Bitcoin crash coming?

[Skillet83]

Originally Posted by Wayne 962

So, I don't really understand why anyone would hold a stablecoin. That doesn't make any sense to me. Take a US Dollar and convert it into something else that is far less of a credit risk (far, far less), but also keep all the risk of the US dollar and inflation? Unless I'm missing something, that doesn't make sense. It only seems to make sense if there is an intangible benefit that I'm not seeing, like being able to use it easily for illegal activities. That's pretty much the only thing I can think of?

So, is there a market to launch a "stable coin" that is backed by real estate? Seems like it could be a smart move. Say someone has a sizable real estate portfolio. They could issue their own "stable coin" backed against the assets. With a 1-to-1 trade on the US dollar, the assets would be guaranteeing the coin. But, for the portfolio owner, the money received would be essentially a zero-interest loan from the coin holders, and then the income from the properties would be "management fees". If one could borrow from Joe and Bob at zero percent interest (there's some management costs involved) and then go invest the funds in quality real estate investments, that could be a rockin' business model. It all relies on people wanting to obtain, hold, and use the stablecoin though. I'm also not sure what one would do with "oversuccess". As in, if one has $100M of real estate and then there is $200M worth of demand, I'm not sure how that would work. I guess one could just keep the excess funds in the bank? Also, the issue that real estate values rise and fall and are not locked in step with the dollar. That's an issue too.

Food for thought though...

-Wayne

Here you go:

slt.finance

I hold just a bit over 5000 SLT tokens, one of my larger holdings, massive upside here. June will be an interesting month: platform goes live, tier 1 exchange announcement, staking paid in SLT, properties listed.

[Wayne 962]

Originally Posted by ShopCat

I think you misunderstand the uses of stablecoins, and personal bias informs your conclusions. Look into the decentralized finance space. Many governments will be coming out with their own "stablecoins" soon.

I'm open minded on the topic. I did some research last night and read up on a lot - mostly from sites very pro-crypto. Unfortunately, on nearly all of these sites there is a lot of hyperbole, and and "this is coming" and "that is coming", but no real benefits to the whole DeFi model except for one - the ability to transact and buy/sell items without any identity attached. The *only* motive that I can think of that would require / benefit this is illegal activity (at the moment in time). If I'm buying a car from Mexico, it's not any easier or better to use Tether than it is to simply send a wire transfer from my US-based bank. The wire transfer is quick, easy, and if there is a problem, I can always get the bank involved to (possibly) resolve it. Unless I was buying a *stolen* car filled with illicit drugs or doing something else illegal, I don't see a benefit.

Again, I am open-minded. There was one blurb here and there about structured, programmed derivative contracts that are set in the code so that they can't be altered or defaulted on by the counter-party. That might have some remote, niche benefit when you're dealing with purchasing counter-party insurance contracts and you're not too sure of the viability of the party on the opposite side. But I don't know how those work (do they escrow the crypto so it can't be moved?). Seems complicated again, and these functions are already provided for fairly well in our established financial system.

I can see and understand someone's argument for "store of value" with a crypto like Bitcoin. But putting and keeping funds in a stable coin like Tether - it makes absolutely no financial sense - unless someone is laundering money?

If you have any links to share on DeFi that gives concrete examples of things that can be done in the crypto space that cannot be done with traditional banking (other than money laundering), then I'm very curious to learn more about them.

I don't have a bias either way, I just call it like I see it on this end.

-Wayne

[Wayne 962]

Originally Posted by Skillet83

Here you go:

slt.finance

I hold just a bit over 5000 SLT tokens, one of my larger holdings, massive upside here. June will be an interesting month: platform goes live, tier 1 exchange announcement, staking paid in SLT, properties listed.

Okay. See my previous post on SLT - it's definitely an unregulated security and is most likely illegal in the US. On the site it specifically says STL is available for trading on the Atomars network, which appears to be specific to Eastern Europe and Asia. So, this is an interesting concept, something I wrote about a few posts ago. In this circumstance I would want to be GP, not simply a "token holder". At this point in time, from looking at the website, there is no backing for any of the tokens or coins. I did sign up to look at what properties were available and they appear to be just equity raises for planned developments with some fancy cgi renderings?

They appear to have raised $37M as of today, based upon 5M tokens in circulation. I'm a bit confused by what they are selling or what is backing this?

