Crypto Market Sinks Below $1 Trillion - Slashdot
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Crypto Market Sinks Below $1 Trillion (bloomberg.com) 133
Posted by msmash
on Monday June 13, 2022 @12:00PM from the watch-out dept.-
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The world stops wasting vast sums of energy on mathematical parlor tricks that create artificial scarcity? In other words, there are no more blockchain based 'currencies'?-
If only it would be a driving force to eliminate energy scarcity.
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Really, that conflation got modded Insightful? The artificial scarcity involving wasted energy is a key, but that is not related to blockchain in any binding way.
Blockchain is not the problem here. Rather blockchain is just a solution still desperately searching for a problem that it provides the best solution for. I haven't seen it. But it obviously can be used for bad solutions to problems that didn't even exist. PoC (for the bad concept) in cryptocurrencies.
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Proof of work blockchain is THE problem
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But it's still being controlled. When you are freezing withdrawals that's control to manipulate value.
The idea that it is completely unregulated is a myth. Just because it's not a government doing it doesn't make it good.
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When you are freezing withdrawals that's control to manipulate value.
No, that plummets value. It's called a run and historically has led to bank failures. So much so there are laws about it such that orderly amounts of money can be withdrawn so everyone has the ability to move their money.
Plus, that's also what things like the FDIC do - part of the reason of the run on banks is their collapse, so all your money is gone. The FDIC ensures that for most people, that doesn't happen.
And it works - we saw it dur
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No, a currency has to be backed by something. Despite popular cryptobro belief the USD is backed by the full faith and credit of the US Gov't and is a representation of US productivity.
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Another post downvoted because it's true. USD is backed by the US citizenry. Crypto is backed by scammers, criminals, drugs, guns, and pedoporn.
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more critically, USD is backed by needing to pay your taxes in it, or in the case of international commerce, backed by needing it to buy certain resources. 'backing' is a bit of a garden path, a simple concept, but not where value comes from. The value of a currency comes form demand for the currency . There are lots of things you can ONLY do in USD, meanwhile crypto.. well, there is nothing it can do that USD can't do better and cheaper.
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To be honest, you do seem to go out of your way to earn that karma.
However, your above post is spot on.
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You think evading sanctions, anti-crime/laundering laws, taxes, etc is a GOOD thing?
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Depends if you trust your government or not. Some people lost that game. [americansf...perity.org]
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Yes, hard currency for low trust open market, and fiat is for high trust closed markets.
Meaning a traveler stopping by in your village pays the innkeeper in gold coins - hard "decentralized" currency - gold is gold, regardless of who "issues" it. Whereas that same innkeeper pays butcher next door in "worthless" face value copper. Much less fungible, but easy to seigniorage as a form of naked credit - not all that different from how modern fiat money works (Gresham's law).
And before you say US dollar - or co
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So one bit of irony here? People talk about gold being 'real' and a value independent of the state, but both gold and silver got their historical value from being what taxes were paid in. The value of gold was literally set by states saying 'this is how much gold/silver you must pay for XYZ', not the other way around.
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Historical value from being what taxes were paid in.
Nope, you're confusing that with copper again. Gold or silver is what you needed to pay mercenaries and foreign imports, whereas local economy used face value coins (whose principal value in metal was 5x-10x less than face value - fractional reserve is not really anything new). Hard (ie 100% reserve) currencies are not only fungible, but also have some really bad downsides - issuing credit in hard currency is bordering on impossible. In fiat, whoever is th
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In the USA, there have been times, including quite recently, when the copper in the 'worthless' copper has been worth more than face value. As others have noted, taxes could be defined in silver and gold, King John being despised (amongst other things) for insisting on this. Trying to get peasants to pay in gold didn't tend to work - they would pay in grain or time, not coins at all. IIRC the oldest form of money actually known is actually Sumerian clay tablets representing debt.
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That's questionable at best. Make no mistake, it is still controlled.
Government is ostensibly meant to represent the best interests of everyone. Where it fails, it fails because a small faction of rich and powerful people pervert it from it's intended purpose.
What value is there in a currency directly controlled by that small faction without need to even pay lip service to the best interests of the people?
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Not really. They tend to be good for locking people into small easily manipulated ecosystems, so there is some utility for larger holders wanting to get richer, for as an actual currency? No. A lot of this was hashed out hundreds of years ago.
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Personally I've always believed the value is about zero.
Because it's backed up with nothing.-
That is not a "belief", that is called a "fact". What is "belief" is when people think this stuff has real-world value.
