Is Crypto dying or just dropping for the moment?

[Jimmy Higgins]

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Cryptocurrency is quite possibly one of the easiest ways to make money... if you were reckless and invested real early and refused to sell out at all of the wild swings. $10 on Bitcoin at $10 a coin would be worth $40,000 today. The trouble is, cryptocurrency has almost no basis for its value, so it can easily sway when a person like Elon Musk announces he is accepting Bitcoin at Tesla or won't accept Bitcoin at Tesla... or talks on SNL.

What's happening: Bitcoin prices have plummeted about 12% to less than $50,000 in the last 24 hours, according to Coindesk. The decline comes after Musk, Tesla's CEO and a vocal bitcoin advocate, said his company was suspending plans to accept the cryptocurrency as payment for electric vehicles, citing its "high environmental cost."

Crypto has dropped notably since SNL broadcasted. Which is never a good sign for an investment if SNL can impact its value heavily.

Cryptocurrency is currently living a lie. That it is well... currency at all. Currency, in order to be useful, must maintain a value. Currency with huge swings in value is harmful for economy. Ironic that those that vouch for it whine about inflation, when Bitcoin has deflated like a balloon crushed by a 100-ton safe.

So with Musk saying 'backsies' over Bitcoin at Tesla, Bitcoin has dropped 10%, I think in part because it exposes the lie of Bitcoin's viability as a currency. Of course, wild drops are not uncommon for imagery funny money, so this could be a periodic drop. The one thing that makes me ponder this is the end is that normal people are investing now. And usually when the normal people are investing, that is the peak of the pyramid, and the sell off begins. Cryptocurrency is tantalizing, as the chance to make money was real (if not reckless and baseless). And that past performances idiom is getting ignored. New start up cryptos are coming out almost like Internet companies in the late 90s, which led to a deflation of that bubble.

 

[Tom Sawyer]

It's value is based on absolutely nothing at all, so confidence that other people will continue joining in at the bottom of the pyramid scheme is the only thing which keeps it making money. This means that the more people who have issues with it, the less suckers there are to bleed dry. The people who understand what bitcoin is (or rather, what it isn't) have been raking in the cash, but there comes a point where they need to decide whether or not it's time to cut their losses because too many have caught onto their scam. Once more of those start saying that it's time, the descending spiral begins.

 

[southernhybrid]

My understanding is that the reason for today's crypto crash is due to people finding out that they have to pay federal taxes on the money once they use it. So, that 40K that was made on the 10 dollar purchase would be taxed as soon as it was spent. At least that's what CNBC is giving as an explanation for the crash. Apparently, a lot of people didn't understand how complicated the tax laws are in regards to crypto. It's like buying a stock. You pay the tax once you sell the stock, assuming you made money on it. You only pay the capital gains rate if you held it for over a year, otherwise it's taxed the same an other income. OF course, that's just US tax rules. I have no idea how this works in other countries.

I watched MusK on SNL. The reason given as to why his crypto crashed was because he joked about it being a scam. I don't remember the exact wording but it did give one the impression, even if it was meant as a joke, that crypto was a scam.

Crypto is just too weird for me. It is highly volatile and it's hard to understand how much it will be used in the future. It seems to be mostly used now as dark money used for illegal things, like when hackers ask for ransom when they shut down an oil pipe line. They want to be paid in crypto. Another weird thing about Bitcoin is that if you lose your password, you're fucked. I read about somebody who had a good amount of crypto lost his password, so he lost his entire investment in crypto.

 

[Politesse]

All money has purely imagined value; what makes it real is its acceptance by social convention and powerful economic institutions, not any inherent property of the medium. What Cryptocurrency has crucially failed to do is gain acceptance as anything other than the identity marker of a certain very narrow societal subgrouping, a demographic slice that is wealthy but largely inconsequential to the basic economic processes that move the world along.

 

[jonatha]

My understanding is that the reason for today's crypto crash is due to people finding out that they have to pay federal taxes on the money once they use it. So, that 40K that was made on the 10 dollar purchase would be taxed as soon as it was spent. At least that's what CNBC is giving as an explanation for the crash. Apparently, a lot of people didn't understand how complicated the tax laws are in regards to crypto. It's like buying a stock. You pay the tax once you sell the stock, assuming you made money on it. You only pay the capital gains rate if you held it for over a year, otherwise it's taxed the same an other income. OF course, that's just US tax rules. I have no idea how this works in other countries.

I don't know why it's crashing (it had no business inflating in the first place), but the tax laws regarding crypto are quite a bit simpler than those governing steock sales. No wash rule, to begin with.

Anybody who's ever invested in anything ought to be familiar with the idea that if you sell something for more than you bought it for you will pay tax on the difference...

