This is some random startup nobody has heard of. HN likes to work themselves into a froth over every scrap of bad crypto news, but this is utterly insignificant. Crypto will continue to fluctuate wildly as it always has.

This. They did the same thing with “terra USD”, some shitcoin I had never heard of until it failed. It was even named to confuse people by sounding like USDT.

HN is only a step above CNN when it comes to trustworthiness on this specific topic.

It doesn't count as real crypto until zionic has heard of it?

Irrespective of your attitude to an unheard-of coin, the situation rather epitomises the problem many have with crypto. They start off as penny stocks, but people expect them all to rocket to Fortune 500 levels for no good reason other than all the other gullible idiots pumping their savings into them, forgetting in their greed that it's quite as easy to start a run if you have enough.

Before you know it —and I very much mean you there— they're trading at $120 with a cap of $32bn before the floor drops out. I know a cap isn't tangible value but none of this stuff is. That didn't stop this being a top 10 crypto currency at one point.

It's all Monopoly money. You can get rich trading it, but you can also lose everything. A lot of people are getting fractions of a penny on their dollar investment. All because, what? It stinks of pump and dump. It all stinks of pump and dump.

Pile on the environmental disaster that is proof of work, and you should be able to see why people hate crypto. It's weirder that more people don't but on investigation that's usually because they have skin in the game.

It’s not all pump and dump; there’s more to crypto than just that:

https://mobile.twitter.com/patdennis/status/1518637225789042...

  Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry.

>It doesn't count as real crypto until zionic has heard of it?

That's not what I'm saying. I consider myself fairly active in the space, and I hadn't heard a peep about this coin until it blew up. I doubt most on HN had either, but that won't stop the doomers.

This only further speaks to the problem.

Isn't it a problem with "the space" that any old Gigachad and his drawful of sockpuppets can jump on a nobody-coin that's been doing nothing for three years, and in 12 months of frothing, pump it up to a top-10 coin, and dump out their holding for a few billion dollars and "active in the space" people like you don't even notice?

Thousands more of these things are being minted every week. Thousands more opportunities to suck in "investors at the ground floor".

I don't think it's fair to label critics as doomers. We just don't see the value you do, or at least, our accounting puts the very visible and very recurrent harms of crypto above their potential benefits.

Not to defend Terra but Luna/UST were an absolutely massive part of the crypto ecosystem. It's not some random shitcoin

Are you possibly confusing UST with USDT? Tether would be fairly characterized as a "massive part of the crypto ecosystem". I don't think you can say the same about terra

Terra was the 9th biggest coin by market cap

Luna something like the 15th

They were absolutely major players and not a "random shitcoin"

UST was like the #8 cryptocurrency by market cap…

Lots of scams have blown up and temporarily been there. I’m sure bitconnect did too.

You're going from 'shitcoin' to 'scam'. Bitconnect was somewhat relevant/ significant. The 100th meme dog coin is not.

So how about USDT losing its peg to the dollar, they some unknown that means nothing whatsoever?

Last I checked it's pegged. DAI and tether fluctuate a lot but generally stay right near $1. Just pulled up the 7d tether chart and I see one spike to $0.9905, which isn't that bad.

To be fair, among the USD-"pegged" stable coins, UST was the third largest and had about 10% of the market cap, until a few days ago. The fact that you hadn't heard of it is hardly pertinent.

Just to put in perspective: a number of non-crypto YC startups had their treasury in UST. The reverberations of this will be massive.

Any company that kept money it really needed in crypto deserves to vanish.

Oh that happened in 2009 as well, tons of startups had their money parked in an asset with a special name, where it was tied to real estate, so the startups' treasury could appreciate without being spent. Because real estate never goes down, you see. It was so safe.

Safety is dangerous.

> Crypto will continue to fluctuate wildly as it always has.

Which is as much as an unfounded absolutism as stating the opposite. While there's not fundamental limit to what you're saying, there might be qualitative differences though going forward: I can still go into a store these days and buy tulip bulbs, it just doesn't cost me two salaries...

