"how do i convert crypto assets into USD without triggering a taxable event?"
the answer was create a stablecoin where you for sure have $1 for each coin so you can always exchange your crypto for dollars.
the problem is all these shady crypto finance people are busy making money off of stablecoins and hoping nobody catches them without enough cash on hand since they invested the USD into assets instead of just holding cash, or when the value went up they minted more stablecoin to sell off and now that the price of the stablecoin is down they don't have the ability to cover their liabilities.
The basic idea to protect against taxes, the extended idea is to enrich every grifter around.
And swapping BTC for USDT still a taxable event. Just as if I bartered my Apple stock for some Google stock of yours: for both of us, there's a capital gain or loss, and it's a taxable event. You don't have to go through actual cash money for it to be a taxable event.
Your interpretation of the law was potentially correct before the Tax Cuts and Jobs Act (this was debated but was never taken to court) but is now not correct and crypto-crypto swaps are taxable and you use the dollar value as reference price. This may not be the case in other countries.
> "how do i convert crypto assets into USD without triggering a taxable event?"
You don’t: “Taxable gain or loss may result from transactions including, but not limited to: [...] Exchange or trade of one digital asset for another digital asset.” [0]
You can't hack around taxable events by avoiding exchange into fiat.
but you're trading $100 worth of Crypto A into $100 worth of USDT or whatever other 'stablecoin' ostensibly backed dollar for dollar with USD, thus there are no gains but you still ostensibly have 'converted' Crypto A to the closest thing you can convert it to that isn't actual USD.
That's the purpose. If you sell a crypto for USD you may get taxed. If you convert it to equal amounts of a different crypto there are no gains and no tax.
> but you're trading $100 worth of Crypto A into $100 worth of USDT or whatever other 'stablecoin' ostensibly backed dollar for dollar with USD, thus there are no gains.
If your basis (purchase) value—irrespective of the current value—of Crypto A is $100, sure. But that would be the same if you converted into actual USD.
But if you actually had gains on Crypto A, say the purchase price was $50 and you sold for $100 worth of USDT, you would have a $50 taxable gain.
“A16. [...] If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. [...]
“A17. Your gain or loss is the difference between the fair market value of the property you received and your adjusted basis in the virtual currency exchanged. [...]” [0]
> If you sell a crypto for USD you may get taxed. If you convert it to equal amounts of a different crypto there are no gains and no tax.
No, you will owe taxes in exactly the same situations as you would if you exchanged the crypto for USD: if the value of what you sold it for exceeds the basis (not current) value of what you sold.
Now, its possible that you can find a crypto exchange that doesn’t deal in US currency or with US banks and is less likely to report information to the IRS, so that trading into stablecoins or other crypto helps you evade taxes that are legally due. But it is not a hack around actually having a taxable event. (In fact, it potentially, if the stablecoin isn’t perfectly stable, makes the purchase with the stablecoin as well as the sale into it a taxable event, which would not be the case with actual USD.)
If I own a house in the clear and make a private transaction to trade my house for someone else's boat, I still own capital gains on the difference between what I bought the house for and what the boat is valued at. So if I bought the house for $250k and I wind up with a boat valued at $1M then I owe taxes on $750k in capital gains.
There's no "if it doesn't touch USD it doesn't trigger taxes" law because that would be instantly gamed and exploited.
Crypto.com are not long for this world but I don't think this is their demise, rather, this is specifically the Solana blockchain, which is... well, it's not a traditional blockchain. More a reflection on Solana (and it's vulnerability to the demise of FTX) than Crypto.com.
I have no idea if this is a frank and earnest assessment or baseless hyperbole, how many times has the price of bitcoin moved >=12% in 24 hours? Has it ever moved 80% in one day?
edit: What I want to run an analysis of the actual data but I did the "next best thing" which is googleing around and reading arbitrary articles, and what I've found is
-22% on 15 January 2015
+28% on a single unspecified day in July 2017
+~25% on 7 December 2017
+~20% on 1st April 2019
I'm sure I've missed some, and there are other, possibly more dramatic spikes and crashes, that happen over longer periods, but this is enough for me to say that a 12% swing in one day is newsworthy, but not frontpage newsworthy
Popcorn meaning you enjoy this? Did you have popcorn in 2008 when the economy was freefalling? Popcorn when people are financially harmed in other ways?
You can be a bitter anti-crypto person without _enjoying_ people's pain wtf.
"Solana’s native SOL token suffered as a result of FTX’s collapse, dropping over 40% on Wednesday at a price of $14.37. This is 92% below its price from a year ago."
I looked it up and it was trading for $230.23 on Nov 9, 2021. As of posting this comment it's at $13.16
Idgi, the Solana network functions normal, and SOL is not intimately tied to FTX. They only reason they would do this imo, is if Crypto.com itself has problems (they want to slow withdrawals?). What am I missing here?
"More than 18 million coins worth approximately $320 million will hit the cryptocurrency market in the next 24 hours after they are released from staking. ... In addition to the aforementioned 18 million SOL, the market should be ready for a 1.7 million Solend whale liquidation; the whale borrowed 30 million USDC against his two million SOL collateral. A total of 96.7% of his loan is backed by the cryptocurrency that is rapidly losing value on the market right now. Technically, liquidation has been triggered already, and the borrow utilization greatly exceeded the liquidation threshold by more than 50%..."[1]
Every asset class does. USD has the US military, gold has difficulty of mining, crypto has maths, watches have complexity of their construction and are a lightweight store of value, art has emotional resonance.
