The more complex crypto seems, the higher the pyramid schemes can go(reallifemag.com)
reallifemag.com
The more complex crypto seems, the higher the pyramid schemes can go
https://reallifemag.com/money-for-nothing/
220 comments
The fact that there is so much money, SO much money, being thrown around a technology that is dodgy at best, and a scam at worst, is terrifying. I'm certain this technology will find a place in the future after it has matured, but hoo boy are there gonna be big winners and big losers until it shakes out.
> The fact that there is so much money, SO much money, being thrown around a technology that is dodgy at best, and a scam at worst, is terrifying.
We have very little evidence to substantiate the actual quantity of real dollars in this system.
The NYAG settlement with Tether shows that it's backed by bailing wire, chewing gum and hope [1]. USDC has stopped publishing their attestations as of January (which, btw, - and I can't believe I'm going to cite Tether's Saul Goodman but - aren't audits [2]) and since then it's market cap has doubled. USDT and USDC both use similar weasel wording about the nature of what backs them.
An attempted ETF a couple of years ago admitted 95% of all trading volume in the crypto space was fake. [3]
The CFTC smacked Coinbase because literally 99% of all Litecoin trading volume in 2017 was one dude, Charlie Lee - the LTC founder, wash trading internally [4]. Lee then took advantage of the market cap he synthesized, dumped literally all his holdings at the peak and sailed off to an island.
This is just a couple of examples off the top of my head. It's all fraudulent.
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
[2] https://twitter.com/bitcoinlawyer/status/1386146486359150597
[3] https://cointelegraph.com/news/bitwise-calls-out-to-sec-95-o...
[4] https://cftc.gov/PressRoom/PressReleases/8369-21
We have very little evidence to substantiate the actual quantity of real dollars in this system.
The NYAG settlement with Tether shows that it's backed by bailing wire, chewing gum and hope [1]. USDC has stopped publishing their attestations as of January (which, btw, - and I can't believe I'm going to cite Tether's Saul Goodman but - aren't audits [2]) and since then it's market cap has doubled. USDT and USDC both use similar weasel wording about the nature of what backs them.
An attempted ETF a couple of years ago admitted 95% of all trading volume in the crypto space was fake. [3]
The CFTC smacked Coinbase because literally 99% of all Litecoin trading volume in 2017 was one dude, Charlie Lee - the LTC founder, wash trading internally [4]. Lee then took advantage of the market cap he synthesized, dumped literally all his holdings at the peak and sailed off to an island.
This is just a couple of examples off the top of my head. It's all fraudulent.
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
[2] https://twitter.com/bitcoinlawyer/status/1386146486359150597
[3] https://cointelegraph.com/news/bitwise-calls-out-to-sec-95-o...
[4] https://cftc.gov/PressRoom/PressReleases/8369-21
We have very little evidence to substantiate the actual quantity of real dollars in this system.
This is especially true of NFTs. With each item unique, there's no meaningful market price. There are just occasional stories about sales.
This is important. With a commodity that has an active market, prices have some meaning. You can usually sell your asset at roughly the current market price. This is not true of unique items. You have to find a buyer who wants your specific thing.
This works just like collectables on eBay. Here's a current collectable.[1] "Rare Tag Error Retired Ty Beanie Baby Claude The Crab 1996 Collector - US $1,235.00 [ 0 bids ]" Note the "0 bids". Now keep scrolling down until something shows up with a bid.[2] "Princess diana beanie baby 1st edition 1997 w/o tag US $0.99 [ 1 bid ]" That's what a willing buyer is prepared to pay. You can scroll through page after page of Beanie Baby asking prices without seeing anything with a bid.
That's what an NFT market looks like when you want to sell.
The NFT market is useful only to those with a fan base they can monetize. If you're the fan, you're the sucker.
[1] https://www.ebay.com/itm/194065105880
[2] https://www.ebay.com/itm/254955747357
This is especially true of NFTs. With each item unique, there's no meaningful market price. There are just occasional stories about sales.
This is important. With a commodity that has an active market, prices have some meaning. You can usually sell your asset at roughly the current market price. This is not true of unique items. You have to find a buyer who wants your specific thing.
This works just like collectables on eBay. Here's a current collectable.[1] "Rare Tag Error Retired Ty Beanie Baby Claude The Crab 1996 Collector - US $1,235.00 [ 0 bids ]" Note the "0 bids". Now keep scrolling down until something shows up with a bid.[2] "Princess diana beanie baby 1st edition 1997 w/o tag US $0.99 [ 1 bid ]" That's what a willing buyer is prepared to pay. You can scroll through page after page of Beanie Baby asking prices without seeing anything with a bid.
That's what an NFT market looks like when you want to sell.
The NFT market is useful only to those with a fan base they can monetize. If you're the fan, you're the sucker.
[1] https://www.ebay.com/itm/194065105880
[2] https://www.ebay.com/itm/254955747357
I searched for most valuable beanie babies and found a site that said the Princess Di bear is worth $500k. The completed auctions on ebay reveal a market price of....$4.50
I think that may be a feature for money launderers. They love exploiting subjective valued things like art and wine. It would also help explain where the dumb money is coming from - losing money during the laundering process is the norm so a "bad deal" could still be a win.
True it's kind of a great fit for that. Your clean money account offers a stupid NFT for $50m, your dirty money account buys it all via anonymised crypto. Though maybe a bit obvious.
While your broad point is correct, that's not at all how you would gauge eBay / marketplace values correctly. The $0.99 one bid example doesn't reveal much about what people are willing to pay. At a minimum you also want to use completed / historical sales, not pick out an item with 0 or 1 or N bids that is an auction in progress.
People often place an initial entry bid on items when the auction begins just to keep track of items of interest as an alternative to the watchlist, and typically there is a rush of activity in the last minute courtesy of robobids.
That Claude the Crab or Diana - depending on condition - might go for $10, $100 or $5,000+. We wouldn't know unless we check historical sales and keep in mind how condition drastically alters the value of collectibles.
Using eBay's filters you can switch to only showing sold items. Or you can use one of the numerous sites that make it easy to check historical prices.
People often place an initial entry bid on items when the auction begins just to keep track of items of interest as an alternative to the watchlist, and typically there is a rush of activity in the last minute courtesy of robobids.
That Claude the Crab or Diana - depending on condition - might go for $10, $100 or $5,000+. We wouldn't know unless we check historical sales and keep in mind how condition drastically alters the value of collectibles.
Using eBay's filters you can switch to only showing sold items. Or you can use one of the numerous sites that make it easy to check historical prices.
Here we have eBay's listing of Beanie Babies that actually sold, sorted highest price first.
There are 21 that actually sold over $5000. How many of those are wash sales is not clear.
[1] https://www.ebay.com/sch/i.html?_from=R40&_nkw=Beanie+Babies...
There are 21 that actually sold over $5000. How many of those are wash sales is not clear.
[1] https://www.ebay.com/sch/i.html?_from=R40&_nkw=Beanie+Babies...
Auctions have an issue for rare items - they require at least TWO bidders to get an idea of a price. One bidder might have been happy to spend a million dollars, but the item still sells for $0.99 because nobody bid against her.
The value is going to be desire times scarcity. It doesn't matter if someone would pay a million dollars for something that is available for 99¢; I'd pay $1000 for a glass of water if they weren't available for a penny.
>>> We have very little evidence to substantiate the actual quantity of real dollars in this system.
Not sure that's public but with the Candian EFTs:
>Toronto-based Purpose Investments Inc. launched the first Bitcoin-backed exchange-traded fund in North America last month. Rival Evolve Funds Group Inc. followed with a similar fund that’s 25% cheaper. The funds, which are listed in Toronto, pulled in a total of C$701 million ($555 million) during the month, according to National Bank Financial analyst Daniel Straus.
>Toronto-based Purpose Investments Inc. launched the first Bitcoin-backed exchange-traded fund in North America last month. Rival Evolve Funds Group Inc. followed with a similar fund that’s 25% cheaper. The funds, which are listed in Toronto, pulled in a total of C$701 million ($555 million) during the month, according to National Bank Financial analyst Daniel Straus.
> The CFTC smacked Coinbase because literally 99% of all Litecoin trading volume in 2017 was one dude, Charlie Lee - the LTC founder, wash trading internally [4].
I don’t have any skin in this. But I found it interesting so read it and the timelines don’t seem to match your claim here about Charlie Lee.
“The order also finds that over a six-week period—August through September 2016...”
Note he sold in December 2017. Well over a year after this. So it sounds like maybe that could’ve been him when he was working there. But anything subsequent is on Coinbase. (Sadly not surprising that SV mindset would legitimize securities fraud as a means for growth hacking since they make up numbers everywhere else.)
I don’t have any skin in this. But I found it interesting so read it and the timelines don’t seem to match your claim here about Charlie Lee.
“The order also finds that over a six-week period—August through September 2016...”
Note he sold in December 2017. Well over a year after this. So it sounds like maybe that could’ve been him when he was working there. But anything subsequent is on Coinbase. (Sadly not surprising that SV mindset would legitimize securities fraud as a means for growth hacking since they make up numbers everywhere else.)
I definitely abridged the Charlie Lee story. Roughly speaking, he joined Coinbase prior to LTC being listed as a trading pair there. He then lobbied internally to list LTC. He then resuscitated LTC with the wash trading. He then quit. At this point, the "bull run" was well under way, and he just sat back, hyped the coins from the side-lines (including on the day of his sale) and then dumped all his bags on retail a few months later.
> We have very little evidence to substantiate the actual quantity of real dollars in this system.
I assume the SEC at least has some idea of how much has been deposited through SEC regulated exchanges. That might be the most useful place to get a rough low ball number.
I assume the SEC at least has some idea of how much has been deposited through SEC regulated exchanges. That might be the most useful place to get a rough low ball number.
All of these are great things happening for regulations getting stronger over time.
But at the same time there's one thing that you can be sure of: when you own Bitcoin, you can go through the whole blockchain with a client even from many years ago, and have cryptographic proof that you own it, and that the blocks were created according to Bitcoin's rules.
But at the same time there's one thing that you can be sure of: when you own Bitcoin, you can go through the whole blockchain with a client even from many years ago, and have cryptographic proof that you own it, and that the blocks were created according to Bitcoin's rules.
This is really useful information. I have a cadre of friends who are serious crypto heads and I almost dread hanging out with them because they are so deep into it. I'd be curious to hear their perspective after I understand these links.
But you are ok with the fractional reserve banking system that has now reached the point there are sometimes literally no legally required reserves?
If you behave anywhere near as absurdly as the traditional financial system then everyone calls you a scam.
If you behave anywhere near as absurdly as the traditional financial system then everyone calls you a scam.
Why wouldn't I be?
Fractional reserve lending is one of the ways in which the money supply is actively managed. Adjusting the reserve rates adjusts how much banks can loan, which adjusts the circulating supply. It's not in and of itself intrinsically harmful.
