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Off-Topic discussion about Bitcoin and cryptocurrency.
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it's mutual... just because we totally disagree on some topic, doesn't mean we're in war :-)) i'm too old to be angry on somebody just because he has different worldview lol.. at the end nothing matters, we all die sooner or later 😂🤣
noo.. don't be :-) be yourself :-) as i said i'm CT freak.. it's really HARD to insult me lol :-)) i'm taking easy a LOT more sharp discussions than this one peaceful arguement
To be fair there is actually a lot of value to be had from these kinds of disagreements, because they put arguments to the test - you have to think your point of view through and see if it makes sense. Of course I'm not expecting to change your mind, or you mine, our views are too well established, but there is some purpose to having the arguments laid out in plain view.
I wanted to come back to this and add a couple of points:
I understand you are using your personal experience here, and that's fair enough. However none of us know what the exchanges get up to, whether they are wash-trading or artificially pumping prices etc... We know for a fact that BitFinex and Coinbase have engaged in shady practices in the past, and Binance last week was charged by the US authorities as well, so it's reasonable to be suspicious IMO.
Ultimately Tether was supposed to be backed 1-for-1 by the dollar. They claimed this on their website and their TOS for years, until they were investigated by the NY AG. Their purpose was to act as a full-reserve bank, every Tether they sold would be backed by a dollar in their bank account. With this arrangement they could make millions of dollars in profit every year by simply banking the dollars backing the 58 billion Tethers in circulation and pocketing the interest (Tethers are interest-free so that's easy money right there).
After years of delays and obstructions we now find out that they are less than 3% backed by dollars. However Tether is the most widely traded crypto in the world, by volume, far exceeding every other currency. That means that at any one time there are potentially millions of people holding Tether, even if it's for a short time. It doesn't matter what kind of trades they are engaging in, Tether is flowing in and out of their account.
If 5% of these holders decide to cash out to fiat, there isn't enough liquidity to pay them out. That in itself could cause a liquidity crisis and crash the whole of crypto.
Another point to consider is that Tether is issuing at a rate of several billion every week, sometimes 2 billion in one day. The speculation is that they are issuing unbacked Tethers to pump the price various cryptos. The revelation of their supposed reserves seems to lend a lot of weight to this theory, since their reserves are not what they should be if they were issuing Tethers backed by real dollars. It's not been proven yet but anyone can see that this fraud is very likely to be what's actually happening. This means that Bitcoin and many other cryptos are widely overvalued, because large volumes have been bought with fake money, pushing the price up. A classic pump and dump.
This is still same case like month or so back. US citisens are not allowed to trade derivatives (which is sick btw, but that's different topic), and there is (or at least some media are stating that - not sure at what extent it is true) that Binance did not make everything possible to prevent US citisens from trading derivatives throug their exchange.
Binance is actually well known as probably one ogf most compliant to KYC and other refulations amongs most of exchanges (ironically, that's actually why in crypto community it is getting some portion of critique lol), so i'm expecting this ends nowhere or at worst with some symbolic penalty. Nothing to worry and care.
Coinbase case you mentioned happened inthink6 years ago ? Teu are now highly under the radar of SEC and other because they're publicly traded company.
Bitfinex is.. just Bitfinex :-)) Nobody cares about bitfinex really. I mean as exchange, are they even still working as exchange ? Don't know.
Same way i can provide you list of tons of large banks who were forced to pay huge penalties for dirty money laundering in recent few yeaes (inclusing HSBC).
Most bad joke is that president of European Central Bank (Christine Lagarde) is convicted criminal (sued and found guilty from 400 million EUR fraud), and was not sent into jail from still unexplained reasons.
So - this is not argument pro / con. It just happens, you can find dirty fishes in every lake.
In general, crypto and especially Bitcoin is actually cleaner than traditional finance in terms of diry money laundering and breaking of law - which was at the end confirmed also by ex CIA chief whi said Bitcoin due to it's just pseudo anonynymity is not that good for illegal activities and in case criminals would use more Bitcoin than USD cash there will be lot more solved cases (try google it, you will for sure found article about that, it happened few weeks ago i think)
TETHER market cap: 53billions
Rest of crypto market cap: 2.2 trillions
That's about 44x more.
Yeah, looks like Tether is pumping price of crypto and when it crashes whole crypto crashes too, for eternity to zero 😂
Huge portion of price movement in dec 2020 - feb 2021 was made by OTC purchases (off the desk, direct transactions between sellers and buyers not via classic exchange liquidity pools). Which means institutional buyers buying with fiat money.
You are still fooled by high VOLUME of terher. But as i explained this is caused by derivatives, not spot purchases.
In case i'll get some time i gather some statistical data for you. But believe me things are a bit different.
