8 ms·

Circle acquiring Poloniex changed the game. The rumored assurances from regulators that Poloniex's prior KYC/AML transgressions would be ignored as long as Circ

Circle acquiring Poloniex changed the game. The rumored assurances from regulators that Poloniex's prior KYC/AML transgressions would be ignored as long as Circle fixed them going forward was all it really took. Now we are seeing a huge wave of M&A deals while Coinbase uses its very strong financial position to buy up the the less compliant but cashflow-rich overseas exchanges. In particular I wouldn't be surprised to see a huge deal such as Coinbase acquiring BitFinex/Tether at a greatly reduced price w/ some negotiated deal with US regulators to phase out Tether as long as holders can prove their Tether balances were acquired legitimately. That said, if trading is the killer app for Bitcoin/Crypto [0] in general - what is the point of this whole business? For example most of the genuinely innovative things I've seen on the ETH blockchain like 0x (the backbone of Paradex), dydx (decentralized derivatives) and related technologies or higher level platforms like relayers and decentralized exchanges involve trading. Which begs the question - what tokens are actually worth trading in the first place? Is all this value really justified by CryptoKitties? Just making HFT bots to trade around a bunch of monopoly money that is useless other than hype-driven speculation? I'm sure this could continue for way longer than I and other skeptics expect, as it already has before, but the whole cryptocurrency sector seems fairly irrational to me. And I say that as someone who was VERY interested/knowledgable about bitcoin during the 2013 bubble, to the point where I was hanging out on IRC channels like #bitcoin-wizards, discussing BIPs etc. [0] - https://tradingplacesnewsletter.com/move-over-crypto-enthusiasts-wall-street-will-take-it-from-here-5b5a9067bc5 https://tradingplacesnewsletter.com/move-over-crypto-enthusi...

