Will DeFi Kill Banks?

[userabcd]

52 minutes ago, Neeranam said:

Btw, when I posted this last Friday, bitcoin was $43,300. Now it is $51,700 ???? 

OK and next week it could be up or down.

[Neeranam]

13 minutes ago, userabcd said:

OK and next week it could be up or down.

Yes, but the risk reward ratio is definitely worth an investment, even if it just to hedge against your other investments. 

The experts, like Raul Pal, are saying $400,000 Bitcoin at the end of this cycle in 4/5 months. 

 

If you know any better investments, please let me know!

[lkn]

Banks were also bullish on subprime mortgages.

 

If there is profit to be made, they will be there! And with this much interest, there is money to be made on trading fees and custodial services. Just look at how much of RobinHood’s profit comes from crypto trading (60% of their accounts trade crypto), or how many billions CoinBase are extracting from their users. Yes, the banks want in on this!

 

But go back and read the interview with the Ripple CEO that I posted. Ripple is a self-proclaimed “enterprise blockchain company” (and pushing their own token), nonetheless, their CEO said in very unambiguously terms that banks do not want blockchains because there are scalability and privacy problems.

 

Blockchain does not solve a technical problem that the financial industry have, but it is currently a new source of revenue for banks, it’s gambling camouflages as investment.

[mjnaus]

5 minutes ago, lkn said:

Blockchain does not solve a technical problem that the financial industry have, but it is currently a new source of revenue for banks, it’s gambling camouflages as investment.

Alright bud; you’ve made it painfully obvious that you don’t get it. Let’s move on. 

[lkn]

38 minutes ago, mjnaus said:

Alright bud; you’ve made it painfully obvious that you don’t get it. Let’s move on. 

And you have made it painfully obvious that you can’t argue facts or answer simple questions like how value is created in a zero sum game, so instead you try to discredit your opponent with derogatory statements.

Edited October 6, 2021 by lkn

[mjnaus]

14 minutes ago, lkn said:

And you have made it painfully obvious that you can’t argue facts or answer simple questions like how value is created in a zero sum game, so instead you try to discredit your proponent with derogatory statements.

I can live with that ????

[HenryfromMalaysia]

Need to ask why bitcoin and crypto appears in the first place.

It is the money printing and inflation.

Bitcoin is capped at 21 million which somehow sort out the money printing thing (ethereum has no cap but that is a different story below) and also inflation.

The ex facebook twin brothers and also the bitcoin creator understand about this money printing flaw hence bitcoin was created.

If you have 1 full bitcoin, then you will be one out of 21 million in this 8 billion planet. Simple.

 

Ethereum which has no cap argues that overtime the additional ether every year will be small in terms of inflation which I disagree personally. But ether have usage, while bitcoin don't have.

 

As for other alt coins, until proven the usage in our daily life, to me it is still zero.

 

Above is just my thoughts and yes I am a long term holder of bitcoin and ethereum (although I don't agree with ether)

 

Saw this on another forum but this fellow got hit hard for posting :-

Banks, Central banks are run by the old system ie people over the age of 50 and they want to continue controlling the market.
Crypto is for the young and wanted a change from the old system.

One thing I don't agree about central bank is how can the interest rate be determine by just a handful of people. Back in the days when interest rate goes up and down, these few central bankers will have positions in the market before announcing their votes on the interest rate. Google Nancy Polesi. She have so many positions in the market.
The old are in control and they will want to continue milking it.

 

 

 

[mjnaus]

24 minutes ago, HenryfromMalaysia said:

Ethereum which has no cap argues that overtime the additional ether every year will be small in terms of inflation which I disagree personally. But ether have usage, while bitcoin don't have.

 

Although Ethereum does not have a programmed cap for it's platform token, its future appears to be one of net deflation, whereas Bitcoin will remain disinflationary until its cap is reached. Since the implementation of EIP1559 transaction fees are now being burned. This alone reduced ETH's inflation rate to around 2% (whereas it previously hovered around 4%, for comparison Bitcoin's inflation rate is around 4% until the next halving). Once "the merge" happens, deflation will become a reality.

