Peter Thiel’s fund wound down 8-year Bitcoin bet before market crash(worldnewsera.com)
worldnewsera.com
Peter Thiel’s fund wound down 8-year Bitcoin bet before market crash
https://worldnewsera.com/news/finance/stock-market/peter-thiels-fund-wound-down-8-year-bitcoin-bet-before-market-crash/
88 comments
https://archive.ph/ec2Pp
I've been reading a lot of the Coinfessions account on Twitter. It's where people post crypto horror stories anonymously.
It's weird to think that they "generated" 1.8bn. If I made 1.8bn selling sandwiches, you could probably find evidence of it somewhere, like in product packaging in dumps. But here the only thing left behind is a bunch of guys going "Yeah I left my position open and drained my life savings by accident."
Like, every bit of that money represents money that someone else lost, and basically nothing else. I can't wrap my head around it.
It's weird to think that they "generated" 1.8bn. If I made 1.8bn selling sandwiches, you could probably find evidence of it somewhere, like in product packaging in dumps. But here the only thing left behind is a bunch of guys going "Yeah I left my position open and drained my life savings by accident."
Like, every bit of that money represents money that someone else lost, and basically nothing else. I can't wrap my head around it.
In the movie “Quicksilver,” Kevin Bacon plays some kind of (commodities) trader who lost an enormous amount of money betting the wrong way and retires from trading to become a bike courier.
He has a friend over at his loft, and while looking at pictures from his finance days, she asks, “What happened to all the money?”
His reply is a classic:
“It’s still there, it’s just in other people’s pockets.”
——
That’s all I see in crypto speculation. It’s a game that involves shuffling money between players, without actually creating new wealth.
(Also, the casino is betting against you and sometimes isn’t satisfied with their rake, so they “rug pull” and leave everyone holding worthless chips. But that is another issue.)
This is very different from, say, selling software that runs a business. Your software is not just transferring money from your customer to you, it’s literally creating new wealth by making your customer more productive.
He has a friend over at his loft, and while looking at pictures from his finance days, she asks, “What happened to all the money?”
His reply is a classic:
“It’s still there, it’s just in other people’s pockets.”
——
That’s all I see in crypto speculation. It’s a game that involves shuffling money between players, without actually creating new wealth.
(Also, the casino is betting against you and sometimes isn’t satisfied with their rake, so they “rug pull” and leave everyone holding worthless chips. But that is another issue.)
This is very different from, say, selling software that runs a business. Your software is not just transferring money from your customer to you, it’s literally creating new wealth by making your customer more productive.
The function of Store of Value (SoV) of any money is acquired by common belief of it's worth. It happened with gold in a very long time-span. People holding gold would not benefit of the increase of price as it took too long.
Gold... what if this common belief can be upgraded to a better form of money?
Bitcoin is energy quite energy intense and slow in the number of transactions but gold has many drawbacks too! It's a heavy rock, can't be easily split for payments, you have to spend efforts in custody and can't be transferred digitally.
Bitcoin... what if this common belief can be upgraded to a better form of money?
Ethereum is way more complex than Bitcoin but solves through clever engineering most of it's drawbacks. Let the Market decide which form of money is best.
Gold... what if this common belief can be upgraded to a better form of money?
Bitcoin is energy quite energy intense and slow in the number of transactions but gold has many drawbacks too! It's a heavy rock, can't be easily split for payments, you have to spend efforts in custody and can't be transferred digitally.
Bitcoin... what if this common belief can be upgraded to a better form of money?
Ethereum is way more complex than Bitcoin but solves through clever engineering most of it's drawbacks. Let the Market decide which form of money is best.
I spoke about crypto speculation, and I was explicit about that. I choose not to debate speculative claims about crypto's potential for becoming a useful "store of value" or "currency for commerce" at this time and in this place.
As to letting the market decide things, I lived through the Bre-X scandal, where the market decided to invest in a fake mine, and real lives were ruined. I believe in regulated marketplaces.
As to letting the market decide things, I lived through the Bre-X scandal, where the market decided to invest in a fake mine, and real lives were ruined. I believe in regulated marketplaces.
