Crypto bank high interest rate

[GuitarStv]

Can they weather such a fine?

If you can't pay the fine, don't do the crime.

[HeadedWest2029]

Here's a pretty insightful look at their loan balance sheet in regards to collateral. https://help.blockfi.com/hc/en-us/articles/4416057566228-What-are-the-risks-of-holding-my-crypto-at-BlockFi-
So they aren't overcollateralized, but they aren't crazy under-collateralized either.  $1.8 billion of loans not backed by collateral (or 20% of the BIA balance).  This makes me feel a little better

[Gatzbie]

Here's a pretty insightful look at their loan balance sheet in regards to collateral. https://help.blockfi.com/hc/en-us/articles/4416057566228-What-are-the-risks-of-holding-my-crypto-at-BlockFi-
So they aren't overcollateralized, but they aren't crazy under-collateralized either.  $1.8 billion of loans not backed by collateral (or 20% of the BIA balance).  This makes me feel a little better

In addition

"It is true that we do offer some institutional loans that have less or no collateral. For the past year we have taken to disclosing our net exposure for the public to see. The key is that we only offer under or uncollateralized loans to institutional clients after subjecting them to rigorous underwriting. Accordingly, they are counterparties of the highest caliber. To date, we have not seen any defaults from our unsecured institutional business."

"The BIA's are (and the BlockFi Yields will be) BlockFi corporate debt and will be treated as such in bankruptcy."

"The BIAs are unsecured credit of BlockFi. BlockFi does now and intends to, going forward, take on secured credit which may rank above customer assets in a bankruptcy."

Taken from a recent Reddit AMA:
https://www.reddit.com/r/blockfi/comments/st8xs9/ama_were_flori_marquez_founder_svp_of_operations/

[zut]

Following this thread closely to learn more.

I’m based in Singapore so while I have a Gemini account, the easiest way for me to fund crypto here is using Crypto.com because there’s a direct integration to fund SGD and buy USDC at 0 fees. Gemini is not that difficult but has higher fees just to buy and sell BTC/SGD and BTC/USD to have USD funds to buy other coins.

The additional risk for me is probably SGD-USD FX risk.

Crypto.com now offers a 3 month lock-in earn program for 10% p.a yield which I’m intending to move my bond allocation. It’ll all be in USDC stable coin so it’ll be less risky though yields can always change.

 I do think that Crypto.com has a chance to be one of the market leaders so I’m also planning to put some money into their utility coin (CRO) and then stake it with a validator who will then use it to validate transactions and share their profits (12+% p.a) in their Crypto.com Defi Wallet app to earn 12+% p.a. It’s more risky here because CRO price is more volatile and would fluctuate. But the benefits is that the returns can be claimed and restaked to compound returns.

Also trying out borrowing/lending through Aave.com Polygon (super low fees) to get more than 10% (the pros combine a few more other things to get crazy high returns) through leveraging with stable coins to also earn the rewards (Matic coin, which I also have high hopes on seeing this utility coin has helped me save loads of fees by avoiding transacting on the Ethereum blockchain).

Again, I’m rather conservative so I’m late in the game. Still learning from those who have started way earlier.

I own CRO and think they have big potential in the crypto banking space. 

[less4success]

Relevant to this thread, it looks like Celsius may be in trouble:

https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6

We are writing with a very important message for our community.

Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts.

[Wintergreen78]

Relevant to this thread, it looks like Celsius may be in trouble:

https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6

We are writing with a very important message for our community.

Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts.

And the company mentioned at the start of the thread is cutting staff. I’m interested in how this will play out.

https://www.cnbc.com/2022/06/13/blockfi-cuts-20percent-of-its-staff-as-bitcoin-plunges.html

[MustacheAndaHalf]

Relevant to this thread, it looks like Celsius may be in trouble:

https://blog.celsius.network/a-memo-to-the-celsius-community-59532a06ecc6

We are writing with a very important message for our community.

Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts.

