I'm as much of a crypto skeptic as the next guy, and there are plenty of decentralization failures in crypto, but you can't have "all these centralized exchanges". The fact that there are so many suggests something worked.
I don't think the promise of Bitcoin was ever that there would be no exchanges, only that no one would be beholden to any given provider. As long as you can pick up your keys and seamlessly start trading on a different exchange, that part of the crypto world is not centralized.
>I don't think the promise of Bitcoin was ever that there would be no exchanges, only that no one would be beholden to any given provider. As long as you can pick up your keys and seamlessly start trading on a different exchange, that part of the crypto world is not centralized.
Can't you see this defeats the whole purpose though? By this logic, traditional banks are also decentralized because you can also take your money out and go to a different bank. The word "decentralized" has no meaning in crypto parlance, it means whatever the speaker wants it to mean at any given time. And at least banks are FDIC insured, when a crypto exchange loses all your money then you can't really pick up your keys again because everything is just gone.
>Can't you see this defeats the whole purpose though? By this logic, traditional banks are also decentralized because you can also take your money out and go to a different bank.
The point isn't that centralized exchanges are decentralized, but that the network is decentralized in spite of the existence of centralized exchanges. Crypto provides financial democratization by way of an open permissionless financial network. Large entities can't collude to lock in customers or lock out competition. Centralized exchanges offer convenience over the base network and so they see a lot of use. But your freedom to transact with the network can't be taken away by centralized players. There is no analogous "base network" when it comes to bank transactions.
But that's also false. In practice the network isn't decentralized at all. This was very obviously the case since the very first bitcoin mining pool formed in 2010. The advantages of re-centralizing are far too great, and the whales have a clear financial interest to put themselves in charge of the network, so that's what they do. Any system that gives you more power because you put more starting cash into it can't be described as "providing financial democratization", so that characterization is just wrong. It's also wrong that they can't take away your ability to transact, the miners absolutely have the ability to block your wallet or ignore your transactions.
And I hope you can see the uselessness in creating a system that fits some vague definition of the word "decentralized" while nearly everyone who uses it just interacts with the centralized services on top of it, because maintaining the illusion of decentralization is so difficult and pointless that nobody actually bothers with it. Maybe it's "decentralized" if you're a whale and you want to capture large portions of the market with fraud without anyone being able to stop you. For everyone else, it's just not. The "base network" here is just for show and marketing purposes, it adds nothing of value to any real legitimate activity.
I don't see a substantive criticism here. I agree that the term decentralized is a misnomer, if only because the term is so vague. Democratization is the term I use to describe crypto. The question is whether powerful entities can interfere with the expected behavior of the network against the will of users. I don't see that this is the case. Sure, miners are in a position to ignore transactions, but doing so would require a high level of coordination that doesn't go against the ideal of "democratization". Yes, if everyone is against you, you're screwed either way. But crypto raises the level of coordination required for such an act to the point of implausibility. Besides, if such a coordinated attack against an individual was in progress, we would likely see hashrate reorganize to short-circuit the attack. This is democratization.
And again, using that term is wrong, because by definition these networks only give more power to those who have more money. Proof-of-work and proof-of-stake are intentionally designed to work that way. There is no democratization or fairness. The level of coordination isn't implausible either, it's already happened several times already, and there's nothing actually stopping it from happening again other than some vague "trust" that the system is going to work in a way that crypto promoters say it will.
Just to make this clear: If you personally don't have a vote then there's no democratization. You don't have one if you don't run a full node, which it's very likely that you don't. And if you do, the hashpower (i.e. voting power) of the full nodes you run is determined by how much money you invest in mining hardware. It's not democratic in any possible way you look at it. I'm not just making this up, crypto developers will readily tell you that the system is purposely designed this way to not be democratic.
The premise of your argument is incorrect. One does not need to participate in securing the network for the network to represent the "democratization of financial power". Democratization doesn't mean "voting", it means something like make equally accessible. What crypto does is make financial transactions equally accessible. The method by which this is accomplished (proof of work/stake) isn't equally accessible, but that is a tangential concern to the accessibility of executing financial transactions. What matters is the miners can't unilaterally interfere with the expected function of the network. Further, that the coordination required to interfere with the expected function is implausible and/or prohibitively expensive.
>The level of coordination isn't implausible either, it's already happened several times already
For instance? And what may have happened in the early days of the network is irrelevant to what is possible today.
>but that is a tangential concern to the accessibility of executing financial transactions
No, I disagree. It's exactly the same, because without that concern your transactions can be deprioritized or blocked. Miners can absolutely interfere with the expected function of the network, because it's entirely them who determine what the expected function is in the first place. There are no other systems in place to guarantee the functioning of the network and as a user (not a miner) you have no say in the matter at all. They do whatever they want and you're forced to accept it unless you can afford to buy huge amounts of mining hardware and take over the network yourself. I believe I addressed this all already, it's not democratic by any definition of that word or in any way you could ever possibly look at it. The original bitcoin whitepaper proposed that many more people would be running full nodes and (correctly) stated that the security properties of the system would come from this, and if that ended up being a realistic way to set the system up then maybe you could have said it was more democratic. But this didn't work out in practice, and it's been very obvious since 2010 that it would never work out that way for multiple reasons, one being that the financial rewards from re-centralizing into mining pools are far too great to pass up.
>For instance? And what may have happened in the early days of the network is irrelevant to what is possible today.
Both bitcoin (in 2013) and ethereum (in 2016) have reverted transactions that the miners didn't agree with. Any statements from them that the network is "immutable" or "decentralized" or "democratic" is simply a lie. Nothing has actually changed since the "early days", the conditions for them to do it again are still there and will likely always be there because this is how the network is fundamentally designed to function, based on a consensus of those who have the most resources available to them to mine. For a smaller coin, it may not even be possible to tell that this is happening, because blocks that the miners all agree they don't want to process can simply be dropped with no log of that happening.
Now, if you could legally require that cryptocurrencies need to set up a legal entity that gives a certain level of democratic control to its stakeholders then that's probably the only realistic way you could change things, but I doubt that would ever happen because crypto enthusiasts don't seem to care much for laws or regulations. And in any case, doing so would not be an innovation, it would still have all the other fatal flaws of cryptocurrency. Best case scenario, it would just be moving back into a poor approximation of a credit union, which is something that already exists.
>Miners can absolutely interfere with the expected function of the network, because it's entirely them who determine what the expected function is in the first place
Like I said, the coordination required to interfere with the expected function is implausible and/or prohibitively expensive. You have given no reason to think this isn't true. There's a common argument that goes like: "X can easily happen, all we need is for everyone to do Y". Call this the fallacy of implausible coordination. "We can break the two-party system, we just all need to vote third party". Your comment reads like this.
>Both bitcoin (in 2013) and ethereum (in 2016) have reverted transactions that the miners didn't agree with
I'm aware of the DAO hack and transaction reversal for ethereum, but what exactly are you referring to for bitcoin? In the case of ethereum, they reversed the transaction because the miners did agree with it. But technically, the transaction wasn't reversed, the network was forked. The original network still operates as ethereum classic. If you get enough people together you can change the past on your alternate chain. But that is not an example of a transaction being reversed.
And please, keep any further replies to focused arguments and free of ranting.
It’s a is ref to https://github.com/bitcoin/bips/blob/master/bip-0050.mediawi... however I don’t think that’s really in the same class to the Eth chain split. It was a db bug, it got fixed, “infra” bugs. Eth was a forced onchain state fix. “Business logic bugs”.
