The crypto crisis has created an advertising vacuum
digiday.com
digiday.com
Seriously, during other crashes, I remember thinking of the real negative externalities that happened during the crash, e.g. many economists have drawn lines to the current housing supply crunch due to underinvestment after the Great Recession.
I don't feel any of that now. I primarily feel that a bunch of grifter scams are finally getting washed away, and then what you're left with are products that are searching for use cases where they aren't worse in every way than currently available products.
It’s odd to look prices dropping to 1/3 and think thing things could get a lot worse or it could turn into just another blip on a larger upwards trajectory.
Which is just one of the reasons why it's a bad store of value or medium of exchange.
I suspect that most retail Bitcoin holders bought it last year and are down 30-70%. The people who post on HN are very much outliers, having known about Bitcoin for a decade. The real retail volume in 2021 came from relatively uninformed people buying their first crypto.
Also, there are the publicly listed corporate whales. Tesla has 42,000 Bitcoins bought at an average price of $31,620. MicroStrategy has over 130,000 Bitcoins bought at an average price around $30k as well.
Public company accounting standards require these companies to mark down their crypto holdings regularly, so it seems that Tesla will be booking a roughly $420M loss for the past quarter, and MSTR has lost a whopping $1.3 billion. (I'm sure Musk appreciates that the loss is close to 420 though, even if Tesla shareholders don't.)
That said, clearly a lot of people are underwater.
I mean, ~everyone who believed the crypto ads that the article is about did, for a start.
I would assume it's far from done unravelling yet, though. Another dubious crypto HYIP seems to go under every few days at the moment.
The real destructiveness of crypto is the other ideas that have been starved for oxygen during this bubble. I am glad it looks like we are beginning to move on.
I always think about this when I see people rail against short sellers, as if the whole idea of betting against a company is morally wrong.
Short sellers are one of the only checks against overly inflated equity prices. If the only people allowed to participate in a market are the believers, you are going to get a very distorted view of the actual value of assets.
For the market to do its thing, you need failure.
The real destructiveness of business as usual.
“When a man’s salary…” is how the saying starts.
Don’t underestimate what can come still. Based on the high price to equity ratios in the stock market, it is likely that the "correction" will correct more. This is also in line with the recent rounds of layoffs. Crypto going down first makes sense due to the amount of speculation. I‘m really curious whether we‘ll get a Lehman Brothers moment in 2022.
Please don't create accounts to break HN's rules with.
People have such a hatred for crypto they are overjoyed to celebrate a crypto crash. They were annoyed people they disliked were getting rich and now feel “vindicated” the bubble is popping.
But…have people actually looked around? Airbnb stock is down 80% in the last 6 months. Netflix, Twilio, DoorDash, and many many other companies have taken a similar beating.
Bitcoin has actually done much better then most of the tech stocks, especially if you look at a 2 year chart.
Amazing to see all this gravedancing when the crypto crash isn’t a crypto crash at all but a speculative asset crash and most of our jobs fall into that category.
Another funny dynamic is many pro-crypto subreddits hate NFTs but similarly we’re seeing gravedancing over monkey JPEGs even though the bored apes have held up better then many “serious” crypto projects.
My point is that people want confirmation bias for their narrative. And they are overjoyed to celebrate crypto crashing to extent it confirms their narrative it’s a big Ponzi scam that was due for a crash. But they seem less eager to be intellectually honest and work in the rest of what’s going on into that narrative.
If bitcoin falling 60% proves it was a scam what does Airbnb falling 80% say about Airbnb. And I know your answer will be they have a business model with cash flow. But these are all “a priori” assumptions. The crash is viewed in a different lens based not on evidence but on what we believe to be true beforehand.
Tech bros celebrating the death of crypto bros are knee deep in the icey waters of the Titanic sinking celebrating the guy whose shoulder deep as they both continue to sink, but due to preconceived notions refuse to realize they’re all about to drown from the same iceberg crash.
Different because shares still give you a part of a real business and equal because it showed that money was too cheap.
I'm not anti crypto just because, I have plenty of good reasons.
And no real cryptobro was able to convince me with good argument s otherwise.
