How much money flows into crypto each month?(tomtunguz.com)
tomtunguz.com
How much money flows into crypto each month?
https://tomtunguz.com/how-much-money-flowing-into-crypto/
81 comments
Seems like Tether’s questionable activity throws a massive wrench in this analysis. You can’t equate minting to flows if the biggest minter is (allegedly) just printing the things whenever they feel like it
This. The amount of real money flowing in supposedly increasing by 5% per month is also not compatible with many real-world indicators of interest showing the opposite, including Robinhood's crypto revenue falling off a cliff.
https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robi...
https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robi...
Robinhood's crypto offering is just a shit product. You are just buying shares in their crypto holdings, not the underlying coins.
It's like saying the internet is dying off because AOL's dialup customer base is shrinking.
It's like saying the internet is dying off because AOL's dialup customer base is shrinking.
Ironically, Robinhood's cryptocurrency revenue shouldn't be high in the estimation of _real_ cryptocurrency enthusiasts, what's the point of crypto if you don't/can't own your keys? Really lays the whole thing bare. FOMO.
Um, yes. Stablecoin issuance that includes Tether is a terrible metric.[1]
(This is a general problem in some areas of finance - is there new money entering the subsystem, or is it the same money going round and round? Crypto is so opaque that you can't tell. NFTs are worse. Coins at least have liquid markets and market prices. NFTs have high asking prices in stalled markets, and wash sales that conceal whether there's any significant resale market at all.)
[1] https://www.coindesk.com/markets/2021/01/11/tether-mints-rec...
(This is a general problem in some areas of finance - is there new money entering the subsystem, or is it the same money going round and round? Crypto is so opaque that you can't tell. NFTs are worse. Coins at least have liquid markets and market prices. NFTs have high asking prices in stalled markets, and wash sales that conceal whether there's any significant resale market at all.)
[1] https://www.coindesk.com/markets/2021/01/11/tether-mints-rec...
This is just wrong. There is definitely issiues with Tether. They dont deserve their place but i havent seen any proof of this claim. Plus usdt is almost always trading slightly above a dollar. Which means even if they are buying bitcoin with printing usdt that is no different than buying bitcoin with their reserves. I dont see any reason why would they do so.
This comment of mine sounds like optimistic. It is just i haven't seen any proof of printing. But i wouldn't trust and try to avoid if it possible because of its inheritance.
He said "Stablecoins are tokens that are backed by a fiat currency."
But it really tokens that are pegged to a fiat currency. You can't redeem tethers because there is no back account holding a dollar for every tether.
But it really tokens that are pegged to a fiat currency. You can't redeem tethers because there is no back account holding a dollar for every tether.
> just printing the things whenever they feel like it
sigh This is a common misconception, so fact check time...
Tether is printed on demand, but it is backed by assets.
An independent audit was done to settle a claim brought by the New York Attorney General. The audit found $35.2 billion in assets against $35.1 billion in issuance liabilities.
The case was settled with an $18 million fine and a promise of increased transparency, but ultimately the NYAG was unable to demonstrate any evidence supporting claims that Tether was unbacked.
sigh This is a common misconception, so fact check time...
Tether is printed on demand, but it is backed by assets.
An independent audit was done to settle a claim brought by the New York Attorney General. The audit found $35.2 billion in assets against $35.1 billion in issuance liabilities.
The case was settled with an $18 million fine and a promise of increased transparency, but ultimately the NYAG was unable to demonstrate any evidence supporting claims that Tether was unbacked.
The "issuance liabilities" included loans backed by bitcoin. If someone posts bitcoin as collateral and tethers are generated, how much money has flown into crypto?
https://blockworks.co/celsius-reportedly-borrowed-1b-from-te...
https://blockworks.co/celsius-reportedly-borrowed-1b-from-te...
When it comes to printing and the biggest minter are you talking about the US government or...?
I think it’s accurate to state these types of complaints against government monetary control. However, doing so generally ignores the features and usage levels of currency that don’t and never will exist in cryptoland.