It is disingenuous to point to the 2013 incident and say this proves a lack-of-decentralization myth.
> Both bitcoin (in 2013) and ethereum (in 2016) have reverted transactions that the miners didn't agree with.
The miners don't agree with Ethereum switching to Proof of Stake, and yet, watch what happens this autumn. Important insight: The users control the network, not the miners. Specifically, it's the users who would be buying the miner's freshly minted coins.
Not exactly the same, because with the US Dollar, every bank can be ordered to freeze your assets.
This may be considered a feature, but the same is true for the Ruble, or the Real. Having assets on the blockchain means you self-custody them in a more portable way (similar to cash), while still having them in a digital form.
It is the same. Crypto exchanges can also freeze your assets when you hold them in that exchange. And actually this is a good thing, the accounts of fraudsters, thieves and scammers should absolutely be frozen and confiscated. Crypto companies are trying to promote this idea that because they've sprinkled some crypto magic on their banking product, they don't have to follow laws, and by doing this all the fraud will just all suddenly disappear for no clear reason. That overwhelmingly isn't true. Don't let them get away with this.
"Self-custody" in crypto is also a lie, there's no such thing. All activity on a blockchain is completely dependent on the miners to run the network.
Instead of a court, in crypto, the operators of a coin decide on what happens to your funds.
They can freeze your assets to make their assets seem more valuable, or they can agree to create an infinite amount of currency (ex: dogecoin)
>As long as you can pick up your keys and seamlessly start trading on a different exchange, that part of the crypto world is not centralized.
I once asked a friend who had signed up to some crypto exchange "Do they just give you your keys when you sign up?". They replied, "What keys?" Eventually they found it. But it's not like they educate the user.
The cool thing is that you can use a centralized exchange and not even know about what keys are, or use the network as it is intended and not rely on a centralized entity.
This is bad because who ever controls the keys controls the coins. So really for all these clueless users, the exchange owns all the coins and you can’t prove otherwise.
And they don’t bother educating the user. Or suggesting best practice. That’s not in the users favour.
Also, I don't think that the main proposition of cryptocurrency is that you don't need a centralized exchange. If you want to exchange fiat for cryptocurrency via the credit card or bank transfer, you need a trusted peer who can accept those forms of payment- whether that's a business or an individual. The centralization and insecurity of exchanges is due to their weakest link- the centralization and insecurity of the fiat system.
Yeah I agree. That was kind of my point also -- the "decentralized" block-chain is pretty reliant on centralized exchanges.
Real jobs is an interesting one. To the individuals yes they are real. To the economy there is no value creation and therefore the work done by these companies is just ultimately burning investor dollars & the planet in a lose:lose situation (as with everything crypto related).
The main benefit of exchanges is that they generate market liquidity. It's certainly possible to trade crypto without an exchange, but it's much more difficult to find buyers and sellers. I suspect that something akin to an exchange would always come about when there are lots of people who want to trade conveniently.
Centralized exchanges are completely unable to exist in the original vision of Satoshi. It's literally in the 2nd sentence of the original white paper:
"...but the main
benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network"
Using a centralized exchange ruins the peer-to-peer aspect and centralizes the transactions. Unless I'm missing something?
That line refers to the mechanism to prevent double spending. If the network needed a centralized controller to assign an ordering to transactions and ensure consistency, that would run afoul of Satoshi's vision. But centralized exchanges are merely users of the base network just like an individual broadcasting transactions themselves. They depend on network consensus just like everyone else.
i know here on hacker news we tend to see everything from the technical perspective and that means bitcoin isn't very interesting. But, try and see things from a financial perspective.
the value proposition of crypto has nothing to with decentralization. Bitcoin isn't about Bitcoin. The reason bitcoin is valuable has more to do with what's happening with governments and fiat currencies than anything about crypto or bitcoin. Ask anyone, why they got into bitcoin, ask any company that got into holding bitcoin instead of cash: they'll tell you: It basically boils down to "I lost faith in fiat".
There's been a huge 50 year bond bubble brewing and 100 year government bubble brewing where govt uses larger and larger amounts of GDP with ever larger debts. The explosion of debt is insane. Ask any financial professional, and they'll tell you with all that leverage in the system, there absolutely WILL be a deleveraging. The govts of the world will NOT be able to meet all their obligations. They can't raise taxes and they can't cut spending. That means, they must default on their currency (this is basically just a huge huge tax on anyone who's holding cash or bonds, even if inflation only stays at 10%, that 100K tax per year on anyone holding a million dollars). And when the Dollar and all the other fiats of the world go bust, you're only going to want to hold 3 asset classes: Equities, Real estate and commodities (gold and bitcoin). Real estate is hard to execute and not scalable at all. Gold, can't be held outside an IRA. So, what does that leave? just Equities and Bitcoin. and anyone that wants any diversification is going to need some bitcoin. one by one sooner or later, everyone is going to come to this conclusion, it's just a matter of time. the future will be one where a 60/40 portfolio is not 60 stock/40 bonds but 60 stock/40 bitcoin.
Bitcoin isn't attractive. On the titanic, do you think, anyone wants to get onto a rickety row boat with no seaworthiness whatsoever? While the music is still playing and party is going, no one gets on board. But, when it becomes clear that the titanic is sinking, everyone's rushing to get onboard. and when Fiat sinks, there's really only a few liferafs: equities, real estate, gold and bitcoin.
>It basically boils down to "I lost faith in fiat".
Well, this makes no sense, because the value of crypto is also a fiat backed by nothing. With crypto it's not just the government you have to worry about, any person can mint infinite numbers of new crypto tokens, pump and dump them, take out massive debts and gain infinite leverage and then debase anything they want. The massive collapses and bankruptcies in crypto over the last few months should show you that the rickety row boat is actually an illusion, and you're really just stepping off into the water with no lifejacket. My suggestion? Take a swimming class, if you get my analogy.
But it actually is though, "fiat" is just another one of those words that crypto promoters have redefined to mean something that it doesn't. The original definition was a currency that isn't backed by a commodity, its value is derived from some group (typically a government) declaring a fiat that it has a certain value they give it. That's why it's called "fiat currency". If bitcoin were a currency (it actually isn't) it would definitely be a fiat currency, because it also has no value from any commodity or consuming demand. The value is derived completely from whatever someone else is willing to pay for it. The idea that bitcoin represents some kind of "digital gold" is simply false.
bitcoin supply is limited to 21 million. that's key.
Meanwhile fiat currencies across the world are the governments escape vehicle for collecting the enormous taxes they're going to need to collect for their enormous debts, via inflation. this isn't just my assessment. Financial professionals (on net) across the world are dumping cash and bonds in record amounts. This is why the feds across the world needs to constantly buy up more and more bonds.
>bitcoin supply is limited to 21 million. that's key.
No, this is another falsehood pushed by crypto promoters. For a user only trying to make a payment, the 21 million is just a magic number. Technically the miners can coordinate to soft fork the protocol to increase the number of bitcoins, and this has been proposed several times already. An uncoordinated group can also hard fork the network and suddenly the 21 million becomes 42 million; this has actually happened several times already to both bitcoin and ethereum.
The idea that bitcoin is inflation proof is simply nonsense, even ignoring all the analysis, you only have to look at its price activity over the last few months to see how much of a lie that is. Another difference is that the bitcoin miners don't need to actually print more bitcoins to experience hyperinflation, the stablecoin issuers can cause that themselves just by printing infinite numbers of stablecoins and dumping them onto the bitcoin market. So it's in multiple ways worse than whatever you think is happening to the US dollar.