I can totally see some type of market for this type of real estate-backed crypto, but this would be nothing more than a REIT whose shares are traded with crypto, instead of on a stock market. Essentially REITs should trade close to their book value - I don't see how investing in an crypto-backed SLT would generate better returns in the long run than a well-run REIT?

Unless I'm missing something. I'm happy to learn and be educated on this topic...

-Wayne

[ShopCat]

I feel like if you do not desire or see the need for decentralized, trustless systems over current financial systems, then all of this is a pointless conversation. No one will ever see the value in crypto until that happens personally, as the current way "works." Or at least, it works until it doesn't. I see this as a potential generational gap.

[Wayne 962]

Originally Posted by ShopCat

I feel like if you do not desire or see the need for decentralized, trustless systems over current financial systems, then all of this is a pointless conversation. No one will ever see the value in crypto until that happens personally, as the current way "works." Or at least, it works until it doesn't. I see this as a potential generational gap.

Unfortunately, when I ask for specific discussions of the benefits of crypto, and decentralized finance, all that seems to be presented is hyperbole, conjecture, and "someday this will be the next big thing." Generationally - indeed, I started selling on the Internet in 1993 on Usenet groups, and I've seen a lot of "the next big things" come and go. People just don't adopt new methods of doing things, unless they are significantly better, or add definitive value over existing systems. Again, the only people that I can see who envision significant value in using crypto currencies are the ones that are using the system to hide their identities and engage in illegal activities?

-Wayne

[ShopCat]

I don't think crypto is as anonymous as you seem to think it is... at least not to the extent to where it would allow you to get away with any illegal activity which your main detraction seems to lean on. Monero is really the only truly anonymous cryptocurrency and its fringe at best. There is an interesting theory, that Satoshi Nakamoto is the CIA. That would make sense on many levels, and kinda leans more your way, as the CIA isn't exactly known for their legal transactions.

Defi is still very young, its goal is to remove the middle man in the finance world as much as possible, simple as that.

Please watch the Gensler MIT course if you actually care to learn anything beyond your illegal activities argument, seeing as the current SEC chair seems to think it has value beyond that. You can keep saying you are open minded but it doesn't come across in your arguments.

[Wayne 962]

So, I did some digging on DeFi to try to understand the appeal and relate it to the real world system it's supposed to be replacing. I found this helpful article here that "explains DeFi in three minutes.": https://decrypt.co/resources/what-are-defi-loans-ethereum-maker-aave-explained-learn

I completely understand what is going on here, and how it works. However, after looking at about 10 of these articles, I still am left with the question of "what borrower would use this?" I can only think of one - a speculative crypto trader. It would seem that these lending contracts are setup so that they can *only* work with crypto speculation. Let me explain (from my perspective).

So, Borrower A wants to borrow some BTC (or any other crypto). Under these DeFi contracts, Borrower A has to pledge Lender B some collateral in order for Lender B to make the loan. Lender B has no idea who Borrower A is - no credit profile, no non-crypto assets, etc. So, Lender B will only accept collateral in crypto that Borrower A already has. The *only* instance I can think of this actually being beneficial would be with margin loans. I mean, why would anyone borrow money from someone else if they had to give them 150 - 200% of the *same money* as collateral in order to process the loan? Margin loans are the only circumstance I can think of.

So, Borrower A pledges 2 BTC in order to borrow 1 BTC from Lender B. The only reason why Borrower A would be doing this would be to control 3 BTC instead of 2, and to participate in any upside appreciation in BTC. This is exactly how margin loans work. So, the DeFi model only seems appropriate for speculators, from what I can tell?

The other day, I wanted a loan from the bank. They told me that they would give me a $XXX loan if I deposited $XXX with the bank. I told them that they were crazy and no sane person would do that. I still don't understand that logic from them. They had some ridiculous story where some people have to keep cash reserves at banks, and thus can't spend them so they borrow against them. This DeFi loan setup seems the same way. In the real world, it does not make any sense to borrow funds from someone when they are asking for 200% of basically asset class that you are borrowing. Again, the only time this makes sense is with margin loans.

Unless I'm missing something...

Smoking gun from that article I linked to above:

What are the Challenges?

Borrowers are often required to over-collateralize their loans, as shown in our previous example with MakerDAO.