Difficulty of mining is a supply side constraint.it doesn't give gold its value.
Gold has long been prized because it doesn't corrode, and makes nice jewelry. There's also industrial applications.
Who admires the maths of their bitcoin? They don't, it's just a supply constraint. Constraining the supply of something that has no value doesn't make it worth something though.
Likewise you probably need a military to defend your country from those who might invade and replace the currency, but that doesn't impart value.
Aluminum used to be more valuable than gold. Then we discovered cheaper ways of processing the ore. Aluminum is so cheap now that people throw away aluminum cans everyday (hopefully in the recycling bin)
People rarely throw away gold like that although some does get tossed in electronic devices. If we found a way to decrease the cost of gold mining by 1000X then maybe people would throw it away like aluminum.
You folks are arguing past each other. As it turns out, the price of something is determined by two factors: Supply and Demand. Imbalances in supply and demand cause changes in price.
If you have one thing then the price should be whatever the highest bidder is willing to pay, if you have a million things, it's whatever the the millionth highest bidder is willing to pay. Thus the more of a thing you make, the less valuable each thing is. This works, because the total value of $things sold increases.
But that 1, or those million people buying the thing have to be willing to pay something.
An aol disc isn't worth anything, even now that they are probably exceedingly rare (I'll bet someone's flogging them on ebay though) because still no one wants them.
Aluminium and gold have fundamentals because they have a use. Some random coin, not so much, not even as a coaster.
And a base value of zero is way different from any positive value, in so far as it can drop 90% an infinite number of times, but something with some use aside from exchange will drop only till it hits the market price of that use.
Scarcity is a major part of gold's value. Gold's value comes from being scarce and easily divisible. It means I can pay for something in an exact small bit of gold.
It doesn't have to be useful or pretty to do either of those things. That's the case for bitcoin being digital gold.
The problem with bitcoin is that it isn't significantly better than gold at doing either of those things, and obviously isn't any better than any other random unit in another distributed crypto ledger. You can create new crypto tokens so fast that people went from trading particular to issuing single instances of new tokens with NFTs.
Being useful and pretty just provides a baseline value; gold is never going to fall to zero. But the important part is that nobody is about to invent a new gold to compete with the old gold on the merits of scarcity and divisibility. Even though bitcoin when considered alone is a nice try, every other cryptocoin destroys its scarcity.
I'm not sure if you're conflating value and worth or missing my point.
If there was only 1 Oz of gold and Mr X was willing to pay $1bn for it. Gold would be worth $1bn. But there's more than one ounce and the market clearing price is much lower than that. Mr X may still value an ounce $1bn, but he doesn't have to pay that, he gets a relative bargain. If no-one valued gold at $1 an ounce today, you shouldn't be willing to pay $1 if there was only 1oz.
Supply just creams of the top people who value gold most highly. Scarcity just means you're creaming off a smaller higher valuing population.
So scarcity doesn't give something value per se.
Id agree in certain edge cases that scarcity does increase value. I'm not sure if gold is an example of not. There are other rarer elements that don't have the same cachet. But in general I don't think scarcity itself adds value.
No, cashflow positive assets generate returns. The idea that a cashflow positive asset could have no demand means that the dividend yield could be infinity. Which is a ridiculous idea.
On the other hand a cashflow negative asset like crypto can easily go to zero when the demand is at or below the cashflow cost.
Why is cryptocurrency mysteriously unique in not being able to generate cash flow? I can use cryptocurrency as gold, as cash, as a savings account, or artwork, all of which very obviously generate returns.
You said that "fundamentals remain solid". If you had said cash or beanie babies had solid fundamentals I would have singled those out explained that they don't.
FTXs terms didn’t allow them to use customer’s money as deployable capital. That’s SBF committing fraud and doesn’t change the low transaction costs and speed of the network, much like madoff didn’t make the concept of cash worthless.
I didn’t buy it at £400 once because it had fallen so much from £1,000. I wouldn’t be surprised if it goes up again when people look to alternative sources of income to offset inflation.
Rationally yes, but people are irrational and things like r/wsb show you irrational can get momentum. I’m probably 80% sure there will be another bull run in the coming years. Even if it’s as trivial as crypto being 5% of its all time high and people decide it’s worth a go just in case, creating its own run.
The S&P 500 is obviously superior even though BTC did well pre-2013. BTC is more like a commodity than an equity, so the long-term returns are expected to be worse compared to index funds.
Another crypto crash? I'm surprised anyone would have serious money still in crypto after the last megacrash, which came after the previous crypto crash.
Nothing but crashes. Bitcoin crashed to $2 in 2011, then it crashed to $250 in 2015, then it crashed to $3000 in 2019, and now it's crashed again to $15000. Smart money knows to stay away and avoid the crashes.
This is a joke, but it also misses the point: a volatile asset doesn’t have to crash to any particular baseline. It only has to crash below the stake price for its investors.
You're talking about MVRV (Market Value to Realized Value). If it's below 1, it means the average investor is carrying a loss, and > 1 means carrying profit. Historically every halving it has spent some time below 1, and we are right on schedule.
