OT: Crypto, Stocks, Bonds, Real Estate, Investments, IRAs & Finances, etc.

[F N 11]

Keeps getting worse but I’m in it for the long run lol.

[F N 11]

So I am short the market with puts. I am so ashamed, I got excited when I heard the news that Biden believes(per US intelligience) Russia has decided to invade Ukraine. Then I got sick to my stomach. this is real life and not numbers or a game. more people are going to die in this conflict.

If you are short the market then you will probably make alot of money when the market opens next week but remember don't **** dance. I hope Putin changes his mind and my puts end up worthless tbh.

Watch on YouTube

I read an article that the market always recovers after crisis. They showed the market the day, and the coming months after disaster or war. For me I’m sticking to my guns so when things sky rocket again, I make my coin. For the day traders, I have no idea, good luck to you.

[Knick4Real]

My stocks, 401k, everything is in the tank today thanks to Russia. I have Apple, Disney, and some other long-term investments I'll never get rid of, but it's sickening to see just how much money investors (and me) lost in just one day.

[F N 11]

My stocks, 401k, everything is in the tank today thanks to Russia. I have Apple, Disney, and some other long-term investments I'll never get rid of, but it's sickening to see just how much money investors (and me) lost in just one day.

Don’t look now S&P up 0.68% with 40 minutes to go. This market is a roller coaster. Enjoy the ride. You will have more money in the long run. You only lose when you sell .

[br7knicks]

So I am short the market with puts. I am so ashamed, I got excited when I heard the news that Biden believes(per US intelligience) Russia has decided to invade Ukraine. Then I got sick to my stomach. this is real life and not numbers or a game. more people are going to die in this conflict.

If you are short the market then you will probably make alot of money when the market opens next week but remember don't **** dance. I hope Putin changes his mind and my puts end up worthless tbh.

Watch on YouTube

I read an article that the market always recovers after crisis. They showed the market the day, and the coming months after disaster or war. For me I’m sticking to my guns so when things sky rocket again, I make my coin. For the day traders, I have no idea, good luck to you.

this.

if anything, buy any tiny amount that's on discount right now. as long as it's something you've researched and know that will continue to grow, you get more at the discounts. that's what i've been doing the last few weeks

[Garbagelo]

My most accurate indicator has printed a bullish print

Same indicator that predicted July bottom and 2019 bottom as well as May top and Oct top

[Stannis]

My most accurate indicator has printed a bullish print

Same indicator that predicted July bottom and 2019 bottom as well as May top and Oct top

This regarding the crypto market in general or just BTC?

[Garbagelo]

My most accurate indicator has printed a bullish print

Same indicator that predicted July bottom and 2019 bottom as well as May top and Oct top

This regarding the crypto market in general or just BTC?

Bitcoin only

I don't do TA on stocks, just assume up only and buy dips

[Stannis]

My most accurate indicator has printed a bullish print

Same indicator that predicted July bottom and 2019 bottom as well as May top and Oct top

This regarding the crypto market in general or just BTC?

Bitcoin only

I don't do TA on stocks, just assume up only and buy dips

Thanks for the heads up playa

[KOA]

Russia is buying up crypto due to economic sanctions. Wondering if this will force the IMF or at least the U.S. to take a stronger stance against crypto to fully enforce its sanctions

[HarthorneWingo]

Russia is buying up crypto due to economic sanctions. Wondering if this will force the IMF or at least the U.S. to take a stronger stance against crypto to fully enforce its sanctions

We should. It's nothing but a Ponzi scheme anyhow. Let Russian give up the ruble for it and watch it even further self-destruct. That would be an act of desperation.

[Garbagelo]

Russia is buying up crypto due to economic sanctions. Wondering if this will force the IMF or at least the U.S. to take a stronger stance against crypto to fully enforce its sanctions

We should. It's nothing but a Ponzi scheme anyhow. Let Russian give up the ruble for it and watch it even further self-destruct. That would be an act of desperation.

Then you should be shorting it

[Stannis]

Russia is buying up crypto due to economic sanctions. Wondering if this will force the IMF or at least the U.S. to take a stronger stance against crypto to fully enforce its sanctions

We should. It's nothing but a Ponzi scheme anyhow. Let Russian give up the ruble for it and watch it even further self-destruct. That would be an act of desperation.

