Well it's not the first, or last time Crypto has crashed. It seems that a lot of companies have already invested in some form of crypto related metaverse, one company even changed their name, Meta.
If there is money to be made, and clearly there is, it will live on in some form - just needs to shake some of that bad reputation and sliminess along the way - or at least superficially present it as more legitimate.
Well, gambling is legal in many places. The US does not allow it online but many other countries do. For the same reason crypto will survive as a form of gambling in many countries even if some countries won't allow it.
If it crashes often enough it will be banned by governments as there are also other negative side effects (e.g. it enables certain criminal activities like ransomware).
> at least in 2008 we weren’t subjected to a barrage of defensive Twitter antics from the bankers asleep at the wheel.
We were subjected to similar rhetoric from Enron execs as that house of cards crumbled[0]. Refusing to face reality in the face of financial calamity is the only rational choice when you are involved in a confidence scam, so we shouldn't be surprised at the Crypto community's recent behavior.
"The prices of Bitcoin and Ethereum, the two most popular coins, have tumbled more than 70 percent from pandemic highs; the NFT market has cratered; and optimism is in short supply. Everywhere you look, the dominoes are falling: One prominent firm, Three Arrows Capital, is reportedly approaching collapse, while other companies are desperately seeking bailouts to stay afloat."
As the article indirectly acknowledges, this sounds just like 2008.
I didn't see the banks all pack up their tables and go home then.
In fact they were collectively bailed out by government. That is, each and every one of us, indirectly.
edit: I certainly don't think crypto should be bailed.
For anyone that likes financial sector history, I would say its more like 1907.
Private sector bailouts managing any collapse. Important in cementing power.
I like that panic because JP Morgan had more money and valuable resources than the US government did at the time, and it is unfamiliar to imagine that government as not all powerful financially. But as a direct result of this, JP Morgan used his leveraged influence to push for that sovereign arm of finance in the United States and succeeded in a form of that with the Federal Reserve Act a few years later, combined with the income tax amendment it put the US on a path to being all powerful financially. Fascinating to me. I kind of like how the opportunities repeat.
Banking is kinda special industry that if it goes down entire economy goes down. On other hand many other sectors have same position, but they can be nationalized.
Closest thing is probably bailing out auto-industry, but I don't think there is appetite to do same with crypto as it really doesn't employ directly or indirectly enough people to matter.
Banks are quasi-governmental institutions, they will always be bailed out. They hold a special governmental license to create money. Too big to fail they call it.
Crypto ain't money, it's an asset class. Asset classes rise and fall, But none of these "billion dollar firms" created yesterday by a 25 year old are going to be safe when the price plummets given the highly leveraged nature of it all.
They're private corporations with the privilege to create money. They should not also enjoy the privilege of being absolved of problems caused by their excesses.
Crypto should certainly not get government bailouts.
Banks will likely stop being bailed out if we move to central bank digital currencies. If the money can still be moved around and things settled, banks are very much less needed.
Crypto firms aren’t systematically important, so no bailout is necessary or warranted. This is more like the .com bust than anything else. In both cases, irrational exuberance surrounding unsound companies quickly vanished.
No one’s 401k was plundered. Most of this was funded by the Federal Reserve via a combination of quantitative easing, low interest rates, and increasing the money supply. The Fed created the perfect environment for runaway speculation.
Actual cryptocurrency does exist and has very little to do with these modern scams (ie, stablecoins, nfts, or anything else centrally controlled). It hasn't been possible to grow a cryptocurrency up from the vulnerable grassroots state since massive public attention and "investors" got involved ~2015. Pretty much every "crypto" project after that date has just been a normal financial scam dressed up in "crypto" clothing.
And these "news" companies, and all the "investors" can't tell the difference, which is the point, I guess. I really hope this is the end of people "investing" in currencies but I doubt it. So the ignorant "investor" opinion that drove speculation up now drives it down... but it has zero impact on me actually using the bitcoin blockchain to pay for things.
I honestly don’t think actual cryptocurrency’s exist. I was very excited when bitcoin came out in 2008 or so but soon after I thought this is not really useful as a currency
Litecoin also has some privacy features now too — MWEB (mimblewimble extension blocks) that aggregates all MW tx into a single blob, and hides the amounts transacted. Check it out if you haven’t seen it, it would be good for the network to expand the volume of the anonymity set.
It's hard to tell for sure, but the evidence suggests that several tens of millions of people survive on Bitcoin remittances from their family members abroad.
Even if they do, why would the best way to allow efficient international transfers be to invent a whole new financial system? If the money is coming from traditional money (as the workers are basically always paid in traditional money) and will be exchanged into traditional money (as the recipients of the remittances will exchange to to be able to use it) why would we want to add an intermediate crypto step (which is also quite volatile)?
It’s the best way because those in power in the centralized institutions embedded along the existing financial system don’t want to service these “fringe” use cases that to them are too volatile. - that’s one potential answer at least.