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Well, to be fair there are some "stablecoins" which do have actual assets backing their currency, the problem is that despite their claims the value of their assets is far, far less than their cryptocoin.
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> do have actual assets backing their currency
No no no. There are some "stablecoins" which CLAIM to have actual assets. None of them are audited.
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Indeed. They could just be making stuff up. Like their "coins"...
Also, it is pretty clear from banking, how much real-world assets you actually need to (mostly) secure things. No "stable" coin with actual assets (not all have them) even comes close.
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And as we recently saw, not so stable.
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It's backed up by the fact that people want it, and of course, "the fact" that hash functions like RIPEMD-160 or SHA-2 are secure.
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"Full faith and confidence of the US government that it will fulfill it's obligations" which it has always done and the understood fact that if it doesn't then you getting your money back is hardly the least of your worries.
Also the USD is not in and of itself a source of value, it is a means of exchange. Nobody cares about the paper itself but the fact that everyone, everywhere around me is willing to accept that paper for the goods they offer.
Why do people continue to ask this like it's some sort of "high IQ gotcha" when it's a fundamental principle of all economics, even Aristotle had it figured out:
"Aristotle found that money, as a common measure of everything, makes things commensurable and makes it possible to equalize them. In the form of money, he says, a substance has a telos, a purpose, and that in creating money individuals have devised a unit of measure on whose basis fair and just exchange can take place. Aristotle thus maintains that everything can be expressed in the universal equivalent of money, and argues that money was introduced to satisfy the requirement that all items exchanged must be comparable in some way."
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Don't forget in Aristotle's days money was still in he form of precious metal coins.
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- The fact the US government forces US citizens to pay taxes in USD.
- The fact the US government charges royalties for oil and mineral extraction on public lands in USD.
- The fact utilities in the US are by law priced in USD.
- The fact it's legal tender and as a result you can demand payment for a debt in USD (accepting any other form of payment such as silver coins or whatever is optional on your part), which means you can force the other party to convert whatever asset they are using as their store of wealth into USD.
All the above create demand for USD.-
You missed a big one: banks are required *by law* to hold certain reserves on deposits and may get loans from the government in a special way to meet those requirements. And all that is done in dollars. If they don't, they can go to jail. This is really what "full faith blah blah blah" means. The US government has monopoly on the use of force to enforce the rules for how money is handled. That simple fact allows the US government to make dollars valuable by literally controlling their supply (and use a
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Yep. And this exactly how gold and silver worked too. They got their value from needing to pay taxes in them, and various contracts/assets/etc with the government were handled in gold or silver (or shells, or whatever) at the time.
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Most taxes by most people in medieval times were paid in grain, chickens, time, or other obligations. Gold was used too, but having to pay taxes in gold didn't make rulers particularly popular. Q. V. King John. The reason is that nobles had chickens and grain. Who were they going to sell that to? The next noble over who also had chickens and grain but no gold? Selling to cities was the only option, and that only worked because a proportion of international trade used hold rather than barter. Paying in gold
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Actually you can't. It just defaults that way unless an alternative agreement is in place, something Russia is finding out right now.
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The US dollar is backed by the requirement that you pay taxes and terrifs in it. If you want to do business in the US, sell your product in the US, or ship your product from the US, you need to obtain USD in order to do so. 'backing' is kinda a distraction, a term/concept that was popularized by the gold standard people, who tend to skip over that the value of gold was also determined by the need to pay taxes/terrifs in it. So USD derives its value the same way gold and silver did, with 'backing' only
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If something takes energy to product, the only thing you can conclude form it is that it took energy to produce. Being really inefficient does not make something more valuable, it makes it less.
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Indeed. Putting something of value into producing something else does not mean that something else has value. It just means that you need to pay to produce it.
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Hahaha, once it's out of the chimney it has zero value.
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This is Bullshit with a capital B. The energy required may set a lower bound on the COST of a thing, but says nothing about the VALUE of the thing. 'Value' depends on one, and only one, thing: how much someone is willing to pay. If the COST exceeds the VALUE, what you have is essentially worthless. Cryptocoins are the purest form of THAT, because they have ZERO tangible value.
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Indeed. It seems many people do not understand that really simple fact though.
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Do you have a clue what 'tangible' means? It means you can touch it - it is real. If tomorrow everyone decided BTC was stupid and wanted to have nothing to do with it (which can happen), the value of your BTC would be zero. If it had tangible value that could not happen. Paper money could have other uses - you can paper your walls, or stuff a mattress, or wipe your butt, or burn it for heat. Coins can be melted and the metal used for something else. Those things are tangible.
