.
Other, more humane jurisdictions view it as an infraction: if caught, you'll get fined, but you won't go to jail.
Such as? UK, NZ, CA, US, AU all at a quick check consider tax evasion a crime (not just a civil infraction).
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However, if you look at the motion that has been happening recently, the declines have initially manifested as 2x faster, both in the most recent Bitcoin correction but especially in the "altcoin" prices, indicating leverage-covering behavior. This tracks with the increasing participation of trad finance (aka indirect leverage-backed prices) and the increasing availability of secondary products (options, shorts) which are also leveraged positions.
Fwiw, in all past Bitcoin price rises I have consistently said "it's not a bubble" -- you can search hn if curious. This time it's different.
Good luck out there folks.