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Why the Bitcoin Crash Was a Big Win for Cryptocurrencies

11 points by jules-jules 5y ago

numtel 5y ago
Non-paywalled: https://web.archive.org/web/20210521150348/https://www.bloomberg.com/opinion/articles/2021-05-20/why-the-bitcoin-crash-was-a-big-win-for-cryptocurrencies https://web.archive.org/web/20210521150348/https://www.bloom...
SideburnsOfDoom 5y ago
Thought experiment: What kind of event could happen, that would not result in an opinion piece about how "this is actually good for Cryptocurrencies" ? Is there such a thing?
imtringued 5y ago
According to the article it's not a win for cryptocurrencies, it's a win for "the decentralized finance system" commonly abbreviated as DeFi. So by cryptocurrencies the article means Ethereum, Cardano and a bunch of other small time cryptocurrencies. If we assume that smart contracts provide utility even in the absence or during the pop of a bubble then a lower price is a good thing, because it means you get cheaper access to services provided by Ethereum. For example, lets say NFTs are used to build a decentralized ebay (auctions and product listing go beyond payments), you would have to spend less dollars on transaction fees as the ETH/USD price goes down. There is a reason why deflation is bad for utility, it's because people start hoarding and drown out productive uses.
boublepop 5y ago
Like clockwork, every time crypto currencies experience adversity, either through price crashes, hacks or what have you. The supporters start chanting “This is good for crypto”. There’s nothing that will ever be bad for crypto in their eyes.
- robot_no_419 5y ago
  Plenty of things would be bad for crypto, they just don't happen. Here's a long list of things that would genuinely be bad for crypto: Financial events: - Posting lower highs and lower lows (not happening) - Decreasing trading volume, decreasing on chain activity, decreasing active address, decreasing hash rate (not happening) - Being outperformed by other commodities (not happening) Political events: - A first world democracy restricting or banning the use of crypto (not happening so far...) - Negative public sentiment against crypto preventing adoption (might be happening as we speak, too early to tell) - Fundamental incompatibility between crypto and our existing legal framework (possible, but not happening so far) Protocol/tech events: - 51% attack (not happening so far) - Exploit of core protocol resulting in instability/loss of funds at the base layer (not happening) - Failure to scale to required levels (possible, but good progress is being made here) Price crashes are not a concern at all for the long term health of crypto. In fact, price crashes are where distribution of supply happen, and that is definitely a good thing for crypto. Think of a price crash as a forest fire that allows new life to grow :)
  - pestatije 5y ago
    So it's a waiting game basically.
    - robot_no_419 5y ago
      Not sure what you meant by this comment, but I don't expect any of these risks I listed to realize themselves anytime soon. If you're waiting for these events to happen, you might need to wait a few decades, or maybe you just keep on waiting and watching Bitcoin climb higher and higher...
  - mikewarot 5y ago
    Missing from the list Criminal events: - An exchange simply takes the bitcoin and run (MtGox owes me a bitcoin) - Ways to work around financial rules are shut down (Tether is used to route money into sites that offer stupid high levels of leverage, and thus speculation pushes prices higher) Mass psychology: - Money flowing out of the market exceeds money flowing inward due to panic selling. (Compounded by above mentioned stupid high levels of leverage and margin calls) So why won't it go away? It is my personal belief that Bitcoin is allowed to continue because it isn't private(all transactions are stored in the blockchain for anyone to see), and thus it turned out to be a great surveillance tool for the powers that be, while seaming to work against them.
jimsmart 5y ago
I guess it's easy for articles like this to overlook the fact that Coinbase went down for an hour for many users. https://www.cnbc.com/2021/05/19/coinbase-is-down-for-some-users.html https://www.cnbc.com/2021/05/19/coinbase-is-down-for-some-us...

11 points by jules-jules 5y ago

Non-paywalled: https://web.archive.org/web/20210521150348/https://www.bloomberg.com/opinion/articles/2021-05-20/why-the-bitcoin-crash-was-a-big-win-for-cryptocurrencies https://web.archive.org/web/20210521150348/https://www.bloom...

SideburnsOfDoom 5y ago

Thought experiment: What kind of event could happen, that would not result in an opinion piece about how "this is actually good for Cryptocurrencies" ? Is there such a thing?

imtringued 5y ago

According to the article it's not a win for cryptocurrencies, it's a win for "the decentralized finance system" commonly abbreviated as DeFi. So by cryptocurrencies the article means Ethereum, Cardano and a bunch of other small time cryptocurrencies. If we assume that smart contracts provide utility even in the absence or during the pop of a bubble then a lower price is a good thing, because it means you get cheaper access to services provided by Ethereum. For example, lets say NFTs are used to build a decentralized ebay (auctions and product listing go beyond payments), you would have to spend less dollars on transaction fees as the ETH/USD price goes down. There is a reason why deflation is bad for utility, it's because people start hoarding and drown out productive uses.

boublepop 5y ago

Like clockwork, every time crypto currencies experience adversity, either through price crashes, hacks or what have you. The supporters start chanting “This is good for crypto”. There’s nothing that will ever be bad for crypto in their eyes.

robot_no_419 5y ago
Plenty of things would be bad for crypto, they just don't happen. Here's a long list of things that would genuinely be bad for crypto: Financial events: - Posting lower highs and lower lows (not happening) - Decreasing trading volume, decreasing on chain activity, decreasing active address, decreasing hash rate (not happening) - Being outperformed by other commodities (not happening) Political events: - A first world democracy restricting or banning the use of crypto (not happening so far...) - Negative public sentiment against crypto preventing adoption (might be happening as we speak, too early to tell) - Fundamental incompatibility between crypto and our existing legal framework (possible, but not happening so far) Protocol/tech events: - 51% attack (not happening so far) - Exploit of core protocol resulting in instability/loss of funds at the base layer (not happening) - Failure to scale to required levels (possible, but good progress is being made here) Price crashes are not a concern at all for the long term health of crypto. In fact, price crashes are where distribution of supply happen, and that is definitely a good thing for crypto. Think of a price crash as a forest fire that allows new life to grow :)
- pestatije 5y ago
  So it's a waiting game basically.
  - robot_no_419 5y ago
    Not sure what you meant by this comment, but I don't expect any of these risks I listed to realize themselves anytime soon. If you're waiting for these events to happen, you might need to wait a few decades, or maybe you just keep on waiting and watching Bitcoin climb higher and higher...
- mikewarot 5y ago
  Missing from the list Criminal events: - An exchange simply takes the bitcoin and run (MtGox owes me a bitcoin) - Ways to work around financial rules are shut down (Tether is used to route money into sites that offer stupid high levels of leverage, and thus speculation pushes prices higher) Mass psychology: - Money flowing out of the market exceeds money flowing inward due to panic selling. (Compounded by above mentioned stupid high levels of leverage and margin calls) So why won't it go away? It is my personal belief that Bitcoin is allowed to continue because it isn't private(all transactions are stored in the blockchain for anyone to see), and thus it turned out to be a great surveillance tool for the powers that be, while seaming to work against them.

jimsmart 5y ago

I guess it's easy for articles like this to overlook the fact that Coinbase went down for an hour for many users. https://www.cnbc.com/2021/05/19/coinbase-is-down-for-some-users.html https://www.cnbc.com/2021/05/19/coinbase-is-down-for-some-us...