Crypto Currency Thread (Vol.2)
Discussion
r3g said:
Seventyseven7 said:
What trading have you been doing?
None. He and the other 3 luddites over the past couple of pages wouldn't even know how to set up a wallet, let alone figure out what to do with it once done.
If cryptocurrencies are ever going to be credible mediums of exchange they need to quickly and easily purchased, stored and sold/exchanged surely?
We’re a long long way from that.
It’s very easy to open a bank account, get a credit card, open a SIPP/ISA.
Why isn’t purchasing, storing and using cryptocurrencies as seamless? And by “using” I don’t mean just selling it on…
To me crypto just seems like a solution in search of a problem.
How does an “average person” buy and use crypto without falling victim to the fly by night companies out there?
I read stuff like this and it literally makes no sense to me. It’s full of jargon and intimidating
dmahon said:
I have ETH in Metamask, BTC in Coinbase Wallet and a “file system wallet” for Solana. I have never successfully synced a node.
Of course I understand that wallets contain private keys and not actual coins, but I still have no idea why I would need to run and sync an ETH or Solana node and then wait for hours for self custody.
Feel free to educate me as we may be talking at cross purposes.
Of course I understand that wallets contain private keys and not actual coins, but I still have no idea why I would need to run and sync an ETH or Solana node and then wait for hours for self custody.
Feel free to educate me as we may be talking at cross purposes.
Edited by dmahon on Thursday 23 June 13:06
r3g said:
Seventyseven7 said:
What trading have you been doing?
None. He and the other 3 luddites over the past couple of pages wouldn't even know how to set up a wallet, let alone figure out what to do with it once done.
Condi said:
It's quite sad that you're so averse to discussion and critical analysis of crypto that you've set up a telegram chat only for people "pro" crypto, essentially so you don't have to hear negative opinions. Honestly, I find that a real shame, what is the point in a forum for chat if all you want it to be is an echo chamber of people pumping it higher?
But no matter, I have Telegram too.
I think the facts were getting a little awkward...But no matter, I have Telegram too.
Mr Whippy said:
In 3yrs it might be £50,000/btc and these will have been cheap buy-ins.
Who knows?
It’s like saying people were idiots buying at £5k on its way down from £15k, before it finally got to £2.5k.
Lost 50pc! Then two years later you were up 10x.
You can’t judge any ‘investment’ until you’re selling.
Also I’m sure some savvy types might realise the loss, buy back in a month later, and then offset future (potential) gains against them.
Btc still has opportunity beyond a pyramid scheme.
The more these booms/busts flatten out (which they seem to be), the better it’s stability.
And if it can finally decouple from fiat, which it might do this economic cycle, then it could be really good in protecting your money from rampant negative real rates in fiat land cash, and without the high risk of using fiat valued asset markets to find yield.
Hmmm
Until it actually finds a use it will remain as a simple indicator of the excess spending power of the wealthless. The price goes up when consumers have spare money and goes down when they don't. Who knows?
It’s like saying people were idiots buying at £5k on its way down from £15k, before it finally got to £2.5k.
Lost 50pc! Then two years later you were up 10x.
You can’t judge any ‘investment’ until you’re selling.
Also I’m sure some savvy types might realise the loss, buy back in a month later, and then offset future (potential) gains against them.
Btc still has opportunity beyond a pyramid scheme.
The more these booms/busts flatten out (which they seem to be), the better it’s stability.
And if it can finally decouple from fiat, which it might do this economic cycle, then it could be really good in protecting your money from rampant negative real rates in fiat land cash, and without the high risk of using fiat valued asset markets to find yield.
Hmmm
It would be a fair investment view to hold that until the global cost of living issues abate that non essential, purposeless goods such as BTC aren't likely to see any significant buying pressure like we've seen before. Or global governments revert to giving money away that won't be soaked up by food and fuel.
Maybe the floor is roughly in but the longer the global situation persists the more HODLers will have to sell up and the greater the risk that the market itself will just become stale and the masses move on to the next thing. If too much time passes then the next wave of punters with money to burn and dreams of great riches for no work will find another medium through which to exercise those dreams.
You need a mechanism to drive it back up. That's either going to be through the product establishing a real use and tonnes of smart money flooding in or the masses getting loads of cash again and pouring it in.
More interesting stuff from Matt Levine and Bloomberg, it's a bit of a read, but bear with.
I'm not posting this to either promote or talk down crypto, but it is interesting how the business models work, and also where the unusually large returns come from when staking or investing coins. As ever, there is no reward without risk and the larger that reward the larger the risk behind it, even if you can't say what that risk is... Gary, this maybe of interest to you.
I'm not posting this to either promote or talk down crypto, but it is interesting how the business models work, and also where the unusually large returns come from when staking or investing coins. As ever, there is no reward without risk and the larger that reward the larger the risk behind it, even if you can't say what that risk is... Gary, this maybe of interest to you.
Bloomberg said:
Celsius
Here is a financial literacy test for you:
You can borrow $18 billion at 8% interest.
You can take that money and invest it in loans that pay 20% interest.
You don’t have to put up any of your own money.
So you get $3.6 billion a year in interest (20% of $18 billion), and you pay out $1.4 billion in interest (8% of $18 billion), so you keep about $2.2 billion for yourself.
Is this good?
This is not a yes-or-no question, and the right answer is probably something like “well, good for who?” If you are a person who invents a business like this, and you are able to do it for a year or two and squirrel away the $2.4 billion, it is very very good for you and you can buy yachts and stuff. But in the long run, if you are borrowing at 8% and lending at 20%, you are taking some huge risk somewhere. Those 20% loans are risky and correlated and illiquid and possibly Ponzi schemes; that 8% money is flighty and unstable; you are lending out all the money you are borrowing and there is no cushion anywhere. At some point the people lending you the money at 8% are all going to ask for it back, and the people borrowing the money at 20% aren’t going to give it back, and you’re not going to have the money to pay back the 8% people, and they’re going to be really mad, and that’s when it will be useful for you to have a yacht to sail away on.
Anyway here’s a Wall Street Journal article about Celsius:
Celsius Network LLC CEO Alex Mashinsky built his cryptocurrency lender into a giant on a pitch that it was less risky than a bank with better returns for customers.
But investor documents show the lender carried far more risk than a traditional bank.
The lender issued numerous large loans backed by little collateral, according to Celsius investor documents from 2021 reviewed by The Wall Street Journal. The documents show that Celsius had little cushion in the event of a downturn, and made investments that would be difficult to quickly unwind if customers raced to withdraw their money. Celsius didn’t respond to requests for comment from the Journal.
Celsius had $19 billion of assets and roughly $1 billion of equity as of last summer, before it raised new funds, according to Celsius investor documents from 2021 reviewed by the Journal. The median assets-to-equity ratio for all the North American banks in the S&P 1500 Composite index was about 9:1, or about half that of Celsius, according to data from FactSet.
We have talked a lot about crypto banks recently, and Celsius’s roughly 5.3% capital ratio is, if anything, high. Tether’s capital ratio is about 0.2% (!); Voyager Digital Ltd.’s is about 4.3%. This banking business, this business of borrowing at lower rates and lending at higher rates and having a thin sliver of equity, this is a pretty well-known business, and in traditional banking there are lots of safeguards around it. That sliver of equity can’t be too slim, you need to keep some cash on hand to give back to your depositors, you need to make prudent loans that are not too risky or too concentrated or too much to your own affiliates, etc. In traditional finance there are “shadow banks” that try to do this sort of business with less regulation, but there are regulatory and market constraints on how much of that is allowed, particularly after shadow banking blew up in 2008. Meanwhile in crypto absolutely anything apparently goes.