> why would the best way to allow efficient international transfers be to invent a whole new financial system?
The risk of running a traditional currency exchange in places where people really need money is high. Some places simply don’t have a money service for this reason.
If you can cut the middle man and transfer money discretely, you may actually be able to send money, as opposed to not.
tl;dr: If the average risk is high enough, the volatility of Bitcoin and risk of getting scammed may actually be lower.
But you still need to have a bitcoin exchange accessible, both to the sender and to the receiver, right? And in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash. It doesn't need to be the same exchange, but both those exchanges would still have the same issues as a traditional exchange, right?
Walk me through a transaction that is better with bitcoin and would not be easier by modifying the current system.
I postulate that modifying the current system is easier than integrating bitcoin/crypto in ways that are actually good, and easier still than replaceing the current system wholesale with crypto.
And you think that replacing the financial systems of those other societies with a system that no one (especially not the societies themselves) has any control over will be easier than improving their current systems?
> you still need to have a bitcoin exchange accessible, both to the sender and to the receiver, right?
No, you only need an exchange accessible to the sender. The receiver can receive Bitcoins; they don't even need to be online while receiving them, because they can agree on a fixed address.
> in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash
That is the case for traditional currency exchanges.
It is not the case for Bitcoin.
The missing part that you might object to is of course: If the receiver eventually wants to convert their Bitcoins into some other currency (USD, or some local, not hyper-inflated currency), they do need some kind of exchange.
But they can choose to wait until they have access, they can send Bitcoins themselves, and they can meet with people to exchange Bitcoins with the risk that involves. None of these scenarios requires a traditional currency exchange to be available in their area. Running such a currency exchange is presumably too risky / not worth it. But being an individual Bitcoin trader might, because individuals are exposed to and assess different risks.
> No, you only need an exchange accessible to the sender.
I said in my original comment that the recipient will need to exchange it to be able use the funds. Unless there has been a huge upswing in bitcoin usage for payments in the areas of the world remittances typically flow to that will be true.
> That is the case for traditional currency exchanges. It is not the case for Bitcoin.
I said unbanked since many remittances are sent by and received by people who are unbanked. How do you exchange something from/to bitcoin if you have no bank account (which usually means no way to pay or receive traditional money online) and there is no physical exchange?
> meet with people to exchange Bitcoins with the risk that involves
That's literally a physical exchange, regardless of if it's just one dude or if it's a company with a physical presence.
> the recipient will need to exchange it to be able use the funds
Eventually, undoubtedly.
Given the choice between non-existent traditional currency exchanges, and some sketchy guy your friend knows who will exchange your Bitcoins into iPhones or USD, Bitcoin presents a solution to a problem that isn't otherwise solved. Bitcoin, being risky and decentralised, allows for being traded in places where traditional currency exchanges will not go.
> How do you exchange something from/to bitcoin if you have no bank account
Using cash, for example.
If you've tried to buy Bitcoin from your bank account, you will have experienced that it is, due to KYC rules, often more difficult than when you exchange them for cash.
The interface between Bitcoin and existing money systems is at conflict in our society.
In societies that don't have well-functional money systems, less so.
Bitcoining the unbanked is easier than bitcoining the banked. :-)
We are literally back to what I said a few comments ago:
> And in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash. It doesn't need to be the same exchange, but both those exchanges would still have the same issues as a traditional exchange, right?
So again: Why would a physical bitcoin exchange be easier to operate than a physical traditional exchange?
If your reason is laws then I'm guessing you'd also need to explain why widespread bitcoin usage wouldn't be subject to those laws too.
I'm not a believer in crypto by any means, but I think there's some fundamental differences between physical money, conventional currency, and bitcoins.
- physical money (eg. precious metals, physical cash) is hard to transfer, so that's out.
- conventional currency requires recognition from a legal system; anyone can open an illicit "exchange" claiming to trade foreign currencies, and record a bunch of numbers in a spreadsheet, in the same way I can claim to have paid you US$100000 through this HN comment. But nobody takes it seriously unless the transfer is recognized as legitimate by some legal body. And if local laws prohibit or severely limit the operation of such exchanges, it just cannot exist.
- Bitcoin's legitimacy is not based on recognition by legal systems, but rather a common, mutual recognition of a blockchain protocol. As long as there's just one shady dealer who accepts bitcoins in exchange for physical money (gold, precious goods, physical local currency), then this is an "exchange". It's not an exchange in the usual sense, but it doesn't really matter.
The crucial point is that the "protocol" if you will of conventional (non-physical) currency depends on some sort of legal system recognizing the currency. We're talking about wire transfers, cheques, etc., not paper money (which in this context is considered physical). The reason I can instruct my bank to transfer money from my bank account to your bank account is because of a bunch of legal rules and processes that ensure that it happens properly. If either party is in a place where such transactions are prohibited by the law, it is fundamentally impossible to do such a transfer because such transfers require recognition by the legal system.