How could the miners soft fork to increase the bitcoin supply? That would be a hard fork, because they will not be able to spend those "higher" coinbase outputs, which are seen as lower to the rest of the network.
>An uncoordinated group can also hard fork the network
What are you talking about? An unintentional hard fork, or an intentional one like BCH?
>The idea that bitcoin is inflation proof is simply nonsense, even ignoring all the analysis
The idea that you can make inferences based on technical analysis alone is based on flawed assumptions.
The bitcoin block reward distribution is not finished yet, so it is too early to say. But I predict that it will be too deflationary, which will harm the network in the long run by creating incentives for selfish mining attacks [0].
>the stablecoin issuers can cause that themselves just by printing infinite numbers of stablecoins and dumping them onto the bitcoin market
That only works insofar as users (irrationally) trust stablecoins disproportionately compared to bitcoin. Eventually they will cash out and the ponzi scheme will fall apart.
>That would be a hard fork, because they will not be able to spend those "higher" coinbase outputs, which are seen as lower to the rest of the network.
If the majority of miners agree to it then the rest of the network either goes along with it, or they're forced to do a hard fork themselves.
>An unintentional hard fork, or an intentional one like BCH?
For the end user just trying to make a payment, it's irrelevant whether it's intentional or not, either way he is now faced with the spitting of his coins and the resulting chaos.
>The bitcoin block reward distribution is not finished yet, so it is too early to say. But I predict that it will be too deflationary
This is also a useless distinction for users, either way hyperinflation or hyperdeflation are both catastrophic.
>That only works insofar as users (irrationally) trust stablecoins disproportionately compared to bitcoin.
Any trust in any cryptocurrency is irrational, there's nothing that actually guarantees any of these coins won't collapse tomorrow. They're all based on ponzi economics. What's the actual value of a bitcoin? There just isn't one.
> If the majority of miners agree to it then the rest of the network either goes along with it, or they're forced to do a hard fork themselves.
No. This isn't even remotely how the technology works. If the majority of the miners right now decide to start doing something different, they have simply excited the ecosystem. The existing network of users and clients will continue to use the remaining set of miners without having to do any active work to switch to them. In the mean time, the majority of miners that decided to go off in the corner and play their own game are going to start seeing defectors back to the "real" network they left behind as they are no longer making money mining as all of the new Bitcoin they are receiving isn't honored by any of the exchanges or stores or users until they convince people to start switching... a process that, for similar reasons of users wanting their transactions to be honored by other users, can't be done piecemeal. The miners simply don't have the power you claim they do.
>If the majority of miners agree to it then the rest of the network either goes along with it, or they're forced to do a hard fork themselves.
The only the hashrate attacks can do is alter the order of transactions (for example allowing them to replace their past transactions and double-spend). They cannot change the way in which users interpret blocks (for example, they cannot spend another user's outputs, change the value of a given output such as a coinbase output, or otherwise alter the tokenomics). I recommend watching 3blue1brown's video: https://www.youtube.com/watch?v=bBC-nXj3Ng4
>For the end user just trying to make a payment, it's irrelevant whether it's intentional or not, either way he is now faced with the spitting of his coins and the resulting chaos.
Any reasonable vendor will wait for X amount of blocks to pass before accepting a transaction. You're describing a well known vector called a "Finney Attack", which becomes exponentially less likely for every block you wait.
>What's the actual value of a bitcoin? There just isn't one.
Take the number of pizzas that are being sold for bitcoins, and divide that by the number of bitcoins in circulation. I think you may find that the value of BTC/Pizza has not changed much over the last decade.
I mean, what is the actual value of a dollar. It is not like we use the gold standard anymore. The dollar is valuable because it is a connected to a useful payment system. You don't mind holding some liquidity in US Dollars because you have an expectation that you will be able to spend your dollars somewhere in the near future, not because you trade it in for shiny yellow ingots.
whether you fork from bitcoin or just create another alt coin, they just don't have enough critical mass to compete with the originals.
> worse than whatever you think is happening to the US dollar.
Bitcoin is risky: it's down over 70% from it's highest point. But the dollar is down over 98%! (from 100 years ago) and let's not forget, the rate at which the dollar and other fiats are crashing is getting faster and faster. at 10%, you'll loose half your purchasing power in just 7 years.
I'm sorry, can't you see what you're saying? Bitcoin can crash over 70% in the span of a month, that's significantly more than the dollar's inflation over 50 years.
And unless you're trying to retrieve your great-grandparent's piggy bank from 1922 and spend its contents, then the dollar inflation from 100 years ago is irrelevant. Even over a year the small level of inflation in USD is inconsequential for the use of a currency. The thing about the inflation of the dollar is that the rate of inflation has become relatively stable and predictable, this is what actually makes it useful as a medium of exchange. With the way bitcoin is now, its inflation or deflation will never be stable, it always will be completely random making it useless as a currency; bitcoiners simply are philosophically opposed to anything that could control the rate of deflation/inflation, like having capital controls and a reasonable monetary policy.
I'm sorry, in the nicest possible way, this is complete nonsense.
Governments can, will, and have printed money to pay their debts. Indeed, for sovereign currency issuers, debt (or whatever) is just an accounting measure. A certain amount of material wealth is collected by government in the form of taxes and redistributed back to society in accordance with the policies of the day. Debt and other financial instruments are just to smooth the process.
Bitcoin will never be a meaningful asset class, anymore than any other pyramid investment scheme.
the default i'm talking about is inflation: it's a soft default. and in the end most of that debt your talking about, will be paid for by those holding cash and bonds.
The value of the dollar, relative to the usual basket of goods and services has no bearing on the value of bitcoin, relative to the dollar. None whatsoever. To imagine that the price of bitcoin will go up to match the inflation of the dollar is quite frankly whimsical.
Nah. Except for a tiny minority of true believers, Bitcoin is just a trading vehicle. The line goes up or down. Traders win or lose. Faith in fiat currency or lack thereof doesn't enter into it. Don't believe the hype.
To the extent there is any real value it's primarily a means for wealthy Chinese to evade currency controls.
When you state "Fiat" currency, you are probably referring to USD or Euros. Fiat currency in other countries like Venezuella or Turkey has much different status.
Do you have any proof that Bitcoin's value is driven by wealthy Chinese who are evading currency controls?
if wealthy chinese did use to evade currency controls, it sure is trackable with all those YKC rules, not to mention a completely open ledger. China could easily find anyone who did that. Fiat is much better for evading currency controls.
so, if you had money/life savings where would you put it?
> Ask anyone, why they got into bitcoin, ask any company that got into holding bitcoin instead of cash: they'll tell you: It basically boils down to "I lost faith in fiat".
Huh, nearly everyone I have asked basically told me they want to get rich (like FU money rich), quickly.
Even as a crypto-sceptic I must give you some serious props for a very well-thought out and written comment.
I found this somewhat persuasive.
But despite being very well written, all this does is say why not fiat.
If you're looking for a store of value, why not gold?
If you're looking to put the money to work, why not value-creating such as real-estate or stocks, growing the wealth through value-creation?
Gold would be great but in the US, it's practically uninvestible unless you have a lot of money in a IRA (a tough feat given the yearly contribution limit). Gold is taxed as a collectible. your "gain" is taxed at 28%. But, gain isn't gain anymore. all that so called gain is just your principle when the dollar value goes from 50K to 1 million but your purchasing power is the same as before. so you'll loose 28% of your principle in the long run, if you hold it outside of an IRA.
