Bitcoin Price Tumbles After Wall Street Selloff
wsj.com
wsj.com
* India may try to make self-custody of crypto assets illegal, requiring all coins be given to exchanges. [A totally unenforceable law, trying to make math illegal, in this case storing 256-bit integers and performing the ECDSA/Schnorr signature algorithm.] Everyday Indian folk will lose their coins when the inevitable happens and the exchanges are compromised.
* Europe considering how to put the genie back in the bottle. Also thinking about custody regulation and reporting.
* US trying to develop (further) regulations around exchanges, trading, KYC/AML, derivatives and accounting.
* Uncertainty over the CSW lawsuit. The jury is still deciding the verdict, possibly next week.
* Custodial Bitcoin loaning service reported losing (wrapped) Bitcoin when defi platform was compromised.
* Larger market uncertainty due to new variants.
Its going to be bumpy. It always is. Maybe I have been watching too much Michael Saylor lately, but I think he is right about a great many things. It is too easy to look at systems from the inside and shout about bubbles. A more systematic appraisal of other large asset classes, the source/sink nature of money creation and capital flows is prudent.
This is a non-sensical but very common expression from crypto-bros. It's like saying that gun control is to "make steel illegal".
The crypto(currency) wars of 20s ARE doomed to failure. Restrictions on cryptocurrency were ultimately about controlling algorithms with certain inputs. Its trying to make some math illegal.
There is no good faith outcome that can continue from this, it shuts down the argument.
Good day.
You don't have to drive something to zero to restrict it successfully.
Let's say Bitcoin was strongly regulated globally. Anyone caught running mining software or transacting in Bitcoin has their hands cut off. Ouch.
I can still download mining software and run it on my computer, and connect through the network through Tor. Blocks are 1 MB every 15 minutes, it's noise. I don't need to know anyone or have anyone's identities. It's really really hard to catch me. Like, wayyyyy harder than the child pornography example.
Well, ok but what's the incentive then for me to use Bitcoin in such a world? Not sure there, like what's the "USD price" per Bitcoin. Ya this part seems tough. If all countries strongly ban Bitcoin with harsh penalties, that seems like it would put a kabosh on my ability to turn it into real world currency. But still could be used for digital goods.
You're forgetting black markets. Drug dealers and gun runners and human traffickers are already breaking serious laws. They don't care about breaking other laws. If they get caught they're already going to jail whether they use illegal math or not.
The lack of utility also assumes that all countries would ban it, which seems unlikely, if only because some countries have the incentive to do anything they can to stick it to other countries they don't like. Then it still retains value globally because it can be turned into real stuff in those countries.
The real issue is this: You can't ban it for the "bad stuff" that gets used as the excuse to ban it, because those guys will just break the law, as they already do. You can ban it for innocent people using it for innocent things, but that's just stupid.
Or corrupt, because incumbents don't like the competition, which is the strongest driving force for such laws.
It's not all that long when you think about it.
You don’t outlaw the maths. You outlaw people holding assets in wallets. Courts will have no trouble distinguishing that from a ban in maths.
Your reasoning that it's "the maths" that makes crypto unassailable shows a lack of understanding of how governments exercise power and control. The law does not care about your worldview and geeky conception of the abstract mathematical nature of cryptography—and guess what—they don't have to: it's purely a question of enforceability.
The different between encryption and cryptocurrency is that the former cannot be targeted, but the latter can. Consider the purpose of encryption: to make communication between 2 or more individuals private. This can happen in many different ways, from whispering in ones ear, to using postcards w/ one-time pads. It can't be regulated because there's no stable target, any group of people that needs privacy can rig up their own scheme independent of all others and change it as necessary. The value they derive is directly from the privacy and depends unqiuely on each situation. The only way for a government to defeat this is through oppressive totalitarianism with direct threat of violence and imprisonment.
Cryptocurrency on the other hand has no direct utility other than its monetary value, and that monetary value is a direct function of the global belief in that value. It would be exceedingly easy for a government to make a specific cryptocurrency illegal because the mechanisms are concrete and public—you can't just swap out the maths for a new implementation. In other words governments can outlaw and devalue cryptocurrencies faster than you can establish and build trust in them.