Of course the share prices General looked weird that's why I didn't invest last time I wanted to.
If you really wanted to see someone argue that position nobody-but-you brought up, here you go: https://youtu.be/XpH3O6mnZvw
It might be as bad, shallow and devoid of value as any other Ponzi scheme of Tulip Mania, and this is sentiment I have about it, but this is not proof.
What if the haters are too biased to see the real value of the so-called "blockchain"?
Only History will tell.
We've had more than ten years of crypto/blockchain history already. We don't need more time to tell -- we have many years of it already being awful. History is already telling us.
I think it's reasonably skeptical. There is a balance here.
> People have such a hatred for crypto they are overjoyed to celebrate a crypto crash. They were annoyed people they disliked were getting rich and now feel “vindicated” the bubble is popping.
I like crypto and even I am rooting for the crash. There is simply too much hype and investment in useless projects, it distracts from the actually useful crypto projects, and is generally bad for the development of cryptocurrency as a whole
But I think we will see increased adoption of less decentralized and anonymous systems like GNU Taler or Nano for micropayments, which are generally lower-risk and hinge more on per-transaction fees. I think that is the "real" use-case of cryptocurrency besides buying drugs on the DN- to serve as an micropayment/spam-prevention system and an alternative to advertisement-based funding for websites.
Output obfuscation is a really useful feature, but it comes at a pretty great cost of bandwidth. I think this area will continue to improve in the future.
Of course I am aware of my strong bias, I don't think I will ever be neutral on this subject, but it does not matter as this bias is only affecting my personal decisions.
Is it even possible to build a neutral judgment on this thing?
Celebrating that bad things burn when good things burn for the same reason (economic downturn) seems like it’s either uninformed or a coping strategy.
That said, if you did want to use tech stocks as a comparison, Bitcoin is the flagship asset of crypto, and meant to be the most stable (deflationary etc.) so more akin to Apple. Apple is essentially flat over the past year.
It’s not, but “reality catching up on speculative, excessive growth” isn’t purely a cryptocurrency thing; they’re just so much a symptom of everyone wanting in on that tech stonks that only VCs could afford.
It’s funny how “the Uber of X” was an admirable description, considering that whole economic model is being questioned right now. Perhaps it just wasn’t the case that Uber was the Uber of Uber.
The second is the collapse of a bunch of crypto schemes (yield farming, leveraged funds, black box firms etc.). These two things are fundamentally different.
Focusing on the first one only since that's what crypto adherents seem to defend with the "it's just like tech stocks" claim (putting aside that crypto was supposed to be different than stocks, and deflationary), what I haven't seen them explain is how "excessive growth" would even be defined in a crypto asset. In stocks, I can point to a price-to-earnings ratio or a price-to-sales ratio to describe how a business is trading far beyond a value that even has hopes of being realized. In Bitcoin, or even worse some shitcoin used for nothing at all, what can I use to distinguish between "excessive" growth and appropriate growth?
There is a critique that can be made of the stock market that it is essentially a speculative game largely divorced from the underlying business fundamentals, and that crypto assets are just a pure form of speculative capital chasing returns. I don't think that's really true though, because stocks do seem to show significant correlation to the underlying business performance. That's why Apple is flat YoY while Airbnb is down 60%.
> In Bitcoin, [...] what can I use to distinguish between "excessive" growth and appropriate growth?
I suppose it depends on what you think Bitcoin is.
It sounds like you think it's a stock.
The SEC thinks it's a commodity.
Clearly it was intended to be a currency, although a very gold-like one.
https://journal.bitcoinreserve.com/can-we-calculate-bitcoins...
[...] researchers determine bitcoin's value based on its use in the following "addressable" markets—areas in which the asset can find the most use:
The unbanked, Tax evasion, Remittance, Online transactions, Store of value, Micropayments, Reserve currency, Offshore accounts, Medium of exchange
Reserve currency counts among bitcoin's many capturable "markets." Arguably this market is one in which bitcoin could wholly dominate—by becoming a global reserve currency.
(...the article goes into more depth.)