Real estate also sounds promising. I'd love to own real estate over bitcoin. but, have you actually done it? i mean buy property as an investment. i have a real estate buddy that just told us an hour long horror story of all the stuff that can go wrong with buying and holding real estate, the renting issues truely are the stuff of horror stories are made of.
So, all that's left is equities and bitcoin. and I don't want everything to be in equities.
OP doesn’t cover btc as a native machine<>machine or digital economy discrete value transfer mechanism. Gold can’t do that, presumably computers will still be around post-default though so the need exists. People will pay each other with venmo still, just maybe not redeemable for fiat vs crypto.
There's a bait-and-switch, or motte-and-bailey argument going on here:
- currencies can collapse. Venezuela, Zimbabwe; you could add Argentina and (checks chart) Turkey to this list. Against what do they collapse? The dollar.
- therefore the dollar will collapse <= this is the "show your working" bit
- therefore people will hold an asset class that does not pay dividends or coupons, indefinitely, against the possibility of this event
> They can't raise taxes and they can't cut spending
They absolutely can if the alternative is SHTF.
There is also an assumption that bitcoin owners will be allowed on to their reserved lifeboat with no government intervention, which I wouldn't guarantee if SHTF badly enough. It's already been banned in China and India. I suppose the plan is to get enough senators bought-in that they'll protect you.
Look at the 100 year long term trend for all countries worldwide. There's a rather shocking chart out there that shows the massive increase in govt spending as % of GDP. whereas it was in the single digits about 100 years ago, now it's in the 30-50% range for most countries. I just don't see this trend reversing.
I think you have it wrong. crypto unlocks a financial api to the masses, which is why the foundation is decentralized. Nothing to do with whether the entire stack has to be decentralized. The freedom that's unlocked is that anyone with a great idea can create a fintech company, like a bank, that would historically require massive captial to build such a network. That is what a distributed ledge brings to the table.
Tbf, that first article was about bad investment choices on their part. In last year's market, they'd just brush this off like nothing. But the current bear market is killing them (and all the other crypto fintechs) and these things just accelerate their fall.
I disagree. The statement was clearly 'everything is fine' and when I read it, I entirely expected this new article to come out a few days later.
I was at a small DeFi conference in May and there were a number of BC.com people there. Young kids with little experience in the industry. They had clearly over hired.
On top of it, they did the cardinal sin of 'never invest more than you are afraid to lose'. They went into a high risk venture and lost hard. It isn't just the bear market.
I see crypto fintech startups failing everywhere. It's not the companies, it's the market. The fact that dumb investors threw money at them expecting this insane growth to continue didn't necessarily help, but if Bitcoin was still going strong, few to none of those companies would be in this kind of trouble.
You see the news and news focuses on the bad. Not all crypto fintech startups are failing. Dig a bit deeper.
For anyone, like myself, that have been in the crypto scene for a very long time, Bitcoin is doing just fine. Markets go up, markets go down. Nothing new here.
Their headcounts usually aren't large and they make insane amounts of money
Whats the mystery there?
They pay in cash, and tokens with short vesting periods of a few months which are sellable for cash, saving you 4-8 years of your life working at FANGs or being paid in illiquid lottery tickets at non-crypto startups
Some also pay in traditional equity (the illiquid lottery tickets), but wont pretend like thats the good deal like all web 2.0 startups try to gaslight their employees into thinking
Its pretty competitive. Remove the “crypto” peculiarity and you just have revenue generating tech startups with a product they can give you that’s sellable for cash on ebay, who might also offer you some ownership in the company also sellable at a higher price since there are a bunch of people looking to buy shares of revenue generating tech startups.
and why do you think that is an accurate conclusion for you?
are you saying that you are incapable of evaluating any specific company? You cant tell the difference between working for Do Kwon or working for Blockchain.com or working for Coinbase?
are you saying that you can’t tell the difference between using your own money to buy crypto versus using none of your money and getting showered with 7-figures of crypto over 3 months that might be worth 6 figures by the time you have it to sell?
Are you saying that Blockchain.com’s layoffs back to headcount levels 6 months ago moves crypto from “grey” area to “red” area for you despite similar headcount reductions being seen across the tech sector?
Were you saying grey/red from a regulatory aspect? Circling back to your inability of evaluating an employment opportunity on your own?
what were you saying and how did you get it from this headline…?
One interesting way to look at it is that the Crypto market is experiencing a 2008-like crisis (unregulated/less regulated shadow banks going bust), but without any bailouts.
Wonder if they'll learn the same lessons and come up with a Crypto federal reserve (likely called Unbanked DAO of Courage represented by Mark Wahlberg or some shit). Would be ironic.
> likely called Unbanked DAO of Courage represented by Mark Wahlberg
The celebrity endorsements of Crypto related investment platforms and product is so gross. Using themes like "you don't have to be smart to trade cypto" "be bold" its so gross.
No matter how complex and viable a perpetual motion machine looks, you can't get more energy out than goes in.
Similarly - no complex restructuring of money into different assets will make more money come out than goes in.
Money only grows in a non zero-sum way when it's put to work in the real world: e.g. creating value by creating a product which is more valuable than the sum of its parts.
The value that cryptocurrency provides is as a payment network between less trustworthy parties. In cryptocurrency, there is a net transfer of wealth from users (in the form of transaction fees) and owners (in the form of inflation/block reward) to miners, who provide value by securing the network.
But I agree that in terms of literal dollars, you could define some sort of "Gauss' Law of Economics" along the lines of:
The amount of dollars a financial entity has is equal to the time-integral of the rate of dollars entering the system minus the rate of dollars leaving the system.
The argument that the payments themselves are a service (while valid) has to be broadly competitive with the mainstream alternative.
So for "securing the network" crypto is very, very clearly less secure than conventional payments. (Far more hacks, defaults, and not centrally backed by government).
And the fees charged are vastly more and vastly slower.
The service is therefore so much worse at such a higher cost that it seems more like the arbitrary product that a Multi Level Marketing firm ostensibly sells than a real offering. (And the only real USP of "enables criminal activity" is not a valid USP that anyone should allow or touch.)
There are cryptocurrency systems like Nano or GNU Taler which can be broadly competitive with the alternatives AFIK, so long you are using them in a peer-to-peer manner that doesn't involve Fiat.
>And the fees charged are vastly more and vastly slower.
...If you are using a system like Bitcoin or Etherium that has poorly-adjusted artificial limitations on consensus bandwidth. Yes, the cryptocurrency market at large needs a wake up call.
>And the only real USP of "enables criminal activity" is not a valid USP that anyone should allow or touch.
I don't think all less-trustworthy payments should fall under this umbrella of "criminal activity". If I want to send some money to a anonymous person on IRC, I'm not going to give them my credit card info let alone paypal because they're attached to my personal information which could be used to blackmail/dox me. There is a reasonable use-case for giving the average person the same privacy they expect from cash, but with the ability to make transfers over the internet (that are signed in a secure way!).
But in any case the whole point of cryptocurrency is to act non-permissively. You might be right to disagree with its criminal use, especially if you live in a free society (where we agree on definitions of crime that are non-authoritarian). But regardless of what either of us think, the system will continue to develop as long as there is financial interest in DN infrastructure and the cryptography is sound.