Canadians are overly protective of market places. It's my money -- not yours. I'll trade it or speculate it as I want.
The common belief of worth is where similarities between bitcoin and gold end.
What you list as drawbacks of gold are exactly the thing that preclude it being so easily weaponised for scams/fraud/rapid-wealth-redistribution.
You call bitcoin a SoV but further down describe it as a form of money. You also have an implicit assumption about what makes a "better" form of money. I'd like to read a bit more about what defines "better" in your opinion.
What you list as drawbacks of gold are exactly the thing that preclude it being so easily weaponised for scams/fraud/rapid-wealth-redistribution.
You call bitcoin a SoV but further down describe it as a form of money. You also have an implicit assumption about what makes a "better" form of money. I'd like to read a bit more about what defines "better" in your opinion.
> The common belief of worth is where similarities between bitcoin and gold end
Sure, it's also enough.
> You call bitcoin a SoV but further down describe it as a form of money. The primary functions which distinguish money are as a Medium of Exchange, a Unit of Account, a Store of Value: https://en.wikipedia.org/wiki/Money
> I'd like to read a bit more about what defines "better" in your opinion. There is definitely a list of features but I would argue that being hard money is the most important feature. Meaning hard/sound where the nominal amount of money does not change.
Bitcoin in definitely hard but Ethereum does even better by being deflationary. As network transactions are slowly reducing the total amount in circulation.
Other nice features of Bitcoin/Ethereum vs Gold/Dollar are: digital, non-seizable and no third party risk.
> You call bitcoin a SoV but further down describe it as a form of money. The primary functions which distinguish money are as a Medium of Exchange, a Unit of Account, a Store of Value: https://en.wikipedia.org/wiki/Money
> I'd like to read a bit more about what defines "better" in your opinion. There is definitely a list of features but I would argue that being hard money is the most important feature. Meaning hard/sound where the nominal amount of money does not change.
Bitcoin in definitely hard but Ethereum does even better by being deflationary. As network transactions are slowly reducing the total amount in circulation.
Other nice features of Bitcoin/Ethereum vs Gold/Dollar are: digital, non-seizable and no third party risk.
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> It’s a game that involves shuffling money between players, without actually creating new wealth.
You can replace "shuffling money" with "shuffling commodities" and you have equally valid statement.
Commodities trades are just middleman between middleman, they dont do anything but inflate prices of goods.
Historically futures were good idea and were exchanged between producer and manufactures as a bet for more stable future (for both parties), not anymore.
You can replace "shuffling money" with "shuffling commodities" and you have equally valid statement.
Commodities trades are just middleman between middleman, they dont do anything but inflate prices of goods.
Historically futures were good idea and were exchanged between producer and manufactures as a bet for more stable future (for both parties), not anymore.
> That’s all I see in crypto speculation. It’s a game that involves shuffling money between players, without actually creating new wealth.
Just shuffling money between players is downplaying it.
"Crypto" often just sends "value" to the bitbucket either intentionally or because of operational errors.
Just shuffling money between players is downplaying it.
"Crypto" often just sends "value" to the bitbucket either intentionally or because of operational errors.
And the "new wealth" being "created" for your customer comes from... other people's pockets.
This is obviously not true. If there was no new wealth in the world than there was 50 years ago, we wouldn’t be so much more well off despite have billions more people.
New wealth is being created in the world but not by crypto.
It's definitely subjective. I.e. if we harm the livability of the earth to create new tech saying there is more wealth is not false per se but based on your pov
[deleted]
That's just humanity being parasites. Apparently the only possible growth we can come up with is population increase.
Population increase came after we unlocked unprecedented, crazy growth.
The industrial revolution demographics might be an interesting read.
The industrial revolution demographics might be an interesting read.
First off, I'd like to commend you for using landfill volume as a proxy for productivity. It's refreshingly honest and I wish economists would take note.
That said, there are last-gen GPUs and ASICs going to landfills. Some people are actually getting paid to make the inputs to the otherwise-ephemeral pseudocurrency. Not to mention all of the CO2 released into the atmosphere... you can't see it but that $1.8B put it there.