Shoue 8y ago
I'm hoping DAG-based cryptocurrencies will be able to provide the transaction speed necessary for consumer transactions to be practical and we'll see stores actually take cryptocurrencies directly. If so, we'd just need someone ambitious enough to make the payment terminals and hopefully stores will see tiny/zero transaction fees as enough of an incentive to switch. To add to your list of points, I'd argue privacy is another thing crypto as a whole hasn't really taken seriously apart from a small set of cryptocurrencies. How many people want to dish out their address to stores when this implies they can see their history and with it way too much metadata like where you spend/earn, how much you spend/earn, and so forth.
- wslh 8y ago
  It does not need to be a DAG, there are newcomers like Cardano, Algorand, DFinity which are no DAGs. Also the last Avalanche work is going in another direction.
jgh 8y ago
> Which begs the question - what tokens are actually worth trading in the first place? Is all this value really justified by CryptoKitties? I guess the old adage "The market can stay irrational longer than you can stay solvent" really applies here.
snissn 8y ago
> Which begs the question - what tokens are actually worth trading in the first place? I think we're getting closer to tokenizing actual securities. Similar to how TrueUSD is tokenizing U.S. Dollars, I think we're fairly close ( 5 years out) from NASDAQ officially tokenizing their stocks ( as an erc20 on the ethereum blockchain)
- jgh 8y ago
  why would they do that?
  - koolba 8y ago
    To finally put an end to flash trading by limiting the total transaction throughput to one trade every ten minutes.
    - Tesl 8y ago
      But they could implement that tomorrow if they really wanted to? Was this a joke that's gone over my head? :)
    - Mtinie 8y ago
      It would be funny if it worked that way, but alas, it doesn’t.
    - shanev 8y ago
      In 5 years both sharding and Plasma would be implemented on Ethereum. NASDAQ would probably run its own Plasma chain or sidechain and wouldn’t be beholden to the main chain’s throughput.
      - tomjakubowski 8y ago
        > NASDAQ would probably run its own Plasma chain If they're running a blockchain on their own, doesn't that defeat the point? > To eliminate _single points of failure, siloing and centralized control_.
guildenstern 8y ago
There is absolutely no chance that bitfinex and/or Tether will be acquired by any legitimate institution, much less Coinbase. They are far to steeped in fraudulent behaviour to ever go legitimate without regulatory punishment.
- hendzen 8y ago
  Why not? Circle (US based) bought Poloniex which is one of the biggest Tether exchanges. If you're Coinbase and you get to buy Bitfinex/Tether at a firesale price + pay some fines to the SEC if needed, why not?
  - guildenstern 8y ago
    Bitfinex isn’t a company that ignored some AML requirements and they’re not a company just using Tether. They’re the company responsible for tether, they are the creators of Tether. Tether is hugely fraudulent, it’s foundation is fraudulent, they haven’t just avoided some regulations. There’s no way that Coinbase or any other legitimate institution would open themselves up to being responsible for that.
    - MichaelGG 8y ago
      Who has Tether defrauded? I agree Tether may have just issued without backing, but they don't promise being able to withdraw. So who is actually being harmed? And why is it unfixable? What if Coinbase promised to completely cover any usdt shortfall?
      - deleted 8y ago
        [deleted]
      - askmike 8y ago
        I think the criticism from the regulators has to do with the fact that you cannot create something representing a dollar without approval from regulators and without requiring anyone to do KYC - effectively circumventing all KYC/AML systems in place in the traditional financial system.
madeofpalk 8y ago
> what is the point of this whole business? what a great question. 9 years later we're still trying to figure out what the point is.
Erlich_Bachman 8y ago
> Just making HFT bots to trade around a bunch of monopoly money that is useless other than hype-driven speculation? How is that different from the rest of the financial market? The huge chunk of all HFT trading is siphoning the money from real investors, it has no real value for the economy. HFT traders hold no positions in the market.
- hendzen 8y ago
  The assets that are being traded represent some other economic activity. For equities trading, for example the shares actually are a piece of a revenue earning company. The trading activity benefits society by allowing the company to sell additional shares to the public when needed, to raise further capital, for example. For futures the contracts represent a guarantee to buy or sell a commodity at a known amount and price at a set date in the future. The trading activity benefits society by allowing commodity producers to lock in a known price and offload the market risk of their harvest/herd/etc to speculators. So the HFT participants in these markets are actually helping society in some way by making these markets more liquid and efficient given that the trading actually serves some benefit. For bitcoin/crypto the trading itself is currently the whole point of the endeavor - people are only buying coins because they think they will go up in price, which makes the trading itself pointless.
  - Erlich_Bachman 8y ago
    What you write applies to regular investors, funds, investment banks, portfolio managers, etc. Speculators in general. But you should really read up on what HFT is. I recommend the book Flash Boys by Michael Lewis. HFT traders do not "trade" in the market in the usual sense. They don't optimize markets, they don't bet on anything, they don't take any risk. Every other investor takes risks (calculated), and that's their contribution to the market. They hedge risks and discover prices for those underlying assets you are talking about. HFTs are exploiting the markets, take no risks and siphon the money out of those investors that actually provide a service for the market.
    - hendzen 8y ago
fwdpropaganda 8y ago
> the whole cryptocurrency sector seems fairly irrational to me. And I say that as someone who was VERY interested/knowledgable about bitcoin during the 2013 bubble I'm not disagreeing with what you said, but I would add that if you were very interested before the 2013 bubble and then lost interest, you were/are irrational as well. Like everyone else you're taking views on the price based on the price.
- erikpukinskis 8y ago
  My price target for Bitcoin was $10k in 2013. I have no way to rationalize a target at $100k, especially sharing the pie with other currencies... not saying it won’t go there, I just don’t know the math for that. Given that there’s not a great reason to buy at $8k. Maybe for diversity among other investments.
  - fwdpropaganda 8y ago
    So after the 2013 bubble shouldn't you be buying like crazy? I maintain my claim :-) Seriously though. Would you share your calculations?

Shoue 8y ago

I'm hoping DAG-based cryptocurrencies will be able to provide the transaction speed necessary for consumer transactions to be practical and we'll see stores actually take cryptocurrencies directly. If so, we'd just need someone ambitious enough to make the payment terminals and hopefully stores will see tiny/zero transaction fees as enough of an incentive to switch. To add to your list of points, I'd argue privacy is another thing crypto as a whole hasn't really taken seriously apart from a small set of cryptocurrencies. How many people want to dish out their address to stores when this implies they can see their history and with it way too much metadata like where you spend/earn, how much you spend/earn, and so forth.

wslh 8y ago
It does not need to be a DAG, there are newcomers like Cardano, Algorand, DFinity which are no DAGs. Also the last Avalanche work is going in another direction.

jgh 8y ago

> Which begs the question - what tokens are actually worth trading in the first place? Is all this value really justified by CryptoKitties? I guess the old adage "The market can stay irrational longer than you can stay solvent" really applies here.