Remember, that nobody has lost a single dollar to a bank failure since the backstop (the FDIC) was introduced in 1933 - following the Great Depression. Even in the Washington Mutual failure in 2008. The FDIC by the way is a funded through premiums paid into it by the member banks. They have an emergency credit facility with the Fed, of course.
This is completely different than issuing company scrip and buying up assets with it to enrich yourself with it.
Fractional reserve lending is one of the ways in which the money supply is actively managed. Adjusting the reserve rates adjusts how much banks can loan, which adjusts the circulating supply. It's not in and of itself intrinsically harmful.
Remember, that nobody has lost a single dollar to a bank failure since the backstop (the FDIC) was introduced in 1933 - following the Great Depression. Even in the Washington Mutual failure in 2008. The FDIC by the way is a funded through premiums paid into it by the member banks. They have an emergency credit facility with the Fed, of course.
This is completely different than issuing company scrip and buying up assets with it to enrich yourself with it.
>This is completely different than issuing company scrip and buying up assets with it to enrich yourself with it.
That is exactly what the fractional reserve banking system does. The dollars in people's accounts don't actually exist, but the bank uses the money that people deposit to buy assets that enrich the CEO and shareholders.
>nobody has lost a single dollar to a bank failure since the backstop (the FDIC) was introduced in 1933
I find that difficult to believe. But people have been scammed indirectly in any case with bank bailouts that pass taxpayer money onto the banks, paying them for gambling with your money and not holding reserves. It's like saying Tether is safe backing only 10% of assets because the government can just bail them out if necessary.
That is exactly what the fractional reserve banking system does. The dollars in people's accounts don't actually exist, but the bank uses the money that people deposit to buy assets that enrich the CEO and shareholders.
>nobody has lost a single dollar to a bank failure since the backstop (the FDIC) was introduced in 1933
I find that difficult to believe. But people have been scammed indirectly in any case with bank bailouts that pass taxpayer money onto the banks, paying them for gambling with your money and not holding reserves. It's like saying Tether is safe backing only 10% of assets because the government can just bail them out if necessary.
> I find that difficult to believe.
Just look it up.
Just look it up.
I don't care to because it wouldn't change my opinion and it's not important with regard to my point. Although I see now the commenter is just talking about USA for some reason
I find it extremely interesting that my comment is getting a lot of negative votes
I find it extremely interesting that my comment is getting a lot of negative votes
> This is just a couple of examples off the top of my head. It's all fraudulent.
I'm not sure how you go from a few examples to -> "it's all fraudulent". Does crypto attract gamblers, crooks and manipulators? Yes, 100%. Does the same kind of behavior also happen on the stock market? Yes, 100%[1][2]. Hedge funds on wall street are doing all kinds of manipulations as well, it doesn't make the whole stock market fraudulent.
1: https://www.wsj.com/articles/what-is-archegos-and-how-did-it...
2: https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
I'm not sure how you go from a few examples to -> "it's all fraudulent". Does crypto attract gamblers, crooks and manipulators? Yes, 100%. Does the same kind of behavior also happen on the stock market? Yes, 100%[1][2]. Hedge funds on wall street are doing all kinds of manipulations as well, it doesn't make the whole stock market fraudulent.
1: https://www.wsj.com/articles/what-is-archegos-and-how-did-it...
2: https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
What Archegos did is nothing like what any of the links I provided show. They leveraged themselves to the tits and got rekked. Happens to the most "WSB" of us - I think there was a petition to make him a mod. They didn't issue company scrip and buy up their own stock with it, then dump it on unsuspecting bag holders. Bill Hwang wouldn't be in the unemployment lines, he'd be in federal prison.
How is the Archegos case manipulation? They made a terrible bet and lost lots of their own money.
Through that opaque structure, they hid just how much exposure they had. They didn't only lose their money, credit suisse also took a huge hit [1], so did many other market participants that bought the over-inflated stocks in question.
1: https://www.wsj.com/articles/credit-suisses-5-5-billion-arch...
1: https://www.wsj.com/articles/credit-suisses-5-5-billion-arch...
This is true, Archegos is best viewed as fraud. The main actor has a history of fraud, and clearly chose the family office structure precisely because it has less oversight and allowed him to get away with things he couldn't do with a hedge fund (like lying to brokers about exposure). The losses will be borne by ordinary investors in Credit Suisse.
If anything, this is an argument for more regulation of family offices though, and says nothing about the crypto space, which is like the wild west in comparison to this sort of family office (which at least has some reporting requirements and is governmed by the rules of a regulated market).
We can't even trust the pricing and transactions on cryptocurrencies as there have been multiple instances of massive frauds perpetrated on users and there is no oversight whatsoever on exchanges.
If anything, this is an argument for more regulation of family offices though, and says nothing about the crypto space, which is like the wild west in comparison to this sort of family office (which at least has some reporting requirements and is governmed by the rules of a regulated market).
We can't even trust the pricing and transactions on cryptocurrencies as there have been multiple instances of massive frauds perpetrated on users and there is no oversight whatsoever on exchanges.
What is the crypto equivalent of the SEC?
They passed a new bill giving that power to SEC and CFTC. They have already sued crypto related people/companies in the past.
1: https://www.coindesk.com/cftc-sec-us-house-representatives
2: https://www.sec.gov/news/press-release/2020-338
3: https://www.cftc.gov/PressRoom/PressReleases/8270-20
1: https://www.coindesk.com/cftc-sec-us-house-representatives
2: https://www.sec.gov/news/press-release/2020-338
3: https://www.cftc.gov/PressRoom/PressReleases/8270-20
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>being thrown around a technology that is dodgy at best
I have yet to meet someone that says this who has foreseen the implications of defi. In my mind, as an early bitcoiner, that was the original promise of bitcoin.
A list of coins by market cap is full of absolute junk: https://www.coingecko.com/en
A list of tokens by locked in value is full of systems that are revolutionizing finance: https://defipulse.com/ Defi protocols are providing useful services and are making money. I doubt I could overstate their enormity.
There's a huge difference between the two worlds. Don't confuse dogecoin's "I like the stonk" hype with Maker's muscle. The "blockchain" isn't the point. The systems made possible on top were always the point, and that's what makes "blockchain" so valuable.
I have yet to meet someone that says this who has foreseen the implications of defi. In my mind, as an early bitcoiner, that was the original promise of bitcoin.
A list of coins by market cap is full of absolute junk: https://www.coingecko.com/en
A list of tokens by locked in value is full of systems that are revolutionizing finance: https://defipulse.com/ Defi protocols are providing useful services and are making money. I doubt I could overstate their enormity.
There's a huge difference between the two worlds. Don't confuse dogecoin's "I like the stonk" hype with Maker's muscle. The "blockchain" isn't the point. The systems made possible on top were always the point, and that's what makes "blockchain" so valuable.
Agreed - the DeFi tech is really interesting: https://medium.com/dragonfly-research/what-explains-the-rise...
There's a lot of snake oil speculative no knowledge spam from people that easily give off a bullshit vibe. So I get that a lot on HN that haven't closely looked at it would be turned off by that and just dismiss it entirely out of hand.
There's some real stuff going on here too and it's worth a deeper look - I think the knee-jerk dismissal is a mistake. At this point over ten years in, it's worth at least taking a deeper look at even if (I'd argue especially if) you're a skeptic.
I also suspect there's some pseudo-intellectual skepticism cynicism as signaling going on like there always is.
Specifically on BTC: https://www.matthuang.com/bitcoin_for_the_open_minded_skepti...
There's a lot of snake oil speculative no knowledge spam from people that easily give off a bullshit vibe. So I get that a lot on HN that haven't closely looked at it would be turned off by that and just dismiss it entirely out of hand.
There's some real stuff going on here too and it's worth a deeper look - I think the knee-jerk dismissal is a mistake. At this point over ten years in, it's worth at least taking a deeper look at even if (I'd argue especially if) you're a skeptic.
I also suspect there's some pseudo-intellectual skepticism cynicism as signaling going on like there always is.
Specifically on BTC: https://www.matthuang.com/bitcoin_for_the_open_minded_skepti...
> "I like the stonk" hype with Maker's muscle.
Some of the tech in the web3 space is so genuinely interesting [0]. And defi's evolution has been nothing short of rapid. It is kind of sad that crypto-currency related topics don't invite as much positive attention and technical discussion on HN.
[0] Especially, XaaS apps on top of Ethereum v2, Cosmos, and Polkadot.
Some of the tech in the web3 space is so genuinely interesting [0]. And defi's evolution has been nothing short of rapid. It is kind of sad that crypto-currency related topics don't invite as much positive attention and technical discussion on HN.
[0] Especially, XaaS apps on top of Ethereum v2, Cosmos, and Polkadot.
I suspect because as many others here my time is limited. Given the amount of scams, misinformation, hype-fueled marketing talk, it's hard to parse information on the crypto-space and so I'm completely put off by it.
Don't take me bad, I believe there are innovations happening there that we will see the results on the mainstream on the next 10 years, it's just too much of an effort for just a curiosity from my side. I keep up with articles shared here on HN as I believe it acts as a curation and filtering tool but I can't keep up with the rate of fads, new technologies, scams and dead technologies on the crypto-space, it's simply exhausting.
Don't take me bad, I believe there are innovations happening there that we will see the results on the mainstream on the next 10 years, it's just too much of an effort for just a curiosity from my side. I keep up with articles shared here on HN as I believe it acts as a curation and filtering tool but I can't keep up with the rate of fads, new technologies, scams and dead technologies on the crypto-space, it's simply exhausting.
I'm pro-crypto-currency but I don't understand this, explanation follows:
> A list of tokens by locked in value is full of systems that are revolutionizing finance: https://defipulse.com/ Defi protocols are providing useful services and are making money. I doubt I could overstate their enormity.
The top ones are all lending and exchanges.
Lending money to someone isn't revolutionary, it's been possible for centuries - and given how easy crypto is to steal and never return, I wouldn't WANT to lend it to anyone anyway!
And decentralized exchanges are cool for sure, but they are self-serving in terms of only needing to exist because cryptocurrencies exist. So they can't really be used as a pro-crypto argument like you're doing because then the solution you're arguing for would only need to exist to solve a problem which it has created itself.
So what is so revolutionary about these?
> A list of tokens by locked in value is full of systems that are revolutionizing finance: https://defipulse.com/ Defi protocols are providing useful services and are making money. I doubt I could overstate their enormity.
The top ones are all lending and exchanges.
Lending money to someone isn't revolutionary, it's been possible for centuries - and given how easy crypto is to steal and never return, I wouldn't WANT to lend it to anyone anyway!
And decentralized exchanges are cool for sure, but they are self-serving in terms of only needing to exist because cryptocurrencies exist. So they can't really be used as a pro-crypto argument like you're doing because then the solution you're arguing for would only need to exist to solve a problem which it has created itself.
So what is so revolutionary about these?