 

[Jimmy Higgins]

Looking at Coindesk and I saw Nano. The thing spiked and unspiked on April 17th.

April 17th

- Noon: $8.99
- 8 PM: $14.09 (67% increase)
- Midnight: $9.19

WTF dude! What shady stuff is driving that? As if assets were exchanged using the crypto as cover.

 

[funinspace]

Looking at Coindesk and I saw Nano. The thing spiked and unspiked on April 17th.

April 17th

- Noon: $8.99
- 8 PM: $14.09 (67% increase)
- Midnight: $9.19

WTF dude! What shady stuff is driving that? As if assets were exchanged using the crypto as cover.

Small stocks can also fly around like this. It seems that the younger generation likes to play in the crypto space.

Go Shiba that one almost got me to go and pick up a crypto wallet...

 

[funinspace]

All money has purely imagined value; what makes it real is its acceptance by social convention and powerful economic institutions, not any inherent property of the medium. What Cryptocurrency has crucially failed to do is gain acceptance as anything other than the identity marker of a certain very narrow societal subgrouping, a demographic slice that is wealthy but largely inconsequential to the basic economic processes that move the world along.

Yep! Though Etherum is trying to work on having functionality..

 

[TomC]

Cryptocurrency has always looked like a Ponzi scheme to me.
Of course, I'm not very well versed on any of the concepts. I've still not entrusted a computer with a credit card number. I buy almost nothing on line, and use disposable cards for that.

Yeah, I'm old.
Tom

 

[funinspace]

Tom, do you entrust your CC to a minimum wage restaurant worker who takes it out of site?

 

[Jimmy Higgins]

Cryptocurrency has always looked like a Ponzi scheme to me.
Of course, I'm not very well versed on any of the concepts. I've still not entrusted a computer with a credit card number. I buy almost nothing on line, and use disposable cards for that.

Yeah, I'm old.
Tom

Meanwhile all of your in-store purchases and CC info were stolen online from Target, Home Depot, etc...

 

[funinspace]

Another weird thing about Bitcoin is that if you lose your password, you're fucked. I read about somebody who had a good amount of crypto lost his password, so he lost his entire investment in crypto.

That is true for any encryption that is good. I knew a guy who encrypted his taxes to store on a cloud drive. But he died suddenly, and his wife and kids were locked out as he didn't have a backup plan. So smart with 2 PHDs, but not very practical...

 

[Swammerdami]

There is about $1 Trillion of wealth stored in Bitcoins right now (minus the unknown billions lost due to forgotten passwords), along with about another $1 Trillion in several other cryptocoins. I thought of putting "wealth" in quotation-marks, but this wealth is just as real (or as unreal) as the wealth stored in Facebook or Pepsico stock.

IIUC, Bitcoin may be approaching the end of its road. There is an imposed limit of 21 million Bitcoins and there are already 19.6+ million. The rewards for mining the coins are diminishing. HOWEVER, the Bitcoin community is a weird amalgam of anarchy and democracy and, IIUC the community MIGHT change the rules. (As mining fees diminish, miners may charge to incorporate transactions. Is this being done yet?)

I tried some Googling and arithmetic just now; did I make a mistake? Over the past 12 months, 135 Twh of electricity has been spent mining Bitcoin; that's about $18 Billion of electricity! If I divide that by the number of coins mined in 12 months I get about $53,000 — about the current price of a Coin. I suppose that should be expected: If it were very profitable to mine Bitcoins, more would enter the business and competition would drive down the mining rate. Is this all correct?

A lot of rich investors have been buying cryptocurrencies. Rather than seeing this as a belief that Coins are a better bet than stocks, I think it's just the wise course of diversifying across all asset classes: a good idea to ensure capital preservation. If I were rich and/or an active investor I'd probably own some Coins, but I don't, and don't intend to buy any. Will the price fall? I dunno. I don't have great faith in stocks, bonds or dollars either.

All money has purely imagined value; what makes it real is its acceptance by social convention and powerful economic institutions, not any inherent property of the medium....

For thousands of years, gold and silver were used as money. If their value is imaginary then so are the values of copper, tin, slabs of Italian marble and olive oil. I wouldn't be at all surprised if precious metals make a comeback as money later in this century.

Some will argue that Bitcoins have a "real value" related to their mining cost, which — if I haven't erred — is about the same as Bitcoin's current market price! However the huge sums spent on computation have not created anything with intrinsic worth. Just the opposite: bit-mining is deliberate "busy work." Wasteful computations are a deliberate feature of the "clever" blockchain design.