And the company mentioned at the start of the thread is cutting staff. I’m interested in how this will play out.

https://www.cnbc.com/2022/06/13/blockfi-cuts-20percent-of-its-staff-as-bitcoin-plunges.html

Surprisingly, you need to be more specific about which crypto company is firing 20% of it's staff.  I think you're referring to BlockFi.  Coinbase just fired 20% of their staff.

https://www.newsweek.com/coinbase-fires-18-percent-workers-via-personal-email-after-crypto-crash-1715876

[less4success]

Update:

• Voyager has also suspended withdrawals (and deactivated debit cards): https://www.investvoyager.com/blog/voyager-update-july-1-2022/
• BlockFi got a bailout from FTX: https://blockfi.com/blockfi-signs-term-sheet-with-ftx

If you're eligible and haven't hit the $10k/year limit, consider buying Series I Savings Bonds instead: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

[Michael in ABQ]

Update:

• Voyager has also suspended withdrawals (and deactivated debit cards): https://www.investvoyager.com/blog/voyager-update-july-1-2022/
• BlockFi got a bailout from FTX: https://blockfi.com/blockfi-signs-term-sheet-with-ftx

If you're eligible and haven't hit the $10k/year limit, consider buying Series I Savings Bonds instead: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

I put a few hundred bucks in Voyager as they were offering a deal for $100 of bitcoin for signing up. Albeit that was last year when Bitcoin was closer to $60k. So, it looks like I may have a write-off for taxes next year due to bad investments if they also fold. Good thing I didn't put more than I could afford to lose in that and 99%+ of my investments are still in broad market index funds.

[ChpBstrd]

Crypto appears to be going through its version of the Great Depression. "Institutions" are folding everywhere.

What's funny is how people are throwing up their hands and saying "oh well, you win some stupid bets and you lose some stupid bets." It's a totally different reaction than if they'd lost a fraction of the money in their USD bank account due to fraud or theft. People are losing thousands of dollars and treating it like just another day at the casino because deep down they knew it was a game of musical chairs.

However, their apathy is why the founders of crypto-firms will get away with their crimes. As I noted elsewhere on this forum, it is practically a sure thing that most of the "hacks" that hit these firms are inside jobs. Now we hear that the trading websites were loaning each other coins? Ha!

[maizefolk]

What's funny is how people are throwing up their hands and saying "oh well, you win some stupid bets and you lose some stupid bets." It's a totally different reaction than if they'd lost a fraction of the money in their USD bank account due to fraud or theft. People are losing thousands of dollars and treating it like just another day at the casino because deep down they knew it was a game of musical chairs.

I've gotta remember this one for the future:

People are reacting too well to losing their money because they understood the risks they were taking and so were mentally prepared not only for the good potential outcomes but also the bad ones.

[PDXTabs]

What's funny is how people are throwing up their hands and saying "oh well, you win some stupid bets and you lose some stupid bets." It's a totally different reaction than if they'd lost a fraction of the money in their USD bank account due to fraud or theft. People are losing thousands of dollars and treating it like just another day at the casino because deep down they knew it was a game of musical chairs.

I've gotta remember this one for the future:

People are reacting too well to losing their money because they understood the risks they were taking and so were mentally prepared not only for the good potential outcomes but also the bad ones.

Yes, I think that there is actual academic research to show that the average crypto investor has a high risk tolerance and was also in other risky bets.

We find that cryptocurrency investors are more likely to trade penny-stocks and stocks featured in pump and dump schemes (Leuz et al., 2018). They are also more likely to participate in other investment vehicles with high idiosyncratic risk, such as emerging market, biotech, and solar-related ETFs. Comparing the portfolio return profiles of cryptocurrency and noncryptocurrency investors, we show that cryptocurrency investors have higher portfolio betas but lower portfolio efficiency, as measured by relative Sharpe ratio losses (Calvet et al., 2007). While the previous literature suggests that cryptocurrency can be used as a diversification instrument (Bouri et al., 2017), the cryptocurrency investors in our sample might underperform due to investment biases. We demonstrate that cryptocurrency investors are more prone to traditional investment biases, such as trend chasing and lottery-stock preferences. - Econstor: Who are the Bitcoin investors? Evidence from indirect cryptocurrency investments

[talltexan]

Thanks for the Voyager notice, I was chatting with a co-worker who looks to be out about $10,000 because of that bankruptcy. I have exposure about that great (in cost basis) to gemini--about half of that in their stable coin--and I'm pondering whether I'm too exposed.