> There is a critique that can be made of the stock market that it is essentially a speculative game
Stocks have clear utility:
You don't have to own literal grain to be invested in our food supplies.
And you can hedge some of the risk of literally owning grain to people with money.
Whatever the underlying value of an asset is, the asset itself provides ability for hedging, which itself is valuable.
Still down a lot, but not quite 80%.
This doesn't accurately reflect the source of my opprobrium, or many other commenters here. I don't particularly care about whether cryptocurrencies make people stinking rich. I care that they're terrible for the planet, morally and civically corrosive, and have hurt people that I care about (in the forms of scams, lies, and false advertising around returns).
As far as I concerned, many (but not all) of these critiques apply to the last 15 years of startups as well. The proximate causes might be slightly different (adtech and cheap VC money), but the outcomes are very similar. So you won't find me dancing on one grave and sobbing over the other. I'll be practicing my Hopak[1] instead.
Bitcoin itself isn't a scam, in fact it has (or had) really ambitious goals. But the dynamics in the last years are quite scammy because not many things are bought with BTC. Maybe PoS will bring something new
I have however reliably found that the HN crowd has rarely been emotional in arguments regarding crypto. For some reason, the anti-crypto arguments being thrown around here have been very convincing, and the pro-crypto arguments less so. But no one here has “silenced” anyone, it’s a public forum.
However, if I were in crypto, I would be extremely worried that one of the biggest tech communities, with “hacker” in the name isn’t really on board with crypto.
That's a horrible timeframe to look at because you're really just looking at the covid economy. The 20% drop in the S&P 500 is the meaningful number for the broader economy.
Only if you look at the 2-year chart (or longer). That includes the tail end of the Tether-fueled market manipulation drive, and at longer scales the entire speculative boom.
Anyway, why are you so concerned about people being "anti-crypto"? You seem to think that everyone makes value judgements based only on how well something performs financially.
That might be relevant if you are an investor. But I am sure there will be more services like AirBnB if it fails, as the concept is sound. Cryptocurrencies on the other hand have certainly enjoyed their time in limelight for a while already, but have failed to deliver any meaningful mass market products (if you discount investing - which is indeed exactly akin to buying AirBnB stock without ever going on a holiday.)
I think celebrating this “crash” is primarily driven by the cryptocurrency community being so insufferably obnoxious to promote their self-serving agenda (“Have fun staying poor”). There’s a natural desire to celebrate the downfall of a community that has been exhibiting such a condescending superiority complex during this run.
I suspect that suicide rates, other wider societal effects, etc are higher with cryptocurrency because (in addition to other factors) it becomes the entire identity to most people in the space - hence the obnoxious Thanksgiving crypto bro archetype.
For these people the crypto crash is more deeply felt because I’m sure for many of them it’s about much more than the financials. They take it really personally to the point where it can strike to the core of who they are. This is especially dangerous given other than constantly hawking their favorite coin they are handing a significant portion of their well-being to a market they have absolutely no control over. Scary.
They also tend to be risk seeking to the point of desperate/reckless, inexperienced, easily influenced, generally unsophisticated, etc. It’s the shoeshine boy giving stock tips. I also think that due to the volatility it likely attracts legitimate gambling addicts at a much higher rate (and the resulting jump in suicides and shattered lives).
I can’t recall it being common to post suicide hotline numbers on various forums, etc when a stock goes down 80%…
If I’m doing any grave dancing at all it’s due to the most obnoxious of them just finally shutting up about crypto. It gets old so quickly.
I have a contact on LinkedIn who is a high level executive at a crypto company you’ve heard of. His activity on LinkedIn is the most childish, obnoxious, and often times offensive I’ve ever seen from a professional in a professional setting. It blows my mind this is how he conducts himself in public on a professional social media platform.
His conduct along with activity, stories, interviews of other major figures (think SBF-types) adds yet another data point on just how far blockchain is from real relevance to the general public.
I keep thinking - if an executive at that level from a bank or any non-crypto related financial anything made these posts they would be fired more or less instantly. This guy was promoted to his current position a few months ago.