We talked about Celsius a few weeks ago, and nothing here really comes as a surprise. “Somebody is lying,” Mashinsky once told Bloomberg Businessweek: “Either the bank is lying or Celsius is lying.” That too was a kind of financial literacy test. Celsius has frozen customer withdrawals for weeks; regular banks, conspicuously, have not.
The Journal article also points to sort of a subtle fact about crypto banking and interconnection:
Adding to Celsius’s leverage was money borrowed from others including Tether International Ltd., which issues a cryptocurrency pegged to the U.S. dollar. As of last summer, Celsius had a credit facility for up to $1.1 billion from Tether, which itself was an early investor in Celsius with a 7.8% stake in the lender as of last spring, Celsius told investors. ...
Like a bank, Celsius was able to pay yields to customers largely by making money through lending at even higher yields to others.
One of its biggest units was lending to other crypto financial businesses, including digital-asset manager Galaxy Digital and institutional crypto-lending firm Genesis, Celsius told investors. Celsius projected in May 2021 that institutional lending would bring in about $290 million of revenue for the year, more than one-quarter of total revenue, the documents reviewed by the Journal show.
While banks like loans to be overcollateralized—homeowners taking out a mortgage post their house as collateral, which is valued at more than the loan—Celsius required its business borrowers to post only an average of about 50% collateral on its $2.7 billion of loans as of last spring, the documents show. Undercollateralized lending is considered a risky practice, one that was more generous than that of many of Celsius’s competitors.
Celsius used some of that collateral to borrow more money itself, a process known as rehypothecation, adding additional risk.
Think about how that business might work. At a high level of generality, you have two crypto financial businesses, perhaps they are Celsius and Genesis, or Celsius and Tether, or whatever, but let’s just call them Borrower and Lender. Borrower has some Bitcoins (or Ether or whatever) and wants dollars (or USDC stablecoins or Tether or whatever); Lender has plenty of dollars (USDC, Tether, etc.) that it is willing to lend. Borrower and Lender get together and agree that Borrower will post its Bitcoins to Lender as collateral, and Lender will hand over some dollars to Borrower collateralized by those Bitcoins. Fine. A normal, collateralized margin loan.
How many Bitcoins should Borrower give Lender for the dollars? Well, if you are Lender, you will want your loan to be well secured. If Borrower gives you $200 worth of Bitcoin and you lend it $100 of cash, then you will be pretty well secured. If Borrower doesn’t pay you back the $100, you can seize its collateral and sell it for $200, giving you plenty of room to repay your loan. Even if the price of Bitcoin falls by 10% or 20% or 40%, you can still sell the collateral for enough to cover your loan. (If it falls by more than 50%, as it has this year, then you are in trouble, but you have margin calls to protect you along the way; you don’t have to wait for it to fall that far.) This is the way that margin lending generally works in retail stock brokerage accounts.
Of course everything is competitive and perhaps Lender will be willing to accept less than $200 worth of Bitcoin for a $100 loan. Perhaps it will feel safe with $150 of collateral, or $120. At some level of collateral, though, you stop feeling safe about the collateral: If you lend $100 of cash against $110 of Bitcoin, Bitcoin is pretty volatile, and if it goes down by 10% your loan will be undercollateralized. If you lend $100 against $110 of Bitcoin, you are making a credit decision: You’re lending the $100 not only because you think Bitcoin is good collateral but also because you think Borrower is good for the money. Certainly if you lend $100 of cash against $50 of Bitcoin, you are making mostly a credit decision; if Borrower vanishes then the best you’re going to do is get $50 back.[1] You are counting on Borrower to repay you, and you have done some underwriting to make you confident that Borrower is a good credit. Or you haven’t, I mean; Celsius has not exactly covered itself in glory in recent weeks. But let’s assume that you do, and you sensibly believe that you are making these (under-)collateralized loans to good strong businesses that should be able to pay you back even in a market downturn.
But now let’s flip it around. Let’s say that you are Borrower, not Lender. You are handing over some Bitcoins and getting back dollars. You will have the use of Lender’s $100, and if you disappear Lender won’t get its money back and will have to seize your collateral. But notice that Lender has the use of your Bitcoins, and if Lender disappears you won’t get your Bitcoins back. Of course if that happens you can keep the $100.[2] But if Lender disappears with $200 of your Bitcoins then that’s not too much consolation.
In other words, these transactions are completely symmetrical, and if you are posting crypto collateral with a crypto lender then you are taking their credit risk. (Notice, here, that Celsius was not in the business of keeping collateral in separate vaults with the borrowers’ names taped on them, or of taking contingent claims on assets that sat in the borrowers’ wallets: It was rehypothecating the collateral for its own use.)
And so if you are a big reputable well-managed crypto firm, and you want to borrow $100 from Celsius, you might want to only post $50 of Bitcoin as collateral, not only because that is more efficient for you (you get more money for less collateral) but also because it is safer for you. If Celsius goes bust or pauses withdrawals and hangs on to your $50 of Bitcoin, well, you still have their $100, it’s fine.[3]
I should say that in traditional finance there is a lot of this symmetrical risk: If I post Treasury bonds to borrow cash from you, then I have your cash and you have my Treasuries and we both want to get our stuff back and worry that we won’t. Traditional finance deals with this in various ways:
Legal regimes that give us some sort of priority claim to getting our stuff back if the other one goes bust.
Third-party custody, where some super-safe entity holds the Treasuries so you can’t run off with them.
The lenders (who tend to be overcollateralized — that is, I tend to post Treasuries worth more than the cash you give me back) are often big regulated banks or money-market funds, so I am relying on the regulatory system to make sure that you don’t actually go bust or run off with my Treasuries.
Long-standing cultures and best practices of credit risk management where, for instance, you will do some due diligence on my credit, and I will send you my audited financial statements, and you will have concentration limits where you can’t invest all your money with me, etc.
Meanwhile … I guess you could imagine ways to deal with this in crypto? I used to joke, about everything, that “smart contracts via crypto make this super doable.” You could imagine a smart contract where I put up Bitcoins and you put up USDC and if either of us runs into some sort of problem trigger then the thing automatically unwinds. And there are things like this in the world of decentralized finance. But actual big-dollar crypto leverage seems to be built mainly on bilateral over-the-counter arrangements rather than smart contracts.[4] And some crypto lenders probably import credit-risk-management best practices from traditional finance and adapt them in smart ways to the realities of crypto! And some of them absolutely don’t.
I have been writing a lot around here about how crypto is having its version of the 2008 financial crisis. One schematic way to tell the story of 2008 would be to focus on “shadow banking.” The basic business of banking is borrowing short-term from people who think their money is very safe, and invest it in longer-term loans that have some risk. That is a dangerous business, and so it is heavily regulated. And in the lead-up to 2008, people in the financial industry found ways to re-create that dangerous sort of business in ways that were less heavily regulated, so they could be more aggressive about leverage and liquidity and concentration and credit risk. And nobody realized how much of this there was, and how dangerous it was, and how interconnected it was with the rest of the financial system, until it popped.