[Michael in ABQ]

Thanks for the Voyager notice, I was chatting with a co-worker who looks to be out about $10,000 because of that bankruptcy. I have exposure about that great (in cost basis) to gemini--about half of that in their stable coin--and I'm pondering whether I'm too exposed.

Edit: I'm a day behind, they declared bankruptcy yesterday. I guess they didn't feel the need to email their customers that news.

Voyager doesn't appear to have declared bankruptcy yet. But apparently, they loaned hundreds of millions of dollars to a crypto investment fund that has declared bankruptcy. So, after digging through shell corporations and dealing with international law they may get something out of it, but it will take months or years and they may very well never see another dime.

So, it's not gone yet, but I'd say there's a fairly good chance my few hundred dollars, and you co-worker's $10k are gone.

[less4success]

Voyager did file for bankruptcy:

https://www.cnbc.com/2022/07/06/crypto-firm-voyager-digital-files-for-chapter-11-bankruptcy-protection.html

[HeadedWest2029]

I have exposure about that great (in cost basis) to gemini--about half of that in their stable coin--and I'm pondering whether I'm too exposed.

I mostly got out of BlockFi as soon as the Celsius news broke.  I had money at BlockFi and at Gemini, but kept my money at Gemini and still do.  I actually feel for BlockFi because they did everything right with collateralization with 3AC and quickly liquidated those positions when it appears 3AC was outright lying about assets to every CeFi company.  The combo of Celsius panic, plus a one-way exit from the platform with the SEC ruling earlier, made for a nasty bank run with no way for people to get back in until SEC approval.  Anyway, I still have money at Gemini because the lend exclusively to Genesis.  Genesis DID take a hit from 3AC https://www.coindesk.com/business/2022/07/06/genesis-confirms-3ac-exposure-dcg-assistance/ and confirmed by the CEO on Twitter, but they have much bigger pockets to absorb this sort of thing since the Genesis parent company is Digital Currency Group.  See CEO thread https://twitter.com/michaelmoro/status/1537822423806009344.  From what I gather, BlockFi was fully collateralized or overcollateralized with 3AC, but part of that collateral was GBTC, which was trading at 30% discount to NAV...so I guess not as collateralized as they originally were with there was a premium to NAV?  At least, that's what I gather from posts and podcasts.  Celsius felt like a ticking time bomb to me from the beginning.  What I can't understand with Voyager, is why they would lend $650m to 3AC with zero collateral.  Really? One single point of failure?  Makes no sense

Right now my cash bucket looks like this:
10% checking
40% online savings
50% Gemini - GUSD

I might do more DeFi / smart contract / overcollateralized stuff like Notional.Finance as well.  It takes the human folly part out of the equation at least (well, other than bad code), but I'm not sure I want the headache of keeping track of taxes with that or staking yet.

I feel for anyone who got burned by Celsius, Voyager, Vauld, Babel, etc.  Not sure CeFi recovers

[Michael in ABQ]

Voyager did file for bankruptcy:

https://www.cnbc.com/2022/07/06/crypto-firm-voyager-digital-files-for-chapter-11-bankruptcy-protection.html

My mistake. I guess I'm a day behind. Sounds like I may still get something out of it but I'm not going to hold my breath.