So are stocks and gold/precious metals if you think about it. How many people got screwed on stocks/investing/401k during crashes?

This Russia news is very bullish imo. Millions of people sold their Ruble for Bitcoin. Why? Because Bitcoin will have better value in hundreds of countries while the Ruble is becoming worthless. What is happening can happen in other countries as well. No currency is safe. Which people do you think are better off in Russia right now? The ones who sold their Ruble for Bitcoin once the war started or the ones who are still holding Ruble and putting their faith in their government/army and Putin??

I would like to also add, my generation and younger are not as infatuated with gold and other precious metals. So Bitcoin tends to move with gold as well, which is why I don't buy precious metals anymore. I just buy Bitcoin instead.

Listen, I'm not saying we should all sell our stocks and USD and buy BTC, but I think it's crazy not to allocate at least 10% of your portfolio to Bitcoin. I admit, I'm wary about these alt-coins, but I'm 100% confident in Bitcoin.

Governments can try to "ban" Crypto, but it doesn't work as long as you move it to your own wallet. Even some exchanges refused to freeze Crypto assets requested by the Canadian government during the protests. Most of these people who say Bitcoin is a Ponzi scheme/scam are (1) just butthurt they didn't think of it first (it's not coincidence that many traditional billionaires bought in and believed in it after the last big dip, basically they just got their price point). (2) Just don't have knowledge about it

[Stannis]

They are gonna push the idea that Bitcoin is used for the Black Market or illegal Russian transactions. Fact of the matter, it probably saved the lives of many innocent families that were screwed by their government and politicians

[SA37]

Russia is buying up crypto due to economic sanctions. Wondering if this will force the IMF or at least the U.S. to take a stronger stance against crypto to fully enforce its sanctions

We should. It's nothing but a Ponzi scheme anyhow. Let Russian give up the ruble for it and watch it even further self-destruct. That would be an act of desperation.

So are stocks and gold/precious metals if you think about it. How many people got screwed on stocks/investing/401k during crashes?

This Russia news is very bullish imo. Millions of people sold their Ruble for Bitcoin. Why? Because Bitcoin will have better value in hundreds of countries while the Ruble is becoming worthless. What is happening can happen in other countries as well. No currency is safe. Which people do you think are better off in Russia right now? The ones who sold their Ruble for Bitcoin once the war started or the ones who are still holding Ruble and putting their faith in their government/army and Putin??

I would like to also add, my generation and younger are not as infatuated with gold and other precious metals. So Bitcoin tends to move with gold as well, which is why I don't buy precious metals anymore. I just buy Bitcoin instead.

Listen, I'm not saying we should all sell our stocks and USD and buy BTC, but I think it's crazy not to allocate at least 10% of your portfolio to Bitcoin. I admit, I'm wary about these alt-coins, but I'm 100% confident in Bitcoin.

Governments can try to "ban" Crypto, but it doesn't work as long as you move it to your own wallet. Even some exchanges refused to freeze Crypto assets requested by the Canadian government during the protests. Most of these people who say Bitcoin is a Ponzi scheme/scam are (1) just butthurt they didn't think of it first (it's not coincidence that many traditional billionaires bought in and believed in it after the last big dip, basically they just got their price point). (2) Just don't have knowledge about it

A few things here:

1) Precious metals and gold have some inherent value and stocks represent companies that have real physical assets (in most cases), like machines, real estate, vehicles...etc. At best, cryptocurrencies are backed by a stablecoin (Tether) which may or may not be backed by some fiat currency, which means it is very possible a stick of bubble gum has more inherent value than any cryptocurrency.

2) Yes, there have been Ponzi schemes and overhyped garbage offerings via investing (Madoff, SPACs, Enron, WeWork, Theranos), but that is why the markets are centralized and regulated, which are two things cryptocurrencies say they do not want/they get around. Yes, there have been market crashes, but things have not been exponentially worse because the system is centralized and is backed by the Fed/a central bank.

3) Some crypto exchanges are working with the US government to help enforce the sanctions, which once again destroys the narrative that cryptocurrencies can and will always be decentralized. (And this is without even getting into the fact that most Bitcoins/NFTs are owned by a small elite.)