It doesn’t really matter what metrics people use, if the current trend of yearly doubling in users/market cap continues, cryptocurrencies will get to the size of fiat currencies in about 10 years. Of course there are people who are sceptical on _whether_ the current trend continues or not.
Humans will run 100 meters in 0 seconds in 2600
I find the disconnect between mainstream "political opinion" and the actions of the big banks more interesting.
Lets assume that crypto as a whole is a 50/50 proposition. And it is certainly a giant question mark (50/50 is symbolic)...cause there are certainly open questions.
...and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks. That makes me go hmm...
...on balance I'm leaning towards IB usually has a good nose for money and where the political winds will blow (or be made to blow by force)
Lets assume that crypto as a whole is a 50/50 proposition. And it is certainly a giant question mark (50/50 is symbolic)...cause there are certainly open questions.
...and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks. That makes me go hmm...
...on balance I'm leaning towards IB usually has a good nose for money and where the political winds will blow (or be made to blow by force)
Banks, even major ones, are frequently doing business with very shady characters.
https://www.theguardian.com/business/2021/dec/17/hsbc-fined-...
If they smell money, they'll do it.
Just because they do it, it doesn't mean it's not "funny money". Both could be true at the same time.
https://www.theguardian.com/business/2021/dec/17/hsbc-fined-...
If they smell money, they'll do it.
Just because they do it, it doesn't mean it's not "funny money". Both could be true at the same time.
> and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks
Jamie Dimon spoke to this a while back. Something along the lines of while he sees no future in crypto and would never invest, if there is customer demand then they really have no choice but to cater to it.
Jamie Dimon spoke to this a while back. Something along the lines of while he sees no future in crypto and would never invest, if there is customer demand then they really have no choice but to cater to it.
Right. You don't have to believe in the value of a thing to make a market in it.
Much of HN is extremely conservative and unimaginative to the point where one should never take these comments seriously when it comes to anything predicting the future. HN completely missed the boat on crypto for example and seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC and banks, decentralized finance, DAOs, and so on. Post about web3, and you'll just have a bunch of geezers complaining about the term "web3" rather than addressing the changes taking place.
Ultimately I think HN is a good place if you want to discuss technical details about super specific topics like Linux kernels, but a terrible place to get a glimpse of the future because most here are too close-minded and stuck in the past.
Ultimately I think HN is a good place if you want to discuss technical details about super specific topics like Linux kernels, but a terrible place to get a glimpse of the future because most here are too close-minded and stuck in the past.
The ad hominems you use here don't belong on Hacker News
Any suggestions as to where one might find those glimpses of the future? I enjoy HN for the high average IQ of the conversations, but I'm always looking for new venues.
Honestly, no, and it's something I'm looking for as well. Crypto Twitter seems to be the best place for crypto/web3 info, but aside from being way too much noise, Twitter's character limit limits any form of discussion to high-level soundbites.
> seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC
Not so much "despite" as "because."
Not so much "despite" as "because."
The purpose of KYC regulations are not to prevent scams but to prevent money laundering.
If that were true, would we all just breath a sigh of relief and say "whew, it's only to prevent money laundering"?
But AFAICT it's not accurate, and KYC checks exist to prevent other forms of illegitimate activity (e.g. loan fraud associated with identity theft) which fit pretty neatly inside most definitions of "scam."
But AFAICT it's not accurate, and KYC checks exist to prevent other forms of illegitimate activity (e.g. loan fraud associated with identity theft) which fit pretty neatly inside most definitions of "scam."
Lenders were doing "KYC checks" long before KYC regulations of course and I'm sure no one is loaning their Bitcoin without doing thorough "KYC". But I'm not sure how this is related to the topic (sending money).
You clearly don't know what the word "scam" means. Look up the definition of the words you use before you start commenting as if you know what you're talking about.
