In theory what they are doing of value, is that at any time you can go to an exchange and say "I want to buy x" or "I want to sell y" and someone will buy it from you our sell it from you... at a price that's likely to be the accurate price.
At the extreme if nobody was providing this service, investors (e.g. pension funds), wouldn't be confident that they can buy/sell their assets as needed in size and at the right price... and because of that, in aggregate stocks would be worth less, and companies wouldn't be able to raise as much capital.
The theoretical model is:
- You want to have efficient primary markets that allow companies to raise a lot of assets at the best possible prices
- To enable efficient primary markets, investors want efficient secondary markets (so they don't need to buy and hold forever, but feel they can sell)
- To enable efficient secondary markets, you need many folks that are in the business of XTX
... it just so happens that XTX is quite good at it, and so they do a lot of this work.
These qualifiers would seem to belie the whole argument. Surely the volume of HFT arbitrage is some large multiple of what would be necessary to provide commercial liquidity with an acceptable spread?
Does the HFT volume actually matter? Is it a real problem that the HFT volume exceeds the theoretical minimum amount of volume needed to maintain liquid markets?
As I understand it, he has the authority to fire for cause. There's just very dubious cause here -- like how he tested the waters with firing Powell over the cost of hq renovations after SCOTUS told him the Fed is different.
Notably in a lot of these cases they’re just canceling injunctions, not deciding the merits.
But effectively it decides the case because nobody is going to stick around through a long trial after the injunction is canceled.
Which basically makes The Supreme Courts shadow docket a fairly arbitrary justice system that doesn’t generate precedent and many courts ignore past the immediate case.
Stocks give you a legal right to the assets and future profits of a company - a legal right enforced by the government (i.e. men with guns).
Crypto gives you no such right. In crypto you just hope someone else will pay more for it later. In that sense crypto is similar to baseball cards, and slightly similar to gold (gold has some industrial “actual” uses, but its high price is really driven by cultural perception of value.)
> Stocks give you a legal right to the assets and future profits of a company - a legal right enforced by the government (i.e. men with guns).
Financial derivatives such as options would be a better analogy, although I don't think anyone is currently buying stocks for the reason you mentioned.
Additionally, BTC and gold have fundamental differences, i talked abt it here and in other comments
Financial derivatives like a call option have a value derived from a stock (which is a real thing that gives real world legal claims on actual assets/profits). So it’s still not like a crypto coin.
People are most definitely buying stocks for the reason I mentioned. There’s a reason why the pension fund of the teachers of California, the pension fund of the teachers of Texas, and your 401k holds stocks. It’s not because they are collectibles with a lot of hype. It’s because they get a claim on future profits at (expected to be, on average, over the long run) a discount. Of course there are people who have no clue what they’re buying or why it works and just buy something… but that doesn’t mean the thing they’re buying doesn’t have a fundamental value connected to reality.
Your argument for "crypto" applies to money. Money will lose 90% of its value over a century or so. In this case I don't have to "just hope someone else will pay more for it later" I know that money will be practically worthless if held.
I kind of agree. Money (e.g. the dollar) only has value because (1) we implicitly agreed as a society to have faith that it can be accepted by others for goods and services (2) the government requires us to pay a material part of our earnings as taxes which can only be paid using money.
If people lost faith, it would lose value.
Mild inflation (say 2-3pct a year) is considered generally good by economists. It’s an incentive to go and invest the money productively or spend that money on goods and services (which is good for growing the economy). Deflation in contrast would create an incentive to hoard money (just keep little papers with no productive value).
That’s a funny phrase and one that I think deserves ridicule.
Society should value savings, in fact historically prosperity is the result of savings and every fall from prosperity is accompanied by artificially low interest rates and low saving rates.
I don’t see how people would differentiate savings from hoarding when infinite compound debasement is supposedly the “smart” policy.
To be clear, I think people that say "hoarding" is bad, really mean to say that they think "saving" is bad and that they should identify as champions of consumerism.
If a company wants to expand and build a new factory (say to provide more, cheaper pharmaceuticals to more people), it needs capital. If you have cash but there’s deflation, you might just keep your cash under your pillow because it’s worth more every year. If instead we have an inflation, and so you have a disincentive to leave the cash under your pillow, you invest it (give to that company to fund its factory). That’s good for society.
