The Death Knell of Crypto!

[Castanza]

33 minutes ago, Longnose said:

 

Honestly, its probably more me fighting against "The Man" than anything. 

 

What problem am I trying to solve? - I don't actually own my money. I can't actually buy the securities. Wells Fargo holds my money. I have to ask WF to send my money to Fidelity to buy and hold securities in my name. At the same time WF & Fidelity are using my money to make more money for themselves. 

So I'm trying to solve 2 things. 1. Actual ownership of money and securities. 2. Screw the middle man. 

 

Now granted your points are all valid. Currently I don't have to pay anything any trading fees and I get little bonuses. cool?

 

Who are you going to call when there is a problem with a decentralized exchange? (valid - currently it would be emailing a developer who set up the exchange. But even if the decentralized exchange goes down I can go connect to another one because the assets are still in my wallet not on the exchange)  Who pays for trading costs.? (me, but if I'm not transacting on ETH i dont really care. Networks like AVAX, SOL, Polygon all have fraction of cents transaction fees and I believe these will only come down over time)  Who sent statements? the blockchain ledger of my wallet. 

 

Typing this out made me thing of stories from the great depression and the runs on the banks. God forbid it ever happen again but what if you went to WF and said I need my money and they said well... see the markets are down so actually you cant have it or whatever their excuse is. But don't worry you can file an FDIC claim and maybe get some money back in the next 10 years... So this is what I am trying to solve. I own my money and I don't need a broker to buy my stocks because I can purchase them on a decentralized exchange and hold them in my wallet. 

 

Are we anywhere near this point right now? No, we are not. But the world will get there and I will welcome it. Also, I wont be an early adopter with a significant portion of my money. But i will be dabbling in it and looking for opportunities that will be exploiting the power of this technology. I am a value investor at heart. 90% of my portfolio is tied up in equities via a broker and that wont change anytime soon. 

 

But you also have laws and the court system backing up claim to your money. I do get the sentiment though and I largely agree, I'm just not convinced crypto offers a truly sound fool proof solution yet. "The Man" still has a lot of power when it comes to regulation and potential implications on crypto.

 

The current monetary system and pipelines are simply easer to use. My parents are not going to run a node in their basement to keep their money out of the hands of "the man". They also wont be buying BTC and storing it on a Ledger Nano hardware wallet. They can barely manage their own Gmail accounts and cell phones. Crypto is simply far too risky for most individuals at this point. It doesn't have the same "assurance" you get from existing system wide structures. And I get you can make the argument it's more secure etc. But that's from the perspective of someone technically inclined, who has an interest in it, and actually cares. You have to think to be involved with crypto. With traditional banking, there is almost ZERO thinking needed. 

[Xerxes]

it hard to take Saylor seriously when he is wearing a suit and tie

 

I've never seen anything as compelling and unstoppable as bitcoin, says MicroStrategy's Saylor (cnbc.com)

[Xerxes]

If Bill Miller had his personal wealth split between Bitcoin and Amazon, check out this guy, who has his wealth solely in Zara's Indintex and his real estate portfolio, and he is over 70 as well.

 

The article is from 2014. He was on the news this morning, as he bought RBC Plaza for a cool $900 million.

 

How Zara's founder Amancio Ortega has quietly built a US$10-billion 'all cash' real estate empire | Financial Post

[Fly]

On 1/11/2022 at 3:33 PM, Parsad said:

 

Miller's whole argument for investing in crypto is because it is a supply/demand issue like artwork or collectibles.  Accordingly, the argument is it's worth what people want to pay.  This is the best argument for crypto and the worst argument for it at the same time! 

 

Artwork/collectibles can be sold or bartered, but ultimately are useless as currency.  They are a store of value because of their utility as a collectible...investors can look at it/sell tickets to view it/donate it and receive tax receipts.  But it can never really be used as a replacement for currency.

 

Ultimately, this current batch of crypto will be viewed as collectibles...whatever people want to pay for it.  What that value is is anyone's guess.  Cheers!

 

BTC is fungible, divisible, portable. You can send it anywhere in the world 24/7/365 without trusting any intermediaries. Try that with art, stocks, fiat, gold, etc. 

 

Think beyond the asset and think about the value of bitcoin as a payment rail. 

[JRM]

11 hours ago, Fly said:

Think beyond the asset and think about the value of bitcoin as a payment rail. 