And then they did realize, and there was a broad after-the-fact crackdown on shadow banking, and now through some combination of regulation and temperament and bad memories there is just less of this sort of thing in traditional finance. Still lots! But less of it, more constrained, less leveraged. Everyone in traditional finance has seen this movie before and knows how it ends.
And yet there is some … natural … human … longing … to borrow short and lend long with no equity? I dunno. Since 2008, the traditional financial industry has tried to suppress that desire. But it found a home in crypto.
Here is a financial literacy test for you:
You can borrow $18 billion at 8% interest.
You can take that money and invest it in loans that pay 20% interest.
You don’t have to put up any of your own money.
So you get $3.6 billion a year in interest (20% of $18 billion), and you pay out $1.4 billion in interest (8% of $18 billion), so you keep about $2.2 billion for yourself.
Is this good?
This is not a yes-or-no question, and the right answer is probably something like “well, good for who?” If you are a person who invents a business like this, and you are able to do it for a year or two and squirrel away the $2.4 billion, it is very very good for you and you can buy yachts and stuff. But in the long run, if you are borrowing at 8% and lending at 20%, you are taking some huge risk somewhere. Those 20% loans are risky and correlated and illiquid and possibly Ponzi schemes; that 8% money is flighty and unstable; you are lending out all the money you are borrowing and there is no cushion anywhere. At some point the people lending you the money at 8% are all going to ask for it back, and the people borrowing the money at 20% aren’t going to give it back, and you’re not going to have the money to pay back the 8% people, and they’re going to be really mad, and that’s when it will be useful for you to have a yacht to sail away on.
Anyway here’s a Wall Street Journal article about Celsius:
Celsius Network LLC CEO Alex Mashinsky built his cryptocurrency lender into a giant on a pitch that it was less risky than a bank with better returns for customers.
But investor documents show the lender carried far more risk than a traditional bank.
The lender issued numerous large loans backed by little collateral, according to Celsius investor documents from 2021 reviewed by The Wall Street Journal. The documents show that Celsius had little cushion in the event of a downturn, and made investments that would be difficult to quickly unwind if customers raced to withdraw their money. Celsius didn’t respond to requests for comment from the Journal.
Celsius had $19 billion of assets and roughly $1 billion of equity as of last summer, before it raised new funds, according to Celsius investor documents from 2021 reviewed by the Journal. The median assets-to-equity ratio for all the North American banks in the S&P 1500 Composite index was about 9:1, or about half that of Celsius, according to data from FactSet.
We have talked a lot about crypto banks recently, and Celsius’s roughly 5.3% capital ratio is, if anything, high. Tether’s capital ratio is about 0.2% (!); Voyager Digital Ltd.’s is about 4.3%. This banking business, this business of borrowing at lower rates and lending at higher rates and having a thin sliver of equity, this is a pretty well-known business, and in traditional banking there are lots of safeguards around it. That sliver of equity can’t be too slim, you need to keep some cash on hand to give back to your depositors, you need to make prudent loans that are not too risky or too concentrated or too much to your own affiliates, etc. In traditional finance there are “shadow banks” that try to do this sort of business with less regulation, but there are regulatory and market constraints on how much of that is allowed, particularly after shadow banking blew up in 2008. Meanwhile in crypto absolutely anything apparently goes.
We talked about Celsius a few weeks ago, and nothing here really comes as a surprise. “Somebody is lying,” Mashinsky once told Bloomberg Businessweek: “Either the bank is lying or Celsius is lying.” That too was a kind of financial literacy test. Celsius has frozen customer withdrawals for weeks; regular banks, conspicuously, have not.
The Journal article also points to sort of a subtle fact about crypto banking and interconnection:
Adding to Celsius’s leverage was money borrowed from others including Tether International Ltd., which issues a cryptocurrency pegged to the U.S. dollar. As of last summer, Celsius had a credit facility for up to $1.1 billion from Tether, which itself was an early investor in Celsius with a 7.8% stake in the lender as of last spring, Celsius told investors. ...
Like a bank, Celsius was able to pay yields to customers largely by making money through lending at even higher yields to others.
One of its biggest units was lending to other crypto financial businesses, including digital-asset manager Galaxy Digital and institutional crypto-lending firm Genesis, Celsius told investors. Celsius projected in May 2021 that institutional lending would bring in about $290 million of revenue for the year, more than one-quarter of total revenue, the documents reviewed by the Journal show.
While banks like loans to be overcollateralized—homeowners taking out a mortgage post their house as collateral, which is valued at more than the loan—Celsius required its business borrowers to post only an average of about 50% collateral on its $2.7 billion of loans as of last spring, the documents show. Undercollateralized lending is considered a risky practice, one that was more generous than that of many of Celsius’s competitors.
Celsius used some of that collateral to borrow more money itself, a process known as rehypothecation, adding additional risk.
Think about how that business might work. At a high level of generality, you have two crypto financial businesses, perhaps they are Celsius and Genesis, or Celsius and Tether, or whatever, but let’s just call them Borrower and Lender. Borrower has some Bitcoins (or Ether or whatever) and wants dollars (or USDC stablecoins or Tether or whatever); Lender has plenty of dollars (USDC, Tether, etc.) that it is willing to lend. Borrower and Lender get together and agree that Borrower will post its Bitcoins to Lender as collateral, and Lender will hand over some dollars to Borrower collateralized by those Bitcoins. Fine. A normal, collateralized margin loan.
How many Bitcoins should Borrower give Lender for the dollars? Well, if you are Lender, you will want your loan to be well secured. If Borrower gives you $200 worth of Bitcoin and you lend it $100 of cash, then you will be pretty well secured. If Borrower doesn’t pay you back the $100, you can seize its collateral and sell it for $200, giving you plenty of room to repay your loan. Even if the price of Bitcoin falls by 10% or 20% or 40%, you can still sell the collateral for enough to cover your loan. (If it falls by more than 50%, as it has this year, then you are in trouble, but you have margin calls to protect you along the way; you don’t have to wait for it to fall that far.) This is the way that margin lending generally works in retail stock brokerage accounts.
Of course everything is competitive and perhaps Lender will be willing to accept less than $200 worth of Bitcoin for a $100 loan. Perhaps it will feel safe with $150 of collateral, or $120. At some level of collateral, though, you stop feeling safe about the collateral: If you lend $100 of cash against $110 of Bitcoin, Bitcoin is pretty volatile, and if it goes down by 10% your loan will be undercollateralized. If you lend $100 against $110 of Bitcoin, you are making a credit decision: You’re lending the $100 not only because you think Bitcoin is good collateral but also because you think Borrower is good for the money. Certainly if you lend $100 of cash against $50 of Bitcoin, you are making mostly a credit decision; if Borrower vanishes then the best you’re going to do is get $50 back.[1] You are counting on Borrower to repay you, and you have done some underwriting to make you confident that Borrower is a good credit. Or you haven’t, I mean; Celsius has not exactly covered itself in glory in recent weeks. But let’s assume that you do, and you sensibly believe that you are making these (under-)collateralized loans to good strong businesses that should be able to pay you back even in a market downturn.
But now let’s flip it around. Let’s say that you are Borrower, not Lender. You are handing over some Bitcoins and getting back dollars. You will have the use of Lender’s $100, and if you disappear Lender won’t get its money back and will have to seize your collateral. But notice that Lender has the use of your Bitcoins, and if Lender disappears you won’t get your Bitcoins back. Of course if that happens you can keep the $100.[2] But if Lender disappears with $200 of your Bitcoins then that’s not too much consolation.