Happy to be educated if that's what you're here for. I also don't mind being insulted, as that usually functions as an effective signal that I'm not missing an educational opportunity (unless it's a very clever insult, of course).
There's plenty of domain specific information I'm missing regarding cryptocurrency and I welcome discovering more. But when it comes to dealing in definitions -- examining what things are -- I'm plenty happy to continue to go to bat for observations that flow from relevant definitions: where the crypto-supporting bullet points tend to pile up around removed review/accountability (as with KYC) that seems likely to be more fertile ground for scamming, and where they pile up around reinventing existing functionality with marginal-to-questionable improvements (as with international transactions), it's easy to wonder if it's hype.
And when evangelism gets extra aggressive or resorts to tactics of high-control social groups, that doesn't help.
There's plenty of domain specific information I'm missing regarding cryptocurrency and I welcome discovering more. But when it comes to dealing in definitions -- examining what things are -- I'm plenty happy to continue to go to bat for observations that flow from relevant definitions: where the crypto-supporting bullet points tend to pile up around removed review/accountability (as with KYC) that seems likely to be more fertile ground for scamming, and where they pile up around reinventing existing functionality with marginal-to-questionable improvements (as with international transactions), it's easy to wonder if it's hype.
And when evangelism gets extra aggressive or resorts to tactics of high-control social groups, that doesn't help.
Make low-effort snarky comments, and you'll get the same back.
Ok, so by your definition cash is also a scam then too because it enables transacting without KYC.
Crypto benefits way more than just scammers. A non-significant portion of the population doesn't have access to banking. Not every country has the blessings of a stable currency, freedom of capital movement, and a sane government. Crypto enables borderless transactions and collateralized loans with low fees without being dependent on a country's institutions. In countries like Argentina that've experienced hyperinflation and bank runs, nobody has trusted banks and their Peso for a long time - preferring to hoard cash and deal in cash transactions, even for house purchases [1]. To Argentinians, crypto is a huge boon. I'd imagine the same in countries like Venezuela and Cuba.
Crypto also enables decentralized anonymous voting, decentralized autonomous organizations (DAOs), and decentralized finance (eg. trading, lending + borrowing, insurance). In 20 years I'd bet we'll see elections run on the blockchain with zero knowledge proofs.
Sure there are downsides as well, but it's tiring seeing shallow comments on here dismissing crypto as a "scam" despite the real value it's bringing to peoples' lives. Crypto is much more than just Ponzi schemes and ape NFTs.
[1] https://youtu.be/dwjiucS4NtY?t=2164
Ok, so by your definition cash is also a scam then too because it enables transacting without KYC.
Crypto benefits way more than just scammers. A non-significant portion of the population doesn't have access to banking. Not every country has the blessings of a stable currency, freedom of capital movement, and a sane government. Crypto enables borderless transactions and collateralized loans with low fees without being dependent on a country's institutions. In countries like Argentina that've experienced hyperinflation and bank runs, nobody has trusted banks and their Peso for a long time - preferring to hoard cash and deal in cash transactions, even for house purchases [1]. To Argentinians, crypto is a huge boon. I'd imagine the same in countries like Venezuela and Cuba.
Crypto also enables decentralized anonymous voting, decentralized autonomous organizations (DAOs), and decentralized finance (eg. trading, lending + borrowing, insurance). In 20 years I'd bet we'll see elections run on the blockchain with zero knowledge proofs.
Sure there are downsides as well, but it's tiring seeing shallow comments on here dismissing crypto as a "scam" despite the real value it's bringing to peoples' lives. Crypto is much more than just Ponzi schemes and ape NFTs.
[1] https://youtu.be/dwjiucS4NtY?t=2164
Banks are going into crypto because they can charge transaction fees many times larger than they can with stocks.
Keep an eye out for decentralized, algorithmic stablecoins like UST which have continued to grow market share which others like DAI have decreased.
Money is not flowing "in" or "out" of assets (except when new assets are being created, via a new offering). Every purchase is also a sale, every sale is also a purchase.