Your confusion might stem from mixing up two concepts -- (A). the general duty to follow the law, and (B). the fact that conventional currencies depend on the law to operate. The GP's friend might be breaking the law no matter what kind of currency they are using, this is consideration (A). This is the same. But Bitcoin doesn't have problem (B).
The consideration of B still comes in when the bitcoin needs to be exchanged for actual goods or services though, where the payment (at least in 99.99% of cases) needs to be in traditional currencies. So bitcoin has not really removed a problem, bitcoin has just moved it. My argument is at least somewhat under the assumption that the trades/exchanges need to be legal to be mainstream. If you assume only illegal trades then of course it easier to postulate a system that works since it does not need to consider how it would work internationally or within a state.
I don't think I'm confused (but then again confused people usually think they are not), but I do think that modifying the traditional system is far more reasonable and doable than moving to the alternative crypto/blockchain system. Considering all the money and manpower thrown behind crypto I'd say it's not unreasonable to think that a better system building on the traditional finance system could be built.
The point is, as it didn't seem to get across in my previous comment, is that Bitcoin doesn't suffer (as much) from consideration B because any shady dealer can act as an "exchange", whereas traditional non-physical finance requires a chain of somewhat reputable institutions to be the middle person.
You can't "fix" traditional finance system if the government of one party makes it illegal to do trades (unless you're thinking about plotting a revolution in another country).
A colleague who sends money to his family in a third world country with unstable currency explained to me why he uses crypto to do so. Even if he uses dollars to initiate the transfer here in the US, his family is going to receive it in the local currency. But that would incur losses as the official exchange rate is held artificially low. Also that currency is losing value very fast due to high inflation (much higher than the US in fact). So it is much better for his family to have their savings in Bitcoin. If there was a way to transmit gold easily avoiding government rules, he could have done that too but sending gold to his country is impossible.
This gets to the heart of another common refrain on HN that Bitcoin is great to facilitate illegal transactions. Well guess what, if a shitty government in some corner of the world is going to make it difficult for its citizens to live a normal peaceful life by devaluing currency and imposing artificial barriers to save meaningfully, then I am rooting for Bitcoin to help people evade that tyranny.
Sure but why would anyone want Jed’s PoS token in the first place? They just printed it and gave it away to people on Facebook when launched. Like all PoS tokens, they have no value and cannot really be used as a universal medium of exchange between fiat; they are best to be used as the antispam and fee mechanism, to conserve and meter precious eternally recorded storage.
> We can only hope that future warfare is computational, rather than kinetic
Why would this hypothetical enemy agree to participate? Even if they wanted coins (instead of say, land, subjects, or natural resources), it's cheaper and easier to steal or extort them from you than mine them.
There are plenty of reasons not to steal and extort, like personal ethics or a fear of getting caught. If it were easier to mine than steal or extort, gangs would be running mining operations instead of wasting their time with theft and ransomware. A hostile cyber army would need mining to be twice as effective at raising funds as theft or ransomware, since stealing 1 BTC drains your reserves and adds to theirs, whereas mining only adds to theirs.
> Such is the nature of the Bitcoin game.
I assume from this sentence in your comment and from your bio ("Character account — I only play a Bitcoin maximalist on the internet") that this is just performance art/trolling for you, so I'll wrap up my end of the discussion here.
Yea agreed. I’m definitely a bitcoin maximalist moreso now. I mean if I were to receive a remittance I rather receive bitcoin than lumens.
Interesting with bitcoin though, when I first heard of it, I remember hearing they use that computational power to help (eg. Hospitals) run various computational heavy simulations in exchange for btc. Kind of like how Seti@home works. Always wondered where I heard that from. Unfortunately it’s just wasting energy rehashing sha256 a billion times :$
I’m definitely not super knowledgeable in cryptography, from the outside, the integrity of BTC is what makes me a bitcoin maximalist when it comes to Crypto lol.
However, the high energy consumption as the tradeoff is definitely like the elephant in the room.
One way to think of it as energy spend on activism for integrity. Many governments, tyrants and thieves would stop at nothing to corrupt the integrity of the chain. By sacrificing energy we make it very difficult for them to do so.
It is not the energy or work itself that is valuable, but the requirement that an adversary outwork in order to inflict a negative outcome.
Ah, so not because of demand, but because of the amount of work that went into them?
This is the labor theory of value, originally espoused by Marx. I'm under the impression that most bitcoin fans consider themselves libertarians. It's interesting to see that combined with Marxist economics.
Not quite :-) I believe it is part of the equation. I don’t think it is the nature that work occurred applies value — rather the demand for something that someone has sacrificed something for exists — in art, generally a work that has sacrificed time to create something aesthetic has a demand that provides its value. It’s value is subjective to the buyer, however the astute buyer is more likely to buy the 1000 hour work over the mass produced out of nothing thing.
