"We think that NFTs are going to play a really important role in the future of retail and social media, entertainment and commerce,'' says Cuy Sheffield, head of crypto at Visa"
Also:
“We envision there could be a future where your crypto address becomes as important as your mailing address,” Sheffield says. “In the same way Visa’s been here through shifts of commerce before, we're really excited to help drive this new shift of commerce in the future.”
The analogy isn't good. Casino chips corresponds 1-1 to dollars. It's not like you have to pay more for them if there is fewer around.
That being said companies benefiting from rising crypto currencies prices buying said currencies just to hold them (and therefore manipulating the price due to limited supply) should at least raise some eyebrows.
If you take the logical view that BTC et al today function more like assets than currencies, then an enormous number of actors in the equity markets are in the situation of buying an equity asset and benefiting if its price goes up (and often talking their own book as well).
Poker chips are like a stablecoin based on USD, an inflationary currency- a very poor investment indeed. I’d be quite worried if a business invested in USD, but they all try to.
Do most money managers want to buy casino chips? Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips? Get you buy chips on all major exchanges? Visa should be worried.
So this one time the entire economy of Albania imploded requiring a bail-out from the IMF because everyone got into a massive Ponzi scheme. [1]
Interestingly enough, it happened at a period of serious political instability - switching over from communism to capitalism. This lack of confidence in social institutions caused people to seek refuge in snake oil salesmen.
There's an awful lot of parallels in this story.
Cryptocurrencies are really, super stupid currencies. They fly in the face of everything we know about modern economics. They're slow, they're expensive, they're deflationary. People don't spend deflationary things, and an economy is built on the idea of money changing hands. They're stupid assets because they're backed by nothing. They're not productive, and the biggest are negative-sum investment vehicles with value constantly skimmed off by miners.
Crypto advocates are basically the anti-vaxxers of finance. If I've learned one thing from history and "Extraordinary Popular Delusions and the Madness of Crowds" it's not to underestimate this kind of insanity.
So, with that in mind, let me address your question head on:
> Do most money managers want to buy casino chips?
I mean, most money managers in 2008 wanted people to buy mortgage-backed securities did they not?
> Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips?
85% of all trading volume is ersatz counterfeit dollars. [2] It really is an open question just how big this market actually is. If it wasn't there would be a Bitcoin ETF. This is in fact the reason there isn't one.
Instead you've got Michael Saylor's next hell-ride, brought to you by the gentleman who lost more money in one day than anyone to date in 2000 when it came to light he was cooking the company books. The MicroStrategy company books. He settled for $11M. [3]
Your only legitimate point about them being really stupid is that they are slow.
But this evolving and improving. It's the only hurdle to crypto having all the properties of a real currency. And it will be fixed.
On the other side you have technology that has now been working for 10 years. Have scammers used it? Yes. But that doesn't mean the technology doesnt work.
Is it deflationary? Yes. So was almost all currency before the 1970s. Do you stop buying TVs and electronics because they'll be cheaper in a few years? Not many people do. Deflationary currencies can work too.
Well done on the ad hominem attack of crypto people being anti vaxxers though. Very good. Why not add trumper in as well? That will really scare people away.
Ok, so I disagree with everything else you posted but this is the most egregious.
> Is it deflationary? Yes. So was almost all currency before the 1970s.
Currency was not deflationary before the 1970s. It stopped being redeemable for gold at the end of Bretton Woods. That's not the same thing. You can see rates as high as +15% and as low as -12.5% in the early 1900s using CPI as a benchmark [1]. Gold isn't deflationary in the Austrian sense either, it continues to be mined meaning the supply continues to grow, and central banks could and in fact continue to adjust their supply.
> Do you stop buying TVs and electronics because they'll be cheaper in a few years? Not many people do. Deflationary currencies can work too.
Former top officials seem to have a nose for this. [1]
> Former acting Comptroller of the Currency Brian Brooks has resigned as the CEO of Binance U.S. after just over three months. He cited “differences over strategic direction.” Meanwhile, Binance is facing regulatory scrutiny worldwide, including in the U.K., Malaysia, Japan, Cayman Islands, Hong Kong, Thailand, Germany, and Lithuania. [editors note: that list has since grown]
> And only really relevant to those that are reliant upon nakamoto consensus…
Regarding speed and efficiency, yes, they principally apply to PoW coins.
