Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Crypto crash?

How to buy, profit and invest in crypto currencies or NFTs
Hallucigenia
Lemon Quarter
Posts: 2616
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Crypto crash?

#500227

Postby Hallucigenia » May 13th, 2022, 11:15 am

GoSeigen wrote:I don't buy the short attack theory. Did shorters profit from the falls? Of course. Were they the cause of the price collapses? No.

You don't need to be an expert to know that the "value" of these crypto coins has been a fantasy all along, so the story is a simple one: normality returns; suckers lose everything.


There's always two sides to these things - an underlying misvaluation can persist for a long time and the trigger for it to be reassessed which can come sooner or later. It's like how the judgement in the Microsoft monopoly case was one of the main triggers for the collapse of the dotcom boom, even though pets.com and garden.com had passed the "daft" level of valuation many months before.

The attack theory is plausible though, it's nothing the market hasn't seen before many times - liquidity arbitrage, attacking a peg that everyone trusts but which is in fact built on sand, that kind of thing. For me the most shocking aspect of the story is how anyone believed the magic beans behind the Luna reserves - but fair play to them for having a go and trying to turn magic beans, into Bitcoin magic beans, into hard cash reserves as the basis of something "real". Just a shame for them that the music stopped before they'd grown any beanstalks.

Hallucigenia
Lemon Quarter
Posts: 2616
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Crypto crash?

#500804

Postby Hallucigenia » May 16th, 2022, 3:32 pm

Some more details emerging. You know how I mentioned their reserves of $3bn had collapsed to ~$90m last week?
https://finance.yahoo.com/news/luna-fou ... 43369.html
the $40 billion Terra ecosystem collapsed last week.... [so a ratio of 13x coins to reserves before the crash]

The "central bank" transferred over 50,000 (bitcoin, ~$2bn) for “directly executing on-chain swaps and transferring (bitcoin) to a counterparty to enable them to enter trades with the Foundation in large size & on short notice.”

The remaining $1bn went the next day by the look of their reserve statements. But it emphasises that the big deal was with a single counterparty redeeming A Lot of stablecoin in one deal.

LooseCannon101
Lemon Slice
Posts: 252
Joined: November 5th, 2016, 2:12 pm
Has thanked: 302 times
Been thanked: 147 times

Re: Crypto crash?

#500863

Postby LooseCannon101 » May 16th, 2022, 11:24 pm

I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?

It seems to me to be a huge Ponzi scheme, with predators using new technology - the blockchain, to fool people into buying something that has no intrinsic value.

Hallucigenia
Lemon Quarter
Posts: 2616
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Crypto crash?

#500867

Postby Hallucigenia » May 17th, 2022, 12:19 am

LooseCannon101 wrote:I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?


The heavy electricity consumption and banks of computers are not needed for "maintenance" of the system, but to create new coins, which can then be sold for real cash. So your question is akin to asking why would de Beers pay for electricity and payroll to mine diamonds? Because they hope to find diamonds that are worth more than the electricity etc consumed in mining them.

Urbandreamer
Lemon Quarter
Posts: 3120
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto crash?

#500923

Postby Urbandreamer » May 17th, 2022, 10:46 am

LooseCannon101 wrote:I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?

It seems to me to be a huge Ponzi scheme, with predators using new technology - the blockchain, to fool people into buying something that has no intrinsic value.


As has already been pointed out, it's not for nothing at all.
This morning I transferred £5 worth of Bitcoin on chain, to a new wallet as a test that I had the method right. What arrived was just over £4. I paid about 80p for your "free" service. But then I knew that it wasn't free.
No doubt some will now think the fact that you pay makes it a "Ponzi" scheme.

There are risks and scams, yes and probably true Ponzi schemes to be avoided. However Mr Ponzi used $'s as the currency of his scheme. Does that make the $ a Ponzi currency?

murraypaul
Lemon Slice
Posts: 785
Joined: April 9th, 2021, 5:54 pm
Has thanked: 225 times
Been thanked: 265 times

Re: Crypto crash?

#500969

Postby murraypaul » May 17th, 2022, 12:50 pm

Hallucigenia wrote:The heavy electricity consumption and banks of computers are not needed for "maintenance" of the system, but to create new coins, which can then be sold for real cash.


The question then, is what happens after the final bitcoin is mined, and there are only mining fees left to pay for all that energy use.