Not saying that Tether is completely clean - tobe honest i'm not using it too much, and i would definitely not hold it for long time. But from a bit different reasons - for me Tether is same shit like USD, centralized regulated crap with infinite supply.
Yes, Elon Musk is more of a problem for the future of crypto than anything or anyone else. I don't know his motivations or who is feeding him, but it will be a great day when his face stops turning up everywhere. But, that's just my opinion.
His motivation is that he owns biggest Doge wallet with 28% supply. I hope SEC will look at his activities soon because this is nothing but intentional market manipulation. He should go to jail.
Some interesting on-chain data. Of course future is not copying past but it often rhymes (especially on financial markets)
I have a sneaky suspicion that the people who would have to jail him might have a passing interest in him doing exactly what he is doing. I have no proof of that though.
Hang on, you can’t be all for the independence of cryptocurrency, unconnected with any individual nation, body or organisation, on one hand, and on the other hand go running to a particular nation’s specific organisation to intervene when bad things happen.
Slightly misleading comparison though, because Tether is pegged to the dollar, whereas most of the rest isn't. The market cap of the unpegged crypto changes every day, and could drop 75% as per 2018.
But in the context of this discussion market cap is irrelevant: trading volume is where the liquidity is, and most of the liquidity in crypto is via Tether. If Tether goes, so does all the liquidity in the market, and a crunch is inevitable. When prices are falling liquidity is everything, because people need to close out their positions fast to minimise their losses or try to hang on to their gains before they are eroded.
I have a few thoughts to add about hard-money regimes and the Gold Standard, which I'll break down into separate posts to keep things clear and simple.
What happens when a bank fails?
Let's imagine a medium-sized bank that has 10,000 customers, 1000 of which are businesses. This bank makes some questionable decisions and some bad investments and finds itself insolvent. If the bank goes bust suddenly, everyone who banks there is potentially vulnerable.
All the businesses who bank there will suddenly find that they can't make payroll, and become insolvent overnight through no fault of their own.
So from the failure of one bank, we can also lose thousands of perfectly viable and solvent businesses, not to mention all the other customers of that bank. This sudden failure then creates a huge spike in unemployment as all the connected businesses fail.
This is what happened in the crash of 1929, hundreds of banks went bust in the US alone, and took thousands of businesses down with them. Unemployment went from 3% to 23% between 1929 and 1932.
And as one bank failed there was a domino effect, not just to connected businesses but also to other banks that had assets tied up with the failing institutions. A bank could be technically solvent, but if some of its assets were tied up in another (failing) bank then it too would fall.
On a gold standard there is no lender of last resort to step in and protect the market when critical institutions fail.
With fiat money the central bank can step in a provide emergency liquidity to prevent this kind of chain reaction.
One objection to this is that it creates moral hazard: institutions can take risks knowing they will be bailed out. But that actually depends on the policy choices that are made at the time.
Let's look at a couple of examples from 2008:
During the financial crisis, in the UK two banks became insolvent. A small one named Northern Rock, and a very large one, Royal Bank of Scotland (RBS).
In both cases the state stepped in and nationalised the banks, protecting all depositors and penalising the shareholders (who had to take a loss).
This prevented the domino effect described above, meaning that the failing banks didn't also take down thousands of viable businesses with them.
It also mitigated the question of moral hazard by penalising the shareholders.
This IMO is a pretty decent policy response, making the best out of a bad situation.
The US response was much more muddled: the authorities let Lehman Brothers fail, but then the chain reaction through the financial system was so terrifying that they immediately regretted that decision and then bailed out all the others unconditionally, with very few strings attached.
This was, IMO at least, a much poorer policy response than that of the UK, because they allowed an institution to fail and bring the whole system to the brink of collapse, but then bailed the rest out without taking moral hazard into account.
But even so, the US response was still better (in terms of ultimate outcome) than 1929 because despite their failings the bailouts did at least prevent another great depression. Bailing out the banks helped to prevent the domino effect. However once deposits are safe the shareholders and executives should have paid a price, and in the US they didn't. That was a policy failure, by choice, but not necessarily inherent to fiat currency since the UK acted differently.
One of the claims made in the article dendy linked to yesterday was that recessions are caused by fiat currency when the central bank manipulates rates.
The historical data however is pretty clear: recessions are much more common under a Gold Standard than they are under a fiat currency regime.
This chart shows US recessions from 1870 to 2010, with the recessions shown in grey:
It's crystal clear that under the Gold Standard recessions were more frequent, deeper, and longer-lasting than after it was abolished in 1933. You can see the before and after effect extremely clearly.
Britain was on the Gold Standard for almost 100 years between the 1840s and 1930s. In that time the UK endured multiple recessions and also the Long Depression (1873-1896) which was originally known as the Great Depression, until the 1930s called. The 1930s Great Depression also saw both the UK and US on the Gold Standard to begin with.