Most borrowers deposit 200% of what they’d like to borrow. If the price of the collateral asset starts to tank, the pool will use its circuit breaker. The rules of the pool state that they won’t lose money, so as the price falls to below 120 per cent of the loan, the pool will start liquidating the collateral to cover the loan. The borrower ends up eating the loss, but will get to keep their Bitcoin, for example.

The ability for borrowers to acquire assets quickly is the draw here. If you’re speculating that Bitcoin prices will spike upwards, as a borrower, you could make a profit and be able to pay the loan back.

-Wayne

[ShopCat]

Originally Posted by Wayne 962

So, I did some digging on DeFi to try to understand the appeal and relate it to the real world system it's supposed to be replacing. I found this helpful article here that "explains DeFi in three minutes.": https://decrypt.co/resources/what-are-defi-loans-ethereum-maker-aave-explained-learn

I completely understand what is going on here, and how it works. However, after looking at about 10 of these articles, I still am left with the question of "what borrower would use this?" I can only think of one - a speculative crypto trader. It would seem that these lending contracts are setup so that they can *only* work with crypto speculation. Let me explain (from my perspective).

So, Borrower A wants to borrow some BTC (or any other crypto). Under these DeFi contracts, Borrower A has to pledge Lender B some collateral in order for Lender B to make the loan. Lender B has no idea who Borrower A is - no credit profile, no non-crypto assets, etc. So, Lender B will only accept collateral in crypto that Borrower A already has. The *only* instance I can think of this actually being beneficial would be with margin loans. I mean, why would anyone borrow money from someone else if they had to give them 150 - 200% of the *same money* as collateral in order to process the loan? Margin loans are the only circumstance I can think of.

So, Borrower A pledges 2 BTC in order to borrow 1 BTC from Lender B. The only reason why Borrower A would be doing this would be to control 3 BTC instead of 2, and to participate in any upside appreciation in BTC. This is exactly how margin loans work. So, the DeFi model only seems appropriate for speculators, from what I can tell?

The other day, I wanted a loan from the bank. They told me that they would give me a $XXX loan if I deposited $XXX with the bank. I told them that they were crazy and no sane person would do that. I still don't understand that logic from them. They had some ridiculous story where some people have to keep cash reserves at banks, and thus can't spend them so they borrow against them. This DeFi loan setup seems the same way. In the real world, it does not make any sense to borrow funds from someone when they are asking for 200% of basically asset class that you are borrowing. Again, the only time this makes sense is with margin loans.

Unless I'm missing something...

Smoking gun from that article I linked to above:



-Wayne

Defi loans are not the largest part of Defi as far as I know, decentralized exchanges are a bigger deal. DEXs are awesome.

Using 2 BTC as collateral to borrow 1 BTC does not give you 3 BTC exposure to the change in values. You would need to use something like a stablecoin as collateral, otherwise any change is just owed back in BTC anyway. I know there are people like Michael Saylor who float the idea to use BTC as collateral for cash loans because in his mind, you are paying 5-10% USD (or whatever currency, crypto or no) interest while holding an asset that returns 100-200% annually. Of course speculating that that the past 10 year's performance will continue going forward.

[HardDrive]

I'm going to get all nutty, and stick to buying property. Feel free to laugh at me when I have not made 10000% interest in 20 years. I guess I'm stuck with the measly 300% gains I have made in the last 10 years. Oh, and the other funny thing is...I still own the property. Its a thing. It's right there.

[ShopCat]

Originally Posted by HardDrive

I'm going to get all nutty, and stick to buying property. Feel free to laugh at me when I have not made 10000% interest in 20 years. I guess I'm stuck with the measly 300% gains I have made in the last 10 years. Oh, and the other funny thing is...I still own the property. Its a thing. It's right there.

or you could do both

[Wayne 962]

Originally Posted by ShopCat

Using 2 BTC as collateral to borrow 1 BTC does not give you 3 BTC exposure to the change in values. You would need to use something like a stablecoin as collateral, otherwise any change is just owed back in BTC anyway. I know there are people like Michael Saylor who float the idea to use BTC as collateral for cash loans because in his mind, you are paying 5-10% USD (or whatever currency, crypto or no) interest while holding an asset that returns 100-200% annually. Of course speculating that that the past 10 year's performance will continue going forward.

