bhupy

48 ms·

391.
by bhupy 6y ago
The latter; the lender doesn't get to enjoy the appreciation of the underlying collateral. The underlying collateral is simply meant to de-risk an anonymous loan with 0 credit check.
392.
by bhupy 6y ago
> Am I missing something fundamental? How does it make sense to borrow $100 and lock up $150 for the lifetime of the loan? Great question, I was just as dumbfounded as you are. Answered below in another sub-thread, which I believe you&#x
393.
by bhupy 6y ago
> If they pay back the loan they can get the shares back. If they fail to pay back the loan the shares are confiscated, no matter the value the shares are now at. You need to make a slight tweak to this statement. Currently, the smart co
394.
by bhupy 6y ago
Right now, no other use case. Though I think your question bakes into it a premise which is itself debatable: that speculation doesn't serve some function in the real economy. Today, most rich people are able to collateralize their own
395.
by bhupy 6y ago
Well, there's also a cost to connecting the other two major grids, and Texans have collectively decided that this cost is not worth it. Energy sovereignty is a concept we talk about in the context of nation-states, but it's also a
396.
by bhupy 6y ago
Super good question, I was perplexed by this myself. Basically what this financial instrument allows the borrower to do is maintain exposure to appreciating crypto assets while still leveraging its value for day to day spending. For example
397.
by bhupy 6y ago
It’s also institutional investors: https://www.scribd.com/document/460382154/May-2020-BVI-Lette...
398.
by bhupy 6y ago
> It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice. I know the payments industry pretty well, and I can assure you tha
399.
by bhupy 6y ago
This is fascinating. Do you have a link with more info?
400.
by bhupy 6y ago
This is interesting! I think for this to really work for Nigerians right now, there needs to already be some critical mass of Nigerian BTC holders bootstrapped. Would be interesting to know if this is already true; from my understanding Nig
401.
by bhupy 6y ago
On the flip side, the fact that we're talking about a Texas-specific outage means that the system actually worked as designed, in a degraded state. We generally try to incorporate redundancy and decentralization in systems design for t
402.
by bhupy 6y ago
The counterpoint to that is that gold has an "intrinsic value"; it's a store of value because it happens to have some use outside of merely just being a store of value. Of course, the counter-counter-point to that is that t
403.
by bhupy 6y ago
Yeah it's "overcollateralized". The borrower has to put 150% of the principal into escrow (this is enforced by the smart contract). If the borrower decides to flake, the lender gets to take the collateral.
404.
by bhupy 6y ago
I'm also still wrapping my head around this just like you, but I think I understand enough to answer some of your questions. > We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce. I don&
405.
by bhupy 6y ago
I'm very new to a lot of this, so you'll have to excuse me if I ask dumb questions. > rely mostly on P2P to on-ramp to crypto How does this work? If I have 1000 NGN, how do I convert that to the equivalent in BTC without going
406.
by bhupy 6y ago
Isn't shutting down the onramps effectively a ban on cryptocurrency?
407.
by bhupy 6y ago
I've only just begun to wrap my head around all of this, and I tried playing with some of the DeFi lending platforms built on top of Ethereum. It has its kinks, but I think on the net it's a remarkably cool thing. I was able to le
408.
by bhupy 6y ago
> ...for practically nothing > I know practically no one around me... I recommend reading a bit more about its use in countries with poor fiscal/monetary policy. https://qz.com/africa/1947769/nigeria-is-
409.
by bhupy 6y ago
> No, it doesn't! Exactly the opposite! How? > Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels? First of all, if a BitCoin miner can generate 1 TWh&#x2F
410.
by bhupy 6y ago
> If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictate
411.
by bhupy 6y ago
It's not (just) that. Gold has an intrinsic value because you can actually do something with it; it's used in semiconductor manufacturing, jewelry, etc. When you buy a gold bar as a store of wealth/value, even though your sp
412.
by bhupy 6y ago
> a minuscule percentage This is true right now considering how nascent this is, but what happens if adoption picks up? One thing I’d like to see discussed is what the marginal power cost of Bitcoin is. From where I sit, the vast major
413.
by bhupy 6y ago
> Bitcoin is purported to be an alternative to fiat money, not gold. And most governments can print fiat money at will, with virtually no energy. That's not completely true. Bitcoin is purported to be an alternative to fiat money b
414.
by bhupy 6y ago
With PoS, withdrawing your stake (read: disposing of your holdings) withdraws your ability to act as a validator. And pretty much every mainstream PoS implementation imposes a delay on stake withdrawal to give the rest of the network time t
415.
by bhupy 6y ago
I think that this critique severely mischaracterizes the argument: we're not just talking about the merits of blindly consuming electricity ("leaving the lights on forever"), we're talking about what happens when you att
416.
by bhupy 6y ago
How are the economic incentives of Proof of Stake any different from Proof of Work?
417.
by bhupy 6y ago
Makes sense in the short run. In the long run, these arbitrage opportunities would naturally fade away as the market settles on yield/interest equilibrium.
418.
by bhupy 6y ago
That explains it. Thanks! I think it makes sense. It's overcollateralized, but that's okay because you actually want to continue holding the asset to realize appreciation. To your point about avoiding capital gains tax, at some po
419.
by bhupy 6y ago
But the collateral almost never covers the full loan amount...otherwise the borrower wouldn't need to borrow money in first place; they already have it in the form of the collateral. For borrowers that ostensibly need liquidity, it wou
420.
by bhupy 6y ago
That makes sense. Then the next logical question is: what if I never get my money back? What if I lend it to a "dog" who then buys highly leveraged calls on GME, only to be unable to pay me back. Do I, the lender, just write it of

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