Sending money to those countries is against US sanctions. So now we're back to the point a lot of cryptocurrency skeptics say. It's only useful for illegal activities.
It's not illegal if you're not in the US, which 95% of people aren't. And there's an exemption in the sanctions for family remittances, so it's not illegal then either.
Not really. PayPal I believe it's ~3% fees + spread + taxes. That's not free. I just sent some money to myself (not via Paypal) effective fee was 2,38% and I will have to wait 3 days. Crypto for a time was a good exchange medium, low fees, almost instant, no KYC, less bureaucracy. But I believe those days are counted because for good and bad it's now regulated and was reduced to speculative virtual assets.
Maybe PayPal subsidizes some users to make it "free" in exchange for gaining control of their finances. They're notorious for stealing users' entire account balances and justifying it with unsubstantiated accusations of fraud, so gaining control of more users' finances is very profitable for them.
Where is this evidence? People like to mention it, but no, there is no such group in the world of a meaningful size to depend on bitcoin for international money transfers.
There are too many good reasons why money is centralised and you are an outlier if you find good reasons to pay for anything with bitcoins. That's the truth.
Posting cryptoasset focused articles on HN is such a weird thing. Do you expect level headed unbiased commentary or are you trying to reaffirm some internally held biases? HN's response is not variable with regards to crypto, it's predictable, but in a world where you can't buy anything with karma, what is the point? Be more interesting than that.
It’s possible to still have fruitful conversations with a completely negative valence. And it’s not even completely negative. There’s always people making comments like these ones, of the form “woe is me, everyone is unfair to my favorite scam!”
My fav scam is TCP/IP. I can’t believe they made every computer on earth speak it and in general accept traffic from anyone else on the planet! Without permission! Haha it’ll never work.
AES, the criminal math. Every day countless innocent bytes are diffused and confused JUST because someone might be watching. Where will the madness end!
Crypto has given back its money-printer-fueled gains since 2020. Tech stocks have done the same. Why should one set of companies should be more worried than the other? The market gives, the market takes away.
The market for Tesla cars is still red hot, though. I would be extremely worried about Tesla if there were no factories and dealers, just stock and hype. If hype is your only asset, it's hard to see how you recover from a crash.
This is not crypto's first crash, and won't be its last. From early 2018, ETH dropped 94%. The current price is about fifteen times higher than it was at the bottom of the 2018 bear market.
So either you can recover when hype is your only asset, or hype isn't crypto's only asset.
Crypto companies are tech stocks. But even so, crypto itself has actually given up LESS than the typical high growth tech stock. The pre-pandemic price of BTC was around 9-10k. It's still double that right now. Meanwhile, companies like Teladoc and Shopify have fallen BELOW their pre pandemic levels, and newly IPO'd companies like Palantir, Robinhood, etc. are floundering down to new lows every other week.
What an odd comparison, BTC is essentially one of two "blue-chips" in crypto. Comparing it to a AAPL or BOFA would be more apt. Or comparing RH PLTR to a shitcoin (ApeCoin has called to essentially nothing.)
Without commenting specifically on crypto, I’d say that any kind of financial speculation is a cut-throat endeavor and taking any media reports at face value is foolish without doing your own research and using your gut.
Big players FUD the assets they want to buy cheaply, and hype up the bags they want to get rid of. This has been going on online even before crypto was invented.
They aren’t called market makers for no reason, but it’s also not as simple as you make it out to be.
They can have impact on the trend however the market can only be controlled to an extent.
When the shit hits the fan everyone loses money the problem is that the bailout tends to be rather selective.
And there is no easy way out of this cycle either. It’s easy to say just don’t bail them out but you are also bailing millions of people who stand to completely lose their life savings, pensions and jobs and so the cycle repeats.
If we want to dissuade unadulterated greed we first need to find a solution of how to effectively finance those who are no longer economically productive.
You bring up some interesting opinions on the greater economy that are worthy of debate and discussion, but I'm not sure how a lot of them are super relevant to the general point made.
As far as your opinion that everybody loses money when the market goes down, well, that's not exactly true. There are numerous financial instruments possible where you can make more money when some asset goes down.
I'm not sure that dissuading greed is either a possible or desirable goal. The economy works, and resources are created and flow, precisely because the motive to benefit yourself exists. Every voluntary trade is entered into because everybody values what they get more than what they give up.
As far as those who are no longer economically productive, there's a lot that can be said about that, starting with an observation that there are people that never have been economically productive and never will be economically productive.
Most people in the business are smart. And smart people generally don't line up to be explicit about manipulating the market and committing possible crimes when it can come back to bite them.
Luckily, despite his best attempts to remove many copies of this video from the Internet, we have Jim Cramer on deck.