4) It would be a rookie mistake to conclude people who don't buy what crypto is selling are "butt hurt" or "don't get it." I've read up on the subject and anyone claiming to completely understand the space is a fool. That said, there are very solid, well-documented arguments against crypto, Web3, NFTs, and Blockchain technology that any crypto enthusiast should read and consider. (Similarly, anti-crypto people need to read up on why crypto enthusiasts are so convinced about the space and what -- if any -- innovations this might bring about.)

Spoiler:

1. The technology does not solve a real problem.

for the last thirteen years these projects have done nothing but scam people by creating synthetic asset bubbles for gambling and destroying the environment. There are fundamental limitations to the scalability of blockchain-based technologies, and every use case is better served by another simpler technology except for crime, ransomware, extralegal gambling, and sanctions evasion; all of which are a drain on society not a benefit. Taken as a whole the technology has no tangible benefits over simply using trusted parties and centralized databases.

2. So called “cryptocurrencies” aren’t actually currencies, and cannot fulfil the function of money.

In an environment in which multiple currencies can commingle there is a perverse incentive to create counterfeit currency or to create parallel currencies. Counterfeit currencies dilute trust in commerce, create counterparty risk and catalyze crime. Parallel currencies introduce exchange risk and create artificial barriers to commerce. The optimal solution within any economic region is to thus have a single currency with a single authority to control the supply, protect against counterfeiting and lower barriers to commerce by discouraging other systems through creating demand. The only possible entity that can fulfil this role is the State and it creates demand for a single currency by requiring citizens to extinguish their obligations to the state in that currency. A single currency and single monetary authority is the inevitable role of the state because of its singular monopoly on taxation and justice.

3. The history of private money is one of repeated disasters that destroy public trust.

Even playing devil’s advocate and assuming cryptocurrency could function as money—which they can’t—we come up against the hard limitation that everytime private money has been tried in history it creates a form of corporate feudalism coupled to a toxic environment that encourages fraud and discourages commerce. The lessons of history are quite clear on this issue because the United States flirted with such a system back in the Free Banking Era from 1837 to 1863. In this time period there were hundreds of private entities that went about issuing their own private bank notes allegedly created one-for-one with state bonds.

The problem with these so-called wildcat banks is that their reserves were not always verifiably backed and were thus subject to runs on the bank in which customers could not access their funds. The second issue is that unlike public money which is universally accepted at par, the wildcat bank notes had a massive secondary exchange market where notes from different banks would not trade at par....Private bank notes are a needlessly complicated, risky and inefficient way to run an economy and this was remedied by the National Bank Act of 1863....

The elephant in the room that no venture investor in these projects wants to talk about is that creating private money, just like in the wildcat banking era, is a license to print money by creating markets for these coins/notes with massive position and information asymmetries baked into the design. These kinds of private money regimes are just as exploitative today as they were in the 1800s, and the so-called “web3” notion of embedding this form of institutionalized corruption as a first class structure into the internet is a terrible idea that ignores the lessons of history.

4. Crypto assets are all unregistered securities.

Cryptocurrencies aren’t currencies and have no mechanism to ever become currencies. They are effectively unregulated securities where the only purpose of the products is price appreciation untethered to any economic activity. The only use case is gambling on the random price oscillations, attempting to buy low and sell high and cash out positions for wins in a real currency like dollars or euros. Yet crypto cannot create or destroy real money because unlike a stock there is no underlying company that generates income. So if you sell your crypto and make a profit in dollars, it’s exactly because a greater fool bought it at a higher price than you did. So every dollar that comes out of a cryptocurrency is because a later investor put a dollar in. They are inherently zero-sum by design, and when you take into account the casino (i.e. exchanges and miners) taking a rake on the game then the entire structure becomes strictly negative-sum. For every winner there are guaranteed to be multiple losers. It’s a game rigged by insiders by hacking human psychology.

