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Crypto crash?

How to buy, profit and invest in crypto currencies or NFTs
Hallucigenia
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Re: Crypto crash?

#500227

Postby Hallucigenia » May 13th, 2022, 11:15 am

GoSeigen wrote:I don't buy the short attack theory. Did shorters profit from the falls? Of course. Were they the cause of the price collapses? No.

You don't need to be an expert to know that the "value" of these crypto coins has been a fantasy all along, so the story is a simple one: normality returns; suckers lose everything.


There's always two sides to these things - an underlying misvaluation can persist for a long time and the trigger for it to be reassessed which can come sooner or later. It's like how the judgement in the Microsoft monopoly case was one of the main triggers for the collapse of the dotcom boom, even though pets.com and garden.com had passed the "daft" level of valuation many months before.

The attack theory is plausible though, it's nothing the market hasn't seen before many times - liquidity arbitrage, attacking a peg that everyone trusts but which is in fact built on sand, that kind of thing. For me the most shocking aspect of the story is how anyone believed the magic beans behind the Luna reserves - but fair play to them for having a go and trying to turn magic beans, into Bitcoin magic beans, into hard cash reserves as the basis of something "real". Just a shame for them that the music stopped before they'd grown any beanstalks.

Hallucigenia
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Re: Crypto crash?

#500804

Postby Hallucigenia » May 16th, 2022, 3:32 pm

Some more details emerging. You know how I mentioned their reserves of $3bn had collapsed to ~$90m last week?
https://finance.yahoo.com/news/luna-fou ... 43369.html
the $40 billion Terra ecosystem collapsed last week.... [so a ratio of 13x coins to reserves before the crash]

The "central bank" transferred over 50,000 (bitcoin, ~$2bn) for “directly executing on-chain swaps and transferring (bitcoin) to a counterparty to enable them to enter trades with the Foundation in large size & on short notice.”

The remaining $1bn went the next day by the look of their reserve statements. But it emphasises that the big deal was with a single counterparty redeeming A Lot of stablecoin in one deal.

LooseCannon101
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Re: Crypto crash?

#500863

Postby LooseCannon101 » May 16th, 2022, 11:24 pm

I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?

It seems to me to be a huge Ponzi scheme, with predators using new technology - the blockchain, to fool people into buying something that has no intrinsic value.

Hallucigenia
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Re: Crypto crash?

#500867

Postby Hallucigenia » May 17th, 2022, 12:19 am

LooseCannon101 wrote:I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?


The heavy electricity consumption and banks of computers are not needed for "maintenance" of the system, but to create new coins, which can then be sold for real cash. So your question is akin to asking why would de Beers pay for electricity and payroll to mine diamonds? Because they hope to find diamonds that are worth more than the electricity etc consumed in mining them.

Urbandreamer
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Re: Crypto crash?

#500923

Postby Urbandreamer » May 17th, 2022, 10:46 am

LooseCannon101 wrote:I have very little knowledge of crypto-currencies, but I believe that they require enormous amounts of electricity to power banks and banks of computers.

Who pays for this electricity? Why would anyone provide a service for nothing?

It seems to me to be a huge Ponzi scheme, with predators using new technology - the blockchain, to fool people into buying something that has no intrinsic value.


As has already been pointed out, it's not for nothing at all.
This morning I transferred £5 worth of Bitcoin on chain, to a new wallet as a test that I had the method right. What arrived was just over £4. I paid about 80p for your "free" service. But then I knew that it wasn't free.
No doubt some will now think the fact that you pay makes it a "Ponzi" scheme.

There are risks and scams, yes and probably true Ponzi schemes to be avoided. However Mr Ponzi used $'s as the currency of his scheme. Does that make the $ a Ponzi currency?

murraypaul
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Re: Crypto crash?

#500969

Postby murraypaul » May 17th, 2022, 12:50 pm

Hallucigenia wrote:The heavy electricity consumption and banks of computers are not needed for "maintenance" of the system, but to create new coins, which can then be sold for real cash.


The question then, is what happens after the final bitcoin is mined, and there are only mining fees left to pay for all that energy use.

Surely either the cost to mine has to drop dramatically, or the mining fees rise astronomically?

Ultimately, Bitcoin will only make sense as a high-tier backbone, to transfer very large amounts of money between a relatively small number of participants. Everything else will have to be off-chain.


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