10 ms·

How much money flows into crypto each month?

40 points by woodrow 5y ago

ChainReaktion 5y ago
Seems like Tether’s questionable activity throws a massive wrench in this analysis. You can’t equate minting to flows if the biggest minter is (allegedly) just printing the things whenever they feel like it
- hunterb123 5y ago
  When it comes to printing and the biggest minter are you talking about the US government or...?
  - Guest42 5y ago
    I think it’s accurate to state these types of complaints against government monetary control. However, doing so generally ignores the features and usage levels of currency that don’t and never will exist in cryptoland.
- dustintrex 5y ago
  This. The amount of real money flowing in supposedly increasing by 5% per month is also not compatible with many real-world indicators of interest showing the opposite, including Robinhood's crypto revenue falling off a cliff. https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robinhood-shares-plunge-after-a-decline-in-crypto-trading-hits-earnings/?sh=399ac9493a06 https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robi...
  - jondwillis 5y ago
    Ironically, Robinhood's cryptocurrency revenue shouldn't be high in the estimation of _real_ cryptocurrency enthusiasts, what's the point of crypto if you don't/can't own your keys? Really lays the whole thing bare. FOMO.
  - mike_d 5y ago
    Robinhood's crypto offering is just a shit product. You are just buying shares in their crypto holdings, not the underlying coins. It's like saying the internet is dying off because AOL's dialup customer base is shrinking.
- Animats 5y ago
  Um, yes. Stablecoin issuance that includes Tether is a terrible metric.[1] (This is a general problem in some areas of finance - is there new money entering the subsystem, or is it the same money going round and round? Crypto is so opaque that you can't tell. NFTs are worse. Coins at least have liquid markets and market prices. NFTs have high asking prices in stalled markets, and wash sales that conceal whether there's any significant resale market at all.) [1] https://www.coindesk.com/markets/2021/01/11/tether-mints-record-2b-usdt-in-one-week/ https://www.coindesk.com/markets/2021/01/11/tether-mints-rec...
- Scott_Sanderson 5y ago
  He said "Stablecoins are tokens that are backed by a fiat currency." But it really tokens that are pegged to a fiat currency. You can't redeem tethers because there is no back account holding a dollar for every tether.
- alienalp 5y ago
  This is just wrong. There is definitely issiues with Tether. They dont deserve their place but i havent seen any proof of this claim. Plus usdt is almost always trading slightly above a dollar. Which means even if they are buying bitcoin with printing usdt that is no different than buying bitcoin with their reserves. I dont see any reason why would they do so.
  - alienalp 5y ago
    This comment of mine sounds like optimistic. It is just i haven't seen any proof of printing. But i wouldn't trust and try to avoid if it possible because of its inheritance.
- mike_d 5y ago
  > just printing the things whenever they feel like it sigh This is a common misconception, so fact check time... Tether is printed on demand, but it is backed by assets. An independent audit was done to settle a claim brought by the New York Attorney General. The audit found $35.2 billion in assets against $35.1 billion in issuance liabilities. The case was settled with an $18 million fine and a promise of increased transparency, but ultimately the NYAG was unable to demonstrate any evidence supporting claims that Tether was unbacked.
  - goatsi 5y ago
    The "issuance liabilities" included loans backed by bitcoin. If someone posts bitcoin as collateral and tethers are generated, how much money has flown into crypto? https://blockworks.co/celsius-reportedly-borrowed-1b-from-tether-with-bitcoin-as-collateral/ https://blockworks.co/celsius-reportedly-borrowed-1b-from-te...
H8crilA 5y ago
Money is not flowing "in" or "out" of assets (except when new assets are being created, via a new offering). Every purchase is also a sale, every sale is also a purchase. It's a cognitive error to not understand the above, and it comes from extrapolation of the individual's point of view (when I buy X then my money goes "into" X) to the collective (when the price of X rises it must be because new money has "gone into" the X).
- dustintrex 5y ago
  I'm not sure what point you're trying to make here. If more people sell fiat and buy crypto, money is going "into" crypto. If more people sell crypto to buy fiat, money is coming "out" of crypto.
  - bpodgursky 5y ago
    All sales have an equal amount of buying, and all buying involves an equal amount of selling. There's never a net movement in one direction.
    - deleted 5y ago
      [deleted]
    - p1necone 5y ago
      You can mine crypto/mint new NFTs/create new coins arbitrarily without paying external currency for them though.
      - deleted 5y ago
        [deleted]
      - deleted 5y ago
        [deleted]
      - nightski 5y ago
        In reality this is devaluing existing crypto relative to other assets. The OP still stands in that money does not flow into crypto. It's not a black hole. Fiat money is being traded for an asset between two parties. The other party gets the fiat. In other words, you can't create or destroy USD (for example) through a cryptocurrency. You can only affect the cryptocurrency itself. Otherwise we'd have a large problem on our hands...
movedx 5y ago
I haven't read the article but I can easily answer the question: too much, because the value is higher than 0. Crypto should only be an experiment at this point in time. Blockchain is another matter entirely as that's a technology that enables all of this and it has other applications. But crypto is a (very) interesting experiment. The more people realise this and treat crypto as an experiment, the less scams and ruined lives we're going to see.
- choward 5y ago
  FOMO is a hell of a drug.
- JSavageOne 5y ago
  So 0 should go into any experiment? That doesn't even make sense.
- guiomie 5y ago
  Bitcoin not blockchain. I'm gonna get downvoted like crazy, but the innovation is bitcoin not blockchain. The more people realise this, the less scams and ruined lives we're going to see.
- RealityVoid 5y ago
  Blockchain is completely uninteresting. The beauty of crypto is not in the tech or cryptography itself, really, but the social consensus it is able to create and the very well balanced, self-sustaining incentive systems it creates. Cryptography is just a tool to enforce is but the social awareness is amazing to me.
- dang 5y ago
  Please let's keep this tedious generic flamewar off HN. Whatever one's views on the topic, it's exceedingly repetitive and therefore uninteresting. We want curious conversation here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
electriclove 5y ago
Keep an eye out for decentralized, algorithmic stablecoins like UST which have continued to grow market share which others like DAI have decreased.
JCM9 5y ago
I think the more relevant/interesting question is where is the money flowing into crypto coming from. The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things, which is a huge red flag. Purely anecdotal but my Facebook feed suggests those with a lot of financial literacy are steering clear while folks from high school that barely passed basic math and never left their home town think this is the absolute best place to invest for the future. Just saying.
- steelstraw 5y ago
  From the same place that also overinflated the stock market: The Fed's money printer.
- mwattsun 5y ago
  Paul Krugman recently said essentially the same thing and got roasted for being elitist. I can see both points of view and well, buyer beware... How Crypto Became the New Subprime https://archive.is/1SMIy https://archive.is/1SMIy
- JSavageOne 5y ago
  > The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things What data? Practically everyone I know owns crypto at this point. Me and many of my software engineer friends have had a pretty significant amount of our portfolios allocated to crypto for over a year now. Some have quit their jobs to work full-time in crypto. Painting crypto investors as "folks from high school that barely passed basic math and never left their home town" sounds not only insulting but comically inaccurate. I've been invested heavily in crypto for over a year now and definitely don't fit to that ridiculous profile you derived from your Facebook feed (who even goes on Facebook other than baby boomers these days anyways?).
  - munificent 5y ago
    I'm a software engineer and no one I know owns crypto. Everyone is in their own bubble these days.
Havoc 5y ago
I find the disconnect between mainstream "political opinion" and the actions of the big banks more interesting. Lets assume that crypto as a whole is a 50/50 proposition. And it is certainly a giant question mark (50/50 is symbolic)...cause there are certainly open questions. ...and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks. That makes me go hmm... ...on balance I'm leaning towards IB usually has a good nose for money and where the political winds will blow (or be made to blow by force)
- oblio 5y ago
  Banks, even major ones, are frequently doing business with very shady characters. https://www.theguardian.com/business/2021/dec/17/hsbc-fined-64m-failures-anti-laundering-fca https://www.theguardian.com/business/2021/dec/17/hsbc-fined-... If they smell money, they'll do it. Just because they do it, it doesn't mean it's not "funny money". Both could be true at the same time.
- JSavageOne 5y ago
  Much of HN is extremely conservative and unimaginative to the point where one should never take these comments seriously when it comes to anything predicting the future. HN completely missed the boat on crypto for example and seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC and banks, decentralized finance, DAOs, and so on. Post about web3, and you'll just have a bunch of geezers complaining about the term "web3" rather than addressing the changes taking place. Ultimately I think HN is a good place if you want to discuss technical details about super specific topics like Linux kernels, but a terrible place to get a glimpse of the future because most here are too close-minded and stuck in the past.
  - wwweston 5y ago
    > seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC Not so much "despite" as "because."
xiphias2 5y ago
It doesn’t really matter what metrics people use, if the current trend of yearly doubling in users/market cap continues, cryptocurrencies will get to the size of fiat currencies in about 10 years. Of course there are people who are sceptical on _whether_ the current trend continues or not.
- doliveira 5y ago
  Humans will run 100 meters in 0 seconds in 2600

40 points by woodrow 5y ago

Seems like Tether’s questionable activity throws a massive wrench in this analysis. You can’t equate minting to flows if the biggest minter is (allegedly) just printing the things whenever they feel like it

hunterb123 5y ago
When it comes to printing and the biggest minter are you talking about the US government or...?
- Guest42 5y ago
  I think it’s accurate to state these types of complaints against government monetary control. However, doing so generally ignores the features and usage levels of currency that don’t and never will exist in cryptoland.
dustintrex 5y ago
This. The amount of real money flowing in supposedly increasing by 5% per month is also not compatible with many real-world indicators of interest showing the opposite, including Robinhood's crypto revenue falling off a cliff. https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robinhood-shares-plunge-after-a-decline-in-crypto-trading-hits-earnings/?sh=399ac9493a06 https://www.forbes.com/sites/sergeiklebnikov/2021/10/27/robi...
- jondwillis 5y ago
  Ironically, Robinhood's cryptocurrency revenue shouldn't be high in the estimation of _real_ cryptocurrency enthusiasts, what's the point of crypto if you don't/can't own your keys? Really lays the whole thing bare. FOMO.
- mike_d 5y ago
  Robinhood's crypto offering is just a shit product. You are just buying shares in their crypto holdings, not the underlying coins. It's like saying the internet is dying off because AOL's dialup customer base is shrinking.
Animats 5y ago
Um, yes. Stablecoin issuance that includes Tether is a terrible metric.[1] (This is a general problem in some areas of finance - is there new money entering the subsystem, or is it the same money going round and round? Crypto is so opaque that you can't tell. NFTs are worse. Coins at least have liquid markets and market prices. NFTs have high asking prices in stalled markets, and wash sales that conceal whether there's any significant resale market at all.) [1] https://www.coindesk.com/markets/2021/01/11/tether-mints-record-2b-usdt-in-one-week/ https://www.coindesk.com/markets/2021/01/11/tether-mints-rec...
Scott_Sanderson 5y ago
He said "Stablecoins are tokens that are backed by a fiat currency." But it really tokens that are pegged to a fiat currency. You can't redeem tethers because there is no back account holding a dollar for every tether.
alienalp 5y ago
This is just wrong. There is definitely issiues with Tether. They dont deserve their place but i havent seen any proof of this claim. Plus usdt is almost always trading slightly above a dollar. Which means even if they are buying bitcoin with printing usdt that is no different than buying bitcoin with their reserves. I dont see any reason why would they do so.
- alienalp 5y ago
  This comment of mine sounds like optimistic. It is just i haven't seen any proof of printing. But i wouldn't trust and try to avoid if it possible because of its inheritance.
mike_d 5y ago
> just printing the things whenever they feel like it sigh This is a common misconception, so fact check time... Tether is printed on demand, but it is backed by assets. An independent audit was done to settle a claim brought by the New York Attorney General. The audit found $35.2 billion in assets against $35.1 billion in issuance liabilities. The case was settled with an $18 million fine and a promise of increased transparency, but ultimately the NYAG was unable to demonstrate any evidence supporting claims that Tether was unbacked.
- goatsi 5y ago
  The "issuance liabilities" included loans backed by bitcoin. If someone posts bitcoin as collateral and tethers are generated, how much money has flown into crypto? https://blockworks.co/celsius-reportedly-borrowed-1b-from-tether-with-bitcoin-as-collateral/ https://blockworks.co/celsius-reportedly-borrowed-1b-from-te...

H8crilA 5y ago

Money is not flowing "in" or "out" of assets (except when new assets are being created, via a new offering). Every purchase is also a sale, every sale is also a purchase. It's a cognitive error to not understand the above, and it comes from extrapolation of the individual's point of view (when I buy X then my money goes "into" X) to the collective (when the price of X rises it must be because new money has "gone into" the X).

dustintrex 5y ago
I'm not sure what point you're trying to make here. If more people sell fiat and buy crypto, money is going "into" crypto. If more people sell crypto to buy fiat, money is coming "out" of crypto.
- bpodgursky 5y ago
  All sales have an equal amount of buying, and all buying involves an equal amount of selling. There's never a net movement in one direction.
  - deleted 5y ago
    [deleted]
  - p1necone 5y ago
    You can mine crypto/mint new NFTs/create new coins arbitrarily without paying external currency for them though.
    - deleted 5y ago
      [deleted]
    - deleted 5y ago
      [deleted]
    - nightski 5y ago
      In reality this is devaluing existing crypto relative to other assets. The OP still stands in that money does not flow into crypto. It's not a black hole. Fiat money is being traded for an asset between two parties. The other party gets the fiat. In other words, you can't create or destroy USD (for example) through a cryptocurrency. You can only affect the cryptocurrency itself. Otherwise we'd have a large problem on our hands...

movedx 5y ago

I haven't read the article but I can easily answer the question: too much, because the value is higher than 0. Crypto should only be an experiment at this point in time. Blockchain is another matter entirely as that's a technology that enables all of this and it has other applications. But crypto is a (very) interesting experiment. The more people realise this and treat crypto as an experiment, the less scams and ruined lives we're going to see.

choward 5y ago
FOMO is a hell of a drug.
JSavageOne 5y ago
So 0 should go into any experiment? That doesn't even make sense.
guiomie 5y ago
Bitcoin not blockchain. I'm gonna get downvoted like crazy, but the innovation is bitcoin not blockchain. The more people realise this, the less scams and ruined lives we're going to see.
RealityVoid 5y ago
Blockchain is completely uninteresting. The beauty of crypto is not in the tech or cryptography itself, really, but the social consensus it is able to create and the very well balanced, self-sustaining incentive systems it creates. Cryptography is just a tool to enforce is but the social awareness is amazing to me.
dang 5y ago
Please let's keep this tedious generic flamewar off HN. Whatever one's views on the topic, it's exceedingly repetitive and therefore uninteresting. We want curious conversation here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

electriclove 5y ago

Keep an eye out for decentralized, algorithmic stablecoins like UST which have continued to grow market share which others like DAI have decreased.

JCM9 5y ago

I think the more relevant/interesting question is where is the money flowing into crypto coming from. The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things, which is a huge red flag. Purely anecdotal but my Facebook feed suggests those with a lot of financial literacy are steering clear while folks from high school that barely passed basic math and never left their home town think this is the absolute best place to invest for the future. Just saying.

steelstraw 5y ago
From the same place that also overinflated the stock market: The Fed's money printer.
mwattsun 5y ago
Paul Krugman recently said essentially the same thing and got roasted for being elitist. I can see both points of view and well, buyer beware... How Crypto Became the New Subprime https://archive.is/1SMIy https://archive.is/1SMIy
JSavageOne 5y ago
> The data there suggests it’s highly concentrated from folks that really have no business investing in extremely speculative things What data? Practically everyone I know owns crypto at this point. Me and many of my software engineer friends have had a pretty significant amount of our portfolios allocated to crypto for over a year now. Some have quit their jobs to work full-time in crypto. Painting crypto investors as "folks from high school that barely passed basic math and never left their home town" sounds not only insulting but comically inaccurate. I've been invested heavily in crypto for over a year now and definitely don't fit to that ridiculous profile you derived from your Facebook feed (who even goes on Facebook other than baby boomers these days anyways?).
- munificent 5y ago
  I'm a software engineer and no one I know owns crypto. Everyone is in their own bubble these days.

Havoc 5y ago

I find the disconnect between mainstream "political opinion" and the actions of the big banks more interesting. Lets assume that crypto as a whole is a 50/50 proposition. And it is certainly a giant question mark (50/50 is symbolic)...cause there are certainly open questions. ...and yet we've got people on this forum describing it as "funny money" while major investment banks are opening crypto desks. That makes me go hmm... ...on balance I'm leaning towards IB usually has a good nose for money and where the political winds will blow (or be made to blow by force)

oblio 5y ago
Banks, even major ones, are frequently doing business with very shady characters. https://www.theguardian.com/business/2021/dec/17/hsbc-fined-64m-failures-anti-laundering-fca https://www.theguardian.com/business/2021/dec/17/hsbc-fined-... If they smell money, they'll do it. Just because they do it, it doesn't mean it's not "funny money". Both could be true at the same time.
JSavageOne 5y ago
Much of HN is extremely conservative and unimaginative to the point where one should never take these comments seriously when it comes to anything predicting the future. HN completely missed the boat on crypto for example and seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC and banks, decentralized finance, DAOs, and so on. Post about web3, and you'll just have a bunch of geezers complaining about the term "web3" rather than addressing the changes taking place. Ultimately I think HN is a good place if you want to discuss technical details about super specific topics like Linux kernels, but a terrible place to get a glimpse of the future because most here are too close-minded and stuck in the past.
- wwweston 5y ago
  > seems to still think its some scam despite the fact that it enables borderless financial transactions without KYC Not so much "despite" as "because."

xiphias2 5y ago

It doesn’t really matter what metrics people use, if the current trend of yearly doubling in users/market cap continues, cryptocurrencies will get to the size of fiat currencies in about 10 years. Of course there are people who are sceptical on _whether_ the current trend continues or not.

doliveira 5y ago
Humans will run 100 meters in 0 seconds in 2600