[HeadedWest2029]

This was well worth the listen, for those who have dabbled with CeFi.
https://awealthofcommonsense.com/2022/07/talk-your-book-blockfi/

[LucarO1]

Here's a pretty insightful look at their loan balance sheet in regards to collateral. https://help.blockfi.com/hc/en-us/articles/4416057566228-What-are-the-risks-of-holding-my-crypto-at-BlockFi-
So they aren't overcollateralized, but they aren't crazy under-collateralized either.  $1.8 billion of loans not backed by collateral (or 20% of the BIA balance).  This makes me feel a little better

In addition

"It is true that we do offer some institutional loans that have less or no collateral. For the past year we have taken to disclosing our net exposure for the public to see. The key is that we only offer under or uncollateralized loans to institutional clients after subjecting them to rigorous underwriting. Accordingly, they are counterparties of the highest caliber. To date, we have not seen any defaults from our unsecured institutional business."

"The BIA's are (and the BlockFi Yields will be) BlockFi corporate debt and will be treated as such in bankruptcy."

"The BIAs are unsecured credit of BlockFi. BlockFi does now and intends to, going forward, take on secured credit which may rank above customer assets in a bankruptcy. The key point is that we only make under or uncollateralized loans to institutional clients after rigorous underwriting. As a result, they are high-caliber counterparties. We have not seen any defaults from our unsecured institutional business to date."

Taken from a recent Reddit AMA actual promo code:
https://www.reddit.com/r/blockfi/comments/st8xs9/ama_were_flori_marquez_founder_svp_of_operations/

True, we do provide some institutional loans with little or no collateral

[HeadedWest2029]

Update since I've been active on this thread.  I'm pretty much out of the CeFi interest account game now.  I pulled the last of my stablecoins from Gemini Earn this week after the FTX / Alameda debacle.  For their part, Genesis which is the counterparty facilitating the lending book for Gemini, posted this week and say they only lost $7m.  https://twitter.com/GenesisTrading/status/1590391027214725120.  I have a tiny amount of bitcoin at BlockFi earning interest and the rest of my crypto is staked ETH on Gemini.  A few contributing factors... 1) rates have gone down.  Gemini is probably the easiest way to deploy new money without being an institutional investor and even if you use their stablecoins GUSD, it's now only 5.65% interest and 2) there are now far less risky assets that have similar interest rates.  For example, 3 month t-bills that are over 4%.  There's just too much contagion risk in crypto right now for the minimal difference in interest you can get.  The good news is we're no longer in the TINA environment (there are no alternatives)

[ChpBstrd]

Update since I've been active on this thread.  I'm pretty much out of the CeFi interest account game now.  I pulled the last of my stablecoins from Gemini Earn this week after the FTX / Alameda debacle.  For their part, Genesis which is the counterparty facilitating the lending book for Gemini, posted this week and say they only lost $7m.  https://twitter.com/GenesisTrading/status/1590391027214725120.  I have a tiny amount of bitcoin at BlockFi earning interest and the rest of my crypto is staked ETH on Gemini.  A few contributing factors... 1) rates have gone down.  Gemini is probably the easiest way to deploy new money without being an institutional investor and even if you use their stablecoins GUSD, it's now only 5.65% interest and 2) there are now far less risky assets that have similar interest rates.  For example, 3 month t-bills that are over 4%.  There's just too much contagion risk in crypto right now for the minimal difference in interest you can get.  The good news is we're no longer in the TINA environment (there are no alternatives)

Yea this whole FTX thing looks a lot like the start of the Panic of 1907, another era before regulations on what bankers could do with their depositors' money. It's a classic bank run, and with Binance out of the picture, and perhaps struggling to cover their own exposures, there is no equivalent of J.P. Morgan to organize a recapitalization this time. Binance looked at the books and ran the other direction, but I wonder if that was because of similarities in business practices rather than differences.

A lesson about bank runs is that they rarely stay confined to just one bank. FTX was reportedly capitalized in dollar terms by Softbank, Blackrock, Sequoia Capital, pension funds(!), and Tiger Global Management. One has to wonder which of these firms will face a liquidity issue next, and whether their losses will transmit to the major investment banks.

Still, you're right that the era of TINA is over. I was looking at investment grade corporate bonds from profitable companies yielding 7.5% to 8% this morning. That's an order of magnitude safer than trying to earn interest on probably-manipulated crypto. What's the point of jumping into such a gamble now?