I didn't propose that. I just linked a relevant indicator. If you'd like me to predict the future, I predict that eventually BTC will fill a similar niche as gold - it will outperform cash under the mattress, but underperform index funds. You'll be able to spot the transition when the MVRV starts to center around 1.0 instead of its current ~1.5. But I couldn't begin to guess when that will happen. Maybe this crash is the catalyst, or maybe it will happen a decade from now. ¯\_(?)_/¯
By that definition, which financial instruments aren't negative sum? E.g. stocks trade hands in a very similar way, and companies can always issue new shares.
The same thing could happen with crypto. A smart contract developer sells crypto to fund development of a smart contract. That smart contract can provide new utility and drive demand for the currency.
Every couple of years they groom a new generation, a new hype cycle of pump and dump starts anew. Some get hooked, some homeless, some are dreaming to get their money back one day…
They said that last time. And the time before. And the time before that.
An actual difference is that current inflation levels make another round of stimulus checks highly unlikely. And the current nominal rates for risk free treasuries are high enough to keep large scale cash parked outside as well.
Another key difference is, IMO, crypto has reached peak saturation.
During the previous run ups, we didn't have institutional investors buying billions of Bitcoin, we didn't have public companies (TSLA) buying a billion dollars of BTC for fun, we didn't have sports stadiums with the name "crypto.com", or ads on TV.
BTC achieved mass adoption during 2020/2021/2022. It's available in 401k funds, derivatives on the stock market, etc.
The only catalyst I can think of that could truly catapult BTC back to the heights of 2020/2021 is if we get to a point at some point in the future where BTC is actually useful for something other than asset speculation and people trying to get rich quick. This could take years.
We're still not into an actual recession as well either, and BTC has never been tested by a properly bad recession (2020 doesn't really count due to how sharp the recovery was).
It is this bad for crypto right now, and there's going to be no cheap cash coming to rescue it for quite some time.
I think it is still possible that there might be a floor down at $4k or so where all the True Believer billionaires may still step in to buy it up and rescue it. If the billionaires themselves are net sellers though needing to raise cash because everything else is in flames (e.g. Elon+Twitter) then it may just fail.
You're both right. The market cap doesn't represent the amount of capital in crypto, e.g. liquidation value, investment capital, etc. The systems have always been relatively shallow in volume, with lots of trades being washes and speculation. In fact, wash trades are like the most commonly offered explanation of crypto's value. (Poor farmer in Afghanistan buys crypto to move money to his summer home in Venezuela and cashes out there.)
because everyone following the best practices is unscathed.
everyone had a choice to just never touch TerraLuna.
everyone had a choice to not keep their funds on exchanges.
I'll give some sympathy to custodial smart contracts being drained and advertised as non-custodial, a legal distinction that has little practical distinction for the user except unlimited amounts and no permission needed to use. But you didn't have to use those either.
and overcollateralized stablecoins type fiat are still fine (for now)
and overcollateralized stablecoins type crypto are still fine with redemptions functioning smoothly through pretty amazing stress tests
other kinds of stablecoins are the ones that actually have implosions and make the news, with the notable exception and danger of Tether which still have passed every stress test despite such a large attack surface being consistently attacked by state actors very publicly
regardless, it has been entirely possible to have stable value in crypto the whole time, and in fact that's where a majority of the capital is, far beyond any hacks, exploits and exchange implosions. overcollateralized stablecoins are still $120bn and has been a steady amount for the past year. redemptions go well when desired, people just don't desire.
and then for the people that actually have the risk profile for volatile assets and self-custody those assets? they're fine too. let the VC and bankruptcy trustees fire-sale, let everything trade for another 90% discount, that's not controversial, commodities trade like that, digital commodities are trading similarly.
You're cute. In the end of the day this entire shenanigan is a game of musical chairs and as every chair is taken out, you should be more anxious to sit down quickly before the music stops. The actual details hardly matter, this is a game played only by investors, and money is slowly draining. Nobody is inserting new chairs into your musical game, only new participants with their own chairs. Unlike musical chairs, you can leave right now.
> The actual details hardly matter, this is a game played only by investors, and money is slowly draining.
and that's not controversial, I'm perfectly fine with that and everyone in the space should be just as objective about their risk profile. We both agree that any other sales pitch for crypto was grifter bingo.
I don't consider this platform for investors to be perfect yet, for example I don't consider any stablecoin overcollateralized by fiat to be 'good' and I don't consider any of the stablecoins overcollateralized by crypto to be great yet, there is a lot to build and a lot of value to extract building.
the point was about storing value in the crypto ecosystem without losing it, after 4 references to stablecoins, so stablecoins. USDC would have been fine. USDT would have been as well, with fluctutations in notional value for brief periods mitigated by redemptions remaining at 100% when redeemed through the issuer
in direct contrast to storing on exchanges, or non-stablecoin crypto assets
What good is a "stablecoin" if the exchange can simply halt withdrawals? If the answer is that they need to be kept in air gapped hardware wallets like all other crypto, then how do you convert from USDT/C to USD? Assuming you can't find someone off exchange to buy it from you.
> stop using exchanges. in crypto they are occasionally part of the journey but people act like they are the destination.
If you ever want normal people to use crypto, exchanges or banks or something similar have to be part of it. Securely storing crypto is just too hard for normal people.