In other words, these transactions are completely symmetrical, and if you are posting crypto collateral with a crypto lender then you are taking their credit risk. (Notice, here, that Celsius was not in the business of keeping collateral in separate vaults with the borrowers’ names taped on them, or of taking contingent claims on assets that sat in the borrowers’ wallets: It was rehypothecating the collateral for its own use.)
And so if you are a big reputable well-managed crypto firm, and you want to borrow $100 from Celsius, you might want to only post $50 of Bitcoin as collateral, not only because that is more efficient for you (you get more money for less collateral) but also because it is safer for you. If Celsius goes bust or pauses withdrawals and hangs on to your $50 of Bitcoin, well, you still have their $100, it’s fine.[3]
I should say that in traditional finance there is a lot of this symmetrical risk: If I post Treasury bonds to borrow cash from you, then I have your cash and you have my Treasuries and we both want to get our stuff back and worry that we won’t. Traditional finance deals with this in various ways:
Legal regimes that give us some sort of priority claim to getting our stuff back if the other one goes bust.
Third-party custody, where some super-safe entity holds the Treasuries so you can’t run off with them.
The lenders (who tend to be overcollateralized — that is, I tend to post Treasuries worth more than the cash you give me back) are often big regulated banks or money-market funds, so I am relying on the regulatory system to make sure that you don’t actually go bust or run off with my Treasuries.
Long-standing cultures and best practices of credit risk management where, for instance, you will do some due diligence on my credit, and I will send you my audited financial statements, and you will have concentration limits where you can’t invest all your money with me, etc.
Meanwhile … I guess you could imagine ways to deal with this in crypto? I used to joke, about everything, that “smart contracts via crypto make this super doable.” You could imagine a smart contract where I put up Bitcoins and you put up USDC and if either of us runs into some sort of problem trigger then the thing automatically unwinds. And there are things like this in the world of decentralized finance. But actual big-dollar crypto leverage seems to be built mainly on bilateral over-the-counter arrangements rather than smart contracts.[4] And some crypto lenders probably import credit-risk-management best practices from traditional finance and adapt them in smart ways to the realities of crypto! And some of them absolutely don’t.
I have been writing a lot around here about how crypto is having its version of the 2008 financial crisis. One schematic way to tell the story of 2008 would be to focus on “shadow banking.” The basic business of banking is borrowing short-term from people who think their money is very safe, and invest it in longer-term loans that have some risk. That is a dangerous business, and so it is heavily regulated. And in the lead-up to 2008, people in the financial industry found ways to re-create that dangerous sort of business in ways that were less heavily regulated, so they could be more aggressive about leverage and liquidity and concentration and credit risk. And nobody realized how much of this there was, and how dangerous it was, and how interconnected it was with the rest of the financial system, until it popped.
And then they did realize, and there was a broad after-the-fact crackdown on shadow banking, and now through some combination of regulation and temperament and bad memories there is just less of this sort of thing in traditional finance. Still lots! But less of it, more constrained, less leveraged. Everyone in traditional finance has seen this movie before and knows how it ends.
And yet there is some … natural … human … longing … to borrow short and lend long with no equity? I dunno. Since 2008, the traditional financial industry has tried to suppress that desire. But it found a home in crypto.
Condi said:
More interesting stuff from Matt Levine and Bloomberg, it's a bit of a read, but bear with.
I'm not posting this to either promote or talk down crypto, but it is interesting how the business models work, and also where the unusually large returns come from when staking or investing coins. As ever, there is no reward without risk and the larger that reward the larger the risk behind it, even if you can't say what that risk is... Gary, this maybe of interest to you.
Bloomberg this morning reporting that the Crypto Jesus fella has gone bust with $30m (IIRC) with PG's. Ouch. I'm not posting this to either promote or talk down crypto, but it is interesting how the business models work, and also where the unusually large returns come from when staking or investing coins. As ever, there is no reward without risk and the larger that reward the larger the risk behind it, even if you can't say what that risk is... Gary, this maybe of interest to you.
Bloomberg said:
Celsius
Here is a financial literacy test for you:
You can borrow $18 billion at 8% interest.
You can take that money and invest it in loans that pay 20% interest.
You don’t have to put up any of your own money.
So you get $3.6 billion a year in interest (20% of $18 billion), and you pay out $1.4 billion in interest (8% of $18 billion), so you keep about $2.2 billion for yourself.
Is this good?
This is not a yes-or-no question, and the right answer is probably something like “well, good for who?” If you are a person who invents a business like this, and you are able to do it for a year or two and squirrel away the $2.4 billion, it is very very good for you and you can buy yachts and stuff. But in the long run, if you are borrowing at 8% and lending at 20%, you are taking some huge risk somewhere. Those 20% loans are risky and correlated and illiquid and possibly Ponzi schemes; that 8% money is flighty and unstable; you are lending out all the money you are borrowing and there is no cushion anywhere. At some point the people lending you the money at 8% are all going to ask for it back, and the people borrowing the money at 20% aren’t going to give it back, and you’re not going to have the money to pay back the 8% people, and they’re going to be really mad, and that’s when it will be useful for you to have a yacht to sail away on.
Anyway here’s a Wall Street Journal article about Celsius:
Celsius Network LLC CEO Alex Mashinsky built his cryptocurrency lender into a giant on a pitch that it was less risky than a bank with better returns for customers.
But investor documents show the lender carried far more risk than a traditional bank.
The lender issued numerous large loans backed by little collateral, according to Celsius investor documents from 2021 reviewed by The Wall Street Journal. The documents show that Celsius had little cushion in the event of a downturn, and made investments that would be difficult to quickly unwind if customers raced to withdraw their money. Celsius didn’t respond to requests for comment from the Journal.
Celsius had $19 billion of assets and roughly $1 billion of equity as of last summer, before it raised new funds, according to Celsius investor documents from 2021 reviewed by the Journal. The median assets-to-equity ratio for all the North American banks in the S&P 1500 Composite index was about 9:1, or about half that of Celsius, according to data from FactSet.
We have talked a lot about crypto banks recently, and Celsius’s roughly 5.3% capital ratio is, if anything, high. Tether’s capital ratio is about 0.2% (!); Voyager Digital Ltd.’s is about 4.3%. This banking business, this business of borrowing at lower rates and lending at higher rates and having a thin sliver of equity, this is a pretty well-known business, and in traditional banking there are lots of safeguards around it. That sliver of equity can’t be too slim, you need to keep some cash on hand to give back to your depositors, you need to make prudent loans that are not too risky or too concentrated or too much to your own affiliates, etc. In traditional finance there are “shadow banks” that try to do this sort of business with less regulation, but there are regulatory and market constraints on how much of that is allowed, particularly after shadow banking blew up in 2008. Meanwhile in crypto absolutely anything apparently goes.
We talked about Celsius a few weeks ago, and nothing here really comes as a surprise. “Somebody is lying,” Mashinsky once told Bloomberg Businessweek: “Either the bank is lying or Celsius is lying.” That too was a kind of financial literacy test. Celsius has frozen customer withdrawals for weeks; regular banks, conspicuously, have not.
