https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robi...
It's like saying the internet is dying off because AOL's dialup customer base is shrinking.
(This is a general problem in some areas of finance - is there new money entering the subsystem, or is it the same money going round and round? Crypto is so opaque that you can't tell. NFTs are worse. Coins at least have liquid markets and market prices. NFTs have high asking prices in stalled markets, and wash sales that conceal whether there's any significant resale market at all.)
[1] https://www.coindesk.com/markets/2021/01/11/tether-mints-rec...
But it really tokens that are pegged to a fiat currency. You can't redeem tethers because there is no back account holding a dollar for every tether.
sigh This is a common misconception, so fact check time...
Tether is printed on demand, but it is backed by assets.
An independent audit was done to settle a claim brought by the New York Attorney General. The audit found $35.2 billion in assets against $35.1 billion in issuance liabilities.
The case was settled with an $18 million fine and a promise of increased transparency, but ultimately the NYAG was unable to demonstrate any evidence supporting claims that Tether was unbacked.
https://blockworks.co/celsius-reportedly-borrowed-1b-from-te...
Lets assume that crypto as a whole is a 50/50 proposition. And it is certainly a giant question mark (50/50 is symbolic)...cause there are certainly open questions.
...and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks. That makes me go hmm...
...on balance I'm leaning towards IB usually has a good nose for money and where the political winds will blow (or be made to blow by force)
https://www.theguardian.com/business/2021/dec/17/hsbc-fined-...
If they smell money, they'll do it.
Just because they do it, it doesn't mean it's not "funny money". Both could be true at the same time.
Jamie Dimon spoke to this a while back. Something along the lines of while he sees no future in crypto and would never invest, if there is customer demand then they really have no choice but to cater to it.
Ultimately I think HN is a good place if you want to discuss technical details about super specific topics like Linux kernels, but a terrible place to get a glimpse of the future because most here are too close-minded and stuck in the past.
Not so much "despite" as "because."
It's a cognitive error to not understand the above, and it comes from extrapolation of the individual's point of view (when I buy X then my money goes "into" X) to the collective (when the price of X rises it must be because new money has "gone into" the X).
When I buy a BTC, my dollar goes to someone else bank account, who then does whatever with that dollar (spends it on electricity, perhaps). If I later get out of BTC, I don't necessarily get my dollar back. So if $1B has gone "into" BTC, perhaps only $1M comes out of it later. So seeing there as a stock is misleading.
That said, if you trust the maintainers of stablecoins, then the article's assumptions do hold. $1B spent on USDT and then later reversed should result in $1B coming back. So you can think of stablecoins as a stock (relative to the tethered currency at least)
When someone sells fiat and buys crypto, that implies that at the same time there is someone on the other side of the trade buying fiat and selling crypto; right?
You can't have more of one than the other.
There's never a net movement in one direction.
This is presumably true for stablecoin deposits too. But what banks are they using? What assets end up changing hands?
The article also doesn't have anything to do with buying things or the prices of things rising.
Stablecoins are very simple to measure inflows and outflows on, as explained in the article. When someone exchanges a real dollar for a USDC token and the dollar goes into the stablecoin issuer's bank account, that's an inflow. When someone exchanges a USDC token back for a real dollar out of the stablecoin issuer's bank account, that's an outflow.
> except when new assets are being created, via a new offering
That's exactly what's happening here. Each stablecoin mint is a new offering.
You're making the very large assumption here that people are exchanging real dollars for stablecoins, which is almost certainly not the case. Tether, in particular, seems to printing their stablecoins out of what appears to be thin air, or at best in exchange for sketchy IOUs.
More fundamentally, money can flow into and out of assets simultaneously -- for example, money flows from scam victims into scams, and from scams out to scammers.
How Crypto Became the New Subprime
You decide this based on what? If people can waste money on lotteries, this is no different.
None of us are posting about it on Facebook though.
What data?
Practically everyone I know owns crypto at this point. Me and many of my software engineer friends have had a pretty significant amount of our portfolios allocated to crypto for over a year now. Some have quit their jobs to work full-time in crypto.
Painting crypto investors as "folks from high school that barely passed basic math and never left their home town" sounds not only insulting but comically inaccurate. I've been invested heavily in crypto for over a year now and definitely don't fit to that ridiculous profile you derived from your Facebook feed (who even goes on Facebook other than baby boomers these days anyways?).
Everyone is in their own bubble these days.
Crypto should only be an experiment at this point in time. Blockchain is another matter entirely as that's a technology that enables all of this and it has other applications. But crypto is a (very) interesting experiment.
The more people realise this and treat crypto as an experiment, the less scams and ruined lives we're going to see.
