How much money flows into crypto each month?
tomtunguz.com
tomtunguz.com
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.
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."
There's plenty of domain specific information I'm missing regarding cryptocurrency and I welcome discovering more. But when it comes to dealing in definitions -- examining what things are -- I'm plenty happy to continue to go to bat for observations that flow from relevant definitions: where the crypto-supporting bullet points tend to pile up around removed review/accountability (as with KYC) that seems likely to be more fertile ground for scamming, and where they pile up around reinventing existing functionality with marginal-to-questionable improvements (as with international transactions), it's easy to wonder if it's hype.
And when evangelism gets extra aggressive or resorts to tactics of high-control social groups, that doesn't help.
Ok, so by your definition cash is also a scam then too because it enables transacting without KYC.
Crypto benefits way more than just scammers. A non-significant portion of the population doesn't have access to banking. Not every country has the blessings of a stable currency, freedom of capital movement, and a sane government. Crypto enables borderless transactions and collateralized loans with low fees without being dependent on a country's institutions. In countries like Argentina that've experienced hyperinflation and bank runs, nobody has trusted banks and their Peso for a long time - preferring to hoard cash and deal in cash transactions, even for house purchases [1]. To Argentinians, crypto is a huge boon. I'd imagine the same in countries like Venezuela and Cuba.
Crypto also enables decentralized anonymous voting, decentralized autonomous organizations (DAOs), and decentralized finance (eg. trading, lending + borrowing, insurance). In 20 years I'd bet we'll see elections run on the blockchain with zero knowledge proofs.
Sure there are downsides as well, but it's tiring seeing shallow comments on here dismissing crypto as a "scam" despite the real value it's bringing to peoples' lives. Crypto is much more than just Ponzi schemes and ape NFTs.
But AFAICT it's not accurate, and KYC checks exist to prevent other forms of illegitimate activity (e.g. loan fraud associated with identity theft) which fit pretty neatly inside most definitions of "scam."
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.
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).
There's never a net movement in one direction.
In other words, you can't create or destroy USD (for example) through a cryptocurrency. You can only affect the cryptocurrency itself. Otherwise we'd have a large problem on our hands...
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.
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.
Everyone keeps saying they are printing but no one has the proof. Even the New York AG investigated Tether and just gave them a slap on the wrist
https://www.bloomberg.com/opinion/articles/2021-10-07/matt-l...
This is presumably true for stablecoin deposits too. But what banks are they using? What assets end up changing hands?
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
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.
None of us are posting about it on Facebook though.
A better measure might be percent of total yearly investment that goes into crypto, since we’re talking about inflow. I’d put that at around 20%, with the other 80% going towards retirement and socks/etfs
You decide this based on what? If people can waste money on lotteries, this is no different.
Not to mention the artificial nature of NFT “scarcity” or the physical aspect. If you buy a Picasso you buy something that one of the greatest artists of all time made with his hands.
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.