The Journal article also points to sort of a subtle fact about crypto banking and interconnection:
Adding to Celsius’s leverage was money borrowed from others including Tether International Ltd., which issues a cryptocurrency pegged to the U.S. dollar. As of last summer, Celsius had a credit facility for up to $1.1 billion from Tether, which itself was an early investor in Celsius with a 7.8% stake in the lender as of last spring, Celsius told investors. ...
Like a bank, Celsius was able to pay yields to customers largely by making money through lending at even higher yields to others.
One of its biggest units was lending to other crypto financial businesses, including digital-asset manager Galaxy Digital and institutional crypto-lending firm Genesis, Celsius told investors. Celsius projected in May 2021 that institutional lending would bring in about $290 million of revenue for the year, more than one-quarter of total revenue, the documents reviewed by the Journal show.
While banks like loans to be overcollateralized—homeowners taking out a mortgage post their house as collateral, which is valued at more than the loan—Celsius required its business borrowers to post only an average of about 50% collateral on its $2.7 billion of loans as of last spring, the documents show. Undercollateralized lending is considered a risky practice, one that was more generous than that of many of Celsius’s competitors.
Celsius used some of that collateral to borrow more money itself, a process known as rehypothecation, adding additional risk.
Think about how that business might work. At a high level of generality, you have two crypto financial businesses, perhaps they are Celsius and Genesis, or Celsius and Tether, or whatever, but let’s just call them Borrower and Lender. Borrower has some Bitcoins (or Ether or whatever) and wants dollars (or USDC stablecoins or Tether or whatever); Lender has plenty of dollars (USDC, Tether, etc.) that it is willing to lend. Borrower and Lender get together and agree that Borrower will post its Bitcoins to Lender as collateral, and Lender will hand over some dollars to Borrower collateralized by those Bitcoins. Fine. A normal, collateralized margin loan.
How many Bitcoins should Borrower give Lender for the dollars? Well, if you are Lender, you will want your loan to be well secured. If Borrower gives you $200 worth of Bitcoin and you lend it $100 of cash, then you will be pretty well secured. If Borrower doesn’t pay you back the $100, you can seize its collateral and sell it for $200, giving you plenty of room to repay your loan. Even if the price of Bitcoin falls by 10% or 20% or 40%, you can still sell the collateral for enough to cover your loan. (If it falls by more than 50%, as it has this year, then you are in trouble, but you have margin calls to protect you along the way; you don’t have to wait for it to fall that far.) This is the way that margin lending generally works in retail stock brokerage accounts.
Of course everything is competitive and perhaps Lender will be willing to accept less than $200 worth of Bitcoin for a $100 loan. Perhaps it will feel safe with $150 of collateral, or $120. At some level of collateral, though, you stop feeling safe about the collateral: If you lend $100 of cash against $110 of Bitcoin, Bitcoin is pretty volatile, and if it goes down by 10% your loan will be undercollateralized. If you lend $100 against $110 of Bitcoin, you are making a credit decision: You’re lending the $100 not only because you think Bitcoin is good collateral but also because you think Borrower is good for the money. Certainly if you lend $100 of cash against $50 of Bitcoin, you are making mostly a credit decision; if Borrower vanishes then the best you’re going to do is get $50 back.[1] You are counting on Borrower to repay you, and you have done some underwriting to make you confident that Borrower is a good credit. Or you haven’t, I mean; Celsius has not exactly covered itself in glory in recent weeks. But let’s assume that you do, and you sensibly believe that you are making these (under-)collateralized loans to good strong businesses that should be able to pay you back even in a market downturn.
But now let’s flip it around. Let’s say that you are Borrower, not Lender. You are handing over some Bitcoins and getting back dollars. You will have the use of Lender’s $100, and if you disappear Lender won’t get its money back and will have to seize your collateral. But notice that Lender has the use of your Bitcoins, and if Lender disappears you won’t get your Bitcoins back. Of course if that happens you can keep the $100.[2] But if Lender disappears with $200 of your Bitcoins then that’s not too much consolation.
In other words, these transactions are completely symmetrical, and if you are posting crypto collateral with a crypto lender then you are taking their credit risk. (Notice, here, that Celsius was not in the business of keeping collateral in separate vaults with the borrowers’ names taped on them, or of taking contingent claims on assets that sat in the borrowers’ wallets: It was rehypothecating the collateral for its own use.)
And so if you are a big reputable well-managed crypto firm, and you want to borrow $100 from Celsius, you might want to only post $50 of Bitcoin as collateral, not only because that is more efficient for you (you get more money for less collateral) but also because it is safer for you. If Celsius goes bust or pauses withdrawals and hangs on to your $50 of Bitcoin, well, you still have their $100, it’s fine.[3]
I should say that in traditional finance there is a lot of this symmetrical risk: If I post Treasury bonds to borrow cash from you, then I have your cash and you have my Treasuries and we both want to get our stuff back and worry that we won’t. Traditional finance deals with this in various ways:
Legal regimes that give us some sort of priority claim to getting our stuff back if the other one goes bust.
Third-party custody, where some super-safe entity holds the Treasuries so you can’t run off with them.
The lenders (who tend to be overcollateralized — that is, I tend to post Treasuries worth more than the cash you give me back) are often big regulated banks or money-market funds, so I am relying on the regulatory system to make sure that you don’t actually go bust or run off with my Treasuries.
Long-standing cultures and best practices of credit risk management where, for instance, you will do some due diligence on my credit, and I will send you my audited financial statements, and you will have concentration limits where you can’t invest all your money with me, etc.
Meanwhile … I guess you could imagine ways to deal with this in crypto? I used to joke, about everything, that “smart contracts via crypto make this super doable.” You could imagine a smart contract where I put up Bitcoins and you put up USDC and if either of us runs into some sort of problem trigger then the thing automatically unwinds. And there are things like this in the world of decentralized finance. But actual big-dollar crypto leverage seems to be built mainly on bilateral over-the-counter arrangements rather than smart contracts.[4] And some crypto lenders probably import credit-risk-management best practices from traditional finance and adapt them in smart ways to the realities of crypto! And some of them absolutely don’t.
I have been writing a lot around here about how crypto is having its version of the 2008 financial crisis. One schematic way to tell the story of 2008 would be to focus on “shadow banking.” The basic business of banking is borrowing short-term from people who think their money is very safe, and invest it in longer-term loans that have some risk. That is a dangerous business, and so it is heavily regulated. And in the lead-up to 2008, people in the financial industry found ways to re-create that dangerous sort of business in ways that were less heavily regulated, so they could be more aggressive about leverage and liquidity and concentration and credit risk. And nobody realized how much of this there was, and how dangerous it was, and how interconnected it was with the rest of the financial system, until it popped.
And then they did realize, and there was a broad after-the-fact crackdown on shadow banking, and now through some combination of regulation and temperament and bad memories there is just less of this sort of thing in traditional finance. Still lots! But less of it, more constrained, less leveraged. Everyone in traditional finance has seen this movie before and knows how it ends.
And yet there is some … natural … human … longing … to borrow short and lend long with no equity? I dunno. Since 2008, the traditional financial industry has tried to suppress that desire. But it found a home in crypto.
Here is a financial literacy test for you:
You can borrow $18 billion at 8% interest.
You can take that money and invest it in loans that pay 20% interest.
You don’t have to put up any of your own money.