It's a cognitive error to not understand the above, and it comes from extrapolation of the individual's point of view (when I buy X then my money goes "into" X) to the collective (when the price of X rises it must be because new money has "gone into" the X).
It's a cognitive error to not understand the above, and it comes from extrapolation of the individual's point of view (when I buy X then my money goes "into" X) to the collective (when the price of X rises it must be because new money has "gone into" the X).
I'm not sure what point you're trying to make here. If more people sell fiat and buy crypto, money is going "into" crypto. If more people sell crypto to buy fiat, money is coming "out" of crypto.
Their point is that thinking of money going "into" crypto means that the money is there to come out of it. And that's not generally true.
When I buy a BTC, my dollar goes to someone else bank account, who then does whatever with that dollar (spends it on electricity, perhaps). If I later get out of BTC, I don't necessarily get my dollar back. So if $1B has gone "into" BTC, perhaps only $1M comes out of it later. So seeing there as a stock is misleading.
That said, if you trust the maintainers of stablecoins, then the article's assumptions do hold. $1B spent on USDT and then later reversed should result in $1B coming back. So you can think of stablecoins as a stock (relative to the tethered currency at least)
When I buy a BTC, my dollar goes to someone else bank account, who then does whatever with that dollar (spends it on electricity, perhaps). If I later get out of BTC, I don't necessarily get my dollar back. So if $1B has gone "into" BTC, perhaps only $1M comes out of it later. So seeing there as a stock is misleading.
That said, if you trust the maintainers of stablecoins, then the article's assumptions do hold. $1B spent on USDT and then later reversed should result in $1B coming back. So you can think of stablecoins as a stock (relative to the tethered currency at least)
The money going in is the difference in price between buy and sell. If you buy for $5 and sell for $100 that is $95 of inflow. If you take your $100 and the buy another $100 worth, that was previously only worth $5. That's another $95 of inflow, but if you bought your original or it's value equivalent back for $100 it is not a new inflow. With traditional assets this is easy to determine, with crypto it's nearly impossible.
There are X bitcoin and Y ether out there in circulation at the moment. All are currently owned in a definitive sense because blockchain ledger.
When someone sells fiat and buys crypto, that implies that at the same time there is someone on the other side of the trade buying fiat and selling crypto; right?
You can't have more of one than the other.
When someone sells fiat and buys crypto, that implies that at the same time there is someone on the other side of the trade buying fiat and selling crypto; right?
You can't have more of one than the other.
All sales have an equal amount of buying, and all buying involves an equal amount of selling.
There's never a net movement in one direction.
There's never a net movement in one direction.
[deleted]
You can mine crypto/mint new NFTs/create new coins arbitrarily without paying external currency for them though.
In reality this is devaluing existing crypto relative to other assets. The OP still stands in that money does not flow into crypto. It's not a black hole. Fiat money is being traded for an asset between two parties. The other party gets the fiat.
In other words, you can't create or destroy USD (for example) through a cryptocurrency. You can only affect the cryptocurrency itself. Otherwise we'd have a large problem on our hands...
In other words, you can't create or destroy USD (for example) through a cryptocurrency. You can only affect the cryptocurrency itself. Otherwise we'd have a large problem on our hands...
[deleted]
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When you buy something using money in your bank account, your bank needs to pay their bank during settlement. Your bank has lower assets (and matching liabilities.) Their bank has more.
This is presumably true for stablecoin deposits too. But what banks are they using? What assets end up changing hands?
This is presumably true for stablecoin deposits too. But what banks are they using? What assets end up changing hands?
It's theoretically true, but Tether at least don't seem to be doing that. They don't even claim to be backed by more than a few percent of cash, and they have never been audited. Imagine a multidecacorn startup that never had submitted to an audit.
They traded Tether for other kinds of money, and the money went... somewhere.
The article is about stablecoin minting and redemption, not purchases or sales, so I'm not sure where this is coming from.