Not that I think this will happen in practice because governments are already taxing cryptocurrency and riding that gravy train as well. But the fact that they are able to tax it is clear evidence that cryptocurrency is not in fact above the law.
Also, unlike drugs and alcohol, Bitcoin is a digital good with no physical footprint, making enforcement much more difficult. With an open-source protocol running on some 12k nodes as well as thousands of miners, most running on Tor - it seems unlikely that a gov could take the network down or even prevent their citizens from participating in the network.
At best, governments could block fiat on/off ramps, pushing bitcoin trading to decentralized exchanges or p2p transactions for trading to/from fiat. There would also be black markets for Bitcoin just as there are black markets for many other things banned by governments.
Ultimately governments banning fiat on/off ramps for Bitcoin could help achieve a goal shared by Bitcoiners of a native Bitcoin currency-based economy. Governments banning bitcoin may even be good for Bitcoin adoption, though it would negatively impact price in the short term.
Governments will successfully ban Bitcoin, just like they successfully banned piracy.
Things like https://thepiratebay.org/search.php?q=category:401 are long gone now, successfully banned.
Think about it - all of the legitimate institutional money would have to divest, all of the loosely interested Coinbase users would sell because they don't want fines/jail, the only way to buy the coin would be with cash because your bank and credit card would report any BTC purchases to the feds...
It would be a much smaller and less liquid market. Bitcoin isn't going away obviously, but that doesn't mean it's worth $50k a coin in the event it's banned.
If it isn't, I'd point out there are still numerous Pirate Bay mirrors I can access.
Either way, I wish it were generally easier to discern which comments on this page are intended literally and which are sarcastic.
In a world where CNC machines were in every house, the same thing would apply re: gun control. People could just make their own guns.
I'm not saying it's a super effective point, but just making sure you get the framing.
This is because you can ban people from buying guns. But you certainly won't be able to stop people from creating their own weapons. Obviously too little people have the capability, but yes, then can.
With bitcoin is more complicated, because trying to control self-custody is basically trying to ban maths. All you need is an internet connection and some google to find software capable of self-custody. Hell, you can do that with excel if you really want to.
So, as hard as trying to ban math.
That would be a shame if the software you downloaded stole the coins from you wouldn't it? Or if your ECDSA implementation in Excel contained a typo and you lost everything.
The only reason cryptography ban in the 90s failed was because everybody in the business world needed to have access to strong crypto for to use security reasons. If people had to roll their own crypto, the NSA cryptanalysts would have had a really fun time because almost all of them would have been utterly broken.
You wouldn’t really need to roll your own crypto to post transactions to the Bitcoin network, a Bitcoin hash is basically sha256 done twice.
Bitcoin uses much the same cryptography that most banks, ssl certs and other internet cryptography use. Unless you plan to memory hole the entire topic of sha256 and bitcoin hash algorithms, it seems unlikely that any government operating on the premise of a citizenry with the right to free speech, could prevent it.
Looks like the parent was talking about rolling its own crypto, isn't it?
Crypto isn’t just math, and it’s subject to law just like everything else.
Where? Not in the USA. And jstark, the guy who made the FGC-9, was rather conspicuously a resident of Germany [0], so it's not like making self-manufacture of firearms illegal made it impossible for him to do so.
0: https://www.thefirearmblog.com/blog/2021/10/12/jstark-passes...
In the USA it is legal to make your own guns.
> The Legal Framework for Individuals: Making a firearm for personal use is legal. Making a firearm for personal use without a federal manufacturing license is legal. This has always been the case, even after the enactment of the Gun Control Act of 1968 ("GCA"). http://freedomblog.skylarklaw.com/2014/10/is-making-firearm-...
Interesting that this came up in a thread about Bitcoin.
Well, that’s precisely my point. You typically don’t ban anything by physically preventing people from doing it.
