Coinbase Is a $100B Crypto Cult
bloomberg.com
bloomberg.com
I understand that in the past year it has enabled people to easily make a lot of money. I personally made a lot of money (relatively speaking that is, as I'm a student) in the past year. But it's just so tiresome to read about it all the time.
Asset X goes up, asset Y comes back down. Rinse and repeat. It wears me out.
My emotional state of mind is not great at the moment, because of lockdown & loneliness, but I think this long lasting asset bubble would've made me tired regardless of my state of mind.
Maybe I'll just do ETFs, maybe I'll just quit for the year.
Any people here who feel the same?
If you aren't feeling great mentally, it might be good to not get emotionally involved in daytrading, speculation or anything related to crypto. Just park the money in a fund, don't touch it, don't check prices, and make sure that the rest of your life is okay.
But I have no regrets, it has allowed me to detach mentally and emotionally from the price swings and I find my mental health worth more than the chance to get dirty rich (or lose it all). I see the prices of a lot of assets I hold during my daily work, but they're just numbers now.
I still have significant (to me) crypto holdings, but I take a longer-term perspective now and am fine with the fact that their market price may very well crash to 10% of now during the year.
But yeah, the goddamn media. Can we stop talking about price please? It's just so uninteresting.
But I can regulate myself. Stop trading. Stop consuming media. Stop watching prices. All this short-term stuff is not meaningful.
Time is the true test. What ideas, companies and crypto projects will survive for decades, and which ones are ephemeral get-rich-quick vehicles?
I'd rather put my wealth in a handful of the former than pretend I can beat people smarter and faster than me by trading the latter.
My own psychology is the biggest obstacle to hanging on for multiple 10X's. I'll always sell winners too soon and hang on to losers too long. So for me, the best strategy is to "set it and forget it" and stop paying attention every day or even every week.
EVERY single fiat currency in human history has either gone to zero, or has lost 99% of its value.
Fiat currencies cannot be "designed" to lose value at a measured rate. Even bitcoin, which is actually designed with a measured addition of supply up to 21 million, cannot control its value.
The president of the central bank doesn't just announce the new exchange rate, because exchange rates are set by markets.
To devalue a currency, the central bank sells a lot of it in the market.
Where do they get all that currency to sell? Either by selling government bonds in the market and using the proceeds to buy foreign currency, or by printing new units of the currency from thin air and selling that to buy bonds or foreign currency.
The point I was making is that devaluation is a term to describe a deliberate thing whereas a currency losing its value 99-100% over time is not.
The past year has been far and away the best year of my life, and that feeling continues today. I credit that to being mindful of how I live my life and making sure that I'm very careful to not live life in a way that becomes self-destructive.
The second issue is that cryptocurrency is akin to a religion. This is also true. Most people buy and hold Bitcoin on the belief it will go up but there isn’t much of a reason for it to go up except a lot of people continuing to buy in and hold. As Peter Shiff and others have made clear Bitcoin is a naturally occurring Ponzi scheme.
Competitors are showing up fast.
New opportunities are opening up in altcoins, staking and more.
This author in particular didn't think it 'was worth the effort' to even use the actual market which offers 0.50% fees on Coinbase and went with the 1click solution that charges 1.49% for the convenience.
Coinbase however makes things super trivial / easy. It's a convenience fee.
3rd reason is the difficulty goes up if more people mine.
Price drives up the profits of mining, and makes it viable to bring more capacity online. There is no mechanism by which difficulty drives the price.
Mining difficulty has little effect on the price. Halvings which the poster was talking about, however, also does not push the price up but rather reduces the rate of inflation.
If the price goes up then it becomes more profitable to mine, so it becomes viable to use more power.
There is no mechanism by which the cost of mining affects the price.
They're the same thing in the end, as long as you don't account for people paying more to get bitcoins now because they know they'll be more expensive in the future.
So in the end the price of a bitcoin (not accounting for the future), will be exactly the cost of electricity to mine it.
Once you account for the future however you realise if you buy now you're getting them cheap, which pushes up the price, and thus causes it to be more profitable to mine, which pushes up the cost of mining, which causes it to be less profitable to mine.
The entire thing was designed by someone who took 1 economics class and thought inflation was a bad thing, so designed in multiple types of deflation, thus making it useless as a currency (who would ever sell a bitcoin?), and bring about the apocalypse faster
People will roughly decrease mining up to the new cost. That doesn't lower the cost further. If a mining pool explodes, decreasing the total power going into mining the price will not be affected.
The causality is fully from price>mining output, and there's no mechanism for the opposite since mining produces the same # of coins regardless of the amount of energy put in.