Surely either the cost to mine has to drop dramatically, or the mining fees rise astronomically?

Ultimately, Bitcoin will only make sense as a high-tier backbone, to transfer very large amounts of money between a relatively small number of participants. Everything else will have to be off-chain.

Hallucigenia
Lemon Quarter
Posts: 2616
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Crypto crash?

#502762

Postby Hallucigenia » May 25th, 2022, 2:58 pm

More shenanigans at Terra/Luna - the Korean authorities have frozen the reserves whilst they investigate embezzlement, and a Twitter user called @FatManTerra is claiming to have inside information that Kwon and his mates engaged in massive fraud :
https://cryptoslate.com/prominent-entit ... a-scandal/

And it's claimed that developers created a coin called MonkeyPoxInu, took in >$400m, and then ran off with it. Hard to verify, but just the fact that such stories are going round tells you something about the state of the crypto market.

https://coinquora.com/monkeypoxinu-devs ... exit-scam/

Gilgongo
Lemon Slice
Posts: 415
Joined: November 5th, 2016, 6:51 pm
Has thanked: 154 times
Been thanked: 127 times

Re: Crypto crash?

#503299

Postby Gilgongo » May 28th, 2022, 9:17 am

Hallucigenia wrote:The heavy electricity consumption and banks of computers are not needed for "maintenance" of the system, but to create new coins,


Possibly some confusion here. Bitcoin "miners" are probably better thought of as "transaction validators" really, and they most certainly ARE maintaining the system with vast amounts of electricity. When you transfer coins from one wallet to another, several miners (AKA "nodes") will work to validate and secure that transaction before it can change ownership (this is called "proof of work"). They receive a payment from the network for their efforts.

Yes, miners might these days mine the odd coin as well, but the creation of new coins was incentivised early in Bitcoin's history so as to create the money supply and stimulate the use of the network (which use ensures its security from hacking and other stuff by the work I've just mentioned). There will only ever be a maximum number of coins able to mined, and as time goes on that gets progressively harder.

murraypaul wrote:The question then, is what happens after the final bitcoin is mined, and there are only mining fees left to pay for all that energy use.


This depends a bit on what your beliefs are. Roughly speaking, the system is designed so that in theory as more people use Bitcoin to transact because there are a fixed (or progressively fewer emerging) number of coins in an anti-deflationary currency, more people will then enter the network due to its rising price and value due to scarcity. The more people enter the network, the more transactions will take place, and the more "use cases" for Bitcoin will emerge (eg being seen as superior to inflationary fiat currency), thereby accelerating the uptake further. So all this means miners reap progressively more fees from validating more transactions and the "virtuous" cycle continues. Unitil you think about the leccy of course...

It may also be worth pointing out that Bitcoin's (or more likely a successor) "proof of work" system might one day be replaced in some way by "proof of stake". The latter would use vastly less leccy.

Also BTW when I mentioned "use cases" above, I think a large part of the confusion around crypto is in thinking it's all about "money". It's very hard to explain why that's a bit of a misconception, but it's like thinking Wall Street is all about stocks and shares when in fact it's also about bonds, futures, covered warrants, debt financialision, CDOs, CFDs, and many other exotic things. The same is becoming true of crypto.

murraypaul
Lemon Slice
Posts: 785
Joined: April 9th, 2021, 5:54 pm
Has thanked: 225 times
Been thanked: 265 times

Re: Crypto crash?

#503342

Postby murraypaul » May 28th, 2022, 11:15 am

Gilgongo wrote:
murraypaul wrote:The question then, is what happens after the final bitcoin is mined, and there are only mining fees left to pay for all that energy use.


This depends a bit on what your beliefs are. Roughly speaking, the system is designed so that in theory as more people use Bitcoin to transact because there are a fixed (or progressively fewer emerging) number of coins in an anti-deflationary currency, more people will then enter the network due to its rising price and value due to scarcity. The more people enter the network, the more transactions will take place, and the more "use cases" for Bitcoin will emerge (eg being seen as superior to inflationary fiat currency), thereby accelerating the uptake further. So all this means miners reap progressively more fees from validating more transactions and the "virtuous" cycle continues. Unitil you think about the leccy of course...