> If instead we have an inflation, and so you have a disincentive to leave the cash under your pillow, you invest it (give to that company to fund its factory). That’s good for society.
There's a lot of "ifs" here with little evidence they're true or necessary.
Without examining all of the "ifs" let me just characterize the argument as fundamentally pro-corporation. I think it's better for society that corporations justify the money invested in them rather than artificially structuring the money such that people are forced to hand their money over to corporations as a form of wealth preservation because Paul Krugman said we'd have a Great Depression otherwise.
Which is why the pro-Trump tech folks are playing with fire. Exchanging potentially faster approvals/lower regulation for favored projects, for an environment where rule of law and institutions are weakened.
you've misread the comment, weakened rule of law and lesser regulations are two different things that (according to the comment) are being exchanged. For example firing Comey had nothing to do with regulations.
More law, better regulation comes from the same school as more code, better product. It’s obviously bullshit but novice practitioners and non-practitioners support the idea because they think all problems are solvable with more something.
The slow and messy process of reaching consensus (or close) via a complex web of institutions help “western” (in the sense that Kotkin uses) societies avoid really bad policy and adapt to mistakes.
Some people are frustrated by this and think it would be much better to substitute their judgment for this process. They don’t necessarily hold this view selfishly or maliciously, they are just short sighted.
I guess I agree. I tend to try to view others actions in best reasonable light, so I default to the idea that they are simply blind to their own limits, but mean well.
The pro-Trump tech folks are 90% about crypto. It's single-issue politics, like abortion or gun rights.
Scratch the surface on a SV Trump supporter like Marc Andreessen, and you'll find a big bag of crypto that they want to keep dumping on retail investors.
After Russian invasion of Ukraine, Germany said it permanently won’t support the opening of Nord Stream 2. NS2 has been Putin’s number one priority for opening so he could deliver gas to Europe while sidestepping Ukraine.
That’s obviously true. And once you accept that then the whole premise behind crypto is gone - if centralization is the only way to make it work, then traditional banking is preferred. All that’s left are use cases that are in the gambling and money laundering category.
I mine ETH. I have flexpool.io configured to pay me out after I accumulate 0.05 ETH which is about $140 right now.
They pay me out to my MEW wallet and the transfer costs me about $7.
I then have to transfer from my MEW wallet to my Coinbase wallet which costs me about $5 since I choose the MEW turtle speed which takes longer.
I then sell the ETH immediately because I realize how useless this crypto crap is for transactions or store of value. That costs me about $2.50.
So about $15 in fees to get my $140. You call that a great transfer of value network? I’ve mine cryptocurrency since you could use a GPU for BTC. There is no legitimate use for cryptocurrency today and I doubt there ever will be. It is structurally flawed in numerous ways.
I'm curious, why you don't just have the pool payout straight to your Coinbase wallet, especially since that is your consistent destination, so at least some of the transfer fees are avoided?
I could theoretically do that. But Coinbase says not to. And every single time I transfer ETH to Coinbase they give me a different wallet address to send the ETH to.
Bottom line, they say not to do it and I personally can't guarantee I'm sending the ETH to my Coinbase account with an old ETH address that I've remembered.
Mining profits are pretty low right now with EIP-1559 live, difficulty being so high and reduction in ETH price.
For example, one of my RTX-3070s is making about $2.10 per day after electricity costs. Before EIP-1559 on high volume days (ex: Shiba Inu launch) I was making $75 per day with just one card!
Supposedly Ethereum 2.0 is coming in June although that has been delayed repeatedly. So who knows when ETH will switch from PoW to PoS. I can't wait for that day to come because then there will be infinite used graphics cards readily available for sale. Everyone thinks they'll move on to Raven or ETC or other coins but those coins can't handle the hashrate that is current on ETH so I truly think PoW mining will not be profitable after Ethereum 2.0.
Let me know if you have any questions but basic setup I use is gminer on flexpool.io. It's dirt simple to set up if you have a 6GB+ video card (i.e. it has to have enough memory to fit the DAC).