I am part of the team developing the Ultrasound Money site, which tracks the burn rate amongst other things. We implemented a nice toggle to simulate what happens after the merge (net negative inflation of around 2%). The only real variable in the used models was the burn rate, for which we now have real data. Once we switch to PoS, block rewards will be reduced from 2ETH to ~0.2ETH (so a factor 10 reduction). Granted, the burn rate will never be set in stone, but we now have about 2 months of actual data to work with. Even during times where transaction fees are lagging a bit, the inflation rate will still be negative. 

 

Bitcoin's hard cap is overrated. I'd take a deflationary asset any day over a hard cap inflationary one. So even though you're not liking ETH as much as you do Bitcoin, I'd argue you're making the right decision holding some ????

[HenryfromMalaysia]

Thanks mjnaus. have only one full ether which is 'hold for life' so just wondering if should stake it for 5% on ether 2.0 but will be tempted to sell 'hold for life' if every double price from now. If....

[sucit]

There seems to be news popping up of Brazil about to legitimize Bitcoin as an official payment system something or other. I obviously don’t know the details. 
 

what I do know is every time there is a development, it’s always… oh, that just little El Salvador. Oh never mind that, it’s just Brazil they are nobodies. Oh, it’s outperforming everything even after a huge crash, that’s worthless. It’s gonna get banned. And on, and on 

[mjnaus]

52 minutes ago, HenryfromMalaysia said:

Thanks mjnaus. have only one full ether which is 'hold for life' so just wondering if should stake it for 5% on ether 2.0 but will be tempted to sell 'hold for life' if every double price from now. If....

If you’re holding it long term, might as well stake it and make some more. There are several solid “liquid” staking pools (Lido, RocketPool) which give you a token in return for staking ETH. For example, Lido gives you stETH in return for locking up ETH. This token can then be used in DeFi. I have a good amount of ETH staked with Lido and have dumped all of the stETH in Curve. The Curve tokens are then deposited in a Yearn vault. All in all, this strategy earn about 11% APY (or thereabouts). Once the merge takes place, we expect staking yields to go up significantly. Not completely without risk of course; but it’s all good fun ???? 

[mjnaus]

2 minutes ago, sucit said:

what I do know is every time there is a development, it’s always… oh, that just little El Salvador. Oh never mind that, it’s just Brazil they are nobodies. Oh, it’s outperforming everything even after a huge crash, that’s worthless. It’s gonna get banned. And on, and on 

Yep, so true. It’s all the standard rhetoric. Everything is dismissed out of the gate, without any nuance, reason or rational. Borderline religious fanatics. Best not to engage with these people, as they’re not at all interested in an actual discussion (although of course they claim that is what they want). Then again, these threads to tend to have high entertainment value ????

[lkn]

Wow! Talk about wearing blinders!

 

Take e.g. El Salvador, it was previously brought up as “see, countries are adopting it” and I linked to an article about their current energy usage, which shows they are mining at a loss, and even if they could use geothermal energy, consumers in El Salvador will indirectly pay via higher energy prices, because they are a net importer of energy, so it’s not like Iceland, which has enough energy to spend on e.g. aluminium smelting.

 

I also pointed out that if we are to believe Nayib Bukele’s numbers, it seems very much like he is seeding unbacked virtual dollars into his economy. So it starts to look more and more like the government trying to print their own money, which they currently can’t, because their economy is based on USD, rather than the anarcho-capitalistic system that many bitcoin proponents want.

 

I further raised the point that half the population is without internet, so this is useless for the poor.

 

But comments like that get zero engagement, and a few posts later, we are back to “you just don’t get it”, “do your own research, I don’t have time to explain why it is great”, or “but price is going up, so it must have value”.

Edited October 6, 2021 by lkn

[Neeranam]

1 hour ago, lkn said:

I further raised the point that half the population is without internet, so this is useless for the poor.

Cardano are working with African countries and internet is not needed. 