Yes, I agree - that doesn't make any sense to use Bitcoin as collateral against another Bitcoin loan - you would need to arbitrage against another currency in a speculative event.

Again, I'm not arguing that Bitcoin and crypto in general are very speculative at this moment - heck BTC changed 10% between the two times I checked it today. I'm sure there's plenty of money to be made. Assuming a currency eventually becomes stable in price relative to other fiat currencies, I'm still struggling to find a compelling real-world advantage for the average Joe (or company) to use it over the conventional banking system? International wire transfers can be a pain in the ass indeed, but converting into a crypto, then sending, and then converting back would also be a pain. Also, in general, accounting is done and reconciled in a single currency - I don't know how one would even account for foreign reserves (I guess International companies have to do it somehow).

What is the primary advantage of a decentralized exchange over a centralized one? Security?

-Wayne

[Wayne 962]

Originally Posted by HardDrive

I'm going to get all nutty, and stick to buying property. Feel free to laugh at me when I have not made 10000% interest in 20 years. I guess I'm stuck with the measly 300% gains I have made in the last 10 years. Oh, and the other funny thing is...I still own the property. Its a thing. It's right there.

Right. We're in escrow on two commercial properties right now!

-Wayne

[ShopCat]

Originally Posted by Wayne 962

Yes, I agree - that doesn't make any sense to use Bitcoin as collateral against another Bitcoin loan - you would need to arbitrage against another currency in a speculative event.

Again, I'm not arguing that Bitcoin and crypto in general are very speculative at this moment - heck BTC changed 10% between the two times I checked it today. I'm sure there's plenty of money to be made. Assuming a currency eventually becomes stable in price relative to other fiat currencies, I'm still struggling to find a compelling real-world advantage for the average Joe (or company) to use it over the conventional banking system? International wire transfers can be a pain in the ass indeed, but converting into a crypto, then sending, and then converting back would also be a pain. Also, in general, accounting is done and reconciled in a single currency - I don't know how one would even account for foreign reserves (I guess International companies have to do it somehow).

What is the primary advantage of a decentralized exchange over a centralized one? Security?

-Wayne

I think right now its not better for any average person, maybe those in third world countries without access to banking otherwise, but its possibly the building blocks for something better. When the internet started gaining momentum, did you ever imagine it would basically replace the taxi industry with Uber 30 years later? It's hard to forecast where these cryptos sectors will make their mark and what they will touch in the future.

Yes security, availability and speed. No central wallet to be hacked or stolen, available to anyone at all times. Current centralized exchanges are limited to certain regions and countries, a DEX can be accessed anywhere.

[sammyg2]

Originally Posted by HardDrive

I'm going to get all nutty, and stick to buying property. Feel free to laugh at me when I have not made 10000% interest in 20 years. I guess I'm stuck with the measly 300% gains I have made in the last 10 years. Oh, and the other funny thing is...I still own the property. Its a thing. It's right there.

OK, but think of this:

you can buy a decent used monopoly game on evil-bay for $10.
Assuming it's intact, it should contain $20,580 in monopoly money.
That's a 205,800% profit iffn I remember my junior high math, which is sketchy.

[ShopCat]

Originally Posted by sammyg2

OK, but think of this:

you can buy a decent used monopoly game on evil-bay for $10.
Assuming it's intact, it should contain $20,580 in monopoly money.
That's a 205,800% profit iffn I remember my junior high math, which is sketchy.

Repackage it named after a dog breed, call it deflationary, mention something about tokenomics and you have yourself a *****coin!

[sammyg2]

PS My house is now worth 5x what I paid for it,
Hard to go wrong with RE.

[ShopCat]

Just do everything. Rentals, crypto, business, traditional investments, attack on all fronts. Buy and hold at least 5% BTC for 10+ years and treat it in your mind as a hedge against the rest.

[ShopCat]

Originally Posted by sammyg2

PS My house is now worth 5x what I paid for it,
Hard to go wrong with RE.

Depends on what year you bought your house.

[Skillet83]

You guys are over thinking this chit. Crypto is here and is not going away. There will be winners and losers, choose wisely. Personally, hold equities, physical real estate and about 5% crypto. There is a chit tonne of money to be made in crypto. Debate while I continue to make money!

[speeder]

I don't have time to read this whole thread, so can you guys just tell me when it's time to buy in again? I missed all of the other times.

Thanks.