Money put into bitcoin went into buying electricity, just to burn it into heat. Someone is in for a rude awakening when they try to extract income from cryptos, not just sell them to the next fool over.
China has so such vast reserves of dollars that they can crash US $ value and cause international panic. Meaning that at any stage you $ saving have chance to be worth nothing.
The BTCs do have value and its a cryptographic promise that cannot be broken. People forget that when using all of those tired old arguments.
BTC is also a sign of new generations knowing that the game is stacked and unfair, and they refuse to play it. BTC is no a problem is a sign of broken system.
People got paid to put them up, and people were paid to tear them down. At least some people were able to put food on the table because of that activity, even it was kind of wasteful.
> China has so such vast reserves of dollars that they can crash US $ value and cause international panic. Meaning that at any stage you $ saving have chance to be worth nothing.
Do they have more than what is present in the US itself? More than the EU? Japan?
Even if USD ends up dropping in value relative to other currencies, it will help US exports, where the US is second-highest:
* https://www.statista.com/statistics/264623/leading-export-co...
> The BTCs do have value and its a cryptographic promise that cannot be broken.
BTC is just as imaginary as anything else of "value" for humans except for air/oxygen, shelter, water, and food. Regardless of what is called "money" is is a figment of the human imagination: sometimes more useful, sometimes less.
At least with dollars I can buy a hamburger, pay my taxes, etc.
There is a guarantee of negative inflation. There is noone who can out of blue print 1T of BTCs and give it to rich to stimulate economy.
Built in transferability so you dont have to rely on some organisations to facilitate transfers and charge you arbitrary amounts.
You don;t have to like those, or agree whether its good or bad but those things are set in stone for BTC.
I would count this as a "con" and not a "pro". A fixed money supply is one of the things that caused a minor economic hiccup to turn into the Great Depression.
* https://www.nber.org/papers/w3488
Going to the equivalent of a digital gold standard is retrogradation:
* https://www.vox.com/2014/7/16/5900297/case-against-gold-stan...
My point is that BTC has built in promises that cannot be broken.
“ I also learned that Tether had lent billions of dollars more to other crypto companies, with Bitcoin as collateral. One of them is Celsius Network Ltd., a giant quasi-bank for cryptocurrency investors, its founder Alex Mashinsky told me. … Hoegner, Tether’s lawyer, [said] … that its secured loans are low-risk, because borrowers have to put up Bitcoin that’s worth more than what they borrow.”
https://www.bloomberg.com/opinion/articles/2021-10-07/matt-l...
Wall St: "hold my beer"
I'm probably breaking a bunch of HN rules here, but I haven't laughed that hard in a while.
Economics of real property is one thing, but fiat economics can be ad hoc manipulated in whatever direction the politi-sphere needs.
Debt at this point is used to put economic uncertainty in the masses.
Cheney even said the quiet part out loud; “Deficits don’t matter.”
It’s impossible to prove a negative; all future people need to do is ask “What debt?” and legislate it away.
France did this once before. We don’t owe the dead.
My point is it’s not a law of physics, but a social contract to be negotiated.
We owed pensions to people and took those away, so it’s not as if society has a very good track record of paying what it’s owed, so don’t get too hung up on those words meaning something forever.
You might take continuous iteration of our social contract as seriously as code; as we can see letting it accrue technical debt and bit rot is not so great.
Two ways:
1. The brutish way: legislate that all T-bills are now worth 1/10th of their nominal value. Potential risk: riots and capitols set on fire. In practice, this was done in history many times without much consequences.
2. The "boil the frog" way: let inflation run hard for a decade, until a 100$ T-bill buys you a nothing but couple of big macs. This has been happening for the better part of a century.
My point is it’s a social contract not a law of physics we cannot hope to bend.
Our embedded memory and experience need not be the one we pass on.
First, at the sovereign level, it only has consequences if the lender has more guns than you.
Seconds, most "debt" in OECD countries is not owed to sovereign entities, but to the countries population themselves, who if push comes to shove will just have to accept that their bonds are worthless if it is ever legislated to be thus.
Yea, the history of the world is full of populations just accepting their governments new policies to screw them over..
There are never any consequences to that, the people just shrug and say them the breaks and go about their day
<<sarcasm>>
Which is why it is much better to achieve the same goal via inflation, where after a couple of decade a 100$ T-bill isn't worth a cheeseburger.
They just create more of their fake err fiat money to cover the debt, sure it is worthless but they "paid it off"
See: the 1 Trillion Dollar Coin....
https://www.forbes.com/sites/francescoppola/2017/11/14/venez...
Until you can't.
Until you can't = when it flash crashes and everyone loses.
Not everyone.
Crypto has flash crashed a large number of times already in the last 10 years, each time weeding out speculators and weak hands and coming back 10x once business was taken care of.
I consider this to be an actual feature of crypto.
Anti-fragile.
Are you serious? Your username suggest you're a whale. Aren't whales considered being investors too?
Very serious. Large volatility swings punish gamblers (day traders) and rewards strong hands / long term players who made a bet they can afford to lose (investors).
> Aren't whales considered being investors too?
Not sure how that ties into the conversation?
It is 'This system will eventually supplant governments and fiat money systems, which it directly competes with. I benefit hugely from this system, so the governments will allow me the crypto whale to become the truly powerful one and I'll be able to buy and sell them as their fiat currency collapses leaving me HODLing the only true asset.'