>There are cryptocurrency systems like Nano or GNU Taler
Nano has the same ponzi-like economics as the rest of the cryptocurrencies so that's a no-go. GNU Taler is explicitly not a cryptocurrency, in particular it should not be used in a fully peer-to-peer manner, there needs to be a centralized operator that's legally required to hold the funds backing the tokens. That thing that stablecoins were supposed to do, but didn't because crypto companies don't care about actually being honest or responsible with customers' money.
>that doesn't involve Fiat.
By definition, all cryptocurrency involves fiat because all cryptocurrencies are technically also fiat money. Tokens in a ledger don't have any inherent value or consuming demand, they're backed by nothing but empty promises.
>There is a reasonable use-case for giving the average person the same privacy they expect from cash, but with the ability to make transfers over the internet (that are signed in a secure way!).
This has nothing to do with cryptocurrency. You don't need to invent a new currency to have a privately signed transaction. Innovation should keep happening in payment systems (with the full involvement of regulators) but it's hard to do that when these fraudulent crypto companies are hogging up all the mindshare and promoting the (false) idea that blockchains are the one true way to accomplish this. They aren't even a good way to accomplish it!
>the system will continue to develop as long as there is financial interest in DN infrastructure
I certainly hope not. All the more reason to make it illegal ASAP.
>Nano has the same ponzi-like economics as the rest of the cryptocurrencies so that's a no-go.
Then fork it yourself and change the tokenomics to suit your interests. If others agree with you, then your fork may become popular and useful.
>GNU Taler is explicitly not a cryptocurrency, in particular it should not be used in a fully peer-to-peer manner, there needs to be a centralized operator that's legally required to hold the funds backing the tokens
The issuer does not need to be legally anything. What you need is for the peers to trust the issuer not to double spend. If the law enables that, then so be it, but the GNU Taler system can also function as part of an extralegal system.
>That thing that stablecoins were supposed to do, but didn't because crypto companies don't care about actually being honest or responsible with customers' money.
The difference between GNU Taler and stablecoins is that stablecoins encourage custodial "staking" AKA investing in ponzi schemes. Whereas in GNU Taler, the issuer can only charge the users on withdrawls/deposits like a typical bank.
"because crypto companies don't care about actually being honest or responsible with customers' money?" Please. Users gravitate towards ponzi schemes because they want to be the ones scamming, even if odds are they're getting scammed themselves. The investors are the ones that instigate this behavior, whether that's through a lack of due diligence or otherwise.
>Tokens in a ledger don't have any inherent value or consuming demand, they're backed by nothing but empty promises.
There is no need for cryptocurrencies to be "backed" by gold, because creating coins or double-spending is non-trivial, so there is no desperate need for additional assurances. The goal of cryptocurrency is not to be a sound investment but instead a useful medium of exchange. To that end, it only needs to ensure its value in the short-term.
Cryptocurrencies are not backed by "empty promises". They are not backed by anything at all. If users have an expectation that they will be able to redeem their cryptocurrency for goods and services in the (near) future, then it may be valuable for them if they find utility in it versus some other payment method. But they own that risk themselves, regardless of what snake-oil salesmen will tell them.
>I certainly hope not. All the more reason to make it illegal ASAP.
I agree. We need to make crime illegal again. Should civilians have access to military-grade cryptography? Bring back the crypto wars!
>Then fork it yourself and change the tokenomics to suit your interests.
I don't need to fork it, the easiest solution is to just not have "tokenomics" at all. If the last several years have been any indication, those will always regress to a ponzi scheme in the end because they're all inherently backed by nothing. In my experience it's also impossible to seek any "agreement" with crypto enthusiasts because they fundamentally disagree with me on what the purpose of money is, and aren't interested in changing their mind, and (tellingly) the only way they have to get me to change my mind is to convince me to invest in one of their tokens. No thank you, it should be a huge red flag to you that the only way for someone to get involved is to become a bag holder. Even in the real world, only the most high-risk high-reward startups are even able to get away with that, and even then it's still acknowledged that you're most likely to lose your entire investment.
>The issuer does not need to be legally anything. What you need is for the peers to trust the issuer not to double spend. If the law enables that, then so be it, but the GNU Taler system can also function as part of an extralegal system.
An extralegal system is one where the other party can just run off with whatever money is in the system and not give any of it back. I'm sorry but I don't want that, I don't think anyone who doesn't like being scammed wants that. The issuer legally needs to do this if they want to avoid being fraudulent.
>The difference between GNU Taler and stablecoins is that stablecoins encourage custodial "staking" AKA investing in ponzi schemes. Whereas in GNU Taler, the issuer can only charge the users on withdrawls/deposits like a typical bank.
Yes, that's one reason why Taler is fundamentally different from a cryptocurrency.
>"because crypto companies don't care about actually being honest or responsible with customers' money?" Please. Users gravitate towards ponzi schemes because they want to be the ones scamming, even if odds are they're getting scammed themselves.
I wish you wouldn't try and victim blame and excuse the behavior of these companies. They've lied to these people by telling them it was a safe investment. This is how every confidence scam operates, by telling the victim what they want to hear.
>There is no need for cryptocurrencies to be "backed" by gold, because creating coins or double-spending is non-trivial, so there is no desperate need for additional assurances.
I'm sorry I don't understand this at all. You can observe from the extreme price volatility in every cryptocurrency, and resulting uselessness as a medium of exchange, that there is a need for additional assurances. You can't use something as a medium of exchange when its value can change 50% in a day.
>But they own that risk themselves
I hope you can see the futility (and extreme capability for fraud) of trying to create a financial system where no company wants to assume any risk, and all of it gets unconditionally pushed off onto the users. In a modern economy this is completely unusable, and it's totally outrageous that crypto people are even suggesting it.
>We need to make crime illegal again. Should civilians have access to military-grade cryptography? Bring back the crypto wars!
Less of the snark, please. It's extremely tiring to keep hearing people make false comparisons to the crypto wars. It's very clear that adding encryption into general purpose systems helps everyone. Blockchains don't help anyone unless you're trying to launch a ponzi scheme or other type of fraud. These systems are intentionally built to have no capital controls and no fraud protection whatsoever. In fact some of them are designed to purposely make it difficult to add fraud prevention in. This isn't a technical advancement that helps anyone, except huge fraudsters like Bitfinex and Coinbase that are reaping billions from "crypto investors" that are being lied to on a daily basis. We can see right now that it isn't helping anyone, but it is destroying the planet and causing a lot of people to lose their life savings. It's a big fraud, fraud is already illegal, the main problem is that it takes too long for a bureaucracy to crack down on such a large fraud.
>No thank you, it should be a huge red flag to you that the only way for someone to get involved is to become a bag holder.
When have I ever said that you should invest in cryptocurrency? I have made it pretty clear that I am skeptical of cryptocurrency as an investment.
Creating a fork of a cryptocurrency does not necessarily involve forking the existing transactions or balances, you can just start a new genesis block if you don't believe in the validity of the existing owners (For example the Bytecoin-BitMonero fork). "Forking" in this context just means copying and modifying the code in a new source tree.
>An extralegal system is one where the other party can just run off with whatever money is in the system and not give any of it back. I'm sorry but I don't want that, I don't think anyone who doesn't like being scammed wants that. The issuer legally needs to do this if they want to avoid being fraudulent.
That is a narrow and inaccurate portrayal of how the extralegal markets operate.