The article also doesn't have anything to do with buying things or the prices of things rising.
Stablecoins are very simple to measure inflows and outflows on, as explained in the article. When someone exchanges a real dollar for a USDC token and the dollar goes into the stablecoin issuer's bank account, that's an inflow. When someone exchanges a USDC token back for a real dollar out of the stablecoin issuer's bank account, that's an outflow.
> except when new assets are being created, via a new offering
That's exactly what's happening here. Each stablecoin mint is a new offering.
The article also doesn't have anything to do with buying things or the prices of things rising.
Stablecoins are very simple to measure inflows and outflows on, as explained in the article. When someone exchanges a real dollar for a USDC token and the dollar goes into the stablecoin issuer's bank account, that's an inflow. When someone exchanges a USDC token back for a real dollar out of the stablecoin issuer's bank account, that's an outflow.
> except when new assets are being created, via a new offering
That's exactly what's happening here. Each stablecoin mint is a new offering.
> When someone exchanges a real dollar for a USDC token
You're making the very large assumption here that people are exchanging real dollars for stablecoins, which is almost certainly not the case. Tether, in particular, seems to printing their stablecoins out of what appears to be thin air, or at best in exchange for sketchy IOUs.
You're making the very large assumption here that people are exchanging real dollars for stablecoins, which is almost certainly not the case. Tether, in particular, seems to printing their stablecoins out of what appears to be thin air, or at best in exchange for sketchy IOUs.
> Tether, in particular, seems to printing their stablecoins out of what appears to be thin air,
Everyone keeps saying they are printing but no one has the proof. Even the New York AG investigated Tether and just gave them a slap on the wrist
Everyone keeps saying they are printing but no one has the proof. Even the New York AG investigated Tether and just gave them a slap on the wrist
Do you really believe that a 10-person company run by a convicted fraudster (Devasini) is managing $78 billion dollars in assets, making them bigger than Vanguard or Schwab, despite the financial world not being able to find any evidence of what they're actually holding?
https://www.bloomberg.com/opinion/articles/2021-10-07/matt-l...
https://www.bloomberg.com/opinion/articles/2021-10-07/matt-l...
It does not matter what I belive, the NY AG looked at that gave a slap on the wrist and I dont think any other US govt agency is looking at them so what does that tell you?
[deleted]
USDC is a coin issued by the US-based company Circle Ltd. It's not related to Tether.
Really that's a play on words though. You might as well say "How much money flows into Tether's bank account". Because it's not going into crypto and just disappearing as the title implies. Someone is going to get to spend those dollars.
In some cases money definitely does flow into asset classes; people speak of money flowing into ETFs, for example, and in those cases ETF units absolutely are being minted.
More fundamentally, money can flow into and out of assets simultaneously -- for example, money flows from scam victims into scams, and from scams out to scammers.
More fundamentally, money can flow into and out of assets simultaneously -- for example, money flows from scam victims into scams, and from scams out to scammers.
Money can absolutely flow “into” crypto. The result is an increasing market cap.
Money flows into an asset as it flows out of another.
I think the more relevant/interesting question is where is the money flowing into crypto coming from. The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things, which is a huge red flag. Purely anecdotal but my Facebook feed suggests those with a lot of financial literacy are steering clear while folks from high school that barely passed basic math and never left their home town think this is the absolute best place to invest for the future. Just saying.
Paul Krugman recently said essentially the same thing and got roasted for being elitist. I can see both points of view and well, buyer beware...
How Crypto Became the New Subprime
https://archive.is/1SMIy
How Crypto Became the New Subprime
https://archive.is/1SMIy
> folks that really have no business investing in extremely speculative things
You decide this based on what? If people can waste money on lotteries, this is no different.
You decide this based on what? If people can waste money on lotteries, this is no different.
Except few people would spend 6 figures on lotteries, but 10000 people own bored apes. Yes, a lot of them didn't buy them at that price, but they are keeping them, which is actually the same thing.