[Neeranam]

1 hour ago, lkn said:

Take e.g. El Salvador, it was previously brought up as “see, countries are adopting it” and I linked to an article about their current energy usage, which shows they are mining at a loss, and even if they could use geothermal energy, consumers in El Salvador will indirectly pay via higher energy prices, because they are a net importer of energy, so it’s not like Iceland, which has enough energy to spend on e.g. aluminium smelting.

There are better cryptos than Bitcoin, much better. 

[ThailandRyan]

1 hour ago, lkn said:

Wow! Talk about wearing blinders!

 

Take e.g. El Salvador, it was previously brought up as “see, countries are adopting it” and I linked to an article about their current energy usage, which shows they are mining at a loss, and even if they could use geothermal energy, consumers in El Salvador will indirectly pay via higher energy prices, because they are a net importer of energy, so it’s not like Iceland, which has enough energy to spend on e.g. aluminium smelting.

 

I also pointed out that if we are to believe Nayib Bukele’s numbers, it seems very much like he is seeding unbacked virtual dollars into his economy. So it starts to look more and more like the government trying to print their own money, which they currently can’t, because their economy is based on USD, rather than the anarcho-capitalistic system that many bitcoin proponents want.

 

I further raised the point that half the population is without internet, so this is useless for the poor.

 

But comments like that get zero engagement, and a few posts later, we are back to “you just don’t get it”, “do your own research, I don’t have time to explain why it is great”, or “but price is going up, so it must have value”.

I guess you can believe what you want, but others including myself see it differently, and have made plenty in the "con" or was it "Gambling in Camouflage" as you call it, I forget, can you please remind me.

[mjnaus]

15 minutes ago, Neeranam said:

There are better cryptos than Bitcoin, much better. 

Shhhh, don't make things too complicated.

 

For those who oppose and dismiss anything crypto-related, it's much easier to consider "crypto" as one, single "thing". The mental gymnastics required to oppose say ETH-maxis (who can't stand Bitcoin) or Cardano fanboys (who hate Ethereum) would be nearly impossible to perform (since it requires in-depth knowledge of these projects). Hence, in their simplistic worldview, if you think a certain blockchain/crypto project has potential, you'll now suddenly have to defend the industry as a whole including the pet-rock that is Bitcoin and outright scams like Onecoin. Let's keep things simple: Bitcoin = crypto, and crypto is bad/useless/scam/unsafe/hacker-prone/run by Ukranian mafia/etc. Let's not bring any nuance into this ????

 

Of course the reality is much more complex. The entire industry is very, very fragmented. But having these non-sensical, ill-informed discussions on multiple fronts with knowledgable people who only see merit in specific projects is too much to handle, even for the hardcore anti-crypto crowd. 

Edited October 6, 2021 by mjnaus

[lkn]

2 hours ago, Neeranam said:

Cardano are working with African countries and internet is not needed. 

What problem are they working with African countries to solve?

 

You actually think that African farmers, with a low literacy rate, wants to buy a battery operated electronic device to exchange digital tokens instead of cash?

 

This is not solving any problems, this is just some spoiled kid’s misguided idea of helping the poor.

[mjnaus]

1 hour ago, lkn said:

What problem are they working with African countries to solve?

 

You actually think that African farmers, with a low literacy rate, wants to buy a battery operated electronic device to exchange digital tokens instead of cash?

 

This is not solving any problems, this is just some spoiled kid’s misguided idea of helping the poor.

Another perfect example of how clueless you are. And of how the religious anti-crypto crowd will simply dismiss everything without having a clue what it really is they’re dismissing. 
 

if you would have bothered to just run a simple Google search query, you’d know that Cardona is doing some form of on-chain identity management for a couple of African governments. Nothing to do with crypto currencies. 
 

But hey, why let some actual research and knowledge about the space stand in the way of some nice, uninformed drivel about all of crypto/blockchain tech being useless.

 

You can’t be surprised people don’t take you serious after posting stuff like this?

Edited October 6, 2021 by mjnaus

[lkn]

In other words: You can’t answer the simple question of what problem they are solving.

 

You could have used the chance to enlighten us, instead you just hurl more insults and again a vague claim with no supporting evidence.