> Former top officials seem to have a nose for this. [1]
They must see it all the time with all the rehypothication going on with sovereign paper on clearing house desks (and that's just what they see in their jurisdiction), so what's another "scam" on their resume.
> Regarding speed and efficiency, yes, they principally apply to PoW coins.
There are PoW chains that don't use nakamoto consensus algos…
I came across this[0] back in april, still doesn't address state growth (not many do except for the zk only contract capable chains i've seen under dev) but was the first PoW chain not using nakamoto consensus I saw (and I haven't been looking closely for non nakamoto consensus PoW stuff).
> Is it deflationary? Yes. So was almost all currency before the 1970s.
Do you have a source on that? As I recall deflation is associated with economic depressions, and from what I'm seeing it looks like the inflation rate has been almost always positive since the 40s.
>85% of all trading volume is ersatz counterfeit dollars. [2] It really is an open question just how big this market actually is. If it wasn't there would be a Bitcoin ETF. This is in fact the reason there isn't one.
Can you explain this? I'm interested in what you mean.
USDT is a fascinating story that I can't do justice in a quick post. The overwhelming majority of crypto trading isn't carried out against fiat currency but against a Stablecoin called Tether [1]. They settled recently with the NYAG, and lost access to doing business in New York at all a few months ago. The AG says:
> “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system."
The PDF is worth a read, pretty riveting stuff [3]. At various times they were completely unbacked by anything.
All their executives aparently received target letters from the DOJ as the subjects of a grand jury investigation re: bank fraud, and since printed up another $3B USDT. Rumor has it they only have 2 actual customers: Cumberland/DRW and Alameda/FTX.
As for the ETF connection, an ETF hoping to list disclosed that 95% of all crypto trading volume was fictional in 2019 [4].
More about USDT here: [older, 5, newer, 6]. Including a great episode of This Week in Startups by Calacanis. [7]
Classic coiner response - the defensiveness, the lack of substance.
But you're pointed in the wrong direction, friend. I've made a lot of money in crypto. That doesn't mean I don't see it for what it is, or think it should exist. In fact, I think you'll find the same is true of a lot of critics. Bitfinex'ed for instance.
I wonder if they have too much crypto laying around and they fear that converting it to fiat would affect the markets... In which case this might make more sense...
Coinbase being an exchange take a % of whatever volume is exchanged. The unit price doesn't matter beyond driving speculative volume. If CB were buying crypto assets to driv speculative volum I think they'd be breaking a lot of regulations?
Negative yielding sovereign trash with CB's as the marginal bid (or majority of the bid in some "markets") or at worst, the latest shit coins that your customers (institutions and individuals alike) are giving you fiat for and at best…
Is it possible they are privy to legislation coming down (in whatever country) that would require them to have a certain amount of actual crypto collateral at all times to back some of their transactions?
Is it possible that they would lobby for such legislation to stifle upstarts that won’t have this kind of purchasing power?
Shocking to see how out of touch hacker news is with crypto. I guess not much has changed since coinbase was launched on HN and faced a bunch of naysayers then also.
Shocking how every criticism of crypto is met with "you're out of touch" or "you're close minded" while the actual technical and social issues get overlooked.
Shocking to see how most criticism is just hand waving “technical and social issues” without citing any details.
And when they do those “issues” are almost all out of date and ignore current technology. Crypto uses too much energy ignores Ethereum converting to PoS in six months. Crypto has no practical use ignores $150 billion in decentralized finance applications today. Crypto is too slow and expensive to transfer ignores super high capacity L2s and rollups that are processing tens of billions in transactions today with essentially zero costs.
> Crypto uses too much energy ignores Ethereum converting to PoS in six months
If it doesn't get delayed yet again. And if it works. Also, right now it's BTC the one with the biggest market cap and name recognition, and I don't think that one is going to change anytime soon.
> Crypto has no practical use ignores $150 billion in decentralized finance applications today
Can I get a loan without 100%+ collateral yet?