So what? You think you have the authority to dictate how other people choose to spend their money?
Well obviously not, then people wouldn’t spend it on nfts.
One could say the same for $80m Picasso's
Not quite. Picasso had actual, one-in-a-billion talent. Most people know someone that could have drawn the Bored Apes better.
Not to mention the artificial nature of NFT “scarcity” or the physical aspect. If you buy a Picasso you buy something that one of the greatest artists of all time made with his hands.
Not to mention the artificial nature of NFT “scarcity” or the physical aspect. If you buy a Picasso you buy something that one of the greatest artists of all time made with his hands.
My well educated bubble is invested in crypto, probably at about 10% of income.
None of us are posting about it on Facebook though.
None of us are posting about it on Facebook though.
It's strange to characterize investment amount in terms of income. I think relative to assets or investment portfolio would be clearer.
In terms of total portfolio it ranges from a few percent to ~30 percent. But that’s dependent on amount previously invested.
A better measure might be percent of total yearly investment that goes into crypto, since we’re talking about inflow. I’d put that at around 20%, with the other 80% going towards retirement and socks/etfs
A better measure might be percent of total yearly investment that goes into crypto, since we’re talking about inflow. I’d put that at around 20%, with the other 80% going towards retirement and socks/etfs
In a world of regular professionals following the religion of Dollar Cost Averaging, the monthly contribution as % of income actually gives a good indication to their current level of faith.
Yeah, instead you won't shut up about it at work, on twitter, on hacker news, etc.
From the same place that also overinflated the stock market: The Fed's money printer.
> The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things
What data?
Practically everyone I know owns crypto at this point. Me and many of my software engineer friends have had a pretty significant amount of our portfolios allocated to crypto for over a year now. Some have quit their jobs to work full-time in crypto.
Painting crypto investors as "folks from high school that barely passed basic math and never left their home town" sounds not only insulting but comically inaccurate. I've been invested heavily in crypto for over a year now and definitely don't fit to that ridiculous profile you derived from your Facebook feed (who even goes on Facebook other than baby boomers these days anyways?).
What data?
Practically everyone I know owns crypto at this point. Me and many of my software engineer friends have had a pretty significant amount of our portfolios allocated to crypto for over a year now. Some have quit their jobs to work full-time in crypto.
Painting crypto investors as "folks from high school that barely passed basic math and never left their home town" sounds not only insulting but comically inaccurate. I've been invested heavily in crypto for over a year now and definitely don't fit to that ridiculous profile you derived from your Facebook feed (who even goes on Facebook other than baby boomers these days anyways?).
I'm a software engineer and no one I know owns crypto.
Everyone is in their own bubble these days.
Everyone is in their own bubble these days.
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I haven't read the article but I can easily answer the question: too much, because the value is higher than 0.
Crypto should only be an experiment at this point in time. Blockchain is another matter entirely as that's a technology that enables all of this and it has other applications. But crypto is a (very) interesting experiment.
The more people realise this and treat crypto as an experiment, the less scams and ruined lives we're going to see.
Crypto should only be an experiment at this point in time. Blockchain is another matter entirely as that's a technology that enables all of this and it has other applications. But crypto is a (very) interesting experiment.
The more people realise this and treat crypto as an experiment, the less scams and ruined lives we're going to see.
Please let's keep this tedious generic flamewar off HN. Whatever one's views on the topic, it's exceedingly repetitive and therefore uninteresting. We want curious conversation here.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
FOMO is a hell of a drug.
Blockchain is completely uninteresting. The beauty of crypto is not in the tech or cryptography itself, really, but the social consensus it is able to create and the very well balanced, self-sustaining incentive systems it creates. Cryptography is just a tool to enforce is but the social awareness is amazing to me.
So 0 should go into any experiment? That doesn't even make sense.
Bitcoin not blockchain. I'm gonna get downvoted like crazy, but the innovation is bitcoin not blockchain. The more people realise this, the less scams and ruined lives we're going to see.