> and given how easy crypto is to steal and never return, I wouldn't WANT to lend it to anyone anyway!
That's why all this "lending" is a joke anyway. They lend you less than your collateral. If you want to "borrow" 1 BTC, for example, you need to first have the value of x BTC (with x being something larger than 1) in the form of some other crypto as a collateral and lock that up somehow.
So if I want to borrow 1000$, I first need to provide 1000€ and then hope the $/€ rate doesn't come too close to 1:1, because at that point my borrowing position is liquidated and I end up having paid interest for borrowing money I already had in the first place.
If that sounds ridiculous, that's because it is. Lending needs trust and is thus inherently incompatible with trustless cryptocurrencies.
That's why all this "lending" is a joke anyway. They lend you less than your collateral. If you want to "borrow" 1 BTC, for example, you need to first have the value of x BTC (with x being something larger than 1) in the form of some other crypto as a collateral and lock that up somehow.
So if I want to borrow 1000$, I first need to provide 1000€ and then hope the $/€ rate doesn't come too close to 1:1, because at that point my borrowing position is liquidated and I end up having paid interest for borrowing money I already had in the first place.
If that sounds ridiculous, that's because it is. Lending needs trust and is thus inherently incompatible with trustless cryptocurrencies.
It's more like borrowing a few k against your house to buy stuff. It has its uses.
Its only "use" is to artificially inflate the total crypto market cap by effectively providing another source of leverage to crypto coin traders.
And no, it is not at all like borrowing against your house. You can live in a house, even if you secure a loan with it. If living in your house is your primary use case for your house, which is the case for a lot of people, that's totally fine. You cannot "live" inside of your BTC. They are a token of value that is effectively useless to you if you cannot do the only thing that you can possibly do with a token of value: spend it for something else you desire to have.
And no, it is not at all like borrowing against your house. You can live in a house, even if you secure a loan with it. If living in your house is your primary use case for your house, which is the case for a lot of people, that's totally fine. You cannot "live" inside of your BTC. They are a token of value that is effectively useless to you if you cannot do the only thing that you can possibly do with a token of value: spend it for something else you desire to have.
With all due respect, if you are anti-DeFi, you are not a pro-crypto person at all. I see a lot of this "I'm a pro-crypto person, but decentralizing finance is not needed" comments, and it's completely incoherent.
>>Lending money to someone isn't revolutionary, it's been possible for centuries - and given how easy crypto is to steal and never return, I wouldn't WANT to lend it to anyone anyway!
Loans issued via Ethereum lending protocols like Maker or Compound are fully collaterized, and default leads to automatic liquidation of the collateral to compensate the lender. It's impossible for the borrower to cheat, because an immutable smart contract enforces the terms of the loan.
>>And decentralized exchanges are cool for sure, but they are self-serving in terms of only needing to exist because cryptocurrencies exist.
No, any asset can be represented as an Ethereum token and traded on a DEX. Having assets worldwide use a common exchange that can never be shut down, hacked or made inaccessible, holds enormous potential for improving financial inclusivity and capital efficiency.
>>Lending money to someone isn't revolutionary, it's been possible for centuries - and given how easy crypto is to steal and never return, I wouldn't WANT to lend it to anyone anyway!
Loans issued via Ethereum lending protocols like Maker or Compound are fully collaterized, and default leads to automatic liquidation of the collateral to compensate the lender. It's impossible for the borrower to cheat, because an immutable smart contract enforces the terms of the loan.
>>And decentralized exchanges are cool for sure, but they are self-serving in terms of only needing to exist because cryptocurrencies exist.
No, any asset can be represented as an Ethereum token and traded on a DEX. Having assets worldwide use a common exchange that can never be shut down, hacked or made inaccessible, holds enormous potential for improving financial inclusivity and capital efficiency.
> With all due respect, if you are anti-DeFi, you are not a pro-crypto person at all. I see a lot of this "I'm a pro-crypto person, but decentralizing finance is not needed" comments, and it's completely incoherent.
I'm sorry but you misread what I said, perhaps I was not clear enough:
I nowhere said or at least did not intend to say that DeFi per-se is bad.
I merely don't understand what's good about the DeFi projects which the person I replied to listed. So my intention was to ask what is good about those in particular.
> Loans issued via Ethereum lending protocols like Maker or Compound are fully collaterized, and default leads to automatic liquidation of the collateral to compensate the lender. It's impossible for the borrower to cheat, because an immutable smart contract enforces the terms of the loan.
So what is the point of borrowing money then if you have the money already, which "fully collaterized" implies?
> No, any asset can be represented as an Ethereum token and traded on a DEX. Having assets worldwide use a common exchange that can never be shut down, hacked or made inaccessible, holds enormous potential for improving financial inclusivity and capital efficiency.
That is a valid point!
I don't understand why a token is needed though, it's impossible to enforce its physical correlation to the asset anyway, so it would be enough to send naked ETH/BTC and use a regular decentralized forum system for setting up trades. I.e. if someone says on a forum "You send me N ETH and you get a car" that has the same validity as moving 1 car token, because nothing can enforce that the digital movement of a car token causes the physical handover of the keys. So "I owe you 1 car" only needs to be documented somewhere, e.g. as a bare textual message in an OP_RETURN or as a hash referencing a forum post, it doesn't have to be a token.
So to be completely honest, I feel like the only reason the developers cramp a token into this usecase is because that allows them to issue the token, which implies they can issue a lot of it to themselves "to fund development", and once it grows in value they're rich.
I'm sorry but you misread what I said, perhaps I was not clear enough:
I nowhere said or at least did not intend to say that DeFi per-se is bad.
I merely don't understand what's good about the DeFi projects which the person I replied to listed. So my intention was to ask what is good about those in particular.
> Loans issued via Ethereum lending protocols like Maker or Compound are fully collaterized, and default leads to automatic liquidation of the collateral to compensate the lender. It's impossible for the borrower to cheat, because an immutable smart contract enforces the terms of the loan.
So what is the point of borrowing money then if you have the money already, which "fully collaterized" implies?
> No, any asset can be represented as an Ethereum token and traded on a DEX. Having assets worldwide use a common exchange that can never be shut down, hacked or made inaccessible, holds enormous potential for improving financial inclusivity and capital efficiency.
That is a valid point!
I don't understand why a token is needed though, it's impossible to enforce its physical correlation to the asset anyway, so it would be enough to send naked ETH/BTC and use a regular decentralized forum system for setting up trades. I.e. if someone says on a forum "You send me N ETH and you get a car" that has the same validity as moving 1 car token, because nothing can enforce that the digital movement of a car token causes the physical handover of the keys. So "I owe you 1 car" only needs to be documented somewhere, e.g. as a bare textual message in an OP_RETURN or as a hash referencing a forum post, it doesn't have to be a token.
So to be completely honest, I feel like the only reason the developers cramp a token into this usecase is because that allows them to issue the token, which implies they can issue a lot of it to themselves "to fund development", and once it grows in value they're rich.
Okay point taken regarding your position on DeFi.
>>So what is the point of loaning money then if you have the money already, which "fully collaterized" implies?
It allows you to access a more liquid asset, like DAI, without selling the less liquid asset being used as collateral, like a CryptoPunk NFT. It's the same reason someone would get a line of credit on their house.
>>I don't understand why a token is needed though, it's impossible to enforce its physical correlation to the asset anyway,
The redeemability can be legally enforceable by the company making a contractual promise to redeem said token for the underlying asset.
>> use a regular decentralized forum system for setting up trades. I.e. if someone says on a forum "You send me N ETH and you get a car"
Forums are not decentralized. A DEX is fully decentralized, and sellers can play an automated role in DEXes by participating as liquidity providers to Automated Market Makers (AMMs) like Uniswap.
The liquidity provider in this case need not do anything, except provide the assets to the trading pool, to participate.
For the buyer, the purchase is seamless, as they are guaranteed to receive the asset once they click 'buy' and authorize the payment. This is a far more efficient means of trading than people could find on forums with manual asset purchase fulfillment.
>>So what is the point of loaning money then if you have the money already, which "fully collaterized" implies?
It allows you to access a more liquid asset, like DAI, without selling the less liquid asset being used as collateral, like a CryptoPunk NFT. It's the same reason someone would get a line of credit on their house.
>>I don't understand why a token is needed though, it's impossible to enforce its physical correlation to the asset anyway,
The redeemability can be legally enforceable by the company making a contractual promise to redeem said token for the underlying asset.
>> use a regular decentralized forum system for setting up trades. I.e. if someone says on a forum "You send me N ETH and you get a car"
Forums are not decentralized. A DEX is fully decentralized, and sellers can play an automated role in DEXes by participating as liquidity providers to Automated Market Makers (AMMs) like Uniswap.
The liquidity provider in this case need not do anything, except provide the assets to the trading pool, to participate.
For the buyer, the purchase is seamless, as they are guaranteed to receive the asset once they click 'buy' and authorize the payment. This is a far more efficient means of trading than people could find on forums with manual asset purchase fulfillment.
[deleted]
> I have yet to meet someone that says this who has foreseen the implications of defi.
Can you give a use case that isn’t intra crypto speculation? That seems to be what Defi consists of at present.
Ultimately finance serves to help with capital allocation and production in the real economy. So: is Defi helping the real economy do things it couldn’t do before? Or, is there a plausible use case for this in formation?
Please be specific. A lot of people seem enthused by this, but no one has been able to explain it in a way that shows the use.
Can you give a use case that isn’t intra crypto speculation? That seems to be what Defi consists of at present.
Ultimately finance serves to help with capital allocation and production in the real economy. So: is Defi helping the real economy do things it couldn’t do before? Or, is there a plausible use case for this in formation?
Please be specific. A lot of people seem enthused by this, but no one has been able to explain it in a way that shows the use.
Not sure if this counts or not. I've got a friend who bought ETH which went up, borrows USDC against it which then swap for fiat money, which he's then investing in a music/bar business. Similar to buy a house, it goes up, mortgage it to invest in business.
Oracles bring the possibility to interface with the real world. For example to track underlying assets like equities, oil, gold... You can these use DeFi services like borrowing with that asset portfolio.
Thanks, just looked into Chainlink. That actually looks interesting. Is it being used for any real world applications yet?
I have to agree aside from the nonsense coins there is something going on about Defi that makes me think it could rewrite a lot of capital markets.
The beauty of it is that it's all software, no middle, back office teams running reports and reconciliation processes.
The beauty of it is that it's all software, no middle, back office teams running reports and reconciliation processes.
It's not all software though. There must be an office somewhere where any actual real world assets are somehow linked to tokens.
This is what puzzles me. When you add that one office, you loose the decentralization aspect and then what's the point of it all?
Yes there must be interfaces with the real world. The classic example is a “tooth fairy” insurance policy where a smart contract yields a coin if the user loses a tooth. How do you verify “proof of tooth”?