snissn 8y ago

> Which begs the question - what tokens are actually worth trading in the first place? I think we're getting closer to tokenizing actual securities. Similar to how TrueUSD is tokenizing U.S. Dollars, I think we're fairly close ( 5 years out) from NASDAQ officially tokenizing their stocks ( as an erc20 on the ethereum blockchain)

jgh 8y ago
why would they do that?
- koolba 8y ago
  To finally put an end to flash trading by limiting the total transaction throughput to one trade every ten minutes.
  - Tesl 8y ago
    But they could implement that tomorrow if they really wanted to? Was this a joke that's gone over my head? :)
  - Mtinie 8y ago
    It would be funny if it worked that way, but alas, it doesn’t.
  - shanev 8y ago
    In 5 years both sharding and Plasma would be implemented on Ethereum. NASDAQ would probably run its own Plasma chain or sidechain and wouldn’t be beholden to the main chain’s throughput.
    - tomjakubowski 8y ago
      > NASDAQ would probably run its own Plasma chain If they're running a blockchain on their own, doesn't that defeat the point? > To eliminate _single points of failure, siloing and centralized control_.

guildenstern 8y ago

There is absolutely no chance that bitfinex and/or Tether will be acquired by any legitimate institution, much less Coinbase. They are far to steeped in fraudulent behaviour to ever go legitimate without regulatory punishment.

hendzen 8y ago
Why not? Circle (US based) bought Poloniex which is one of the biggest Tether exchanges. If you're Coinbase and you get to buy Bitfinex/Tether at a firesale price + pay some fines to the SEC if needed, why not?
- guildenstern 8y ago
  Bitfinex isn’t a company that ignored some AML requirements and they’re not a company just using Tether. They’re the company responsible for tether, they are the creators of Tether. Tether is hugely fraudulent, it’s foundation is fraudulent, they haven’t just avoided some regulations. There’s no way that Coinbase or any other legitimate institution would open themselves up to being responsible for that.
  - MichaelGG 8y ago
    Who has Tether defrauded? I agree Tether may have just issued without backing, but they don't promise being able to withdraw. So who is actually being harmed? And why is it unfixable? What if Coinbase promised to completely cover any usdt shortfall?
    - deleted 8y ago
      [deleted]
    - askmike 8y ago
      I think the criticism from the regulators has to do with the fact that you cannot create something representing a dollar without approval from regulators and without requiring anyone to do KYC - effectively circumventing all KYC/AML systems in place in the traditional financial system.

madeofpalk 8y ago

> what is the point of this whole business? what a great question. 9 years later we're still trying to figure out what the point is.

Erlich_Bachman 8y ago

> Just making HFT bots to trade around a bunch of monopoly money that is useless other than hype-driven speculation? How is that different from the rest of the financial market? The huge chunk of all HFT trading is siphoning the money from real investors, it has no real value for the economy. HFT traders hold no positions in the market.

hendzen 8y ago
The assets that are being traded represent some other economic activity. For equities trading, for example the shares actually are a piece of a revenue earning company. The trading activity benefits society by allowing the company to sell additional shares to the public when needed, to raise further capital, for example. For futures the contracts represent a guarantee to buy or sell a commodity at a known amount and price at a set date in the future. The trading activity benefits society by allowing commodity producers to lock in a known price and offload the market risk of their harvest/herd/etc to speculators. So the HFT participants in these markets are actually helping society in some way by making these markets more liquid and efficient given that the trading actually serves some benefit. For bitcoin/crypto the trading itself is currently the whole point of the endeavor - people are only buying coins because they think they will go up in price, which makes the trading itself pointless.
- Erlich_Bachman 8y ago
  What you write applies to regular investors, funds, investment banks, portfolio managers, etc. Speculators in general. But you should really read up on what HFT is. I recommend the book Flash Boys by Michael Lewis. HFT traders do not "trade" in the market in the usual sense. They don't optimize markets, they don't bet on anything, they don't take any risk. Every other investor takes risks (calculated), and that's their contribution to the market. They hedge risks and discover prices for those underlying assets you are talking about. HFTs are exploiting the markets, take no risks and siphon the money out of those investors that actually provide a service for the market.
  - hendzen 8y ago

fwdpropaganda 8y ago

> the whole cryptocurrency sector seems fairly irrational to me. And I say that as someone who was VERY interested/knowledgable about bitcoin during the 2013 bubble I'm not disagreeing with what you said, but I would add that if you were very interested before the 2013 bubble and then lost interest, you were/are irrational as well. Like everyone else you're taking views on the price based on the price.

erikpukinskis 8y ago
My price target for Bitcoin was $10k in 2013. I have no way to rationalize a target at $100k, especially sharing the pie with other currencies... not saying it won’t go there, I just don’t know the math for that. Given that there’s not a great reason to buy at $8k. Maybe for diversity among other investments.
- fwdpropaganda 8y ago
  So after the 2013 bubble shouldn't you be buying like crazy? I maintain my claim :-) Seriously though. Would you share your calculations?