Endgame is decentralizing the internet and perhaps non-internet protocols. Even if the probability of a decentralized social network working is small, the upside in the case it does work is so large that it's worth the bet
ie: 100% downside vs 10,000%+ upside. If only 1 out of 100 such bets works out they break even. If 2 they have a profitable fund, 3+ they have knocked it out of the park.
I don't believe the VCs have such lofty or noble goals as decentralising the internet. If it were possible I believe they'd want to corner the emerging market as it grows.
But I think you're right that the upside is so attractive given how little they need to invest to realise significant gains.
>Endgame is decentralizing the internet and perhaps non-internet protocols.
The internet was always decentralized. That's literally the entire point of TCP/IP. The web, however, is indeed being centralized; and crypto is at the forefront of that. For all the talk of "democratizing finance", the reality is that all of these web3 proponents have no interest in anything beyond enriching themselves by reinventing the existing centralized banking system minus all that pesky regulation.
Internet protocols are all decentralized. We tried, users do not want to be an agent in a distributed system. They want to watch TikTok on their phone, not setup a home server or a wallet for decentralized finance ideas. Coinbase and similar firms success is proof that people do not want decentralized anything.
article subtitle: The crash should have been a humbling moment for the industry. Instead, companies are doubling down.
And then I saw no mention the sine qua non of that, when in late May a16z announce its 4th crypto fund at $4.5B. Man, would I kill for that list of LPs. They have deep, deep pockets and you can sell them anything.
I believe the title of this article to be misleading.
Companies ARE acting like it. Coinbase, after all, did reduce its headcount in order to reduce their burn rate to be able to withstand the market turbulence.
More importantly, the current market turmoil extends way past just crypto. Many investment vehicles such as stocks, bonds, startups, commodities, etc have experience elevated volatility recently. That is normal. The market does not monotonically move up forever.
Also, do not take the above statement to mean I endorse crypto as an investment. I believe crypto is akin to unregulated startup investing (at least for most higher risk startups you need to be accredited which is a way to acknowledge risk). When investing in a new crypto you are IMO investing in the idea and team making it. The company! Not on a line-chart on your broker's screen. If the project turns out (in the long run) to have widespread adoption you would hope its value would go up.
For instance, consider the Chia (XCH) project. It currently has a market cap of $165M. Therefore, if I were buying Chia at the moment I would think about the following: Do I believe that this company/idea can be worth more in the future? Is it a fair valuation for this startup/company?
“Do you know even one person who has a problem withdrawing from Celsius?” he tweeted. Just over 24 hours later, the company put a freeze on all withdrawals, locking customers out of their accounts. (The freeze remains in place almost two weeks later.)
Think what we’re seeing is really a market correction. Crypto took off, and everyone was investing in it, even if they didn’t know what it was. Companies like Coinbase made it very easy to do. What I think we’re seeing is all of those viral investors, so to speak, jumping ship.
It’s still worth something, so someone out there thinks it has value. If it has value, then it’s worth pursuing.
Is crypto correcting or crashing? Because I profited a bit when I bought btc right under $20k a week later it seems to be rebounding. My speculation is people want it to fall so they can buy low like I did.
The panic just isn't there, yes it has and will go down dramatically but the people that buy crypto still have expendible liquidity. This is crypto being naturally unstable, it isn't an index fund you expect to remain stable.
Investing aside illicit use of crypto alone will ensure significant cashflow in my opinion. It isn't just speculative investors that are in the game. As an investment, it has a lot if vaue similar to derivatives, inherent value is not as significant as consumer/investor demand.
ETH has crashed from $4800 to $1200. That's a pretty terrible crash unless you consider that the current price is still a roughly 10X gain from March 2020.
Volatility works both ways and the press often doesn't consider that, especially in bear markets. The reason companies are still involved is because they do consider it.
Anyone who wants to experience volatility can start wagering money in a casino though. If volatility was the objective then investment companies could more easily find it in coin flips, instead of capitalizing new ventures.
In a casino you know the odds are against you. In crypto so far, the long-term trend has been up, so the odds have been in favor of anyone holding long-term.
Bitcoin is ridiculously volatile—this is the third time it's lost 70% of its value—but it's still more than twice US$10k. That was its low price in May 02020, the first year of the pandemic, which was its all-time high in June 02019. Maybe it'll go to US$10k or US$5k again. I don't share Gottsegen's confidence that the numbers "will almost certainly go up again". They certainly could, but there's no fundamental reason they must.
It would be great if we could, as Gottsegen says, shake the fraudsters out of the ecosystem—and I'd add the gamblers, too—leaving only the people who are using it as a currency, but I don't see that happening anytime soon. Certainly if the numbers go up again they'll be back.
I hear your idea of weeding the fraudsters and gamblers out, but democracy of money aka bitcoin (kind of) is all inclusive (kind of). It just needs checks and balances so it doesn't get gamed. If you took all the gamblers, fraudsters, manipulators, bad actors, evil horrible people out of US stonks, it would also be better, more reliable, more useful, more honest.
