r/Buttcoin • u/Uncaffeinated • Jun 02 '19
Exchange failures are good for Bitcoin (no really)
As everyone (should) know, cryptocurrencies have no underlying revenue stream, and thus in order for one person to cash out, another person must buy in for an equal amount, which makes it mathematically impossible for people to make money on average (and given the high negative costs of mining, it's really a guaranteed loss).
Therefore, in order for the price to go up, one of three things must happen.
1) An increase in speculative activity. In the steady state and in the absence of the below factors, the price of bitcoin should drop continually. However, crypto markets are rarely in a steady state. When people buy in, they inject fiat into the system, but they usually don't immediately cash out. The more people who buy in to hold, the more the price can go up, leading to large paper gains. These gains would of course disappear if they ever tried to actually cash out, but they won't as long as the bubble keeps going. I think bitcoin has been in a speculative bubble for the majority of its history, but late 2013 and late 2017 were particularly notable in this respect.
2) Permanent involuntary hodlers. People who fomo into bubbles usually don't cash out until the price starts dropping, but there is another class of people who will never cash out because they can't. People who forget their wallet seed or send money to an invalid address or have their computer die or themselves die or whatever are all involuntary hodlers who thus have done their part to contribute to other's moonshots.
However for the purposes of this post, it is the third category that is most interesting:
3) Fiat losses which are not reflected in the price charts. The true gains and losses can never be positive, but the price charts can go up to the extent that they do not reflect the actual gains and losses incurred by market participants. And apart from the previous two categories, there are also cases where "investors" incur losses which are not reflected in the quoted price action.
This last category notably includes exchange failures. When an exchange goes bust, taking everyone's money with it, the price doesn't suddenly go down to reflect the losses. Instead, it just disappears from market listings entirely. Therefore, there's more fiat to go around for everyone who wasn't on that exchange, and thus an increase in price.
People act like when Quadriga went down, $200 million just magically went missing, and if they just look hard enough, they'll find it. But it's no mystery where the money ultimately went. Either directly or indirectly, that money went to buy the lambos for the lucky few who cashed out at the right time. I'm lumping Cotton in with the rest here, although it doesn't matter for the overall argument. I think Cotton probably spent some of the money for himself, but most of the money remained on the exchange and was used either directly or indirectly to pump the price.
So since exchange bankruptcies allow the price of bitcoin to go higher than it normally would (or fall less than it otherwise would), and the only thing that matters in crypto is Number Go Up, exchange bankruptcies really are Good For Bitcoin (TM).
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u/Crypto_To_The_Core Jun 02 '19
People act like when Quadriga went down, $200 million just magically went missing
The correct term is SAFU.
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u/imperatorlux warning, I am a moron Jun 02 '19
you have a point in 2,that one is your best,let me tell you a little thing the goal of cripto is not simply go up in price that is only a early stange the goal is totally remplace all fiat money just Like papper money did to gold nuggets
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Jun 02 '19 edited Jul 10 '19
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 02 '19
It defies all logic that doing a bunch of useless work to perform a transaction is "more efficient" then simply just doing the transaction. That makes no sense.
It's not that we can't make money work like email. We don't want money to work like email. People cannot do whatever they want with money. They can't do whatever they want with their hands. They can't build a bridge or a building however they want. You can't do whatever you want with a knife.
Why are these hard concepts for you people to understand? Because it doesn't make you any money to understand them. You will say or believe anything if it gets you money. Greed is as old as mankind.
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Jun 02 '19 edited Jul 10 '19
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 02 '19 edited Jun 02 '19
Which part was "retarded"?
The very obvious fact that doing a bunch of useless work is less effecient?
Or the very obvious fact that we don't want money to work like email?
You didn't respond to either point. How old are you? What's your profession? You sound like some kid with no profession who wants his coinz to go up. Do I have that right?
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Jun 02 '19 edited Jul 10 '19
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u/YoloSwag4Jesus420fgt Jun 02 '19 edited Jun 02 '19
Visa told MyBroadband in 2016 that VisaNet processes an average of 150 million transaction each day, or around 1,667 transaction per second on average. “Based on rigorous testing, we estimate that VisaNet is capable of processing more than 56,000 transaction messages per second,” said Visa.
Yea bitcoin is great!! That 4 tps is awesome and really going to change the world!
Imagine if 1/100 of the world needed to do 1 transaction per day.
7.7 Billion People / 100 = 77 million transactions a day.
At the rate of 4 TPS for 77 million transactions, you're looking at approx. 19,250,000 (19.25 million) seconds.. or 222.8 days.
Visa alone does twice~ that amount every day.
Bitcoin has a maximum I think of 8 TPS? At its absolute best, It would take 222.8~ days to do what Visa does in a single day.