So you get $3.6 billion a year in interest (20% of $18 billion), and you pay out $1.4 billion in interest (8% of $18 billion), so you keep about $2.2 billion for yourself.
Is this good?
This is not a yes-or-no question, and the right answer is probably something like “well, good for who?” If you are a person who invents a business like this, and you are able to do it for a year or two and squirrel away the $2.4 billion, it is very very good for you and you can buy yachts and stuff. But in the long run, if you are borrowing at 8% and lending at 20%, you are taking some huge risk somewhere. Those 20% loans are risky and correlated and illiquid and possibly Ponzi schemes; that 8% money is flighty and unstable; you are lending out all the money you are borrowing and there is no cushion anywhere. At some point the people lending you the money at 8% are all going to ask for it back, and the people borrowing the money at 20% aren’t going to give it back, and you’re not going to have the money to pay back the 8% people, and they’re going to be really mad, and that’s when it will be useful for you to have a yacht to sail away on.
Anyway here’s a Wall Street Journal article about Celsius:
Celsius Network LLC CEO Alex Mashinsky built his cryptocurrency lender into a giant on a pitch that it was less risky than a bank with better returns for customers.
But investor documents show the lender carried far more risk than a traditional bank.
The lender issued numerous large loans backed by little collateral, according to Celsius investor documents from 2021 reviewed by The Wall Street Journal. The documents show that Celsius had little cushion in the event of a downturn, and made investments that would be difficult to quickly unwind if customers raced to withdraw their money. Celsius didn’t respond to requests for comment from the Journal.
Celsius had $19 billion of assets and roughly $1 billion of equity as of last summer, before it raised new funds, according to Celsius investor documents from 2021 reviewed by the Journal. The median assets-to-equity ratio for all the North American banks in the S&P 1500 Composite index was about 9:1, or about half that of Celsius, according to data from FactSet.
We have talked a lot about crypto banks recently, and Celsius’s roughly 5.3% capital ratio is, if anything, high. Tether’s capital ratio is about 0.2% (!); Voyager Digital Ltd.’s is about 4.3%. This banking business, this business of borrowing at lower rates and lending at higher rates and having a thin sliver of equity, this is a pretty well-known business, and in traditional banking there are lots of safeguards around it. That sliver of equity can’t be too slim, you need to keep some cash on hand to give back to your depositors, you need to make prudent loans that are not too risky or too concentrated or too much to your own affiliates, etc. In traditional finance there are “shadow banks” that try to do this sort of business with less regulation, but there are regulatory and market constraints on how much of that is allowed, particularly after shadow banking blew up in 2008. Meanwhile in crypto absolutely anything apparently goes.
We talked about Celsius a few weeks ago, and nothing here really comes as a surprise. “Somebody is lying,” Mashinsky once told Bloomberg Businessweek: “Either the bank is lying or Celsius is lying.” That too was a kind of financial literacy test. Celsius has frozen customer withdrawals for weeks; regular banks, conspicuously, have not.
The Journal article also points to sort of a subtle fact about crypto banking and interconnection:
Adding to Celsius’s leverage was money borrowed from others including Tether International Ltd., which issues a cryptocurrency pegged to the U.S. dollar. As of last summer, Celsius had a credit facility for up to $1.1 billion from Tether, which itself was an early investor in Celsius with a 7.8% stake in the lender as of last spring, Celsius told investors. ...
Like a bank, Celsius was able to pay yields to customers largely by making money through lending at even higher yields to others.
One of its biggest units was lending to other crypto financial businesses, including digital-asset manager Galaxy Digital and institutional crypto-lending firm Genesis, Celsius told investors. Celsius projected in May 2021 that institutional lending would bring in about $290 million of revenue for the year, more than one-quarter of total revenue, the documents reviewed by the Journal show.
While banks like loans to be overcollateralized—homeowners taking out a mortgage post their house as collateral, which is valued at more than the loan—Celsius required its business borrowers to post only an average of about 50% collateral on its $2.7 billion of loans as of last spring, the documents show. Undercollateralized lending is considered a risky practice, one that was more generous than that of many of Celsius’s competitors.
Celsius used some of that collateral to borrow more money itself, a process known as rehypothecation, adding additional risk.
Think about how that business might work. At a high level of generality, you have two crypto financial businesses, perhaps they are Celsius and Genesis, or Celsius and Tether, or whatever, but let’s just call them Borrower and Lender. Borrower has some Bitcoins (or Ether or whatever) and wants dollars (or USDC stablecoins or Tether or whatever); Lender has plenty of dollars (USDC, Tether, etc.) that it is willing to lend. Borrower and Lender get together and agree that Borrower will post its Bitcoins to Lender as collateral, and Lender will hand over some dollars to Borrower collateralized by those Bitcoins. Fine. A normal, collateralized margin loan.
How many Bitcoins should Borrower give Lender for the dollars? Well, if you are Lender, you will want your loan to be well secured. If Borrower gives you $200 worth of Bitcoin and you lend it $100 of cash, then you will be pretty well secured. If Borrower doesn’t pay you back the $100, you can seize its collateral and sell it for $200, giving you plenty of room to repay your loan. Even if the price of Bitcoin falls by 10% or 20% or 40%, you can still sell the collateral for enough to cover your loan. (If it falls by more than 50%, as it has this year, then you are in trouble, but you have margin calls to protect you along the way; you don’t have to wait for it to fall that far.) This is the way that margin lending generally works in retail stock brokerage accounts.
Of course everything is competitive and perhaps Lender will be willing to accept less than $200 worth of Bitcoin for a $100 loan. Perhaps it will feel safe with $150 of collateral, or $120. At some level of collateral, though, you stop feeling safe about the collateral: If you lend $100 of cash against $110 of Bitcoin, Bitcoin is pretty volatile, and if it goes down by 10% your loan will be undercollateralized. If you lend $100 against $110 of Bitcoin, you are making a credit decision: You’re lending the $100 not only because you think Bitcoin is good collateral but also because you think Borrower is good for the money. Certainly if you lend $100 of cash against $50 of Bitcoin, you are making mostly a credit decision; if Borrower vanishes then the best you’re going to do is get $50 back.[1] You are counting on Borrower to repay you, and you have done some underwriting to make you confident that Borrower is a good credit. Or you haven’t, I mean; Celsius has not exactly covered itself in glory in recent weeks. But let’s assume that you do, and you sensibly believe that you are making these (under-)collateralized loans to good strong businesses that should be able to pay you back even in a market downturn.
But now let’s flip it around. Let’s say that you are Borrower, not Lender. You are handing over some Bitcoins and getting back dollars. You will have the use of Lender’s $100, and if you disappear Lender won’t get its money back and will have to seize your collateral. But notice that Lender has the use of your Bitcoins, and if Lender disappears you won’t get your Bitcoins back. Of course if that happens you can keep the $100.[2] But if Lender disappears with $200 of your Bitcoins then that’s not too much consolation.
In other words, these transactions are completely symmetrical, and if you are posting crypto collateral with a crypto lender then you are taking their credit risk. (Notice, here, that Celsius was not in the business of keeping collateral in separate vaults with the borrowers’ names taped on them, or of taking contingent claims on assets that sat in the borrowers’ wallets: It was rehypothecating the collateral for its own use.)