It would be more honest, but the spreads would be a lot wider. Also you'd be structurally denying those evil horrible people the ability to save money in the asset class with the highest returns over a normal working lifetime, which is probably a disproportionate level of punishment for gambling.
I doubt that crypto is really dead, just that tough times are coming. And fortune favors the bold, especially in a culture like that of the crypto community. I would guess that the leaders of these companies are making an educated guess that that forging ahead won't guarantee that they can survive the coming winter, but going to ground will guarantee non-survival.
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[ 3.6 ms ] story [ 189 ms ] threadIf there is money to be made, and clearly there is, it will live on in some form - just needs to shake some of that bad reputation and sliminess along the way - or at least superficially present it as more legitimate.
I read:
"If there is money to be made, ___gambling___ will live on in some form."
Or fill in the blank with any other vice.
At least gambling is regulated by states.
Just pointing out that "things that make money" can be a fairly low bar.
We were subjected to similar rhetoric from Enron execs as that house of cards crumbled[0]. Refusing to face reality in the face of financial calamity is the only rational choice when you are involved in a confidence scam, so we shouldn't be surprised at the Crypto community's recent behavior.
[0]: https://www.nytimes.com/2002/02/16/business/enron-s-many-str...
As the article indirectly acknowledges, this sounds just like 2008.
I didn't see the banks all pack up their tables and go home then.
In fact they were collectively bailed out by government. That is, each and every one of us, indirectly.
edit: I certainly don't think crypto should be bailed.
Why would banks even care about crypto except for transaction fees they can collect?
It would be just a matter of time until other governments consider this too.
Private sector bailouts managing any collapse. Important in cementing power.
I like that panic because JP Morgan had more money and valuable resources than the US government did at the time, and it is unfamiliar to imagine that government as not all powerful financially. But as a direct result of this, JP Morgan used his leveraged influence to push for that sovereign arm of finance in the United States and succeeded in a form of that with the Federal Reserve Act a few years later, combined with the income tax amendment it put the US on a path to being all powerful financially. Fascinating to me. I kind of like how the opportunities repeat.
If you think crypto will be bailed out by governments, keep dreaming.
I certainly don't think they should be.
Nor do I think the banks should have been bailed in 2008. Some indvidual banks were directly bailed, the entire industry was indirectly bailed.
Closest thing is probably bailing out auto-industry, but I don't think there is appetite to do same with crypto as it really doesn't employ directly or indirectly enough people to matter.
Crypto ain't money, it's an asset class. Asset classes rise and fall, But none of these "billion dollar firms" created yesterday by a 25 year old are going to be safe when the price plummets given the highly leveraged nature of it all.
Crypto should certainly not get government bailouts.
And these "news" companies, and all the "investors" can't tell the difference, which is the point, I guess. I really hope this is the end of people "investing" in currencies but I doubt it. So the ignorant "investor" opinion that drove speculation up now drives it down... but it has zero impact on me actually using the bitcoin blockchain to pay for things.
The risk of running a traditional currency exchange in places where people really need money is high. Some places simply don’t have a money service for this reason.
If you can cut the middle man and transfer money discretely, you may actually be able to send money, as opposed to not.
tl;dr: If the average risk is high enough, the volatility of Bitcoin and risk of getting scammed may actually be lower.
Walk me through a transaction that is better with bitcoin and would not be easier by modifying the current system.
This is true for societies that have good money systems.
No, you only need an exchange accessible to the sender. The receiver can receive Bitcoins; they don't even need to be online while receiving them, because they can agree on a fixed address.
> in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash
That is the case for traditional currency exchanges.
It is not the case for Bitcoin.
The missing part that you might object to is of course: If the receiver eventually wants to convert their Bitcoins into some other currency (USD, or some local, not hyper-inflated currency), they do need some kind of exchange.
But they can choose to wait until they have access, they can send Bitcoins themselves, and they can meet with people to exchange Bitcoins with the risk that involves. None of these scenarios requires a traditional currency exchange to be available in their area. Running such a currency exchange is presumably too risky / not worth it. But being an individual Bitcoin trader might, because individuals are exposed to and assess different risks.
I said in my original comment that the recipient will need to exchange it to be able use the funds. Unless there has been a huge upswing in bitcoin usage for payments in the areas of the world remittances typically flow to that will be true.
> That is the case for traditional currency exchanges. It is not the case for Bitcoin.
I said unbanked since many remittances are sent by and received by people who are unbanked. How do you exchange something from/to bitcoin if you have no bank account (which usually means no way to pay or receive traditional money online) and there is no physical exchange?
> meet with people to exchange Bitcoins with the risk that involves
That's literally a physical exchange, regardless of if it's just one dude or if it's a company with a physical presence.
Eventually, undoubtedly.