For cryptocurrency to have any real utility, the volatility needs to cool off. If that were to happen, there would be little reason for the public to speculate on cryptocurrency prices, given that there would no longer be the potential for massive returns. The smart money exits, the liquidity disappears and the bubble collapses. This is the inevitable fate of all cryptocurrencies, and we see this reflected in the simple fact that the median return on all these thousands of flash-in-the-pan coins is zero. Every crypto coin is just on a random walk to zero by a different path.

https://www.stephendiehl.com/blog/against-crypto.html

By 2016, the very power structures that crypto swore to replace had already carried out the necessary steps to preserve the status quo, silently calling checkmate on any uprising. JPMorgan had already built its own blockchain: Quorum, a copy (or fork) of Ethereum, the second most popular cryptocurrency at the time, and along with other existing power structures, it was time to start building new systems using the so-called enemy’s weapon. While the crypto narrative began to entice the masses into buying Bitcoin and other cryptos in early 2017, elites from Big Tech behemoths, like Google and Microsoft, and Wall Street giants, like JP Morgan Chase and Credit Suisse, joined forces as founding members of the EEA (Ethereum Enterprise Alliance).

Fast forward to 2020, and JPMorgan made a quiet announcement. According to a press release on August 25th, the megabank sold its Quorum blockchain to a company called ConsenSys, which didn't seem like anything out of the ordinary. Only, that was until it became apparent that the founder of ConsenSys, Joe Lubin, was also the co-founder of Ethereum. Crypto elites and megabanks working together? Some financial “revolution” or “liberation” this turned out to be....

And if a cryptocurrency is not pledging to create financial liberation, then it's trying instead in some capacity to merge with the legacy system. Among the altcoins, meme-coins, and ****, quasi-cryptos like XRP (Ripple) have been touted to become part of a new global payments system. Though like any other crypto, these are pure speculative plays that will pay out only if existing power structures adopt them, and even so, as Michael Kao (a must-follow on Twitter via @UrbanKaoboy) points out, why must a government or private sector entity adopting a token affect its value? Why must “number go up”?

To become a major cog in this new paradigm of digital money, these cryptos must also defeat competing technology from legacy power structures. The likes of Goldman Sachs, JPMorgan, and other giants have been gobbling up all the outfits that deliver global payments solutions while assembling their own blockchain replicas of the legacy financial system, like JPMorgan's JPMCoin and Onyx blockchain, which Concoda covered back in 2021:

Sucked in by the hype of crypto-mania, existing power structures have thrown a lot of capital at blockchain technology, though they have run into a slight issue. Most of the projects they created have ended up going nowhere, because they have slowly come to realize that blockchain, a glorified append-only database, is nothing new, revolutionary, or even superior to their existing systems. A recent article by CoinDesk illustrated this, reporting that “IBM has cut its blockchain team down to almost nothing”.

“There is not really going to be a blockchain team any longer,” a source “familiar with the matter” revealed. “Most of the blockchain people at IBM have left.”

...At the first limitation, every crypto paradigm, from Bitcoin to NFTs, has become increasingly centralized. Take “Web3” companies, like Dapper, who’ve hired Google Cloud, a supposed Web2 rival, because they have not found a better way to scale and provide infrastructure to “support their networks”.

What was once a proposed revolution, is now a farce, with almost all Web3 apps using the same two centralized entities, Infura or Alchemy, to communicate with the blockchain. (Because even techies don't want to set up their own servers, let alone the general public). Everytime your web3-crypto wallet interacts with the blockchain, you’re likely using a centralized service. So what’s the point of reinventing the wheel through “decentralization,” if you're not actually doing it in practice?...

The major support propping up this narrative is Tether, the global “wildcat bank” which accounts for over 70% of all cryptocurrency volume. It’s run by crypto cartel members, mostly convicted criminals and associated shady individuals, who have engaged in, among other things, software piracy, fraud, and money laundering.

Tether also is in bed with all the major crypto exchanges like FTX, Kraken, and Binance, as they provide most of the liquidity in the crypto ecosystem. These exchanges are practically casinos posing as traditional brokerages.

With traditional brokerage accounts, it's estimated that 95% of day traders lose money. Not only that, but brokers tend to replicate their clients' trades to juice profits, betting against Group X (95%) and copying Group Y (5%).

With crypto exchanges, of course, it's worse. Most remain unregulated, so they have free reign to exploit anyone, especially those under 18, by manipulating prices, liquidating positions unfairly, and "front-running" their own clients. And guess what? Nobody can stop them. Not even regulators, it appears. And, of course, up to 90% of trading volume on these exchanges is wash trading or “painting the tape”: an illicit form of trading where a broker and trader collude, profiting from feeding deceptive info to the market.