How much value do you assign to a payment rail?

[KJP]

1 hour ago, JRM said:

How much value do you assign to a payment rail?

 

Isn't the blockchain the rail and the Bitcoin/token both the unit of value that can move across the rail and the unit of value that must be used to pay to transfer value on the rail?  That's why blockchains have always seemed to me to be bad fits for combining (i) store of value/investment, and (ii) payment rail, because as the value of the token goes up, the usefulness of the system as a payment rail goes down because transaction fees go up.  I realize there are layer 2 efforts to address this, but if BTC goes to $1 million, as some suggest may happen, can the Bitcoin blockchain be a useful payment rail for anything but very high value transactions?

[TwoCitiesCapital]

3 hours ago, JRM said:

How much value do you assign to a payment rail?

 

Quite a bit when you look at companies like Visa and MasterCard. My first valuation exercise of BTC was to take the enterprise value of Visa, MasterCard, American Express, and PayPal and divide by 21 million coins. The value at the time was 40-50k/coin.

 

Didn't consider lost coins, didn't consider that a network is more valuable as it gets more participants (and thus BTC should be more valuable than their sum if it disrupts their entire networks), didn't consider the value of all the other payment processors globally, didn't consider there was only 18 million outstanding at that time, and didn't consider any store of value aspect. At the time it was trading for 10k so I started buying. 

 

Now? The store of value argument appears to be holding water for many and the enterprise value of each of those companies is significantly higher. So BTC should trade significantly higher than 40-50k if you believe it will successfully disrupt those companies OR add substantially to the volume of payments (nobody puts a house on a Visa but people are buying houses in BTC). 

 

 

1 hour ago, KJP said:

 

Isn't the blockchain the rail and the Bitcoin/token both the unit of value that can move across the rail and the unit of value that must be used to pay to transfer value on the rail?  That's why blockchains have always seemed to me to be bad fits for combining (i) store of value/investment, and (ii) payment rail, because as the value of the token goes up, the usefulness of the system as a payment rail goes down because transaction fees go up.  I realize there are layer 2 efforts to address this, but if BTC goes to $1 million, as some suggest may happen, can the Bitcoin blockchain be a useful payment rail for anything but very high value transactions?

 

Bitcoin is both the rail and the value transferred. 

 

I think of it like a pipeline that carries oil. Bitcoin is both pipeline and the oil. It is the Bitcoin protocol embedded in the coin that allows for the transfer of value - BTC/protocol itself is that value that is transferred. 

 

The Blockchain is just what gives you confidence in the security, authenticity, and validity of the transaction - it is not the transaction itself. 

Edited January 14, 2022 by TwoCitiesCapital

[JRM]

4 hours ago, TwoCitiesCapital said:

I think of it like a pipeline that carries oil. Bitcoin is both pipeline and the oil. It is the Bitcoin protocol embedded in the coin that allows for the transfer of value - BTC/protocol itself is that value that is transferred. 

 

 

Now you're starting to speak my language!  So the two pieces to the value of the bitcoin network (as a transfer mechanism) and the token itself.  I would think the network piece would be valued close to the cost of completing the transfer.

 

The second piece of value for the token itself is what traditional asset can bitcoin displace.  This is where I have a harder time convincing myself Bitcoin is going to replace anything like USD, treasuries, etc. (even layer 2 protocols).  It may replace some failed currency, but a major currency?

Edited January 14, 2022 by JRM

[TwoCitiesCapital]

5 hours ago, JRM said:

 

Now you're starting to speak my language!  So the two pieces to the value of the bitcoin network (as a transfer mechanism) and the token itself.  I would think the network piece would be valued close to the cost of completing the transfer.

 

The second piece of value for the token itself is what traditional asset can bitcoin displace.  This is where I have a harder time convincing myself Bitcoin is going to replace anything like USD, treasuries, etc. (even layer 2 protocols).  It may replace some failed currency, but a major currency?

 

The major currencies will likely be last to adopt it because they have most to lose by giving up control. 

 

But at some point there will be a critical mass of small countries, and small jurisdictions (like Miami), and small individuals all demanding to use it as a form of payment that it'll be in everyone's best interest to simplify commerce and accept BTC as the global settlements currency. Much like everyone basically currently uses the dollar despite the headaches that comes with being in a dollar system that the US has weaponized. 