 

[The Cipher]

9 minutes ago, lkn said:

In other words: You can’t answer the simple question of what problem they are solving.

Some random problems/innovations from the general crypto space; no particular order:

 

Major potential for opex reduction. Uniquely verifiable information - prevention of counterfeiting, proof of ownership, and veracity of records. Decentralized worldwide networks not subject to a central control point and related vulnerabilities. 24/7 markets traded globally. Cheaper remittances and transfers w/ instant settlement. Store of electrical power generated during off-peak times. Source of catch-up growth; applies to entities ranging from nation states through to individuals. Intermediary removal via immutable records on blockchain, as well as smart contracts, open many avenues for intermediary reduction or removal. Potential for structurally higher yield options for retail investors even in a theoretically mature market via removal of bank spreads - a specific form of intermediary removal. NFTs are becoming a foundational and essential keystone block of the metaverse, which is increasingly being built out on Ethereum. There's more.
 

I condensed that into an annoying-to-read paragraph of single sentences, but every one of those sentences is brimming with applications and can be expounded on in detail (no, I won't do it). There are a lot of issues with the crypto space, but "they don't solve any problems" is probably not the direction I, personally, would go in to start making a bear case.

[mjnaus]

20 minutes ago, lkn said:

In other words: You can’t answer the simple question of what problem they are solving.

 

You could have used the chance to enlighten us, instead you just hurl more insults and again a vague claim with no supporting evidence.

Again, a simple Google query goes a long way. But since you can't be bothered, here you go: https://africa.cardano.org/. How's that for "supporting evidence"? 

 

And I never said Cardano is solving anything with their Africa deals (apparently the Ethiopian government appears to think so, but let's put that aside). I replied simply to point out that you haven't got a clue, yet still feel the need to continue vent your opinion on how its all useless. 

 

Myself and others have tried, for 6 pages now, to "enlighten" you. Surely the one thing we can agree on is that that has proven to be a pointless endeavor? It's really not rocket science, my friend. You want to be "enlightened"? Open yourself up to the possibility that maybe, just maybe, you're not entirely correct and some of these blockchain projects have merit and potential. That'd be step one. Now, onto step 2.... instead of claiming you know what's happening in the industry, actually do some research (hint: watching the talking heads on CBN discussing how Bitcoin is used by hackers ain't actual research), join some Discord groups, join some Telegram groups, sit in on some of the dev calls for the leading projects, etc.

 

But as long you remain unwilling to open your mind just a tiny bit, no matter how much effort anyone puts into trying to "enlighten" you, it'll continue to be pointless exercise.  

[lkn]

41 minutes ago, mjnaus said:

Again, a simple Google query goes a long way. But since you can't be bothered, here you go: https://africa.cardano.org/. How's that for "supporting evidence"? 

That page does not say what problem is being solved.

 

What it says is that they have partnered with Ethiopia's Ministry of Education to create a blockchain-based digital identity for 5 million students.

 

But why does the Ministry of Education need a blockchain to run their identity system? Most countries in Europe have a national identity system used to sign official documents, log in to your bank, etc., and none of this needs blockchain.

 

In fact, a public blockchain would probably leak information that should not be leaked, and you could have some issues if people lose their private key / identity (which, with 5 million students, is definitely going to happen).

[lkn]

Adding to the above, the “solving problems in Africa” actually started with this bold claim: “Cardano are working with African countries and internet is not needed”.

 

I see a pattern where bold claims are made, then when digging a little, and it turns out there is nothing, we are back at the insults.

 

But then later, we get a repeat of these bold claims. For example, the entire remittance thing we already went over, with quotes from Ripple CEO saying blockchains are not what the banks want.

 

Give me just one problem that is actually being solved by blockchain now, not possibly in the future, and not just some company adding blockchain to their press release to be vogue.

 

And tell me how it is possible for all of us to invest $100 in buying coins, and then all of us end up with more than $100 worth of value. And don’t just brush it off as “you wouldn’t understand” or “do your own research” — I did the math, it does not compute.