Put differently, we have a wildcat bank, Tether, facilitating 70% of all crypto trading volume, while remaining best buddies with crypto exchanges that manipulate up to 90% of their trading volume. And we're supposed to believe that crypto is the future of finance.

https://concoda.substack.com/p/the-crypto-revolution-was-over-before?s=r

It’s important to understand that nearly all consumer interactions with bitcoin happen through centralised entities who require domiciled entities within the United States for their continued access to payments infrastructure, banking and customers. This makes them particularly vulnerable to coordinated law enforcement and coercion by their banking relations and payments processor partners.

There is no legitimate economy that transacts in bitcoin. It is an absolutely rubbish means of payment and most customers are simply looking to realise short-term gains in terms of Dollars and Euros as a result of zero-sum speculation on price movements, which is indistinguishable from gambling. They do so through consumer gambling apps (Robinhood Crypto, Cash App, etc) that present a casino-like interface that lets users gamble on the price movements of these hypervolatile pseudo-assets. The app itself relies on a third party service provider for exposure to the market and custody of the underlying assets, however the customers are not able to realise or transfer these underlyings and are only able to convert the marked gains in a virtual dollar account which is settled back-office in real dollars with the service provider. This makes apps like Robinhood Crypto not significantly different than what would traditionally be called bucket shops in normal markets. These markets are highly manipulated by pump and dump schemes and are in aggregate are a net wealth transfer from victims to early stakeholders who manipulate prices, networks and exchanges for their own gain....

Right now there are two foreign entities that have been given free reign to print unbacked cash equivalents against the US Dollar without oversight of regulators or the Treasury. These two entities are:

Bitfinex/Tether with USDT token. (Incorporated in Hong Kong)

Binance with BUSD token. (Likely incorporated in Cayman Islands)

Shutting down these entities and legislating away the glaring loophole that allows US companies to hold these stablecoins would fix the crypto wildcat banking problem in the same way that Liberty Reserve was brought to heel. This would snuff out 70% of trading against most crypto tokens pairs which is widely predicted to be a source of artificial inflation and wash trading in the markets. Since most of these markets are already thinly traded this would cause a massive run on exchanges back into normal currencies and would drain whatever holdings the exchanges allege to hold to zero, and causing most of the wildcat foreign entities without dollar accounts at the Fed to fold.

US companies wishing to launch domestic stablecoins pegged to the dollar should likely be brought under proposed Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, which would require any prospective issuer of a stablecoin to obtain a banking charter, obtain FDIC insurance and produce publicly verifiable audits of the assets comprising the offering. This would force companies like Facebook to purse domestic banking partners rather than trying to become the same kind of problematic shadow bank we saw during the global financial crisis.

https://www.stephendiehl.com/blog/destroy-bitcoin.html

Considering that the most popular stablecoin is probably a fraud doesn’t look good. But even so, does it matter? Surely it’s just one of many leading cryptocurrencies in the space. How could Tether’s collapse disrupt the latest crypto boom or, worse, damage crypto’s long-term rep?

Unfortunately, Tether has become the crypto market’s primary source of liquidity. The crypto ecosystem’s backbone is now the dodgiest stablecoin on the market. As Coinlib shows, most of Bitcoin and other coin’s daily inflows come from Tether, with USDT facilitating 50 to 60% of Bitcoin transactions since 2019. Its total circulation has surged from $5 billion in February 2020 to $56 billion in May 2020 to almost $63 billion in the last few weeks — and shows no signs of stopping.

Since Tether’s money printer has effectively fueled crypto-mania, a loss of confidence in its stablecoin will likely create the largest crypto crash in history. We’ll witness the Bitcoin equivalent of a bank run, a crypto-style rerun of the 2008 subprime collapse.

Why then, with all this FUD out in public, has everyone yet to panic? Why have large chunks of the financial community, who know it's likely a Ponzi, snubbed both its critics and skeptics? After all, markets have shrugged off past Tether shenanigans. When the NYAG concluded Tether “had no access to banking”, Bitcoin dropped 25% then recovered. Just two months ago, Tether’s questionable “Pie Charts” release cut crypto’s market cap in half. Tether survived. What gives?

