Three Arrows Capital reportedly facing insolvency(fxstreet.com)
fxstreet.com
Three Arrows Capital reportedly facing insolvency
https://www.fxstreet.com/cryptocurrencies/news/three-arrows-capitals-zhu-su-speaks-out-after-400-million-liquidation-due-to-celsius-and-terras-luna-fiasco-202206150841
400 comments
3AC isn’t just large. 3AC is the largest trader by volume in the world for like 4 years. Them going bankrupt is like long term capital management going bankrupt.
Its nothing like LTCM, its much worse because when LTCM the fed and SEC cleaned up by reducing interest rates and helping GS take over the positions. Crypto is "free" from govt interference like this.
If crypto bubble bursting is what precipitates the next recession I'm going to be beyond upset. Getting burned by something I purposefully stayed out of is nothing short of enraging. I'd legislate it out of existence out of spite at that point.
What's happening here isn't causing the recession, it's indicating it, for the most part. Crypto was never really disconnected from the public markets, not like it claimed it was.
Exactly, the crypto bubble is tied to US monetary policy, even though they don’t want you to think that.
Every time I make a comment about this I get downvoted by the crypto gang.
Every time I make a comment about this I get downvoted by the crypto gang.
Maybe the nuevo crypto gang, but OG Bitcoiners have seen enough bubbles they view them as inevitable and don’t particularly care about the reason for them.
Seen enough bubbles? They’ve only known one type of monetary policy and rate environment (essentially zero). This is uncharted territory for all crypto.
The Fed is precipitating the next recession (maybe) and also created the crypto bubble along with the stock market bubble, the venture capital bubble and various other asset inflations due to its easy/cheap money policy.
What's happened now is that the Fed has suddenly withdrawn its cheap and easy money and these people are having a wile-e-coyote moment. Currently they're suspended in mid air with nothing below.
Crypto isn't to blame, neither is the Fed (maybe), it's just the hangover from covid and the war in Ukraine.
What's happened now is that the Fed has suddenly withdrawn its cheap and easy money and these people are having a wile-e-coyote moment. Currently they're suspended in mid air with nothing below.
Crypto isn't to blame, neither is the Fed (maybe), it's just the hangover from covid and the war in Ukraine.
> it's just the hangover from covid and the war in Ukraine*
No way. COVID and the war are just the straws that broke the camel's back, they just helped bring down this house of cards that was the bubble economy the Fed created purely out of cheap money I'm the last decade, and overinflated in the last 2 years.
COVID and the supply chain disruptions it caused, was the perfect wake-up call to parachute the economy back down to earth, but instead they just kept the money printer running at full speed until the war came.
How is COVID and the war to blame that the Fed quadroupled the money supply in just 2 years? How was that house of cards ever going to be sustainable?
Of course the war brought it down. And if the war wouldn't have happened, something else would have brought it down instead. It was just not sustainable.
No way. COVID and the war are just the straws that broke the camel's back, they just helped bring down this house of cards that was the bubble economy the Fed created purely out of cheap money I'm the last decade, and overinflated in the last 2 years.
COVID and the supply chain disruptions it caused, was the perfect wake-up call to parachute the economy back down to earth, but instead they just kept the money printer running at full speed until the war came.
How is COVID and the war to blame that the Fed quadroupled the money supply in just 2 years? How was that house of cards ever going to be sustainable?
Of course the war brought it down. And if the war wouldn't have happened, something else would have brought it down instead. It was just not sustainable.
I blame the death of the defined-benefit pension.
Basically, Wall Street created a "You're locked in here with me" scenario for the entire American public. Everyone has to throw their money at some speculative asset category, typically stocks, to have a meaningful chance of beating inflation. (Yeah, real estate, fine art, and Yu-gi-oh cards exist, but they're far less fungible and liquid at the scales required)
This creates a political feedback loop: the S&P 500 must keep going up in perpetuity because we're all afraid of being 82 years old and in failing health but having to still flip burgers to afford our medication. Ergo, policies like super-low interest rates that make alternatives like bonds ever less compelling and focus ever more interest in an asset bubble.
TBH, I feel like there's a real opportunity to ask "why are we investing."
For people forced into the market for things like retirement and educational savings, maybe we need some sort of contribution-based scheme, rather than a market-price-based one. Sign up now, contribute an agreed-upon sum for N years, and you get your retirement condo/kid's tuition at Harvard prepaid in 2044. Make the institutions-- the ones with teams of actuaries on staff and the financial backstop to handle it-- eat the inflation risk instead of the individual with a net worth of $650 on a good day.
That sort of program could remove a lot of the "mere mortals who stand to lose everything" from the market. The political benefit is then it returns Wall Street to being a casino for the rich and distasteful, and makes it much easier to propose regulation or managed-growth policies. When not everyone is chained to the market through a 401(k), the threats of a market tank don't bite quite as hard.
Basically, Wall Street created a "You're locked in here with me" scenario for the entire American public. Everyone has to throw their money at some speculative asset category, typically stocks, to have a meaningful chance of beating inflation. (Yeah, real estate, fine art, and Yu-gi-oh cards exist, but they're far less fungible and liquid at the scales required)
This creates a political feedback loop: the S&P 500 must keep going up in perpetuity because we're all afraid of being 82 years old and in failing health but having to still flip burgers to afford our medication. Ergo, policies like super-low interest rates that make alternatives like bonds ever less compelling and focus ever more interest in an asset bubble.
TBH, I feel like there's a real opportunity to ask "why are we investing."
For people forced into the market for things like retirement and educational savings, maybe we need some sort of contribution-based scheme, rather than a market-price-based one. Sign up now, contribute an agreed-upon sum for N years, and you get your retirement condo/kid's tuition at Harvard prepaid in 2044. Make the institutions-- the ones with teams of actuaries on staff and the financial backstop to handle it-- eat the inflation risk instead of the individual with a net worth of $650 on a good day.
That sort of program could remove a lot of the "mere mortals who stand to lose everything" from the market. The political benefit is then it returns Wall Street to being a casino for the rich and distasteful, and makes it much easier to propose regulation or managed-growth policies. When not everyone is chained to the market through a 401(k), the threats of a market tank don't bite quite as hard.
Global crypto is a small compared to public markets, and financial institutions essentially can't incorporate them in any way that would pose any real risk. This collapse is a symptom of tightening financial conditions. People don't have free cash to throw into them any more. It seems that without that spare cash, there just isn't enough real value in crypto for it to sustain itself.
The chairman of the fed is explicitly saying they will increase interest rates until inflation is down to 2%, even if that increases unemployment and creates a recession. Crypto collapsing won't be the cause of a recession.
> If crypto bubble bursting is what precipitates the next recession
It isn't. The "crypto bubble" also includes an over-inflated sense of the significance of crypto-currencies.
It isn't. The "crypto bubble" also includes an over-inflated sense of the significance of crypto-currencies.
Complaining about speculative bubbles on a VC website is beyond ironic.
How is this this worse? A few people will go under immediately because they took undue risk but prices will settle to where they need to and the world will move on.
As opposed to embedding that failure into the core of the system to protect a few interests so that the same issues are surfacing 20 years later.
That doesn't seem all that bad.
As opposed to embedding that failure into the core of the system to protect a few interests so that the same issues are surfacing 20 years later.
That doesn't seem all that bad.
Very correct. Financial failure of a participant must be an intrinsic part of financial systems and currently only the anarcho capitalist plane of cryptocurrencies has that.
While I do not subscribe to the ideals of anarcho capitalism at all this is one feature of crypto culture that I think they got right.
While I do not subscribe to the ideals of anarcho capitalism at all this is one feature of crypto culture that I think they got right.
Also LTCM had something like 1 trillion dollars in swaps. It put the entire world economy at risk.
How are a that worse? Not paying for a bailout sounds good to me.
worse for crypto holders
Mt Gox says hello.
We’ve been here before, we’ll be here again, a bunch of people will lose money and the cycle will repeat. It’ll all work out.
We’ve been here before, we’ll be here again, a bunch of people will lose money and the cycle will repeat. It’ll all work out.
None of it has ever happened before during a recession. Crypto basically didn’t exist the last time the world had one. Being religious and so sure about the way something is going to turn out should be a warning sign to the self.
> None of it has ever happened before during a recession
We are not currently in a recession.
If we get into a recession in the next quarter or two, there's no harm done to crypto. The market is headed into bear territory regardless of the macro economic climate.
I swear no one remembers 2017. Thousands of projects that raised billions of dollars died. No one cares. The market rebuilds itself every 3-5 years. This is absolutely no different.
We are not currently in a recession.
If we get into a recession in the next quarter or two, there's no harm done to crypto. The market is headed into bear territory regardless of the macro economic climate.
I swear no one remembers 2017. Thousands of projects that raised billions of dollars died. No one cares. The market rebuilds itself every 3-5 years. This is absolutely no different.
Man, I have to respect your true believer attitude about the everlasting cyclical system that has existed within a single lifetime.
I believe it until the pattern stops. No other reason to believe people won't continue to be addicted to gambling.
You are correct that people will continue to engage in stupid gambling. The problem is they're not going to have gobs of cheap money to throw into it and get leveraged 100x on which drives a lot of the speculative value.
Great! That means people will invest in cryptocurrency projects with good fundamentals and that deliver value, instead of the pure speculation that we've suffered until now.
Cheap money will come back again also, at least within 3-5 years
What’s the argument for this? Do you think rates would drop again within 3-5 years?
Rolling over our current national debt at the current rates will make the debt servicing costs too high relative to tax income. So either rates cannot stay high indefinitely, or inflation will continue until debt is smaller compared to tax income. In both cases money becomes cheap. The average maturity on debt is 5 years which is where I got that time scale, but this is also in line with previous cycle lengths-- you can't find many times where the fed has waited longer to cut rates. Debt has also never been this high as a percent of GDP, so more pressure from that shouldead to faster policy changes.
Yes, because after correcting for irrational exuberance and the economy being in a holding pattern for 2 years all the next politician has to say is that they alone can fix the economy by lowering rates. They will then install a dummy head of the Fed that will play along.
It has literally happened once before, that does not mean it is going to revive again. What if we're at crypto saturation and the demand won't cover another crash?
I have no idea if it's true, but it seems like people are writing about contagion within crypto, as if it is more substantial than last time, and worrying a little bit about it affecting the rest of the economy.
This game of lending crypto assets for ridiculous interest rates wasn't nearly as popular last time, was it?
This game of lending crypto assets for ridiculous interest rates wasn't nearly as popular last time, was it?
> This game of lending crypto assets for ridiculous interest rates wasn't nearly as popular last time, was it?
- ICOs - DAOs - NFTs - Yield - Earn - Farming
etc. All of these can be ephemeral concepts within a single crypto bull cycle. Regardless of whether or not you think crypto is valuable, there's no denying people love money. So long as crypto remains unregulated there will always be bull markets imo.
- ICOs - DAOs - NFTs - Yield - Earn - Farming
etc. All of these can be ephemeral concepts within a single crypto bull cycle. Regardless of whether or not you think crypto is valuable, there's no denying people love money. So long as crypto remains unregulated there will always be bull markets imo.
We may currently be in a recession. The second quarter GDP numbers aren't out.
> None of it has ever happened before during a recession.
The 2020 Covid crash was a recession. A very short one, but also one of the most severe since the Great Depression. Bitcoin crashed from about $10,000 to $4,000 in the span of 3 weeks, before recovering and peaking at nearly $70,000.
https://www.investopedia.com/articles/economics/08/past-rece...
What might be correct to say is that bitcoin has never gone through stagflation, but that's a terrifying prospect for every person and asset class.
The 2020 Covid crash was a recession. A very short one, but also one of the most severe since the Great Depression. Bitcoin crashed from about $10,000 to $4,000 in the span of 3 weeks, before recovering and peaking at nearly $70,000.
https://www.investopedia.com/articles/economics/08/past-rece...
What might be correct to say is that bitcoin has never gone through stagflation, but that's a terrifying prospect for every person and asset class.
crypto could go away tomorrow and the impact on the economy would be tiny to nonexistent.
What people are entirely missing here is the massive economic indicators flashing that are preempting this crypto stuff. The US dollar is about to be devalued and take with it, the entire global economy. We're heading into a serious depression, not just a little 2008 recession here. $9-10 gal of gas by October and double of all goods and food prices likely by Sept-October time frame. The outlook is growing very bleak.
What do you base that claim on?
In and of itself, yes. But there's a real risk (far from a certainty, but a real risk) that it will cause some kind of crisis of confidence in the markets more broadly that could result in a much more catastrophic crash.
So if it didn't exist how can you be so sure about dismissing it? It literally is a new paradigm.
EDIT: nice to see all the luddites downvoting me. Guess the meme is true -- we still are early.
EDIT: nice to see all the luddites downvoting me. Guess the meme is true -- we still are early.
Investment fraud is not a new paradigm. Selling bags of nothing is not a new paradigm. Goes all the way back to the South Sea Company in 1711 [1].
I recommend reading Extraordinary Popular Delusions and the Madness of Crowds published originally in 1841 [2].
[1] https://en.wikipedia.org/wiki/South_Sea_Company
[2] https://www.amazon.com/Extraordinary-Popular-Delusions-Madne...
I recommend reading Extraordinary Popular Delusions and the Madness of Crowds published originally in 1841 [2].
[1] https://en.wikipedia.org/wiki/South_Sea_Company
[2] https://www.amazon.com/Extraordinary-Popular-Delusions-Madne...
Extraordinary Popular Conclusions is also available for free from Gutenberg: https://www.gutenberg.org/ebooks/24518
I don't see it usually mentioned when people cite the South Sea Company, but their principal actual business was the slave trade.
