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Tell me, what assets exactly are backing BTC which stop it from crashing just like Luna?

dmichulke 4y ago
Let's make it clear that the dollar lost more often 99% of its value than bitcoin. And it never recovered. I think this will hold in the future as well. Or are you rather concerned with the volatility? Because surely bitcoin crashed more often 80% than the dollar... So pick your poison...
thedudeabides5 4y ago
BTC is not pegged, that's the diff. When you don't claim a value, you don't need a 'backstop.'
- NovemberWhiskey 4y ago
  There were two pieces of this particular crypto asset framework. The first part was Luna, which was a generic coin with no pegging mechanism or backing assets. The second part was Terra, which was a USD-pegged stable coin. The novelty was a guaranteed mint/burn mechanism across the two which was intended to maintain the peg on Terra. As the prior poster correctly asserts, Luna was never pegged.
- snovv_crash 4y ago
  You always need a backstop, otherwise you only have scarcity and not intrinsic value. Scarcity gives value in a bull market when people want in, but only a backstop gives real intrinsic value in a bear market when people want out. It isn't like you can reverse the mining process and get back the electricity which was used to mint your BTC or something.
eric_cc 4y ago
LUNA minted trillions of brand new tokens within the span of a day or so rendering the token worthless. This is due to the way LUNA was tied to the algorithmic stablecoin UST. It was a true ponzi. BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.
- jtaft 4y ago
  Do you think the value of Bitcoin will go to zero due to lost private keys?
  - eric_cc 4y ago
    I think it would sooner be rendered obsolete for another reason before this scenario. It would take a long, long time for this to play out.
  - wallacoloo 4y ago
    one usually hears the opposite argument: Bitcoin becomes more scarce as users lose their private keys. lost keys => smaller supply => higher price per unit. i can see the opposite argument though: lost keys => less desire to interact with bitcoin => lower demand => lower price per unit. so it might just be a wash.
    - ImPostingOnHN 4y ago
      The former relationship wouldn't play out IRL, since there's no authoritative "lost bitcoin registry" to signal to buyers that the supply has effectively decreased
      - netheril96 4y ago
        The buyers do not need to know about that. The effect of supply and demand on price doesn’t depend on anyone knowing supply and demand.
        ImPostingOnHN 4y ago
        the effect of supply on demand does indeed require that buyers know something about the supply I mean, just think about it for a moment: how many bitcoins were "lost" today? Was it 0 or 100,000? Perhaps it's -100,000, because somebody gained access to 100,000 that were previously lost. If it doesn't make a difference, then the supply isn't affecting demand If it DOES make a difference, then demand can't be affected, because nobody knows whether it was 0 or 100,000 or -100,000
paxys 4y ago
Nothing is stopping BTC from crashing to zero, so why is it not crashing to zero?
- postalrat 4y ago
  "Nothing is stopping BTC from crashing to zero" isn't true. Although it can still crash to zero.
- rednerrus 4y ago
  Because they continue to print Tether to prop the price up? Am I doing this right?
- chrismcb 4y ago
  Because there are enough people still buying it.
GaylordTuring 4y ago
Nothing, but I guess I don’t have to tell you that, since your question seems rhetorical in Nature. However, what keeps BTC from crashing is the same psychological effect that keeps Twitter, Facebook, Nike, or Coca-Cola from crashing: Brand awareness. Bitcoin sucks compared to many other cryptocurrencies, still it’s the most popular one because it was the first, because people know about it, and because people know that other people know about it. Even if you could fork Twitter and put it behind a different domain name, for example , Twutter, and you would add some functionality that everybody would like to have (let’s say an edit button), most people would still go to Twitter. If you could sell the rights to use the name Coca-Cola or Nike, even if you had to make it clear to the customer that the new product that you sold had nothing to do what so ever with old product, the names alone would be worth a couple of fortunes. So what’s stopping Bitcoin from crashing is the brain virus (or meme if you want) that has infected hundreds of people around the globe and made them believe that other people will know about and believe that Bitcoin is valuable. And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself.
- Sebb767 4y ago
  > And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself. I think you undersell that point: Bitcoin has proven itself. A lot of currencies have come and crashed, had backdoors, hacks, hard forks etc.; Bitcoin is simple-ish and stable. It also the longest surviving crypto currency. So it wields a lot of trust and market power.