(Btw, the enormous majority of bitcoin usage already goes through exchanges, just because it's almost the only practical way to use it so I don't really think this law is gonna change anything in itself)
Sending Transactions over SMS is a thing. This may exist today, but I assume in the future bots on WhatsApp will broadcast raw hex/base64 encoded transactions to the network for peers in restricted countries. Policing WhatsApp content is extremely difficult, we have seen in the recent years.
One can restrict the centralized exchanges. One cannot control every communication channel, or prevent every ECDSA signature from being signed.
And it assume you can get this whatsapp proxy from a reliable source because it would be a pity if it was in fact a honeypot run by the government to find you (EncroChat-like).
If someone trusts a WhatsApp bot with their bitcoins, they brought it upon themselves.
1. Not forward the transaction (I can tell relatively quickly by checking the mempool)
2. Doxx me/report me/etc by observing my IP, Whatsapp account name, and what wallet it is connected to.
Besides that, I can put my transactions up on a billboard for all I care.
You mixing things up here, the mempool won't help you since your whatsapp proxy could tamper it. The only reliable thing is the chain itself once your transaction has been inserted in a mined block.
> 2. Doxx me/report me/etc by observing my IP, Whatsapp account name, and what wallet it is connected to.
But when doing direct crypto transaction is a crime in your country, this is a more serious threat than “tampering the transaction” or anything. Going to jail, or being tortured by some gang who want your private key, or both depending how corrupt the police is in that country.
But as I said, this is not what matters: the doxxing part is the deadly threat.
You can tell within about 15 seconds or so if a transaction hasn't hit the memepool. Just look up you wallet on blockchain.com/etherscan etc. It's a standard step that nearly every send/receive UI offers a link after submitting a transaction. These services mark mempool transactions as "pending" before they are inserted into a block.
For example, here's a wallet for Gemini, you can see pending transactions under the "Age" column as they hit the mempool [0]. They are "pending" while in the mempool and then are labeled with a time as they are added to blocks.
I'm continually impressed with how resilient the system is, even more-so after our thread about a hypothetical adversary.
(Again you can run your own mempool service on your own node, and publish transactions to it, but in our hypothetical situation you need to instead issue it out through a Whatsapp channel manually.)
[0] https://etherscan.io/address/0x056fd409e1d7a124bd7017459dfea...
In the case of bitcoin should the public don't use it anymore, the price would collapse, making the current mining unsustainable, and as the mining difficulty declines the robustness of the protocol reduces sharply, especially if state actors start buying the unused mining devices…
BTW, the sneakernet is unsuited for most uses of bitcoin transactions: you don't just want to be able to transfer the token from one address to another. Most of the time a transaction is an interactive process: you send the money and I give you something in return after I've checked that I actually received the funds. This usage simply doesn't work well on the sneakernet, because of the very high latency.
It is sensible.
Properly designed cryptosystems produce ciphertext that is indistinguishable from a random number.
So, at the very end of it all, the possession of random numbers would need to be regulated.
This is unenforceable (of course) and absurd.
The analogy you make to (physical goods) is a poor one. Regardless of how you feel about restrictions on physical items or how difficult they might be to enforce, it is at least plausible that these restrictions could be enforced.
Not so with a prohibition on random numbers.
It's also impossible to tell from a 100 dollar bill if it has been taxed or not, yet taxes are enforceable.
Almost no law enforcement relies on physically preventing something from existing, especially in any kind of automated manner.
So yes, they can't stop people from possessing private keys that correspond to wallets, or whatever, but they can stop banks from working with crypto related business, force google to block results, force ISPs to take down crypto sites, block any kind of crypto app from both app stores, etc etc. Even block foreign sites. Not to mention, jail people who touch crypto.
Not saying they will or that they should, but "crypto is math" is not a relevant argument.
I think it is pure risk off.
I don't remember a time they weren't compromised - https://rekt.news
This all depends on how motivated people are and how readily they will switch to alternatives.
One person selling a few million in Bitcoin can cause a few billion drop in the whole market lol.
I think regulations on leverage would be the best thing for the crypto market as a whole.
You can sign up for an account at an exchange and get 10x leverage without KYC or anything. That's insane.