Dotcom bubble friends. BITO ETF at the top to unload VC capital onto a bag holding public.

And they're not going insolvent / losing customer funds. They are shutting down because they were not able to run their business profitably.

Yeah, never heard of this exchange before.

It's not an exchange.

Ah. Still never heard of it before. Seems like an NZ based company, so that would be why.

I'm not positive on crypto in general, but they seem to have run of of their own money (capital) and not their customers' money. I.e. they didn't lose their customers' coins. Actually, it seems that they have never held them anyway. So it's not like a bank crash.

The service seems to have been making it possible for people to sell their coins directly to one another. (Crypto exchanges hold your crypto and don't do an actual transaction through the block chain until you withdraw what you have. Though they could still guarantee not losing your coins if they go bankrupt...)

This is what they said about it:

> Are my funds safe?

> We don’t hold customer funds – at the time of the trade, we send the cryptocurrency directly to your wallet. If you need to execute a trade at this time, other platforms can facilitate this.

Bitcoin market cap is about 580 Billion. SP500 market cap is about 38 Trillion. During unremarkable market swings, the SP500 gains and loses the entire Bitcoin market cap daily (1.5%)

Crypto can go to zero and the world will continue on.

These days rather, it loses and loses the entire market cap of bitcoin daily.

> a theoretical crypto crash won’t throw the market into turmoil

I don't think it will affect markets much. There are only a few companies involved. Most of the money is from the retail investors, and that money is already gone. The crypto exchange balances going to zero won't change things much as those are mostly imaginary numbers anyway.

Really hard to know the exact breakdown, but there's also a significant amount of institutional activity in crypto too. The recent crash has put a large whole in the balance shit of many trading firms and VCs

"The normalized insanity from the past several years is just beginning to unwind."

I don’t like crypto and in all truth, I would love to use this as evidence that I’ve always been right. However, at its core, this story is about some random startup running out of money. It doesn’t mean a thing and I can’t possibly use it to slag on crypto.

Cryptocurrencies are a tiny and insignificant part of the financial landscape. Maybe (formerly) a bit larger than VC but even less influential.

Bitcoin alone was apparently given a market cap of over 2 trillion recently.

That’s roughly the entire GDP of France. If France’s economy poofed out of existence or halved in value, that’d be a huge shake up.

It helps when you understand that "market cap" has no meaning in the crypto world and that their "trillion dollar" numbers are completely imaginary.

The market cap of a stock (shares outstanding x share price) makes sense because each share represents a piece of the profits of the company and an ownership stake. If you took away half of the shares, the price per share would ~double and the market cap would remain the same since it's based on current cash + projections about the future profitability of the company, and the share price reflects those expectations. None of that is true for crypto.

Financially illiterate crypto people started multiplying the coin price x number of coins outstanding and calling that a "market cap" but there's nothing underlying the crypto world. Owning a bitcoin doesn't represent a percentage profit of some underlying economic activity that's being independently valued, coins are zero coupon bearer instruments, the value is in the coin itself. It's like talking about the "market cap" of pesos, just incoherent and easily gameable.

And for a practical example of how the crypto operators weave “market cap” out of nothing, read this revealing interview with Sam Bankman-Fried:

https://www.ft.com/content/eac0e56c-f30b-4591-b603-f971e60dc...

He’s the CEO of one of the largest and most established crypto exchanges. The interview is stunning.

How you can be in business selling this shit as non-shit when admitting the truth without having some crazy legal liability exposure problems is amazing to me. Like, FTX literally advertises "you don't need to know anything about crypto." But he says you should here!

For a lot of people, the game seems to be simply to grab the cash now and if regulators eventually come knocking, lawyer up, settle and keep most of your profits.