There is something about a useless or immoral business that often excites greed beyond what anything beneficial to society can.
There is something about a useless or immoral business that often excites greed beyond what anything beneficial to society can.
I'm not. Bitcoin could still MOON. I'm just saying you shouldn't be so sure either way with so much uncertainty.
Hopefully this time, we get some regulator action so we're never back here again. Each time the cycle gets bigger, the tendrils work their way into traditional finance - and more people get hurt. This time, the Quebec public servants are getting rekt on their investment into Celsius [1]. Now it's hurting pensioners, not just a bunch of degenerate gamblers and moonbois.
It's fine for a bunch of pokemon card traders to get rekt - but by the time you get to 3AC scale, it's time for regulators to put the kibosh on the whole space. They're securities. They either get registered or you go to Club Fed.
With all due respect, fingers crossed, this time it does not work out.
[1] https://www.cdpq.com/en/news/pressreleases/celsius-network-a...
It's fine for a bunch of pokemon card traders to get rekt - but by the time you get to 3AC scale, it's time for regulators to put the kibosh on the whole space. They're securities. They either get registered or you go to Club Fed.
With all due respect, fingers crossed, this time it does not work out.
[1] https://www.cdpq.com/en/news/pressreleases/celsius-network-a...
> Now it's hurting pensioners, not just a bunch of degenerate gamblers and moonbois.
No, that's your public institution making degenerate gambles on late-stage startups. The largest venture capital investor in Canada isn't some poor victim, they are the perpetrators, the owners. It's completely laughable to paint them as a victim of some crypto-ecosystem heist.
No, that's your public institution making degenerate gambles on late-stage startups. The largest venture capital investor in Canada isn't some poor victim, they are the perpetrators, the owners. It's completely laughable to paint them as a victim of some crypto-ecosystem heist.
The victim is the pensioners, not necessarily the gambling fund. "regulator action" can refer to simply preventing sensitive/prison funds from going into certain classes of risky ventures, and not regulation against crypto itself.
The pensioners are the victims of both the fund and Celsius.
Neither should the fund be allowed to invest in Ponzi schemes, nor should the so-called investments be permitted to run them in the open.
[edit] I'd have the same criticism of both if they'd invested in Bernard L. Madoff Investment Securities LLC.
Neither should the fund be allowed to invest in Ponzi schemes, nor should the so-called investments be permitted to run them in the open.
[edit] I'd have the same criticism of both if they'd invested in Bernard L. Madoff Investment Securities LLC.
It should be illegal for fiduciaries to invest client funds in crypto schemes without client consent, not illegal for individuals to speculate.
I take the position that cryptos are clearly securities under the Howey test. It's pretty self-evident. As such, they must be registered in order to be traded by anyone other than an accredited investor. To be clear, this is the law of the land today. All that's missing is regulatory enforcement action.
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Question: what is the point of crypto if it becomes regulated like traditional financial assets? Crypto doesn't have any actual use-value like stocks or real estate, and its entire selling point was that it's decentralized and unregulated.
Simplifies and modernizes cross-border flows. Try buying shares in a firm listed on the Indonesia Stock Exchange—you’ll spend days to weeks dealing with middlemen. Should be a couple clicks to submit to a public ledger.
I don’t see where lack of regulation is a selling point—it greatly limits invested capital.
I don’t see where lack of regulation is a selling point—it greatly limits invested capital.
As far as I can see, https://wise.com/us/ is in all ways a better way to simplify cross-border flows than crypto. When working with overseas teams, it is literally how they ask to be paid.
And revolute when Wise don't work. It's easy and has some of the protection of the "outdated" banking industry.
this works for c2c transfers but not for businesses, business payments, trading, lending other derivative products etc.
Sure it does, they have business offerings. Trading, use IBKR. Lending, IBKR. Other derivative products, IBKR.
Isn't the reason buying international shares is slow that they don't want you to do it and therefore have regulated it?
There's no technical merit in crypto that actually makes things fast, it's just a regulation dodge. It's necessarily slower and more expensive than TransferWise.
There's no technical merit in crypto that actually makes things fast, it's just a regulation dodge. It's necessarily slower and more expensive than TransferWise.
A country that _Doesnt_ want to more capital flowing into their companies? Sounds pretty weird no?
The capital comes at the cost of sovereignity.
They have decided it's better to avoid their local businesses being beholden to foreign investors, which is a case that can be argued.
If you're being directed mostly by overseas investors who will never see your actual operation in person, that increases the pressure to cook the books, either on a direct accounting-level basis, or by cutting corners in operations, environmental or labour standards, or product quality.
Notice how some countries insist on joint ventures with a 51% local partner, which similarly ensures there's some local skin in the game.
They have decided it's better to avoid their local businesses being beholden to foreign investors, which is a case that can be argued.
If you're being directed mostly by overseas investors who will never see your actual operation in person, that increases the pressure to cook the books, either on a direct accounting-level basis, or by cutting corners in operations, environmental or labour standards, or product quality.
Notice how some countries insist on joint ventures with a 51% local partner, which similarly ensures there's some local skin in the game.
No - crypto does nothing for cross-border flows. It could only make it worse. Purchasing shares in foreign countries say France often (not always) requires one to go through an approved French broker (middleman). Why?
- so there's somebody in France that can *make money* being the middle man
- so the French broker can be held to some standards reporting and what not. For example, the French broker at risk of criminal prosecution cannot sell shares to NK or Iran.
- so the rules around transfer of shares for payment and settlement are set so people can't be screwing each over or not completing settlement in a timely fashion
- because of scale: there are zillions of trades done every day. that's why netting-out is a real thing. settlement has to be fast, tight, nailed down. And regulation helps with that through known pre-approved brokers with set roles and responsibilities
Also consider that unlike crypto you gotta settle. Settlement is serious. And settle in a bonafide currency that everybody agrees is a currency: EUR, for example. And you have fixed time to do it in.
You can't be waving your hands with some stupid story about how your broker/holder of crypto,
- stopped you from withdrawing your stuff
- is down
- is in chapter 7 or 11
- that you forgot your crypto keys
- and the entity getting the cash for selling shares isn't gonna wait around for some miner to "approve" your transfer maybe in 10 mins ... or maybe tomorrow
- so there's somebody in France that can *make money* being the middle man
- so the French broker can be held to some standards reporting and what not. For example, the French broker at risk of criminal prosecution cannot sell shares to NK or Iran.
- so the rules around transfer of shares for payment and settlement are set so people can't be screwing each over or not completing settlement in a timely fashion
- because of scale: there are zillions of trades done every day. that's why netting-out is a real thing. settlement has to be fast, tight, nailed down. And regulation helps with that through known pre-approved brokers with set roles and responsibilities
Also consider that unlike crypto you gotta settle. Settlement is serious. And settle in a bonafide currency that everybody agrees is a currency: EUR, for example. And you have fixed time to do it in.
You can't be waving your hands with some stupid story about how your broker/holder of crypto,
- stopped you from withdrawing your stuff
- is down
- is in chapter 7 or 11
- that you forgot your crypto keys
- and the entity getting the cash for selling shares isn't gonna wait around for some miner to "approve" your transfer maybe in 10 mins ... or maybe tomorrow
I think the settlement story for bitcoin is actually superior than with USD/EUR. Yes you have to wait 10min x a few blocks, but that is final, irreversible settlement.
I mean, so is FedNow and RTP and SEPA - the list goes on and on - none of which are blockchain powered. They settle instantly and finally. In the case of international transfers, the delay is intentional for regulatory and risk management purposes. Not technical reasons. So the advantage of crypto isn't technology but regulatory arbitrage.
These work if you either have a master fed account or have credit with some bank that does. You can't settle instantly with an entity that is not already known in the system.
I can't see how that's a problem.
Do you think a bearer asset like cash has zero use cases? Bitcoin allows settlement much like this with a party that doesn't need to be identified and already trusted by a central clearing house. Of course this can be dangerous and might not be desirable for every transaction, but there clearly a technological achievement to make it possible.
Except for the possibility of unconfirmed transactions if the network is under load right? With both centrally registered clients and counterparts what’s the case for decentralisation here again?
If the network is under load you can prioritize by paying a higher fee. If mining slows down it can take more time for a block, but difficultly will adjust to get back to 10mim cadence.
I'm not sure what you mean by centrally registered clients. You can still use bitcoin peer to peer. Also the idea that banning peer to peer bitcoin would be what would make decentralization not worthwhile feels rather circular.
I'm not sure what you mean by centrally registered clients. You can still use bitcoin peer to peer. Also the idea that banning peer to peer bitcoin would be what would make decentralization not worthwhile feels rather circular.
Surge pricing to settle stock trades? Obviously this is worse than the existing tech
To trade you need to be registered by regulated entity, it’s already a centralised environment. You’re also purchasing shares issued by a centralised issuer, the corporation. Your suggestion that bitcoin offers any solution to settlement (much less a superior solution), just escapes me
To trade you need to be registered by regulated entity, it’s already a centralised environment. You’re also purchasing shares issued by a centralised issuer, the corporation. Your suggestion that bitcoin offers any solution to settlement (much less a superior solution), just escapes me
I'm not sure why you are talking about stock trading. Settlement is a general, non stock specific thing. I'm talking about settlement in regular transactions, e.g. paying rent or buying groceries.
"Crypto doesn't have any actual use-value..."
Same can be said for most financial instruments yet they're regulated. Gambling has no "real world use-value" yet it is heavily regulated.
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Any advice for those getting rekt in the traditional markets, or are you hoping that doesn't work out too?
Wait it out or become an active investor in value creation. There is no such thing as a free lunch.
There was never any in crypto either. Anyone who thought so is just as stupid as the HN'ers that think cryptocurrencies are bogus. Thinking a few over leveraged crypto companies getting wiped out will destroy cryptocurrencies is laughable.
Mt. Gox happened when crypto was a small fraction of what it is today, in terms of capital, transactions, even # of players.
> Them going bankrupt is like long term capital management going bankrupt.
Which ironically would be bullish for bitcoin . stocks rebounded huge after the 1998 crisis.
Which ironically would be bullish for bitcoin . stocks rebounded huge after the 1998 crisis.
Isn't Alameda a bigger trader?
Without loginwall:
https://nitter.net/hodlKRYPTONITE/status/1536902115540742144
https://nitter.net/hodlKRYPTONITE/status/1536902115540742144
for commenters assuming the US Government would step in, absolutely not. the death of Crypto is inherently in the interest of US foreign policy as it strengthens regional soft power in denied spaces by gutting uncooperative states (iran, venezuela, cuba, etc...) of their ability to sidestep western capital embargos. it also guts Wikileaks ability to defend itself in court, as its sitting on a good deal of crypto since being denied access to regular donations.
it also helps dampen inflation by strengthening the dollar, at whatever level that may be.
it also helps dampen inflation by strengthening the dollar, at whatever level that may be.
I like crypto, though not really what it has become in recent years. I too hope the US government does not step in. That would be totally antithetical to the entire point of crypto.
I'm out of the loop on crypto.
Are the loans denominated in crypto or dollars? Does this mean the lenders will have to sell crypto when they realize the loss?
Are the loans denominated in crypto or dollars? Does this mean the lenders will have to sell crypto when they realize the loss?
The situation is not entirely clear because some lenders may not loudly announce that they have liquidity issues as early as possible. It seems like a large part of the forced selling by 3AC and counterparties is already over, and it seems like many counterparties don't actually have any collateral from 3AC to sell and must eat the loss.
The answer is probably yes for both questions. These crypto and loan contracts are typically very complex and involve many classes of crypto and physical assets involving many 3rd parties. Therefore it's going to take awhile to untangle things to the point where each party knows their precise risk exposure and ability to take loans out against this exposure/loss.
Matt Levine had an aside in one of his recent columns about how ironically, "safe" investments are frequently the most un-safe, because the tiniest crack in the faith people have in them leads to panic.
For instance, the stablecoins.
Bitcoin itself doesn't seem to be vulnerable, exactly because there's no particular objective value. If it goes down 90%, well, nobody promised it wouldn't.
For instance, the stablecoins.
Bitcoin itself doesn't seem to be vulnerable, exactly because there's no particular objective value. If it goes down 90%, well, nobody promised it wouldn't.
Link to that?
Sounds as if that's somewhat related to J.K. Galbraith's variant of Gresham's Law, in which "bad assets drive out good", during a crash, as the need to cover obligations as bad assets tank leads to sale of quality assets / securities.
From The Great Crash: 1929. One of my favourite books.
Sounds as if that's somewhat related to J.K. Galbraith's variant of Gresham's Law, in which "bad assets drive out good", during a crash, as the need to cover obligations as bad assets tank leads to sale of quality assets / securities.
From The Great Crash: 1929. One of my favourite books.
https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...
> Safe assets are much riskier than risky ones. This is I think the deep lesson of the 2008 financial crisis, and crypto loves re-learning the lessons of traditional finance. Systemic risks live in safe assets. Equity-like assets — tech stocks, Luna, Bitcoin — are risky, and everyone knows they’re risky, and everyone accepts the risk. If your stocks or Bitcoin go down by 20% you are sad, but you are not that surprised. And so most people arrange their lives in such a way that, if their stocks or Bitcoin go down by 20%, they are not ruined.
> On the other hand safe assets — AAA mortgage securities, bank deposits, stablecoins — are not supposed to be risky, and people rely on them being worth what they say they’re worth, and when people lose even a little bit of confidence in them they crack completely. Bitcoin is valuable at $50,000 and somewhat less valuable at $40,000. A stablecoin is valuable at $1.00 and worthless at $0.98. If it hits $0.98 it might as well go to zero. And now it might!