And so if you are a big reputable well-managed crypto firm, and you want to borrow $100 from Celsius, you might want to only post $50 of Bitcoin as collateral, not only because that is more efficient for you (you get more money for less collateral) but also because it is safer for you. If Celsius goes bust or pauses withdrawals and hangs on to your $50 of Bitcoin, well, you still have their $100, it’s fine.[3]
I should say that in traditional finance there is a lot of this symmetrical risk: If I post Treasury bonds to borrow cash from you, then I have your cash and you have my Treasuries and we both want to get our stuff back and worry that we won’t. Traditional finance deals with this in various ways:
Legal regimes that give us some sort of priority claim to getting our stuff back if the other one goes bust.
Third-party custody, where some super-safe entity holds the Treasuries so you can’t run off with them.
The lenders (who tend to be overcollateralized — that is, I tend to post Treasuries worth more than the cash you give me back) are often big regulated banks or money-market funds, so I am relying on the regulatory system to make sure that you don’t actually go bust or run off with my Treasuries.
Long-standing cultures and best practices of credit risk management where, for instance, you will do some due diligence on my credit, and I will send you my audited financial statements, and you will have concentration limits where you can’t invest all your money with me, etc.
Meanwhile … I guess you could imagine ways to deal with this in crypto? I used to joke, about everything, that “smart contracts via crypto make this super doable.” You could imagine a smart contract where I put up Bitcoins and you put up USDC and if either of us runs into some sort of problem trigger then the thing automatically unwinds. And there are things like this in the world of decentralized finance. But actual big-dollar crypto leverage seems to be built mainly on bilateral over-the-counter arrangements rather than smart contracts.[4] And some crypto lenders probably import credit-risk-management best practices from traditional finance and adapt them in smart ways to the realities of crypto! And some of them absolutely don’t.
I have been writing a lot around here about how crypto is having its version of the 2008 financial crisis. One schematic way to tell the story of 2008 would be to focus on “shadow banking.” The basic business of banking is borrowing short-term from people who think their money is very safe, and invest it in longer-term loans that have some risk. That is a dangerous business, and so it is heavily regulated. And in the lead-up to 2008, people in the financial industry found ways to re-create that dangerous sort of business in ways that were less heavily regulated, so they could be more aggressive about leverage and liquidity and concentration and credit risk. And nobody realized how much of this there was, and how dangerous it was, and how interconnected it was with the rest of the financial system, until it popped.
And then they did realize, and there was a broad after-the-fact crackdown on shadow banking, and now through some combination of regulation and temperament and bad memories there is just less of this sort of thing in traditional finance. Still lots! But less of it, more constrained, less leveraged. Everyone in traditional finance has seen this movie before and knows how it ends.
And yet there is some … natural … human … longing … to borrow short and lend long with no equity? I dunno. Since 2008, the traditional financial industry has tried to suppress that desire. But it found a home in crypto.
??Ari said:
Seventyseven7 said:
Ari said:
I'm a little surprised that our crypto fans in this thread haven't been comparing how much they're investing in buying the dip.
That's what these smart investors do isn't it, buy the dip?
Unless they think that it's not a dip?
The chat is mostly in the telegram group main group and the various little ones that have come from it. That's what these smart investors do isn't it, buy the dip?
Unless they think that it's not a dip?
I bought 1.1 BTC at 17.5 US and I bought 18 QNT at 55. I had a small short on ETH at 1,200 but have closed it. I will probably open a longer short on ETH in the near future.
What trading have you been doing?
Very boring, I know, but it seems to work for me.
Is that you cashed out from it now, or investing that half somewhere else?
funinhounslow said:
I wouldn’t have a clue either and I’m just an average bloke ie the sort of person who needs to be using crypto if it’s going to be widely adopted
If cryptocurrencies are ever going to be credible mediums of exchange they need to quickly and easily purchased, stored and sold/exchanged surely?
*sigh*If cryptocurrencies are ever going to be credible mediums of exchange they need to quickly and easily purchased, stored and sold/exchanged surely?
How many more times does it need to be repeated before you stocks/commodies people get it ?
NOBODY CARES ABOUT ITS USE CASE. NOBODY. ANYONE WHO SAYS ANY DIFFERENT IS LYING.
Got it ?
The only reason we buy into these is to speculate in the price increasing and selling at a nice profit or to gamble on the endless stream of 3% per day full degen ponzi projects before they rugpull. It's a form of gambling, that's it. Do you people go into the horse betting threads and casino threads droning on and on and on and on and on about your 1% per year stocks and shares comparing them with each other? No. So why do it here? You don't like crypto, that's fine, it's not for you, so off you go back to your stocks threads. Stop endlessly trolling this one (collectively).
Like in every asset class, you get a handful of deluded people who think the price is going to go to £1m and believe it will take over the world. Such people can also be found in the gold and silver threads and tend to get quite upset when you point out that neither of them have done anything price wise, and certainly not the gold at $100k and silver at $10k like they've all been predicting since time began. If that's what they choose to believe, so what? Leave them be in their bubble.
funinhounslow said:
r3g said:
Seventyseven7 said:
What trading have you been doing?
None. He and the other 3 luddites over the past couple of pages wouldn't even know how to set up a wallet, let alone figure out what to do with it once done.
If cryptocurrencies are ever going to be credible mediums of exchange they need to quickly and easily purchased, stored and sold/exchanged surely?
We’re a long long way from that.
It’s very easy to open a bank account, get a credit card, open a SIPP/ISA.
Why isn’t purchasing, storing and using cryptocurrencies as seamless? And by “using” I don’t mean just selling it on…
To me crypto just seems like a solution in search of a problem.
How does an “average person” buy and use crypto without falling victim to the fly by night companies out there?
I read stuff like this and it literally makes no sense to me. It’s full of jargon and intimidating
dmahon said:
I have ETH in Metamask, BTC in Coinbase Wallet and a “file system wallet” for Solana. I have never successfully synced a node.
Of course I understand that wallets contain private keys and not actual coins, but I still have no idea why I would need to run and sync an ETH or Solana node and then wait for hours for self custody.
Feel free to educate me as we may be talking at cross purposes.
Of course I understand that wallets contain private keys and not actual coins, but I still have no idea why I would need to run and sync an ETH or Solana node and then wait for hours for self custody.
Feel free to educate me as we may be talking at cross purposes.
Edited by dmahon on Thursday 23 June 13:06
But don't confused Bitcoin with other Cryptocurrencies like Solana, treat it as two separate entities entirely.
To open a bank account, I'm unsure of the timeline these days, but a few hours I assume? Do you still need to go to a branch with ID? Or do you send in ID and then it takes a few days to get verified etc?
Eitherway, to create your own wallet (Like a bank account) takes less than 60 seconds. to receive Bitcoin to that wallet takes less than 60 seconds, then to send it to an external ledger if you don't want to store it in your online wallet is again another 60 seconds. I could show someone who has never had Bitcoin before, how to create and own a wallet and receive their first amount of Bitcoin in under 5 minutes.
I completely agree with you, that when you first hear 'the jargon' it makes no sense. But it's a learning curve like everything in life. When the internet first came around, everyone had to learn what download and upload meant, what an ISP is, what a packet is etc etc.
Edited by Seventyseven7 on Thursday 30th June 09:44
r3g said:
*sigh*
How many more times does it need to be repeated before you stocks/commodies people get it ?
NOBODY CARES ABOUT ITS USE CASE. NOBODY. ANYONE WHO SAYS ANY DIFFERENT IS LYING.