[HeadedWest2029]

well there you go...
https://twitter.com/BlockFi/status/1590875997351866368/photo/1

and Genesis update https://twitter.com/GenesisTrading/status/1590836594382032896

[lost_in_the_endless_aisle]

well there you go...
https://twitter.com/BlockFi/status/1590875997351866368/photo/1

and Genesis update https://twitter.com/GenesisTrading/status/1590836594382032896

That Genesis tweet is almost in the same style as all of the others that were made 1 to 3 days before meltdown

[MustacheAndaHalf]

It seems like various crypto exchanges have money at risk, but for most it's not enough to shut down their normal operations.
https://www.coindesk.com/business/2022/11/09/who-still-has-exposure-to-ftx/

[firemane]

I left some money in there. Not enough to set me back sigfnificantly, but enough to sting and bother me quite a bit. I Cannot get it out and am feeling pretty dumb about it. I expect total loss of my funds. I used to be into crypto years ago and I am familiar that not your keys not your coins. The problem with personal wallets is that they are a massive hassle and require firmware updates. My experience with usb crypto wallets is that they can be as much hassle as rental properties

I believe after this I am completely done with crypto aside from whatever exposure index funds have to it. With a busy career I don’t have time to watch my ass for the next scam or bankruptcy 24/7.

[blue_green_sparks]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, I dumped the small amount I had making 6%. Maybe it was the wrong reason but at least I missed out on all this bad betting.

[SilentC]

I wonder if people come back to gold/silver as stores of value as people keep getting burned over and over again on crypto?

[lost_in_the_endless_aisle]

I wonder if people come back to gold/silver as stores of value as people keep getting burned over and over again on crypto?

Total gold in circulation is ~200,000 tons which is $12.5 trillion in value at current prices vs all crypto at $850 billion ($3 trillion at peak valuation). Silver by itself is ~$1.2 trillion, and the value of all copper mined at current prices is $6 trillion. If crypto were a publicly traded company, it would be a single large-ish blue chip stock. One thing crypto is good at is sucking all of the air out of the room.

[SilentC]

I wonder if people come back to gold/silver as stores of value as people keep getting burned over and over again on crypto?

Total gold in circulation is ~200,000 tons which is $12.5 trillion in value at current prices vs all crypto at $850 billion ($3 trillion at peak valuation). Silver by itself is ~$1.2 trillion, and the value of all copper mined at current prices is $6 trillion. If crypto were a publicly traded company, it would be a single large-ish blue chip stock. One thing crypto is good at is sucking all of the air out of the room.

Good point, also a lot of people and institutions are in the process of losing that $850bn so it’s not like that can all rotate into metals.

[ChpBstrd]

I believe after this I am completely done with crypto aside from whatever exposure index funds have to it. With a busy career I don’t have time to watch my ass for the next scam or bankruptcy 24/7.

I wonder how many other people feel this way. If the sentiment among current and former cryptocurrency owners is similar, it could mark the end of an investing fad. Comparisons of FTX and Enron seem to place us at about 2001 in a generational process of investors pulling back from risky and potentially fraudulent tech-adjacent investments.

For how many years before 2022 was it the smart advice to stick with the mainstream names like Bitcoin and FTX, because at least their future value was assured amid the ups and downs? Now it seems the whole concept is scammy or vulnerable, and the likelihood of people ever buying a stick of gum using a permanent-deflation cryptocurrency on a defi platform slips farther and farther away.

The difference between cryptocurrency and dot-com stocks was of course that at least some of the dot-coms had a bright future of value creation ahead of them despite what the stock market thought in 2003, while crypto and NFTs have only - until now - attracted speculative flows. There is no firewall between here and zero.

[MustacheAndaHalf]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

[Telecaster]

The dollar is the world's reserve current for a lot of reasons, one of which is that the dollar is the world's reserve currency, with the Euro right up there.   It is a lot easier to do international trade if both parties are using the same currency.   And it is even better if both parties can turn around and do deals with different international partners using that same currency.  Barely anyone uses Bitcoin for business transitions.  It is not even a rounding error of a rounding error. 

