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Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current
by cortesoft 4y ago
Matt Levine always likes to say that cryptocurrencies are relearning hundreds of years of financial lessons in just a few short years. He describes the current crypto crisis as a repeat of the 2008 financial crisis.
Every single problem that cryptocurrencies face are extremely well known and studied phenomena in traditional economics. It is all very predictable.
- martincmartin 4y agoSeems more like the U.S. Bank Panic of 1907.[1] "The panic might have deepened if not for the intervention of financier J. P. Morgan, who pledged large sums of his own money and convinced other New York bankers to do the same to shore up the banking system. That highlighted the limitations of the US Independent Treasury system, which managed the nation's money supply but was unable to inject sufficient liquidity back into the market." This led to the creation of the Federal Reserve System. [1] https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907
- evah 4y agohttps://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking
- kareemsabri 4y agoDo you really think they're "learning" it? Nobody is all that surprised by these events. People have been pointing this stuff out all along.
- phailhaus 4y agoIt's like crypto enthusiasts honestly believe that the problem with the financial system is that the buildings have the word "Bank" on them. Then they turn around and offer to take your money promising absurdly high interest rates. Surprise! The only way to do that is to invest in risky assets, except this time there is no FDIC insurance, no capital requirements, no regulations whatsoever to protect your money.
- sacrosancty 4y agoCrypto enthusiasts will be doing fine having bought in many years ago. The trouble is for the randos who just jumped on the bandwagon and use all the weird risky add-on services.
- Tesl 4y agoI'm pretty sure at this point the majority of crypto "investors" are underwater. https://debthammer.org/cryptocurrency-survey/ https://debthammer.org/cryptocurrency-survey/
- int_19h 4y agoThe majority of crypto "investors" aren't crypto enthusiasts. They're make-me-rich-quick investment enthusiasts.
- kbenson 4y agoOr, it's like they're incentizied to believe and promote what they're doing and new and different because it's a way to short circuit the current financial system and make money without having to have all the same connections and rules required to make that work in the current system. Some are lying about it being different, some are willfully ignorant, and some are just clueless, but they were all excited to start something up in this new and exciting industry where people were literally throwing money at them.
- irusensei 4y agoWrong. What “crypto enthusiasts” refer as the problem is the trust on a third party, banking or watherver. Therefore people who got burned trusting centralized lending castle of cards cannot be referred as crypto enthusiasts.
- tpxl 4y agoClassic no true scottsman.
- 4y ago
- notch656a 4y agoIf that's true, at that rate crypto will blaze past traditional finance in only a few years, and be hundreds of years ahead of traditional finance in a couple decades. Sounds pretty good to me.
- mym1990 4y agoBut if we really take the analogy to heart, not much has changed fundamentally with finance since 2008. There are now more regulations, which is the exact same thing that will happen to crypto after all of this has settled. Maybe it zooms past traditional finance in a couple decades...but it needs to survive the next few years first.
- HillRat 4y agoBy that logic, we should all be taking our paychecks in tulip bulbs.
- irusensei 4y agoPeople should stop mentioning that highly exaggerated cautionary hoax created by calvinists. https://www.finance-watch.org/lessons-from-history-vii-tulip-mania-and-the-bubble-propaganda-of-elites/ https://www.finance-watch.org/lessons-from-history-vii-tulip... https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
- notch656a 4y agoThe logic applied by OP was that crypto will become trad-fi in a couple years and was basically rapidly moving in that direction. The extension of the logic was that at the same pace, it will quickly outpace traditional finance in innovation. You are unwittingly making the argument that traditional finance, or the future thereof, is (/ "should be") tulip bulbs. Perhaps not the worst of arguments, but probably not your intention to advocate as you have that traditional finance become tulip bulbs.
- cortesoft 4y agoSure, but the solution will end up looking just like traditional banking, only more expensive to run.
- hindsightbias 4y agoIn the ashes of cryptolibertarianism, Krugman is right again.
- codehalo 4y agoA comment that finally explains HN's sentiment on cryptocurrencies. I take it then that crypto is the financial equivalent of a fax machine (as Krugman described the early internet)? Well then, let's see how it all works out...
- irusensei 4y agoThis Krugman? https://www.nytimes.com/2020/11/19/opinion/joe-biden-economy.html https://www.nytimes.com/2020/11/19/opinion/joe-biden-economy...
- lamontcg 4y ago> He describes the current crypto crisis as a repeat of the 2008 financial crisis. That's optimistic.
- SV_BubbleTime 4y agoAgreed. No one is coming to the rescue. No one backed by guns really cares a ton. The idea is solid, but a wiping of the slate will allow for a new generation. One that will better benefit established powers.
- irusensei 4y agoThis doesn’t make a lot of sense. Bitcoin and ethereum are still up and processing blocks with little regard to what is happening in the financial system. Those lending companies closing down are basically centralized platforms very much like the legacy financial system. This take is the same type of uneducated comment that someone does while attributing actions done by say Coinbase to crypto as a system.
- sbierwagen 4y ago>Bitcoin and ethereum are still up and processing blocks with little regard to what is happening in the financial system. Those are internal database tasks. I'm sure the IT staff at Lehman Brothers could have run defrag jobs and swapped backup tapes until the Sun went out. That wasn't the problem at Lehman. The bitcoin network can process blocks when a bitcoin is worth $10,000 or $1 or $0.00001. The problem is that in the last two cases, economically, nobody would care if bitcoin is still processing blocks.
- andirk 4y agoWhen BTC was trading at 1USD, there was an alive and vibrant community making it all work. Your point is sound almost regardless of fiat price. Here's a 2011 @ 6USD interview https://youtu.be/Ta73DofiT7o https://youtu.be/Ta73DofiT7o
- cortesoft 4y agoWell, the treasury kept printing money and stores still took dollar bills during the 2008 financial crisis, too. I am not saying the whole system fell over. I am saying the ‘banks’ became over leveraged with risky assets whose risks were correlated in surprising ways.