Got it ?
The only reason we buy into these is to speculate in the price increasing and selling at a nice profit or to gamble on the endless stream of 3% per day full degen ponzi projects before they rugpull. It's a form of gambling, that's it. Do you people go into the horse betting threads and casino threads droning on and on and on and on and on about your 1% per year stocks and shares comparing them with each other? No. So why do it here? You don't like crypto, that's fine, it's not for you, so off you go back to your stocks threads. Stop endlessly trolling this one (collectively).
Like in every asset class, you get a handful of deluded people who think the price is going to go to £1m and believe it will take over the world. Such people can also be found in the gold and silver threads and tend to get quite upset when you point out that neither of them have done anything price wise, and certainly not the gold at $100k and silver at $10k like they've all been predicting since time began. If that's what they choose to believe, so what? Leave them be in their bubble.
I think most will agree entirely with you. It has been the underlying view for years. 2027 was basically the last time there was actual 'hope of use' getting priced in. How many more times does it need to be repeated before you stocks/commodies people get it ?
NOBODY CARES ABOUT ITS USE CASE. NOBODY. ANYONE WHO SAYS ANY DIFFERENT IS LYING.
Got it ?
The only reason we buy into these is to speculate in the price increasing and selling at a nice profit or to gamble on the endless stream of 3% per day full degen ponzi projects before they rugpull. It's a form of gambling, that's it. Do you people go into the horse betting threads and casino threads droning on and on and on and on and on about your 1% per year stocks and shares comparing them with each other? No. So why do it here? You don't like crypto, that's fine, it's not for you, so off you go back to your stocks threads. Stop endlessly trolling this one (collectively).
Like in every asset class, you get a handful of deluded people who think the price is going to go to £1m and believe it will take over the world. Such people can also be found in the gold and silver threads and tend to get quite upset when you point out that neither of them have done anything price wise, and certainly not the gold at $100k and silver at $10k like they've all been predicting since time began. If that's what they choose to believe, so what? Leave them be in their bubble.
The issue, arguably, is that on PH the perma-punters who leap from one risk miss-prices retail punt to the next in an endless cycle of losses really bought into the delusion of this punt. Like buying into the delusion of a bent Aussie with multiple criminal form flogging a hole in the ground a single toothless alcoholic has dug, pitching the hole, the toothless old boozer and his caravan as the next big gold mine and long after the boozer was found dead in his hole and the bent Aussie showman has moved on to selling a drug that will make stupid people live forever and still holding their share cert in the air and screaming that it's going to the moon just as soon as gold is found, so crypto has completely turbo charged this scenario of Ladbroke pay packet walkins pretending to be leading authorities in subjects that contain a lot of made up words.
We've all seen it with every bit of retail junk from AIM stocks, P2P lending, crowdfunding etc etc.
The point being that if someone realises it is just a punt on flawed risk pricing and you chuck in amounts that have no material impact then there is no problem but punters by their very nature can't ever see that and as you can see with crypto you are getting large numbers of people who have spanked more than they can afford.
Nothing has changed with bitcoin. I still use it every day and it's better than ever. Yes the financial industry cowboys, the Israeli scammers and the global banking cartel are doing their best to abuse and suppress it...but nothing has changed. We knew this was coming, it's a great test. Bitcoin still 100% operational
dimots said:
Nothing has changed with bitcoin. I still use it every day and it's better than ever. Yes the financial industry cowboys, the Israeli scammers and the global banking cartel are doing their best to abuse and suppress it...but nothing has changed. We knew this was coming, it's a great test. Bitcoin still 100% operational
how do you use it everyday?r3g said:
*sigh*
How many more times does it need to be repeated before you stocks/commodies people get it ?
NOBODY CARES ABOUT ITS USE CASE. NOBODY. ANYONE WHO SAYS ANY DIFFERENT IS LYING.
Got it ?
The only reason we buy into these is to speculate in the price increasing and selling at a nice profit or to gamble on the endless stream of 3% per day full degen ponzi projects before they rugpull. It's a form of gambling, that's it. Do you people go into the horse betting threads and casino threads droning on and on and on and on and on about your 1% per year stocks and shares comparing them with each other? No. So why do it here? You don't like crypto, that's fine, it's not for you, so off you go back to your stocks threads. Stop endlessly trolling this one (collectively).
Like in every asset class, you get a handful of deluded people who think the price is going to go to £1m and believe it will take over the world. Such people can also be found in the gold and silver threads and tend to get quite upset when you point out that neither of them have done anything price wise, and certainly not the gold at $100k and silver at $10k like they've all been predicting since time began. If that's what they choose to believe, so what? Leave them be in their bubble.
No but I didn't do that here did I? I asked some questions about cryptocurrency on a cryptocurrency thread. The difference is that if I ask a question about horse betting or casinos on a gambling thread I wouldn't get accused of trolling. I didn't say I didn't "like" crypto btw I said I didn't understand it...How many more times does it need to be repeated before you stocks/commodies people get it ?
NOBODY CARES ABOUT ITS USE CASE. NOBODY. ANYONE WHO SAYS ANY DIFFERENT IS LYING.
Got it ?
The only reason we buy into these is to speculate in the price increasing and selling at a nice profit or to gamble on the endless stream of 3% per day full degen ponzi projects before they rugpull. It's a form of gambling, that's it. Do you people go into the horse betting threads and casino threads droning on and on and on and on and on about your 1% per year stocks and shares comparing them with each other? No. So why do it here? You don't like crypto, that's fine, it's not for you, so off you go back to your stocks threads. Stop endlessly trolling this one (collectively).
Like in every asset class, you get a handful of deluded people who think the price is going to go to £1m and believe it will take over the world. Such people can also be found in the gold and silver threads and tend to get quite upset when you point out that neither of them have done anything price wise, and certainly not the gold at $100k and silver at $10k like they've all been predicting since time began. If that's what they choose to believe, so what? Leave them be in their bubble.
If you're saying crypto "trading" is just the latest version of the "greater fool theory" than fair enough - but there are quite a few others on here arguing that crypto has potential and utility in the real world, so you can perhaps understand my confusion.
dimots said:
Nothing has changed with bitcoin. I still use it every day and it's better than ever. Yes the financial industry cowboys, the Israeli scammers and the global banking cartel are doing their best to abuse and suppress it...but nothing has changed. We knew this was coming, it's a great test. Bitcoin still 100% operational
And I think that's where we are with Crypto, some people do actually use it. There will never be a wide acceptance of it, there simply is no appetite for it by the greater population and while that happens the Bitcoiners will just continue to use it in their own little crypto ecosystem.
There is no winning or losing the Crypto argument, Bitcoin will never die but it will also never take over the world.
All in my opinion of course.
dimots said:
I have been running bitcoin/crypto payment integrations in many of my online businesses since around 2014. It was the simplicity of accepting bitcoin payments compared to running payment gateways that first convinced me of its value.
That’s really interesting. How do you price? Ie do you price in fiat and convert at the spot exchange rate, or price in BTC and vice versa, or have different price lists?dimots said:
Ouroboros said:
how do you use it everyday?
I have been running bitcoin/crypto payment integrations in many of my online businesses since around 2014. It was the simplicity of accepting bitcoin payments compared to running payment gateways that first convinced me of its value.Gassing Station | Finance | Top of Page | What's New | My Stuff