I remember a guy on HN a year or two ago who was very proud of the ICO he ran in 2017. The token was useless, investors lost their money, and he was fined something around a million dollars by the SEC. But to him that was a mark of pride, like he fought The Man and won. His excuse for scamming investors was basically “startups fail too, I’m a founder.”

The toxic startup hustle exemplified by Uber and some other companies ten years ago directly led to the utter moral collapse in crypto.

It's just particularly amazing when someone doesn't even follow a "keep your mouth shut until after any potential legal fallout comes" playbook.

And like, if you're a crypto true-believer, any crash that may or may not happen this year probably doesn't mean too much: the surge in prices wasn't because of any particularly groundbreaking developments in terms of the main long-term pitches (e.g. "new financial infrastructure for the world"), even NFTs seemed to really follow the price run-up, not lead to it. It really looks more just like a lot of people gambling with cash to burn in a situation where a lot of traditional entertainment was less attractive if not outright restrictive. So keep your head down and keep building...

But building a trading platform then talking shit about stuff that as far as I can tell you are making money off of trading (e.g. Luna, https://help.ftx.com/hc/en-us/articles/4491807784852-FTX-wil... )... that just seems begging for trouble.

At the risk of starting a flamewar: I wonder about the relationship between the degraded practices of many startups and this sort of "got mine" mentality. The dominant pattern for startups over the last 10-15 years has been to soak up VC money, obtain massive valuations, flood the market with supply, and establish yourself as a hegemon once you've wiped out all of the stable but cash-poor competitors.

Perhaps it's excessive pattern matching, but it's hard not to see a civic relationship between the (correct) perception of startups as underhanded and the rise of an entire industry of scammers who will do and say anything to get ahead.

That's funny. Founder. Like if I were a woman I would treat that like, "What? You're in a band?" Like OK lead singer of a known band, then you're not in a band, you're in that band. But it's just nah.

So the view from the inside, like what a VC sees, is that everybody is piling up and it's so so easy to say "I've got hot shit" and you have to be like "yeah maybe." A lot of the time "don't pitch me bro." And set it up like a nightclub, realistically none of the founders will have real tech without getting it from real researchers, so they have to impress you with how well they work the club. Now that I say that I'm figuring out my own strat too, treat it like a club.

So the second secret, don't tell anybody, don't link to this comment, close the doors, unplug the ethernet, turn on the wifi jammers, put your smartphones in the faraday cage, the secret is: everybody wants you to lose. Everybody wants you to lose. Just like in a club. When you accept that, it's so much easier! The entire club wants you to prove you're a lesser man, like sit next to the bar waste your money on drinks (never on a hotel), parade in circles concentrically around the women dancing with their clique of girlfriends in the middle, asking like once or twice and feeling bad for months about being rejected, that's what the club wants the men to do. And there is violence at the club, it's not like "the worst that can happen is she says no" that's a load of shit, it depends on a lot of things.

So it's the same adversarial environment, everything going against you. Realize that, and it's suddenly much easier.

If he’s the person I’m thinking of then his parents are two lawyers who teach at Stanford.

GDP is a flow. It would be better to compare the total assets of France to Bitcoin’s market cap. France’s public stocks have a market capitalization of over $2T alone. Then there are private firms, real estate, personal and government assets, IP, etc. In short, France’s actual worth far dwarfs that of the BTC market.

Right, trying to compare GDP and "market cap" is like trying to compare the Amazon river with Lake Michigan.

France's GDP results from liquid money already being moved around.

"Market cap" estimates assume that everyone could sell without the price moving. It's going to be far more sensitive to price changes than an actual country's GDP, it's based on what current trading prices are.

And Bitcoin, unlike a company with a huge market cap, isn't providing goods or services. E.g. if Apple disappeared into thin air, everyone hoping to buy new Apple phones or computers would be dramatically affected and that would have a ton of ripple effects. But if Apple's sales dropped to 0 and then they went out of business, their valuation would be down to 0 but a lot of people would've recouped some of their investment on the way down - the people selling earlier being better off than the ones later. This is a crazy scenario, though, since they're sales wouldn't go to 0 overnight.