>I'm sorry I don't understand this at all. You can observe from the extreme price volatility in every cryptocurrency, and resulting uselessness as a medium of exchange, that there is a need for additional assurances. You can't use something as a medium of exchange when its value can change 50% in a day.
"Volatility" and "Liquidity" are not some sort of magical property that conventional currencies have by merit of being controlled by a central entity. The volatility is a result of it being used for speculative investment rather than a medium of exchange. The more that vendors/customers use a cryptocurrency as an actual medium of exchange, the less volatility there will be because vendors/customers will be forced to stomach the change in price over the course of a transaction (for better or for worse). Conventional currencies are stable because there are lots of vendors/customers that don't want to constantly change their prices every nanosecond. Why are there lots of vendors? because it is stable. So it is circular logic in either case.
I use cryptocurrency as a payment network all the time, and I accept the risks. It is good for my use case. I am not saying that it will take over the global economy, but I do think it would be a major boon for the internet economy because it will make many transactions feasible that aren't otherwise. You cannot trust banks to implement proper security and privacy when they benefit from obscurity and surveillance. If you could, then we would all be using DigiCash and Bitcoin would have never existed in the first place.
>Less of the snark, please. It's extremely tiring to keep hearing people make false comparisons to the crypto wars.
Here's your argument with an extra-small side of diet snark: regulation of cryptocurrencies may not seem ethically the same as regulation of strong encryption, but it is effectively just as difficult if not impossible. You are trying to regulate a computer program, and every time world governments have tried to stomp out the network it has only adapted to become more resistant to censorship.
>These systems are intentionally built to have no fraud protection whatsoever. In fact some of them are designed to purposely make it difficult to add fraud prevention in.
The fraud protection is designed to prevent double spending. If "fraud prevention" involves a third party who puts their thumb on the scale and gets to determine what is or isn't fraud, then it's not desirable for a trust-less network. Shame that cash does not have a built in fraud detection mechanism that allows authorities to remotely destroy it. The privacy guarantees of cryptocurrencies are only comparable to those of cash.
With cryptocurrency users can expose themselves to as many third parties as they voluntarily choose (e.g. a Bisq-like trading system).
>This isn't a technical advancement that helps anyone
Well it helps me. It is not good for every use-case, but it works for my use-case and it is decent at what it does.
>but it is destroying the planet
The environmental impact of cryptocurrency is a problem, but has perhaps it has been misrepresented in the common discourse.
>the main problem is that it takes too long for a bureaucracy to crack down on such a large fraud.
I should also mention another reason why banning cryptocurrency is not like banning encryption. The only thing that encryption actually needs to function is two people, and the encryption algorithm itself. If any two parties agree on the algorithm and a set of keys then they can create a secure communication channel; it doesn't even need to be over the internet, you can communicate securely by copying the message onto a flash drive and sending it via carrier pigeon, or just writing the bits down on a piece of paper and putting in a wine bottle and tossing it in the river. Now, those methods definitely may not be reliable, but they are theoretically secure if the message is encrypted.
Crypto on the other hand, requires a running network of many publicly identifiable participants to function. The blockchain code by itself does nothing; this network only functions if it has a critical mass of miners to run the network and a critical mass of buyers to pump up the price of the token. Without those things, the token becomes insecure and worthless and can't be used. So inherently, crypto will always be an easy target for attackers, will always be vulnerable to getting shut down by governments, and will always be manipulated by ponzi schemers looking to make a quick buck. This is a fundamental design property of the system, you can't fix it by adding some more code to it. It's also the same reason why all the marketing around it is a lie. Cryptocurrency is terrible as a currency and terrible as an investment, and just all around terrible.
>When have I ever said that you should invest in cryptocurrency?
Sorry, I should have been clear I didn't mean you. I've heard so many crypto promoters ignore my comments and tell me I don't understand unless I buy the token. Asking me to fork their project and start selling my own token is dangerously close to what they say, so please don't ask me to do that either. No one can solve the problem with ponzi schemes by creating more ponzi schemes.
>That is a narrow and inaccurate portrayal of how the extralegal markets operate.
It wasn't meant to be a complete portrayal, it's just one example. Fraud is rampant in those markets.
>The more that vendors/customers use a cryptocurrency as an actual medium of exchange, the less volatility there will be because vendors/customers will be forced to stomach the change in price over the course of a transaction (for better or for worse)
But this doesn't make sense. You're not saying there's actually less volatility, you're saying the users will just be forced to accept extreme volatility. That's markedly different from what's happening with the USD. And why should they accept it? Why would they want to be forced to accept a 50% increase in the price of something over 10 minutes? There's no reason for them to do that other than the (entirely philosophical) insistence from blockchain programmers that there should never be any price stabilization because capital controls are bad, and completely free unregulated markets are somehow good despite that you can very obviously see how that philosophy is repeatedly and directly causing people to lose their life savings gambling in the various crypto frauds and hacks and bankruptcies.
>I use cryptocurrency as a payment network all the time, and I accept the risks. It is good for my use case.
I disagree that it's good for your use case, because crypto is bad for any use case. I'm serious, it's that useless of a technology. There's nothing it does that can't be better served by something else. Perhaps you just haven't looked at the other alternatives?
>You cannot trust banks to implement proper security and privacy when they benefit from obscurity and surveillance.
You cannot trust crypto companies to implement that either, judging by the ridiculous amount of times they've suffered catastrophic hacks and thefts. Or sometimes they just openly run a ponzi scheme that's guaranteed to lose your money no matter how secure or private it is.
>regulation of cryptocurrencies may not seem ethically the same as regulation of strong encryption, but it is effectively just as difficult if not impossible.
No it's not, you just crack down on the exchanges and stablecoin issuers. Those are incredibly centralized by necessity, and almost all the liquidity and pumping can be traced directly back to them. They were all fraudulent from the start too; without them, very very few people would have any use for crypto at all. Get rid of them and it's obvious to even the most clueless of crypto investors that the emperor has no clothes.
>The fraud protection is designed to prevent double spending.
Double-spend is only one type of fraud among a countless other ways to commit fraud. See all the other fraud and theft that is committed by various crypto companies on a daily basis.
>If "fraud prevention" involves a third party who puts their thumb on the scale and gets to determine what is or isn't fraud, then it's not desirable for a trust-less network.
This sentence is nonsense. Blockchains are fundamentally not a trustless network, you're trusting that the miners (a third party who puts their thumb on the scale) will maintain the network in a certain way that you interpret as being fair. Just like with cash, there are certain things the government can to do crack down on the illicit use of cash, you just trust that they won't do it.
>With cryptocurrency users can expose themselves to as many third parties as they voluntarily choose (e.g. a Bisq-like trading system).
What possible reason would any user have to want to "voluntarily" expose themself to fraud and theft?
IMHO the importance of currencies is getting highly inflated. It's just a tool and if the real economy is not going well - or the part that is actually mapped with the currency anyway - then the numbers don't look good. I'm not sure about the zero sum game part but I highly doubt changing the scale (which is what Bitcoin for instance does by limiting the max. amount of coins) is changing the dynamics
Crypto used to be the domain with the most "free money" floating around and the most need to outhire your competitors. Of course, they overhired with a much lower bar than the industry in general, and of course the market will now be flooded with these developers.
Prob a lot of these companies are just cutting the bottom bucket. Don't companies like banks usually do this during a little downturn, using the "economic conditions" as an excuse even though they know it's just 6-12 months max.
