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"No sane lender would extend credit against assets lacking any underlying collateral." I love this quote. This is the reason I refuse to get involved in crypto
by japhib 4y ago
"No sane lender would extend credit against assets lacking any underlying collateral."
I love this quote. This is the reason I refuse to get involved in crypto.
- moolcool 4y agoWhat about pictures of monkeys?
- seydor 4y agoAny kind of collateral is useless without a mechanism to guard it and enforce ownership. Bitcoin needs to acquire nukes. In a decentralized way. I know, i know
- arthurcolle 4y agoMaybe an AGI that likes to hodl will eventually do this
- rich_sasha 4y agoI'll sell you the NFT of one.
- xur17 4y ago> assets lacking any underlying collateral But what does this statement actually mean? What is "underlying collateral"? The US dollar doesn't have any physical assets backing it, but I'm pretty sure most lenders would lend against it.
- Eisenstein 4y agoThe US dollar is a medium of exchange, not an asset or an investment. You use dollars to buy things, you don't own dollars just to own dollars.
- rich_sasha 4y agoYes, if you want to hold "dollars" you probably actually buy US bonds with your dollars.
- anon291 4y agoThe US dollar can be traded on very safe markets for any number of commodities fairly trivially. What can I purchase with bitcoin other than USD or other currency? Even the eshops that accept bitcoin only do so to immediately convert into fiat. Prices are still denominated in USD.
- pwagland 4y agoIt doesn't have underlying physical assets, it does have the backing of large stable government. This is largely the same reason why the USD is more stable than, for example, the Kenyan Shilling.
- medvezhenok 4y agoIt also has a de-facto underlying physical asset, since the Kingdom of Saudi Arabia will only sell oil to you in USD since ~1974 (based on the backroom deals between US & Saudis). That's why our system is called the Petrodollar system.
- traveler01 4y ago"Large stable government". Define "stable", because the USA has been anything but stable last few years. The currency itself is being quite volatible as well due to the inflaction going on right now. Also, the fact that they can just print money of out thin air (which caused the inflaction) should scare people way more than it did.
- piva00 4y agoNot that I like the petrodollar system but please, go ahead suggesting a better and more stable system, I'm sure if you find it you'll get plenty of support and boatloads of literal money.
- raincom 4y ago> The fact that they can just print money of out thin air (which caused the inflation) should scare people way more than it did. Yes, crypto bros are scared, that's why they invest in crypto. However, every exporter out there want to swap his/her physical assets with US dollars. That's the difference between the crypto crowd and others.
- MilStdJunkie 4y agoThe collateral is "it will kill you dead". I call this the Blood Standard. How many people can your organization / nation murder in 90 minutes? By comparing the numbers, we get a rough idea of the baseline value for each nation's currency. It's one of the things that make nuclear weapons such a good deal; when you can kill a number of people equal to all of your neighbors, you become invasion-proof.
- deleted 4y ago[deleted]
- taylodl 4y agoThe US dollar has the US Fed, US government, US military, US industry, and US financial markets backing it. It's also the de facto reserve currency for many countries around the world. Do you know of any other currency, digital or not, having more physical assets backing it?
- naveen99 4y agodepends on who is the counterparty. US treasury doesn't offer collateral, neither do student loans. Also, the sentence doesn't parse. Credit against assets by definition collateralized by the assets. You also have credit against nothing.
- perfecthjrjth 4y agoPeople across the world are ready to swap US treasury notes with real assets(oil, gold, iron, cars, planes, etc). This is not the case with crypto.
- denton-scratch 4y ago> Also, the sentence doesn't parse. Credit against assets by definition collateralized by the assets. Since we're grammar-sniping, that second sentence doesn't parse either.