So who's actually relying on Bitcoin? Some companies in the space, sure. Probably a bunch of individuals who did stuff like use bitcoin as part of their wealth portfolio when taking out loans. But if those people had those holdings wiped out, will the ramifications be huge? My guess is probably not but I don't actually know how many people would, for instance, be unable to pay their mortgage if their crypto holdings imploded.

(This will be interesting to see if a crash does happen: in a world where you believe prices always go up, the "clever" move is to not sell your bitcoin, but to borrow against it, so it appreciates in the background still. But in a world where there's a crash, this could leave you worse off than before, the debt won't go away just because the price fell.)

Reverse wealth effect will have a significant impact though: suddenly millions of people who thought they were well off will find out otherwise as their crypto investments melt into air at the same time as their stocks and bonds crater and central banks have few tools left to fix this as they are fighting inflation.

Market cap is a hilariously meaningless term in the world of crypto. $2 Trillion very simple <number of coins> * <last purchase price> calculation. Nowhere near $2 Trillion of actual money are in this system. Comparing this to the GDP of one of the largest economies on the planet is... well, it's just silly.

The economy of France is a device that generates the GDP. Erasing that device is not the same as taking away the (one year's worth of) product of that device. If you erase the economy of France then you erase a lot of companies doing business with a substantial fraction of the world. So you shake the whole world economy not simply through erasing some money owned by someone but business connections. You'll have a lot of companies in trouble for losing either customers or important suppliers.

Consider also that Bitcoin already halved in value in recent months without having the impact of half of a France getting bombed out of existence. ;)

But still up at least 400-500% if you bought any time up until COVID hit. ;)

19,783 to 27,000 is much less than 400-500%.

I think you've picked a starting point a year into COVID?

~$7500 (Dec 2019) to ~$35000 (May 2022)

https://i.imgur.com/N117Uqp.png

In my timeline 2018 happened before covid hit.

You can even see it on your chart.

How is the late-2019 starting point relevant?

Because it was right before COVID occured and pretty close to the average trading price for the prevous 5 or so years. Sure, the price has run significantly higher than that average for a month or two among those 5 years... If I wanted to be pedantically accurate, I would have added a few paragraphs of disclaimers, but it was an off-hand comment pointing out the obvious that the GP had ignored in their own off-hand comment.

There is a big difference though. GDP is measured per year. Bitcoin market cap is of its lifetime value on date when you measured it (based on exchange rate fluctuations of course). So Bitcoin collapsing is not the same as France's economy going out of existence.

France's economy actually produces things, though; it represents the economic output of 60 million people. Bitcoin is an asset in a class of assets that doesn't really do much of anything on its own.

To Belgium, perhaps.

Slightly less than Apple's market cap.

GDP is annual. Market cap is not. It’s like comparing income with net worth.

It's the classic mistake of comparing stocks and flows

It seems to be (I hope so anyway) quite inbred as well... for the most part, only those in the crypto space should be affected. with little repercussions in the wider world

$ 1.2 trillion, or 6 % of US GDP p. a., according to coinmarketcap.com

I guess it was about 10 % at some point not too long ago?

Nah. As posted elsewhere, "Market cap" is a nonsense term in the crypto world, just utterly meaningless. I could create a new coin right now, call it MarketCapCoin, with an initial mint of 1 billion MCCs. If someone buys 0.01 MCCs for $10, that would mean the "market cap" of my shitcoin was $1 trillion. Does my stupid shitcoin represent 6% of US GDP? Of course not. There's no liquidity or economic value, it's just cosplaying with a spreadsheet.

Luckily we were still at the beginning of banks lending REAL money using Crypto as collateral.

So you won't see much effect in the real economy.

There is absurd amounts of Crypto lending that's probably causing a lot of margin calls forcing a negative feedback loop in Crypto prices.

