2 ms·

FDIC protection being invoked will still have anyone holding US dollars to rush for the doors trying to put it into anything else. There's absolutely no guarant

FDIC protection being invoked will still have anyone holding US dollars to rush for the doors trying to put it into anything else. There's absolutely no guarantee of protecting the value of assets, simply the number of them.

Robotbeat 6y ago
What would happen if suddenly (on news from some exploit or a scheduled banning by the vast majority of governments) everyone tried to pull their Bitcoin and put it into anything else? The blockchain can only do 7 transactions per second regardless of demand.
- tobylane 6y ago
  The mempool queue would increase, iiuc. https://bitcoinqueue.com/#1,24h https://bitcoinqueue.com/#1,24h
  - quesera 6y ago
    That's correct, if the "into anything else" transaction required a cross through (any) blockchain. And the clearing feerate, which correlates to mempool queue depth, incoming transaction velocity, and cohort feerates, would increase dramatically. But if there was a run to convert BTC to USD, the exchanges would not be able to cover the USD required. They'd limit or suspend withdrawals immediately. At some point someone would have to start buying with fresh USD for the exchanges to be able to pay out the sellers. With big enough news, there could be tens of thousands of dollars gap between bid and ask, which would take a long time to ease.
  - Robotbeat 6y ago
    Yup, and the transaction fee would be bid up by people desperate to make transactions. To say nothing of the bottom falling out of the value of Bitcoin ...
- krupan 6y ago
  This is different that everyone withdrawing dollars from a bank. The equivalent would be exchanging dollars for something not dollars. FDIC doesn't help there.
ceejayoz 6y ago
The FDIC is regularly invoked. https://www.npr.org/templates/story/story.php?storyId=102384657 https://www.npr.org/templates/story/story.php?storyId=102384... > But on the other hand, check these FDIC folks out. They know what they're doing. And every week they get more experience. In the 10 weeks since the FDIC took over the Bank of Clark County, 18 more banks have failed. That brings us to a grand total of 20 since the start of this year — a number that will likely grow tomorrow.

Robotbeat 6y ago

What would happen if suddenly (on news from some exploit or a scheduled banning by the vast majority of governments) everyone tried to pull their Bitcoin and put it into anything else? The blockchain can only do 7 transactions per second regardless of demand.

tobylane 6y ago
The mempool queue would increase, iiuc. https://bitcoinqueue.com/#1,24h https://bitcoinqueue.com/#1,24h
- quesera 6y ago
  That's correct, if the "into anything else" transaction required a cross through (any) blockchain. And the clearing feerate, which correlates to mempool queue depth, incoming transaction velocity, and cohort feerates, would increase dramatically. But if there was a run to convert BTC to USD, the exchanges would not be able to cover the USD required. They'd limit or suspend withdrawals immediately. At some point someone would have to start buying with fresh USD for the exchanges to be able to pay out the sellers. With big enough news, there could be tens of thousands of dollars gap between bid and ask, which would take a long time to ease.
- Robotbeat 6y ago
  Yup, and the transaction fee would be bid up by people desperate to make transactions. To say nothing of the bottom falling out of the value of Bitcoin ...
krupan 6y ago
This is different that everyone withdrawing dollars from a bank. The equivalent would be exchanging dollars for something not dollars. FDIC doesn't help there.

ceejayoz 6y ago

The FDIC is regularly invoked. https://www.npr.org/templates/story/story.php?storyId=102384657 https://www.npr.org/templates/story/story.php?storyId=102384... > But on the other hand, check these FDIC folks out. They know what they're doing. And every week they get more experience. In the 10 weeks since the FDIC took over the Bank of Clark County, 18 more banks have failed. That brings us to a grand total of 20 since the start of this year — a number that will likely grow tomorrow.