Or is your point that no one is, and that if enough levered trades go the wrong way, the whole system is at risk?
It causes a domino effect across the whole crypto market because people are using leverage to buy any coin even shitcoins like Doge and Shib.
The only real unique property that Bitcoin would seem to have in the long-term would be its history, especially its initial-distribution that concentrates wealth in the hands of few. And that's not an advantage but a liability: if it went mainstream, most folks would probably just say, hey, let's use some alt-coin instead so we all have more wealth (which obviously wouldn't be true for the minority of people who are Bitcoin whales, but why would the majority of people who aren't care?).
Anyway, just commenting to ask:
> There are several things happening, which is reducing confidence. Of course, as a permabull, I believe that these things are transitory.
As far as I can tell, it's all transitory; that much seems plainly obvious. So if you're a permabull, well, why? What future might you imagine in which Bitcoin, specifically, remains a preferred system? In particular, what reason might you have to believe that a Bitcoin you might buy today would have any significant value in systems 20 years from now?
I'm not even asking for a reasonable prediction, but what's even a plausible best-case scenario? For example, let's say cryptocurrency goes mainstream, and everyone everywhere starts using it -- what sequence of events might lead to Bitcoins available today being relevant in such a future system?
Rather, I'm curious why someone who appears to have followed Bitcoin a bit might self-identify as a "permabull".
I haven't read "The Bitcoin Standard" but believe it addresses some of your curiosities.
Bitcoin is a protocol, primarily, as well as an ecosystem, a unit of account and a new paradigm in digital value transfer. The cryptoeconomic model is to create new coins every 10 minutes until the year 2140. The energy committed to protect the ledger is unmatched, and thus it is the most secure. 8 Million of the 18M coins that exist moved in the last year. I don't think the concentration is quite what people believe. As the years go on, there are less and less large holders. Everyone gets antsy when seeing large swings to their savings.
The development philosophy is one of caution, of incremental and well tested changes. "Only soft forks", as opposed to forced consensus changes by developers (EIP1559 comes mind). Radical changes are rejected and even small upgrades take time to stick. This is a good thing, as the base layer of money needs to be simple, work reliably and be very secure.
I only trust a peer to peer monetary network that I can run myself. Most newer 'next generation' blockchains are for datacenters only. Being able to run a full Bitcoin Core node will remain within the reach of most users for quite some time, hopefully forever.
Inflation is a pressing concern for all countries and people right now. The 'Bitcoin Standard' scenario seems like less of fantasy in 2021. And this is still the beginning, we are quite early!
I mean, we all get why folks with a lot of Bitcoin want it to be adopted: they'd get rich. The problem for everyone else is that they'd be the ones subsidizing that wealth. Which the majority could avoid by just adopting an alt-coin instead.
So why Bitcoin, specifically? This is, in Bitcoin's ideal scenario where it would win out globally and everyone would love it -- even in that extreme case -- why would everyone use Bitcoin instead of starting a new block-chain where they'd get more personal wealth?
Are Bitcoin-HODL'ers basically just praying that the majority of the world's population would just be oblivious to that possibility, choosing to instead buy into Bitcoin at their own loss out of sheer ignorance? (Sorry if that sounds dismissive, just, it seems so far-fetched to me; I don't get belief-system behind it.)
Proof of stake is a scam, and reinvents oligarchies, and introduces systemic censorship and consensus enforcement risks.
You can't clone Bitcoin, the network, the users or the ecosystem.
I've never understood this argument. Bitcoin's first software release is just shy of 13 years ago now, and the whitepaper and related discussions were even before that. That's an enormous amount of time in the technology world. As a comparison, the first iPhone came out 14 years ago, and 13 years before that, you could still buy a brand new Apple II from Apple.
Bitcoin is a protocol, a meme, a way of life (?). "Internet" is TCP/IP. It is a protocol, a meme, and a way of life.
TCP/IP was invented in 1983. SMTP was invented in 1981. The way we TCP/IP and SMTP are used today would be impossible to predict for their inventors.