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Cryptocurrencies are meant to be a tool for conducting transactions, not a yet another tulip for some scammers to pyramid on.
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Is that a legitimate claim? The majority of the transactions seem to be concerned with getting into our out of the currencies themselves. Or are transactions for "real" commerce more than statistical noise?
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The getting in and out is not much more than noise either. The real transaction volume is wash trading.
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Their transaction rates and fees don't support that. The only thing they're good for is sending untraceable money to criminals.
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And they're not even particularly good at THAT (anymore). Authorities are identifying funds and increasingly clawing it back.
It's all over except the shouting.
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Indeed. The anonymity of most crapcoins is somewhere between "nonexistent" and "easily broken". The supposedly anonymous crapcoins, on the other hand, can be completely brought down by a single vulnerability in the code.
So really, these things are good for nothing except creating vast overblown fantasies and then scamming people using these.
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If by untraceable you mean there's a verifiable permanent record on every coin of all the owners it's ever been to, forming an unbroken chain back to its creation, you're correct. It's like paying a ransom by check, except the names on the check and the bank account are wallet numbers instead.
It has the added advantage that when the "bankers" want to take it away from you, they don't actually have to gain possession of a physical dollar bill, they just have to vote that it belongs to someone else, with the
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There was a report not long ago how they caught about 1,100 pedophiles, many of them actively taking sexual pictures of young children, some even of babies, because someone followed their "untraceable" bitcoin payments.
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Most of the popular cryptocurrencies like Bitcoin and Ethereum are actually terrible to use as an actual currency because they have high transaction fees and slow transaction verification times. They had to create side chains like Lightning and Polygon to get around those issues.
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I have a better idea. Why don't we create central authorities called "exchanges". People can keep their money in "wallets" on these exchanges and the exchange can verify transactions faster without the need to in real time commit them to the blockch... oh wait I just described normal finance.
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There is only ONE real use case for crypto: circumvention of regulations. There are absolutely no other use cases.
https://medium.com/@straumli/n... [medium.com]-
It's not very good at that use either. Blockchains have a history that goes back to the beginning of time and investigators have gotten shockingly good at trying blockchain transactions to individuals.
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There is not actually much really "shocking" here. The people doing research into deanonymizing anonymized data could do things like that 30 years ago (otrlonger, I just started to get interested about 30 years ago). It takes some initial effort before you can actually do it, because a lot goes by association, but once that effort has been invested, you can use an offline valet, but money gotten from criminal activity in there and let it sit. You cannot actually spend it or use it without an extreme risk of
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Getting around laws as a criminal is all crypto is good for.
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Indeed. So "criminal activity" is the only business case.
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The problem is that can't be separated from being attractive for speculators/scammers.
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Does not look like it. Crapcoins seem to be intended for funding criminal activity (ransomware), money-laundering and gambling. An actual means of payment need to be, above anything else, reasonably stable. There is absolutely no mechanisms in regular crapcoins that would cause stability and the so-called "stable" crapcoins merely pretend to have those mechanisms. In reality they use something that somebody clueless could mistake for a stability-mechanism, but that is not actually one that works reasonably
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Or rather they will by ending the scam and crashing all crapcoins to zero.
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Individual stocks might go to zero. But stocks collectively have never gone to zero. And stocks represent intrinsic value specifically future cash flows. There is really no comparison between stocks and crypto games.
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You seem to have been raised by lions. Stock makes someone a part owner of a company. Companies own things, plus as long as they're in business they have a chance to make money. So if a company goes out of business, at least all it owns can be sold (the difference in value between the stock and the physical assets is known as "goodwill") and the money given to the stock owners. And while they're still in business, the income alone makes the stocks worth something There's even a boring old formula for it, it's stock price divided by earnings (P/E). Professionals get nervous when the ratio gets too high, it's the sign of a bubble.
Old-fashoned-rich people like Warren Buffet get richer when they buy things that have a low price tag for the inherent value that it contains (or can produce with better management). In fact, he and others have repeatedly offered advice that the time to buy stock at a discount is when people are panicked to sell at low prices. Buffet doesn't resell things, but in general, "buy low, sell high".