Its accurate that storing crypto is hard for a lot of people
Its also accurate that I don’t care about that and I’m never one of the people pushing for “mainstream adoption”. The alpha exists while it is hard. The Venture Capital exists to bring capital to a place where it is hard. Most of the platforms are financial services. Traditional finance has many obscure financial services that mainstream never directly interacts with and its the same here. In both, there are nuances in having access. You need special hardware and special accounts to be a merchant or payment processor, you need special permission and infrastructure to trade credit default swaps, you have to jump through many hoops to self-custody any paper-claim to an asset. These arent games for mainstream. If you want to jump through those hoops you can.
> Its also accurate that I don’t care about that and I’m never one of the people pushing for “mainstream adoption”.
And you think the value is going to rise without increased adoption? Or that actually using your Crypto to purchase goods and services is going to become easier without increased adoption?
> redemptions go well when desired, people just don't desire
Why hold stables? I’m confused why you’re interested in coin pegged to inflationary fiat. The yield accounts are all scams, so that’s definitely not a good idea.
the answer entirely depends on if you are asking from a crypto user perspective or a crypto skeptic perspective
for users its just a convenience for staying onchain and having stable value while awaiting other opportunities, if you have the risk profile to hold something else then do that. Its just a trade and a few months of single digit inflationary pressures really is a non-issue
I highly doubt it, but it's not impossible. Bitcoin doesn't really have any intrinsic value to provide a floor for the price. It's all technicals, all perception.
Why both deposits and withdrawals? They risk spooking their customers by preventing withdrawals. If you wanted to mitigate risk, wouldn't you just prevent deposits/buys?
At the end of day, this entire fiasco really drives home the point if its not your keys its not your coins. Shady exchanges/banks can always collapse and take your entire portfolio with it, but if you have a securely backed up wallet, then your coins will be untouchable no matter what kind of shady shenanigans goes down in the wider cryptocurrency landscape.
Celsius = centralised, terra = centralised, FTX = centralised...
The point is stop trusting centralised wolf in sheeps clothing.. same goes for ethereum with Proof Of Stake.. ur just reinventing central banking (but private)..
and bitcoin has exorbitant transaction fees, slow transaction times, massive power usage for relatively little throughput, etc., etc.
time to end the crypto social experiment and go back to using the traditional banking system which has safeguards in place to prevent people from being continuously taken advantage of. oh wait, nobody was really using crypto for anything other than a FOMO investment anyways
By taken advantage of, you mean like becoming a debt slave paying off mortgage on overvalued house because of a housing bubble they blew out of proportion yet nobody was held accountable for?
No- by taken advantage of I mean like putting your life savings into a 20% APR yield crypto savings account and getting rugpulled the next week. Funny how you reference being taken advantage of in standard financial institutions as having debt but it is just as easy if not easier to take out loans in the crypto space that people have no chance in hell of paying off. Regardless, that's unrelated to what I was talking about, which was about people getting conned day in and day out in the crypto space. At the very least, this is minimized in the regular financial market which has safeguards in place to protect consumers. Is this system perfect? No. Is it 100x better and safer than the current state of crypto because of lessons of the past and the laws put in place because of them? Yes.
If you believe that crypto is in any regard better than the traditional banking system (which it seems you do), please state those claims explicitly.
I definitely don't think crypto is in any way "better" as an investment (you can look at my other comments here), but I definitely think the destruction as misery caused by traditional finance was so much higher.
Crypto is extremely speculative and risky and everyone knows it.
Housing on the other hand, get extremely favorable regulation that's unjustified in my opinion. You got the Fed buying mortgage backed securities.
In my view, what is going on in traditional finance is morally wrong much more than in crypto. Unlike crypto were the bubble doesn't effect me, I need to work and pay higher rent and my freedom is restricted as a direct consequences of the evils of traditional finance wether I'm participating in their bubble directly or not.
Many of the things you call "safeguards" of traditional finance are greater evils than nothing at all. Especially safeguards of collateralization, like mortgage.
(And don't get me wrong - I'm very capitalistic in my world view. You can just hardly call capitalism the way the Fed and mortgage dealers acted, and central banking is the bane of modern capitalism).
Basic transaction cost at this time is est $0.05, or 54 cents for high priority.
> slow transaction times
If by slow you mean ~10 minutes, it turns out this is a strength (Solana is not scalable; Ethereum will also likely grow in an unbounded fashion making individual node-running infeasible); and layer 2 solutions such as Lightning Network enable sub-second Bitcoin transactions.
the transaction fees, the verification and throughput limitations are fundamental technical tradeoffs required for a truly decentralised store of value.
The people and technologies claiming to have "fixed" or "improved" upon bitcoin are often making different trade offs they lie about. This is why I like solana, they make no pretence of being decentralised.
btw fiat is 1000x worse. You don't see it on the news because you're forced through coercen to bail out & insure these bad actors. The current US bank reserve requirement is 10%.. the only reason there isn't a bank run is FDIC. The whole thing is an incestious mess that creates our current world of cantillionaires..
Yeah but the collapse of those exchanges drove down the price of the coins. Even if its your keys and your coins those coins become worth less money than they were before.
If u look at the past decade, the real coins survive. Its the venture backed ponzis that die..
Basically no exchange should be holding enough to cause a collapse of the coin. With bitcoin this will never happen, there was multiple collapses at times where liquidity & ramps were non existent.. and bitcoin still survived to go up multiples.
I think it is the last item that motivates the rich folks desire for a store of value that doesn't rest on providing funds for the rest of society to borrow. The rich would keep their wealth out of circulation while the society withers due to lack of investment in the work and inventions of that society.