In the 19th century Britain had enormous economic power: it was the seat of the industrial revolution, a major exporter, with an empire to plunder for resources and Sterling was the world reserve currency until WW1. Despite all this, and being on the Gold Standard, it suffered major economic shocks.
19th century US was pretty much exactly the world that Bitcoiners want to recreate: small goverment, low taxes, no central bank. Yet recessions and depressions were more common then than they are now under fiat. There is just no evidence that this regime is more economically stable than the one we have now. None.
In the US at the turn of the century the Gold Standard was in fact extremely unpopular, and there was a populist revolt against it (William Jennings Bryan's "cross of gold" speech).
Incidentally and as an aside (so far to the side it’ll probably fall off)
Japan has long had a situation where with no health assistance, families save a considerable amount just in case it is needed. This is a cultural ethos. As a result, families often generally have a lot of money to invest in this and that.
Finally to wrap this up: policy choices are always a compromise. Every outcome can produce winners and losers, there is no such thing as a perfect world.
Low inflation, for example, favours creditors over debtors. High inflation is better for debtors and punishes creditors and savers. It's impossible to please everyone, so there is always a trade-off.
The same goes for interest rates: high rates are better for savers, worse for debtors. With low rates the inverse applies. All economic outcomes produce both winners and losers.
And this is one of my main objections to hard-money economics: it takes a complex problem (inflation) and offers a simple solution that appeals to people but doesn't stand up to scrutiny. There is no analysis of stocks-vs-flows (money is a stock, spending is a flow), no taking into account that there are always two sides to a balance sheet (one person's liability is another person's asset). It's a wordlview that completely lacks nuance and rigour.
The world is complex and messy, and policy choices necessarily involve compromises (and often mistakes too). It can't be solved with a formula or an algorithm. The Bitcoin vision is utopian, like communism, and similarly doesn't take human fallibility into account.
And Japan's high saving rate is one of the reasons it has struggled to get its economy growing for 30 years. The paradox of thrift in action: if one person saves it's good for them, if everyone saves the economy stagnates due to lack of spending.
You're wrong, this is not how it works.
Market cap == current market price multiplied by number of issued coins.
Liquidity == number of coins available in pool
Trading volume = accumulated size of transactions. Volume is almost irrelevant to topic. Volume is just cumulative value of transactions in given time frame.
If you have 1 BTC and tou sell / buy it 10 times in row you created 10 btc of trading volume and 485 000 tethers trading volume (with current 48.5k btc price)
What people usually do on spot marker.
1/ long term hodlers
2/ mid term hodlers / short terms speculstors
From there comes that big volume. But it's nothing wrong about it. Yes, price of Bitcoin like any other asset on planet is driven by demand/offers. At the end that is main point of Stock2Flow model. If you remove out of equation USDT, nothing changes on this.
If you are holding USDT, in most cases your intention is not to convert it to fiat but to buy back BTC. Those who wants tomcash our, convert BTC to fiat and then they send it ro bank accout. Converting BTC -> USDT -> Fiat makes absolutely no sense (except of rare specific cases) due to doble fees ;-)
Even more clear it is with derivatives:
You have let's say 1000 USDT.You open long at BTCUSDT futures pair with leverage 1:10 - you basically made trading volume 10 000 USDT. Bitcoin goes 5% up. Now you close your position - you basically added 10500 USDT to trading volume and you have 1500 USDT in your accout.
And 1:10 is still very conservative leverage, many degens are using even 1:50 or 1:100 ... So as you can see nominal trading volume may look very high (thats from where most of USDT trading volume comes). That's why then USDT looks like giant. And it is indeed - for derivatives market. But not for spot purchases (interesting)
Of course, i have to add that i don't like possibility to use high leverages - i would appreciate regulation here , and limiting allowed leverage to let's say 1:10. Overleveraged trades are one of main reasons of fast price spikes or drops (becsuse of long / short squeeze, which is basically chain reaction of positions liquidations)
Lower loverage would add lot more stability to market, and would be benefitial to almost all market participants (except of exchanges who are earning huge profits on liquidations, and degens who are used to use 125x
) - it would help stabilise crypto lot more than solving puzzle at what extent is or is not Terher backed.
Thanks for the breakdown, I appreciate the clear explanation of your reasoning. You might be right about the volume of derivatives vs spot with Tether, but it would be good to see some hard data on that ratio.
Just to question this: Liquidity == number of coins available in pool
Liquidity is dependant on how easily a coin can be traded, which is why stable coins are favoured since they are pegged to fiat (and thus easier to price). Is there any other coin that is traded as widely as Tether?
Bitcoin is not particularly liquid, partly because it's volatile and partly because transactions are slow.