This, folks, is the “golden age” of fraud, and it’s going to take a lot more than speculation and in-depth detective work to prove Tether’s alleged deception.

If Tether’s critics are right, only when tight money ushers in deflation will we see crypto’s biggest FUD producer meet its fate. Since it’s the only economic environment where everyone wants to tell the truth and face up to reality, tight money is a crony capitalist’s worst enemy.

In the 2000s, several warnings from whistleblower Harry Markopolos, plus multiple S.E.C investigations, failed to bring down Bernie Madoff’s $69 billion Ponzi scheme. In the end, economic gravity exposed the scam. It’s been a recurring theme throughout history with the other famous Ponzis: the 18th-century South Sea Bubble, the 21st-century subprime boom, and the latest high-profile swindle: Wirecard, which collapsed in June last year, just after the German economy started to slump....

In the next economic downturn, as the above charts illustrate, we know cryptocurrencies will take a dive. How far, however, depends on a range of factors, from the Fed’s response to the amount of leverage in the system. But the most important factor is Tether. What will the next downturn do to its balance sheet? Is it 74%-backed, 100%-backed, or backed by thin air? Who knows. For obvious reasons, Tether Ltd. will never release a full audit.

Instead, all we have to go on are two bizarre pie charts they released back in March 2021. Not only does this fail to prove Tether has a full 1-to-1 backing, but it also deepens the mystery. Their balance sheet has become a fusion of the wildest financial instruments available. Commercial paper, short-term debt instruments issued by corporations, makes up half of Tether’s assets, but there’s no way to tell what company that debt belongs to. It could be Apple or Microsoft. If so, great. But it could also be a dodgy crypto company issuing worthless paper.

Even 3.6% of Tether’s reserves consist of “reverse repo notes”, which shows they have entered the shadow banking layer, doing business with Wall Street’s underworld — something that most crypto fans will regard as heresy.

These are the kind of questionable financial assets now backing the most systemically important stablecoin in the crypto ecosystem. Tether, a company that’s supposedly spearheading the crypto movement, has gone full “Wall Street casino”. The major source of crypto market liquidity, the primary lever providing essential crypto plumbing, is backed by the same financial instruments of Wall Street’s premier gambling den, the very paradigm Satoshi Nakamoto sought to eliminate and topple....

By supporting Tether, a currency that ex-Wall Street and corporate mischiefs have built, backed by dodgy assets that go against everything “sound money” stands for, they have abandoned their principles, succumbing to denial and greed.

This shows how much the status quo of ultra-cheap money has eaten away at our society. It’s even corrupted the crypto movement, the very revolution that set out to defeat crony capitalism.

If the crypto movement has any legitimacy left, it must show cheap money who’s boss, by eliminating bad ideas and punishing bad actors. Unlike the megabanks, Tether won’t get a second chance. It’s not backed by the casino bailout machine at the Federal Reserve. With the evidence suggesting that its critics will be proven right, when deflationary forces arrive we may witness Tether’s collapse, creating the next crypto crisis.

In the aftermath, it will seem unlikely that another bubble will form. But while the monetary elites maintain the cheap money status quo, the demand for crypto will remain strong. No matter how much damage the coming collapse has on crypto’s reputation, tight money and deflation will force out a huge monetary response from the financial power structure, paving the way for cheap money to fuel the next crypto boom.

https://concoda.substack.com/p/the-coming-crypto-market-crisis?s=r

Mark Carney’s description of this situation as the “Uberisation” of money is an accurate description of the problem. Private entities now wish to disrupt the global international order by issuing private money, much like we saw in the 1830s United States Wildcat Banking era, but this time on global scale. It is an attempted financial coup by the anarcho-capitalist wing of Silicon Valley to set themselves up as central bankers but without any accountability or democratic oversight.

