Fukd

submitted by [deleted] from self.cryptocurrency

Luna owned $2.6bn of btc to secure their stablecoin's peg to the dollar. As people withdraw from the crypto market because of BTC crashing, the stablecoin needs to sell massive amounts of BTC, which drives the price down more... which makes more people withdraw...

They created a feedback loop.

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[–][deleted] 7 insightful - 2 fun7 insightful - 1 fun8 insightful - 2 fun -  (8 children)

That actually sounds pretty similar to the shit that sunk Enron, which kind of tells you something about crypto.

[–][deleted] 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

Crypto is a solid idea, just without regulations there was/is rampant abuse. Like NFTs that aren't really worth anything standing in for collateral.

[–]Zapped 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (6 children)

This is what's kept me out of the crypto market. It has this pyramid scheme "feel" to it, for me, anyways. I was considering investing in MicroStrategy last year. I'm glad I couldn't convince myself to pull the trigger. I don't fully understand the block-chain aspect to crypto, but pyramid schemes rely on arranging information to make it hard for investors to understand what is going on.

[–]jostiniane 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (5 children)

We are all here for the money, if you are not day trading or have a bot doing it for you then it doesn't make any sense to hold and hope for the best.. This is not 2018 anymore..

[–]Zapped 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (4 children)

Don't get me wrong. People can still make money in certain pyramid schemes as long as they get out before time runs out.

[–]jostiniane 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (3 children)

I used and still use crypto for certain things (VPN, hosting, getting paid for gigs, ..), but this is not 100% of what I have in real life, I wouldn't miss pyramid schemes or any other scams if they disappear as they are harmful to society, but I will miss crypto a lot as I am already reliant on it.. The rest of the time for me is basically day trading to make more profits so I don't understand how does that compare to pyramid schemes or other types of scams.

[–]Zapped 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (2 children)

What is the backing of cryptocurrency? Does the blockchain make it safe? How can blockchain be easily described to the average person? What value besides a "placeholder" does cryptocurrency have? Cryptocurrency's value is what people give it, much like the Beenie Baby craze of the 1990's. I agree that the more people "invested", the more stable it is, but it can still fall apart as it is not married to enough solid assets.

[–]jostiniane 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

I agree with everything you said.. Not backed by anything yes.. But so is everything else, it's just the trust we put in it.

(I am not an expert but I am doing my best in what follows)

How can blockchain be easily described to the average person?

A relatively new way of having a database replicated everywhere in a secure way using building blocks (employing state of the art encryption) as a way to establish peer to peer trust without a centralized authority.. The peers are going to agree somehow (either vote or use powerful nodes) on if a change to that database is legit or not.

Does the blockchain make it safe?

Now it seems to be the safest, we will wait for the next Satoshi to bring a better alternative.. But now this is what we got.

What is the backing of cryptocurrency?

Nothing. But so is every other currency.. And so is the gold.. I mean paper currency is a piece of paper that you trust others will take from you in exchange for goods.. Some people argue that gold is different (in some way it is as it's more portable and cannot be printed) but you just trust others will take from you in exchange for goods, if the free market decides it's useless then it will die off.

but it can still fall apart as it is not married to enough solid assets.

Having governments using and stoking BTC is enough insurance to go full on it for me.

Have you heard the stories of people transferring tens of millions in usd using LTC and yet paying <$1 for the whole transfer that takes a second? how much fees does it even take to buy a $100 item? what about transfers and limitations, add to that censorship, the government will rob you if you have the wrong thoughts, now imagine if this currency is not controlled by the government and if it cannot be inflated for whatever reason.. Just think about it, we have been scammed by the current financial system for centuries.. Governments are bad at handling currencies..

[–]Zapped 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (0 children)

Thanks for the explanations.

[–]chottohen 3 insightful - 2 fun3 insightful - 1 fun4 insightful - 2 fun -  (8 children)

But if BTC goes down even more, won't people start to buy it again to take advantage of the low price, driving the price back up? BTC has crashed before and come back.

Or is this crash a cue for government(s) to step in and put controls on crypto trading? For example, Monero is already outlawed in some countries but there are ways I'm sure. Caveat: I really don't know what I'm talking about when it comes to crypto.

[–]Rastafoo 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

All I know is, ever since Biden took office, all the exchanges are sending out tax forms to their users. Even if the price of bitcoin drops, nobody wants to put in all the effort and attention just for Biden to get the profits.

[–][deleted] 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (4 children)

But if BTC goes down even more, won't people start to buy it again to take advantage of the low price, driving the price back up

BTC keeps failing to maintain support at resistance levels. If it doesn't hold at 30k some people (Peter Schiff espoused this theory) think it's going to tumble to 10k.

My understanding is that growth stocks like tech are going to take the biggest hits due to the economy, and crypto is correlated with tech stocks. We'll see what happens when the NYSE opens, but many outlooks are bleak. People are more scared than greedy right now.

[–]chottohen 3 insightful - 2 fun3 insightful - 1 fun4 insightful - 2 fun -  (3 children)

Thanks for the explanation that does make sense. It looks like a controlled demolition of the US economy that's been going on since before Biden but he's going to be the fall guy.

Peter Schiff was right in 2007 when he said the real estate bubble was going to pop. People were openly laughing at him. I don't know if he's right this time. In 2007 people were more greedy and not scared at all. I got out just in time and my accountant has never spoken to me since.

[–][deleted] 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (2 children)

It looks like a controlled demolition of the US economy that's been going on since before Biden but he's going to be the fall guy.

It does, doesn't it. In fact it was kinda suspicious, after the fed raised rates and the markets were still optimistic -- not the intended effect, a mass dump occurred all at once. I think someone phoned a friend to dump a ton of assets to facilitate the intended effect.

I got out just in time and my accountant has never spoken to me since.

Hahaha, that's awesome!

I think the real estate bubble is about to burst. It's overpriced. Lots of things are overpriced. I think cash is king rn. What's 8% inflation in a year compared to everything losing more.

[–]chottohen 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

I'm sure you're tracking it but now BTC is 31900 in heavy, erratic trading so maybe it is coming back. I have no more real estate over there. All I know is what I learned on a TruthStream video from about two weeks ago: http://truthstreammedia.com/2022/04/29/this-is-a-housing-crisis/ . It's been linked on saidit and is pretty depressing. BlackRock, BrownStone, and Biden. I'm keeping my fingers crossed.

[–]Zapped 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

The housing "crash" has already started out west and is moving east. I think we have until the end of this year or middle of next year before it's nationwide. And connected to this, lumber prices are about to drop again, I think.

[–]jostiniane 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

There are good takes by better people but what I think is that wall-streters are getting out but not the rest. There's already a lot of money put in BTC and some others, I doubt BTC will go to 20k and ETH to 1500, governments are going full on BTC.. shitcoins are going to 0 but I think at least BTC, ETH, XMR and XRP will survive this..

[–]chottohen 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

Let's hope so.

[–]Drewski 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

If / when USDT crashes that will really wreck the market. Might be necessary though.

[–][deleted] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

Yep, all those stablecoins are shady, shady. UST and Luna have had a couple rallies over the evening, we'll see tomorrow how they fare.

[–][deleted] 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

They allow downward and unhindered suppression of good coins, but when bankrolled shitcoins are getting pounded they suspend trading. It's all a joke.

[–][deleted] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

I understand why they did that. There was the possibility Luna could have fucked everything. It was dicey there.

[–]package 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (0 children)

this is good for buttcoin