Everytime this happened before - the Central Bank of Tether came to the rescue and printed 10% of the entire Crypto market cap in ~2 days to pump up the market ~30%.

Time will tell if they have the balls to do this now - when they're already under investigation in many jurisdictions.

While this particular event doesn’t mean much, if you are heavily invested in crypto you should be anything but calm.

If you are big into an altcoin, prepare for that to go up in smoke the next few months.

If you hold a lot of Bitcoin, make peace with it losing over 75% of value in the next few months. It’s going back to pre-covid levels at best.

BTC, ETH and XMR are pretty comfy. A lot of scams are going to get purged, and that’s a good thing. Good projects will survive as they always do.

BTC already dropped another 1000. Will continue dropping.

If you’re so sure about that, put your money where your mouth is and go short it.

Lots of 1000s to go.

It sounds like it's a business that has run out of its own money at exactly the wrong time. There's no customer deposits on this exchange in terms of crypto accoording to their FAQ so this is a case of "startup runs out of money", not "crypto is going to zero"

My speculation:

It looks exactly like Robinhood (a liquidity issue), but without the faceless an unaccountable entity sitting behind them telling them to suspend trading.

These guys appear to be acting as middlemen between their New Zealand customers and several exchanges. Bank transfers take days to finalize (and weeks to settle), so their business appears to be built around capitalizing on that time opportunity and allowing their customers to lock-in quotes without having to wait for their funds to appear in their exchange account if they dealt directly with an exchange.

While the crypto markets are stable and the volume is predictable, everything is fine and they can maintain a balance on their exchanges and in their bank account. A sudden surge in volume (due to a massive price swing) means having to close shop and suspend trading while the transfer from exchange to bank account (or the other way) finalizes.

If you're talking about the crypto market crashing,

yes, this is absolutely in context indicative of the speculative circus ending.

Everyone knows the coyote has been running in air, waiting for various planks of a putative bridge to somewhere to materialize; those who put money into this vision who do not have it out now, will not get it back in a meaningful time frame, modulo dead cat bounce.

IMO "hodling" anything other than the most conservative (sic) of "coins" means taking a total loss. Bitcoin and Ethereum and a few others may crawl back over a few years; whether there is appetitive for another bubble with them is TBD.

It is not rational to believe their putative utility will emerge in that time; any future run up will merely be another round of speculation..

Crypto is still a new and high-risk asset, and is considered a risk-on asset by all of the broader financial markets.

When Fed interest rates are low and credit is cheap, money supply increases and more of it flows into higher risk/return assets like crypto and drives their prices up.

When Fed interest rates go up and credit becomes more expensive, money supply decreases and funds flow out of high risk assets like crypto, driving their price down.

The current bear market will last as long as the Fed continues raising interest rates, then turn back into a bull market when that reverses. Unless there's a war going on, in which case all bets are off.

This is a sign (among many) of the endgame yes. If you have money in cryptocurrencies and can get it out you should do so now.

Exchanges are auxiliary to Bitcoin. The protocol works quite well without any need for an exchange. The exchange in question is a small-time player. Back when the biggest of the big time players, Mt Gox, went under in 2014, Bitcoin came back stronger than ever.

Nobody who uses crypto has ever heard of BitPrime

I haven't seen a market crash since the housing crisis.

Of course, I didn't move my money into crypto so that might be the reason.

> or why the current market turmoil ain’t so bad

You can buy the dip! /s

Buy some (casino) chips first, then the dip...

All you have to know is that any coin that has to be backed by anything is a shit coin. Think about that. Understand that. There's only one coin that is not backed by anything, that has no founder, that has no ulterior motive, that is not centralized, that is not designed as a get rich quick scheme for the founders. And the venture capitalist, in the backers. You know which one that is. So if you make that realization, however painful, that might be, you are neo, you have taken a red pill. And no, that real world, your first glimpse of it, it's not going to be pretty, but then, after you process, you will see it is beautiful, it is full of hope and love, you have found home.