> Safe assets are much riskier than risky ones. This is I think the deep lesson of the 2008 financial crisis, and crypto loves re-learning the lessons of traditional finance. Systemic risks live in safe assets. Equity-like assets — tech stocks, Luna, Bitcoin — are risky, and everyone knows they’re risky, and everyone accepts the risk. If your stocks or Bitcoin go down by 20% you are sad, but you are not that surprised. And so most people arrange their lives in such a way that, if their stocks or Bitcoin go down by 20%, they are not ruined.
> On the other hand safe assets — AAA mortgage securities, bank deposits, stablecoins — are not supposed to be risky, and people rely on them being worth what they say they’re worth, and when people lose even a little bit of confidence in them they crack completely. Bitcoin is valuable at $50,000 and somewhat less valuable at $40,000. A stablecoin is valuable at $1.00 and worthless at $0.98. If it hits $0.98 it might as well go to zero. And now it might!
Thanks!
Holy crap I had no idea this was Galbraith's insight. I've heard William K. Black talk about Gresham's dynamics a few times, but always wondered why his use of the term didn't comport with Wikipedia's article on it. It's because he's using it in Galbraith's sense. I'll be checking out the book for sure. Thank you.
Do read the book, it's excellent. I'd finally done so myself only after the 2007-8 meltdown and found it hugely useful.
The passage I reference is toward the end of Chapter VI:
Never was there a time when more people wanted more money more urgently than in those days. The word that a man had "got caught" by the market was the signal for his creditors to descend on him like locusts. Many who were having trouble meeting their margin calls wanted to sell some stocks so they could hold the rest and thus salvage something from their misfortunes. But such people now found that their investment trust securities could not be sold for any appreciable sum and perhaps not at all. They were forced, as a result, to realize on their good securityies. Standard stocks like Steel, General Motors, Tel and Tel, were thus dumped on the market in abnormal volume, with the effect on prices that had already been fully revealed. The great investment trust boom had ended in a unique manifestation of Gresham's Law in which the bad stock were driving out the good.
-- John Kenneth Galbraith, The Great Crash: 1929, chapter VI
NB: In re-typing the above passage, I managed to render "hold" as "hodl". I've fixed that, but note the fact here...
The passage I reference is toward the end of Chapter VI:
Never was there a time when more people wanted more money more urgently than in those days. The word that a man had "got caught" by the market was the signal for his creditors to descend on him like locusts. Many who were having trouble meeting their margin calls wanted to sell some stocks so they could hold the rest and thus salvage something from their misfortunes. But such people now found that their investment trust securities could not be sold for any appreciable sum and perhaps not at all. They were forced, as a result, to realize on their good securityies. Standard stocks like Steel, General Motors, Tel and Tel, were thus dumped on the market in abnormal volume, with the effect on prices that had already been fully revealed. The great investment trust boom had ended in a unique manifestation of Gresham's Law in which the bad stock were driving out the good.
-- John Kenneth Galbraith, The Great Crash: 1929, chapter VI
NB: In re-typing the above passage, I managed to render "hold" as "hodl". I've fixed that, but note the fact here...
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Frankly, this sounds like a feature rather than a bug. Speculation of this type is high risk/reward. If this guts the lenders, that’s a good thing - they’re not treating this with the appropriate amount of respect for speculating and protecting their balance sheets.
TL;DR - like Usher said, “let it buuuuurrn”
TL;DR - like Usher said, “let it buuuuurrn”
Someone on twitter succinctly described the situation by saying, “ I think a lot of stadiums are gonna have to change their names over the next few years.”
I've got an Enron Field hat around here somewhere.
It's likely worth quite a bit. I was intrigued recently by the seemingly hot collectors market for corporate swag from famous failures like theranos, enron, etc. on ebay.
I've got an Enron Broadband fiber map PDF for the entire western USA.
Did anyone ever "mint" any Beanie Baby NFTs?
That would have been funny.
That would have been funny.
I’m sure there are some Tulips out there somewhere.
Explanation corps help requested.
A startup named Crypto.com bought naming rights to the Staples Center in Los Angeles and renamed it to Crypto.com Arena. If Crypto.com goes out of business maybe the building will get renamed again.
Coinbase also had their name/logo all over the NBA Finals - both in TV ads as well as branding and logos physically on the courts. Millions of dollars in ad spend while they are laying off swaths of their staff..
It looks bad now, but really, when those contracts were signed (and paid for), layoffs seemed like an impossibility. And once those were deals are finalized, it’s not something that you can really pull back from. Sadly, all it serves to do now is remind potential customers of how bad things are right now for Crypto.
It a bad look, and I feel for everyone affected by the layoffs. But this isn’t a decision Coinbase made two weeks ago.
It a bad look, and I feel for everyone affected by the layoffs. But this isn’t a decision Coinbase made two weeks ago.
> when those contracts were signed (and paid for), layoffs seemed like an impossibility.
The decision makers at Coinbase might have thought so, but they were clearly wrong. A massive crypto collapse is probably the most predictable financial crash in decades.
The decision makers at Coinbase might have thought so, but they were clearly wrong. A massive crypto collapse is probably the most predictable financial crash in decades.
Do they prepay 10 years of naming rights? Or is the city obliged to find a new namer asap if a bankruptcy happens?
Washington Nationals Park is plastered in Terra/Luna collateral. [1]
[1] https://www.bloomberg.com/news/newsletters/2022-05-19/terra-...
[1] https://www.bloomberg.com/news/newsletters/2022-05-19/terra-...
The Staples Center in L.A. Is being renamed the Crypto.com Arena or something like that, I'm not aware of any other crypto companies paying to have sports stadiums named after them though.
FTX Arena in Miami
[deleted]
LA’s Staples Center renamed Crypto.com Arena
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Crypto companies put their names on stadiums. If they go bankrupt the names will have to change.
There's also FTX Arena, which is where the Miami Heat of the NBA play.
Zing
Is there any downside to this? Seems to me this is a positive outcome if it encourages speculators to leave the cryptocurrency space.
Crypto was never intended to be used (and abused) in such a way, and is a considerable deviation from Satoshi's original vision regarding Bitcoin. Perhaps it's time to get back to basics.
Crypto was never intended to be used (and abused) in such a way, and is a considerable deviation from Satoshi's original vision regarding Bitcoin. Perhaps it's time to get back to basics.
I appreciate the feeling, but the problem is that Bitcoin just isn't very useful for the original vision, "a purely peer-to-peer version of electronic cash". [1] It's fine for a little light crime, where people are willing to put up with slow transactions, high costs, inconvenience, and significant risks to e.g., buy some mail-order LSD. But when you compare it with things like debit cards, Venmo, and M-Pesa, it's just not competitive.
I think Bitcoin was a really interesting idea in the pre-iPhone era, but for a variety of reasons it just didn't pan out. Which is why the space was so readily colonized by scammers, grifters, criminals, fraudsters, speculators, and loons.
[1] https://bitcoin.org/bitcoin.pdf
I think Bitcoin was a really interesting idea in the pre-iPhone era, but for a variety of reasons it just didn't pan out. Which is why the space was so readily colonized by scammers, grifters, criminals, fraudsters, speculators, and loons.
[1] https://bitcoin.org/bitcoin.pdf
It was supposed to be cash without the burden of nation state oversight. Instead, it turned into a giant casino ecosystem of unregulated securities involving more and more layers of abstraction (exchanges, stable-coins, NFTs, bundled transactions, hedges, subchains, ...)
> It was supposed to be cash without the burden of nation state oversight
While convenience remains the core point under contention, the secondary point of debate with crypto is the one you raise here: why is this a good thing?
Why would I want an unregulated currency, free of consumer protections or government oversight? If someone steals my credit card I call the bank and reverse the charges. When a bank gets robbed or collapses, the FDIC ensures consumers are unaffected.
Governments aren't a power independent of their communities, they're not aliens from outer space interfering with natural human ways of life. Government is how we the community organize ourselves to ensure our collective protection. They're, obviously, deeply imperfect, but a system completely severing itself from those organizing principles is fated to replicate them with even greater imperfection.
While convenience remains the core point under contention, the secondary point of debate with crypto is the one you raise here: why is this a good thing?
Why would I want an unregulated currency, free of consumer protections or government oversight? If someone steals my credit card I call the bank and reverse the charges. When a bank gets robbed or collapses, the FDIC ensures consumers are unaffected.
Governments aren't a power independent of their communities, they're not aliens from outer space interfering with natural human ways of life. Government is how we the community organize ourselves to ensure our collective protection. They're, obviously, deeply imperfect, but a system completely severing itself from those organizing principles is fated to replicate them with even greater imperfection.
> Why would I want an unregulated currency, free of consumer protections or government oversight
And why would I believe that it has value compared to gold, or a cow? And while the value of a dollar is an abstract of those physical trades, at least it has the backing of the nation’s resources, its people, and its military ability to plunder. Bitcoin has all the backing of …
And why would I believe that it has value compared to gold, or a cow? And while the value of a dollar is an abstract of those physical trades, at least it has the backing of the nation’s resources, its people, and its military ability to plunder. Bitcoin has all the backing of …
Your last paragraph is spot on. The right know that government intervention is what holds them back from consolidating power over the less fortunate in society, so it has been a central plank of their strategy to present the government as indeed being 'aliens from outer space', and so to neuter its reach.
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If you read about the history of nation-state oversight of finance, you can learn that going "without the burden of nation state oversight" is approximately equivalent to "a giant casino ecosystem". Not always, of course, but often enough. E.g., the South Seas bubble, the wildcat banking era, and the US stock market leading up to Black Tuesday. An awful lot of financial regulation comes into being because financiers working in some unregulated area create such a giant disaster that there's enough popular anger to override government's normal tendency to suck up to people with money.
> I think Bitcoin was a really interesting idea in the pre-iPhone era, but for a variety of reasons it just didn't pan out.
It’s panning out just fine. Everyone who thinks Bitcoin is old news presupposes that you can do something like Bitcoin, but better. There’s no evidence of this in any non-Bitcoin cryptocurrency.
This also ignores that Bitcoin is improving every year. Tools like Liquid and Lightning are incredibly sophisticated, first principles based approaches to real problems in finance, banking, and fungibility. That fly by night securities called "cryptocurrencies" with shallow liquidity claim that they can do better, but always fail to deliver, hasn't undermined anything about Bitcoin.
I agree with the parent post. This is great for crypto. Maybe all the web developers who think they can do cryptography better than cryptographers can go do something else now.
It’s panning out just fine. Everyone who thinks Bitcoin is old news presupposes that you can do something like Bitcoin, but better. There’s no evidence of this in any non-Bitcoin cryptocurrency.
This also ignores that Bitcoin is improving every year. Tools like Liquid and Lightning are incredibly sophisticated, first principles based approaches to real problems in finance, banking, and fungibility. That fly by night securities called "cryptocurrencies" with shallow liquidity claim that they can do better, but always fail to deliver, hasn't undermined anything about Bitcoin.
I agree with the parent post. This is great for crypto. Maybe all the web developers who think they can do cryptography better than cryptographers can go do something else now.
> Everyone who thinks Bitcoin is old news presupposes that you can do something like Bitcoin, but better.
For most people's everyday purposes, all those things the parent mentioned are doing something like Bitcoin, but better.
The one technical problem that cryptocurrency unquestionably handles better than any other technology is solve a problem that is only experienced by people who choose to use cryptocurrency.
For most people's everyday purposes, all those things the parent mentioned are doing something like Bitcoin, but better.
The one technical problem that cryptocurrency unquestionably handles better than any other technology is solve a problem that is only experienced by people who choose to use cryptocurrency.
I was an early adopter of bitcoin (2012) and I'm pretty over it at this point.
It hasn't managed to do much more than be fancy digital gold. I don't find gold very interesting. It isn't a productive asset. It's just a shiny rock that people lock up in a vault. It doesn't benefit society.
And as financial instruments, both bitcoin and gold are deflationary, which seems quite bad.
I still have a bit of hope for some actually useful stuff to come out of the defi / smart-contract space. But I'm still fairly skeptical. There is a lot of noise and little signal.
It hasn't managed to do much more than be fancy digital gold. I don't find gold very interesting. It isn't a productive asset. It's just a shiny rock that people lock up in a vault. It doesn't benefit society.
And as financial instruments, both bitcoin and gold are deflationary, which seems quite bad.
I still have a bit of hope for some actually useful stuff to come out of the defi / smart-contract space. But I'm still fairly skeptical. There is a lot of noise and little signal.
This is patently false, many crypto currencies have done what Bitcoin has done much better, Fantom, Monero, Ethereum to name a few off the top of my head
Monero.
Yeah, the original vision was never plausible. BTC has absolutely never been viable as a currency and never will be.
Totally. Why would I want anyone I pay to know exactly how much I’ve spent on all my other transactions?
Not a problem thanks to CashFusion [0], easy privacy for P2P electronic cash.
[0] https://cashfusion.org/
[0] https://cashfusion.org/
What do you mean "pre-iPhone era"? Bitcoin was released in 2009.
Sure, but that was really the beginning of the smartphone era. In 2009, the iPhone had ~15% market share for smartphones. [1] Counting 2007 and 2008, Apple sold ~15 million units, about half of those in the last quarter of 2008. So when the Bitcoin paper was first published, Apple had sold something under 10m units. And that paper was of course based on earlier work.