[blue_green_sparks]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

[GuitarStv]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

The ultimate goal was to enrich early adopters smart enough to sell when things started to take off.  And is succeeded for a great many!  I honestly don't believe there was any goal beyond that - just lies to convince the marks to prop up the value of the monopoly money.

[Michael in ABQ]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

I recall reading somewhere that the fundamental design of bitcoin was such that at most it could handle something like 6 transactions per second. That sounds like a lot until you think about the billions (trillions?) of transactions Visa, Mastercard, etc. process every year. I'm not sure how many per second that works out too- but it's certainly orders of magnitude greater. So, Bitcoin can never replace the dollar or Euro, it can maybe be something less frequently traded like gold or silver - but it can't be a currency used for everyday transactions.

[lost_in_the_endless_aisle]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

The ultimate goal was to enrich early adopters smart enough to sell when things started to take off.  And is succeeded for a great many!  I honestly don't believe there was any goal beyond that - just lies to convince the marks to prop up the value of the monopoly money.

There are many libertarian-leaning tech-utopians involved as well that are probably true-believers in crypto, e.g. Vitalik Buterin. Not everyone involved is a criminal; some of them are merely deluded and/or naive. Everyone agrees that Buterin, and many others involved, are quite smart (maybe this is a fairer video to share), which--given the opportunity costs--makes their utopian pursuit of crypto that much more tragic. (disclaimer: I'm very much a crypto-skeptic and could easily be wrong; maybe smart contracts on the blockchain will save the world some day)

[MustacheAndaHalf]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

You answered my question with a question, so let me ask again: what evidence shows the US dollar being replaced by Bitcoin or crypto as the global reserve currency?

[blue_green_sparks]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

You answered my question with a question, so let me ask again: what evidence shows the US dollar being replaced by Bitcoin or crypto as the global reserve currency?

I am not talking about this year or next but maybe in a few decades. I believe the US is on the decline side of the cycle as evidenced by an attempted coup, divided populace at each other's throats, inflation, massive debt, huge military budget yet unsuccessful military campaigns, expensive workforce and low participation, failing/dated infrastructure, unhealthy population and great wealth divide. The whole Dalio shebang. This is why the dollar will fall out and be replaced by something in the minds of people all over the world and that could very possibly be crypto. I catch the anti-US drift ever present in crypto-chat. So I just don't think it is beneficial and is possibly harmful to the US dollar in the long term. It is also one reason other countries such as China have banned it. They would prefer the next reserve currency be their own, I bet.

[MustacheAndaHalf]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

You answered my question with a question, so let me ask again: what evidence shows the US dollar being replaced by Bitcoin or crypto as the global reserve currency?

I am not talking about this year or next but maybe in a few decades. I believe the US is on the decline side of the cycle as evidenced by an attempted coup, divided populace at each other's throats, inflation, massive debt, huge military budget yet unsuccessful military campaigns, expensive workforce and low participation, failing/dated infrastructure, unhealthy population and great wealth divide. The whole Dalio shebang. This is why the dollar will fall out and be replaced by something in the minds of people all over the world and that could very possibly be crypto. I catch the anti-US drift ever present in crypto-chat. So I just don't think it is beneficial and is possibly harmful to the US dollar in the long term. It is also one reason other countries such as China have banned it. They would prefer the next reserve currency be their own, I bet.

That's interesting.  In your view, various problems in the U.S. are risks to the US dollar, which in turn will convince other countries to find an alternative.  It sounds like you assume a better alternative will be found, but I think that's the whole problem.  The dollar has made strong gains against both the Euro and Chinese Yuan... so inflation seems to favor the US dollar, rather than being seen as a weak spot for the US (side note: inflation is worse in Europe).

China has limited currency outflows at various times, which makes it unusable as a reserve currency.  If you owe a debt in Chinese Yuan, and China won't let you buy Yuan to repay it, you're going to have a big problem.  US Treasuries are the most liquid (free flowing) market, which helps them as a reserve currency.