That said, there are last-gen GPUs and ASICs going to landfills. Some people are actually getting paid to make the inputs to the otherwise-ephemeral pseudocurrency. Not to mention all of the CO2 released into the atmosphere... you can't see it but that $1.8B put it there.
And the paper clip factories churn on.
Do not click this link, you will loose at least 6hrs of your life:
https://www.decisionproblem.com/paperclips/index2.html
https://www.decisionproblem.com/paperclips/index2.html
My pet theory is that the massive excess in GPUs from the crypto explosion are being fed back into the AI explosion we are seeing now.
In reality I wander how many former mining GPU farms are now doing AI training...
In reality I wander how many former mining GPU farms are now doing AI training...
[deleted]
All of the crypto companies have had layoffs since the crash.
The big exchanges are downsizing- but obviously there's still some money in it.
People doing "economist things" but with money at stake (i.e. financial analysts) already do that stuff.
some use freight activity as a measure of economy, atleast "real economy".
And therefore completely ignore the 50% of the global economy that is services.
Not entirely, most services require some products as inputs, so they are still measured in some way.
What about electricity generation requires a shipping container?
Energy production is kit a self contained endeavor. Transformers, steel, copper, pipe, valves, digital equipment for monitoring and control systems are just some of the necessary inputs for construction and maintenance.
Beyond that, efficient use energy production requires some place for it to be used, Generally home and industry appliances.
Beyond that, efficient use energy production requires some place for it to be used, Generally home and industry appliances.
>Energy production is kit a self contained endeavor. Transformers, steel, copper, pipe, valves, digital equipment for monitoring and control systems are just some of the necessary inputs for construction and maintenance.
Freight is a very poor way to measure electricity output. Both turbines and balance of plant equipment usually last 40 years (so we replace c. 2.5% in a given year) and now a days, most fuel is piped.
>Beyond that, efficient use energy production requires some place for it to be used, Generally home and industry appliances.
Yes, all of which is economic activity unrelated to freight.
Freight is a very poor way to measure electricity output. Both turbines and balance of plant equipment usually last 40 years (so we replace c. 2.5% in a given year) and now a days, most fuel is piped.
>Beyond that, efficient use energy production requires some place for it to be used, Generally home and industry appliances.
Yes, all of which is economic activity unrelated to freight.
freight in this context generally includes commercial rail freight.
Do we ship natural gas via rail now? Are we replacing our turbines every year?
Plenty of economic activity that is not fake involves no freight.
Plenty of economic activity that is not fake involves no freight.
It's actually worse than that because of cost of mining. It's a negative-sum game. People who lost money paid those who made money plus they paid for a bunch of useless computations.
Strictly speaking, this is not true. Crypto is used by many countries with tight/problematic banking regimes to send/exchange money. Ironically, both by Ukrainians and russians, for example.
Another thing is buying drugs on the darknet. Whatever your opinion of that is, the fact is crypto has some usages, though not a lot rn.
Those are pretty big use cases but not "authorized". Nevertheless, they are real use cases.
I get tired of hearing day after day about billionaires making not just billions, but 10's and 100's of billions without doing much of anything except having impeccable timing... and a lot of money to invest.
As long as crypto is touted as "investment", this is bound to happen.
Crypto isn't about mining anymore.
Crypto isn't about mining anymore.
You ever heard of the lottery? Guess what? Every bit of it is money someone lost and half of it funds your government. Wait till you hear about options trading and people committing suicide over bad trades.
You aren’t wrong, but people have very different mindsets.
People play the lotto for fun. They think hey maybe I’ll get lucky and win. Sure there are addicts , but I don’t think default behavior is “if I play this I’ll be rich “
Crypto is literally “if I trade this I’ll get rich”.
But, both are roughly 0 sum games in the end as you rightly pointed out.
People play the lotto for fun. They think hey maybe I’ll get lucky and win. Sure there are addicts , but I don’t think default behavior is “if I play this I’ll be rich “
Crypto is literally “if I trade this I’ll get rich”.