[bluedevil]

There is a lot of speculation and frenzy around the various crypto tokens.   But as to Bitcoin - I think Miller and Saylor have very well reasoned arguments why it is a digital and far more advantageous replacement for gold. 

 

[SharperDingaan]

Most payments are going to be done with CBDC, not BTC. Minimal value to the BTC rails.

Difficult to recognize if you live in NA, but very obvious if you live in a China, or Asia. Digital Currency Electronic Payment (Digital Yuan) has trialed in major centers for quite some time, and is scheduled for rollout at the Beijing Olympics. Question is why is it that a China can do this, yet the US cannot? 

 

This is retail CBDC. Wholesale CBDC replaces payment rails, and when on steroids - it replaces reserve currency. 

Change is here, and the writing is on the wall for both sh1te coin and stable coin being used for payment.

 

SD

 

 

Implications of Digital Yuan.pdf

[Dave86ch]

Centralized China and Decentralized West it may be an option.

Culturally it would be more coherent.

Edited January 16, 2022 by Dave86ch

[muscleman]

22 hours ago, SharperDingaan said:

Most payments are going to be done with CBDC, not BTC. Minimal value to the BTC rails.

Difficult to recognize if you live in NA, but very obvious if you live in a China, or Asia. Digital Currency Electronic Payment (Digital Yuan) has trialed in major centers for quite some time, and is scheduled for rollout at the Beijing Olympics. Question is why is it that a China can do this, yet the US cannot? 

 

This is retail CBDC. Wholesale CBDC replaces payment rails, and when on steroids - it replaces reserve currency. 

Change is here, and the writing is on the wall for both sh1te coin and stable coin being used for payment.

 

SD

 

 

Implications of Digital Yuan.pdf 448.83 kB · 7 downloads

 

There is a currency called USDT, issued by a startup called Circle. It is essentially the digital dollar.

They are going IPO in Q1 this year. You may want to follow that.

[KJP]

14 minutes ago, muscleman said:

 

There is a currency called USDT, issued by a startup called Circle. It is essentially the digital dollar.

They are going IPO in Q1 this year. You may want to follow that.

 

Doesn't USDC have same issue as Tether:  What exactly is the collateral?  Are they currencies or units in some type of opaque money market/bond fund?

 

Another potential stablecoin:  https://www.coindesk.com/business/2022/01/12/us-banks-form-group-to-offer-usdf-stablecoin/

 

 

[TwoCitiesCapital]

1 hour ago, KJP said:

 

Doesn't USDC have same issue as Tether:  What exactly is the collateral?  Are they currencies or units in some type of opaque money market/bond fund?

 

Another potential stablecoin:  https://www.coindesk.com/business/2022/01/12/us-banks-form-group-to-offer-usdf-stablecoin/

 

 

 

No, it doesn't. They have audited public record of their reserves. Last I checked it was mostly cash with SOME credit instruments. I believe they have since committed to migrating to 100% cash, but don't quote me on that.  

 

It is part owned by a publicly traded, regulated company (Coinbase) and is about to be a publicly traded company itself with audits, reporting standards, third party custody, etc etc etc. 

 

It's got everything Tether doesn't which is why it recently surpassed Tether as the leading stablecoin on the Ethereum network.

 

Took way longer than expected - months instead of days - but ultimately stablecoins like Gemini USD (GUSD), Paxos' USD (USDP), and USDC are significantly more trustworthy and transparent and will continue to eat market share from untrustworthy sources like Tether. 

[KJP]

35 minutes ago, TwoCitiesCapital said:

 

No, it doesn't. They have audited public record of their reserves. Last I checked it was mostly cash with SOME credit instruments. I believe they have since committed to migrating to 100% cash, but don't quote me on that.  

 

It is part owned by a publicly traded, regulated company (Coinbase) and is about to be a publicly traded company itself with audits, reporting standards, third party custody, etc etc etc. 

 

It's got everything Tether doesn't which is why it recently surpassed Tether as the leading stablecoin on the Ethereum network.

 

Took way longer than expected - months instead of days - but ultimately stablecoins like Gemini USD (GUSD), Paxos' USD (USDP), and USDC are significantly more trustworthy and transparent and will continue to eat market share from untrustworthy sources like Tether. 