So to recap, as long as something has an inherent monetary value, the price of it being offered for sale will be greater than zero. The point is that crypto currencies' inherent value is the particular order of a bunch of 1's and 0's, which unlike amazon, tesla, ibm, etc, doesn't actually have inherent value, other than the mere hope that there's a bigger fool that will pay more money.
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I think real estate might be better comparison, in terms of leverage sans fundamentals. Sure you could always argue you can choose to live in a $1000 house in some Detroit ghost town alley. But would you, really? There's a point when your fundamentals simply evaporate when facing leverage too high. The fundamental utility of bitcoin is to be digital cash - it needs to be capitalized only as much to serve that purpose (out of my ass ballpark, about 100x less leveraged than it is now, to cover drug, racketeer
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The stock market is not 100% gambling. It is a market like any other. You see a stock being sold for $100. You decide whether or not you think the future cashflow / dividends are going to exceed $100. if you think they are, then you will make a profit. If they don't you make a loss. But crucially, once you own shares, you can get income off them without having to sell them. Bitcoin is purely speculative as there is nothing generating income on a bitcoin. You have to find someone to buy your bitcoin for more
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When you own stock in a company you both can influence the company's decision making process AND you get a cut of their profits. Companys are also constantly buying back or selling stock, meaning the investment is ongoing. You are confusing the idea of there being a secondary market with the secondary market being the only one.
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Stocks and Bonds often pay dividends based off a company's performance. In order for stocks to go to zero, the economy would have to go to zero, which can only happen if everyone is dead.
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by PPH ( 736903 ) on Monday June 13, 2022 @12:11PM (#62615648)
... with tulip bulbs, you can plant them and grow pretty flowers.
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Oh drat, no mod points. But of course you are correct.
The good news is that those cryptos were paid for with real money, so their destruction is deflationary which will slightly reduce the inflation rate.
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They don't burn your real money when you buy crypto. They go out and buy lambos, coke and hookers. The US dollars don't get burned, they just get yet another dusting of fine China white and g-string sweat.
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The money was not destroyed, it just ended up in the pockets of someone who likely already has too much money to actually use it productively in the economy.
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And just like crypto they will look pretty for a short time then disappear without any idea if the bulbs survived and will rebound in the next spring.
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At least hackers can't steal tulip bulbs from your digital wallet.
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promoted as the hedge? To me they look like the anchor. "the freezing of withdrawals by the Celsius lending platform" means their money isn't there. The shakers and movers need a chance to split what is left before they close up shop.
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Really? a Bank? Banks have FDIC insurance now. This reminds me of history, late 20's, early 30's before banks had FDIC insurance. The depositors money was gone because the "banks" had little in reserves and very high leverage rates(not sure that is the right term). If the players can't convince customers to stand pat, this could get worse.
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Banks don't have liquidity crises. A solvent but illiquid bank will have no trouble obtaining funding and can resolve liquidity issues. An insolvent bank that is liquid can sometimes keep going and try to become solvent again but usually the regulators catch on and shut it down. Crypto companies like Celsius are most certainly insolvent and illiquid with little chance of becoming solvent or liquid. If they were a bank, the regulators would have shut them down a long time ago.
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You can't honestly say something is a hedge unless it's historically proven to be an effective hedge. Cryptocurrencies haven't been through a complete economic cycle, so we don't know how they will value over time. My personal best guess is none of the current cryptocurrencies will survive a complete economic cycle.
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Cryptocurrencies are highly correlated with other investments so they're not a hedge.
The point of a hedge is that it goes up when your other investments go down, and vice versa, so you're always generating some income. If you have to wait more than the interval between two payments on your yacht, it ain't a hedge.
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I think for the most part the only people who believed they were a hedge were conspiracy theories or out right antisemites who though anything that could get away from 'the banks' and 'the government' was somehow closer to nature and thus was not effected by the evil baby eating cabal that ran the world. They mad easy marks for the pyramid scheme.
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to the mariana trench, hopefully to never be seen again... and take the NFT market with you
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Even if it's going away I suspect it's going to bounce around a bit on its way down.
Individual crypto currencies can vanish in a puff of smoke but for crypto as a whole I think there's still too many people who will see the drops as an opportunity to get in cheap before the next jump. And then when they buy it will create a mini rally before any subsequent drop.
Long term I think it vanishes almost entirely, but in the short term it's going to be bouncy.
Note, the game changer will be when the exchanges fail,
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I kinda wonder if after all the get rich quick stuff dies away if anyone will actually find something this technology can actually be used for.
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Could you just post a daily summary of cryptocurrency disasters instead of a separate article for each one?