13 years ain't much in protocol terms :-)
> let's use some alt-coin instead
The problem is that it's hard to agree on which one to use, with 15000 to choose from :-(
My vote would be for the one that doesn't concentrate wealth in the hands of few...
0.67 hashes per day!
Other friend: why was bitcoin up to begin with?
The world population has been increasing by between 1.05% and 2.2% per year over the past 50 years[0]. Remember also that faith in cryptocurrency operates in the same way as the spread of infectious diseases[1], so some previously infected hosts can lose immunity over time and become reinfected.
[0] https://ourworldindata.org/world-population-growth
[1] https://www.theguardian.com/technology/2018/apr/10/bitcoin-s...
I’m not taking a stand on crypto here, just pointing out a logical fallacy, namely, the data is incomplete and we don’t know the future.
And the South Sea company collapse far beyond its founding _definitely_ had ramifications.
"contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels, with the major acceleration starting in 1634 and then dramatically collapsing in February 1637"
Their popularity and cultivation in the United Provinces (now the Netherlands)[32] is generally thought to have started in earnest around 1593 after the Southern Netherlandish botanist Carolus Clusius had taken up a post at the University of Leiden and established the hortus academicusIt didn't for Cisco.
1. Created in 1792
2. Gold standard in 1900
3. Abandoned gold in 1971
Not sure at what point USD was no longer a logical fallacy. If it's the 1971 non-gold-standard dollar to now, then it's exactly 50 years as of now. Or for the full history of the dollar it's 229 years.
You mean Ethereum gas prices almost hit 1k Gwei?
> None of the proposed eips do anything to de-incentivize "surge pricing" in mining rewards during "bank panics".
I'm assuming that you're talking about gas price surges, as gas prices don't directly correlate with mining rewards (since EIP-1559 was implemented).
What sort of mechanism would you propose to disincentivize surge pricing? Block space is a limited resource that's auctioned off, so a naive price cap would come with its own whole set of problems. I have never heard of a fair way to disincentivize surge pricing, but if you have an idea, I would love to hear it!
https://www.nyse.com/network/article/nyse-increases-resilian...
It just means that the backbone has to work even harder to clear the backlog once it's back online.
1559 means that in mad rushes, excessive fees get burned instead of given to miners.
Both of these things help combat gas prices and dampen runaway auctions. But ultimately there’s not a lot you can do to stop people who want to outbid others for faster inclusion, without introducing other ordering rules which are hard to agree on and seem to usually introduce dos vectors.
This “crash” however is unlikely to be the beginning of it.
1. Big institutional investors (Tesla, Microstrategy) pull out or face crashing their stock as well - they bought Bitcoin directly or indirectly with borrowed money https://www.youtube.com/watch?v=st3KJN_DzCg
2. Crypto community panics and claim their money en masse
3. "Satoshi" and other insiders secretly cash out
Since it is mainly a stakeholder manipulated market, regulation had not much impact so far...
As long as the narrative keeps perpetuating belief & demand, it will live.
The crypto community selling out after all the years of "hodl"? I would pay to see that!
Satoshi "secretly" cashing out....what? How could that even happen it's literally impossible for those coins to move. Maybe Satoshi simply sells his private key off-chain, is that what you mean?
1-hr interview youtube video above of Michael Saylor with Fox's Tucker Carlson where he bragged about doing this removed recently- VERY SUSPICIOUS.
El Salvadore needs to be cut off from the world financial markets; or at least USD markets. World Bank and IMF need to refuse to do transact with the country at all. This bitcoin experiment is going to end in disaster.
I fail to see how that would improve their situation.
Some not to be named hedge funds that were very long spot started selling aftermarket Friday to test the liquidity while taking out short positions.
Then when they felt the market was illiquid enough after probing it for a few hours, they quickly dumped their long positions, liquidated the leveraged longs, cashed in their shorts, and bought back into the ensuing panic sell off.
Edit: this is also a great resource to see whales moving funds from their wallets, which telegraphs their trades: https://whale-alert.io/
Also, watch short positions. If you see them ratcheting up when the market is calm and trading is thin, lookout below.