Bitcoin lost 75% of it's value from its peak, so anyone buying things with Bitcoin has seen +300% inflation.  Compare that wild swing with the level of inflation in the 7-8% range, which is already making people angry.  How angry would people be over +300% inflation?  And that's why I don't view Bitcoin as a currency, and it can't really function as one.  I haven't heard of it being successfully adopted as a currency - even in Ecuador, where people simply emptied their accounts and ignored it.

[SilentC]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

You answered my question with a question, so let me ask again: what evidence shows the US dollar being replaced by Bitcoin or crypto as the global reserve currency?

I am not talking about this year or next but maybe in a few decades. I believe the US is on the decline side of the cycle as evidenced by an attempted coup, divided populace at each other's throats, inflation, massive debt, huge military budget yet unsuccessful military campaigns, expensive workforce and low participation, failing/dated infrastructure, unhealthy population and great wealth divide. The whole Dalio shebang. This is why the dollar will fall out and be replaced by something in the minds of people all over the world and that could very possibly be crypto. I catch the anti-US drift ever present in crypto-chat. So I just don't think it is beneficial and is possibly harmful to the US dollar in the long term. It is also one reason other countries such as China have banned it. They would prefer the next reserve currency be their own, I bet.

The whole Dalio thing is that superpowers rise and fall in cycles and if another besides the US will emerge the odds that they don’t want control of the currency is about 0.0%. 

[Telecaster]

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

That may be the goal, but what is the plan?   Almost everybody accepts dollars, virtually nobody accepts Bitcoin.   If I want to sell wheat to say, Germany and use the proceeds to buy gas from Norway, who wants to buy electronics from China, the whole round trip transaction can be conducted dollars because everybody already accepts dollars.  Can't be done in Bitcoin.  So there is a momentum problem.  To put it another way, nobody uses Bitcoin so nobody wants to use Bitcoin.

But it is worse than that.   Let's say I set up contract to buy XX cubic meters of natural gas each month for a year from you, and in exchange of I send you Z amount of Bitcoin each month. Problem is, Bitcoin is a hyperinflating currency, losing over 75% of its value this year.     What was a fair deal at the first of the year is now an unworkable deal.   You can't have a hyperinflating reserve currency.  And Bitcoin can hyperdeflate too, which in some ways in even worse.   It is impossible to have future contracts denominated in Bitcoin.   That makes it unusable as a currency except for small, immediate transactions.   

On top of that, due to its poor design the Bitcoin blockchain can only process about five transactions a second.  That's barely enough for your local mall and many orders of magnitude too little for what is required for a reserve currency. 

Bitcoin maximalists talk about it becoming a reserve currency, but it is literally impossible. 

[Michael in ABQ]

When I decided that that cryptocurrency will probably damage the USD's standing as the global reserve currency, ...

The top 5 countires have about half the world's GDP.  Which of them have Bitcoin currency reserves?  China banned it, and India considered banning it.  I don't think Japan's or Germany's central banks have begun accumulating Bitcoin.  Did you decide this without evidence?

It may not be succeeding at the moment, but isn't the ultimate goal to replace centralized fiat?

You answered my question with a question, so let me ask again: what evidence shows the US dollar being replaced by Bitcoin or crypto as the global reserve currency?

I am not talking about this year or next but maybe in a few decades. I believe the US is on the decline side of the cycle as evidenced by an attempted coup, divided populace at each other's throats, inflation, massive debt, huge military budget yet unsuccessful military campaigns, expensive workforce and low participation, failing/dated infrastructure, unhealthy population and great wealth divide. The whole Dalio shebang. This is why the dollar will fall out and be replaced by something in the minds of people all over the world and that could very possibly be crypto. I catch the anti-US drift ever present in crypto-chat. So I just don't think it is beneficial and is possibly harmful to the US dollar in the long term. It is also one reason other countries such as China have banned it. They would prefer the next reserve currency be their own, I bet.