My point is that conceptually, the peer-to-peer, proof-of-work thing was much more suited to the desktop era, a sort of SETI@Home for money. It wasn't until a few years later that we truly began to see what the mobile era would look like (e.g., Venmo was August 2009, Uber was May 2010). The peer-to-peer aspect is basically a failure, as the rise of mining pools and centralized exchanges demonstrate. As do the relatively small transaction volumes for Bitcoin compared to things that are actual modern cash substitutes. If somebody were inventing cryptocurrency today, it would not look like Bitcoin.
[1] https://appleinsider.com/articles/10/02/04/idc_apple_iphone_...
My point is that conceptually, the peer-to-peer, proof-of-work thing was much more suited to the desktop era, a sort of SETI@Home for money. It wasn't until a few years later that we truly began to see what the mobile era would look like (e.g., Venmo was August 2009, Uber was May 2010). The peer-to-peer aspect is basically a failure, as the rise of mining pools and centralized exchanges demonstrate. As do the relatively small transaction volumes for Bitcoin compared to things that are actual modern cash substitutes. If somebody were inventing cryptocurrency today, it would not look like Bitcoin.
[1] https://appleinsider.com/articles/10/02/04/idc_apple_iphone_...
2009 is well before the iPhone was the default computer
iPhone is at 15% global market share; when was it ever a "default computer"?
iPhone and iPhone-like devices.
The iPhone era describes mobile computing, touchscreens, app stores, etc.
The iPhone era describes mobile computing, touchscreens, app stores, etc.
Exactly. I'm not a big fan of Apple, but in the same way they defined the user experience for desktops via the Mac, they defined the user experience for mobile computing with the iPhone. So much so that most people don't even remember that there were plenty of smartphones previous to the iPhone.
2009 seems to be the start of what I'd call the iPhone era. 2011 would be the latest.
I think its one saving grace will be that it is used for non-recreational drugs that will soon become illegal or functionally unobtainable, for example Plan B and HRT.
I think there's some % chance that this collapse will hit outside the crypto world. I'm not going to be shocked when we find out through some stupid chain pensions were invested and the like.
Could wind up with major governmental oversight moving forward, basically making damn sure it's barely ever adopted. Everyone always talks about "satoshi's vision" and what not, but crypto isn't going to be worth shit if you are forced to make trades in black market scenarios because it shit the bed so bad it took down serious stuff with it.
Granted this is probably worst case which i'd put at very low odds.
Could wind up with major governmental oversight moving forward, basically making damn sure it's barely ever adopted. Everyone always talks about "satoshi's vision" and what not, but crypto isn't going to be worth shit if you are forced to make trades in black market scenarios because it shit the bed so bad it took down serious stuff with it.
Granted this is probably worst case which i'd put at very low odds.
> Could wind up with major governmental oversight moving forward, basically making damn sure it's barely ever adopted.
I'm basically of two minds about this.
One is that as long as people understand they're buying nothing of real value, it's fine if they want to "gamble". It's like a lottery ticket in this regard.
The other is if or perhaps when taxpayers will need to bail out crypto companies. At this point, I'll be extremely angry, and want the strictest government regulation possible.
I'm basically of two minds about this.
One is that as long as people understand they're buying nothing of real value, it's fine if they want to "gamble". It's like a lottery ticket in this regard.
The other is if or perhaps when taxpayers will need to bail out crypto companies. At this point, I'll be extremely angry, and want the strictest government regulation possible.
I think it's best to let people make their own decisions wherever possible. Of course with pensions the people with exposure aren't the same ones making investing choices.
I would be fine with regulation that just bans those sorts of vehicles from investing in crypto. That way individuals can speculate with their money, while being guarded against more systemic and indirect risks.
I would be fine with regulation that just bans those sorts of vehicles from investing in crypto. That way individuals can speculate with their money, while being guarded against more systemic and indirect risks.
> I think it's best to let people make their own decisions wherever possible. Of course with pensions the people with exposure aren't the same ones making investing choices.
If pensions were involved the people who decided that pensions should be invested in crypto should be prosecuted.
> I would be fine with regulation that just bans those sorts of vehicles from investing in crypto.
I would be fine with regulation that banned people from investing in something that has no value.
If pensions were involved the people who decided that pensions should be invested in crypto should be prosecuted.
> I would be fine with regulation that just bans those sorts of vehicles from investing in crypto.
I would be fine with regulation that banned people from investing in something that has no value.
Value is subjective, so who decides?
We recently got to hear that some Canadian pensions had invested in Celsius, but not very much.
It doesn't seem like the linkage between traditional finance and crypto finance is that strong yet.
If it ever got to that point I think we'd more likely see prudential authorities restrict traditional finance actors from investing in crypto rather than governments banning crypto outright.
If it ever got to that point I think we'd more likely see prudential authorities restrict traditional finance actors from investing in crypto rather than governments banning crypto outright.
The original vision has some questionable assumptions. Being deflationary by design practically guarantees speculation and undermines any utility as a currency.
If broad adoption was an actual goal, cryptocurrencies wouldn't be fundamentally structured like ponzi schemes.
If broad adoption was an actual goal, cryptocurrencies wouldn't be fundamentally structured like ponzi schemes.
The problem is that the people at the bottom of the pyramid have no idea how crypto works or the risks involved. Seems to me that defining crypto as an Unregulated Security would be a good first step, allowing only "Accredited Investors" to participate in crypto trading directly.
Homomorphic encryption without financialization will be the final form of cryptocurrency, and only for things like escrow and transfers between banks (probably replacing commercial paper). It'll take a decade and people will probably never see anything but their native currency in their banks. Part of the slow adoption will probably be due to it making Olde-Timey forms of corruption no longer possible. (But I'm sure new kinds will arise.) It was never meant to be an investment, just like you said.
Satoshi was absolutely aware that this was going to happen, even if Satoshi might not have liked it.
It's impossible to have a currency without speculation and financial markets on top of it.
It's impossible to have a currency without speculation and financial markets on top of it.
No, there is no downside to this
There are going to be some great discounts when correlated assets bid down during these liquidations, and some nice block space available
Just pick the right asset if you want to speculate, there is always some that move
pre-2017 crypto was not a beneficiary of quantitative easing, the hedge funds didnt exist (barring like 3 with low AUM) and the LPs had no vehicle to purchase crypto
its more closely a return to that environment, except with waaaay better infrastructure
There is still over $200bn in stablecoins ready to move into any crypto asset at any moment 24/7, the redemptions to fiat aren’t really happening
There are going to be some great discounts when correlated assets bid down during these liquidations, and some nice block space available
Just pick the right asset if you want to speculate, there is always some that move
pre-2017 crypto was not a beneficiary of quantitative easing, the hedge funds didnt exist (barring like 3 with low AUM) and the LPs had no vehicle to purchase crypto
its more closely a return to that environment, except with waaaay better infrastructure
There is still over $200bn in stablecoins ready to move into any crypto asset at any moment 24/7, the redemptions to fiat aren’t really happening
There's a non zero amount of people who put their life saving into crypto because it was going to go "to the moon." Everything was coming up Milhouse... until it wasn't.
So those people are probably going to rely upon taxpayers for help. And so when homeless hodlers appear on the streets looking for the government handout, that's gonna piss off liberals and conservatives alike.
So those people are probably going to rely upon taxpayers for help. And so when homeless hodlers appear on the streets looking for the government handout, that's gonna piss off liberals and conservatives alike.
This is the part where a speculative bubble doesn’t threaten the mainstream economy, doesn’t harm anyone not involved, doesn’t get a taxpayer bailout.
This is way better than how it works in conventional finance.
This is way better than how it works in conventional finance.
It doesn't threaten the mainstream economy because everyone knows it's a scam and no one is creating important financial infrastructure that relies on it. If crypto actually had the widespread adoption the enthusiasts dream of, we would be seeing a 2008 level disaster (and corresponding required bailout) all over again.
Here's hoping. If the federal government bails out crypto, then I will not be happy. I don't think it's gonna happen, because influential government figures have been calling it a risky, speculative asset class from the very beginning.
There is no way the federal government bails out crypto. That would be the most absolute bonkers thing I've ever witnessed.
I dunno man, I barely understand the financial world, but it's my understanding that the federal government bailed out a bunch of wall street speculators in 2008, despite nobody thinking it could happen. I'm not sure how close the two situations are, but the prospect is enough to make me nervous at the very least.
They failed to buy off government officials quick enough to get a "too big to fail" card :)
>doesn’t harm anyone not involved
How on earth do you think this is possible?
How on earth do you think this is possible?
Because the collapse of crypto isn't actually that likely to take down the rest of the financial system.
We still let people write off losses on crypto.
Every time these stories pop up, I'm amazed at how much infrastructure has built up around crypto. Entire websites with reporters that do nothing but cover crypto stories. Layers upon layers of derivatives built on top of coins I've never heard of, which themselves are built upon structures on top of ETH or BTC. Hedge funds. Analysts. Exchanges. Fintech. So much money swirling around a Greater Fool scam.
Wall Street is bad enough. This is insanity.
Wall Street is bad enough. This is insanity.
Reminds me of the good old days when World of Warcraft got so big that there was a substantial grey market for the in-game gold. At first, it was simple enough, forums where you could pay someone $10 with PayPal or whatever, and then they would meet you in-game and give you 1,000 game gold coins.
Within just a few years there were large-scale "gold mining" operations set up in China, wholesalers, retailers, "forex" markets, etc... Nearly the entire modern economic ecosystem was set up around a game.
At some point, if WoW was treated as a country, its "currency" would have ranked above quite a few real countries in terms of forex trading. If I remember correctly, it was bigger than 70 real nations.
Crypto is the same, except times a thousand.
Within just a few years there were large-scale "gold mining" operations set up in China, wholesalers, retailers, "forex" markets, etc... Nearly the entire modern economic ecosystem was set up around a game.
At some point, if WoW was treated as a country, its "currency" would have ranked above quite a few real countries in terms of forex trading. If I remember correctly, it was bigger than 70 real nations.
Crypto is the same, except times a thousand.
This is still happening, in WoW and other games, and has morphed into some pretty wild things - such as people in impoverished countries playing the games as a source of income.
https://www.polygon.com/features/2020/5/27/21265613/runescap...
https://www.polygon.com/features/2020/5/27/21265613/runescap...
One of my all-time favorite examples of an alternate communication channel is when, their URL banned from in-game chat, gold sellers spelled it out in corpses on a hillside: https://www.reddit.com/r/wow/comments/2y2vb3/back_in_wrath_g...
That was true for runescape too, but it seemed like its ended entirely when you were able to sell membership bonds for in game gp on the grand exchange. Now its like, why go with a scammer website where they will scrape your info when you can give jagex $8 and have 60 mill in game in a few moments? Brilliant way to get around the issue imo and it practically acts like a stimulus package for the players so they don't have to run flax like I did for hours 15 years ago.
The thrust of your comment is accurate, though
> it seemed like its ended entirely
not quite: relative volume actually increased as a function of growing game popularity around the time of the introduction of bonds (http://crystalmathlabs.com/tracker/players.php - amusingly enough, this is currently serving me a first-party ad for goldbuying) but that obviously represented a slice of a previously-undivided pie.
It's like legal weed: black markets still exist for those willing to forgo security and convenience for a deal. IIRC, black-market gold was 40-60% of the face price of a bond for the period I was active as a reasonably high volume swapper/seller. That kind of discount isn't worth it if you're buying 10m or a single prerolled joint or whatever, but generally makes sense in any kind of volume / if you've got the connections to mitigate the risk.
But the analogy continues: if the black market is relegated to a fairly small proportion of the total pool of individuals who buy (weed|gp), even if a lot of the volume transactions aren't captured, many of its harms are mitigated as you don't have unsophisticated consumers smoking rat poison / getting their mom's credit card stolen / etc.
> it seemed like its ended entirely
not quite: relative volume actually increased as a function of growing game popularity around the time of the introduction of bonds (http://crystalmathlabs.com/tracker/players.php - amusingly enough, this is currently serving me a first-party ad for goldbuying) but that obviously represented a slice of a previously-undivided pie.
It's like legal weed: black markets still exist for those willing to forgo security and convenience for a deal. IIRC, black-market gold was 40-60% of the face price of a bond for the period I was active as a reasonably high volume swapper/seller. That kind of discount isn't worth it if you're buying 10m or a single prerolled joint or whatever, but generally makes sense in any kind of volume / if you've got the connections to mitigate the risk.
But the analogy continues: if the black market is relegated to a fairly small proportion of the total pool of individuals who buy (weed|gp), even if a lot of the volume transactions aren't captured, many of its harms are mitigated as you don't have unsophisticated consumers smoking rat poison / getting their mom's credit card stolen / etc.
But even that is more real than Crypto. That’s a currency used to buy something people wanted.
The Wall Street guys have piled in running schemes that they are unable to do in the normal banking world because it is regulated & insured.
Most of the regulations have come from centuries of banking history, which the crypto world seems to be speed-running through right now, learning the hard way.
There is plenty to criticize about the banking world, but crypto is indefensible at this point.
Most of the regulations have come from centuries of banking history, which the crypto world seems to be speed-running through right now, learning the hard way.
There is plenty to criticize about the banking world, but crypto is indefensible at this point.
Crypto is speed running it because it is trying to get to the terminal state of finance, but regulated through software and cryptography instead of centralized governments that have a monopoly on violence. Time will tell if this is possible. Too many people seem certain it is, or isn’t. I think DeFi is insanely cool, if it manages to work.
the day they announced Crypto.com bought the naming rights to the Staples Center it really brought me back to the year 2000 dot-com bubble. It's even a dot-com! But this time... it's with crypto. It's the over-the-top silliness of it. Super Bowl Ads. Macy's Thanksgiving Day parade floats. Hundred million dollar naming rights deals. Writing Matt Damon a blank check (I hope he got one because, why else would you do this Matt?? Why Matt, why??)