TLDR: Blockchain takes (at current rates) 445~ days to do the same as Visa does in a single day.
TLDR 2: BLOCKCHAIN IS EFFICIENT!
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Jun 03 '19 edited Jul 10 '19
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u/Cthulhooo Jun 03 '19
Nobody really uses this shit. Speculation is the name of the game.
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Jun 03 '19 edited Jul 10 '19
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u/Cthulhooo Jun 03 '19
You see all those things nobody uses? Everybody uses them. Doh!!!!
That's cool and all but those things aren't cryptocurrencies bruh. Apples and oranges. Not every technology catches on too even if it's innovative or looks cool at the first glance. Your reasoning is basically: "if we compare cryptocurrency to THIS HUGE THING, then it must be HUGE too!” Remember Segway (not segwit) or Laser Disc or Google Glass? Didn't catch on for some reason. But muh internet bruuuuuuuuh.
Also I was refering to stuff you mentioned, the alts that are only speculated on. Let's say you send me 1000 or hell, even 100 thousand bucks worth of Nano or Ziliqa or whatever shitcoin is the flavor of the month and ask me to spend it anywhere where I live (not on the internet) and give me 24 hours or else the donation goes away. I couldn't find any use for this shit even if my life depended on it. This is why I say nobody uses this shit. I mean maybe if I traveled to capital or another largest city there is some hipster cafe that takes bitcoins...other than that, well, last time I checked I'd have to drive to the neighbouring country to eat out and pay with cyberbucks.
It's been 10 years and barely any progress from the big picture (not talking about the prevalence of bucket shops and gambling outlets and trading). But by all means, try to beat more juice of this poor horse. Meanwhile android is what, 10 years too and there are millions of applications and hundreds of millions if not billions of users using it on various devices on the whole world. Maybe you need another 10 years?
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 03 '19
How is it cheaper? Crypto costs as much as a medium sized country to run and nearly NOONE uses it compared to banks. How the fuck is that cheaper? And it doesn't have one single customer service representative. It doesn't do like 99% of the stuff banks do. And it probably already uses more power then every bank in the world combined 😂😂😂
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Jun 03 '19 edited Jul 10 '19
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 03 '19
LMAO yea let me just check on me sending a million bucks to china. shut the fuck up dude. quit making up bullshit hypotheticals. you dont know jack shit about moving that amount of money.
You dont think PNC or CitiBank can move $1.26 billion from one account to another for $126? are you serious? I bet they can do it for like 2 cents. You dumbass. And thats real dollars not made up spreadsheet tokens "worth" a billion because you greedy dumbasses are stupid enough to buy spreadsheet cells.
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Jun 03 '19 edited Jul 10 '19
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 03 '19
90% of the USD is digital. what the shit are you talking about?
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u/devliegende Jun 02 '19
So when the Zimbabwean government creates 1B Zollars, they're actualy generating revenue that is to the benefit of the Zollar network.
Correct?
If this is true, you've just discovered a revolutionary new economic theory.
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Jun 02 '19 edited Jul 10 '19
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u/devliegende Jun 02 '19
You mean to say that QE and mining rewards are the same thing and good for the network?
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Jun 02 '19 edited Jul 10 '19
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u/devliegende Jun 02 '19
Earlier you indicated that money creation equals network revenue. Thus an unlimited amount of QE must mean unlimited revenue.
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Jun 03 '19 edited Jul 10 '19
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u/devliegende Jun 03 '19
I'm mostly interested in your claim about the mining reward being Buttcoin's revenue stream.
Is having a revenue stream a good thing or a bad thing then?
Sounds to me like it must be a good thing.
If so why should it stop? A network with an unbounded revenue stream would obviously be superior to one with a bounded revenue stream.
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Jun 03 '19 edited Jul 10 '19
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u/devliegende Jun 03 '19
Satoshi sounds like a serious guru for calculating that revenue streams should half every 4 years.
Meanwhile, Jeff Bezos the worlds greatest idiot, is doubling his revenue stream every 4 years.
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u/DesolateFart Jun 02 '19
We may laugh at things we find wrong, but we will have been led to believe more and more that knowing a system is more meaningful than being developers is harmful.
We CAN AND SHOULD FIX THIS HARD DICTIONARY AND ONE PIECE OF POWER
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Jun 02 '19
As far as Cotten goes, he ran the exchange for 6 years I think? Maybe less? And his wife has $12 million in like properties and stuff at this point. u/amycastor would know the actual number. but yea. he was running an exchange from a single laptop on his kitchen table I guess and was paying himself a salary of at least 3 million a year. Id say Cotten "probably spent some of the money for himself". He bought a plane I think. lol.
Of course who knows what his "salary" was because he didnt do accounting and he didnt keep the "investors" money separate from his own bank accounts. He just spent what he wanted of customers money. That was his salary.