This reminds me of the Churchill quote, “democracy is the worst form of government – except for all the others that have been tried.”

For all the problems in the US, there's really no other major country doing better.

China, Russia, India, Japan, Brazil, EU, etc.

All of them have similar serious structural problems. Some are doing better than the US in those areas; some are doing worse. Inflation is worse in the EU. Most of those countries are facing serious demographic problems and, in some cases, have started to see population declines. Japan's national debt is worse than the US. China is watching its economy slowly implode as the real estate market has finally started to come to terms with the reality that a half-finished empty apartment unit in an empty poorly built building is not going to keep increasing in value - and may ultimately be almost worthless. Russia has just watched a significant portion of its military get wiped out including literally thousands of pieces of equipment (tanks, trucks, artillery, etc.) and easily tens of thousands of Soldiers in just 9 months. Compare that to US losses of about 7,000 over 20 years of fighting since 9/11.


I see nothing on the horizon in the next few decades that is going to knock the US off the top of the mountain. Not to the point that USD ceases to be the reserve currency for most of the world.

[HeadedWest2029]

And now another big shoe drops...
Genesis illiquid which means Gemini Earn withdrawals are halted.

https://twitter.com/GenesisTrading/status/1592867198900768769
https://twitter.com/Gemini/status/1592873279232278532

[ChpBstrd]

And now another big shoe drops...
Genesis illiquid which means Gemini Earn withdrawals are halted.

https://twitter.com/GenesisTrading/status/1592867198900768769
https://twitter.com/Gemini/status/1592873279232278532

Somebody talk me out of a bear spread on BITO.

[HeadedWest2029]

I don't hate it as a short term trade.  You'd think there will be lots of forced liquidations going on for awhile as the risk spreads.  I'm kind of amazed Bitcoin isn't getting crushed more than this right now to be honest.  The thing is, crypto would have spiked with the better than expected inflation report if it weren't for FTX.  I know, I know, it's supposed to be an inflation hedge...but let's not kid ourselves at this point.

[Telecaster]

I'm kind of amazed Bitcoin isn't getting crushed more than this right now to be honest. 

I would be shocked if there isn't widespread price manipulation going on.   

[firemane]

I imagine the reason it is not worse is because no one can withdraw.

If blockfi, Gemini, genesis, etc all lifted freezes at once then many billions would be sold at once. If I had access to my measly 0.1 btc I’d sell it immediately lol

Also wondering if any ¡not your key not your coins! guys are not selling because they are afraid to send money to an exchange

[blue_green_sparks]

I really hope taxpayers don't end up paying for some sort of bail-out.

[ChpBstrd]

I imagine the reason it is not worse is because no one can withdraw.

If blockfi, Gemini, genesis, etc all lifted freezes at once then many billions would be sold at once. If I had access to my measly 0.1 btc I’d sell it immediately lol

Also wondering if any ¡not your key not your coins! guys are not selling because they are afraid to send money to an exchange

For the second time, someone please try to talk me out of a bear spread on BITO.

[bwall]

I imagine the reason it is not worse is because no one can withdraw.

If blockfi, Gemini, genesis, etc all lifted freezes at once then many billions would be sold at once. If I had access to my measly 0.1 btc I’d sell it immediately lol

Also wondering if any ¡not your key not your coins! guys are not selling because they are afraid to send money to an exchange

For the second time, someone please try to talk me out of a bear spread on BITO.

I'm not too familiar with bear spreads, but if you're looking for a green light to short Bitcoin futures i.e. profit in a falling Bitcoin market then I'd say 'fire away'.

I can't see any short term catalysts to move the Bitcoin market upwards (Fed slows pace of rate hikes?).

I can envisage many short term catalysts to move the Bitcoin markets downwards. (another exchange or two blow up, cascading bankruptcies of other crypto entities, rising interest rates, Bitcoin miners puking up their inventory, FBI selling seized Bitcoin https://www.cnbc.com/2022/11/07/feds-seize-3point36-billion-in-bitcoin-the-second-largest-recovery-so-far.html, etc).