Also this is a great resource to predict these sorts of manipulations before they happen: https://whale-alert.io/
Also, watch those short positions!
Thus it boils down to just some random thing that people have arbitrarily decided has value, like we did with tulip bulbs centuries ago.
This “story” has been told many times thought history and we know how this story ends. The technology is interesting, but the “value” of the coins seems built on a house of cards just waiting to collapse. Although like anything in that space, including tulip bulbs, those that can get in and out at the right time can make a killing while the suckers are left holding the bag at the end.
When the supply of suckers starts to dry up that’s when the value that nobody can explain in real terms starts to become very interesting to watch.
Here's a site that tracks it: https://bitcointreasuries.net/
Again, if you know deeply that Bitcoin is a fraud then this probably just further confirms how crazy wacky the world is and doomed for a fall. I get it.
To me it's something else.
But I don't think the comment was aimed at explaining this specific correction, I think it was aimed at predicting a future, more precipitous fall.
> random thing that people have arbitrarily decided has value
It has value because it's a fixed-supply currency that can't be manipulated like state currencies, allows for near-instant transactions of arbitrary amounts, is open 24/7, gives banking to billions of people who otherwise wouldn't have it, makes it possible to transact with anyone all over the world without an intermediary, and prevents exactly what's happening right now with inflation.
Seems like a funny time to be making the inflation hedge argument. Say what you will about USD inflation, but it's never lost ~30% of its buying power in a month, as Bitcoin has in the past month.
Check out the Lightning network, it's much more about currency/goods/services as a Bitcoin service.
With the possible exception of dark web drugs/gun/murder-for-hire/WHY every case I've seen of BTC being used for goods and services involves dynamic currency conversion. i.e. the price is in, say, USD and the amount it costs in BTC is derived from the USD spot price of BTC.
It's like I swipe my credit card in Japan; the price is in JPY but I pay in USD.
I would be interested to see any counterexamples.
Everything on OpenSea is priced in cryptocurrencies natively: https://opensea.io/
By USD OpenSea's contract transacted an estimated 8% of Amazon's revenues.
To Bitcoin.
When you define the USD as stability, then yes, USD is stable. It seems like circular logic.
Simply stated, purchasing power of $dollar has been going down, consistently, over the last 200 years.
Bitcoin is a more volatile asset but over long term (year+) it's going up.
By a lot.
Hugely.
This might change in the future but the historical performance of bitcoin crushes historical performance of a $dollar.
This might change in the future but as long as we're sticking to the past performance, bitcoin doesn't need defending. It's vastly superior to $dollar.
People trust fiat over Bitcoin because they don't understand economics. In simple terms: given a currency X that can be traded for some fixed amount of resources, the more of that currency that exists, the more competition there is for the fixed amount of resources.
As governments continue to back themselves into a corner by printing more and more money, we will hit an inflection point (multiple historical examples of this) where inflation goes near-parabolic. When that happens, there are a few options: starving people, asset forfeiture (either direct by force or via high taxes), or, the issuance of a "new" state controlled currency (see discussions on Central Bank Digital Currencies for a modern version or the Rentenmark for a historical version).
Those CBDCs (what I think is most likely) will be the same exact grift replayed, but this time, with even more strict controls over your money because the technology enables it (money that expires, money that can be taken from you instantly and permanently, etc).
Why I defend Bitcoin ultimately is that it gives freedom back to people and restores the potential for a real economy (exchanging value for value). Not a debt-based economy where the government steals money from the productive via taxes and entraps the poor with inflation (all the while accomplishing absolutely nothing but more suffering via bad policy).
To not defend Bitcoin means to blind oneself to the reality that they are, in effect, property of their government. They just don't realize it because they're free range.
We don't know that. Nothing like Bitcoin has ever existed. And I'd imagine most people would prefer the short-term uncertainty and pain of reorienting their usage of money over starving or fighting to the death.
If people take off the goggles, they will realize that it's all an illusion. The government is just other people like you and me with access to violence and the ability to indirectly control/manipulate other systems we depend on (e.g., banks, housing, etc). Their ceasing to exist doesn't preclude civilization collapsing long-term; they've just convinced people that it would.