Every day I'm more mystified and scared of where does all this money come from, and where it goes... To me it feels like nothing makes any sense. Who has this much money to throw at essentially gambling without any real revenue sources.
a week ago the market was worth cca 800B. today the market is worth over 1T. for some perspective just how huge this is, ukraine's foreign debt is at 20B, or 10% of the weekly growth of the crypto market. some crash lol
Such numbers always fascinate me, and showcase my ignorance (I freely admit it; I had a "Ask HN" recently about some "Economy 101" suggestions:) of both regular financial/economy, as well as crypto.
It's 1T worth of... what?
I can kinda sorta understand 1T of car factories and farms and food plants. I can understand the over-simplified-into-nothingness capital model of I give you $1000, you build a factory, you build cars, you create value, eventually you give me back $1100. Or something.
I can even intuitively understand (or fool myself) as to 1T of services - tourism, accounting, software, consulting. I can see its place in the world, the interconnectedness with industry and people and products and markets.
I cannot visualize/intuitively understand 1T of crypto. It feels so... insular, self-contained. 1T of... companies running datacentres running random calculations... for money, kind of? People giving each other more and more non-crypto money and making it very complex? It feels like this whirl-storm of activity, vortex that sucks stuff ("real world money") in, but I don't understand its connectivity to outside world, it's output, the balance of interfaces. My mental image is incomplete and clearly wrong.
(I suppose I should think of it more along the lines of, say, Gold market, but I don't understand that either :D )
1T of 'belief that someone will pay more than the last person'. That will continue oscillating between the highs and lows until either someone finds a genuinely good use for crypto, at which point the value rockets upwards and today's coin prices look comically small, or people stop believing and the whole thing collapses.
There's multiple things to consider with the crypto space:
1) Bitcoin: It is attempting to establish hard money standard outside of state authority. It's slow going. Takes a long time to build and educate. Currently largely treated as a store of value, but there are efforts under way to make it usable as a method of payment (the Lightning network).
2) Tether and fully backed stablecoins: These provide dollar liquidity to the crypto ecosystem. More importantly, they are a very important store of wealth for the developing world, where they want dollars but laws and capital controls prevent stunt that.
3) Shitcoin casinos: The space for degenerate gamblers.
To use your phrase, all cryptos are shitcoin casinos. The difference between bitcoin and all the others are just one more shitcoin. The Lightning Network is fundamentally flawed and broken anyway [1]. If it actually did work in any capacity, it would still be nothing more than a poor bandaid on top of a broken system. The bitcoin developers have the ability to fix scaling problems by taking various measures (like increasing the block size limit) but refused to do so because doing so cuts into the profits of the miners. They don't want it to be a usable payment system. The community has shown repeatedly that they'll resist all efforts to do that because it reduces the amount of money they can make. Actually the design of bitcoin means that the miners profit much more from forcing people to continuously make useless transactions, not payments.
To be honest, payment systems are well-known for being a difficult, risky and low-margin business that are the front-lines of defense against fraud and malicious bots trying to take advantage of any tiny bug they can to swipe someone's funds. It's really not surprising that the crypto promoters have washed their hands of any responsibility about this, passing it around like a big game of musical chairs to whatever project makes the most empty promises it can about being a scalable solution (but still having no answer to the problem of massive fraud and bot attacks).
As for your second item, illegally circumventing capital controls in favor of a risky, unregulated offshore bank (that repeatedly denies they are a bank in order to avoid being shut down, because they couldn't possibly comply with banking regulations) is not actually helping anyone store or accumulate wealth in a developing economy.
Your post demonstrates a clear lack of understanding about how Bitcoin works.
1) The Lightning Network is fine and stronger than ever. That >2 year old outdated post is meaningless. There are MANY more routing nodes than ever, and markets have sprung up that allow nodes to make profit around selling liquidity to other nodes. Lightning is bigger, better, easier and more private than ever, and it only continues to improve.
2) The Bitcoin developers do not control Bitcoin. The Bitcoin miners do not control Bitcoin. The nodes control Bitcoin. There are tens of thousands, at least, of full nodes. Bitcoin developers and miners have tried many times to change the consensus rules of Bitcoin, and have failed every time, because the node operators just wouldn't run the code.
That's because Bitcoin is actually decentralized. The Bitcoin community reached a social consensus that the protocol consensus rules were probably never going to change, and it was preferable that they not change. Instead, the majority of the effort for scaling Bitcoin has gone into building higher Bitcoin layers, such as the Lightning Network.
Also, if the Bitcoin developers cared about miner profits, they wouldn't have implemented something like SegWit which is a backward-compatible change which dramatically reduced transaction fees to miners.
The truth is, no amount of block size or block time changes will ever make a cryptocurrency scale enough to remain decentralized and be a network for ALL payments. Building in layers is a sound engineering decision, and it allows people to create a payment network like Lightning without making potentially deadly trade-offs in the base layer.
How do these stablecoins work if there is capital controls? Okay you have them on exchange, but how you then actually get dollars out in anywhere with capital coins? Surely some local must do trade, but surely that trade won't be 1:1?
You just trade them as dollars. In places like Lebanon, Turkey, etc many people will just use them as dollars. You can send them around in crypto wallets.
That's an interesting point I hadn't thought about before but it should have been obvious. Crypto is inherently inflationary to the system as a whole, since you're increasing the amount of currency without increasing the number of goods.
But that doesn't matter, you can borrow one on a defi platform and re-lend it. The exact same "money creation" process that people complain about with "banks" also works for any deposit-taking lending organisation.
In general I always felt bit weirded out by whole crypto "market cap". So there is X million tokens and they are worth this number... But how much money has there actually ever been invested into it?
Not that stock market and "wealth" loss there makes much sense to me either. Or that they own what ever, power plants, ships, factories. And they sell whatever they make. Ir I get point that company makes this much money and is expected to make it going forward. Still, if the number they are traded for drops something is lost? It wasn't there in first place.
The only mistake here is that you chose to apply a separate higher standard to crypto, as opposed to seeing how a lower standard fraught with disaster is used in traditional markets.
This is a conversation about “public float”, and so your comparison or explanation of whats hard to understand for you should be about float.
Any stocks, bond, commodity, currency, set of assets, all experience the same phenomenon: where none of the daily or weekly marketcap changes have anything to do with the equivalent amount of money changing hands.
> Any stocks, bond, commodity, currency, set of assets, all experience the same phenomenon: where none of daily or weekly the marketcap changes have anything to do with the equivalent amount of money changing hands.
Stocks have two parts to the market cap values - the value of assets and revenue, and the speculative value of future asset/revenue values. Bonds have promises of their assigned values and dividend payouts. Commodities are useful.
Currency is the closest, of course, but then it has the promises of some government - a government that can tax the income of their people, and enforce that taxation.
Only cryptocurrency, among them, only has the value of what you hope to sell it for. In the moment, it's a consensus price, but the value only goes up based on speculation that it will go up enough for your individual purposes, or somehow that particular cryptocurrency will useful enough to hold value beyond speculation.
The S&P 500 performs about a half a trillion dollars a year in stock buybacks, funded by corporate profits, in addition to their roughly half a trillion dollars a year in dividends, because people are happier when numbers go up.
none of the daily or weekly marketcap changes have anything to do with the equivalent amount of money changing hands
you also have said nothing to the contrary
basically the commonality is that you two are attempting to have a conversation on differences valuation models, when this isn't a conversation on valuation models. everyone understands that this is thinly veiled copypasta for why you respect one asset class and don’t respect another asset class, some people love to read that stuff but this isn’t what this conversation is about.
its a conversation on float and what float does and does not convey. the limitations of what float can convey is the same across all asset classes which is that the last traded price of a small portion of the supply is multiplied by the total supply, and this does not factor in how much could be sold at that price and does not factor in how the buyer and seller agreed upon that price or if there was any pricing projections or valuation metrics involved at all.