Liquidity is basically measurement how easy is to buy or sell asset without moving it's price. From this point of view it makes no sense to talk about stablecoin liquidity because it's designed to NOT change price :-))) Stablecpin is tool to trade not subject to trade.
From all crypto assets, Bitcoin is of course most liquid. Some small cap altcoins have low liquidity so it can happens spot buy/sell even by relatively small volume can move price up or down significantly.
On this example you can see highly liquid ETH/BTC pair. This is order book - list of bids and ask on various price levels - set of all those asks and bids is basically liquidity and you want to have smalles possible stepping and smalles possible difference between actual bid and ask price (which is called spread)
Here if you buy lets say 0.5 ETH you move price little to nothig, but if you try buy on market (immediately, no matter of price) lets say 100 ETH you can move price up.
Basically higher market cap == higher liquidity.
Brw. i almost never trade pairs agains USDT, i always trade ALT pairs aagains BTC - because i totally don't care what is value of my portfolio in USD or EUR - only what interests me is accumulating more BTC.
So altBTC are only pairs i'm watching and on futures i trade pairs where collateral is BTC not USDT. So regarding me even if today USDT disappeared from existince, my trading habits will be affected literally on zero level 😁
Okay, so a really simple question:
there are 48 billion Tethers in circulation, many people are holding those Tethers, even if it's for a short time. What happens if confidence in Tether suddenly vanishes and everyone holding Tethers wants to get rid of them quickly?
Since Tether has less than 3% cash in reserve (after claiming for years that it was 100%), what happens once that 3% is paid out? There's still $45 billion's worth of bags being held, that can't be paid out.
There is no lender of last resort here, so if there is a run on Tether I can't see any way that ends in anything other than gigantic losses.
I would say most of them are holded by exchanges as part of their liquidity pools, or in DeFi borrowing/lending platforms, not people in personal wallets. So they are effectively not easy quickly accessible in. ase of black swan event - there will be enough time fir market makerd to solve potential issue in the way well known from traditional banking system - simply by locking them and preventinv people accessinh hem until some solution for problems will be developed.
Also if you have USDT in your private wallet, Tether company can lock them anytime they want and you will be not able to send them. That's why imtotally don't use it outside short term trades, and on my HW wallet i hold striclty just really decentralised currencies.
Can't speak for other people - what i would do (and many other people with who i siscussed this topic would do same) would change USTD to BTC. Which would basically result into significant BTC price increase .. but as i said above, this would be probably not possible because all operstions with USDT would be suspended in first place. So it's hypothetical question and answer.
Yes, there will be some looses indeed. But again look at numbers. 2.2 trillion market cap vs. 50 billion of loses. Not saying it wouldn't hurt. Not saying it wouldn't cause some temporary complications mostly for derivatives where USDT is used as collateral and for DeFi bortowing/lending platformd and decentralized exchanges liquidity pools.
But i'm pretty sure cryptomarket would recover from that and it would make it even stronger than before (like any bad event in past).
It would be also very positive for other stablecoins like USDC or BUSD - bigger market for them :-)))
Anyway, i believe stablecoins backed by some traditional assets are obsolete concept, i pretty much believe future lies in algorythmic stablecoins.
enough with tether, we will not solve it anyway..
this is interesting... bitcoin full node distribution (full node cointains whole blockchain file)
Even in my dream country, Seychelles (small dot above Madagascar) :-)
I would say that the tethers are purely a transitory transfer medium, somewhat analogous to an old style postal order (don’t know what the equivalent is for other countries).
Exactly that's very much my opinion too..
Btw this is really great article about algorithmic stablecoins, worth to read for deeper understanding of stablecoin topic
https://medium.com/dragonfly-research/a-visual-explanation-of-algorithmic-stablecoins-9a0c1f0f51a0
“We can disagree without being disagreeable.” 👍 I should also note here that I like all of the people who are interacting on this topic. There is no reason complicated issues cannot be discussed among friends.
This was an interesting article. It doesn't draw any conclusions, only reports what some people are saying on both sides of the question:
Bitcoin: Inflation Hedge or Not?
The DOGE developer just a few days ago claimed they had been in communication with him for some time (I’ll try to find the reference). If this is true, he has failed to disclose his relationship with them and he could be liable for criminal manipulation IF he holds large amounts of DOGE. I think real proof needs to be uncovered first, however.
UPDATE: Found the reference. https://decrypt.co/70945/exclusive-dogecoin-developers-say-theyve-been-working-with-elon-musk-since-2019
ADDENDUM: It’s possible that since cryptos are not currently regulated like stocks and other forms of investment, there may not be any applicable law or regulation which would prevent crypto market manipulation.
Yes that was pretty good IMO.
most funny (but also sad) about musk is - he criticizes bitcoin for enviromental impact, and in same time he:
what a epic clown.
Bitcoin dipped $10k this week: