Ripple co-founder loses $44 billion on paper during cryptocurrency crash
He lost $44.1 billion dollars in 13 days, which is just about $3.4 billion per day.
To place that in perspective, the total spending of the government of the United Kingdom, the sixth largest economy in the world, is about $3.0 billion per day.
I can't say that I get the cryptocurrency. If it's just an investment vehicle, what exactly are people investing in?
ReplyDeleteIf it's actually a currency, then that's counterfeit money and is illegal.
Counterfeit? Only if it's pretending to be a dollar or pound or whatever. It's a global economy separate from a specific nation. This makes it dangerous to most authorities as it inherently can't be tracked.
DeleteAs for why it's worth what it is, that answer is absurdly complicated and involves powerful computers with the highest end graphics cards crunching numbers. A bitcoin is just a string of numbers that can only be used (spent) once. Not a physical coin or bill.
All cryptocurrency operates on the same notion, more or less.
The problem is what this story describes: everyone knew there was a massive bubble in that market. This is that bubble at least partially popping, with upstart currencies like Ripple hit hardest and bitcoin faring the best.
The reality is that cryptocurrency could become a global currency trumping all separate monetary units in a single global economy. It's just becoming clear we'll all be flying around on jetpacks before that happens. For now, bitcoin is good for buying illicit goods without risk of government knowing what you buy.
No.
Delete1.Whatever country the cryptocurrency is being used in, if it's being used as currency and not as an investment vehicle or with the cryptocurrency being initially bought with cash, then it's counterfeit in that nation.
2.Anytime people give a reply like 'it's absurdly complicated' people should run away. The reality is everything has a market value for one reason and one reason only: scarcity relative to demand.
Or rather, the good is scarce relative to demand.
DeleteSo, in the short term, sure you could answer 'well, bitcoin is scarce relative to demand.' But, as I asked in my original question, ultimately what are people buying the various cryptocurrencies for?
DeleteThere is so much nonsense surrounding money. The crypotcurrency promoters are no different than the gold bugs. The money creation process isn't actually all that difficult is a person takes the time to learn what occurs and 'unlearns' all the nonsense.
There are sound reasons why governments (especially the central banks) have to keep control of the money supply, and it has nothing to do with the conspiratorial nonsense of trying 'to keep control of people.' (Though I don't discount that trying to eliminate the use of cash may be an attempt to 'keep control of people' though that seems to be more of a private corporation thing than a government thing.)
This is a good primer on the money creation process: http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=money%20creation,%20the%20process
You're still goofy on the counterfeit thing. If I give someone diamonds or gold for goods or services, I'm not using counterfeit money. That's how cryptocurrency works: it's not actually money. It's something people have assigned value to outside of standard markets. Because it doesn't fit other words like a "mineral" or "metal" they call it a cryptocurrency. It's not a currency like deutschmarks, it's a weird little string of numbers.
ReplyDeleteI actually mentioned that possibility, it could be either an investment vehicle or a currency.
DeleteGold, in my opinion, is still very overvalued because it should be treated as a commodity like other metals or minerals, however, I understand that some people regard it as having worth as a 'safe haven' or as a 'store of value' in times of insecurity.
Cryptocurrency certainly is not a commodity and as a 'store of value' it's showing itself to be far too volatile (though maybe as it matures a bit...) I sort of understand value as a blockchain but that's about it, and bitcoin is hardly worth $10,000 a unit as a blockchain.