I think people are too hyper focused on the price aspect of cryptocurrencies. The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
The genie is already out of the bottle and there is no way to put it back. There will always be those especially in the younger generations that want something better than the current system. Bitcoin shows that you can have a completely transparent monetary system based on code that is available to be audited by anyone. Bitcoin may or may not survive, but the idea behind it will.
> The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
I don't get it. How does this description fail to encompass the likes of SBF, CZ, or Do Kwon? And while they didn't modify the money supply (although UDT kinda did), their actions had a strong impact on the value of money. So anyone holding coins in their own wallets still got screwed by their actions.
Bitcoin only solves the problem of manipulation of the underlying money supply. It does not solve the problem of fraud and scams. Maybe one day we can also solve that problem with exchanges existing only as smart contracts, but with exchanges that are not completely transparent you always run into the risk of getting defrauded because you don't really know what's going on under the hood.
I always see advocates for crypto bashing central exchanges, but at the same time they bemoan the slow pace of adoption. I just don’t see it ever being even remotely main stream without central organizations. It is far too much work managing it all yourself even for tech savvy people. Just the process of downloading a wallet and downloading ledger is a huge pain in the ass. And then have to do it for every crypto if you’re not using a multi-wallet!
I'd rather not have my access to my net worth be behind a six word phrase. Might be tough to pay for shit after I get hit by a car or get old or something and have trouble remembering stuff.
If you’re storing your own crypto you need a wallet, backups, and cold storage at the very least. Plus you need to remember your seed phrase. If I lose my bank account info or cards I have several ways of getting access to my money, crypto no so much.
It has been a while since I set up but last time I did I had to download the blockchain’s ledger aka the history of every single transaction. Is this no longer the case?
What everyone is saying and you’re missing, is that those scams and frauds affect the inherent value of your bag, and reduces your purchasing power of services/products. You can take solace in having X/N possible BTCs, but you’ll need 100X when the price falls.
> The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
Is this really true, given that the largest currency pair of Bitcoin is with USDT, which is alleged to have been arbitrarily created at whim to pump up the price of Bitcoin?
Let’s not forget the frictionless enablement of spectacular ransomware enterprises, and the glorious enrichment of dangerous actors with stolen funds. It’s a small price to pay for all this… freedom?
It also enabled about $60+ million dollars to be donated to Ukraine and that's just one data point. Whether these other problems are a small price to pay will depend on who you are talking to. To the Ukrainians that benefited from these donations and to those that have food, weapons and shelter from these donations, it is most likely a small price to pay.
Perhaps a portion of these donations could have come from other sources if cryptocurrencies did not exist, but there isn't really a good way to quantify that, so I won't go into that discussion.
Maybe they finally realized they looked stupid after a decade of using Venezuela as an example of how crypto can help a country, even though crypto hasn't made anything better there.
I was able to donate hundreds of dollars to Ukraine using the same credit card I use for everything else. What is special about crypto donations to Ukraine? I suspect that the fees of converting USD->BTC (or other crypto) and then the recipients converting back to UAH are higher than the <2% CC fee I paid. (I used a card with no foreign transaction fee.)
And with credit card, the donation recipient wouldn't be at risk of losing double digit percentages of the value donated if they didn't immediately cash out into fiat currency.
It is true that a cabal of rich people cannot arbitrarily modify the money supply. We instead get a permanently chosen system of money supply that was created by an ideologically driven software engineer who appears to have vanished into the ether. Is it not possible that Satoshi chose a less optimal system than the central banks would? The finite and logarithmic rewards make a huge huge huge difference in the eventual distribution of BTC worldwide, should it become a dominant system. In my opinion, a system where early adopters get unimaginably rich forever is simply unethical.
And if another system eventually wins... then isn't that simply an example of a cabal of people (though not necessarily rich at first in this case) modifying the rules for money supply? Doge produces a different outcome than BTC. That's important.
I don't think fair distribution of cryptocurrency in the bootstrap phase is a solved problem. We got a long way to go if we are to come up with a fair system. Satoshi went with the best that he could come up with which is a no premine solution.
A slightly better solution would be a no premine coin with a global announcement for 5 years before the mining begins so everybody gets a fair shot at participation. I am sure we can develop even more fair forms of distribution with sufficient research.
Coins don't return to the reward pool when somebody dies. A system of new aristocratic families based on who was an early adopter and held on to some BTC is not something I'm excited about.
I also don't think that going backwards is a good thing. Yes, BTC is more equitable than a system of divine right of kings where the monarchy literally owns everything. Hooray.
> people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
Is this satire?
Because crypto currencies are not the gleaming example of “free of manipulation” that you think they are. There’s endless cases of whales, exchanges, NFT groups and crypto-celebrities using their capital and power in order to manipulate markets and supply in exactly their favour. The NFT space was especially bad for this. In fact, a lot of those NFT groups are exactly what I’d describe as a “cabal”.
>The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
if this is a stab at the federal reserve, my response would be "democracy" at least in the abstract. either way not much different from the whales that hold disproportionate amounts of influence in the system right?
It's your keys, and your coins, and most importantly your initial and continuous due diligence... and not just on the asset itself, but on the possible motivations of any asset holder with a sufficient stake to meaningfully affect the price.