But that can't happen (as Bitcoin is currently designed).
There is a maximum number of transactions per block possible, and the number of blocks per hour is regulated by difficulty settings to remain basically constant. So the number of transactions can't increase in that way.

scrumpyjack
Lemon Quarter
Posts: 4811
Joined: November 4th, 2016, 10:15 am
Has thanked: 605 times
Been thanked: 2675 times

Re: Crypto crash?

#503347

Postby scrumpyjack » May 28th, 2022, 11:41 am

Frankly I think it would be a 'good thing' for the world's financial system if the crypto bubble does collapse, like the tulip one centuries ago.

Whilst there is much to be said for some sort of currency that is independent of governments and cannot be manipulated or debased, it has become clear that crypto is not it, at least as it stands now. It is inefficient, prone to fraud, unstable and a facilitator for crime.

Gilgongo
Lemon Slice
Posts: 415
Joined: November 5th, 2016, 6:51 pm
Has thanked: 154 times
Been thanked: 127 times

Re: Crypto crash?

#503402

Postby Gilgongo » May 28th, 2022, 2:18 pm

murraypaul wrote:There is a maximum number of transactions per block possible, and the number of blocks per hour is regulated by difficulty settings to remain basically constant. So the number of transactions can't increase in that way.


Yes, this is why I said "roughly speaking". I didn't want to get into the bottomless rat hole of on/off chain technical design stuff, forks and whatnot that might or might not affect the general idea of how crypto/Bitcoin is supposed to work. I was trying to summarise :-)

Gilgongo
Lemon Slice
Posts: 415
Joined: November 5th, 2016, 6:51 pm
Has thanked: 154 times
Been thanked: 127 times

Re: Crypto crash?

#503418

Postby Gilgongo » May 28th, 2022, 2:53 pm

scrumpyjack wrote: it has become clear that crypto is not it, at least as it stands now. It is inefficient, prone to fraud, unstable and a facilitator for crime.


I'd point out that at least three of the drawbacks you mention also apply to cash :-) But while I tend to agree with you when it comes to "simple" things like Bitcoin speculation, crypto in general is not, as I've pointed out, simply an "asset" like money, gold or tulips any more. The "use cases" are really the key to understanding that. But if you expect those use cases to be about pricing and value, then you're not going to get very far. The future of crypto - if it has one - is going to be in facilitating interactions in decentralised systems in order to achieve more valuable things. After all, aside from simple value speculation, money (and assets like shares or gold) does exactly that: it builds houses, puts food on tables, allows retirement, insures your car, etc. etc. The hard thing about crypto is predicting how decentralisation works when those things are involved. Does it bring about the end of the Westphalian notion of nationhood and sovereign power, ushering in a new human era of individual self-determination (as the likes of Peter Thiel and Elon Musk believe)? Or is that all just loony alt-right word-salad, and crypto will just collapse like the Ponzi South Sea Bubble it really is?

I'm on the fence.

Urbandreamer
Lemon Quarter
Posts: 3120
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto crash?

#503425

Postby Urbandreamer » May 28th, 2022, 3:45 pm

scrumpyjack wrote:It is inefficient, prone to fraud, unstable and a facilitator for crime


I REALLY hate the use of the word "inefficient" when used about anything. It's a quite meaningless word, because it doesn't describe any aspect that it is applied to. Are shops with long ques inefficient, while those with short ones who have to spend more on staff efficient? I've certainly heard people claiming that ques are a sign of inefficiency.

I'm going to go out on a limb and assume that you might be talking energy costs, but what of the energy mining, smelting and minting the 1p coins in circulation? Or producing those plastic £5 notes. Possibly we should save that energy and ban cash.

Of course you might alternatively have meant that huge parts of the world simply can't use cryptocurrency because it relies upon data exchange, while they can use metal coins or paper. Hence it's restricted use is a sign of inefficiency. Wait, isn't that an argument for an energy intensive aspect of currency, ie real cash?

Then again you could have meant that using it at the moment requires significant effort that state currency doesn't and hence it's not efficient.

I'm at a loss what you meant by inefficient.

As to prone to fraud. Well your argument is clear, but the same could be said of any currency.
Facilitator for crime? There are many non crypto examples of the existing banking and currency systems across the world that could be applied to.
Take the recent example of WireCard.
https://www.moneylaunderingnews.com/202 ... a-scandal/

NOBODY is going to claim that fraud and crime don't happen with crypto, but to argue or imply that they wouldn't happen without crypto is rather strange give that they existed before anyone came up with the idea of cryptocurrency.

JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: Crypto crash?

#503439

Postby JohnB » May 28th, 2022, 4:32 pm

One bitcoin transaction uses 2100kWh of electricty, which could power a US house for 74 days or 2.6m Visa transactions. Could anything be more inefficient?

Cryptocurrencies need not be inefficient, all those who argue that Bitcoin is the one to use probably have a vested interest in it. If someone could do a swap of proof of work bitcoin with a proof of stake based one, much of my endless criticism would stop.

Lanark
Lemon Quarter
Posts: 1321
Joined: March 27th, 2017, 11:41 am
Has thanked: 595 times
Been thanked: 582 times

Re: Crypto crash?

#503444

Postby Lanark » May 28th, 2022, 5:00 pm

Winston Churchill once said that: “democracy is the worst form of government – except for all the others that have been tried.

Crypto is the best form of currency – except for all the others that have been tried.

ursaminortaur
Lemon Half
Posts: 6942
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Crypto crash?

#503455

Postby ursaminortaur » May 28th, 2022, 6:01 pm

Lanark wrote:Winston Churchill once said that: “democracy is the worst form of government – except for all the others that have been tried.

Crypto is the best form of currency – except for all the others that have been tried.


Sorry, it may be an investment but its volatility means that it is far far from the best form of currency if it can really be considered a currency at all.

Urbandreamer
Lemon Quarter
Posts: 3120
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto crash?

#503457

Postby Urbandreamer » May 28th, 2022, 6:06 pm

JohnB wrote:One bitcoin transaction uses 2100kWh of electricty, which could power a US house for 74 days or 2.6m Visa transactions. Could anything be more inefficient?


Yes.

Yesterday I hung my washing out to dry. I had to take it in every shower. Some people I believe use energy to dry their clothes. I have no idea how many tumble driers that there are in the world but a single use of one tumble drier consumes 4.5kWh of energy.

Odd fact but in some places it's against local law to hang your clothes outside to dry.
Here is a bit from Scotland.
https://www.heart.co.uk/lifestyle/resid ... g-gardens/
I understand that such also happens in London and parts of the USA.

Of course drying produces vapor that must be dumped outside. A mining rig produces dry heat, that could be used to heat a homes.
https://www.independent.co.uk/news/worl ... 41159.html

I STILL dispute the use of the word "inefficient". It's just being used to mean "I don't like it". Bitcoin and Visa are DIFFERENT. Can you really compare the two and claim either is more efficient than the other. Pick a metric like ability to hold currency outside your state. In countries with currency controls Visa certainly doesn't offer that does it.

ReformedCharacter
Lemon Quarter
Posts: 3120
Joined: November 4th, 2016, 11:12 am
Has thanked: 3590 times
Been thanked: 1509 times

Re: Crypto crash?

#503459

Postby ReformedCharacter » May 28th, 2022, 6:15 pm

Urbandreamer wrote:
Of course drying produces vapor that must be dumped outside. A mining rig produces dry heat, that could be used to heat a homes.
https://www.independent.co.uk/news/worl ... 41159.html

Yes, one of my sons who likes to acquire gaming and other computer hardware heated his flat entirely from crpto mining the winter before last. I've no idea of his profit \ loss on the exercise but he seemed to think he was doing well from it.

RC

JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: Crypto crash?

#503467

Postby JohnB » May 28th, 2022, 6:46 pm

There are plenty of actually useful things for computers to do with those cpu cycles. Why doesn't the bitcoin mining algorithm do protein folding, or climate modelling, rather than a whole lot of nothing. Highly irresponsible.

Lanark
Lemon Quarter
Posts: 1321
Joined: March 27th, 2017, 11:41 am
Has thanked: 595 times
Been thanked: 582 times

Re: Crypto crash?

#503468

Postby Lanark » May 28th, 2022, 6:46 pm

ursaminortaur wrote:
Lanark wrote:Winston Churchill once said that: “democracy is the worst form of government – except for all the others that have been tried.

Crypto is the best form of currency – except for all the others that have been tried.


Sorry, it may be an investment but its volatility means that it is far far from the best form of currency if it can really be considered a currency at all.

Couldn't agree more!


Return to “Crypto and NFTs”

Who is online

Users browsing this forum: No registered users and 1 guest