Just as absurd as an office supply company named after an office supply doing the same thing
The next generation will have fond memories at that stadium and won’t think about the name either
The next generation will have fond memories at that stadium and won’t think about the name either
The saddest part to me was watching Larry David feature in a crypto commercial.
You're right, but I think this also means that we should take another look at the similar encrustations around real economies. Part of the reason the cryptocurrency thing took off so thoroughly is that a lot of financialization was already in extremely tenuous contact with reality. It was easy enough to sever the link entirely and focus on pure dreams of digital gold.
We need look no further than the 2008 financial crash for evidence of that; The Economist was reporting for years that there was clearly a lot of risk being shuffled around such that nobody was quite sure where it was. We all found out, but not until after a lot of the shufflers made their money and got out.
We need look no further than the 2008 financial crash for evidence of that; The Economist was reporting for years that there was clearly a lot of risk being shuffled around such that nobody was quite sure where it was. We all found out, but not until after a lot of the shufflers made their money and got out.
Yes. Funny thing is, in the real world, the trading and analysis has some purpose (steering share prices towards their "true" value, thus solving the capital allocation problem; aggregating time preferences & determining rates, thus solving the investment decision problem; allowing people with certain exposures to hedge themselves; etc.)
But in crypto land, it's a pure cargo cult - a facade of finance and analysis, with nothing behind it.
But in crypto land, it's a pure cargo cult - a facade of finance and analysis, with nothing behind it.
I has never heard about 3AC before. It's hard to keep up with so many acronyms.
Can anyone recommend a paper or post that explains how it is linked?
Can anyone recommend a paper or post that explains how it is linked?
3AC is a hedge fund that actively traded shitcoins on centralized and decentralized exchanges and bought locked tokens from newish projects (like a VC).
3AC = Three Arrows Capital, the hedge fund the article is about.
Hundreds of developers, modelers, artists, and the like spent months working on NFT games, “digital land” and other projects that are sure to either get canceled or be commercial failures.
Ironic how similar the crypto and traditional world is.
Ironic how similar the crypto and traditional world is.
it is amazing, but not surprising. So many major VC funds built around Crypto. Really interesting if it all crashes.
I'd love to see some analysis (probably impossible at this point) of VCs on Twitter who added "crypto/web3" into their bios over the course of late 2021 through early 2022, and how many of them have deleted any reference to it since then.
Oh, I imagine most of them are still defiantly bullish. The bottom hasn't completely dropped out yet. If the worst happens over the next few years though, it'd be interesting to see how quickly they drop off.
This is an exciting time for that field.
This is an exciting time for that field.
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No, this is great. Great, great fun. Life is too short to keep playing boring traditional finance, better play with crypto where things are always interesting.
I get the sentiment. Except... when you play a game of e.g. Monopoly it doesn't contribute to global economic collapse that affects real people that weren't even playing.
What would invalidate your belief that it is all just a greater fool scam?
I think every cycle has dramatic stories. To me this is just another downturn where I buy with confidence and wait till the tides shift. I maybe wrong and that's fine. But history often rhymes.
Sure, but there's no intrinsic reason for crypto to have a given value.
Assets that generate value (cash flow) will fluctuate in value per the moods of Mr. Market, but over their long run will hew to the present value of their future earnings power.
There's no similar number for crypto. Might as well be tulips. In that case, perhaps it is true that history will rhyme.
Assets that generate value (cash flow) will fluctuate in value per the moods of Mr. Market, but over their long run will hew to the present value of their future earnings power.
There's no similar number for crypto. Might as well be tulips. In that case, perhaps it is true that history will rhyme.
Gold doesn't provide cash flow and is a 3 trillion dollar market.
Next you're going to say that gold has some magical property called "intrinsic value" which Bitcoin doesn't have.
Well, Bitcoin has absolute scarcity and a global permissionless and trustless payments network. Despite the protestations of many, it's a form of money and useful to many people.
Next you're going to say that gold has some magical property called "intrinsic value" which Bitcoin doesn't have.
Well, Bitcoin has absolute scarcity and a global permissionless and trustless payments network. Despite the protestations of many, it's a form of money and useful to many people.
Gold has a variety of industrial uses as well as aesthetic value. At minimum, it's a heavy physical object, and heavy objects also have a variety of uses.
Beyond that, the less rational reasons people value gold as if it had intrinsic value are at least deeply rooted in our history & culture.
Beyond that, the less rational reasons people value gold as if it had intrinsic value are at least deeply rooted in our history & culture.
Gold isn't valued by its industrial uses. That's why gold is good as a currency, precisely because it has very limit use. With actual use comes demand based on that use, and that demand causes swings in value - what you don't want for a monetary yardstick.
Gold is gold because it is useless and also rare. And can't be produced. And spread widely. All these little features are its value because they are what you want in a currency. And the good currencies try to replicate that. It its perfect in this regard, but closer than any other phsyical item.
BTC has some of these and its properties are still in flux. And BTC is only part of the cryptofx world might wind up being the same thing financially.
> At minimum, it's a heavy physical object, and heavy objects also have a variety of uses.
Quite possibly the dumbest explanation of gold I've ever read.
Gold is gold because it is useless and also rare. And can't be produced. And spread widely. All these little features are its value because they are what you want in a currency. And the good currencies try to replicate that. It its perfect in this regard, but closer than any other phsyical item.
BTC has some of these and its properties are still in flux. And BTC is only part of the cryptofx world might wind up being the same thing financially.
> At minimum, it's a heavy physical object, and heavy objects also have a variety of uses.
Quite possibly the dumbest explanation of gold I've ever read.
Gold simply isn't actually useless though. Part of its value is derived from industrial processes-- how could it he otherwise when it is used for those things? To want to use something so expensive in price for industrial uses is pretty much by definition to value it-- at that same price-- for those uses. Why should anyone decide to use it when they say "but know, it is not worth nearly as much as that". To pay a given price for something when there are alternatives, however reluctantly and however much value & price are not quite the same thing, is to value it. No one would say "I don't value this thing and there are
Though I admit that a large portion of it's price is due to people valuing for it's properties as a financial instrument. The fact that the price would be lower if it did not have that purpose is irrelevant to valuing it at that price for other purposes. Otherwise you might say then precise thing about any other object with multiple purposes: "if not for oil being useful as fuels and instead only plastics and other pretro chemicals it's price would not be so high."
Further, I don't deny the potential for BTC or other cryptocurrencies to be used for similar financial purposes as gold, only that such uses remain theoretical, and it is uncertain whether-- given it's track record & the potential for governments to regulate it into something indistinguishable from traditional financial tools-- that it could ever achieve those uses on a wide scale. Certainly to date it has been completely useless for the financial purposes that gold currently fills. And, as this conversation started, unlike other traditional financial instruments it has absolutely no underlying asset for which it is an abstraction & which, no asset that, absent any specific financial instrument would still be utilized for its value.
It's current price is a function of two variables: 1) speculation that it's price will increase. 2) it's expected future value for the theoretical purposes already mentioned. These are abstract reasons in which it differs significantly from the concrete underlying value of traditional finance. I don't mean this as an insult. Playing video games for fun or reading books for pleasure doesn't have a separate value apart from the abstract reasons reasons for doing so either. But unlike legions of crypto advocates I don't insist on it.
Though I admit that a large portion of it's price is due to people valuing for it's properties as a financial instrument. The fact that the price would be lower if it did not have that purpose is irrelevant to valuing it at that price for other purposes. Otherwise you might say then precise thing about any other object with multiple purposes: "if not for oil being useful as fuels and instead only plastics and other pretro chemicals it's price would not be so high."
Further, I don't deny the potential for BTC or other cryptocurrencies to be used for similar financial purposes as gold, only that such uses remain theoretical, and it is uncertain whether-- given it's track record & the potential for governments to regulate it into something indistinguishable from traditional financial tools-- that it could ever achieve those uses on a wide scale. Certainly to date it has been completely useless for the financial purposes that gold currently fills. And, as this conversation started, unlike other traditional financial instruments it has absolutely no underlying asset for which it is an abstraction & which, no asset that, absent any specific financial instrument would still be utilized for its value.
It's current price is a function of two variables: 1) speculation that it's price will increase. 2) it's expected future value for the theoretical purposes already mentioned. These are abstract reasons in which it differs significantly from the concrete underlying value of traditional finance. I don't mean this as an insult. Playing video games for fun or reading books for pleasure doesn't have a separate value apart from the abstract reasons reasons for doing so either. But unlike legions of crypto advocates I don't insist on it.
To be sure, crypto has a cost to maintain its stable state/value in storage, compute, power. gold does have intrinsic value, but clearly the value has been over-represented by speculation long term. Conflating gold as intrinsic value is just as deluded as crypto. In the most disastrous outcome, gold will still be worth what people value wearing it around their necks. Crypto will only have value until all participants pull the plug on once the liability to maintain it outstrips it's potential returns.
The cost to store crypto is quite negliable compared to the cost to store gold.
Easy to hide a billion dollars of bitcoin on a USB stick for 10 years. Good luck storing a billion dollars of gold, you couldn't even physically move it by yourself.
Easy to hide a billion dollars of bitcoin on a USB stick for 10 years. Good luck storing a billion dollars of gold, you couldn't even physically move it by yourself.
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Intergenerational wealth transfer is far from assured. A billion dollars worth of cattle could die. Gold could be stolen. Bitcoin might be irrelevant.
Wampum didn't do so well either
Wampum didn't do so well either
Sure, I was merely commenting on the cost to physically secure the asset. Necessary (to prevent theft) but not sufficient.
Those tulips though. On some level it's understandable that those old Dutch NFTs were selling like that:
https://commons.wikimedia.org/wiki/File:Semper_Augustus_Tuli...
https://commons.wikimedia.org/wiki/File:Semper_Augustus_Tuli...
Isn't the only thing from that era the NFTs (original tulip craze paintings) they left behind of any value?
Plenty of cryptos have real cash flows. Even ETH has cash flows in terms of both staking and fees paid to the network.
The most important thing to remember in these cases is that ETH and BTC are likely the only top 10s to survive.
Maybe Doge because it's the original meme coin, but everything else will die. Just like the billions of random tokens I hold from 100s of ICOS from 2017. They're all worthless.
The casino will be back in another 3 years.
Maybe Doge because it's the original meme coin, but everything else will die. Just like the billions of random tokens I hold from 100s of ICOS from 2017. They're all worthless.
The casino will be back in another 3 years.
Well the stablecoins should (hopefully) still be around and will likely even grow in mcap.
Tether is likely insolvent so maybe you should double check that
Does anyone have a view on how "contained" crypto is? I.e. do these failures lead to anything other than pretend value going back to zero? Is there anything real that somehow depends on crypto (like what happened with mortgages)?
Seems like the entire capitalization of crypto is around $1 trillion. The total value of housing in the USA is a bit over $40 trillion. So that should give you some sense of scale of the crypto market versus other markets that pose systematic risks.
Note that the dot-com bubble lost about $1.7T [edited from B] in market cap, off a total of roughly $3T for the sector:
https://money.cnn.com/2000/11/09/technology/overview/
In the grand scheme of things crypto is still relatively small, another dot-com bubble or not even that. It's going to be a sideshow for the bloodbath that happens in the public equity and corporate debt markets (and eventually, the housing market), which is just getting started.
https://money.cnn.com/2000/11/09/technology/overview/
In the grand scheme of things crypto is still relatively small, another dot-com bubble or not even that. It's going to be a sideshow for the bloodbath that happens in the public equity and corporate debt markets (and eventually, the housing market), which is just getting started.
> Note that the dot-com bubble lost about $1.7T …
… in 2000. That would be $2.85T today, going by the official CPI inflation calculator.[0]
[0] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.7&year1=2000...
… in 2000. That would be $2.85T today, going by the official CPI inflation calculator.[0]
[0] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.7&year1=2000...
At peak ~7 months ago crypto's market cap was ~$2.8 trillion. Now down nearly $2 trillion.
Tether's $70B market cap is currently over 50% of ETH's and nearly 20% of BTC's. The whole thing looks like an incredible shitshow.
https://coinmarketcap.com/charts/
Tether's $70B market cap is currently over 50% of ETH's and nearly 20% of BTC's. The whole thing looks like an incredible shitshow.
https://coinmarketcap.com/charts/
But the 1T number is mid-crash - I think the pre-crash figure I've seen was around 3T. Adjusted for inflation, crypto is still a bit short of the dot-com crash, but not by a lot, and it doesn't seem like it's over.
The peak number was not monetizable unlike the door com crash. Dutch and Razzlekhan had five billion dollars worth of crypto, but had trouble buying 500$ Walmart gift cards. The wealth effect really never took hold- there was no market depth and the holders didn't act as if their wealth was real, so they won't change their behavior when it evaporates
The housing market is somewhat different than the crypto market in that people need a place to live.
Crypto in general contains a lot less uncollateralized debt, surprising chains of counterparty risk, and so on than traditional finance. This is because those defi protocols and exchanges that want to survive have process margin calls and liquidations quickly or be wiped out. 3AC may leave some counterparties in bad situations, but those counterparties are totally insignificant compared to the entities one hears about in traditional finance.
> Crypto in general contains a lot less uncollateralized debt, surprising chains of counterparty risk, and so on than traditional finance.