I disagree. I believe there's a lot of areas where crypto can bring much more efficiency and transparency into financial markets, and that's a good thing. I agree the point is not to replace banks, but perhaps evolve them, bring about new types of financial institutions, products and instruments.
While I expect there are important new types of financial institutions, products and instruments that may be evolved by cryptocurrency experimentation, I would be extremely surprised if normal people could do a coherent analysis of the pros and cons of them, and expect they would not be able to distinguish the good ideas from the scams. I mean, look at how many people think literal lotteries are a good investment, or who are furious about the existence of inflation, or whose mind is blown when they first learn about fractional reserve banking.
I don’t know what you mean about efficiency, as there are multiple different ways to count this. Energy efficiency clearly isn’t a selling point, so can you expand on what you do mean?
I’m furious about the existence of inflation. I think it should really be called monetary debasement instead of inflation. Satoshi Nakamoto created Bitcoin in part to provide an alternative inflation free money option.
Why am I being naive or foolish to be furious about the existence of inflation? Is it a good thing that I simply misunderstand?
I am genuinely curious. Please help me understand.
I believe the accurate answer here is twofold:
- money is perpetually not supposed to be a great perpetual store of value relative to goods and services. Government policy aims for some inflation, fears too much and fears too little. Why? Because a bit of inflation is an incentive to use your money on more productive asset - eg don’t hold on to it but instead invest in a startup or go use someone’s services or goods (go to a restaurant!). The issues happen when inflation is so high that the money melts away before you have time to figure out how to use it productively. Deflation is also bad because then people stop spending on services, stop investing - and just hold onto money. (“No I don’t want to invest in this startup! I have the best investment I need, just holding onto my cash!”) That slows down the economy.
- either way Bitcoin doesn’t solve inflation in any way. It’s just another asset - that can go up or down or whatever, and happens to have gone up for a long time (just like Facebook stock) and then dropped a lot. Just like any stock or any asset, Bitcoin can have higher-than-inflation real returns or lower-than-inflation. And more recent returns have definitely been lower. What will happen in the future? Who knows. Same answer applies to the S&P500 and to Gold and to the new condo in my neighborhood.
Curiously, I was just thinking how I personally am often wrong about inflation right before logging back in to see what responses I’ve had to this comment.
One of the important things I tend to forget, is that effective rate of inflation is different for different people within the same economy.
This is because inflation isn’t just caused by just governments printing money, it’s also caused by a reduction in the availability of things to spend that money on and even the rate at which money changes hands (https://en.wikipedia.org/wiki/Velocity_of_money).
There’s also a totally unrelated argument that I can follow but not adequately repeat about the impact of various levels of inflation on consumer spending and the feedback that has on employment etc., but that’s not an argument that I expect to do anything at all to reduce anger.
> All you're doing is chattering on the web. You will never understand anything this way.
Is that why you feel justified throwing insults instead of engaging like an adult? This isn’t the only comment where you’ve directed insults my way. It seems you are only capable of name calling, not substantive discussion.
I believe the current state of affairs has governments holding a monopoly on lotteries and actively promoting and marketing said lotteries to the financially illiterate. The odds of coming out ahead are wildly better in crypto vs lotteries. Perhaps we should put an end to government-controlled scams such as lotteries before claiming that regulated industries can do no wrong?
I’m not saying regulated industry can do no wrong, I’m saying the graph of for frequency vs. quantity of wrong for regulated is smaller overall and closer to the axis than for unregulated.
I would counter with the great financial crisis of 2008 - and the stated reason for the creation of Bitcoin. Those were all regulated banks and financial entities that were deeply involved in a fraudulent scam to mis-represent the quality and contents of their mortgage backed securities. They took sub-prime mortgages and then added massive amounts of leverage and somehow the ratings agencies all gave them a AAA rating. This was all in a heavily regulated environment and as such it proved the need for a decentralized alternative.
My questions for those who trust in regulation:
-Why was no one ever prosecuted for this fraud?
-Why did regulation not work in the case if the 2008 GFC?
-If it didn’t work then, why would it work the next time?