Coinbase, which happen to be a Y Combinator unicorn, is saying they're totally fine. Credit where it's due: Coinbase never ever dealt with Tether/USDT. They say the $42 billion of USDC they minted are all backed and that all the clients' assets on their site (USDC/coins/EUR/USD/etc.) are all backed 1:1.
I hope Coinbase is and stays an honest (and regulated) player in that crazy space:
creating 20,000 new currencies isnt really an economy, or rather its a purely entertainment based economy like Las Vegas or Macau. Those things I guess are valuable but is this the best use of our computing power and our Human Resources?
If you store your funds in a secure wallet, you will not be able to FOMO in recklessly on shitcoins hoping for a 10-bagger, the facilitation of which is the raison d'etre for most crypto exchanges.
People don't want to buy and hodl, they want to get rich. There's no Benjamin Graham for crypto because crypto has no fundamentals, no underlying value to go long on. The best any crypto advisor can do is to warn you when to hit the ejector seat button.
We're starting to see the cascade of exchange failures, just like we saw in 2008 with the banks during the GFC. The exchanges all made loans to one another in order to backstop their customer's assets. Now that the value of those loans are evaporating the entire system is going to come crashing down all at once. This is a systemic crisis, and there is no white knight to save it.
There's a beautiful difference. Unlike in 2008, today
- I can transact efficiently and safely without a bank account. This is currently not possible in traditional finance
- Subsequently, none of my assets are locked. I have never stored assets in an exchange, and have no need to do so.
- Exchanges can't ask daddy government to mint coins for a bailout.
Tl;dr: exchanges and banks who think they can get away with being overleveraged, doing unbacked derivatives trading, lending without locates etc. are in for a bitter surprise. Crypto can't be gamed so easily and it shows.
The problem is, if these exchanges collapse, the value of that crypto you have will drop significantly. So yes, you still have your crypto assets, but there is a real chance they could end up being worthless.
Even if you don't use exchanges, you are still exposed to their failure because they are major players in the market that determines the value of the cryptocurrencies. When major players in a market go bust, it's unlikely that any of the other market participants will end up unscathed.
Given that crypto value is based solely on what other people are willing to pay for it, it really could go to zero. It probably won't go all the way to zero, but I'd still expect a significant drop.
This indicates that the value was propped up by market manipulation. I have no problem with a crash like this, as I have no exposure to centralized * exchanges.
I also don't have illusions about price action. I don't invest into crypto to make a quick buck. I invest because I fundamentally oppose traditional finance.
Really, no exposure to centralized finance? You only use crypto to pay your rent and buy your groceries and your clothing? Your employer pays you in crypto?
crypto *is* traditional finance. whenever humans transact with each other, we reify the behavioral mechanisms which define us as a species. we cannot help but create economies, to trade and transact. all finance is "traditional" finance until our biology changes and new emergent dynamics and equilibriums establish themselves. however thermodynamics, statistics and other math might also have a lot to say on the matter.
there is no such thing as traditional finance, just finance.
When people talk about traditional finance, we mostly refer to the existing technologies for issuance of currency, settlement of fiat transactions, and the debt hierarchy.
Of course finance is an incredibly nuanced word. To quote V. Buterin:
> Finance can be viewed as a set of patterns that naturally emerge in many kinds of systems that do not attempt to prevent collusion
you are displaying a lot of foolish ignorance and compounding it with misplaced certitude but in good faith and a spirit of wide eyed curiosity I applaud your lack of understanding of finance. also you get a lot of credit for using the word "nuance" as if it somehow changes the definition of the word finance.
finance, trading, barter, humans will not allow collusion to continue unchecked. so finance being defined partly as the lack of check against collision is pure propaganda by Buterin and you are his mark. the only reason the collusion rife in the crypto space is so unchecked is because its a big casino constructed for you to play in by people like SBF, CZ, V. Buterin. The whales represent a huge cartel. The drama of the last few days is a parable of collusion, retail being tricked into gambling their life savings, retail being fed lies about how the word is and how the world is not, lies which are easy to disprove.
you are a classic retail mark, being fed and regurgitating marketing and propaganda to encourage you to play your part.
look up retail FX trading manias in Japan in the early to mid 00's as recent past as prologue.
First of all, the "collusion" Buterin is referring to is a game -theoretic term and is precisely defined. Based on your response I'm guessing you are not familiar with his blog post.
Calling something propaganda without being familiar with the source is probably the purest form of irony.
> you are displaying a lot of foolish ignorance and compounding it with misplaced certitude but in good faith and a spirit of wide eyed curiosity I applaud your lack of understanding of finance.
Why is this kind of defensive retort so commonly seen in discussions about the value of cryptocurrency?
On HN this particular flavor seems to only accompany crypto. Other polarizing topics e.g. criticism of Apple or Facebook, or even China, don’t exhibit this weird style.
this is no ad hominem - I am attacking your statements here not you as a person. you are flaunting your ignorance and using some weird appeal to authority by posting a vague quote from V. B. which itself is like, not even wrong.
I am not defensive, I am embarrassed for you and all of the people poisoned by this antisocial propaganda, and it makes me despair for humanity.
I wasn't making an appeal to authority, nor was I agreeing with V.B. I was trying to point out that finance may mean different things in different contexts. Not sure why you keep obsessing over this propaganda narrative, as if I'm a brainless NPC. I'm open to learning new things, and if you're more knowledgable then I'll listen.