I don't think that's obvious at all when you have entities like Tether with unclear off-chain financials. Only the on-chain stuff is transparent and works as you explained.
I don't think that's obvious at all when you have entities like Tether with unclear off-chain financials. Only the on-chain stuff is transparent and works as you explained.
People will contradict me on this because it's counterintuitive, but crypto flows are big enough these days that they can move the US stock market. This is quite noticable on days with big crypto-only news.
Meaning that crypto is very corellated with the stock market index, and if big selling happens on crypto, the statistical arbitrage algos will sell the stock market to exploit the correlation.
Meaning that crypto is very corellated with the stock market index, and if big selling happens on crypto, the statistical arbitrage algos will sell the stock market to exploit the correlation.
Correlation or causation?
E.g. there's a big correlation between tech stocks and cryptocurrencies, but it could just be that investors consider them both in a single category (risky assets) and thus buy / sell at the same time.
E.g. there's a big correlation between tech stocks and cryptocurrencies, but it could just be that investors consider them both in a single category (risky assets) and thus buy / sell at the same time.
Matt Levine got into this earlier this week.
https://www.bloomberg.com/opinion/articles/2022-06-15/crypto...
I just want to block quote the second paragraph, but instead, just the first sentence.
“The deeper problem, always, is when you add leverage. Someone who gambled $40,000 on Bitcoin now has $20,000, fine. But someone who bought a Bitcoin with $20,000 of their own money and $20,000 borrowed from someone else now has roughly nothing, which is worse.”
https://www.bloomberg.com/opinion/articles/2022-06-15/crypto...
I just want to block quote the second paragraph, but instead, just the first sentence.
“The deeper problem, always, is when you add leverage. Someone who gambled $40,000 on Bitcoin now has $20,000, fine. But someone who bought a Bitcoin with $20,000 of their own money and $20,000 borrowed from someone else now has roughly nothing, which is worse.”
The global crypto market cap is $893B, it's completely insignificant and will have no impact on anything.
Definitely close to meaningless next to the implosion going on in other major assets (and the damage that is about to hit housing as well).
Just the five US big tech companies (AAPL, MSFT, META, AMZN, GOOGL) are down a combined ~$3.4 trillion so far from the highs.
Just the five US big tech companies (AAPL, MSFT, META, AMZN, GOOGL) are down a combined ~$3.4 trillion so far from the highs.
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Always the same story: New generations of degen traders get wiped out on leverage. The smart ones figure out that Bitcoin is the only signal amongst the crypto noise, and the network gets stronger.
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> The firm is known to have had large positions in the Grayscale bitcoin Trust ...
This (GBTC) is a closed-ended fund that institutional investors have been picking up because it's the only way to get 100% bitcoin exposure from something that trades on major stock exchanges. It's not an ETF, although many treat it as such. In the past, its net asset value has traded at a premium to the underlying bitcoin. But in the last couple of years, that's changed. The NAV is now well below the value of the underlying bitcoin.
Unlike an ETF, there is no mechanism to keep GBTC's value equal to the underlying bitcoin.
The knock-on effects could be surprising. According to this filing:
> Grayscale Bitcoin Trust (Btc) (US:GBTC) has 87 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 32,132,151 shares. ...
https://fintel.io/so/us/gbtc
That 32 million share number translates into about 400 million dollars at the current price/share.
This (GBTC) is a closed-ended fund that institutional investors have been picking up because it's the only way to get 100% bitcoin exposure from something that trades on major stock exchanges. It's not an ETF, although many treat it as such. In the past, its net asset value has traded at a premium to the underlying bitcoin. But in the last couple of years, that's changed. The NAV is now well below the value of the underlying bitcoin.
Unlike an ETF, there is no mechanism to keep GBTC's value equal to the underlying bitcoin.
The knock-on effects could be surprising. According to this filing:
> Grayscale Bitcoin Trust (Btc) (US:GBTC) has 87 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 32,132,151 shares. ...
https://fintel.io/so/us/gbtc
That 32 million share number translates into about 400 million dollars at the current price/share.
It's all imploding way quicker than I thought. I was giving it another year or two in my guestimates. Now everyone is taking their gains and running or recouping what money they can because of the coming recession and major implosion of all crypto.
You can set your watch by the periodicity of crypto FUD and it being labeled dead.
You can also set your watch by the rugpulls, collapses, and by how often people lose their shirt in it.
Which would be fine if it produced useful products where dumb investments get burned, but the industry doesn't produce anything useful. It's just money flowing from suckers to grifters.
Which would be fine if it produced useful products where dumb investments get burned, but the industry doesn't produce anything useful. It's just money flowing from suckers to grifters.
Explain to me how you can take your money out of Russia, Iran, Lebanon, Ukraine or Venezuela without Bitcoin. I'll wait
Fraud and money laundering unironically described as the killer use case for crypto isn't the slam dunk you think it is.
So now taking your wealth with you is fraud or money laundering?
Ah yes, the "leave a permanent record of violating sanctions in an immutable blockchain" strategy of money transfer.
Better chances at a casino.
https://en.wikipedia.org/wiki/Informal_value_transfer_system
"The sender gives money to an...agent and his/her counterpart in the receiver region/country acts as deliverer of this money. The sender calls or faxes instructions to his counterpart and the money gets delivered in a matter of few hours. In the past, the message could be delivered using couriers, with men or even animals (such as pigeons). Settlements are made either with a private delivery service or wire transfer in the opposite direction. Another method of balancing the books is to under-invoice goods shipped abroad, so that the receiver can resell the products at a higher market price"
"The sender gives money to an...agent and his/her counterpart in the receiver region/country acts as deliverer of this money. The sender calls or faxes instructions to his counterpart and the money gets delivered in a matter of few hours. In the past, the message could be delivered using couriers, with men or even animals (such as pigeons). Settlements are made either with a private delivery service or wire transfer in the opposite direction. Another method of balancing the books is to under-invoice goods shipped abroad, so that the receiver can resell the products at a higher market price"
In and out of Russia? Use a non-sanctioned bank. My parents are still sending remittances to Russia.
Ukraine? Use a bank. Or maybe PayPal? My parents are also still sending remittances to Ukraine.
Lebanon, Iran, Venezuela? Probably Hawala, or maybe through China or India, but you'll probably get a more detailed answer from an ex-pat.
I will also point out that shitcoins and NFTs and the various pyramid schemes that are currently unraveling aren't a solution to this problem.
In fact, they only solve the problem of transferring money from the pockets of the greedy and financially illiterate to the pockets of the greedy and financially literate.
Ukraine? Use a bank. Or maybe PayPal? My parents are also still sending remittances to Ukraine.
Lebanon, Iran, Venezuela? Probably Hawala, or maybe through China or India, but you'll probably get a more detailed answer from an ex-pat.
I will also point out that shitcoins and NFTs and the various pyramid schemes that are currently unraveling aren't a solution to this problem.
In fact, they only solve the problem of transferring money from the pockets of the greedy and financially illiterate to the pockets of the greedy and financially literate.
Who are these masses of people exfiltrating their money from these countries with crypto? They seem as yet more theoretical & annecdotal (and even few of those) than actual, especially since there are still normal traditional finance ways for individuals to do this sort of thing.
Also any of these hypothetical people that put their money in crypto just lost a significant chunk of their life savings.
Also any of these hypothetical people that put their money in crypto just lost a significant chunk of their life savings.
Buy yuan or any other traded fiat currency from a friendly state.
In other words, the same way people have dodged currency controls and sanctions since time immemorial.
In other words, the same way people have dodged currency controls and sanctions since time immemorial.
For Ukraine any ordinary international transfer works.
People said the same probably about enron fud or tulip fud. until it wasn't fud anymore
bubonic plague killed the tulip derivatives traders
We don’t know what would have happened, the entire futures and spot price divergence was 3 months
Its the worst example of a bubble
We don’t know what would have happened, the entire futures and spot price divergence was 3 months
Its the worst example of a bubble
The Enron of this situation (LUNA) is already dead. If you're trying to compare the entire market to Enron or Tulip mania, that's incredibly short sighted.
I'm so tired of these same low value takes year after year.
I'm so tired of these same low value takes year after year.
Why do you think there is only one shoe ("the Enron") to drop?
Despite very little knowledge about crypto or conventional finance, what I've read about USDT suggests it has to collapse sooner or later.
I get this sense that people assume if there is some questionable stuff reported, and nothing happens, it must have been FUD. Like fast decaying radioactive waste, it has a half-life.
But when an organization has always made excuses for why they can't be audited, and tried to confuse people about whether they have been, it never becomes ok.
Despite very little knowledge about crypto or conventional finance, what I've read about USDT suggests it has to collapse sooner or later.
I get this sense that people assume if there is some questionable stuff reported, and nothing happens, it must have been FUD. Like fast decaying radioactive waste, it has a half-life.
But when an organization has always made excuses for why they can't be audited, and tried to confuse people about whether they have been, it never becomes ok.
I agree that USDT will collapse at some point and it will have a massive effect across the market but that doesn't make the entire market equatable to the Enron situation.
Enron didn't fall alone. Adelphia, Worldcom, Tyco, Arthur Anderson, ImClone, Global Crossing, Mirant, Qwest, and others...
There was a lot of fallout beyond Enron, either directly because of Enron's collapse or indirectly because all of a sudden people looked a little harder at corporate accounting in places where there had been strong scents of financial BS.
In short, if we're using Enron as a comparison point, we're talking about systemic shockwaves through two systems (power industry & corporate accounting)
There was a lot of fallout beyond Enron, either directly because of Enron's collapse or indirectly because all of a sudden people looked a little harder at corporate accounting in places where there had been strong scents of financial BS.
In short, if we're using Enron as a comparison point, we're talking about systemic shockwaves through two systems (power industry & corporate accounting)
You can also set your bids by it.
for the same reason casinos are still around, humans like to beat the odds.
> The address marked as 3AC has a collateral position of 211,999.12aWETH (worth $235 million) on AAVE V2 and a total debt of $183 million in stablecoins USDC and USDT
They picked the wrong stablecoins to have debt in.
They picked the wrong stablecoins to have debt in.
They were a major investor in USDT also. They had something like 500 million in it that is now worth about 500 bucks. That's what started this whole thing with 3AC and Celcius.
Heh that’s good. I was just about to write out an angry comment on USDT vs UST when the joke hit.
Finalement we have our first large shadow currency event (to echo the shadow banking collapse in 08/09)
This is good for Bitcoin.
Bitcoin is the new John McCain.
I really don't understand this comment... Bitcoin is similar to a dead US senator who voted outside party lines on occasion?
During the 2008 election season, it became a running joke that certain pundits reacted to anything that happened with "this is good news for John McCain".
Ah, okay, that makes sense. An oblique reference but satisfying once understood.
How does lending and borrowing between these Crypto funds happen? Do they borrow in real (fiat) money or do they lend and borrow the Internet magic money
under various names? So Celsius which works pretty much like a bank, collects BTC from retail investors who deposit their coins for 10% returns. Then Celsius lends say 10000 BTC to 3AC. Is that how it works? And why is it an issue if the value of that coin drops in USD terms? After all 1 BTC = 1 BTC right?
Dudes who started this don’t even look like credentialed hedge fund managers. How did they get so big
Funny to talk about credentials. As far as I can tell, the purpose of credentials when hiring hedge fund managers is so that when the hedge fund loses money, you can say, “Look, we did our best, we hired the best people.” Then you can swap in a new set of hedge fund managers with the same credentials and repeat.
(Edit: Hedge funds naturally lose money some of the time, and investors naturally get angry when that happens and look for someone to blame, and hiring someone who has good credentials lets you pass the blame, instead of having to explain to your investors that hedge funds just sometimes lose money. I’m not trying to tie this to the discussion about whether hedge funds work or not, just talking about how they operate.)
(Edit: Hedge funds naturally lose money some of the time, and investors naturally get angry when that happens and look for someone to blame, and hiring someone who has good credentials lets you pass the blame, instead of having to explain to your investors that hedge funds just sometimes lose money. I’m not trying to tie this to the discussion about whether hedge funds work or not, just talking about how they operate.)
Coming soon to the crypto world at this rate.
Do you have any evidence for this theory that credentials are just for show and misdirection? For example hedge funds trying to fall back on the credentials of their employees in the event of failure?
1. Look at the rate at which hedge funds hire people from ivy-league schools, compared to the rate at which other businesses hire from ivy-league schools. What explanations do we have for these different rates? (There’s a long discussion here which I’m omitting. There’s more than one explanation, but the basic hypothesis is that hedge funds value ivy-league credentials more than other industries, because ivy-league credentials are more valuable to hedge funds, and if they were just after skills, they would probably make different hiring decisions.)
2. Look at what happens when a hedge fund fails. What kind of business decisions are scrutinized (and which are not)? How are decisions justified? Are those justifications founded? (Another long discussion which I’m omitting. The basic theory is that you need to CYA for the inevitable failures. If you CYA and then the fund fails, investors may give you another shot. If you don’t CYA, you get replaced.)
I only save citations about a subject if I’m writing an article. If I were writing an article, I would post from my other account.
2. Look at what happens when a hedge fund fails. What kind of business decisions are scrutinized (and which are not)? How are decisions justified? Are those justifications founded? (Another long discussion which I’m omitting. The basic theory is that you need to CYA for the inevitable failures. If you CYA and then the fund fails, investors may give you another shot. If you don’t CYA, you get replaced.)
I only save citations about a subject if I’m writing an article. If I were writing an article, I would post from my other account.
Hiring from Ivy League or Berkeley, Stanford, MIT, Caltech, Mud, etc. means you are at least guaranteed the top 1% of IQ. It means you are getting someone who probably posses a combination of good analytical skills and competitiveness.