Physical gold?
They can also ban transacting with any wallet that is not publicly registered. Any private wallet becomes, by fiat, illegal for the citizens of that country to transact with.
Thus, any such "blacklisted" wallet is as good as confiscated, since no one can (or will) trade with your tainted coins. Your wallet's coins are, effectively, permanently banned. (It's as if they confiscated your gold and locked it in a vault, never to be used again.)
Perhaps some other blockchain protocol has solved this issue, but Bitcoin hasn't, since Bitcoin wasn't designed with privacy in mind.
And frankly, if they do, they're essentially admitting that they want to enslave you and your complicity with that is tantamount to self-immolation. Why in the world would you do that to yourself (or wish it on others) if you had an escape?
Sure, I could manipulate USD by seizing control of the Federal Reserve, but BTC can be manipulated by tweets from laser-eyes
Tulip Mania - the classic story of a Dutch financial bubble is mostly wrong:
https://theconversation.com/tulip-mania-the-classic-story-of...
The world is transition from oil to other things. Oil gets expensive near the ends of its life tho! ;-)
Things which have none of those properties: cryptocurrencies.
https://twitter.com/BitcoinMagazine/status/14658601494704496...
You can pay for a Starbucks coffee by waving your phone next to a terminal because Visa solved the issue of instant, "virtual" payment that doesn't involve dealing with non-scalable technology of dollar bills.
Building similar overlay instant payment network over bitcoin is obviously doable.
That's the story people tell themselves, not the value proposition. The actual value proposition is/was it's an appreciating asset and FOMO.
Uh... this has been said over and over for the past decade-plus, and yet it seems to already be a viable currency at scale. Unless you want to append a bunch of no-true-Scotsman caveats onto the definition of "currency".
I can't withdraw more than a few K per week with crypto exchanges. How can $300B evaporate just like that?
Valuation was lost. Not actual coins. That works with any stocks...
Don’t worry, the unregulated exchanges can wash trade the prices right back up again. Just don’t be left holding a bag when the USD liquidity runs dry.
Market cap is last price times total supply. Only a few coins are sold each day compared to the total supply so changes in price have a magnified affect on market cap.
For example a blockchain has 10 coins and a fixed price initial sale at 1$ per coin. All coins are sold so the market cap is 10$ which refects the total money sunk into the coin.
But now someone sells their coin for 2$. The market cap is now 20$ but only 11$ we're spent on the coins.
depends on location/country etc. Houses are out of reach for most millenials worldwide and i don't see that changing either
In a thick market, one with many buyers and sellers and lots of transactions happening all of the time, you can be reasonably confident that if you go to sell something you will receive something reasonably close to the current price. In a thin market you may get a very different price when you go to buy and sell.
A persistent criticism of crypto markets is that they APPEAR to be thick but that most of the trades happening are just bots buying and selling on behalf of a very small number of actual participants in order to give the appearance of high volumes and that people will be in for a rude awakening if they ever try to exit out of a substantial position (the price they receive may be a fraction of the current market price, assuming they are even able to find a buyer at all).
I could see this. Somewhere else it was pointed out during this "crash" that it was all off-chain, blocks and mempool were relatively empty, so the crash was on exchanges.
Market cap can change a lot, using very little money, depending on how many units or shares there are.
For example: 1 million MC = 1 million shares * 1$ cost per share
If one person is suddenly able to sell 1 share at 2$, market cap immediately doubled to 2 Million, using only 2$.
If just a few parties trade one-trillionth of an asset at $1, then we say that asset is worth a trillion dollars because we extrapolated. If the next trillionth sells for $2, we’ve just doubled the valuation to two trillion dollars, but that amount never changed hands, and at worst only one person only ever valued the asset above a trillion dollars. If the next trillionth sells for $0.50 all of a sudden we’ve wiped $1.5 trillion in valuation off the face of the Earth but only two dollars and fifty cents has changed hands in this example. In broad terms, that example explains what is going on here.
