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Comment by rfd4sgmk8u | Hacker News Reader

There are several things happening, which is reducing confidence. Of course, as a permabull, I believe that these things are transitory. Here are some more macro events that are worth considering. BTFD

* 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.

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> trying to make math illegal

This is a non-sensical but very common expression from crypto-bros. It's like saying that gun control is to "make steel illegal".

I'm not a crypto-bro. The crypto(graphy)wars of the 90s were doomed to failure. Restrictions on cryptography were ultimately about controlling algorithms with certain sized inputs. Its trying to make some math illegal. It seems nonsensical in 2021.

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 banning crypto-currencies. Making the on and off ramps too hard for majority is a real possibility on other hand.

By that logic, there is no banning murder.

Getting away with murder isn't exactly simple. I think majority of cases are found out eventually and then there is whole process. So there is point banning it as it clearly results in less murders.

And banning cryptocurrency could be done just as effectively. If exchanging US dollars for crypto was illegal. The value would drop overnight because most of the investors would not be interested in doing something illegal.

Unless people will eventually do without on and off ramps.

That's reductio ad absurdum ... a logical fallacy. It's like saying restrictions on digital child pornography are doomed to failure because they're about controlling certain bit strings. But as it turns out, people involved in that kind of stuff get identified; get arrested; go to prison; and society abhors and rejects their behavior.

I don't think reductio ad absurdum is normally considered a logical fallacy? Maybe it's more like the fallacy of composition.

You're right; it's only an informal fallacy; my bad!

It's not a fallacy of any kind. It's a form of logical argument. If A implies B and B is absurd then A is absurd.

Whats the fallacy called when CSAM is used as an argument by authoritarians wanting to ban math?

I have literally no idea what you're talking about; but the fallacy that's about implying someones argument is bad because they're a bad person is called ad hominem, HTH HAND.

I think you do. It's appeal to emotion, and appeal to authority. HAND

Do you not think it's possible some people genuinely don't want children to be assaulted, and perhaps (in some cases) care more about that then they do about the sanctity of mathematics or whatever? Perhaps I'm naive but it seems likely to me that there would be a lot more people like that than people who are cynically utilizing the CSAM argument to pursue a deep-seated loathing of mathematics.

Anytime somebody tries to illustrate the futility of banning math, they are confronted with this argument. It is the same argument that has been used for DECADES at this point to continuously erode digital freedoms. There are countless memes documenting this through the Internet ages. https://en.wikipedia.org/wiki/Four_Horsemen_of_the_Infocalyp...

There is no good faith outcome that can continue from this, it shuts down the argument.

Good day.

Well, I'm suspecting "CSAM is used as an argument by authoritarians wanting to ban math" wasn't really a good faith argument either. Either way good day to you too.

Restrictions on digital child pornography do seem doomed to failure. It's why the FBI et al keep asking for backdoors and anti-encryption, and why Apple is adding CSAM scanning on device.

You're missing the point. How many people would be "doing cryptocurrency" if it were as strong regulated against as child pornography? Some minuscule number, I would imagine; at which point how interesting or useful would it be?

You don't have to drive something to zero to restrict it successfully.

Hmm good question.

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.

> 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.

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.

Historically, US destroy any countries that dares to undermine USD. Given China now is on board, US has no stronger military opponent to crush. Russia is already very muted. That SAmerican country using crypto officially will see something happening soon. May God has mercy on their souls.

Historically = over the past 80 years since World War 2.

It's not all that long when you think about it.

Is this really a proper analogy? Child pornography is the content and the internet is the medium. For what OP is talking about, cryptography is the medium, not the content. We're moving towards banning the medium here, and what types of legitimate content enabled by it will we be throwing out?

It was nonsensical in 1995 as well, and Gore’s key escrow bullshit cost him some votes. As you can guess I’m still salty about that.

> Its trying to make some math illegal.

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.