This is where the concept of an oracle comes in. Chainlink is attempting to provide a decentralized, tamper-proof oracle network for smart contacts so if you want to know about the cutting edge look at what they’re publishing.
This is where the concept of an oracle comes in. Chainlink is attempting to provide a decentralized, tamper-proof oracle network for smart contacts so if you want to know about the cutting edge look at what they’re publishing.
Do Chainlink oracles offer any kind of benefits over Discreet Log Contracts like the ones we see on Suredbits[0]?
[0] https://oracle.suredbits.com/
[0] https://oracle.suredbits.com/
But are you not then putting your faith into a central party (Chainlink) even if they apply some level of decentralization as to how they say publish a price level?
The top 7 on Defi Pulse (1) are currency exchanges ("liquidity pools") and overcollateralized loans, which are mostly used by speculators to get leverage. Useful, I guess. But enormous — only in monetary terms.
I believe crypto & blockchain technologies have a future. But we ain't there yet.
(1) and I suspect more than that, those are just those I'm familiar with.
I believe crypto & blockchain technologies have a future. But we ain't there yet.
(1) and I suspect more than that, those are just those I'm familiar with.
What do you think that future is? I’m curious, since you believe it in but also are able to see that most of Defi by volume is just speculation.
I’d be interested to hear to pro-Crypto case.
I’d be interested to hear to pro-Crypto case.
Barring original developments, simply replacing the existing financial infrastructure — replacing the middlemen by smart contracts and decentralized organizations. This is less costly to build (in terms of infrastructure and paperwork) and much more flexible. Also, anybody with a good idea or use case can enter the space.
Companies that could be replaced/rebuilt on the block chain include Visa, stock exchanges (NYSE, CBOE), Swift, Stripe, ...
The blockchain also feels like the natural progression of a process of digitalization and increased transparencies. For many proposed uses, you don't actually need a blockchain, but it turns out to be the easier choice anyway.
Let's make up an example: say we didn't have a way to track containers (the kind that travel on ships) - it would be much easier to set it up on the blockchain as an Ethereum NFT than spinning the required infrastructure. The blockchain also comes with governance cookie-cutter solutions. In the real world, you'd need to set up or contract a company to run the servers — who owns this company or who does it contracts to? The blockchain solution is easier to set up and probably easier to sell once the technology becomes more accepted.
Another way to look at this is that the blockchain makes it easier to set up real-world APIs which enables not only to track things (recorded on the blockchain, a secure ledger) but also to perform real world actions (e.g. orders) that involve real-world financial values. Central to that is the ability to represent physical assets on the blockchain (e.g. our containers for before - you trust that the blockchain is an accurate representation of reality because you trust the transactions signed by container companies).
Note that this vision is in a certain sense quite boring. Nothing really fundamental changes for the common man, though he may end up benefiting from the resulting innovations.
Companies that could be replaced/rebuilt on the block chain include Visa, stock exchanges (NYSE, CBOE), Swift, Stripe, ...
The blockchain also feels like the natural progression of a process of digitalization and increased transparencies. For many proposed uses, you don't actually need a blockchain, but it turns out to be the easier choice anyway.
Let's make up an example: say we didn't have a way to track containers (the kind that travel on ships) - it would be much easier to set it up on the blockchain as an Ethereum NFT than spinning the required infrastructure. The blockchain also comes with governance cookie-cutter solutions. In the real world, you'd need to set up or contract a company to run the servers — who owns this company or who does it contracts to? The blockchain solution is easier to set up and probably easier to sell once the technology becomes more accepted.
Another way to look at this is that the blockchain makes it easier to set up real-world APIs which enables not only to track things (recorded on the blockchain, a secure ledger) but also to perform real world actions (e.g. orders) that involve real-world financial values. Central to that is the ability to represent physical assets on the blockchain (e.g. our containers for before - you trust that the blockchain is an accurate representation of reality because you trust the transactions signed by container companies).
Note that this vision is in a certain sense quite boring. Nothing really fundamental changes for the common man, though he may end up benefiting from the resulting innovations.
FYI, but this is HN, so you might like to know that "enormity" has a specific meaning with negative connotation, it's not just a way to describe something as "really big," (enormous) but rather "really evil."
> Although enormity has been used since the late 1700s to denote large size, this usage continues to be disparaged by various language commentators who argue that enormity should be reserved for senses related to "great wickedness." It is enormousness, they insist (a hefty and considerably less common word), that should be used in reference to great size, despite the fact that, like enormity, it too originally was used to denote wickedness or divergence from accepted moral standards. For better or worse, this proscription has been widely ignored by many English speakers, including professional writers. — https://www.merriam-webster.com/dictionary/enormity
It's not as clear as you're making it out to be.
It's not as clear as you're making it out to be.
It’s bizarre that this is being downvoted. I wouldn’t call it “really evil” but the negative connotation is legit. See...any dictionary.
[deleted]
(in neutral use) large size or scale.
"I began to get a sense of the enormity of the task"
Is that a quote from a dictionary or what?
Yep, Ofxord Languages (the one provided by google)
https://languages.oup.com/google-dictionary-en/
https://languages.oup.com/google-dictionary-en/
And when I Google “define enormity” I get “ noun
1.
the great or extreme scale, seriousness, or extent of something perceived as bad or morally wrong.
"a thorough search disclosed the full enormity of the crime"
2.
a grave crime or sin.
"the enormities of the regime" “
Just click on "translations and more definitions" at the bottom.
defi = decentralized finance, https://en.wikipedia.org/wiki/Decentralized_finance
^^ You would think a group of engineers and founders would see that, and yet HN remains stubbornly, irrationally anti-crypto.
Ask yourself a question - why is that? What is the reason for this phenomenon?
Why does a group of comparatively (to other public forums) competent engineers from different fields are skeptical about crypto"currencies"? Do they they have an ulterior motive? Maybe they are secretly shorting everything in crypto? And if not, then maybe they can be listened to? :)
Why does a group of comparatively (to other public forums) competent engineers from different fields are skeptical about crypto"currencies"? Do they they have an ulterior motive? Maybe they are secretly shorting everything in crypto? And if not, then maybe they can be listened to? :)
[deleted]
> The fact that there is so much money, SO much money, being thrown around
This is the kind of thing that happens when the wealthiest people have so much more than everyone else: there are enough people with vast amounts of money that they have no idea what to do with that they can easily fund a bubble like this, especially when they are promised by smart-sounding geeks that this is The Next Big Thing that will a) let them get in on the ground floor of a whole new currency, and b) give them a way to leverage their wealth to retain and increase their power as we gradually move more and more toward a post-scarcity society.
This is the kind of thing that happens when the wealthiest people have so much more than everyone else: there are enough people with vast amounts of money that they have no idea what to do with that they can easily fund a bubble like this, especially when they are promised by smart-sounding geeks that this is The Next Big Thing that will a) let them get in on the ground floor of a whole new currency, and b) give them a way to leverage their wealth to retain and increase their power as we gradually move more and more toward a post-scarcity society.
Similar to dot-com bubble where people were investing their life savings into companies that just had a domain name with no business plan whatsoever. Lots of them blew up, but the ones that made it through ended up becoming trillion dollar companies.
Only if you use a circular definition of made it through which means became a trillion dollar company.
Plenty of companies made it through but never recovered their dotcom market cap or prestige, a few prominent examples: Csco, hpq (only recently passed the 2000 price), yhoo, emc, vrsn, real networks. There were plenty of also-rans who limped through but didn’t justify the hype pricing years later, and the real revolution came to fruition years later with mobile computing and mass-market online stores, but there was definitely underneath it all an obvious and real information revolution which the dotcom bubble was merely irrational euphoria about - everyone knew sonething big was happening, even if they rejected the crazy prices.
I sincerely don’t think this crypto bubble is similar, because there is no there there amd because almost all assets are severely overpriced right now - crypto is full of scams and nobody is actually using it any more as a currency, this means all these joke coins worth 100s of millions are going to zero, no doubt just after joe public buys in. There’s a reason coin base insiders are frantically selling as soon as they can and more and more frauds are coming to light. Even the more legitimate companies in this space are full of fraud.
Plenty of companies made it through but never recovered their dotcom market cap or prestige, a few prominent examples: Csco, hpq (only recently passed the 2000 price), yhoo, emc, vrsn, real networks. There were plenty of also-rans who limped through but didn’t justify the hype pricing years later, and the real revolution came to fruition years later with mobile computing and mass-market online stores, but there was definitely underneath it all an obvious and real information revolution which the dotcom bubble was merely irrational euphoria about - everyone knew sonething big was happening, even if they rejected the crazy prices.
I sincerely don’t think this crypto bubble is similar, because there is no there there amd because almost all assets are severely overpriced right now - crypto is full of scams and nobody is actually using it any more as a currency, this means all these joke coins worth 100s of millions are going to zero, no doubt just after joe public buys in. There’s a reason coin base insiders are frantically selling as soon as they can and more and more frauds are coming to light. Even the more legitimate companies in this space are full of fraud.
Yes, it's like that, but with the completely unregulated trading environment reminiscent of the Roaring 20s. That's why it's much, much worse. The dot-com bubble was driven by margin, enthusiasm and poor decision making. This one's got all those plus the hallmarks of the 20s: insane leverage (see: DeFi), bonkers leverage (see: BitMEX), and a fictional currency being printed at a rate of billions of dollars per week that's then used to prop up the prices of the assets themselves.
It's basically the dot-com bubble, the roaring 20s and 2008's CDO shell game rolled into one.
It's basically the dot-com bubble, the roaring 20s and 2008's CDO shell game rolled into one.
Exactly. I -really- hope crypto ETFs don't end up in ordinary people's 401Ks, but I fear it is heading that way.
>"Yes, it's like that, but with the completely unregulated trading environment reminiscent of the Roaring 20s."
If you think the modern day SEC is doing anything about the current levels of market manipulation and wild speculation, I've got a bridge to sell you.
If you think the modern day SEC is doing anything about the current levels of market manipulation and wild speculation, I've got a bridge to sell you.
The last part is why so much money is in it. Everyone remembers how everyone said dot.com was over in 2002 when the biggest dot.coms were yet to come. Everyone remembers when everyone laughed at Tesla and SpaceX. Everyone remembers Bitcoin at $1.
There is a hell of a lot of FOMO around.
There are also record low interest rates not just in the USA but globally, and that is inflating every asset at once.
If there is a crash I don’t think it will just be cryptocurrency. It will be broad and deep.
There is a hell of a lot of FOMO around.
There are also record low interest rates not just in the USA but globally, and that is inflating every asset at once.
If there is a crash I don’t think it will just be cryptocurrency. It will be broad and deep.
I see this too. Almost every asset class is moving together. When interest rates can't be dropped further then the real problems will begin. Banks have built floors into their loans so that variable rates can't drop below zero already. At the point when interest rates drop below zero, lower interest rates will actually harm the economy rather than help it and then we'll see everything come crashing down.