It’s not really a counter though: for that you’d need to compare 2008 against markets with weaker or absent regulation.
I’m not sure the relative weighting of causes, between fraud, the misuse of Black Scholes[0], the elimination of various regulations which has been created at the end of the previous crisis, and the failures of credit rating agencies.
At least some of the fraud which did occur resulted in prison time.
[0] I did hear one of the big problems was everyone looking at the (Nobel Prize for economics winning) Black Scholes model, applying it inappropriately, and justifying this in the grounds everyone else was doing it. This is hard to fix, and group-think of this type is also very much the kind of failure mode I expect to happen more often in unregulated markets, but that doesn’t mean I don’t expect it to pop up everywhere given time.
> At least some of the fraud which did occur resulted in prison time.
Could you point me to any examples? When I looked into this the only person to serve prison time during this period was Bernie Maddoff and his great crime was stealing from the rich.
Thanks for sharing that link. It was very informative. They didn’t go far enough (e.g. None of the ratings agencies were impacted) but I’m glad to be proven wrong on this issue.
on a related note: I mentioned in other comment here that people will demand regulation. On the other hand, on numerous occasions I've stated that the next financial crisis will come from crypto. You already have wrapped tokens, tokens that wrap other yield making tokens, tokens that are just confirmation of collateral, yet they can be used as collateral elsewhere, tokens that can wrap multiple different tokens, NFTs that can wrap other NFTs, etc. etc.
Given the human nature, it's pretty much inevitable that some dirt will get lost in this chain, and we will face the exact same fate as we did with CDOs, just with different terminology.
What kind of efficiency are you talking about? It's far, far from clear -- at best -- that crypto can be more energy-efficient than traditional banking.
Transparency? Really? For whom? Do you want your taxes on the blockchain for everyone to see?
I am not an expert in crypto at all, but what I would love to see maybe, is some type of stablecoin supported by the USPS. USPS used to be in the banking business and are now looking into it again. Is there an opportunity for the USPS to support USDC, to replace money orders to help serve the underbanked?
Why wouldn't the USPS just be a bank, with accounts with the Fed and FDIC insurance though? The USPS not providing banking services is because Congress won't let it.
The whole premise behind crypto isn't gone. You can build centralized custody wallets on the blockchain and you still get programmable money, no middle-men for transactions and lower barrier to entry for innovation in financial services (and of course self-managed wallets for powerusers)
Where there's code, there are bugs. I don't want that in my money, thanks.
> no middle-men for transactions
At what cost? Most people don't care about censorship resistance, they want free/cheap/fast payments and transfers.
> lower barrier to entry for innovation in financial services
There's plenty of innovation in finance given the proper legal framework. See the number of fintech startups popping up every year. The only innovation we see in the cryptocurrency space is the recycling of old scams that are impossible in modern finance.
But none of that is true... transactions still require middle-men, and decentralised finance is fundamentally incompatible with financing. So we are left with "programmable money"... whatever that means.
In other words, people who can’t walk or can barely walk are likely not that healthy - is probably a more intuitive theory than walking causes better health.
> a more intuitive theory than walking causes better health.
Why? Genuine question. In todays world, people drive themselves in cars and then park themselves in chair for hours. Then, on other end there are people having physical work that is literally body destroying - or people who literally go too much all in sports.
Why would it be unintuitive that normal walking around, mild exercise related to easy day to day activity would be better for health?
Obviously that will be the case to some extent, but it doesn't necessarily explain the whole effect, given this part:
> Dose-response meta-analysis indicated a strong inverse association, wherein the risk decreased linearly from 2700 to 17,000 steps per day.
I expect (especially in the US) that many or even most people who could walk several thousand steps a day, don't. They talk about the 70+ age group separately, but most of it is talking about the general population and says the relationship holds.
Of course, this meshes with what we already know about the clear links to exercise causing better health - not just things like balance, less risk of injury, bone density etc. in older people but for anybody prevention of or improvements to things like non-alcoholic fatty liver disease (combined with diet), improvements for those with metabolic syndrome, etc. which all contribute to a lot of early mortality.
Spoken like someone has no clue what they are talking about and just throwing out jargon