The saving grace of this situation is the technology being proposed to do this is neither robust nor particularly useful at achieving their stated political goals. Every Econ 101 student studies that a currency is four things:

1. A unit of account

2. A means of payment

3. A stable store of value

4.Capacity to act as a single numeraire

Bitcoin and most other cryptocurrencies have none of these features, nothing is priced in it and commerce could never be done in something so unregulated and volatile without recreating an extremely convoluted system of intermediaries to manage the technical and legal shortcomings, which defeats its entire stated ideological purpose. The “digital money” narrative has even been rejected by most crypto acolytes, and those that cling to this narrative do so out of some misplaced faith that volatility and transaction speed will fix themselves through magical thinking and unspecified means or empty appeals to heterodox economic theories.

The second failed narrative is that cryptocurrencies are “digital gold” or “store of value”. This is seemingly plausible but not supported by any evidence. Cryptocurrencies don’t have a consistent relationship with macroeconomic factors that explain their volatility and in order for them to be a store of value they would obviously have to well, store value and be a safe haven in times of market volatility. However the opposite is true, during the COVID-19 shock US equities fell by about 35% and bitcoin collapsed by 50% dragging the entire crypto market (which is highly correlated) down with it. In 2018 we saw an even deeper shock when bitcoin fell by more than 80% in the span of a few months. An alleged store of value has to reliably and consistently be redeemable on long time scales and there is zero evidence that any of these token schemes provide this....

The notion that these technologies can transform financial services in any way is laughable, because there is no mechanism or specific problem they aim to address that is not currently better done with a simpler solution. How will crypto fix mortgage issuance, trade finance, commercial lending or underwriting? These are the bread and butter of the industry and it is absurd to think that some highly volatile casino token can transform those lines of business. These subsectors are built on person-to-person interactions, commercial trust and deep amounts of centralisation and intermediaries as checks and balances on risk.

Even the canonical example often cited for a potential successful crypto business model, international remittances, ignores the history that around four dozen companies have all tried and failed to make this business model profitable. The graveyard of these companies is vast and stems from a systemic misunderstanding that actually doing the initial and final leg currency pair conversions and compliance checks which incur a non-trivial cost that needs to be passed down to the consumers and for which margins are absurdly small. This is the original sin of blockchain: trying to find a problem for a solution without understanding why the market hasn’t served the problem already.

https://www.stephendiehl.com/blog/non-innovation.html

[Knicks Byke]

damn.

[SA37]

They are gonna push the idea that Bitcoin is used for the Black Market or illegal Russian transactions. Fact of the matter, it probably saved the lives of many innocent families that were screwed by their government and politicians

It's not a mutually exclusive thing: it can be used for both things at the same time.

The problems with Bitcoin (and other cryptocurrencies) don't disappear because it had a potentially functional use in a very specific instance. Russians could trade their rubles for dollars, euros, gold, silver, bitcoin, iPhones, laptops, jewelry, cars, bikes, food...etc; that doesn't prove that food, bikes, cars, jewelry, laptops, or iPhones are useful as currencies, stores of value, or units of exchange.

If nothing else, what this is all showing is the vital role centralization and regulation can play in (potentially) bringing a violent conflict to an end without having to resort to sending troops or escalating the physical violence. The "decentralized," unaccountable nature of cryptocurrencies takes this option off of the table. Does this sound like an optimal outcome? No, and some crypto exchanges are in talks with the government to do precisely the opposite of what it claims it exists for.

Of course, many of us may feel justified that the US and its allies are doing the right thing in this particular case given that Russia seemingly attacked the Ukraine for no reason (the situation is way more complex than this, but let's leave the politics and geopolitical chess to the side for now). However, we have seen how a centralized, regulated system can pick winners (financial institutions) and losers (most people), as was the case in 2008 GFC.

The point is, centralization and regulation forces some amount of conformity that forces some level of cooperation, just like it does in trade, and allows us to put in place safety measures and approved practices that keep us safe most of the time and increase our ability to trust strangers, which is why most of us are willing to submit to all sorts of medical exams and interventions by medical staff we've never met or buy food and products made by people we don't know. Decentralization does the opposite of that.

This isn't to say centralization and regulation are perfect; they are not. They are subject to human error, whether that is done intentionally or not. In most cases, though, the answer is not going to be less regulation or decentralization, unless the level of regulation is too strict (potentially drug laws, for example) or concentrated power is too great, like with political power (dictator/king/queen/emperor), a monopoly, or judicial power. It's the same underlying principle in our democracy: do you think the US would be better off without a central authority (the federal government) with each state doing its own thing or do you think the centralized aspect is necessary and unifying in ways a "decentralized" setup is not?