> the limitations of what float can convey is the same across all asset classes which is that the last traded price of a small portion of the supply is multiplied by the total supply, and this does not factor in how much could be sold at that price and does not factor in how the buyer and seller agreed upon that price or if there was any pricing projections or valuation metrics involved at all.
The limitations of what float can convey may be the same across all asset classes, but other asset classes do not suffer the limitation that there is no source of value except for the float.
A corollary of this is that market caps of stocks, bonds or commodities may reflect valuation metrics other than Greater Fool Theory.
> So in a conversation about float you should stick to float.
It is true that in some crypto assets value can be realised as claims to the sort of value the OP said they understood, like future revenues of a business (or "DAO"), instead of solely by finding buyers for the crypto. But it is not true for the typical "insular, self-contained" cryptocurrency they sought to contrast it with, in which the market cap can be realised solely by sufficiently deep-pocketed Greater Fools purchasing the float.
In a conversation about the fundamental weirdness of assets whose value can only be realised by float, one probably should stick to assets whose value can only be realised by float.
So you acknowledge the strawman argument of valuation, used to discredit the initial point about how marketcaps change when crypto is involved, and then we both agree that the strawman argument cant even be reliably used to discredit the initial point, but then you double down on the only times it can anyway? Just for the sake of a reply?
Well good chat. I hope it is insightful to someone that passes by.
The only strawman argument of valuation was you dismissing the OP's perfectly sensible doubts about whether $1T of legal claim to business with actual physical capital and profit expectations was truly equivalent to $1T of cryptographic strings valued because number go up by pointing out technically, their market caps were both calculated in the same way, as if nobody should ever consider fundamentals or how much of the market cap of assets of the respective classes could be realised in a selloff (or indeed how much wash trading took place to completely fake market cap)
But yes, your persistence in insisting the conversation should be about what you care about, and not about the original subject matter got me to acknowledge that some cryptoassets - which are unlike the high profile, high market cap unbacked cryptoassets the OP was talking about - imitate stocks and may generate future revenue streams from selling things other than tokens. Glad you enjoyed that bit. I do hope the insight passers by come away with isn't that DAOs and stocks have equally strong legal claims and rosy expectations and float is all that matters though.
In many ways a casino is like a theme park. Customer comes in, you empty their wallet, they feel happy for a while, job done move on to the next sucker. By aggregating over a large number of customers the casino takes what is gambling to the individual punter and makes it into a sure fire income stream. In a way it's honest work.
Whereas most of the "cryptocurrency" stuff is a scam, sometimes a scam onion, with layers of scams performed on other scammers. It me reminds of a juice MLM I ran into. At first I see the usual pyramid structure, there's no way you can "make money selling this" unless you're near the top of that pyramid, there are celebrity "endorsements" paid for with a nice chunk of money, and so on - but then I realise there's a whole other level. The real scammers don't waste their lives on this "fake it til you make it" crap. The MLM company has an exclusive supply deal with a single manufacturer, every bottle of crappy juice a victim pays for as "stock" for their "home business" is coming from one company owned by the scammers who dreamed all this up. They're nothing to do with any pyramid scheme, even if the Feds bust the whole thing, they're innocent, they just own a business which sells 10¢ of juice for $5 to the MLM company, just Capitalism red in tooth and claw. For every $1000 some fool spends on juice they'll never drink, $100 may end up going to some shark with great charisma and no conscience who reeled in that MLM fool, but $500+ ends up with the faceless juice makers.
A person would think that a system whose purpose is to count would have a better understanding of $1T vs $2T vs $3T. The reason for that discrepancy is that crypto is not about the proper count of dollars.
also noteworthy is the fact that if you bought BTC in 2018 just before the crash at 20K and held you would have made some serious money even at today's "crashed" prices. however if you bought into the predominant sentiment on HN (imminent crypto collapse) and sold you would have had some serious losses
Liquidity is what actually matters here. Your 1t figure includes all of the celciuscoins and many other coins which can't be sold in any meaningful amount.
sure much like in company valuations liquidity is an issue. however the fact that the stable coin marketcap is worth 180B gives good liquidity to the whole ecosystem
it depends how you read it? do you look at the global picture. the last "crash" happened after the market reached a peak of 700B value. today the market is worth more than that even after crashing. my point is that the crypto market shows crash-resilience unlike anything else that has actually crashed
For those who bought Bitcoin at around $60K - $40K it is indeed a giant crash from its previous high which it has lost 60% of its value. It is possible that if can crash another 60% to $10K, taking the whole crypto market with it. But we'll see.
> > my point is that the crypto market shows crash-resilience unlike anything else that has actually crashed
Yes. Crypto has had many 'crashes' but it seems that it isn't going to completely go away as wrongly predicted in 2011, 2013, 2015, 2017, 2018, 2019, 2021 and now 2022.
But again, as the commenters still fail to notice, the whole market (including crypto) has crashed.
if you bought into the predominant sentiment on HN (imminent crypto collapse) in 2018 and sold you would have had some serious losses. if you held your position you would have made some serious gains
> It is possible that if can crash another 60% to $10K, taking the whole crypto market with it. But we'll see.
Unfortunately, lots of people are indeed going into debt for crypto. That’s what happens when unregulated gambling becomes widely available.
“Survey: Americans Borrow Money, Default on Bills to Buy Cryptocurrency
More than 32% of cryptocurrency investors have used a payday loan in the past, and 11% have used a payday loan or title loan to invest in cryptocurrency, in spite of triple-digit interest rates…
About 21% of crypto-investors said they’ve used a loan to pay for their cryptocurrency investments. Personal loans were most popular, but payday loans, title loans, mortgage refinances, home equity loans and leftover student loan funds also have been utilized…
Investors are going into debt: Almost 19% of respondents said they’ve struggled to pay at least one bill due to the amount of money they’ve invested in cryptocurrency, and about 15% said they’ve worried about eviction, foreclosure or car repossession due to their investing…
More than 35% have used a credit card to purchase cryptocurrency, with about 20% of those paying it off when the bill came due, and another 14% are paying it off incrementally with either an 0% APR introductory offer or at the full interest rate, while 1% maxed out their card altogether…”
my point is that the ammount of borrowing people are doing to get into crypto is nothing in comparison to the amount of borrowing that drove the real estate bubble
Indeed. And with enough sun, rain, soil, and chill hours[1], that bulb can become two in a few years, doubling your investment…
[1] which can and should be faked by putting the bulb in the fridge for 12-14 weeks before planting, if you live in a warm winter climate like the Bay Area
i am pretty confident that people are not taking out mortgage-sized-loans to buy crypto. if they are banks should be taken out of business ... by crypto
in comparison to the amount of people taking out home loans in order to get in on the housing bubble that was subsidized by the government ... yes definitely
People have been taking out debt from crypto firms to buy crypto. That's what all the "staking" nonsense was about - and why it blew up. People are also buying on margin, which is a form of debt.
Then all these centralized exchanges popped up to make it easier.
Whenever I see these types of announcement I have two reactions:
a) I cheer, because the sooner the pyramid collapses the less the damage.
b) I'm sad because these are real people losing real jobs