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You have it backwards. The trillions of tokens were created because people lost trust in it. Specifically, the loss of trust instigated the price drop from $1 t
by seoaeu 4y ago
You have it backwards. The trillions of tokens were created because people lost trust in it. Specifically, the loss of trust instigated the price drop from $1 to ~98¢. That's what started the collapse. Only afterwards did the "death spiral" of minting of more tokens, which degraded trust, which decreased the price, which drove more minting, etc. happen
- stickfigure 4y agoThere were two coins involved; the overprinting of Luna corresponded with lost confidence in UST. The obvious conclusion is that "algorithmic" stablecoins are bullshit. Whatever fate lies ahead for Bitcoin, it doesn't have this particular weakness. It's not "leveraged" in the same way as Luna/UST.
- lfmunoz4 4y ago
- nwiswell 4y agoIt's chicken and egg. People lost trust because they knew people losing trust would cause a death spiral, and they wanted to get out before everyone else. It was a fire in a crowded theater. Bitcoin depends on trust, yes, but there's no Damoclean sword like there was for Luna. Some people losing confidence does not necessarily lead to others losing confidence.
- _carbyau_ 4y agoLike toilet paper in a COVID pandemic... people were acting not because of the item itself, but because they knew how "the crowd" would react - a self-fulfilling prophecy.