Efforts to control cryptocurrency may be doomed to failure but the reason would be because a critical mass of rich and powerful people own them and thus will not allow them to be de-valued.

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.

I don’t buy the position that government bans automatically cause the market price to crash. See marijuana, alcohol, cocaine, heroine, etc. None of those saw market demand, nor price crash.

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.

Similar style of argument that was used for piracy back in the day. It's just copying bytes.

I thought pirates were people who violently boarded ships, killed, ransomed and/or sold those on board and stole the ship and its contents.

Yes, just moving items from one place to another. How dare they make that illegal.

Exactly.

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.

You can easily imagine a situation though where the government bans crypto and as a result, Bitcoin crashes irrecoverably and trades for maybe a few hundred dollars a coin at best.

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 this is sarcasm, then I'd point out that link doesn't work here.

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.

Oh, yes, very successfully.

This point is meant to be more about the futility of making Bitcoin illegal because it's just math and code. Similar to how strong encryption was an "illegal munitions export" from the USA in the 90s.

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.

I guess the comparison breaks down when it comes to usability. If you could make a gun and bullets at home there’d be nothing stopping you from using it. But if India bans apps that allow you to pay with Bitcoin then it becomes a far less viable proposition.

How can you ban an app? Another way centralized app stores can backfire!

Anyone can make their own alcohol at home, without any kind of expensive machine, but in many places that's quite successfully outlawed.

I think a better metaphor to gun control is "trying to make physics illegal".

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.

Haha yes, banning physics is the perfect metaphor here!

> 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.

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.

> 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.

> Hell, you can do that with excel if you really want to.

Looks like the parent was talking about rolling its own crypto, isn't it?

Its also illegal to make weapons yourself. “You can’t prevent it” is a silly standpoint to argue from. Should you make it legal for American school children to shoot their classmates simply because apparently the country can’t prevent it? No of cause not.

Crypto isn’t just math, and it’s subject to law just like everything else.

> Its also illegal to make weapons yourself.

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...

The link seems to disprove your point, the police raided his house.

The point above was that even in the case of making something illegal, it doesn't stop people from physically doing it.

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.

> The point above was that even in the case of making something illegal, it doesn't stop people from physically doing it.

Well, that’s precisely my point. You typically don’t ban anything by physically preventing people from doing it.

Ah ok. Seems to be some misunderstanding with words.

The point is that typically when you make something illegal, it is still physically possible to do the thing that is forbidden. That's why it's not at all strange or unusual to ban this very particular usage of "math".

Yes, this is missing the point that bitcoin isn't only about “Math”. Bitcoin is a peer to peer protocol even more than it is a cryptographic protocol. If you have a private key but no access to the peer to peer network, you're not gonna do much with your bag of bytes.

(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)

I would say that as long as there is a communication channel provided to a person, they can interact with the bitcoin network. That is the great invention, a boring grey (digital) metal that can be transmitted over a communication channel. Plaintext channel level censorship can be circumvented by encryption and steganography. The blocks can be received by satellite today.

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.

Having full node connected to the chain through some whatsapp proxy is making exchange-less bitcoin usage even more cumbersome and dangerous than it already is.

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).

> 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.

If someone trusts a WhatsApp bot with their bitcoins, they brought it upon themselves.

It sounds like you may be missing some parts of how it works. A "transaction" is just a short string that includes a signature. It's impossible to manipulate or change. Therefore the only adversarial things the WhatsApp bot can do are

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.

> 1. Not forward the transaction (I can tell relatively quickly by checking the mempool)

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.

How can Whatsapp tamper with my transaction without my private key?

Not Whatsapp themselves, the proxying bot. And I'm not talking about tampering the transaction but the mempool (or at least the view you have about it) to make you believe they've forwarded the transaction.

But as I said, this is not what matters: the doxxing part is the deadly threat.

Re #1: Not forwarding the transaction.

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...

