7 ms·

Sure looks like a bank run. I'll set the line on an official entry here https://en.wikipedia.org/wiki/List_of_bank_runs https://en.wikipedia.org/wiki/List_of_ba

by jefb 4y ago

Sure looks like a bank run. I'll set the line on an official entry here https://en.wikipedia.org/wiki/List_of_bank_runs https://en.wikipedia.org/wiki/List_of_bank_runs at 4.5 days.

criddell 4y ago
Bank run doesn't seem like the correct term since the exchanges aren't banks.
- halfmatthalfcat 4y ago
  But they've been acting like them, leveraging reserves into even riskier coins.
- hn_throwaway_99 4y ago
  It's the same dynamics, though, and "bank run" is the historical term used for these dynamics, i.e. institution takes depositors funds, institution loans out funds to other parties (the difference in the crypto case is that it appears this was done illegally, while in banking it's the underpinning for our financial system), and then there is a crisis of confidence where people run to take their money out, with the fear that you don't want to be last in line when the run starts.
  - c7b 4y ago
    i) that's not how banks work [0] ii) that's not how these exchanges work. if they are non-fraudulent, they'd have to hold cryptocurrency and cash on behalf of their clients. they'd never have a problem meeting withdrawal requests (the critical element of bank runs) iii) crypto exchanges, if they are non-fraudulent, would be an equivalent to stock brokers, not banks [0] https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Money-Creation-in-Fiat-and-Digital-Currency-Systems-48843 https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...
    - hn_throwaway_99 4y ago
      That absolutely is how banks work. Yes, there are fundamentally complexities under the covers, but banks take deposits and make loans - that is their fundamental purpose. Your points about "that's not how these exchanges work" is just a rephrasing of the point I made where the assets were loaned out illegally.
      - c7b 4y ago
        Have you even had a look at the article that I linked? You are making a claim without providing any backup whatsoever for your position, after it's already been pointed out to you with a scholarly reference that your belief is wrong.
        hn_throwaway_99 4y ago
        Suggestion: if you're trying to make a point, state it. Linking to 40 page article about the theory behind monetary creation in the modern world is not exactly a good way to make your argument against the statement that "banks take deposits and make loans". I honestly don't know how one can argue against that, it is simply true to anyone who has used a bank. I did not make any larger statement about the mechanics of modern-day money creation.
        c7b 4y ago
        It's in the abstract already: money creation is a result of bank's loan creation - the two are connected. Banks don't take deposits that they then lend out, they instead create those deposits ex nihilo when they make a loan.
        hn_throwaway_99 4y ago
        The difference is still useless pedantry for the purposes of a discussion about bank runs. If a bank makes a lot loans, and those loans go bad, and then depositors are fearful for their money and make a run on the bank, it is the depositors who are still shit out of luck unless their deposits are insured. You can argue all you want that the traditional model of fractional reserve banking isn't how today's money creation works, but at the end of the day there is a direct line between the quality of a bank's assets (its loans) and the ability for it to service its liabilities (its deposits).
- chasd00 4y ago
  > since the exchanges aren't banks These aren't anything though, they're made up by the founders. They don't behave like any typical financial institution. These things are just implementations of functionality, the fact that they are trusted with large amounts of money by random people on the internet is really good marketing and promises of riches.
- ktta 4y ago
  Well maybe we should find a new term, because atleast in the US, bank runs on actual banks aren't possible anymore due to the fed mandated reserve requirement being 0% and banks being able to print new $ These events are the closest we can get to bank runs today
- bandrami 4y ago
  Ironically historical bank runs were mostly on thrifts or savings & loans, which also aren’t banks.

by jefb 4y ago

Sure looks like a bank run. I'll set the line on an official entry here https://en.wikipedia.org/wiki/List_of_bank_runs https://en.wikipedia.org/wiki/List_of_bank_runs at 4.5 days.

criddell 4y ago

Bank run doesn't seem like the correct term since the exchanges aren't banks.

halfmatthalfcat 4y ago
But they've been acting like them, leveraging reserves into even riskier coins.
hn_throwaway_99 4y ago
It's the same dynamics, though, and "bank run" is the historical term used for these dynamics, i.e. institution takes depositors funds, institution loans out funds to other parties (the difference in the crypto case is that it appears this was done illegally, while in banking it's the underpinning for our financial system), and then there is a crisis of confidence where people run to take their money out, with the fear that you don't want to be last in line when the run starts.
- c7b 4y ago
  i) that's not how banks work [0] ii) that's not how these exchanges work. if they are non-fraudulent, they'd have to hold cryptocurrency and cash on behalf of their clients. they'd never have a problem meeting withdrawal requests (the critical element of bank runs) iii) crypto exchanges, if they are non-fraudulent, would be an equivalent to stock brokers, not banks [0] https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Money-Creation-in-Fiat-and-Digital-Currency-Systems-48843 https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...
  - hn_throwaway_99 4y ago
    That absolutely is how banks work. Yes, there are fundamentally complexities under the covers, but banks take deposits and make loans - that is their fundamental purpose. Your points about "that's not how these exchanges work" is just a rephrasing of the point I made where the assets were loaned out illegally.
    - c7b 4y ago
      Have you even had a look at the article that I linked? You are making a claim without providing any backup whatsoever for your position, after it's already been pointed out to you with a scholarly reference that your belief is wrong.
      - hn_throwaway_99 4y ago
        Suggestion: if you're trying to make a point, state it. Linking to 40 page article about the theory behind monetary creation in the modern world is not exactly a good way to make your argument against the statement that "banks take deposits and make loans". I honestly don't know how one can argue against that, it is simply true to anyone who has used a bank. I did not make any larger statement about the mechanics of modern-day money creation.
        c7b 4y ago
        It's in the abstract already: money creation is a result of bank's loan creation - the two are connected. Banks don't take deposits that they then lend out, they instead create those deposits ex nihilo when they make a loan.
        hn_throwaway_99 4y ago
        The difference is still useless pedantry for the purposes of a discussion about bank runs. If a bank makes a lot loans, and those loans go bad, and then depositors are fearful for their money and make a run on the bank, it is the depositors who are still shit out of luck unless their deposits are insured. You can argue all you want that the traditional model of fractional reserve banking isn't how today's money creation works, but at the end of the day there is a direct line between the quality of a bank's assets (its loans) and the ability for it to service its liabilities (its deposits).
chasd00 4y ago
> since the exchanges aren't banks These aren't anything though, they're made up by the founders. They don't behave like any typical financial institution. These things are just implementations of functionality, the fact that they are trusted with large amounts of money by random people on the internet is really good marketing and promises of riches.
ktta 4y ago
Well maybe we should find a new term, because atleast in the US, bank runs on actual banks aren't possible anymore due to the fed mandated reserve requirement being 0% and banks being able to print new $ These events are the closest we can get to bank runs today
bandrami 4y ago
Ironically historical bank runs were mostly on thrifts or savings & loans, which also aren’t banks.