Given the choice between non-existent traditional currency exchanges, and some sketchy guy your friend knows who will exchange your Bitcoins into iPhones or USD, Bitcoin presents a solution to a problem that isn't otherwise solved. Bitcoin, being risky and decentralised, allows for being traded in places where traditional currency exchanges will not go.
> How do you exchange something from/to bitcoin if you have no bank account
Using cash, for example.
If you've tried to buy Bitcoin from your bank account, you will have experienced that it is, due to KYC rules, often more difficult than when you exchange them for cash.
The interface between Bitcoin and existing money systems is at conflict in our society.
In societies that don't have well-functional money systems, less so.
Bitcoining the unbanked is easier than bitcoining the banked. :-)
We are literally back to what I said a few comments ago:
> And in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash. It doesn't need to be the same exchange, but both those exchanges would still have the same issues as a traditional exchange, right?
So again: Why would a physical bitcoin exchange be easier to operate than a physical traditional exchange?
If your reason is laws then I'm guessing you'd also need to explain why widespread bitcoin usage wouldn't be subject to those laws too.
- physical money (eg. precious metals, physical cash) is hard to transfer, so that's out.
- conventional currency requires recognition from a legal system; anyone can open an illicit "exchange" claiming to trade foreign currencies, and record a bunch of numbers in a spreadsheet, in the same way I can claim to have paid you US$100000 through this HN comment. But nobody takes it seriously unless the transfer is recognized as legitimate by some legal body. And if local laws prohibit or severely limit the operation of such exchanges, it just cannot exist.
- Bitcoin's legitimacy is not based on recognition by legal systems, but rather a common, mutual recognition of a blockchain protocol. As long as there's just one shady dealer who accepts bitcoins in exchange for physical money (gold, precious goods, physical local currency), then this is an "exchange". It's not an exchange in the usual sense, but it doesn't really matter.
The crucial point is that the "protocol" if you will of conventional (non-physical) currency depends on some sort of legal system recognizing the currency. We're talking about wire transfers, cheques, etc., not paper money (which in this context is considered physical). The reason I can instruct my bank to transfer money from my bank account to your bank account is because of a bunch of legal rules and processes that ensure that it happens properly. If either party is in a place where such transactions are prohibited by the law, it is fundamentally impossible to do such a transfer because such transfers require recognition by the legal system.
Your confusion might stem from mixing up two concepts -- (A). the general duty to follow the law, and (B). the fact that conventional currencies depend on the law to operate. The GP's friend might be breaking the law no matter what kind of currency they are using, this is consideration (A). This is the same. But Bitcoin doesn't have problem (B).
I don't think I'm confused (but then again confused people usually think they are not), but I do think that modifying the traditional system is far more reasonable and doable than moving to the alternative crypto/blockchain system. Considering all the money and manpower thrown behind crypto I'd say it's not unreasonable to think that a better system building on the traditional finance system could be built.
You can't "fix" traditional finance system if the government of one party makes it illegal to do trades (unless you're thinking about plotting a revolution in another country).
This gets to the heart of another common refrain on HN that Bitcoin is great to facilitate illegal transactions. Well guess what, if a shitty government in some corner of the world is going to make it difficult for its citizens to live a normal peaceful life by devaluing currency and imposing artificial barriers to save meaningfully, then I am rooting for Bitcoin to help people evade that tyranny.
https://stellar.org/learn/stellar-for-remittances?locale=en
Then what's special about PoW tokens that give them value?
Why would this hypothetical enemy agree to participate? Even if they wanted coins (instead of say, land, subjects, or natural resources), it's cheaper and easier to steal or extort them from you than mine them.
> Such is the nature of the Bitcoin game.
I assume from this sentence in your comment and from your bio ("Character account — I only play a Bitcoin maximalist on the internet") that this is just performance art/trolling for you, so I'll wrap up my end of the discussion here.
Interesting with bitcoin though, when I first heard of it, I remember hearing they use that computational power to help (eg. Hospitals) run various computational heavy simulations in exchange for btc. Kind of like how Seti@home works. Always wondered where I heard that from. Unfortunately it’s just wasting energy rehashing sha256 a billion times :$
it’s possible that general purpose and usable proof of work system might exist but I dont think we have found it.
I have always said knowledge of the silicon capability of SHA256 and the integrity of ECDSA is itself of immense value.
However, the high energy consumption as the tradeoff is definitely like the elephant in the room.
This is the labor theory of value, originally espoused by Marx. I'm under the impression that most bitcoin fans consider themselves libertarians. It's interesting to see that combined with Marxist economics.
okay, i'll bite, what's it called
- Actually designed for payments
- Doesn't use silly blockchain token nonsense
- Allows for collecting taxes easily
(suddenly pays attention)
Is. Is there an electricity downside, like there is with blerkchain?
But, you know, equities can be extremely useful while Enron stock can still be a scam.
So either you can recover when hype is your only asset, or hype isn't crypto's only asset.