Edited October 6, 2021 by lkn

[The Cipher]

1 hour ago, lkn said:

And tell me how it is possible for all of us to invest $100 in buying coins, and then all of us end up with more than $100 worth of value. And don’t just brush it off as “you wouldn’t understand” or “do your own research” — I did the math, it does not compute.

I'll explain this one. Although it could also be Googled as well.
 

What determines the real-time stock price in any public market (tradfi or crypto) is bid-ask pressure. Prices are marked based on the moving bid-ask equilibrium on exchanges during open-trading periods, which for crypto is 24/7 (hey, an innovation in action!). Essentially the market price is given by the price of the most recent transaction. So the floating value of your asset is always marked to that price.

 

But what would happen if a ton of people wanted to sell at once? Well, the massive number of orders on one side of the trade would need to find counterparties on the other side to fill them, creating a buyer's market and pushing down prices to find a willing buyer. So realized returns for market participants would (a) differ from each other; and (b) deviate from the previous equilibrium price. If there were no willing buyers at all, the asset value would drop to zero.

 

This is how all financial markets function. It is not a quirk of crypto. For instance if every shareholder of AAPL wanted to liquidate at the same time, they would encounter an identical problem. In public markets where nobody wants to sell a stock and folks want to buy (think positive earning surprise), prices quickly gap up.

 

To hammer the point home, do you own real estate? If so, did real estate in <your home city here> appreciate since the start of the pandemic? How did everyone end up with more nominal value than they put in? Now what would happen if everyone tried to realize those values at the same time by putting their houses up for sale?

 

So hopefully that clears this issue up.

---

Bonus note: The peculiarities of the crypto market result in price movements that happen a lot faster than most other asset classes. Reasons for this include coins off exchanges; illiquidity; availability and use of callable leverage; leverage rehypothecation; and herding behavior resulting in market participants that tend to cluster on one side of a trade depending on fear/greed consensus.

[ThailandRyan]

Here is a link to a Fed writeup where they believe that Cryptocurrencies could reduce reliance on Fiat, along with other things that could also weaken the USD.  Seems that many just like China are working on creating their own digital currencies. Crypto has definitely awoken people to a new asset class while some on here feel it is nothing more than a sham, yet BofA seems to also be on board.....hmmm

 

https://www.theblockcrypto.com/linked/119664/digital-currencies-could-reduce-reliance-on-the-u-s-dollar-says-new-fed-paper?utm_source=coinbase&utm_medium=rss

 

"Regarding digital currency, the Fed staffers wrote: "A shifting payments landscape could also pose a challenge to the U.S. dollar's dominance. For example, the rapid growth of digital currencies, both private sector and official, could reduce reliance on the U.S. dollar."

 

The Federal Reserve has seen increased political pressure to account for its work on crypto, particularly a central bank digital currency. The Fed itself has been hesitant to commit one way or the other to the issuance of a digital dollar, which current chair Jerome Powell maintains would require congressional approval anyway.

[Neeranam]

Someone mentioned beanie babies, which I've never heard. The following guy mentions it and calls us idiots. Who is the idiot now, with bitcoin trading at $55,000. In this vdo, Bitcoin was at $7,000 when this was made. If you have bought crypto, despite the continual abuse from those not in the know, congratulations! 

 

 

[userabcd]

16 hours ago, sucit said:

There seems to be news popping up of Brazil about to legitimize Bitcoin as an official payment system something or other. I obviously don’t know the details. 
 

what I do know is every time there is a development, it’s always… oh, that just little El Salvador. Oh never mind that, it’s just Brazil they are nobodies. Oh, it’s outperforming everything even after a huge crash, that’s worthless. It’s gonna get banned. And on, and on 

Would you be referring to dinosaurs with no ears?

[Neeranam]

The wise, including George Soros, are selling stocks and buying cryptos. 

[mjnaus]

7 hours ago, The Cipher said:

I'll explain this one. Although it could also be Googled as well.
 

What determines the real-time stock price in any public market (tradfi or crypto) is bid-ask pressure. Prices are marked based on the moving bid-ask equilibrium on exchanges during open-trading periods, which for crypto is 24/7 (hey, an innovation in action!). Essentially the market price is given by the price of the most recent transaction. So the floating value of your asset is always marked to that price.