But, both are roughly 0 sum games in the end as you rightly pointed out.
Then their mindset is the problem, not everyone else or the crypto ecosystem. The risk behind the volatility and instability is your responsibility to understand. No one is deceiving or misleading people about these risks. If there are "get rich quick" schemes around crypto, I agree they should be prosecuted for fraud.
> No one is deceiving or misleading people about these risks
Almost everyone in cryptocurrency has deceiving prospective buyers for years. You can still find people shilling the long-term value of Bitcoin and until the crash you could throw a rock and hit someone claiming NFTs were an investment or saying that it was just like the stock market.
That was the source of so much of the opposition on HN: it’s not that it was new but that it was being sold as something it transparently wasn’t, and perhaps 5% of the people in the field could engage intellectually with people who asked about fundamentals. Had people been selling digital lotto tickets, far fewer people would have objected because the risk and benefit profiles would have been accurate.
Almost everyone in cryptocurrency has deceiving prospective buyers for years. You can still find people shilling the long-term value of Bitcoin and until the crash you could throw a rock and hit someone claiming NFTs were an investment or saying that it was just like the stock market.
That was the source of so much of the opposition on HN: it’s not that it was new but that it was being sold as something it transparently wasn’t, and perhaps 5% of the people in the field could engage intellectually with people who asked about fundamentals. Had people been selling digital lotto tickets, far fewer people would have objected because the risk and benefit profiles would have been accurate.
Tell me how many articles you can find on the web about how Crypto is the path to get rich.
Now repeat the search with Lotto or Slot Machines.
The information out there is not at all unbiased or fair.
Now repeat the search with Lotto or Slot Machines.
The information out there is not at all unbiased or fair.
How legit is this site? There is this blub in their About which is not very reassuring (I never heard of them):
> World News Era is the world leader in online news and information and seeks to inform, engage and empower the common men and all age groups. World News Era has millions of daily readers.
https://worldnewsera.com/about-us/
> World News Era is the world leader in online news and information and seeks to inform, engage and empower the common men and all age groups. World News Era has millions of daily readers.
https://worldnewsera.com/about-us/
This is blogspam. FT is the original "source" for this rumor.
https://archive.ph/8XLr6 original
> Founders Fund sold out of the vast majority of its entire cryptocurrency portfolio by the end of March 2022
In Feb 2022, when I saw crypto ads during the Super Bowl, it seemed like a warning sign that something was about to go bad and the existing players were looking for suckers.
In Feb 2022, when I saw crypto ads during the Super Bowl, it seemed like a warning sign that something was about to go bad and the existing players were looking for suckers.
On the London tube there were self referential ads saying "when you see crypto ads in the tube it is time to buy". /Facepalm
Site is down.
Here's the google cache:
https://webcache.googleusercontent.com/search?q=cache:8E9sp-...
Here's the google cache:
https://webcache.googleusercontent.com/search?q=cache:8E9sp-...
This episode from beginning to end is extremely interesting to me. Admittedly one of my areas of interest for the past several years has been studying bubbles from various eras but I think there is a lot to take from this story.
First, bubbles typically uncover something revolutionary but because of the hype and hoopla, leverage, and endless promotion, the markets overshoot what is possible currently to a ridiculous extent and most lose huge sums of money. In the aftermath where once the sky was the limit everyone swears the idea off and leaves it for dead.
An example: the Florida land boom of the 1920's. This is one of the wildest stories that many people who live in Florida don't even know about. They don't realize that nearly all of Florida was developed within the past 100 years and that major cities like Miami, Boca Raton, West Palm Beach, and on up the coast were created during this boom basically out of thin air by speculators. Throughout there were shameless promotions including one orchestrated by Charles Ponzi after he was released from prison as well as the creation of South Beach, the founder of whom ended up losing everything after spending huge amounts on land plots and promotional advertising. Anyone studying that era will see amazing similarities to the crypto bubble.
But the interesting part of that story is that those who were engaged in land speculation in Florida were absolutely correct in seeing the potential for the area as were the rest of the promoters and speculators of which there were many. But the population and development of the time just wasn't enough to keep up with the spend at the time. Essentially they were early.