For instance, I really like your view of finance as these emergent properties of human behaviour. My question is then: how do you propose we refer to the entities we currently have in place for trading of securities, market making, fractional banking, clearing houses, central bank issued fiat, etc? Clearly there is a difference between those "things" and what we do in DeFi, right?
So what label am I allowed to use to distinguish these entities from DeFi?
The only point at which you should quote Buterin is if asked to quote someone with absolutely no knowledg trying to speak from a position of authority. Him making up a new definition for a widely used word to justify the existence of his shitcoin does not make it gospel.
I think the mania is still there, based on some of the reactions I see defending crypto. But a lot of people must have bailed out to make the Bitcoin price drop so much.
I'll believe the mania is over when Bitcoin reverts to pre-2017 prices and stays that way forever. Honestly I've been considering buying some because I suspect the dip will be temporary, but ultimately I'm not that foolish with my money.
The entire crypto market is nothing but[1] market manipulation and speculation. If that goes away your crypto will be virtually worthless.
[1] pre-empting the "but it's used for practical things in countries with crumbling economies instead of the local currency" argument: yes, but that's such a tiny portion of total market cap that it probably doesn't affect the value of your holdings by any meaningful amount.
> [1] pre-empting the "but it's used for practical things in countries with crumbling economies instead of the local currency" argument: yes, but that's such a tiny portion of total market cap that it probably doesn't affect the value of your holdings by any meaningful amount.
Also good ol' fiat dollars are better than crypto for that use case in pretty much every way.
Exchanges should not collapse if all they do is collect commissions from people trading. They collapse when they issue their own tokens and borrow hard assets against those very soft tokens.
Nobody in the crypto industry has the self-control to just be an exchange.
The whole idea of crypto attracts the same people as other get-rich-quick schemes. Some scammers, some earnest people. But all ultimately lacking in self control.
if these exchanges collapse, the value of that crypto you have will drop significantly
The throne is never empty, right? We are probably still to find out if it’s worth sitting on long term, but since that genie left the bottle, I suspect it is.
There are tons of vendors I actively use that accept crypto. Not as much as I'd like, but hardly no one.
But yeah, you're right, a currency nobody uses is obviously worthless. I'm attempting to drive adoption so that they CAN be exchanged for goods and services.
And when the mom-and-pop bookstore down the road can no longer exchange their crypto for fiat (needed to pay their taxes), do you think they’ll keep accepting your crypto?
Good proxy for the promise and reality of crypto though - you need to interact with some shitty PayPal crypto platform and they charge you charge 1.8% for the luxury of doing so.
I looked at the Colorado site. I predict this will also get shut down. Basically you are paying more just so you can say, "I paid my taxes with cryptocurrency", which honestly seems stupid.
You're not getting it. Vendors almost all immediately convert Crypto to USD or their local currency. When the exchanges collapse that will no longer be possible. Poof, your ability to use Crypto also ceases at that very moment.
You are incredibly exposed to the same risk that these exchanges have.
If a large enough user base and set of vendors accept crypto, there's no need for converting to USD.
How do you handle refunds? Converting twice? Sure, charge users for it, you'll be driven out of the market by businesses who are not scared to keep a crypto wallet liquid.
How are the vendors that accept crypto paying their invoices? The company I work for has hundreds of vendors and suppliers, and none of them accept cryptocurrency. They all seem to want USD.
This train of thought requires every single person involved in production down to the person putting the item on your doorstep to be a true crypto believer.
Honest question: Suppose you lived in a world where crypto was more common. What if you have a vendor who refuses to use crypto? Would you still transact in fiat?
Even if crypto catches on more than it has, I do not think everybody will want to deal with it. I am do not do any importing or exporting. Dealing with another currency just seems like wasted energy.
I'm a pragmatic person, not some crazy fundamentalist. I do use fiat where necessary, yeah.
> I do not think everybody will want to deal with it.
The thing is, crypto should be much, MUCH easier to deal with, we just don't have mature software/UX around this. Because we're still figuring out best practices, and people are learning about this tech.
And do those vendors use crypto to buy from their suppliers? Otherwise, they have to raise their crypto denominated prices as the exchange rate falls and you're still in the same boat as selling it yourself.
Genuine question: what are you doing with that crypto anyway if not planning on cashing out back into fiat currency again?
My understanding is that the vast majority of cryptos are useless for actually paying for anything and the vast majority of businesses still don’t accept them anyway. So unless you are basically only using and holding BTC (which has a relatively small market of goods that can actually be purchased with it on a daily basis), I’m not really sure what good that crypto is doing for you other than sitting around as a speculative asset which will need to be converted via an exchange.
Genuine answer: I'm holding my crypto assets until I can exchange them for the goods and services I need. I never exchange any crypto back to fiat.
I don't "invest" to make money. It's a currency. I buy it to use it. I might have to hold it for 5 years, maybe 10, maybe 30, or maybe I'll die and crypto will never be successful (a sad thought but possible).
But in the meantime I'll do what I can to improve adoption. That includes working on core protocols, improving UX for non-technical users, or writing software that helps vendors with payment integration. I also make an effort to approach business and show that there is demand for crypto payments.
This is literally the only way to make crypto successful. All this price action non-sense, and people wanting to get fiat-rich is just unproductive noise to me.
you should invest your spare cash (no matter what the currency) into actual investments. cash is dead money, and taking a buy and hold approach to foreign exchange trading is probably a bad idea compared to something like (just off the top of my head) the All Weather Portfolio.
