Cryptos : no more QE, ZIRP and third part trust?

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Here we go, a few interesting claims by crapto-fans and the reality.

 

1. ZIRP. No interest policies by central banks are going to destroy the fiat currencies, cause rampant inflation and generally eliminate the human population (or something like that). 

 

How much interest do the craptos offer?

 

2. QE. Quantitative Easing, or supplying a large amount of liquidity out of thin air by the central bank. Will destroy the fiat currencies.

 

Isn't that exactly the same when new alt-craptos come into existence?

 

But it goes further.

 

https://news.bitcoin.com/tether-printing-press-in-high-gear-issuing-400-million-in-four-days/

 

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The amount of new bitcoins created each day is worth approximately $18 million. Miners need to sell most of these coins to cover their utility costs. This means that $18 million of new money needs to enter the markets daily just to maintain current prices. Given that $400 million of tethers has been issued over the past four days.

 

Tether is a crapto that is supposedly linked to the USD.

 

Quote

 In the short-term, the issuance of tethers serves as a form of quantitative easing that keeps the markets ticking over, even amidst negative news and regulatory uncertainty. As one commenter pointed out, “Tethers aren’t really ‘backed’ by USD fiat, but rather by confidence in Bitfinex itself.

 

3. Trust in third parties. Fiat requires trust in third parties, craptos will solve this.

 

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No one, at this stage, realistically believes that Tether is receiving $100 million a day in customer deposits via its diminutive Polish bank and then converting these into USDT. That just ain’t happening.

 

USDT is the acronym for tether.

 

So all those tethers are not really backed by what they would like to claim.

 

Hope those miners are managing to sell USD 18 million of bitcoins today. Otherwise they might find their electricity cut off.

[lkn]

The irony continues: Remember how bitcoin was supposed to allow peer-to-peer payments without needing an intermediary like a bank?

 

Well, bitcoin doesn’t scale, so they’re working on a secondary payment layer called Lightning Network.

 

A very rough explanation is that you do a time-locked deposit for 30 days with another person. After the 30 days, the deposit is returned to you, but if before the 30 days are up, you and the third party agrees to change how much is returned to you, and how much goes to the third party, you can do that (by both signing instructions that override the original instructions of returning it all to you).

 

They call this a “payment channel” but it really is just a time-locked deposit.

 

It does require one bitcoin transaction to setup a time-locked deposit, and it would require another bitcoin transaction to submit changed instructions. The idea is that you do not submit the change instructions until after 29 days, so in these 29 days, you can make many changes about how much goes back to you, and how much goes to the third party.

 

The problem is that if I meet a random stranger and want to pay them money, I won’t have an existing time-locked deposit with this person, and setting one up is no faster than just paying them directly (which won’t lock up my money for 30 days).

 

So the solution?

 

Everybody go setup a time-locked deposit with your exchange, then when I want to pay a random stranger, the exchange will effectively debit my “payment channel” (time-locked deposit) and credit the stranger’s payment channel.

 

Now what does that remind me of? Certainly not PayPal…

 

And if you’re thinking; wouldn’t there be a problem if the exchange’s portion of the stranger’s time-locked deposit is smaller than what I want to pay them: you are absolutely right, that would be a problem! So actually, this is not really like PayPal.

 

Of course this is all hypothetical as the Lightning Network is still not fully deployed.

 

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9 minutes ago, lkn said:

Of course this is all hypothetical as the Lightning Network is still not fully deployed.

 

Lightening Network is simply sticking a bodge on top in an effort to keep the thing going, and to overcome the huge delays. It will never gain acceptance.

 

Anyway, look at what is happening in China.

 

They are now making instant transfactions of annualised USD 9 trillion using mobile phones. Quick, convenient and with an eco-system that pulls people in. Wish I had invested in tencent. Maybe it is not too late? 

 

Don't see much blockchaining going on, which raises the question again, what do we really need it for? Is it just some techie fad?

 

It is worth a watch just to see Naomi. She is awesome........ 

 

https://www.wsj.com/video/series/moving-upstream/chinas-great-leap-to-wallet-free-living-moving-upstream/09D91AAD-5839-49C0-BFBD-E369F25C55FB

 

(I posted this in the business forum as well, as I am interested in seeing where PromptPay is going)