 

Interesting.  Here is the S-4 for those reading along:  https://www.sec.gov/Archives/edgar/data/0001876042/000110465921153174/tm2124445-4_s4a.htm

[thepupil]

Dumb question re the more reputable stable coins. 
 

if I am a Bangladeshi working in Saudi, can I send a stable coin home to my parents if 

 

1) I have a mobile and/or internet access with internet but parents don’t 

2) we both have mobile 

3) neither have mobile 

 

does one/both sides need a bank? 

if so, what is the t-cost?

 

[SharperDingaan]

Thing to keep in mind is that CBDC is guaranteed by the central bank of the nation, and that if both buyer/seller are domestic - there are no fees to use it. Everyone has their own wallet at the central bank, and the CBDC has exactly the same functionality as the fiat equivalent. Sure you could still pay for things using some other currency or token, but why would you do so ? with CBDC there are no debit/credit card transaction fees, no commissions, and settlement is instant. 

 

A Stablecoin being used for payment purposes, simply prices at the NAV of the collateral supporting 1 unit of CBDC - or the FX rate. Same as the Yuan/USD FX rate, we now just have multiple Yuan/Stablecoin X rates - or digital currency FX rates as well as fiat currency FX rates.

 

Stablecoin doesn't die, it just replaces the existing collateral with something better (mortgages, bonds, etc.), and becomes a 'back door' securitization or mutual fund. - little different to a SALT or BITGOLD. The problem for many of the existing Stablecoin, is that there is no buyer for the existing collateral.

 

Opportunity 

 

SD

Edited April 14, 2022 by SharperDingaan

[KJP]

18 minutes ago, thepupil said:

Dumb question re the more reputable stable coins. 
 

if I am a Bangladeshi working in Saudi, can I send a stable coin home to my parents if 

 

1) I have a mobile and/or internet access with internet but parents don’t 

2) we both have mobile 

3) neither have mobile 

 

does one/both sides need a bank? 

if so, what is the t-cost?

 

 

I assume you're asking about sending a portion of wages back to Bangladesh.  How does this hypothetical worker get paid?  Direct deposit of riyals into a Saudi bank account?

[thepupil]

Good point, yea assume that.

 

more succinctly, do stablecoins circumvent KYC and/or reduce transaction costs for remittances/cross border payments?

[KJP]

1 hour ago, thepupil said:

Good point, yea assume that.

 

more succinctly, do stablecoins circumvent KYC and/or reduce transaction costs for remittances/cross border payments?

 

At a minimum, USDC is connected to the traditional banking system at creation and redemption.  See S-4 quote below.  In between, they can be transferred between blockchain-compatible digital wallets.  Hopefully someone else can explain the transaction fees for (i) creation and withdrawal, (ii) transfers between Circle accounts, and (iii) transfers between a Circle account and a non-Circle digital wallet.  If you start with a non-USD currency, I assume you have additional conversion costs.

 

 

From the S-4:

 

Issuing and redeeming USDC from our platform involves risks, which could result in loss of customer assets, customer disputes and other liabilities, which could adversely impact our business.

To receive USDC a customer must deposit, via credit or debit card, ACH or wire transfer, to a Circle bank account, U.S. dollars corresponding to the amount of desired USDC tokens. Once the credit is made to the Circle bank account, USDC tokens are issued to the customer’s digital wallet (the “Circle Account”), effectively increasing the USDC in circulation. Likewise, customers with USDC in their Circle Account can redeem USDC so that the system cancels the USDC tokens and transfers U.S. dollar funds out of reserve and into a customer’s linked bank account, effectively reducing the USDC in circulation.

 

 

 

Edited January 16, 2022 by KJP

[thepupil]

Thanks! won’t ask anymore ?’s without modicum of reaearch

[Sweet]

On 1/11/2022 at 3:24 PM, TwoCitiesCapital said:

 

Probably because he CAN afford to and believes in it. This is the same man who started buying it in 2014 at $400/coin. We're 7-years later and it's $42,000/coin and has been as high as $69,000/coin. 

 

Maybe instead of asking how could he have 50% of his net worth in an investment, maybe we should ask ourselves what we missed that allowed it to go from $400 to $42,000 and why people are still so critical of it today? 

 

 

It rose the entirety of 2017 into it's last bubble top of 20k the whole time the Fed was tightening. We've been there and done that. 

 

I’m of the same opinion now as I was then - I wouldn’t invest.