He went from at least one absolutely ridiculous FOMO/if you don’t buy in you’re a moron/have fun staying poor post daily to first disappearing for a week (likely managing fallout) to now occasionally posting some lighthearted saying maybe once a week or so.
Humble pie.
Even though I essentially can’t stand this person (and many like them on Twitter) I find their personalities and activity to be a really interesting observation into the space.
I had to work extra hard to try and convince family members to not sink their hard earned savings into it, and worried that the hype train would affect many I knew when it actually did crash, during one of the worst economic periods in recent history...
It did crash hard, despite how many promises were made. NFTs also were proven to be insecure. Web 3.0 was based on totally fraudulent claims by opportunistic people... That is why people are celebrating the current peril it is in, and also why no one accountable ever really wants to step up and own the failure of it all.
Not all these projects will survive, 90% of crypto projects will die, just like the 90% of these startups failing and the fact that we are seeing the many projects and startups getting wiped out in this crash, like the dotcom crash we will see the projects that have utility continue to survive this crash.
Like in the replies to your comment, many of the angry anti-crypto folk continue to fall into the absolutism trap and the only absolute that exists: is none. Just look at the free software-foundation, after 37 years of fighting the likes of Google, Microsoft, Facebook, etc of trying to get rid of all non-free software, it has completely failed and the tech bros have hijacked the point of open-source. It has gotten so bad in that realisation that there are now tech bros that are branded as 'traitors' in this noble conquest of ridding all non-free software.
Now the tech-bros are screaming at destroying all crypto-projects towards the crypto-bros. Destroying 'all of them' doesn't seem to be going well for them and they are no better than the crypto maximalists in aiming for this goal.
The fed rate is still under 2%, it was 2.41% in March of 2019, there's still room to continue to take the punchbowl away.
Gas prices are still high and inflation is still pretty much on a tear. It took a bit of a pause but $110/bbl oil is still quite high.
This is not even a recession yet.
At the same time though the fed tacking on 50 and 75 bp rate hikes and talking about how they want to puncture the housing market sounds like we're definitely going to have one. And I don't think that is just all talk since we've seen actual increases in real labor costs, unionization and a large overhang of jobs, along with worker sentiment towards job hopping and zero job loyalty.
So I very much think we're only at the start here. The Fed is going to continue to jack up rates until something(s) in the real economy significantly pops. And Zuckerberg and Musk have been talking tough-economy talk and they're likely bellweathers for what the CEO/billionaire class is thinking.
I don't think we've seen the crypto crash yet.
When (not if) Coinbase pops then I think we'll be in the middle of it.
No, I was annoyed that people were being scammed. The bulk of this crypto advertising was aimed at selling extremely dubious products to normal people who had no idea what they were getting themselves into. If another crypto ad is never placed, the world will be a better place.
Maybe not. Most of crypto works like a Ponzi scheme. Gains to early investors come from later investors. Eventually, you run out of suckers. We're there.
Last 24 hours:
- Someone pulled another $160 million out of USDT. Look at their market cap graph for the last 3 months. Every few days, somebody pulls out another $100 million+ amount. Pretty soon you're talking about real money.[1]
- Vauld went bust.[2]
- The Celsius collapse is affecting Aave and MakerDAO.[3]
All those "staking" schemes are based entirely on a "line goes up" assumption. All they are doing is feeding funds into some speculation.
[1] https://coinmarketcap.com/currencies/tether/
[2] https://news.ycombinator.com/item?id=31974146
[3] https://cointelegraph.com/news/maker-cuts-off-aave-s-dai-sup...
Same with the unlicensed and unregulated exchanges that they do business with. You want out? Take a number and get in line.
If I had a large amount of USDT I would get out right now and wait for things to settle down. There’s no upside, it’s all downside right now.
Wonder what will happen tomorrow when everyone is back at their trading desks and dealing with the collapses over the holiday.
Or another way, if AAPL went to $0 and I bought up all the shares, it still prints money, and I could tell the board I want a dividend. It has some amount of intrinsic value in extreme situations. If I own all of some cryptocurrency (and maybe I do!), there's no way to extract value without finding a sucker to sell to.