If they wanted to make P2P protocols illegal, they will have to ban E2E encryption, I could be running the bitcoin protocol over Signal/Telegram/WhatsApp/HTTP. I could be transmitting signed transactions over the sneakernet over the border to a land where bitcoins are free North Korea style.

They can make it illegal and call it a day. The successful crackdown of BitTorrent usage is a good illustration of that. The protocol is still here and you can use it, but the general public doesn't anymore. In the case of torrent, it causes seeding issues and severely limit the availability of non-mainstream stuff (finding non-Hollywood movies is hard for instance).

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.

"This is a non-sensical but very common expression from crypto-bros."

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.

> Properly designed cryptosystems produce ciphertext that is indistinguishable from a random number.

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.

That's a long list of things that looks hardly any different today than it did yesterday; unlike the price of BTC.

I don't get why someone would think that Bitcoin would have long-term viability. Seems like it's more of a question of when/how it'll fade out rather than if.

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?

This seems like a massive question outside the scope of what this thread can deliver. Recommend reading "Mastering Bitcoin" by Andreas Antonopoulos!

Reading a pop-culture piece won't help; I get the technical stuff.

Rather, I'm curious why someone who appears to have followed Bitcoin a bit might self-identify as a "permabull".

Ah okay! Well, in case the OP doesn't respond, and because this is a much larger question, perhaps there's another book that fits the bill.

I haven't read "The Bitcoin Standard" but believe it addresses some of your curiosities.

I can explain a few points for a long term view.

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!

But why not a random Bitcoin clone?

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.)

Ahh. Its the energy consumed and security provided by Proof of Work. Anyone can fork the bitcoin source code. (thousands have). Anyone can fork the ethereum source code (handfuls have, and some are quite successful so far: BNB, AVAX, MATIC and TRON are all examples of this).

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.

The majority of bitcoin movement happens on exchanges, and there's good evidence that a large proportion of exchange transactions are just wash sales, aka people transferring funds to themselves

> And this is still the beginning, we are quite early!

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.

iPhone is a product.

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 :-)

Internet isn't TCP though, it's _just_ IP, and there's two internets, some computers have access to one, or the other, or both.

> 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.

> 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...

If, say, India makes the apps illegal, some people will find them anyway, but they won't be as popular. (And they won't run on an iPhone.) This will give other kinds of financial apps and investments an advantage.

This all depends on how motivated people are and how readily they will switch to alternatives.

These are all good and totally valid points but in the end I don't think they explain why crypto is down.

I think it is pure risk off.

I mean I'm sure that's right in some sense; when the only trade is the momentum trade it only takes a small amount of change in sentiment to trigger these kind of large moves. I guess? I just don't understand at all what the structure of the bitcoin market is supposed to be.

I think the biggest problem with crypto is leverage. Over 2 billion liquidated in 12 hours. This is how a normal 5% drop turns into a 20% drop.

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.

Who is covering that credit risk?

Or is your point that no one is, and that if enough levered trades go the wrong way, the whole system is at risk?

Pretty much. Most exchanges will automatically sell your position at market price if you reach a certain percentage of margin. That how you get the massive dips that get bought very quickly. You have tens of thousands of Bitcoin being sold at market price.

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.

Enforceable just not 100%. If they take out main investors, crypto will have a cap that will be way lower than now. Then control gpu where enforce gpu to stop working if it detects crypto usage, a bit like printers unable to print money. Next, stop all exchanges making crypto has no monetary exchange capabilities other than another crypto. Drive all crypto activities to underground and send in the law enforcers as hound to send ordinary citizens to mandatory 10+ years jail term. With math, you just need a pencil and some papers. With crypto you need gpus, electricity and exchange. You do the math how easy to crack down on crypto miners.

Bitcoin mining can be done with pen and paper: http://www.righto.com/2014/09/mining-bitcoin-with-pencil-and...

0.67 hashes per day!

* Custodial Bitcoin loaning service reported losing (wrapped) Bitcoin when defi platform was compromised.

I don't remember a time they weren't compromised - https://rekt.news

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