Crypto space feels like a decentralized slot machine spiraling out of control with shiny lights, loud sounds and exponential payouts.
Always worth reiterating: the house always wins.
Always worth reiterating: the house always wins.
> I'm certain this technology will find a place in the future after it has matured
Why? It doesn’t solve any real problem that anyone has ever had.
Why? It doesn’t solve any real problem that anyone has ever had.
It solves the problem of: how can I start a pyramid scheme relatively anonymously.
It solved the problem of paying for drugs which you ordered online.
It solved the problem of ransomware payments, before winlockers used to ask for gift cards which didn't scale well.
It solved the liberty reserve problem where the US government shuts down your sketchy no-KYC money transfer platform.
At a very general level cryptocurrency has solved the "anonymous online payments"-problem.
These are all very real problems solved by cryptocurrency.
It solved the problem of ransomware payments, before winlockers used to ask for gift cards which didn't scale well.
It solved the liberty reserve problem where the US government shuts down your sketchy no-KYC money transfer platform.
At a very general level cryptocurrency has solved the "anonymous online payments"-problem.
These are all very real problems solved by cryptocurrency.
I hoped HN to have a more informed take but I guess not.
Blockchains solve the problem of having a decentralized public database, currency is just a particular use
Blockchains solve the problem of having a decentralized public database, currency is just a particular use
> Blockchains solve the problem of having a decentralized public database.
That's not a problem. A problem is something like this: "as a video editor/doctor/..., I need something that helps me...".
Yours is just a tech description.
That's not a problem. A problem is something like this: "as a video editor/doctor/..., I need something that helps me...".
Yours is just a tech description.
A decentralized public database is a solution, not a problem (snark aside about bitcoin). The question is "What is the purpose of it being decentralized and public?".
What problem does a decentralized public database solve?
As far as I can tell, over a decade in, blockchain is still hunting for one.
As far as I can tell, over a decade in, blockchain is still hunting for one.
It does solve the problem of being unable to get a bank account. In theory, once the scaling problems are solved and the transactiom fees go down.
>It does solve the problem of being unable to get a bank account. In theory, once the scaling problems are solved and the transactiom fees go down.
You could say the same thing about Walmart's money orders and check-cashing services, but that doesn't use an entire country's worth of electricity, suck up the world's supply of GPUs, or support the same number of scammers.
You could say the same thing about Walmart's money orders and check-cashing services, but that doesn't use an entire country's worth of electricity, suck up the world's supply of GPUs, or support the same number of scammers.
Crypto technologically solves the social problem of trust.
I‘ll leave the interpretation of this statement up to you ;)
I‘ll leave the interpretation of this statement up to you ;)
Crypto really has nothing to do with trust.
It provides a mechanism that enables distant parties to be confident that they hold copies of the same document.
That’s all.
It provides a mechanism that enables distant parties to be confident that they hold copies of the same document.
That’s all.
The blockchain, consensus algorithms and the whole shebang are only needed because cryptocurrencies do not want transactions to be mediated by a central authority that would need to be trusted. Crypto is about trust, or rather a lack thereof.
Despite all that, people mostly trade crypto on centralized exchanges.
The users really hate the decentralized aspect of crypto, as shown by immediately giving away their wallet to some "trusted" third party if it reduces fees.
The users really hate the decentralized aspect of crypto, as shown by immediately giving away their wallet to some "trusted" third party if it reduces fees.
Users neither love nor hate decentralization. Users don’t care how it works. They love features like not having to worry about losing their wallet if a piece of hardware dies or having to manually back it up.
People hate manual IT management. We are nearing the point at which the idea of doing this will be compared to cranking a car engine by hand to start it. If decentralized systems can’t offer this kind of “it just works” experience then the future is 100% centralized.
People hate manual IT management. We are nearing the point at which the idea of doing this will be compared to cranking a car engine by hand to start it. If decentralized systems can’t offer this kind of “it just works” experience then the future is 100% centralized.
Decentralization was the whole point of Bitcoin. If people just use centralized exchanges, they might as well be using bank accounts.
Crypto users may be distrustful, but crypto doesn’t create trust or solve any problems to do with it. It’s just currency for the distrustful.
Un-alterable ledgers like blockchain are incredibly useful for legal and economic applications. Unfortunately there are a lot of caveats that need to be worked out, and crypto is finding them at scale.
how about this: https://i.imgur.com/lSfdTfK.jpg
This chart affects 0.35% of the global population. This one is far more representative [1]. Notice how after Bretton-Woods ended, things got really nice and stable? That's successful active management.
Venezuela's problem isn't inflation - that's a symptom. Venezuela's problem is the Maduro government. Solve the latter and you solve the former.
[1] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
Venezuela's problem isn't inflation - that's a symptom. Venezuela's problem is the Maduro government. Solve the latter and you solve the former.
[1] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
"If only they did this!" -- that's not a solution. The goal is to prevent this from even being possible in the first place.
There are very real challenges from inflationary monetary supplies in countries like Argentina, Turkey, Venezuela and notably Zimbabwe.
There are very real challenges from inflationary monetary supplies in countries like Argentina, Turkey, Venezuela and notably Zimbabwe.
When you have a bad government, the currency is the least of your problems. When you resolve the government, the currency is no longer a problem.
Seriously, in Venezuela there have been recently shortages of: milk, meat, coffee, rice, oil, precooked flour, butter, toilet paper, personal hygiene products and medicines. Some Venezuelans have resorted to eating wild fruit and garbage [1]. Somehow resolving inflation through a cryptocurrency with $50 transaction fees that loses 27% of its value in one week every few months doesn't change any of that. It's just a different set of problems.
However, overthrowing the government will resolve both issues.
Sometimes there are no easy answers.
[1] https://en.wikipedia.org/wiki/Shortages_in_Venezuela
Seriously, in Venezuela there have been recently shortages of: milk, meat, coffee, rice, oil, precooked flour, butter, toilet paper, personal hygiene products and medicines. Some Venezuelans have resorted to eating wild fruit and garbage [1]. Somehow resolving inflation through a cryptocurrency with $50 transaction fees that loses 27% of its value in one week every few months doesn't change any of that. It's just a different set of problems.
However, overthrowing the government will resolve both issues.
Sometimes there are no easy answers.
[1] https://en.wikipedia.org/wiki/Shortages_in_Venezuela
being able to save money is a basic affordance that many in despotic monetary regimes are deprived of -- this extends far beyond venezuela, which is just a dramatic example. defecting from a debased currency to discipline abusive central banks is democratic power. "just overthrow the government bro" is cold comfort and ridiculously condescending to the ordinary people who are purely victims of these situations.
In what concrete way would this situation be made better with a stable currency?
kind of hard to import goods or even leave the country when you are paid in toilet paper
Certainly if you're sanctioned. Unless the MO is that Amazon launches fly-by-night dead drops paid for in crypto?
our sanctions do not prevent civilians from importing food, that is a function of worthless money
Is there any reason that Venezuelans couldn't be paid in USD for their exports? After all, they can trade internationally, so why not buy USD instead?
[edit] And in fact it appears that Venezuela is moving in that direction. Domestic banks are already allowed to offer USD denominated accounts, and the government is making it easier to use [1].
It's not a surprise as of course, the dollar is a much better currency.
In fact as the article points out it is estimated 66% of transactions in Venezuela are now conducted using the US dollar. Once that gets to 100%, will you concede that "Venezuela" wasn't ever a great talking point? After all it's clear, the people have spoken: economic activity in USD is preferred over BTC in Venezuela by an absolute landslide. Is this not a scathing indictment of BTC and crypto in general? In a failed state with hyperinflation - a flagship use case - the population was given many options, including both BTC and USD. They picked USD.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
[edit] And in fact it appears that Venezuela is moving in that direction. Domestic banks are already allowed to offer USD denominated accounts, and the government is making it easier to use [1].
It's not a surprise as of course, the dollar is a much better currency.
In fact as the article points out it is estimated 66% of transactions in Venezuela are now conducted using the US dollar. Once that gets to 100%, will you concede that "Venezuela" wasn't ever a great talking point? After all it's clear, the people have spoken: economic activity in USD is preferred over BTC in Venezuela by an absolute landslide. Is this not a scathing indictment of BTC and crypto in general? In a failed state with hyperinflation - a flagship use case - the population was given many options, including both BTC and USD. They picked USD.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
[deleted]
Are you trying to claim cryptocurrency will "solve" rising inflation, as if it is some kind of bad thing?
Inflation is an implicit tax on the working class and savers. How is that not a bad thing?
If you're rich, you can keep borrowing money at rock bottom rates to invest and get richer, if you're just an average person, everything around you is becoming more and more expensive, yet your compensation doesn't change.
If you're rich, you can keep borrowing money at rock bottom rates to invest and get richer, if you're just an average person, everything around you is becoming more and more expensive, yet your compensation doesn't change.
Inflation is a tax on money (so yes, savers). It's not a tax on labor, nor is it a tax on productive assets. Normally speaking, compensation changes with inflation
Simple: I'm not naive enough to make reductive arguments about trillion dollar economies.
base698(1)
While you wrote this, your country's Central Bank printed a few billions (or trillions, if you are american) in your currency, so that your money now is worth a lot less than before.
This is a dramatic misunderstanding of economics.
Inflation is a function of both supply and velocity. Velocity is low because US savings are at an all-time high. The central bank has a number of tools to contract the supply once velocity increases. [1]
Your statement that an increase in supply leads to a commensurate reduction in the value of each unit is strictly false. And something you can measure by going to the grocery store and checking if your bill is 100% higher this year than last.
[1] https://www.stlouisfed.org/on-the-economy/2014/september/wha...
Inflation is a function of both supply and velocity. Velocity is low because US savings are at an all-time high. The central bank has a number of tools to contract the supply once velocity increases. [1]
Your statement that an increase in supply leads to a commensurate reduction in the value of each unit is strictly false. And something you can measure by going to the grocery store and checking if your bill is 100% higher this year than last.
[1] https://www.stlouisfed.org/on-the-economy/2014/september/wha...
You are obfuscating with technical terms the fact that the central bank haves the power to devaluate your cash savings.
No, that's not what I'm doing.
What I'm telling you is that supply is simply half the picture, and you're neglecting the other half of the picture. If you print a $10 trillion dollar coin, then give it to me and I throw it into a vault, has that increased the price of goods? No. Supply went up, velocity went down commensurately. This is what you're seeing in a macro scale.
Yes the central bank actively manages the money supply, and maintains a consistent 2% inflation rate. Inflation is good for debtors (i.e. most people) as debts are denominated in the currency of the year of issue and repaid with inflated money. So long as wages keep pace (they do [1]) it's generally a benefit.
Money isn't long-term savings. It's a short-term store of value that only needs to be fungible, cheap to transact, and retain the bulk of its value for as long as you hold it. Above all, it just needs to be predictable. Anything else is honestly a non-goal. Your job as a participant in the economy is to spend that money on basic needs or invest it productively.