"They'll never object to that, or make it illegal or anything. That would be RUDE. And anti-freedom.'
I think you're correct about the volatility swings, but the nature of societies is that they've gotta come up with defenses against the whales like you, otherwise you're just King over everyone. Those defenses won't be further volatility swing, but legislating against your profiteering directly. Not because it doesn't work, but because it does.
No, the bet I'm making is that if BTC goes to zero, it won't affect my life in any way, shape or form.
If, on the other hand it continues going up, which I believe it will, it provides me with additional side money to play with.
> his system will eventually supplant governments and fiat money systems, which it directly competes with
I don't believe BTC will supplant government-managed money systems.
As a matter of fact, I don't even think I wish for that to happen. I'm much happier for it to remain a parallel system, an escape hatch if you will, to keep govts honest because they know if they decide to shave their flock too hard, there is an alternative.
Basically, like in any political system, you want to have counter-powers if you want everyone to behave.
And up until now, there was no such thing on the currency / wealth preservation front: all the power was in the hand of the govts.
BTC is a very welcome change to the status quo.
> "They'll never object to that, or make it illegal or anything. That would be RUDE. And anti-freedom.'
You seem to imply that I'm looking at the situation from a very naive pov.
I think that there's a high likelihood some governments will try to make it illegal. Specifically for the reasons I outlined above (escape hatch).
What I count on is the historically established tendency for sovereign powers to profoundly disagree with one another and using said sovereignty to explicitly allow some things that their counterparts forbid.
A political marketplace, if you will, and one in which you can participate because of the highly cross-border nature of BTC.
> they've gotta come up with defenses against the whales like you
???
What a very strange thing to say.
First, you're inferring from my handle that I am a bitcoin whale ... that's quite a stretch. I like Bitcoin, that's clear from my posts, but you have strictly no clue how much of it I hold.
Second, you seem to be implying that I'm somehow hurting other people / society ... another giant stretch and something I feel is a completely unjustified attack. This whole 'King over everyone' business is particularly strange, the only creature on this earth I sometimes lord over being my dog when he pesters me too much.
Apologize, I mis-interpreted "speculators" as "investors".
But yes there is a problem that there is a lack of safe investments that pay a little above inflation. Bonds used to do that, but they don't anymore, because there are too few people who need money and too many who have it (ironically the price of money has cratered).
I suspect that this is linked to our inability to build things anymore. With interest rates in the toilet the various government should have borrowed way more money so that they could invest them in bridges, road maintenance and so forth.
I mean, aside from the Tether time bomb.
I was just discussing Bitcoin 'investing' with a client last week and one of his engineers overheard us and told us a friend of his (another fresh Lebanese immigrant) maxes out his credit cards on the first of the month buying bitcoin, then sells it on the last day of the month and pays off the credit card and pockets the difference. I just...had no response to that. It seemed so obviously dangerous and irresponsible that I couldn't believe a grown adult would do that.
AND THEN he told me about another friend who does the same thing--but with the tuition/living money his family scrapes together and sends him from Lebanon. To me, that was not only stupid, it was a staggering betrayal in trust. Imagine your entire family scrimping and scraping to get money together to send you to college in the US and then you just casually betting it on Bitcoin.
Your acquaintence is going to be very wealthy. Not from this trade, but from the instinct to see the leverage opportunity and take that risk. Sure, bitcoin could go to a small fraction of what it's trading at, and he is out $2k minus whatever he netted on the leveraged trading. The cost to account for it properly outweighs any profits at that level, but it's a scrappy trade by someone who saw the opportunity.
As someone who still mainly makes money with labour, I was impressed anyway.
What leverage opportunity? He's gonna lose big on any prolonged downward trend.
Much depends on his age and family situation.
If he's young, single, able-bodied and with no debt, why not? He can always take a night job at a micky dee's to pay back the credit card debt.
It's a gamble I would have taken in my 20s.
Way better odds than going to Vegas and same thrill.
At least its not hiding behind the might of massive banks and being sold as prime stock.
Care to elaborate? Genuinely interested in those.
WRT Tether, when (not if) it implodes, it's actually unclear that effect it'll have on BTCUSD.
Short term, I think it'll lead to a huge price surge (USDT holders will rush for BTC/ETH as a bridge to get out).
Mid term, I believe it'll bring BTCUSD down by a fair bit (likely a 10x hit).
Long term, BTCUSD will be back to its unstoppable ratchet up.
See UST from Luna as an example.
The reason I like this idea is that it encourages behavior like people arbitraging the peg and they provide a service to keep it that way.
Here is a post mortem on the big crash back in the beginning of the summer and how it affected the UST algo stable coin.
https://medium.com/@terra-bites/luna-black-swan-do-kwon-ama-...
To me this was quite confidence inspiring, that even while the peg came off more than other stables it snapped right back.
The housing crash of 2008 was a drunken debt binge. Housing by its nature is funded by debt and that is why we saw such a massive impact when it cratered.
I 'think' that most crypto is being purchased by people who have idle cash on hand. They don't want to invest in debt because the return is absurdly low. They don't want to invest in stocks because the US Fed has poured so much money into the system that stock prices are nuts. Thus, crypto seems like a good deal. Add to that the confidence that you can always spot the top and get out before the crash and voila, you have the crypto surge.