The $300B that “evaporated” mostly never existed in the first place. The order books are not very deep and the valuation of Bitcoin looks great as long as everyone hodls and refuse to let the price go down- at the expense of trading volume. Once people get nervous and decide they want to try to turn their imaginary crypto gains into real money to cover losses in the slightly less imaginary stock market, the selling price tumbles because there aren’t that many bids at the previous price. So the price moves down without much volume being traded.
Might even make sense to calculate how much is on cold wallets of known entities and then add to those how many actual coins have moved in let's say in year. Then multiply this number by price to get more realistic idea of market cap.
And yes, same is true for the stock market. Everything is made up. Nothing is real.
If it dropped to zero it wouldn't mean any bitcoin or USD disappeared, just that no one wants to buy it; mathematically everything still adds up.
The 300B number comes from market cap. Take the current price of BTC, multiply it by the number of BTC, and call that the value of bitcoin as a whole. But that's just an overly simple guess to the total value, not a mathematical fact.
Reality is of course more complicated: Imagine the BTC market as an order book. Maybe there's 10 people with an order to buy for 6k or less, 3 people with an order to buy at 5.7k 5 people with an order to buy at 5.5k or less, etc.
Then if someone sells 18 bitcoin they'll get 6k for the first 10, 5.7k for the next 3, and 5.5k for the rest; while causing the price to lower from 6k to 5.5k. Since there's way more BTC than this hypothetical person sold, it causes the market cap to lower much more than the amount of money they made.
And of course this too isn't static in the real world. Some people may sell when they see the price going down, some people may _buy_ when they see the price going down, and general unregulated chaos.
At the same time however you can't outright move a bunch of money off an exchange unless your account is rated for that. I don't particularly move a lot of value in cryptocurrency (I'm not remotely close to wealthy, just a SWE in an east coast, non-FAANG job) but I have a 250k USD daily withdraw limit on my exchange account.
At least on my main exchange, if you set up certain security restrictions(2FA, wallet quarantine periods, etc), do KYC, and have an active account for X duration in time, you get larger withdraw limits and access to higher trade volume tiers. It's all about how much risk you present to the exchange and the associated financial organisations. I represent a very low risk level (I'm very boring and generally risk adverse) so I get access to pretty high withdrawal and deposit volumes. I don't leverage them but if I wanted to I could.
Many other assets are merely priced in bitcoin and their dollar value can fall without a single trade occurring. This needs to be fixed sector wide.
And finally, people have unlimited withdrawal limits to fiat or crypto from exchanges. You need to convince your exchange to raise yours or get another exchange. OTC desks have no limit which is what institutional traders use.
These can differ greatly.
If I buy one Bitcoin on the market for $1, and then another Bitcoin on the market for $100, I now have two Bitcoins, with a market cap of $200, which I only paid $101 for. It's like $99 just appeared out of thin air! But that $99 might disappear again when I sell my bitcoins. After selling one of them, the market price might plummet back down to $1.
When someone on your street sells their house for $1 million, the paper value of the neighbourhood might shoot up by $10 million, just from all the nearby houses being revalued at that latest price, despite only $1 million actually changing hands. The same can happen in reverse, too.
Note that this applies to all asset classes, although many asset classes do have some rules of thumb that can indicate if the current market value seems overvalued or undervalued. (It should be noted that as of late, these rules of thumb suggest that many asset classes range from "overvalued" to "holy hell, where is this valuation coming from‽").
Bitcoin is somewhat unusual in that many people invest in Bitcoin primarily, if not solely, expecting to make money only by selling it off to somebody else later for a higher price--holding Bitcoin doesn't offer any kind of dividend like holding money in stocks, real estate, bonds, or even the miserly rate offered in a bank account. Thus, compared to other assets, you should be extremely skeptical that the actual "total capital basis" has any close relation to the market capitalization. (I personally suspect that the market capitalization is several multiples of the "total capital basis", and I suspect there's even less money sitting in the cryptocurrency ecosystem than even the "total capital basis").
I'm something of a collector of bullshit hype tech
not that bad...
There is nothing mysterious about Alameda making money from it triggering margin cascades.