> Crypto is too slow and expensive to transfer ignores super high capacity L2s
Tens of billions? Zero costs? Where is that?
You also forget the following issues:
- Irreversible transactions mean that scams, bugs and fraud are much more difficult to fight and revert. If someone steals my card I can cancel it and be safe. What if I lose my crypto wallet?
- DeFi does not actually bring anything new to the table other than "decentralized". It will still have to deal with all the problems of financing and loans, from scratch. Default risk, collection of collateral, predatory loans...
- The current economic system doesn't work too well with deflationary currency.
- Volatility. As long as crypto is more of an investment than a currency, people will prefer to have their actual money in something more stable. And as long as supply is limited, speculation will always be present.
- A big one: governments! It's pretty naive to think that governments are just going to give up monetary policy to an algorithm and a bunch of nodes in the blockchain.
- The main new thing from the blockchain is decentralization and authenticated record of transactions. Claiming that it's going to solve problem that have nothing to do with those two features is wishful thinking, usually from ignorance of the problem space.
Both of these sound like they made a regular bank, or a p2p lending platform. You could make exactly the same thing they're proposing without crypto. The goldfinch one is weird, as it completely glosses over the part of borrower defaults.
> Fast, feeles, higher tx troughput crypto, NANO:
This looks interesting, but the problem is the same as with Ethereum: too many coins, each with different technologies and protocols. Meanwhile, BTC still is the best-known one and the one with the highest market cap. The energy usage problem is not going away anytime soon.
This is quite common in trust less scenarios. We call them pawn shops or "empeños' in México. They are one of the most important lending instruments over here given the high default rates and lack of legal means to get money back for a non-collateralized loan.
Except that in this case, the collateral needs to be actual money. While in real life you can give someone a physical thing, you can't give it in the virtual world (and NFTs do not matter here: if I have the NFT title to your house but I can't evict you from it and sell it, it's useless).
These DeFi loans are less useful than pawn shops. That's the point they're at right now.
One issue with crypto is that it doesn't produce any value (it consumes value) and it has no intrinsic value. So as an investment it doesn't make any sense.
It's pretty obvious to me: it's a sign of the aging of HN average reader. I experienced the same phenomenon in Slashdot back in the day: Comments in the first years were very interesting, constructive and enticing. As the population grew older, it started questioning everything without analysing (less space than a nomad?). Nowadays the level of the conversation there is terrible.
It is similar to what happens in the mainstream: I'm 40 years old. I see chatroulette, snapchat, ticktock and dont understand them. I could dismiss them as stupid, unnecessary and fads. But the truth is that they are new takes on old subjects that maybe I dont understand; whereas 20 years ago I was on top of what was new or yet to come.
I mean, Long Island Iced Tea -> Long Blockchain Company got the "yay" [sic] of Wall Street but the "nay" of "people who recognized that an Iced Tea company claiming they could magically reinvent their business around blockchain with no specifics as to how"; and subsequently it turns out that, actually, there was no business plan and it was an insider trading pump and dump move. I'm sure before the insider trading charges that the executives of the company were absolutely happy to have market approval and leases on yachts, as anyone would be.
I should say, I think Coinbase is relatively well situated to capitalize on crypto, and it's a real business. I also think it's pretty well situated to shrink and deleverage if there's a decline in the crypto market. I don't think they're a scam.
I just mean that using market approval as evidence that the market is real, not a scam, not a trend, or does something useful is foolish. The point-in-time correlation of market success and fundamental success is nearly 0, even if the long-term correlation is very high.
Recently see also: NFT mania. Surely you'd rather be the artist that gets paid $50 million for selling some bits even as the process is widely derided, since you the artist aren't the bag-holder later on when it turns out the bits aren't worth $50 million.
I know a dev (used to work from Leeds UK, i don't know where he is actually) who created a crypto with 2 friends for someone who had the "yay" of Wall street. Long story short, he collected 200k for a 3-month job as actual payment, and another 600k when he sold his shitcoins (that's what he shared in our alumni group at least), i think the shitcoin creator escaped with 3M and a lot of people actually lost money.
I thought it was funny and an actual tax on stupidity, but now i understand that it was targeted at poor and/or young people who did not really had to money to loose in these schemes.