Lol. I admire your faith in the system.
36% of Harvard students come from legacy admissions programs, their admission has less to do with their personal merit than their last name. Other Ivy leagues aren't far behind.
A non-zero part of the product these schools sell is the ability to make friends with rich and powerful people. It's not the whole story, I'm not saying they're not good schools, but your average student isn't going to be that much smarter than your average well regarded public school, just a lot more wealthy.
36% of Harvard students come from legacy admissions programs, their admission has less to do with their personal merit than their last name. Other Ivy leagues aren't far behind.
A non-zero part of the product these schools sell is the ability to make friends with rich and powerful people. It's not the whole story, I'm not saying they're not good schools, but your average student isn't going to be that much smarter than your average well regarded public school, just a lot more wealthy.
lol not nearly 36%. most ivy league admittees are upper middle class.
https://www.cnbc.com/2019/04/07/harvards-freshman-class-is-m...
"Harvard’s Class of 2022 is made up of over 36% legacy students, according to The Harvard Crimson. The year before, the share of the freshman class was just over 29%. (CNBC Make It has reached out to both The Crimson and Harvard’s admissions office to confirm these figures.)
As of 2015, legacies were five times more likely to get into the world-famous university than applicants without relatives who went to Harvard.
Stanford University gives legacies a significant advantage as well. “It used to be that every application would be read twice. Now, only one reading is guaranteed, although — thanks, Mom and Dad — every legacy application still gets two sets of eyes,” a 2013 Stanford Magazine article about the school’s admissions process reported."
"Harvard’s Class of 2022 is made up of over 36% legacy students, according to The Harvard Crimson. The year before, the share of the freshman class was just over 29%. (CNBC Make It has reached out to both The Crimson and Harvard’s admissions office to confirm these figures.)
As of 2015, legacies were five times more likely to get into the world-famous university than applicants without relatives who went to Harvard.
Stanford University gives legacies a significant advantage as well. “It used to be that every application would be read twice. Now, only one reading is guaranteed, although — thanks, Mom and Dad — every legacy application still gets two sets of eyes,” a 2013 Stanford Magazine article about the school’s admissions process reported."
I didn't mean citations so much as examples, since I assumed you had observed this in the real world to form your opinion.
I'm not sure I agree with 1, but appreciate the clarification regardless.
I'm not sure I agree with 1, but appreciate the clarification regardless.
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Why would he/she need evidence? It's an observation which you may disagree with. Asking him/her to provide evidence is just silly. He/she is not here to prove anything to you.
This comment is silly. It's not an observation, it's an assertion. If it was an observation it would contain evidence. He/she is here to have a discussion, presumably.
No, the parent comment is spot-on.
The idea that observations “contain evidence” is an idea that I’m unfamiliar with. I’m not sure what point you’re making about observations or assertions, or how the distinction between the terms is germane (not talking about the distinction between the concepts).
Asking for evidence is confrontational and a bit gauche. Better to ask someone to elaborate, or ask them what the reasoning is. That’s a good way to continue the discussion because it doesn’t frame the discussion as an argument.
The idea that observations “contain evidence” is an idea that I’m unfamiliar with. I’m not sure what point you’re making about observations or assertions, or how the distinction between the terms is germane (not talking about the distinction between the concepts).
Asking for evidence is confrontational and a bit gauche. Better to ask someone to elaborate, or ask them what the reasoning is. That’s a good way to continue the discussion because it doesn’t frame the discussion as an argument.
Happy to clarify. If I say "I remember when Craptastic Hedge Fund failed and used their traders credentials to distract from their incompetent trades" (LTCM might fit the bill here) that would be an observation. An observation is evidence. If I just say, "Hedge Funds use credentials to hide their incompetent trades" that's an assertion. It doesn't contain any evidence, I'm just stating something I believe to be true.
It's germane because the OP (and you) seem to think it's inappropriate to ask if you have any examples (maybe "example" would have been less "gauche" than "evidence")
It's not really important, you've clarified, and even added in some advice on manners.
It's germane because the OP (and you) seem to think it's inappropriate to ask if you have any examples (maybe "example" would have been less "gauche" than "evidence")
It's not really important, you've clarified, and even added in some advice on manners.
Oh, I definitely didn’t think that was the kind of response you were looking for.
What credentials do you believe are required to start and manage a hedge fund?
The ability to persuade very rich people to give you money, or a lot of money of your own. Expensive suit helps. Cartoons about "the only way is up" a more unconventional route to the same end.
Especially considering one of the most famous hedge funds was founded by an MD.
You don't need anything to start a business claiming to be a hedge fund, but you need a guy with a series 65 license to do investment advising in most US states.
We're a fund regulated by a government other than the US. Our regulated investment manager (which confusingly is the entity that one would say does "investment advising" in the US) does not have any staff with US-specific licenses.
Despite all this, we could trade US equities, if we wanted to trade in markets that are deeply unfair and have fixed costs for data feeds and colocation in the tens of millions of dollars.
Despite all this, we could trade US equities, if we wanted to trade in markets that are deeply unfair and have fixed costs for data feeds and colocation in the tens of millions of dollars.
What does a credentialed hedge fund manager look like? What do you want, a Patagonia vest?
It's the oldest story in finance: easy money, hubris, a lack of regulation, and a sense of entitlement ("it's all a scam, so there's nothing wrong being one more scam").
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how at risk is coinbase?
If the price spirals from multiple whales getting liquidated/margin-called (3AC included), the whole crypto project dies and Coinbase sees their volume drop 100X.
The issue is that with past Crypto runs, not everyone knew about BTC/ETH/ETC. This time around, literally the entire world has heard about crypto and has been pitched to buy, up to having Matt Damon calling you a coward for not buying during the Superbowl. So when the price of BTC finally stops at somewhere like $800 a coin, people aren't going to be buying anymore. There's no magic left in the system. The whole "it runs on vibes" thing is the only true statement that backs the price of BTC given that it's a negative-sum game.
When the vibes run out the miners leave the hotels fold the bars close and the whole circus leaves town. Coinbase will be a ghost town in a few years.
The issue is that with past Crypto runs, not everyone knew about BTC/ETH/ETC. This time around, literally the entire world has heard about crypto and has been pitched to buy, up to having Matt Damon calling you a coward for not buying during the Superbowl. So when the price of BTC finally stops at somewhere like $800 a coin, people aren't going to be buying anymore. There's no magic left in the system. The whole "it runs on vibes" thing is the only true statement that backs the price of BTC given that it's a negative-sum game.
When the vibes run out the miners leave the hotels fold the bars close and the whole circus leaves town. Coinbase will be a ghost town in a few years.
afaik coinbase is just an exchange, so hopefully they didn't speculate on crypto derivatives with 0 risk management like 3AC did
Sure, but if there's no more "number goes up", and people stop trading crypto, then Coinbase's revenue vanishes.
They get a cut in both directions.
Both directions meaning buying and selling, not active market and dead market like the parent comment is talking about. What's their cut of trades on Terra today?
Their revenue is proportional to volume. Which we can expect to eventually plummet as people are skittish to enter and happy to exit.
And their revenue is dollar denominated. Even if the volume of coins traded remained the same, if the dollar-denominated value of those coins drop then so does revenue.
That's why the parent emphasized "trading stops", as in there is no trading in any direction.
Coinbase has Coinbase Ventures, for which they invest in many crypto projects.
I heard exchanges hold a bunch of the stable coins in lieu of holding actual real currency. Not sure if the statement is true or not.
good news!
Are we finally allowed to use the Tulip bulb analogy?
It might help propagate a story that did not really happen the way people think it happened:
> Research into tulip mania since then, especially by proponents of the efficient-market hypothesis,[17] suggests that his story was incomplete and inaccurate. In her 2007 scholarly analysis Tulipmania, Anne Goldgar states that the phenomenon was limited to "a fairly small group", and that most accounts from the period "are based on one or two contemporary pieces of propaganda and a prodigious amount of plagiarism".[11] Peter Garber argues that the trade in common bulbs "was no more than a meaningless winter drinking game, played by a plague-ridden population that made use of the vibrant tulip market."
Source: Wikipedia - tulip mania
> Research into tulip mania since then, especially by proponents of the efficient-market hypothesis,[17] suggests that his story was incomplete and inaccurate. In her 2007 scholarly analysis Tulipmania, Anne Goldgar states that the phenomenon was limited to "a fairly small group", and that most accounts from the period "are based on one or two contemporary pieces of propaganda and a prodigious amount of plagiarism".[11] Peter Garber argues that the trade in common bulbs "was no more than a meaningless winter drinking game, played by a plague-ridden population that made use of the vibrant tulip market."
Source: Wikipedia - tulip mania
I don't really know economics, but I believe they are quite different -- cryptocurrencies value is 100% speculative. Tulips at least have an inherent value as a decorative object. Even fiat currency can be used as toiletpaper in a pinch.
> Even fiat currency can be used as toiletpaper in a pinch
Even as origami sculptures, like the Venezuelan bolivar:
https://www.vozdeamerica.com/a/figuras-de-origami-hechas-con...
That 4 meter long cobra origami figure looks so cool (check picture 4).
Even as origami sculptures, like the Venezuelan bolivar:
https://www.vozdeamerica.com/a/figuras-de-origami-hechas-con...
That 4 meter long cobra origami figure looks so cool (check picture 4).
Damn, that’s some astounding modular origami work.
> Even fiat currency can be used as toiletpaper in a pinch.
Hmm - but actually can it? Isn't destruction of bills forbidden? It certainly is in my home country.
Hmm - but actually can it? Isn't destruction of bills forbidden? It certainly is in my home country.
Technically you are right, but I think it would have to be a really widespread issue before the government tried to do anything about it.
Given how many hands your average bill has passed through, that sounds extremely unhygienic. I'd rather use a tulip!
I think it's difficult to call something 100% speculative or 100% not. Some individuals may buy something for speculation, while others may desire the utility. You can speculate on the price of soy beans (many do), but people also buy soy beans to use.
There are individuals who get some utility out of bitcoin (international money transfers etc.)
There are individuals who get some utility out of bitcoin (international money transfers etc.)
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> There are individuals who get some utility out of bitcoin (international money transfers etc.)
What do you mean with money transfers?
What do you mean with money transfers?
I mean that when I've asked people what utility they get out of blockchain they mention the ability to send BTC overseas quickly and easily, to countries in which it's difficult to send money. I assume they're not lying about that use case.
In practice transferwise (now wise) is able to transfer money more easily and with much lower fees. At least if your needs match normal consumer needs.
This switches if you need to transfer millions of dollars, or you're trying to pay for something illegal. Which is why one of Bitcoin's significant real-world uses is for ransomware. It does indeed make it easy to launder millions of dollars of money across national boundaries.
https://www.npr.org/2021/06/10/1004874311/how-bitcoin-has-fu...
This switches if you need to transfer millions of dollars, or you're trying to pay for something illegal. Which is why one of Bitcoin's significant real-world uses is for ransomware. It does indeed make it easy to launder millions of dollars of money across national boundaries.
https://www.npr.org/2021/06/10/1004874311/how-bitcoin-has-fu...
In practice there are things such as country-wide sanctions that make "regular" services not particularly reliable in some cases.
So the utility of crypto is to violate sanctions?
They send nothing as BTC is not located anywhere. They buy and sell btc with fiat currencies, that is all.
Still 6 orders of magnitude away, I'm afraid.
1 BTC = 20k USD
When 1 BTC = 0.009 USD, go ahead.
1 BTC = 20k USD
When 1 BTC = 0.009 USD, go ahead.
Whatever your view on the Tulip bulb analogy, that has no relevance to this story. This is a story of traders with bad risk management who blew themselves up with leverage. That is a story that has played out plenty of times in the past on every other type of asset (housing, stocks, FX) as well.
Tulip analogies are always apt & forever welcome. But looking at those ancient Dutch trading charts, there appears to be a single 99% crash, that occured in a single trading session I believe. BTCUSD has collapsed 70%+ at least 7 times.
It's global. There's always a new pool of money coming new.
And tulip bulbs are really only good for one thing. Extremely perishable, fungible, analog and centralized stores of value ;)
It's global. There's always a new pool of money coming new.
And tulip bulbs are really only good for one thing. Extremely perishable, fungible, analog and centralized stores of value ;)
> There's always a new pool of money coming new.
FTFY: There's always been a new pool of money coming in, so far.
FTFY: There's always been a new pool of money coming in, so far.
People have been using the Tulip bulb analogy for 12 years. What's stopping most people at this point is they understand the analogy doesn't fit.
Not until people begin cooking and eating their crypto.
My understanding of Dutch history (which isn't great) is that nobody ate tulip bulbs after the Tulip Mania ended. The famous instance of that occurring (to my knowledge) was during and immediately after WWII.
To be more precise, some Dutch from above the rivers (i.e. to the north of the "Waal" and "Nederrijn" rivers which divided the liberated south from the still occupied northern half of the country), especially the western part ate boiled tulip bulbs during the "hongerwinter" [1] (hunger-winter) of 1944-1945 when the Germans blocked food imports to that region in retaliation for the Dutch efforts (e.g. the national railway strike) to assist the allies in the liberation efforts.
The effects of the famine are still visible in the generation which grew up during that period and those which came after [2].
Source: I'm Dutch, my parents lived in this region and had their share of tulip bulbs.
[1] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%80%931...
[2] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%80%931...
The effects of the famine are still visible in the generation which grew up during that period and those which came after [2].
Source: I'm Dutch, my parents lived in this region and had their share of tulip bulbs.