[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
What I'm telling you is that supply is simply half the picture, and you're neglecting the other half of the picture. If you print a $10 trillion dollar coin, then give it to me and I throw it into a vault, has that increased the price of goods? No. Supply went up, velocity went down commensurately. This is what you're seeing in a macro scale.
Yes the central bank actively manages the money supply, and maintains a consistent 2% inflation rate. Inflation is good for debtors (i.e. most people) as debts are denominated in the currency of the year of issue and repaid with inflated money. So long as wages keep pace (they do [1]) it's generally a benefit.
Money isn't long-term savings. It's a short-term store of value that only needs to be fungible, cheap to transact, and retain the bulk of its value for as long as you hold it. Above all, it just needs to be predictable. Anything else is honestly a non-goal. Your job as a participant in the economy is to spend that money on basic needs or invest it productively.
[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
But the central bank doesnt print money to throw it into a vault. The commercial banks borrow that money to lend it themselves to the people for consumption and investing, so printing money definitely haves an effect on your buying power even if its not 1 to 1.
Maybe you live in a country with a independent central bank but many countries are far more corrupt and the goverments make their central bank print money for themselves and have huge inflation rates. Cryptocurrency gives them a way to protect their savings from that.
Maybe you live in a country with a independent central bank but many countries are far more corrupt and the goverments make their central bank print money for themselves and have huge inflation rates. Cryptocurrency gives them a way to protect their savings from that.
> But the central bank doesnt print money to throw it into a vault.
Correct, however US personal savings rates are at all-time highs. [1] So, you are correct, the banks aren't taking the money and locking it into vaults. However, people are taking their money and locking it up in savings accounts and investment accounts. This is reducing velocity. The "printing" was to offset this reduction in velocity and avoid a deflationary spiral. Through lending, so they can be used for productive things.
This also explains how asset prices spiked without actually causing inflation.
> Cryptocurrency gives them a way to protect their savings from that.
I don't want to get too far down this rabbit hole, but literally everything that isn't currency is inflation-proof. Inflation only affects currency. So, if you buy real estate, or stocks, or even un-productive assets like gold, silver or cryptocurrencies, you're equally protected from inflation. It may underperform, but now we're talking about rate of return in constant-dollar terms.
Cryptocurrencies do protect you from inflation, yes, but they have massive deficiencies that make them a poor choice relative to their peer investments, in my opinion. Such as the rampant fraud in the space. This hinders price discovery, and makes it impossible to determine a real value. It also causes massive swings of 27% week-to-date. That's an annualized inflation rate of 25,000,000% when measuring the value of a bitcoin against CPI.
[1] https://fred.stlouisfed.org/series/PSAVERT
Correct, however US personal savings rates are at all-time highs. [1] So, you are correct, the banks aren't taking the money and locking it into vaults. However, people are taking their money and locking it up in savings accounts and investment accounts. This is reducing velocity. The "printing" was to offset this reduction in velocity and avoid a deflationary spiral. Through lending, so they can be used for productive things.
This also explains how asset prices spiked without actually causing inflation.
> Cryptocurrency gives them a way to protect their savings from that.
I don't want to get too far down this rabbit hole, but literally everything that isn't currency is inflation-proof. Inflation only affects currency. So, if you buy real estate, or stocks, or even un-productive assets like gold, silver or cryptocurrencies, you're equally protected from inflation. It may underperform, but now we're talking about rate of return in constant-dollar terms.
Cryptocurrencies do protect you from inflation, yes, but they have massive deficiencies that make them a poor choice relative to their peer investments, in my opinion. Such as the rampant fraud in the space. This hinders price discovery, and makes it impossible to determine a real value. It also causes massive swings of 27% week-to-date. That's an annualized inflation rate of 25,000,000% when measuring the value of a bitcoin against CPI.
[1] https://fred.stlouisfed.org/series/PSAVERT
Out of all the things you can argue in defense of, central banks printing money and handing it straight to the richest people on earth has got to be one of the weakest. “Just throw out the Venezuelan government!” If only that were so easy. Meanwhile millions of people starve to death! There really isn’t a use for a monetary unit decoupled from the government?
New money doesn’t go to “the rich” per se it’s the product of loan origination. Whoever borrows money. In America that’s a national pass time for everyone. I wager the lower income borrow more as a fraction of net worth than anyone else.
I’m curious how an inflation free money might stop people starving in a country unable to provide even the most basic services?
Decoupled from government maybe - though to a degree all the major central banks are. But it’s the passive management by an unelected group who made completely arbitrary decisions accountable to nobody with no consideration for what makes a good currency.
I’m curious how an inflation free money might stop people starving in a country unable to provide even the most basic services?
Decoupled from government maybe - though to a degree all the major central banks are. But it’s the passive management by an unelected group who made completely arbitrary decisions accountable to nobody with no consideration for what makes a good currency.
Government printing press can be abused and often is. But it can be used responsibly (for economy long term).
On the other hand crypto apologists propose us currencies which are uncontrollably printed by some anonymous guys in the non extradition offshore. Just last year 75% of all Tethers were printed out of thin air, since USDT trading amount is 14 times bigger than USD (not even counting tricks like Bitfinex listing USD while actually trading tethers behind the scenes) we can assume that whole crypto community is propped up by a lot of hot air and cut paper.
tl;dr - Look, USD currency management looks bad (or suboptimal). - Let's replace it with even worse scheme! HODL!
On the other hand crypto apologists propose us currencies which are uncontrollably printed by some anonymous guys in the non extradition offshore. Just last year 75% of all Tethers were printed out of thin air, since USDT trading amount is 14 times bigger than USD (not even counting tricks like Bitfinex listing USD while actually trading tethers behind the scenes) we can assume that whole crypto community is propped up by a lot of hot air and cut paper.
tl;dr - Look, USD currency management looks bad (or suboptimal). - Let's replace it with even worse scheme! HODL!
[deleted]
It's understandable why people consider 100% of crypto to be a scam.
But several projects have an actual P/E ratio now. You can't deny a P/E ratio. Value is being created here.
In 2013 bubble everything was bitcoin clone but "better". No cash flow. In 2017 it was unregulated securities - illegal, no cash flow. In 2021 with Defi you don't need to struggle to explain anything.
People get paid for providing capital at a higher rates than in traditional finance because smart contracts are removing friction. Stakeholders get paid dividends for governance, just like a normal company.
But several projects have an actual P/E ratio now. You can't deny a P/E ratio. Value is being created here.
In 2013 bubble everything was bitcoin clone but "better". No cash flow. In 2017 it was unregulated securities - illegal, no cash flow. In 2021 with Defi you don't need to struggle to explain anything.
People get paid for providing capital at a higher rates than in traditional finance because smart contracts are removing friction. Stakeholders get paid dividends for governance, just like a normal company.
> You can't deny a P/E ratio. Value is being created here.
Oh yes, yes you can. You're talking about a currency exchange, not a commodity. I guess you weren't around for the last two bubbles.
There literally is no value being created. Coinbase earnings are based on people paying to use its service, and that service is trading imaginary currency with no intrinsic value. Unlike a semiconductor, oil, or even industrial labor.
Oh yes, yes you can. You're talking about a currency exchange, not a commodity. I guess you weren't around for the last two bubbles.
There literally is no value being created. Coinbase earnings are based on people paying to use its service, and that service is trading imaginary currency with no intrinsic value. Unlike a semiconductor, oil, or even industrial labor.
So it's like a mobile game with in-game purchases and loot boxes. It's the entertainment industry in the finance industry's clothing.
Coinbase provides KYC compliance which then gives it government blessing to be a gateway between crypto and the US dollar financial system. That is the value. Otherwise, there are DApps that allow trading between cryptos and don't require employees, offices, centralized server infrastructure, etc. that would take the place of Coinbase.
it is value based on vaporware. don't be a K=1 thinker.
Madoff had a price to earning ratio too. I don't think that variable doesn't say what you think it does. Higher rates implies more risk which certainly applies to cryptocurrencies.
LOL defi is a neat idea but the current reality is order of magnitude slower and orders of magnitude more expensive than "legacy". It adds a lots of friction. Players "get paid" because folks can't read smart contracts and see that behind the cover story it's just flows from new players to exiting players, which looks good as long as inflows are larger than outflows, which of course will last forever.
Can you please give specific examples which are enabling things that aren’t intra crypto speculation?
The only examples I’ve seen tend to be services that make money off crypto investing, which is obviously circular: those revenues ultimately depend on there actually being value in crypto.
But perhaps there are cases I’ve missed.
The only examples I’ve seen tend to be services that make money off crypto investing, which is obviously circular: those revenues ultimately depend on there actually being value in crypto.
But perhaps there are cases I’ve missed.
Let's say I have some Bitcoin and I want to buy a car without selling any Bitcoin. I can take out an over-collateralized loan in a stablecoin at 4% APR. I can transfer my stablecoin to an off-ramp exchange and pay for the car. Now two things can happen - either I pay off the loan myself or the price of bitcoin drops and my collateral is liquidated to pay off the loan, then it's no different than buying a car with bitcoin.
The existing financial system already lets you take out loans against houses, stocks, etc. How is this different?
Global availability, no questions about the purpose of the loan, not difference in rates depending on purpose, transparency enforced by a smart contract, no hidden fees or upfront costs.
> Global availability
Good in theory, but how much does this matter to anyone in a country with a functional financial system? I have access to many loan products
> not difference in rates depending on purpose
Isn’t this bad for borrowers with valuable purposes or good credit? They’d potentially expect higher rates.
> transparency enforced by a smart contract
For most people this is akin to saying “you can examine the code yourself!” Most people can’t do that. And it’s not especially difficult to read a loan contract, if you would have the ability to understand a smart contract.
How many people taking crypto loans have no idea about liquidation, or capital gains tax obligations in the event of liquidation?
> no hidden fees
See previous question: it seems like for many sudden liquidation or owing capital gains tax in such an event may be unexpected.
> upfront costs
Loans normally don’t have upfront costs.
The loans seem neat for bringing collateralized lending to crypto, but it doesn’t seem like you’d have much advantage in selling stock and moving to crypto for loans. Or am I missing something?
Good in theory, but how much does this matter to anyone in a country with a functional financial system? I have access to many loan products
> not difference in rates depending on purpose
Isn’t this bad for borrowers with valuable purposes or good credit? They’d potentially expect higher rates.
> transparency enforced by a smart contract
For most people this is akin to saying “you can examine the code yourself!” Most people can’t do that. And it’s not especially difficult to read a loan contract, if you would have the ability to understand a smart contract.
How many people taking crypto loans have no idea about liquidation, or capital gains tax obligations in the event of liquidation?
> no hidden fees
See previous question: it seems like for many sudden liquidation or owing capital gains tax in such an event may be unexpected.
> upfront costs
Loans normally don’t have upfront costs.