A company exists to pay dividends, and its value is the present value of all future dividends. That's the classic view, and it was the normal pattern for companies until the 1970s or so.
Two things changed. One, bankruptcy became less painful. "Secured creditors" became a more general concept. This meant that banks and bondholders moved up in priority, at the expense of unpaid vendors, customers with deposits, and others who never wanted to lend money in the first place. This paved the way for Michael Milken and the junk bond industry.
Second, interest and principal payments on debt are not taxed, while dividends are. This makes debt more attractive than equity as a means of obtaining capital. A high-interest loan with the strong possibility of bankruptcy is effectively an equity investment but is taxed as a debt.
This combination has warped capital markets out of shape. It's why there's "private equity", which is essentially a leveraged buyout. It's what powered the financialization of everything.
Why? Because money was taken out to pay the electric companies for mining, to the tune of 10-20Bn so far.
Has that money generated real returns anywhere? Nope. Nothing was manufactured, created, or improved.
The sum is negative. All past and present holders of crypto, on net, are down 20bn -- and havent yet realised it.
Snowden and Navalny were funded via BTC.
Those that disagreed with the small block Bitcoin plutocrats moved to other projects, mainly Ethereum.
Sure, if you can exchange coins for goods consistently, then the value of that basket of goods is the value of the coin.
ie., take a BTC and go to every store, across the economy, and exchange it for goods. Do that until you've spent all the BTC. Divide by the number of BTC, and that's a reasonable estimate of the value.
However, since you can't do that... and, indeed, doing anything even remotely similar would immedaitely crash the price... there's no basis on which to value crypto. There doesnt seem any rational basis on which anyone would trade 1 BTC (etc.) for anything.
The only reason BTC has a nominal price is that it can't actually be consistenly exchanged, by holders, for goods; and holders are strongly discouraged from doing so by its deflationary design.
Were such opporunities actually presented, tomorrow 1BTC would buy a car, next week a vodka, the week after a pack of gum
Additionally, the tokenomics of monero are somewhat inflationary as of last month, they've activated a constant block reward.
The development of BTC as a payment system are very complicated. There was a long period from 2017 where you've had two competing mechanisms for low-fee payments: BCH (Bitcoin Cash, fork to increase blocksize), and BTC-LN (Bitcoin Lightning network, gossip network of multisig accounts). This really fragmented the userbase and slowed down BTC's adoption as a payment system.
I'm not saying comparisons to BTC are meaningless, I'm just saying that BTC is a bad example of a "typical cryptocurrency".
It's even worse than that. The $900 billion is about 20% stable coins.
If USDC exchange rate fell due to crisis of confidence, liquidations will occur fine.
As discussed in another post, news move faster than ever. Would not you like to be the next early investor in a successful trend. You don't need to care of "the thing" has value or not, you just need to sell the hot potato before it burns you.
One possible learning use the cryptocurrencies were a bad investment and a cost to the planet. Another one is that unregulated markets are good for early investors. Don't let stop you that probably when you hear about it it's already too late.
I do not know if the "real economy" will be same to handle this big bags of money that go as fast as they came. (Ads, GPUs, energy, ...)
The drop in crypto ad spend is an interesting (and meaningful) indicator of market sentiment. I'm thinking we won't be seeing 2023 Superbowl crypto.com ads. I could be wrong.
There's what? 20,000 coins? Most of them will die in the short term if they haven't already.
So I don't know if Bitcoin will continue crashing or stabilize. No one does. If they did they'd make a ton of money. In the very least I'd bet the bear market will continue for awhile but at some point Bitcoin or some successor will roar back to life.
I've been seeing this misspelling a lot lately. It's "rein in," as in causing a horse to slow down by pulling back on the reins.
I can’t believe I’m longing back to the days when it was gambling and petroligarchs instead.
His reasoning was that if even the shoe-shine boy was buying stock, the market was saturated and had no-where to go but down.
https://www.goodreads.com/quotes/5273325-j-p-morgan-tells-th...
WaMu Theater in Seattle is still called that even though WaMu went under during the financial crisis. (Though now it stands for Washington Music.)
