Crypto Market Sinks Below $1 Trillion (bloomberg.com) 201
Bitcoin plunged to the lowest in about 18 months after the freezing of withdrawals by the Celsius lending platform added to concern that systemic risk in the crypto ecosystem will accelerate the digital-asset market meltdown. From a report: The world's largest digital token tumbled as much as 17% to $22,603 -- its lowest since December 2020. Other cryptocurrencies also declined as a broader sell-off continued. The MVIS CryptoCompare Digital Assets 100 Index, which measures 100 of the top tokens, dropped as much as 17%. And the total market value, which topped $3 trillion in November, dropped below $1 trillion as of 10:54 a.m. New York time on Monday, according to CoinGecko. "The fundamentals to support stabilization and recovery just aren't there," said Steven McClurg, co-founder and CIO at crypto fund manager Valkyrie Investments. "Things can and likely will get worse before they get better."
What will 'better' mean? (Score:5, Insightful)
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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
Re:What will 'better' mean? (Score:5, Insightful)
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.
Re:What will 'better' mean? (Score:5, Interesting)
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 So much so there are laws about it such that orderly amounts of money can be withdrawn so everyone has the ability to move their money.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 during 2008 when many banks DID fail, like Washington Mutual. There wasn't a big run for people cashing out - and another bank took over. The FDIC ensured the money was there, and other banks saw an opportunity in that WaMu still had a valuable customer base, and still had incoming money from loans, and basically took the bank over.
About the most hardship felt I believe was that for a few days, ATMs and debit cards didn't work.
Deregulated finance didn't have any of this, so halting withdrawals is basically causing a run - if you don't get out now, you might lose it all. And the more it goes down, the more urgent it is to get out, leading to the downward spiral. That's why the regulations exist to limit withdrawals plus the creation of the FDIC
Re:What will 'better' mean? (Score:5, Insightful)
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.
Re:What will 'better' mean? (Score:5, Insightful)
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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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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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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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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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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Personally I've always believed... (Score:5, Insightful)
Because it's backed up with nothing.
Re:Personally I've always believed... (Score:5, Insightful)
That is not a "belief", that is called a "fact". What is "belief" is when people think this stuff has real-world value.
Re: Personally I've always believed... (Score:4, Informative)
Re: Personally I've always believed... (Score:5, Informative)
> 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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> 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.
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.
Re:Personally I've always believed... (Score:5, Insightful)
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.
Re:Personally I've always believed... (Score:5, Informative)
"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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Which were only "precious" because everyone in that society had a shared understanding that they were. Hence, the ability to use the coins as currency. Paper serves the purpose just as well.
You can't eat gold.
Re:Personally I've always believed... (Score:5, Insightful)
- 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.
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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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Re: Personally I've always believed... (Score:3)
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which means you can force the other party to convert whatever asset they are using as their store of wealth into USD.
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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GDP.
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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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Re:Personally I've always believed... (Score:5, Insightful)
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.
good for legitimate uses (Score:4, Insightful)
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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Their transaction rates and fees don't support that. The only thing they're good for is sending untraceable money to criminals.
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.
Re:good for legitimate uses (Score:5, Informative)
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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They had to create side chains like Lightning and Polygon to get around those issues.
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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Yeah, but you forgot about the Bored Apes.
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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]
Re:good for legitimate uses (Score:4, Informative)
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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
Totally correct (Score:2)
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
They will not get better (Score:2)
Or rather they will by ending the scam and crashing all crapcoins to zero.
Re:They will not get better (Score:5, Insightful)
Re:They will not get better (Score:5, Insightful)
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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At least ... (Score:5, Funny)
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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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Or Eat them [wikipedia.org], when an occupying army kills the food transport lines...
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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.
I thought Cryto currencies were (Score:2)
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everyone calm down, it’s possible that this is just the bank experiencing a liquidity crisis [twitter.com]
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promoted as the hedge? ....
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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Please, keep sinking... (Score:2)
to the mariana trench, hopefully to never be seen again... and take the NFT market with you
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to the mariana trench, hopefully to never be seen again... and take the NFT market with you
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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This is getting boring (Score:5, Funny)
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Re:This is getting boring (Score:5, Informative)
Maybe a website similar to FuckedCompany could be created (FuckedCurrency?) that will track them circling the drain.
https://web3isgoinggreat.com/ [web3isgoinggreat.com]
To quote Mr. Burns (Score:3)
Excellent!
If this is happening to crypto currencies. (Score:2)
The exchanges have suspended trading (Score:2)
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
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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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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
Shocked (Score:5, Funny)
I am Shocked... Shocked I say... to find that there is gambling in the casino.
Almost agree with Steven McClurgh (Score:5, Funny)
Relevant facts (Score:2)
Etherium down about 74% from peak,
Doge coin down 85%
NASDAQ down 32%
DOW down 17%
S&P down 21%
NIkkei down 12%
FTSE 100 down 5%
Across the board world wide every market is tanking. At least be honest and not pretend that crypto isn’t spherical, frictionless, and falling in a vacuum.
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Veneno on the cheap (Score:2)
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).
Few practical use cases (Score:5, Insightful)
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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