The loans seem neat for bringing collateralized lending to crypto, but it doesn’t seem like you’d have much advantage in selling stock and moving to crypto for loans. Or am I missing something?
I think you’re missing a key point here, which is that all of these are also available instantly, 24/7. There is no need to negotiate financing with your bank or otherwise work around a traditional banking schedule.
Further to that point, there are new DeFi products like Alchemix which allow for loans on collateral that cannot be liquidated, so not only do you get your money but you don’t run the risk of ever paying interest or gains tax via a liquidation.
Further to that point, there are new DeFi products like Alchemix which allow for loans on collateral that cannot be liquidated, so not only do you get your money but you don’t run the risk of ever paying interest or gains tax via a liquidation.
Fair, that’s some benefit. Speed and ease do unlock potential.
Can you expand on the second point? If something can’t be liquidated/sold, how can it be collateral?
Can you expand on the second point? If something can’t be liquidated/sold, how can it be collateral?
> now. You can't deny a P/E ratio. Value is being created here.
Which ones?
Which ones?
https://sushi.com is the best example.
A lot of people that invest simply lack better alternatives. On the other hand the people that could invest reasonably like homeowners in energy efficiency do not have the money to do so, with the current monetary policy. Even if they had, they would gain more from investing in overvalued assets that have a growth in value detached from reality, driven by loose money supply for investors.
> A lot of people that invest simply lack better alternatives
Yeah, stocks haven't had a good year in over a decade /s
Yeah, stocks haven't had a good year in over a decade /s
Widespread access to low-fee index-fonds is pretty new and alternatives were not as bad as they are now. You could at least get inflation back by just letting your money stay at the bank, which is not possible now anymore.
The biggest change has been free trades and lower account minimums. For a long time, as long as you could hit the minimum (usually $2500-$5000), Vanguard was an amazing choice. The minimum wasn't great, but really, investing less isn't all that interesting, at least not as a missed opportunity for building wealth. Low-fee ETFs have also been around for a while, but the $10 per trade you'd pay in 2005 meant you didn't really want to buy less than $1,000 of anything.
> lack better alternatives
What?!
Wow, this is a painfully misinformed statement. Like, so misinformed I want to hug you.
Index funds have consistently beaten inflation by double digits and have practically nil management fees. They are vastly more secure alternative to imaginary crypto exchanges.
What?!
Wow, this is a painfully misinformed statement. Like, so misinformed I want to hug you.
Index funds have consistently beaten inflation by double digits and have practically nil management fees. They are vastly more secure alternative to imaginary crypto exchanges.
You just assume people want low risk low reward. But you are wrong. Id rather put 10% of my saving into high risk and high reward and keep the rest at low risk basically no reward.
The 10% at high risk is either going to zero or its going to be worth as much as the rest. P good dead if you ask me. If you have +1000% on the 10% you doubled your savings. There is no way you could double your savings with index funds or something similar. At lest not in the time span crypto could (around 4 year bull/bear cycles)
You can call it gambling if you want but its actually cleverer and the chance of winning isn't like with gambling allays lower than 50% its simply unknown but you can manage it by how much you bet on high risk.
You can call it gambling if you want but its actually cleverer and the chance of winning isn't like with gambling allays lower than 50% its simply unknown but you can manage it by how much you bet on high risk.
Yes. And I think the OP correctly suggests that this... not unique, it's increasing parts of the economy.
> It is understandable enough to want to participate in such collective delusions. It’s much more fun to be awed by not getting a movie than to realize that you do get it and it’s just boring. This same idea also helps explain speculative bubbles. It’s more fun to believe in magic than to recognize how much of financialized capitalism is just scams and pyramid schemes. Nonetheless, if the popular press is full of explainers “clarifying” what a “very complicated” investment phenomenon is all about, hide your wallet: You are being shilled into a game of Three-Card Monte.
> It is understandable enough to want to participate in such collective delusions. It’s much more fun to be awed by not getting a movie than to realize that you do get it and it’s just boring. This same idea also helps explain speculative bubbles. It’s more fun to believe in magic than to recognize how much of financialized capitalism is just scams and pyramid schemes. Nonetheless, if the popular press is full of explainers “clarifying” what a “very complicated” investment phenomenon is all about, hide your wallet: You are being shilled into a game of Three-Card Monte.
That.
Combined with the fact that so many productive people and healthy business have limited or no access to it.
This is a really fantastic article above and beyond what the headline suggests. I recommend giving it a full read.
I disagree, but to each its own. I thought it was full of condescending takes.
For example:
For example:
- "getting" Memento does not make it boring.
- Finding the art world being often vacuous does not mean you are an acculturated ignoramus.
- Electricity does not make blockchain valuable, it's both the social and proof-of-work, the electricity cost is incidental and unrelated. (Bitcoins and NFT works even if you are ignorant of its inner workings.)[deleted]
Agreed. Writing of this quality is very rare, such a talented author.
Every technology comes with good and bad. Better and more rewarding to be an optimist!
Comparing tulip bulbs and NFTs: With one of them you can grow a flower, while the other isn't even good fertilizer.
In the past weeks I've seen a ton of ads (on Youtube, Twitter, etc.) that look an awful lot like elements of pump-and-dump schemes. Even to this financial idiot, the scam factor looks very high.
In the past weeks I've seen a ton of ads (on Youtube, Twitter, etc.) that look an awful lot like elements of pump-and-dump schemes. Even to this financial idiot, the scam factor looks very high.
People overpaying for serial numbers loosely related to jpgs is terrible in my opinion. There's truly intelligent and useful things going on in cryptocurrency. Don't like the bubbles? There's billions in stable coins tied to the dollar, like the $11 billion in US based USDC. There's scams galore, just like in all other markets, but this one actually makes technical progress day by day.
> Don't like the bubbles? There's billions in stable coins tied to the dollar, like the $11 billion in US based USDC.
Unless I'm trying to avoid high transaction fees when exchanging currency with an undeveloped banking system with dollars, what's the point? My dollars already work fine, and for large amounts, international wire transfers work well.
Unless I'm trying to avoid high transaction fees when exchanging currency with an undeveloped banking system with dollars, what's the point? My dollars already work fine, and for large amounts, international wire transfers work well.
> like the $11 billion in US based USDC.
"USDC is issued by regulated financial institutions, backed by fully reserved assets, redeemable on a 1:1 basis for US dollars"
$11 billion dollars in reserved assets? Instantly redeemable? Why does this remind me of another scam with similarly "backed by assets" USDTs
"USDC is issued by regulated financial institutions, backed by fully reserved assets, redeemable on a 1:1 basis for US dollars"
$11 billion dollars in reserved assets? Instantly redeemable? Why does this remind me of another scam with similarly "backed by assets" USDTs
Try to cash $11B out of a bank then
While uncommon, this happens from time to time when a lot of people try to withdraw money from a bank: in times of crises, when there are rumours of troubles at a bank etc.
And no, not even banks have that kind of money backed up by real assets (that's why there's usually a government-mandated minimum insurance on all deposits).
And you want me to believe that some scammers with no accountability have 11 billion dollars in assets backing up their claims? Just because they have the magical word "crypto"?
And no, not even banks have that kind of money backed up by real assets (that's why there's usually a government-mandated minimum insurance on all deposits).
And you want me to believe that some scammers with no accountability have 11 billion dollars in assets backing up their claims? Just because they have the magical word "crypto"?
The author of the article may have some valid points, but she doesn't understand crypto so she completely discounts any mechanisms of value creation that might come from it. Near the end of the article it gets really bad. She attempts to make the case that paper menus are more efficient than apps, without doing any math whatsoever:
> For example, delivery apps make it feel “easy” to order food, when in fact we are spending much more in buying the phone, keeping it charged, paying our data plan, paying our subscriptions, and so on, for every order — in other words, we are using more hours of our labor to do so. Before smartphones, we could call the restaurant with a landline, but we also had to have previous knowledge of the restaurant as well as potentially a menu or at least a phone book’s yellow pages. The app replaces the drawerful of menus with a commensurate amount of electricity, which we pay for when we buy and charge our phone and pay our phone bill, which the restaurant pays for on their end in keeping their computers up, and which the app skims a huge percentage of to pay back venture-capitalist investors and keep the servers running.
If you look at only a single transaction, the app is much more efficient: Instead of requiring the restaurant to hire a printer and someone to deliver menus to you, you just press a button. But with a paper menu, restaurants have to do that only once, whereas you need to marshal the same amount of energy each time you use the app. By the third or fourth time you order takeout from a particular place, suddenly the paper menu is looking like an ecological marvel.
> For example, delivery apps make it feel “easy” to order food, when in fact we are spending much more in buying the phone, keeping it charged, paying our data plan, paying our subscriptions, and so on, for every order — in other words, we are using more hours of our labor to do so. Before smartphones, we could call the restaurant with a landline, but we also had to have previous knowledge of the restaurant as well as potentially a menu or at least a phone book’s yellow pages. The app replaces the drawerful of menus with a commensurate amount of electricity, which we pay for when we buy and charge our phone and pay our phone bill, which the restaurant pays for on their end in keeping their computers up, and which the app skims a huge percentage of to pay back venture-capitalist investors and keep the servers running.
If you look at only a single transaction, the app is much more efficient: Instead of requiring the restaurant to hire a printer and someone to deliver menus to you, you just press a button. But with a paper menu, restaurants have to do that only once, whereas you need to marshal the same amount of energy each time you use the app. By the third or fourth time you order takeout from a particular place, suddenly the paper menu is looking like an ecological marvel.
To your point paper production is a wasteful process, I’ve heard figures of 10-20L of freshwater are used per one piece of A4 paper in addition to transportation costs and running a pulp mill. Pulp mills produce waste as well.
The phone has a lot of waste on metals but in a less consumerist world - read don’t upgrade your phone every year - it has the property of reuse for every restaurant and durability compared to a restaurant menu.
Even better you can power your phone with the rays from the sun.
The phone has a lot of waste on metals but in a less consumerist world - read don’t upgrade your phone every year - it has the property of reuse for every restaurant and durability compared to a restaurant menu.
Even better you can power your phone with the rays from the sun.
How one does explain that the price of Ethereum follows the price of Bitcoin, while both networks are separated, and follow a different roadmap?
ETHBTC is up 40% this month. The chart is totally chaotic. ETHUSD (sometimes) goes up after Bitcoin does because people hear about ETH after they hear about bitcoin - most price movements in either pair are due to new money. The prices of all cryptocurrencies also respond together to any regulatory threat.
The weak correlation between ETHUSD and BTCUSD has many obvious explanations.
Most things crypto are suspicious. I don't think there is anything suspicious about the ETHBTC chart.
Edit - This may be informative:
https://en.wikipedia.org/wiki/Beta_(finance)
The weak correlation between ETHUSD and BTCUSD has many obvious explanations.
Most things crypto are suspicious. I don't think there is anything suspicious about the ETHBTC chart.