The electricity wasted on Bitcoin mining ($18 Billion worth in the most recent 12 months) will seem shameful when we recall that humanity wants to reduce power usage to cut CO2 emissions. I think this problem is what Elon Musk reacted to.

 

[TomC]

Tom, do you entrust your CC to a minimum wage restaurant worker who takes it out of site?

Generally, no.
I strongly prefer cash in situations like that. I prefer cash, period.
When I do, I am really careful about checking the statement. I like "bank by phone" where I can check things daily, if I want.
Tom

 

[TomC]

Cryptocurrency has always looked like a Ponzi scheme to me.
Of course, I'm not very well versed on any of the concepts. I've still not entrusted a computer with a credit card number. I buy almost nothing on line, and use disposable cards for that.

Yeah, I'm old.
Tom

Meanwhile all of your in-store purchases and CC info were stolen online from Target, Home Depot, etc...

Hasn't happened, and very unlikely to happen.
Not impossible, but I use cash as much as possible.
Tom

 

[Jimmy Higgins]

Cryptocurrency has always looked like a Ponzi scheme to me.
Of course, I'm not very well versed on any of the concepts. I've still not entrusted a computer with a credit card number. I buy almost nothing on line, and use disposable cards for that.

Yeah, I'm old.
Tom

Meanwhile all of your in-store purchases and CC info were stolen online from Target, Home Depot, etc...

Hasn't happened, and very unlikely to happen.
Not impossible, but I use cash as much as possible.
Tom

Has as it did. Several stores were hacked... or just had their info hanging out there.

 

[Jarhyn]

ITT: people not understanding the issue with crypto.

Crypto is dying for various reasons. No one reason is going to capture all of it.

The reason I have stepped away from it is twofold, and originates in a concept called Proof of Work vs Proof of Stake.

Most crypto is proof of work. People prove that they are doing [meaningless busy]work to turn the wheel and win the next block lottery. Bitcoin is exclusively trapped into the proof of work paradigm. Bitcoin is the biggest crypto so it ends up being the leader of price changes.

The problem is that Proof of Work efficiently consumes all energy in pursuit of arbitrary value. Literally, we are spending untold amounts of energy on this Proof of Busywork concept. And even if we made the work easy, it would still tend towards infinite expansion of resource consumption because the fastest computer still makes the most spacebux doing the work before others may.

This is THE reason that most technologists will find reasons to divorce themselves from it.

Related to this are the fees: as Bitcoin gets more valuable, the fees to transact go up. At this point, even small transactions on BTC can end up with 20 dollar fees. This is not tenable either.

Finally, the only thing you can spend any of it on is the black market or pyramid scheme style speculation.

Only people I know on Crypto are idiots and drug dealers/buyers.

 

[bilby]

For thousands of years, gold and silver were used as money. If their value is imaginary then so are the values of copper, tin, slabs of Italian marble and olive oil. I wouldn't be at all surprised if precious metals make a comeback as money later in this century.

The commodity value of gold is a tiny fraction of its spot price, and has exactly the same basis as the value of bitcoin - none at all.

If you have the vast majority of a metal that has ever been mined simply sitting around in warehouses unused, its intrinsic value as metal is very low indeed; When that inventory costs a lot of money to guard, the value proposition in keeping hold of it is highly dubious.

If there were vast stores of copper ingots in warehouses worldwide, the spot copper price would plummet, and mining would cease as it would be hugely unprofitable. But gold hasn't yet seen such a crash in value, solely because people still expect to be able to trade it for real money.

Real money is money someone somewhere is required to have - almost invariably because a government demands it for payment of taxes.

If nobody's accepting tax payments in a 'currency', then its intrinsic value is zip, and any value it has lies purely in the expectation that it can be exchanged for a real currency when the taxman comes a-calling.

Gold and silver used to be currency in the sense of being accepted ways to pay tax. And markets are irrational and have long memories. But there's no particular reason why gold shouldn't crash in value, nor why it should recover from any crash. Reason isn't even a factor. People like gold because they know that people like gold.

People like copper, tin, and olive oil because they are useful. Italian marble is pretty and it's fairly rare. Gold is pretty, but there's tons of it just sitting around gathering dust, hidden away in bank vaults.

 

[Trausti]

 

[southernhybrid]

All money has purely imagined value; what makes it real is its acceptance by social convention and powerful economic institutions, not any inherent property of the medium. What Cryptocurrency has crucially failed to do is gain acceptance as anything other than the identity marker of a certain very narrow societal subgrouping, a demographic slice that is wealthy but largely inconsequential to the basic economic processes that move the world along.

Of course, but the dollar is backed by the US government. As long as there is trust in the government, the dollar has value. What exactly backs Bitcoin? Everything humans make up are based on myths.