And the people in the housing bubble mostly lived in those houses, yet they got burned by the crisis nonetheless.
You don't properly evaluate the present value of money if you are willing to trade your present money for future money at completely unknown conversion rate and adoption date.
Relative to the strategy of buying it when you could use it (which also satisfies your intents) you are practically speculating. You can also look at it like opportunity cost.
> You don't properly evaluate the present value of money if you are willing to trade your present money for future money at completely unknown conversion rate and adoption date.
Unknown can mean many things. I'm convinced that the fair value of crypto is much, much higher. Adoption is still sluggish and small.
I believe in crypto's success, which you might call speculation.
> This is literally the only way to make crypto successful. All this price action non-sense, and people wanting to get fiat-rich is just unproductive noise to me.
Why are you buying crypto regularly? If you don’t care about the price, and you have no idea what the fair value is - what’s the right coin and right amount to hold?
Your response is the first that's really interesting. I know that the fair value is much, much higher than it is now, because there is virtually no real adoption.
> what’s the right coin and right amount to hold?
That's an amazing question. I have truly no idea. I'm investing based on my personal conviction.
But this opens up a really interesting discussion about game theory and prediction markets. In a zero-sum prediction market, refusing to play is pareto-optimal and an equilibrium strategy.
So you could call me an irrational actor. I'm making a first move based on personal belief, thereby giving you an opportunity to arbitrage me. I believe that the fair value is higher than it is now. If you believe differently, short me. (I'm just joking of course, but I do find your question intriguing, and is something I've been thinking about a lot)
This is such a meaningless stance in the context of this discussion.
If only everyone was buying various crypto and holding it in a cold wallet for the next 300 years!.. that’s the only true usage for crypto. No insidious banks, no fiat, no regulations, just pure bits in my virtual wallet until I die.
I'm curious because a lot of this started (in the short term) with Binance dumping their FTT. Just yesterday it looked like a "4D chess move" because then Binance could acquire FTX for next to nothing. Now I'm curious if Binance just tipped over the gasoline can that can finally set this whole shitshow of uselessness ablaze, but potentially taking down Binance with it.
I'm not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state internally that it made sense to sell his holdings in FTT. I could buy the idea that he wanted to hurt FTX with his tweet, but things quickly escalated out of control.
I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.
Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.
If this was planned in advance, it was not 4D chess, it was just a really bad plan.
And also: at the time of Binance's offer to buy FTX, it makes sense only if Binance saw significant contagion risks to FTX's failure. But then they got a little closer and saw the huge hole in FTX's balance sheet and decided that they couldn't do that either. So it's really the worst outcome - they signal that FTX is important to their own business, but then can't do anything to save it. Does not seem to be good news for Binance.
Binance already knew that there was a hole there. They had just triggered the bank run by calling it out. The attempt to bail out FTX later was only for saving face and maybe also because they freaked out but couldn't stop it at that point.
And if they didn't know how large the hole was, they must have gotten a pretty good idea before signing the LOI. Even if it was rushed, surely that would be the first question they ask.
It seems clear from CZ's public announcement of a $2b FTT dump that their intention was to destroy FTX and Alameda. So my theory is that the LOI was a trap to put a nail in the coffin, destroying any remaining trust in FTX.
Before they were merely starting rumors; the phony acquisition attempt let them declare "we've seen the books and FTX is unsalvageable".
> not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state
FTX could have just been illiquid. With a lot of loans to other crypto players who would do fine if FTX were rescued. Turns out, they weren’t. They were fundamentally insolvent.
People are ascribing brilliance and cunning to something that was simple self interest. FTT was risky, so they dropped it. What would they have done if FTT was risky and they didn't intend to acquire FTX? The same thing.
I think broadcasting the intent to sell the FTT was the big mistake. It isn't in their interest to announce to the market their trading plans so, and to my knowledge they are not beholden to any regulation to do so, so why do it? Just slowly offload the risky asset.
Could've, sure, but then they'd be accused of insider trading, or trading against their users or something. With their volume would a death spiral not have happened anyway after all the downward force? You could also see it as them giving their users a chance to get out first.
Binance didn't benefit by announcing it either. The token dumped before they liquidated, and they didn't scoop up their competitor.
It's a "very small player" that has their name plastered on one of the most prominent arenas in the United States. (FTX also had their name on another arena, for that matter!)
It's quite possible that the public perception poison will be way worse than any collapses themselves because these players have tried so hard to associate themselves with crypto in the public eye.
> cascade of exchange failures, just like we saw in 2008
They are related in both being cascading crises of confidence. ‘08 manifested from a novel opacity around correlation (lack of centralised counterparty reporting) from novel non-bank banks (shadow banks). This is just a three-point recursion cycle: FTX, FTT and Alameda.
The old saying goes, when you are getting stock tips from your cab driver, get out of the market. Maybe the same should be true for arena's. When your local arena is named after a crypto site, sell your coins.
What I really wonder a lot is who will left with the money when the music stops and the tide goes out. Early adopters? Crypto mining hardware manufacturers? Electricity companies? Generation machinery manufacturers?
Lambos and mansions and even jets of lucky crypto bros are just a small change on how much dough was buried in all the crypto schemes of the world.
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