 

If I could reliably spot bubbles in the making, like crypto, I would trade them - but I don’t know if that’s possible.

 

If I had FU money I might be able to put down a fraction of my income on these types of bets - but I don’t.

 

Being open to these types of ideas requires having deep pockets - not sure how that’s a strategy open to all.

 

In other words, I’m not entirely sure there is much to be learned from examining the rise of crypto.

[KJP]

2 hours ago, thepupil said:

Thanks! won’t ask anymore ?’s without modicum of reaearch

 

I've been poking around to find out more about USDC.  As far as I can tell, small dollar USDC transfers on the Ethereum chain are expensive.  For example, here are some transfers in the last hour, with USD cost derived from current ETH price:

 

$39.52 fee to transfer $175 USDC:  https://etherscan.io/tx/0xb59571d03f1d3f1f6549f121786f82dfe972558890059488473e3f5609778cc3

$42.00 fee to transfer $338 USDC:  https://etherscan.io/tx/0x952f0e5cf1502f3c047890abacbe2119c96182df7d46c6873eb21c5e760cf569

$36.83 fee to transfer $821 USDC:  https://etherscan.io/tx/0x13879fb45cfb6c470d1d8de4cf7ab17bb633dd79333516178c82aec7423a6300

 

Ethereum currently seems far too expensive for small value USDC transactions until gas fees come way down. 

 

USDC transfers on other chains appear much cheaper.  For example, 15 cents to transfer $250 USDC on Avalanche:  https://snowtrace.io/tx/0x0f21d42026b6f9efd0be2515e4c1a30297787418ca1c0996859ad7d3a5f916ee

 

[TwoCitiesCapital]

4 hours ago, thepupil said:

Good point, yea assume that.

 

more succinctly, do stablecoins circumvent KYC and/or reduce transaction costs for remittances/cross border payments?

 

The creation/redemption is done via institutional entities similar to an ETF. Not anyone can just create/redeem the coins. 

 

That being said, the coins circulate via Ethereum network and can be acquired via decentralized exchanges and sent between anonymous wallets.

 

That being said, it's harder and harder to get anonymous wallets and cash into the crypto ecosystem without hitting KYC at the onramps. I'm sure it can be done, but wouldn't know how. 

 

42 minutes ago, KJP said:

 

I've been poking around to find out more about USDC.  As far as I can tell, small dollar USDC transfers on the Ethereum chain are expensive.  For example, here are some transfers in the last hour, with USD cost derived from current ETH price:

 

$39.52 fee to transfer $175 USDC:  https://etherscan.io/tx/0xb59571d03f1d3f1f6549f121786f82dfe972558890059488473e3f5609778cc3

$42.00 fee to transfer $338 USDC:  https://etherscan.io/tx/0x952f0e5cf1502f3c047890abacbe2119c96182df7d46c6873eb21c5e760cf569

$36.83 fee to transfer $821 USDC:  https://etherscan.io/tx/0x13879fb45cfb6c470d1d8de4cf7ab17bb633dd79333516178c82aec7423a6300

 

Ethereum currently seems far too expensive for small value USDC transactions until gas fees come way down. 

 

USDC transfers on other chains appear much cheaper.  For example, 15 cents to transfer $250 USDC on Avalanche:  https://snowtrace.io/tx/0x0f21d42026b6f9efd0be2515e4c1a30297787418ca1c0996859ad7d3a5f916ee

 

 

Yes. Ethereum has become unusably expensive. Was $300 a week ago when I was forced into a transaction based on the contractual logic. They really made the system awful and gave their competition a foothold when they locked up like 80-90% of the supply for the move to Proof-of-stake while still requiring the remaining 10% act as the fuel for the entire system....and we're burning a portion of that 10% with every transaction. 

 

The arrangement absolutely favored token holders and scarcity over the usability of the eco system and was a terrible development IMO. Basically the same thing as if oil went to $300/barrel. Economic activity would crater. 

 

That being said, there are still ways to acquire it via centralized intermediaries that batch transactions and keep fees low to nil. Celsius and BlockFi are two I use to hold interest bearing deposits. Deposit fiat and get USDC or GUSD with no fees on deposits or withdrawals. Currently paying 8-9%. PM I'd you want referral codes. 

Edited January 16, 2022 by TwoCitiesCapital