 

But what would happen if a ton of people wanted to sell at once? Well, the massive number of orders on one side of the trade would need to find counterparties on the other side to fill them, creating a buyer's market and pushing down prices to find a willing buyer. So realized returns for market participants would (a) differ from each other; and (b) deviate from the previous equilibrium price. If there were no willing buyers at all, the asset value would drop to zero.

 

This is how all financial markets function. It is not a quirk of crypto. For instance if every shareholder of AAPL wanted to liquidate at the same time, they would encounter an identical problem. In public markets where nobody wants to sell a stock and folks want to buy (think positive earning surprise), prices quickly gap up.

 

To hammer the point home, do you own real estate? If so, did real estate in <your home city here> appreciate since the start of the pandemic? How did everyone end up with more nominal value than they put in? Now what would happen if everyone tried to realize those values at the same time by putting their houses up for sale?

 

So hopefully that clears this issue up.

---

Bonus note: The peculiarities of the crypto market result in price movements that happen a lot faster than most other asset classes. Reasons for this include coins off exchanges; illiquidity; availability and use of callable leverage; leverage rehypothecation; and herding behavior resulting in market participants that tend to cluster on one side of a trade depending on fear/greed consensus.

Excellent explanation.

 

Two things I’d like to add: first off, what @lkn and many others often seem to miss is that when prices go up, nobody is actually magically ending up with extra $$ in their pockets. Unrealized gains of an X amount of value does not automatically translate into realized gains. This does not happen until the underlying asset gets sold. Now, as @The Cipher pointed out, if everyone were to try to convert their unrealized gains into realized gains by selling the underlying asset, this would put tremendous pressure on the asset’s spot price which would quickly go down. In this aspect, digital assets don’t behave differently from other assets such as stock where the same principle applies. 
 

As to how value gets created; consider the following example on the Ethereum network: every epoch (arbitrary amount of time) a block gets added to the chain for which the miner or validator gets rewarded a certain amount of freshly minted ETH. This is ETH that did not exist previously and that now gets added to the marketcap of Ethereum. Voila; value created! As long as the issuance of fresh ETH is below the demand for ETH, prices will continue to experience upward pressure. This needs to happen to continue securing the network (rewarding validators for new blocks). 
 

As long as demand continue to outpace supply, prices will experience upward pressure. Now, the critics will continue to argue the demand side; “why would anyone want to buy ETH” and “it has now value” etc. It OBVIOUSLY does have value, otherwise prices would not expirerende upward pressure. Just because you don’t understand the demand side, does not mean it doesn’t exist. You can sit there all day and argue that everyone buying these assets are fools and are falling victim to a scam, etc. All of that does not take away from

the fact that there is larger demand for these assets than there is supply. And when demands slows down; there are corrections in price (as there would be on any functioning market), but the sky doesn’t fall… the market rides out the correction and continues as it would.
 

Again, crypto does not differ from day stocks for that matter. Some

might say there is absolutely no value in a certain stock, while other think it’s undervalued. This also shows that investing in an asset simply because you expect it to go up, isn’t all that bizar. It’s what investors do on traditional markets every single day. 
 

“Value” is a funny, fuzzy and totally subjective thing. But stocks have company fundamentals and dividends that underpin their value, some might say… Looking at fundamentals went out window with regards to valuing stock prices a long time ago. Current stock prices have nothing to do with fundamentals or dividends (which most stocks do not pay, and if they do it’s so low, it really isn’t a factor anymore). Furthermore, blockchains like Ethereum and Terra have protocol revenue and other fundamentals that would allow traditional fundamentals investors to value the protocol tokens based on those fundamentals (some investors are actually taking that approach).

 

Second, to the point of market volatility, in addition to the points made by @The Cipher with regards to the markets being most unregulated allowing for rather extreme levels of leverage, etc. Some argue that the volatility is a feature of true free markets that are allowed to function without any interference. 

Edited October 7, 2021 by mjnaus