"I haven't seen him for a minute"
"I haven't been home for a minute"
If you're wondering like me why everyone started saying "for a minute" and where it came from, I recently watched The Wire and that's the earliest use I know about.
When I was growing up in America, people said they "had to stand in line" but now they say "had to stand on line"
I believe "stand on" instead of "stand in" comes from Britain
Is this a generational/regional thing? I'm an East Coast millennial and I never hear people say "stand on line."
The "in a minute" example I believe comes from AAVE, if it was present in The Wire it was probably common in the Baltimore lexicon long before that show hit HBO.
[0] - Juba to Jive edited by Clarence Major
https://www.amazon.com/Juba-Jive-Dictionary-African-American...
https://www.merriam-webster.com/words-at-play/is-it-on-line-...
Anyway i would bet 2 bitcoin that it will not be down another ten thousand in a month. However im not aware of any escrow that would hold btc for one party and usd for the other as im sure you don’t want to bet in btc if you think that asset is dropping. Not without using some derivatives on eth that I don’t trust anyway.
I wouldn't take the other side of this bet though, I'm long-term bearish BTC, but I don't think it will drop below $10,000 this month
Own stocks? If the company tanks, they still have assets to liquidate.
Own foreign currencies? People still have to pay their taxes in those, so there's always some market for them.
Own Bitcoin? Once people stop believing it'll go to the moon, there's no reason to own it for 99.9% of people (and the reasons the remaining 0.1% want it are antithetical to a functioning and economically healthy society).
Fourteen years ago a good deal of those banks crashed the world economy but are still around because governments decided that their immense loses had to be socialized using taxpayer money. Not my definition of economical healthy.
Before the advent of altcoins and before the fees skyrocketed people were using BTC to pay for stuff. A network that can facilitate this has value. What that value is is a matter of debate, just like it's debatable whether Tesla should be worth ten times as much as Volkswagen.
Any crypto that survives in the long term and will facilitate near-instant global payments at minuscule costs without middlemen will have enough value for a lot of people to want to have it.
Because the result of that is entirely predictable, and has, in fact, been playing out over the last few years, with the crypto world, as many people have described, "learning 200 years' worth of lessons in how economies and finance really work compressed into a decade."
No; the right answer is to take up our collective responsibility and work together to fix those systems so they serve everyone again (or possibly for the first time; YMMV), rather than replacing one elite with another.
The hedge funds and large funds listed have retreated. This category will go lower but jump in when the bottom hits.
We could drop another 10,000 but I doubt it unless there a whale who stop believing and are part of selling off?
Aren't there more bitcoins in circulation now than in 2018? I know it's not a ton more, but if BTC drops to the same market cap as in 2018, the price of each coin will actually be less than $5000.
In Dublin, for a few weeks, seemingly half the buses had ads for something called Floki Coin, which was, and I can't believe I'm typing this, named after Elon Musk's dog. Everyone, _everyone_, who saw those ads and bought in would have lost money. Lost everything, if they'd stayed in.
(Ultimately, a complaint against the ads was upheld, but by then it was far too late: https://www.businesspost.ie/news/asai-upholds-complaints-aga...)
The world would be a better place with no cryptocurrency ads.
(Some of us have more interest in one than the other.)
Yuga Labs outsourced their metaverse to Animoca Brands and Improbable. Improbable has been working on scaling technology for very large multiplayer games for years. There have been working games (Worlds Adrift, Scavengers) using their technology. It does seem to work, although game devs say it's a pain to use.
But it's very expensive to run, because it requires a lot of servers and large amounts of communication between them to coordinate a big world with tens of thousands of players in one space. Originally it had to be run on Google's "cloud", and the game operator paid for every event that went to the servers. Three indy free to play games, and one rather nice-looking world (Nostos) from China, went live, got users, and went broke. Lesson: free to play not compatible with the server cost of this approach.
Otherside/BAYC is all people with lots of spending money. They all paid at least US$3000 to get in. Some paid much more. None of that "inclusive" stuff. So they've paid for the operating cost.
It's extroverted people; BAYC runs raves for them. It's people into FOMO. That's a very attractive customer pool to advertisers.