Edit - This may be informative:
https://en.wikipedia.org/wiki/Beta_(finance)
Arbitrage.
Many exchanges deal only in crypto currencies, where exchange rates are relative to other coins. Price differences between both coins and exchanges create an ability for someone to make money while equalizing the market.
It also means that all coins are inevitably linked together in some way. And why obvious scam coins also follow same curves.
Many exchanges deal only in crypto currencies, where exchange rates are relative to other coins. Price differences between both coins and exchanges create an ability for someone to make money while equalizing the market.
It also means that all coins are inevitably linked together in some way. And why obvious scam coins also follow same curves.
Arbitrage isn't the fundamental explanation. There's no pure arb relationship between ETH and BTC.
The real reason they're linked is for macro reasons. Hype for ETH is correlated with hype for BTC. Regulatory environment for ETH is correlated to that for BTC.
Statistical arbitraguers then front run the resulting macro flows, but the core reason they're linked is the macro flows, not the arbitrageurs.
The real reason they're linked is for macro reasons. Hype for ETH is correlated with hype for BTC. Regulatory environment for ETH is correlated to that for BTC.
Statistical arbitraguers then front run the resulting macro flows, but the core reason they're linked is the macro flows, not the arbitrageurs.
Market makers. They have to determine a price, but ETH hasn't yet evolved to a point where it operates in its own world, so they lazily (but understandably) follow the price fluctuations of BTC while allowing people to buy or sell within a certain range. Obviously if a huge buy comes in, or a lot of people are buying, they'll let it go up (or down if its the opposite), but once that dies down they'll again follow BTC price swings. However, I expect this to change as cryptocurrencies mature.
Market makers can't force a correlation to exist. They're neither a sufficient or necessary condition for it. They only front run an already existing correlation.
The correlation exists because of non market makers.
The correlation exists because of non market makers.
Not sure if this is a nit or not, but NFTs rarely represent ownership of anything other than the NFT. You're not really buying the art, you're buying association with the art. At least if I buy a Jackson Pollock, but the world realizes he's a one-gimmick artist, I can still enjoy the painting. If the world stops caring about NFTs, you're left with "cool story, bro."
Buying these NFTs is more like buying your name on some dedication plaque no one will read unless directed to do so; people do this, sometimes with millions of dollars, because it is, in fact, a "cool story" vs. merely sending an anonymous envelope of cash to the owners of the building (maybe a University or local government).
More like you are buying a unique business card with an address of building where dedication plaque is located. (a .json file with a hyperlink)
Not only it's mostly useless since anyone can print the same address anywhere they want, but also it WILL become literally useless when that address changes.
Not only it's mostly useless since anyone can print the same address anywhere they want, but also it WILL become literally useless when that address changes.
It's quite a bit different, since your donation doesn't imply ownership of the plaque (or even of anything built by the donation). The non-fungibility of the plaque is irrelevant because you don't own it, and therefore can't resell it, and therefore can't expect it to appreciate in value, and therefore nothing approaching a pyramid scheme is possible.
I appreciate it isn't exactly like (hence why I merely said "more like" ;P). I think people are way too focused on the idea of the value of these NFTs going up in value: most of the discussion about why they are actually valuable in the relevant communities is merely as an alternative to Patreon-style interactions. (And so like, I totally agree that a lot of scams are being built over them: I am just defending why the "cool story" part actually is worth real value to some people.)
Yes, I could have been more clear: I was trying to suggest that if someone wants to give money to an artist in the form of a Patreon-style interaction, then they can just... donate. :P It's clear to me that the hype is precisely because people want their tokens to appreciate in value; you can design a non-transferable-token if you want to give patrons the "cool story" without muddying the waters with pseudo-investment shenanigans (of course, I suppose at this point there's nothing stopping anyone from issuing an NFT on your NTTs, sigh...).
Okay, I use NoScript. It's a hassle, but it's an eye opener, so I keep using it. Here, I needed yet again to enable JavaScript to read what ought to be a static, text heavy article.
Nothing new so far. What's interesting however is that instead of the article, I didn't get the usual blank page. Instead, I could read the following quote:
> "Appropriate technology" was a movement beginning in the late 1960s that aimed to shift the emphasis from mass technology to smaller-scale, affordable technologies, informed and targeted to local needs and customs. Many of its ideas are as relevant today. So is one of its major shortcomings: why would we rely on technology to mitigate the harm technology does?
Turns out I got redirected to https://reallifemag.com/appropriate-measures/
How ironic. When trying to disable a technology that's quite useless as displaying text (and more often than not is more about tracking me than serving me), I got a lecture on appropriate technology. And a fairly good one at that, which should probably be reflected on by proponents of crypto currencies.
Nothing new so far. What's interesting however is that instead of the article, I didn't get the usual blank page. Instead, I could read the following quote:
> "Appropriate technology" was a movement beginning in the late 1960s that aimed to shift the emphasis from mass technology to smaller-scale, affordable technologies, informed and targeted to local needs and customs. Many of its ideas are as relevant today. So is one of its major shortcomings: why would we rely on technology to mitigate the harm technology does?
Turns out I got redirected to https://reallifemag.com/appropriate-measures/
How ironic. When trying to disable a technology that's quite useless as displaying text (and more often than not is more about tracking me than serving me), I got a lecture on appropriate technology. And a fairly good one at that, which should probably be reflected on by proponents of crypto currencies.
I have NoScript too. I, too, had nothing on the screen but instead of enabling the JS for the site I switched to reader mode and boom! the static text heavy article was before my eyes. ¯\_(ツ)_/¯
Go figure. Personally I'm able to reproduce the issue: with JavaScript on, no problem. Disable it, I'm not redirected yet, but I see the appropriate measure quote. Re-enable it, and I'm redirected to the appropriate measure article.
I still argue that JavaScript is no an appropriate technology to display static text (at least not if we care about screen readers).
I still argue that JavaScript is no an appropriate technology to display static text (at least not if we care about screen readers).
Sure, but so is the world economy apparently:
https://www.forbes.com/sites/jeffmcmahon/2019/04/05/the-worl...
https://www.forbes.com/sites/jeffmcmahon/2019/04/05/the-worl...
My Occam's Razor: NFTs are tax avoidance and/or bribe money vehicles that happen to be attracting useful idiots.
They are perfect because:
1) an unlimited number of them can be created quickly and easily
2) "artwork" value is subjective and therefore the value and short term appreciation/depreciation can't be easily questioned
They are perfect because:
1) an unlimited number of them can be created quickly and easily
2) "artwork" value is subjective and therefore the value and short term appreciation/depreciation can't be easily questioned
Forgive my ignorance, but NFTs use the same algos as bitcoin, correct? And are the blockchains public, so that you may know who owns the NFT for the physical item? If that is all true, then trying to launder money via an NFT means that law enforcement can access the blockchain and see the whole chain of custody too, right?
I feel that I am missing something key though.
I feel that I am missing something key though.
Blockchains are public, and everyone can see transactions, but they are tied to an address and not to a person. The person who controls the address can make transactions without revealing who they are. That’s how we know Satoshi owns billions of dollars worth of bitcoins but we don’t know who Satoshi is.
However, if the address is revealed to belong to a person in the real word, they are no longer anonymous and you can see all of their transactions.
However, if the address is revealed to belong to a person in the real word, they are no longer anonymous and you can see all of their transactions.
NFTs compete with sketchy charities in this case. Donating to a politician's charity works just as well, except that the charity's funds are difficult to spend later. NFTs solve this problem.
The more complex our global monetary system seems, the higher the pyramid scheme can go.
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A successful pyramid scheme has a couple of valuable attributes: "plausible deniability", i.e. the ability to disguise the pyramid scheme to convince as many people as possible that it isn't actually a pyramid scheme, and "self-sustainability", i.e. the ability to keep the scheme going for as long as possible without collapsing.
The article's headline suggests the article is about "plausible deniability". This has indeed been improving over time as the schemes have become more sophisticated. With Bitcoin for example, articipants could say "it's not a pyramid scheme because you can buy a pizza with it", although that was about the extent of it in practical terms (excluding more nebulous claims like "it is going to change the world", "it is the internet of money" etc.). However, with more sophisticated schemes like Ethereum, participants used to say things like "it's not a pyramid scheme because you can run DApps on it", now say things like "it's not a pyramid scheme because you can do DeFi with it", and may in future have something else with which to deny it is a pyramid scheme.
However, the article itself talks specifically about NFTs. These aren't so much about "plausible deniability", but about "self-sustainability". People need to buy Ethereum to buy the NFTs. It is like the ICOs - people needed to buy Ethereum to participate in the ICOs. When the ICOs dried up and the ICO companies started cashing out their Ethereum the prices collapsed, but now we have NFTs to take their place. If NFT sales dry up and NFT sellers cash out the prices may collapse again, but by then there may be something else to take their place and keep the scheme self-sustaining.
The article's headline suggests the article is about "plausible deniability". This has indeed been improving over time as the schemes have become more sophisticated. With Bitcoin for example, articipants could say "it's not a pyramid scheme because you can buy a pizza with it", although that was about the extent of it in practical terms (excluding more nebulous claims like "it is going to change the world", "it is the internet of money" etc.). However, with more sophisticated schemes like Ethereum, participants used to say things like "it's not a pyramid scheme because you can run DApps on it", now say things like "it's not a pyramid scheme because you can do DeFi with it", and may in future have something else with which to deny it is a pyramid scheme.
However, the article itself talks specifically about NFTs. These aren't so much about "plausible deniability", but about "self-sustainability". People need to buy Ethereum to buy the NFTs. It is like the ICOs - people needed to buy Ethereum to participate in the ICOs. When the ICOs dried up and the ICO companies started cashing out their Ethereum the prices collapsed, but now we have NFTs to take their place. If NFT sales dry up and NFT sellers cash out the prices may collapse again, but by then there may be something else to take their place and keep the scheme self-sustaining.
NFTs are dodgy as all hell, I will not defend them. But she is politically motivated and her arguments against Bitcoin don't really hold up. A key giveaway is when people attack crypto for it's 'libertarian' nature. Like other far left people she knows crypto is a threat to state currencies. Without state control of the money it makes redistribution of wealth more difficult. These people often believe in MMT (Modern Monetary Theory). They hand-wave away inflation. This text is rife with Russell Conjugations and should not be taken seriously as a critique of Bitcoin. There are legitimate critiques of BTC of course, but not here.
Yes, this is the author who wrote 'In Defense Of Looting'.
Yes, this is the author who wrote 'In Defense Of Looting'.
Miss leading title. This is about NFTs and not about crypto or a pyramid scheme thereof.
It is not that complex actually, you just have to learn more about it and read a lot of information on the internet. Right now cryptocurrencies might not be that popular but in the future I am sure that they will replace regular currencies, but for now people don't really trust the technology. Many years ago when credit cards came out, the majority of people didn't trust the technology and preferred using cash, I still know some people who are like that. So invest in it now before it's too late.