Let's make it clear that the dollar lost more often 99% of its value than bitcoin. And it never recovered. I think this will hold in the future as well. Or are you rather concerned with the volatility? Because surely bitcoin crashed more often 80% than the dollar... So pick your poison...

thedudeabides5 4y ago

BTC is not pegged, that's the diff. When you don't claim a value, you don't need a 'backstop.'

NovemberWhiskey 4y ago
There were two pieces of this particular crypto asset framework. The first part was Luna, which was a generic coin with no pegging mechanism or backing assets. The second part was Terra, which was a USD-pegged stable coin. The novelty was a guaranteed mint/burn mechanism across the two which was intended to maintain the peg on Terra. As the prior poster correctly asserts, Luna was never pegged.
snovv_crash 4y ago
You always need a backstop, otherwise you only have scarcity and not intrinsic value. Scarcity gives value in a bull market when people want in, but only a backstop gives real intrinsic value in a bear market when people want out. It isn't like you can reverse the mining process and get back the electricity which was used to mint your BTC or something.

eric_cc 4y ago

LUNA minted trillions of brand new tokens within the span of a day or so rendering the token worthless. This is due to the way LUNA was tied to the algorithmic stablecoin UST. It was a true ponzi. BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.

jtaft 4y ago
Do you think the value of Bitcoin will go to zero due to lost private keys?
- eric_cc 4y ago
  I think it would sooner be rendered obsolete for another reason before this scenario. It would take a long, long time for this to play out.
- wallacoloo 4y ago
  one usually hears the opposite argument: Bitcoin becomes more scarce as users lose their private keys. lost keys => smaller supply => higher price per unit. i can see the opposite argument though: lost keys => less desire to interact with bitcoin => lower demand => lower price per unit. so it might just be a wash.
  - ImPostingOnHN 4y ago
    The former relationship wouldn't play out IRL, since there's no authoritative "lost bitcoin registry" to signal to buyers that the supply has effectively decreased
    - netheril96 4y ago
      The buyers do not need to know about that. The effect of supply and demand on price doesn’t depend on anyone knowing supply and demand.
      - ImPostingOnHN 4y ago
        the effect of supply on demand does indeed require that buyers know something about the supply I mean, just think about it for a moment: how many bitcoins were "lost" today? Was it 0 or 100,000? Perhaps it's -100,000, because somebody gained access to 100,000 that were previously lost. If it doesn't make a difference, then the supply isn't affecting demand If it DOES make a difference, then demand can't be affected, because nobody knows whether it was 0 or 100,000 or -100,000

paxys 4y ago

Nothing is stopping BTC from crashing to zero, so why is it not crashing to zero?

postalrat 4y ago
"Nothing is stopping BTC from crashing to zero" isn't true. Although it can still crash to zero.
rednerrus 4y ago
Because they continue to print Tether to prop the price up? Am I doing this right?
chrismcb 4y ago
Because there are enough people still buying it.

GaylordTuring 4y ago

Nothing, but I guess I don’t have to tell you that, since your question seems rhetorical in Nature. However, what keeps BTC from crashing is the same psychological effect that keeps Twitter, Facebook, Nike, or Coca-Cola from crashing: Brand awareness. Bitcoin sucks compared to many other cryptocurrencies, still it’s the most popular one because it was the first, because people know about it, and because people know that other people know about it. Even if you could fork Twitter and put it behind a different domain name, for example , Twutter, and you would add some functionality that everybody would like to have (let’s say an edit button), most people would still go to Twitter. If you could sell the rights to use the name Coca-Cola or Nike, even if you had to make it clear to the customer that the new product that you sold had nothing to do what so ever with old product, the names alone would be worth a couple of fortunes. So what’s stopping Bitcoin from crashing is the brain virus (or meme if you want) that has infected hundreds of people around the globe and made them believe that other people will know about and believe that Bitcoin is valuable. And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself.

Sebb767 4y ago
> And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself. I think you undersell that point: Bitcoin has proven itself. A lot of currencies have come and crashed, had backdoors, hacks, hard forks etc.; Bitcoin is simple-ish and stable. It also the longest surviving crypto currency. So it wields a lot of trust and market power.