With crypto, it was pretty much ignored until it wasn't. Then it hit a critical mass and the promoters seeing an opportunity to grift, came out of the woodwork. Once it hit a critical mass in price, people started to believe the hype and retrofitted use cases to it. Then after it crashed, most said "see I knew it was a stupid idea." Jamie Dimon was saying this as recently as this morning on CNBC.
This is the second part of the story that's interesting. Many people argue "crypto has no tangible value, it's just fake money." Well, that may be true but those same people take as self evident that things like gold, Monet and Van Gogh paintings, and tons of other things that arguably have no tangible value are worth vast sums of money. It's all subjective.
The bottom line is that things are worth what groups of people believe they are worth at a given time. This is a very difficult concept for most to wrap their minds around because it seems counterintuitive. Amazon stock is clearly worth $2 trillion because it's a massive company built by a forward-thinking genius. But when it was worth a few billion most thought it was too expensive. At each point in time the price wasn't right or wrong, it just reflected what people agreed it was worth.
With cryptos they aren't inherently valuable or worthless, they are worth something if there is at least one person who is willing to pay for it, regardless of how stupid you think it is.
So I would not be that surprised to one day see cryptos reemerge with new and better and clearer use cases which in hindsight will seem obvious but still very few will have capitalized on them. I'm not inherently bullish on crypto either. I've never owned any. But I also have been around enough to know that the crowd is smarter than I am and just because it seems stupid that something is happening in the market does not make it wrong. The fact that even now the price is over $20k is somewhat telling that the popular narrative is in complete disagreement with the fundamentals.
First, bubbles typically uncover something revolutionary but because of the hype and hoopla, leverage, and endless promotion, the markets overshoot what is possible currently to a ridiculous extent and most lose huge sums of money. In the aftermath where once the sky was the limit everyone swears the idea off and leaves it for dead.
An example: the Florida land boom of the 1920's. This is one of the wildest stories that many people who live in Florida don't even know about. They don't realize that nearly all of Florida was developed within the past 100 years and that major cities like Miami, Boca Raton, West Palm Beach, and on up the coast were created during this boom basically out of thin air by speculators. Throughout there were shameless promotions including one orchestrated by Charles Ponzi after he was released from prison as well as the creation of South Beach, the founder of whom ended up losing everything after spending huge amounts on land plots and promotional advertising. Anyone studying that era will see amazing similarities to the crypto bubble.
But the interesting part of that story is that those who were engaged in land speculation in Florida were absolutely correct in seeing the potential for the area as were the rest of the promoters and speculators of which there were many. But the population and development of the time just wasn't enough to keep up with the spend at the time. Essentially they were early.
With crypto, it was pretty much ignored until it wasn't. Then it hit a critical mass and the promoters seeing an opportunity to grift, came out of the woodwork. Once it hit a critical mass in price, people started to believe the hype and retrofitted use cases to it. Then after it crashed, most said "see I knew it was a stupid idea." Jamie Dimon was saying this as recently as this morning on CNBC.
This is the second part of the story that's interesting. Many people argue "crypto has no tangible value, it's just fake money." Well, that may be true but those same people take as self evident that things like gold, Monet and Van Gogh paintings, and tons of other things that arguably have no tangible value are worth vast sums of money. It's all subjective.
The bottom line is that things are worth what groups of people believe they are worth at a given time. This is a very difficult concept for most to wrap their minds around because it seems counterintuitive. Amazon stock is clearly worth $2 trillion because it's a massive company built by a forward-thinking genius. But when it was worth a few billion most thought it was too expensive. At each point in time the price wasn't right or wrong, it just reflected what people agreed it was worth.
With cryptos they aren't inherently valuable or worthless, they are worth something if there is at least one person who is willing to pay for it, regardless of how stupid you think it is.