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Maybe a website similar to FuckedCompany could be created (FuckedCurrency?) that will track them circling the drain.
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by Anonymous Coward on Monday June 13, 2022 @01:08PM (#62615908)
Maybe a website similar to FuckedCompany could be created (FuckedCurrency?) that will track them circling the drain.
https://web3isgoinggreat.com/ [web3isgoinggreat.com]
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Indeed. Gave me a big smile. Of course the morons and deniers will claim this is just a minor hurdle, but these people never understand what is actually going on.
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I wonder how the NFT(nothing fraking tangible) market is doing?
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sorta like how banks block runs and Wall Street'll shut down the stock market.
There was a big bitcoin holder with a "kill switch" at $25k where they'd sell billions in assets, likely triggering a collapse. I think they moved the goal post though back to $20k, likely because they don't want to completely crash the markets.
Crypto is one of those things that if people ever see the emperor has no cloths that'll be that. So they're all trying to avoid killing that golden goose.
I just hope it doesn't-
Wall street has "circuit breakers" that result in short-term suspension in trading which gives everybody time to assess and avoid panic selling. Banks don't really have mechanisms to avoid runs but they don't generally need it. Solvent banks aren't really subject to runs anymore.
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Yeah, the stock market is different because just slowing things down is just that. The real value of the physical assets held or managed by the companies does not change while the trading is paused, but its perceived value can stabilize as information spreads. In the US at least, a bank that halts transactions is basically done for. The FDIC will move in and shut them down and possibly start filing criminal charges if there were rules being broken. As I understand it, that actually happens on a decently
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The bursting of the Millennial technology bubble may be a better model. It hit the dot.coms, the telecoms and the optics companies hard, and may have vaporized $3 trillion in illusional or delusional assets. But the impact was largely localized to those industries and companies that depended on them, and many of them survived, albeit much smaller, because they had value. Dark fiber sold for pennies on the dollar in 2003, but as long as it was operable, the buyers eventually made money leasing or selling it.
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There isn't anything remotely like a trillion dollars invested in cryptocurrency. The majority is held by various founders and early adopters who mined or awarded it to themselves for free or almost free.
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I just hope it doesn't wreck the broader economy. $1 trillion is a lot of (pretend) money. Enough to cause problems if the bubble bursts S&L style (God I'm old).
That may be a significant amount (about 5% of the US GDP), but it's not all that much in the grand scheme of things that can go wrong.
For example, the Chicago Mercantile Exchange group does trades each day worth $1 trillion in notional value for stock index futures and options, only. They do trades in a lot more things, like credit swaps, and
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by guygo ( 894298 ) on Monday June 13, 2022 @01:36PM (#62616012)
I am Shocked... Shocked I say... to find that there is gambling in the casino.
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I bet this means you can get a good deal on a used Lamborghini right about now. Especially since those margin calls are starting to come in and a lot of the people who borrowed money to buy Bitcoin are being carried out feet first (financially).
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The demonstrated practical use cases for crypto are few. First, black market transactions, most famously by the infamous late great Silk Road. This has carried on less flamboyantly, so as not to attract too much attention. Next, the more legitimate application of remittances from immigrant workers back to their home countries. In that case, I've heard crypto can have lower fees than the traditional wire services; and it may augment the traditional trust-based "hallawa" systems popular in Islamic countries. Finally, NFTs are mostly a joke but an open cryptographically verified certificate of authenticity system has some merit.
After that I'm hard pressed to find too many use cases. I looked in to it as a micro-payment "tip jar" system, but the tax accounting makes it lose a lot of appeal (at least in the US).
Beyond that, it's basically online gambling, a "numbers game" like the lottery or something but with mascots and cheering sections. I guess that's quasi-legitimate if you take it as such; but the trouble is too many people confuse that as a serious investment.
Pro tip: If you're cheering for a dog, you're at the track not the brokerage.
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In history, someone is always, buying into the downturn. You thank "who ever" when it is not you.
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Many commodities such as oil, gas, nat gas, corn, soy beans at near all time high. So is real estate in many regions because real estate may be dampened by possible recession but is actually buoyed by inflation - look at the 1970s.
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Yes, some things are up. Energy markets are one of the outliers, but generally across all markets world wide everything is down. The idea that it’s all crypto or it isn’t tied to the stock markets or currencies is a simple fantasy, times get tough and markets turn bearish, people pull their money out of everything. Even gold, the historical “make my wealth physical and immune from markets” is down 12%.
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