[1] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%80%931...
[2] https://en.wikipedia.org/wiki/Dutch_famine_of_1944%E2%80%931...
Thanks for elaborating!
watch the "extra credit history" 5+ episodes about it. You will be shocked how wrong we all are about the tulip thing.
In 8 months, revisit.
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Turns out that tightly wrapping a small kernel of nothing with many layers of leverage can turn into a bomb that will blow up in your face.
I think it's funny this could be said about fiat and debt just as easily as crypto. Maybe there are some similarities.
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The sad thing is that a new crop of suckers will appear in a few months / years, and we'll repeat the blues again.
I'm just pissed that we wasted all of this time and money on this crap.
IMO the past ~10 years of the VC industry has been one of the biggest collective wastes of time and resources in the history of computing. We came into this with the goal of creating the next Google or the next Apple, and we exited with... what exactly?
Investors of every stripe collectively lost their gourds and poured hundreds of billions into unsustainable companies that have never found their unit economics (and likely never will) like WeWork, Uber, and Lyft. After that whole scheme started unwinding they then collectively poured more hundreds of billions into something even worse - rather than simply losing money on useful products, they decided to simply lose money without even bothering with the product part of it. The result is years of tulip-mania that just set an unholy amount of money on fire and fleeced innumerable retail investors' savings.
What if we poured that collective funding into producing... well, actual businesses? Delivering products that actually improved people's lives? Delivering products that at least make money?
All I see from the past 10 years of the industry is the missed opportunity and what could have been. How many groundbreaking products would we have today if we put the money into... well, not this?
I suppose it's not all bad - there have been some promising companies that actually deliver products for profit that came out of this era (see: Shopify, Stripe) but I can't help but wonder where we'd be without this entire misadventure.
IMO the past ~10 years of the VC industry has been one of the biggest collective wastes of time and resources in the history of computing. We came into this with the goal of creating the next Google or the next Apple, and we exited with... what exactly?
Investors of every stripe collectively lost their gourds and poured hundreds of billions into unsustainable companies that have never found their unit economics (and likely never will) like WeWork, Uber, and Lyft. After that whole scheme started unwinding they then collectively poured more hundreds of billions into something even worse - rather than simply losing money on useful products, they decided to simply lose money without even bothering with the product part of it. The result is years of tulip-mania that just set an unholy amount of money on fire and fleeced innumerable retail investors' savings.
What if we poured that collective funding into producing... well, actual businesses? Delivering products that actually improved people's lives? Delivering products that at least make money?
All I see from the past 10 years of the industry is the missed opportunity and what could have been. How many groundbreaking products would we have today if we put the money into... well, not this?
I suppose it's not all bad - there have been some promising companies that actually deliver products for profit that came out of this era (see: Shopify, Stripe) but I can't help but wonder where we'd be without this entire misadventure.
John Mills about 150 years ago put it very well:
As a rule. Panics do not destroy Capital ; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.
His full comments can be found at https://archive.org/stream/oncreditcyclesor00manc/oncreditcy....
I cannot think of anything as hopelessly unproductive as what has been spent on cryptocurrency. To name just one example, as https://www.nrdc.org/stories/crypto-has-climate-problem points out, the electricity used for mining bitcoin is on par with that used by Sweden. And all of this energy goes to produce...what?
As a rule. Panics do not destroy Capital ; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.
His full comments can be found at https://archive.org/stream/oncreditcyclesor00manc/oncreditcy....
I cannot think of anything as hopelessly unproductive as what has been spent on cryptocurrency. To name just one example, as https://www.nrdc.org/stories/crypto-has-climate-problem points out, the electricity used for mining bitcoin is on par with that used by Sweden. And all of this energy goes to produce...what?
> We came into this with the goal of creating the next Google or the next Apple, and we exited with... what exactly?
The free software activists would like to have a word with that and the VCs really don't care other than making money. So it is futile to believe that they would ever change or even when after 37 years the free software movement has been hijacked by 'open-source' which the same companies like Google and Apple getting away with that.
Generally they failed to stop closed-source software and systems from proliferating and existing and the fact that some of these engineers who were formerly part of this movement jumped ship to Google, Microsoft and Facebook tells us that it hasn't gone the way they envisioned.
Just like how the free software movement failed to stop closed-source software, the anti-crypto folks will also suffer the same fate and will realise that it's futile to try to 'destroy' all cryptocurrencies and their projects. That view to even think of trying to destroy all of it is just as delusional as the pro-crypto maxis thinking that it will take over the current system, even post regulations. Co-existence is most likely outcome from this.
> I suppose it's not all bad - there have been some promising companies that actually deliver products for profit that came out of this era (see: Shopify, Stripe) but I can't help but wonder where we'd be without this entire misadventure.
The fact that Stripe, Checkout.com, Shopify and MoneyGram are using cryptocurrencies not only have legitimised some of them of having a valid use-case, it says that they are going to be still around for a long time. Not all these crypto projects or companies will survive, but only a compliant few will still be around; almost the same outcome as the dotcom bubble with a wipeout of many frivolous companies and a remaining few surviving.
The free software activists would like to have a word with that and the VCs really don't care other than making money. So it is futile to believe that they would ever change or even when after 37 years the free software movement has been hijacked by 'open-source' which the same companies like Google and Apple getting away with that.
Generally they failed to stop closed-source software and systems from proliferating and existing and the fact that some of these engineers who were formerly part of this movement jumped ship to Google, Microsoft and Facebook tells us that it hasn't gone the way they envisioned.
Just like how the free software movement failed to stop closed-source software, the anti-crypto folks will also suffer the same fate and will realise that it's futile to try to 'destroy' all cryptocurrencies and their projects. That view to even think of trying to destroy all of it is just as delusional as the pro-crypto maxis thinking that it will take over the current system, even post regulations. Co-existence is most likely outcome from this.
> I suppose it's not all bad - there have been some promising companies that actually deliver products for profit that came out of this era (see: Shopify, Stripe) but I can't help but wonder where we'd be without this entire misadventure.
The fact that Stripe, Checkout.com, Shopify and MoneyGram are using cryptocurrencies not only have legitimised some of them of having a valid use-case, it says that they are going to be still around for a long time. Not all these crypto projects or companies will survive, but only a compliant few will still be around; almost the same outcome as the dotcom bubble with a wipeout of many frivolous companies and a remaining few surviving.
But this isn't really new; this is what the managerial class of the 1970's and their deregulation enablers in the Reagan era wrought, multiplied. What if nearly every large American industrial corporation hadn't been financially engineered into oblivion in the 80's and 90's? What if private equity hadn't been allowed to turn healthy brick and mortar retailers into debt-riddled zombies over the past four decades?
You could’ve said almost the same exact thing in 2001, after the dot com bubble well and truly burst. Pets.com was a laughing stock. So was that stupid Super Bowl commercial where they shot a hamster out of a cannon.
Turns out those companies weren’t wrong. They were just 20 years too early. And one or two of them even survived and thrived. (Amazon.) Also we got a lot of fiber laid that turned out to be useful.
I think it’s a similar situation here. If we knew a priori which uses cases and companies would work out we’d only fund those. But we don’t. So boom, bust, repeat. Humanity moves forward. Of course, as you said there is collateral damage. And externalities.
Turns out those companies weren’t wrong. They were just 20 years too early. And one or two of them even survived and thrived. (Amazon.) Also we got a lot of fiber laid that turned out to be useful.
I think it’s a similar situation here. If we knew a priori which uses cases and companies would work out we’d only fund those. But we don’t. So boom, bust, repeat. Humanity moves forward. Of course, as you said there is collateral damage. And externalities.
Yeah, but buying things online and having it shipped to your house was so very obviously useful and something that should exist, and you didn't have to be a PhD to realize it then. Pets.com was clearly not a bad idea. But I haven't yet heard of a crypto use-case that is obvious, at all.
Um we came out of the 2000s with incredible tech progress. Smartphones, social media, etc… the 2010s have given us what? Fake internet money that will soon be worthless, incremental improvements? Nothing new happened.
Hopefully there will be a bunch of descent GPUs dirt cheap so at least we got that.
Yes. When the generation finishing high school and entering uni right now, are finally graduating and start getting disposable income. That's when crypto will rise up again. They are too young rn to understand the greater fool game going on, and learn from losses. That's why there's a 4-year cycle. People already in undergrad right now wouldn't really fall for it again.
Will they though? If this really crashes spectacularly we might see some people trading it but most people are going to steer clear of this mess.
Crypto was mainstream now. Anyone gullible enough and with cash (or credit score) was into crypto now.
I tend to think that after enough cycles people will begin to write off crypto entirely.
A USD CBDC will kill it either way
A USD CBDC will kill it either way
People still "invest" in multi-level marketing stuff, so I'm not an optimist.
Have you seen this new coin? Have you read the white paper? It's a completely new scam^Wthing!
Have you seen this new coin? Have you read the white paper? It's a completely new scam^Wthing!
By "kill", I mean that it won't likely go mainstream mania, featured on CNBC etc. Not that it won't exist at all.
There's definitely another fool born every day
There's definitely another fool born every day
MLM never was any close to being this mainstream. Maybe in 1997 in Albania.
Herbalife, Amway, Avon, etc. all became pretty big, it just doesn't seem like that to most people in tech bc it's a different target market.
They were orders of magnitude from having 3 trillion market cap.
Market Cap really doesn't mean anything - if I buy a grain of sand for $1 suddenly sand has the largest market cap at $7,500,000,000,000,000,000.00
My understanding is CBDC’s are for banks and not retail. So it won’t kill it.
I don't think crypto actually serves much of a purpose at retail. As a customer, what reason do I have to pay for my groceries with bitcoin instead of my debit card?
A CBDC is just a bank account at the Fed with an API. You don't need retail banks anymore if you have one; conversely you don't need one if you already have retail banks.
Banks already have such an account at the Fed, and are getting realtime FedWire soon, and it doesn't really matter that the API involves SFTP'ing ACH files around.
Banks already have such an account at the Fed, and are getting realtime FedWire soon, and it doesn't really matter that the API involves SFTP'ing ACH files around.
Hmm what would the advantage be then? The Fed is already linked up with US Banks
Somehow I doubt it.
It's just too easy to participate.
Also: are you interested in my brand new Krasnol-NFT?
It's just too easy to participate.
Also: are you interested in my brand new Krasnol-NFT?
I'm sure the fact that the US seized the Russian central banks dollar reserves will do wonders for the adoption of a US CBDC
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After all the ads and pop ups loaded on this website I could only see about three lines of text on my phone. Cancerous website.
I've been using Speedreader (shipped by default on Brave) and this page loaded as pure text without any JS Elements/Ads for me. I'd definitely recommend Brave solely for this feature: https://support.brave.com/hc/en-us/articles/360045031392-Wha...
If you are on mobile you should check Bromite. It's a fork of Chromium with an ad blocker and better privacy (and not bs privacy like Brave)
> some random fly-by-night chrome fork
you people will be remembered as the folks who installed a dozen shaddy tool bars on internet explorer in the 90s.
Just use Firefox and uBlockOrigin. jeez.
you people will be remembered as the folks who installed a dozen shaddy tool bars on internet explorer in the 90s.
Just use Firefox and uBlockOrigin. jeez.
While I use Firefox as my main browser on all systems (i.e. Linux and Android and occasionally MacOS (only for testing purposes)) I also have Bromite around for those sites which just refuse to work in Firefox/Gecko and to test whether things work as intended on the Blink engine. I keep my own blocklist to feed to Bromite, based on the same lists as I use in uBlock on Firefox.
Sadly, I already tried it and it used to crash a lot, specially when I had too many tabs (10+) open.
The some random fly-by-night chrome fork is the most sane option I know since the only option left is Brave
The some random fly-by-night chrome fork is the most sane option I know since the only option left is Brave
Firefox mobile also allows adblocker extensions. With the nightly version you can even install userscripts.
I already tried it and it used to crash, specially when I had too many tabs (10+) open.
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bulish !!!
It's interesting to note that it wasn't Tether which imploded, that everybody here say it's such an obvious scam that it will blow AnyMomentNow for 4 years, but Luna, Celsius and Three Arrows Capital, names that were not mentioned on HN at all.
That's a bit revisionary. Every time someone posted about Anchor's "15% returns" there was at least one comment noting that this is unsustainable and probably a Ponzi scheme that will collapse.
The thing with crypto is that there are so many scams and houses of cards that making an exhaustive list is difficult. People point to Tether because it's a house of cards that's #3 by market cap. Tether hasn't imploded yet but its market cap is dropping precipitously right now and if they're not properly backed they might run out of money to redeem USDT soon.
The thing with crypto is that there are so many scams and houses of cards that making an exhaustive list is difficult. People point to Tether because it's a house of cards that's #3 by market cap. Tether hasn't imploded yet but its market cap is dropping precipitously right now and if they're not properly backed they might run out of money to redeem USDT soon.
HN is useless at predicting things. Posting here actively is basically to admit you're clueless.
Considering we're talking about financial instruments: if you had inside knowledge that could help you time the collapse of something you'd be out there shorting it, not posting here. But I think it's safe to say that a lot of crypto assets are built on very shaky foundations. That's not the same as knowing when something will give though.
A strange comment to make for someone who posts comments on HN as often as you do. Or was that mean to be self-deprecating humour?
https://twitter.com/hodlKRYPTONITE/status/153690211554074214...
Basically, they're a large crypto fund that has borrowed from almost every major crypto lender, and if they can't cover their margin calls (which is expected if they're insolvent), the risk of the debt is then transferred to the lenders themselves.