So I would not be that surprised to one day see cryptos reemerge with new and better and clearer use cases which in hindsight will seem obvious but still very few will have capitalized on them. I'm not inherently bullish on crypto either. I've never owned any. But I also have been around enough to know that the crowd is smarter than I am and just because it seems stupid that something is happening in the market does not make it wrong. The fact that even now the price is over $20k is somewhat telling that the popular narrative is in complete disagreement with the fundamentals.
About 4-5 months too late IMO, but smart move. Cash is king for the foreseeable future.
As they say on Wall Street, "Nobody rings a bell at the top or the bottom of a market".
Timing their exit to lock in $1.8bn of paper gains does look great ... with the benefit of hindsight. If the valuations had gone in the other direction, presumably there would be plenty of people saying what a stupid move it was to sell.
Timing their exit to lock in $1.8bn of paper gains does look great ... with the benefit of hindsight. If the valuations had gone in the other direction, presumably there would be plenty of people saying what a stupid move it was to sell.
> As they say on Wall Street, "Nobody rings a bell at the top or the bottom of a market".
Completely untrue. There are uncountable numbers of people ringing both of those bells at the top and bottom of the market.
It's just hard to notice, because the bells ring at every other position of the market too.
Completely untrue. There are uncountable numbers of people ringing both of those bells at the top and bottom of the market.
It's just hard to notice, because the bells ring at every other position of the market too.
“Their decision looks great in hindsight. If something totally different happened they would look stupid” sounds like an amazing compliment, but the tone of your comment sounds like you didn’t mean to compliment them?
I like to think he saw the FTX commercial during the Superbowl and realized it was time to sell.
This article seems to be suggesting that Thiel was pumping while the fund was dumping.
That is the inference to draw.
Actually saying in print that Thiel was doing that might be risky.
Actually saying in print that Thiel was doing that might be risky.
I would not put much weight on this article. The fund is entirely private, it does not need to disclose its holdings in public government submitted documents. This article does not cite any sources.
It is always a good idea to use a heavy doze of skepticism when confronted with statements about someone's brilliance at market timing. Especially when those statements are not backed by any evidence. Peter Thiel previously had to disclose more of his trading and, other than his decision to put half a million in a tiny startup called facebook made a long time ago, he has not shown any brilliant market timing.
It is always a good idea to use a heavy doze of skepticism when confronted with statements about someone's brilliance at market timing. Especially when those statements are not backed by any evidence. Peter Thiel previously had to disclose more of his trading and, other than his decision to put half a million in a tiny startup called facebook made a long time ago, he has not shown any brilliant market timing.
The original source is two Financial Times San Francisco journalists: https://www.ft.com/content/0a1d5597-7145-4035-987b-ff033bba3...
Who do not site their source.
A blogger spamming their article.
Alternatively Hacker News only lets you post a link once. So if someone posted the FT link at a bad time, you wouldn't be able to post it again and it wouldn't get exposure. This gives the link a second chance
Alternatively Hacker News only lets you post a link once. So if someone posted the FT link at a bad time, you wouldn't be able to post it again and it wouldn't get exposure. This gives the link a second chance
My point is that even the original financial times article did not seem to cite sources as to the fact that Thiel sold his bitcoin in the middle of 2022.
Isn't it all on the public blockchain somewhere?
Oh and by the way, Peter Thiel is an investor in Ycombinator who runs Hacker News so it is pretty much a given that any comment criticizing his brilliance will be downvoted immediately.
Let's see if that is true. I don't think it is. Peter Thiel and the dark enlightenment is a bad thing for the world. NYT article. https://www.nytimes.com/2021/09/21/books/review/the-contrari...
I'll never be a billionaire, but if I were, I hope I don't think the solution to all problems is pushing for things that benefit me personally.
I'll never be a billionaire, but if I were, I hope I don't think the solution to all problems is pushing for things that benefit me personally.
Ten minutes later and multiple downvotes on your post. I don't even know what could possibly be considered controversial in your post.
It's the next day and I'm still positive, above 0 ;-)
I never believed in the "tech douchebags are going to make the world better" hype but I can see the appeal for the general HN audience.
Those who fund big tech are no different than those who fund big oil.
Your sacrifice will not be in vain, I will tell your story.