Absolutely, the price of BTC drives the viability of mining, BUT the cost of mining doesn't have the reverse effect, it doesn't affect market price.
And yes, I agree, the whole thing is a clusterfuck :)
Ill leave it to you to invent the secure system that uses less power since nobody else seems to be able to figure it out. If you know of a way, please specify step by step in detail and how to roll that out effectively.
But Bloomberg is not to be trusted anymore ( The Phony Hack ), especially on subjects which may partially compete with its own core business.
https://www.bloomberg.com/news/articles/2021-02-27/coinbase-...
That’s just good branding.
Crypto would possibly be great, not until the big players got in and now it no longer is money but rather investement thing. (Hold for 5 years get rich!) wtf? Right, I also hold bags, but it has just taken very different approach.
Binance has 9x the volume of Coinbase, 5-10 times less fees, much more offerings and its 'stock' is at least an actual cryptocurrency rather than a US IPO.
>I was wrong, spending about $1,200 on those trades at a commission rate of 1.49%.
Anyway, the author could've had 0.50% fees even on Coinbase (still 5x higher than the lowest Binance fees) by switching to Pro which is free. The author for some reason thinks "it wasn't worth the effort". Well, if you don't want to spend the 10 minutes to use the market rather than the 1click solution, I dont see how its the exchange's fault.
Protectionism at its finest.
It’s a very weak, meandering article with no significant point. I usually expect better from Bloomberg on financial topics, but I guess it’s just the usual trendy anti-cryptocurrency drivel.
Bitcoin is more than a cult, for what it's worth. Bitcoin has value for rich Chinese to circumvent yuan capital export restrictions (https://www.scmp.com/economy/china-economy/article/3098981/c...), for Iran to sort-of bypass international sanctions (https://observers.france24.com/en/middle-east/20210203-in-ir...) and for North Korea to fund their nuke program (https://www.nasdaq.com/articles/un-says-north-korea-funded-n...).
In addition to that, it is a perfect tool for Western people to buy drugs, weapons and other contraband (Silk Road and its countless successors), for sending large sums of money across borders, and soon-ish to buy Tesla cars.
Basically, there are many people and governments with massive stakes in keeping Bitcoin operable and its dollar value somewhat high-ish.
Cryptocurrencies are. Bitcoin is outclassed by e.g. Monero in that niche and sadly, the constant international busts of DNMs have made buying drugs online an ordeal with markets having very short lifespans currently.
Not mentioned in the video, I've recently observed people noticing that Bitcoin Cash has decent transaction fees. (I don't remember where - maybe on twitter or in a forum)
If so, why isn't this the headline of the past month?
Because we only use last price to evaluate assets, small changes in demand and last price can have considerable effects on overall valuations, even though (I think) the total value of the asset is not much different.
A simple example of the idea is this: I have 100 ecoins and I want to sell them. They are the only ecoins in the world. I sell the first for 100; the next, I have fewer buyers, so I settle for 99... etc all the way to 1 for the last. The initial valuation, based on last price, would have been 100*100 = 10,000. The actual cash recouped was 5,050. Obviously volume has an impact, and in reality prices are generally more stable and the whole process is much more complicated but you get the idea. But if bitcoin / gme / tesla have taught us anything, it's that price can remain irrationally high indefinitely because of the way wealth and money can be moved around and there's no urgency to use it (due to lack of taxation).
Artificial inflation/manipulation of assets seems like a great argument for wealth taxation. It would discourage tying up liquidity in bad assets and encourage better investment.
One group (including the Fed) points at CPI and PCE and says there is no inflation, in fact they want some inflation but can't get it.
The other group says there is inflation but it is 'asset inflation' causing things like real estate, healthcare, education, trading cards, classic cars, crypto, etc to sky rocket.
And then you have gold bugs and contrarians like Mike Burry talking about Weimar 2.0 hyperinflation coming.
You have to go to St Louis FRED data and decide for yourself. Look at M1 and M2 supply, velocity etc. Commodities have been on a tear for 6 months after a 12 year bear run. That could just be supply shock for a quickly recovering economy. And now we have an incoming 1.9T stimulus, with a lot of it going directly to consumers instead of sitting on bank balance sheets like QE. Who knows?
Debt is cheap, there is a growing concern on the ability of the USD (and others for that matter) to retain its long-term value and BTC can be used as collateral for fiat loans to gain liquidity while still being exposed to BTC.
In case anyone missed it: https://www.microstrategy.com/en/resources/events/world-2021...
This extends to retail as well. E.g there was even some research on RobinHood which showed a sharp uptick in trading the day after the stimulus checks landed.