Big players FUD the assets they want to buy cheaply, and hype up the bags they want to get rid of. This has been going on online even before crypto was invented.
They can have impact on the trend however the market can only be controlled to an extent.
When the shit hits the fan everyone loses money the problem is that the bailout tends to be rather selective.
And there is no easy way out of this cycle either. It’s easy to say just don’t bail them out but you are also bailing millions of people who stand to completely lose their life savings, pensions and jobs and so the cycle repeats.
If we want to dissuade unadulterated greed we first need to find a solution of how to effectively finance those who are no longer economically productive.
As far as your opinion that everybody loses money when the market goes down, well, that's not exactly true. There are numerous financial instruments possible where you can make more money when some asset goes down.
I'm not sure that dissuading greed is either a possible or desirable goal. The economy works, and resources are created and flow, precisely because the motive to benefit yourself exists. Every voluntary trade is entered into because everybody values what they get more than what they give up.
As far as those who are no longer economically productive, there's a lot that can be said about that, starting with an observation that there are people that never have been economically productive and never will be economically productive.
Most people in the business are smart. And smart people generally don't line up to be explicit about manipulating the market and committing possible crimes when it can come back to bite them.
Luckily, despite his best attempts to remove many copies of this video from the Internet, we have Jim Cramer on deck.
https://www.youtube.com/watch?v=jIfixbq_u0Q
https://www.youtube.com/watch?v=8RkqzRs95Sc
Also, as a general rule, it just pays to understand the following:
> With few exceptions, the entire media is shit and barely understands the topics they cover. It is easy for smart people to manipulate them.
> Access journalism is widely practiced.
> There's literally millions/billions/trillions of dollars at stake.
In this environment, it's close to a complete metaphysical certainty that media manipulation to profit occurs.
Sequoia and a16z effectively force LPs to put money in it.
Even with a tinfoil hat I can’t figure out their endgame, is it really just to make money off of greater fools?
ie: 100% downside vs 10,000%+ upside. If only 1 out of 100 such bets works out they break even. If 2 they have a profitable fund, 3+ they have knocked it out of the park.
But I think you're right that the upside is so attractive given how little they need to invest to realise significant gains.
The internet was always decentralized. That's literally the entire point of TCP/IP. The web, however, is indeed being centralized; and crypto is at the forefront of that. For all the talk of "democratizing finance", the reality is that all of these web3 proponents have no interest in anything beyond enriching themselves by reinventing the existing centralized banking system minus all that pesky regulation.
delegitimizing themselves in the process
.
> Even with a tinfoil hat I can’t figure out their endgame, is it really just to make money off of greater fools?
yes
And then I saw no mention the sine qua non of that, when in late May a16z announce its 4th crypto fund at $4.5B. Man, would I kill for that list of LPs. They have deep, deep pockets and you can sell them anything.
https://www.reuters.com/markets/wealth/andreessen-horowitz-r...
Companies ARE acting like it. Coinbase, after all, did reduce its headcount in order to reduce their burn rate to be able to withstand the market turbulence.
More importantly, the current market turmoil extends way past just crypto. Many investment vehicles such as stocks, bonds, startups, commodities, etc have experience elevated volatility recently. That is normal. The market does not monotonically move up forever.
Also, do not take the above statement to mean I endorse crypto as an investment. I believe crypto is akin to unregulated startup investing (at least for most higher risk startups you need to be accredited which is a way to acknowledge risk). When investing in a new crypto you are IMO investing in the idea and team making it. The company! Not on a line-chart on your broker's screen. If the project turns out (in the long run) to have widespread adoption you would hope its value would go up.
For instance, consider the Chia (XCH) project. It currently has a market cap of $165M. Therefore, if I were buying Chia at the moment I would think about the following: Do I believe that this company/idea can be worth more in the future? Is it a fair valuation for this startup/company?
“Do you know even one person who has a problem withdrawing from Celsius?” he tweeted. Just over 24 hours later, the company put a freeze on all withdrawals, locking customers out of their accounts. (The freeze remains in place almost two weeks later.)
It’s still worth something, so someone out there thinks it has value. If it has value, then it’s worth pursuing.
The panic just isn't there, yes it has and will go down dramatically but the people that buy crypto still have expendible liquidity. This is crypto being naturally unstable, it isn't an index fund you expect to remain stable.
Investing aside illicit use of crypto alone will ensure significant cashflow in my opinion. It isn't just speculative investors that are in the game. As an investment, it has a lot if vaue similar to derivatives, inherent value is not as significant as consumer/investor demand.
Volatility works both ways and the press often doesn't consider that, especially in bear markets. The reason companies are still involved is because they do consider it.
It would be great if we could, as Gottsegen says, shake the fraudsters out of the ecosystem—and I'd add the gamblers, too—leaving only the people who are using it as a currency, but I don't see that happening anytime soon. Certainly if the numbers go up again they'll be back.