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That's not how you get into financial ruin. You get into financial ruin by leveraging onto a speculative position (borrowing money to buy an asset that goes up

That's not how you get into financial ruin. You get into financial ruin by leveraging onto a speculative position (borrowing money to buy an asset that goes upside down). I suspect most retail cryptocurrency buyers are not doing this yet.

otoburb 5y ago
It also seems strange that people would be worrying about a highly leveraged speculative frenzy while simultaneously acknowledging that the underlying asset is highly volatile. The irony is that almost monotonically increasing prices of other assets lull investors into a false sense of security that encourages ever larger leveraged positions, resulting in increased risk exposure. But volatilility, especially for digital assets (sic), usually flushes out and resets build-ups of highly leveraged positions in both directions.
- gunshai 5y ago
  It's my overall hypothesis that deleveraging events in crypto should happen more frequently and be less catastrophic systemically. The tether question not with standing, but I believe even if an event such as tether blowing up wouldn't be the end of crypto it would just birth a new thing over night to take its place.
ur-whale 5y ago
The real question is where do they borrow the money from? If lenders were doing their due diligence properly (as in: I'm going to lend you a 100 grand, but you had better explain what you're going to do with it and how I'm going to get it back plus some interests), then I see zero problem with people borrowing to buy risky assets such as crypto. If lenders are to dumb or lazy to do their work, I see this as a win for the ecosystem when they get liquidate by a crypto crash: they'll probably be a little more careful next time they lend money or altogether go do something else. In other words: the problem is not with borrowing to bet on crypto, but with the facts that it's all too easy for financial institutions to lend other (unsuspecting) people's money to huge credit risk borrowers (just like in 2008).

otoburb 5y ago

It also seems strange that people would be worrying about a highly leveraged speculative frenzy while simultaneously acknowledging that the underlying asset is highly volatile. The irony is that almost monotonically increasing prices of other assets lull investors into a false sense of security that encourages ever larger leveraged positions, resulting in increased risk exposure. But volatilility, especially for digital assets (sic), usually flushes out and resets build-ups of highly leveraged positions in both directions.

gunshai 5y ago
It's my overall hypothesis that deleveraging events in crypto should happen more frequently and be less catastrophic systemically. The tether question not with standing, but I believe even if an event such as tether blowing up wouldn't be the end of crypto it would just birth a new thing over night to take its place.

ur-whale 5y ago

The real question is where do they borrow the money from? If lenders were doing their due diligence properly (as in: I'm going to lend you a 100 grand, but you had better explain what you're going to do with it and how I'm going to get it back plus some interests), then I see zero problem with people borrowing to buy risky assets such as crypto. If lenders are to dumb or lazy to do their work, I see this as a win for the ecosystem when they get liquidate by a crypto crash: they'll probably be a little more careful next time they lend money or altogether go do something else. In other words: the problem is not with borrowing to bet on crypto, but with the facts that it's all too easy for financial institutions to lend other (unsuspecting) people's money to huge credit risk borrowers (just like in 2008).