[SA37]

The shadow banking system's "innovations" produced three effects:

I. Leverage: regulated banks must place limits on how much their customers can borrow and gamble with. "Credit swaps" allowed for effectively unlimited leverage, so that every routine transaction in the real economy could result in fortunes changing hands in the shadow banking world.

II. Rigidity: To reduce the risk presented by this over-leveraging, shadow banks created brittle, rigid contracts that dictated automatic sell-offs or margin calls when certain things took place. In good times, these made the gambling seem safe. During a crisis, these turned into suicide pacts.

III. Bank-runs: When over-leveraged assets hit a bump, the leverage and the rigidity of the contracts meant to "de-risk" it triggered cascading price-drops, which sent investors running for the doors. When everyone tries to get out of a market at once, you get a bank-run, which drives otherwise sound institutions to collapse.

The shadow-banking system created a whole menagerie of exotic "products" that all shared one characteristic: they were complex. The complexity of these instruments made it hard to know when you were taking a sucker's bet. Worse, they made it hard for designers, analysts and executives to understand how all the pieces put together – steps taken to make one part of the system less risky could make otherwise sturdy parts far shakier....

In shadow banking 1.0, money-market mutual funds were billed as a way to anchor abstract financial transactions to the real economy, a safe and reliable way to cash out of your investments. They proved to be anything but.

In shadow banking 2.0, we have stablecoins like Tether, which are pegged to real money like the US dollar and (allegedly) backed by dollar-denominated assets. Hypothetically, Tether has $1 worth of assets for every $1 worth of Tether it has issued. In reality, it's an open secret that Tether is a colossal fraud, issuing worthless paper backed by empty promises.

In shadow banking 1.0, we had complex financial instruments that you had to be a finance expert to begin to understand. In shadow banking 2.0, we have smart contracts, which you need to be a financial expert and a coder to make sense of.

These smart contracts don't just create instability by being too complex to understand and vulnerable to coding errors – they're also fraud magnets...

The Venn intersection of "people who code" and "people who understand finance" is so small it's a sphincter. Scammers who work smart contracts don't even need to change up the swindle: no matter whether the mark is a coder or a banker, there will be key elements of the game they can't make heads nor tails of.

Smart contracts introduce extraordinary brittleness into shadow banking 2.0. They allow defi loans to automatically liquidate if the value of collateral dips below a set threshold. That could send the borrower into a selling frenzy, liquidating other assets, driving down their prices, triggering other automated liquidations.

There are theoretical ways to build circuit-breakers into smart-contracts to prevent this kind of cascade, like having them consult another contract before firing, or even waiting for a human referee (an "oracle") to give the go-ahead. But each of these transactions comes with "gas fees" for the computing to run them, and penny-pinching shadow bankers are loathe to pay these fees.

Likewise theoretical is the way that stablecoins could constrain leverage in defi: but "when stablecoins are used as collateral for loans, the proceeds of those loans are often used as collateral for other loans, which can then be used as collateral for further loans, and so on."

Leverage plus brittleness leads to bank runs. Stablecoins are (alleged) to be redeemable for real money. If (when) leverage and brittleness trigger a stampede for the exit, exchanges and issuers will be on the hook to find a lot of actual dollars to make the "investors" of the defi world whole.

When that happens, it won't just be the defi world that gets sucked under. As with shadow banking 1.0, shadow 2.0 is increasingly woven into the real economy, thanks to ventures like Jpmorgan's blockchain team and the regulated banks working towards issuing their own stablecoin.

Shadow banking 1.0 crashed the world's economy and destroyed millions of lives in part because regulators sat by and watched as it created risk that is loaded onto all of our books. The same thing is happening with defi right now.

https://pluralistic.net/2022/03/02/shadow-banking-2-point-oh/

[NYKinMIA]

damn.

Oh noooooo!

[NYKinMIA]

My most accurate indicator has printed a bullish print

Same indicator that predicted July bottom and 2019 bottom as well as May top and Oct top

What indicator is that bruh? I'm still on my journey seeking that alpha.

This thread has become comedy with the normie fudsters praying for doom.