Pop!
Infusion of $3.5bn not enough to revive Terra's 'stablecoin'
TerraUSD, a so-called "stablecoin," has seen its value drop from $1 apiece a week ago to about $0.09 on Monday, demonstrating not all that much stability. The cryptocurrency token, abbreviated UST, is supposed to be pegged to the price of the US dollar. Hence the "stable" terminology. But UST is not a "centralized stablecoin …
COMMENTS
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Tuesday 17th May 2022 01:22 GMT BOFH in Training
Do Kwon is better off, probably
I understand Do Kwon had another algo stablecoin prior to Terra. Which also didnt' work.
https://www.coindesk.com/tech/2022/05/11/usts-do-kwon-was-behind-earlier-failed-stablecoin-ex-terra-colleagues-say/
And now he wants to restart again.
https://www.bloomberg.com/news/articles/2022-05-16/do-kwon-proposes-creating-another-blockchain-from-terra-s-ashes
Sounds like he isn't doing all that badly out of this crash. And will not be surprised if he gets another bunch of investors jumping in for his 3rd attempt.
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Tuesday 17th May 2022 05:38 GMT Anonymous Coward
Re: Do Kwon is better off, probably - Certainly
These pyramid/Ponzi schemes, implode when the new suckers buying in are out volumed by people selling out. It doesn't need an end to the suckers, it just needs them to be outnumbered by the insiders cashing out.
Kwon's game there, looks to be no different than paying out prior investors a portion of the money you take in. It may be simply a way for him to confuse a jury, and portray himself as some sort of hero trying to save the currency using 'his' own money.
You may also find that Kwon was cashing out at the same time as doing his "hero to the rescue" bit, and simply smoothing the cash out to try to extract more than he's putting in. Typically such actions will be done with trolls pushing "buy the dip" claims.
There's the classic "the product is confusing and opaque and not the important things".... you're buying a stablecoin, but it's neither stable nor a coin. Claims of stability are bogus. Claims that arbitrage secures them are bogus. Claims that trading between two such worthless items somehow constitutes value, are bogus.
If it was a stable coin with amazing returns, you might wonder why Kwon has cash.
Crypto are just unregistered securities, designed to be confusing to the people they sucker in. No different than any other pyramid scheme or Ponzi scheme.
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Tuesday 17th May 2022 06:31 GMT Anonymous Coward
Re: Do Kwon is better off, probably - Certainly
"Crypto are just unregistered securities, designed to be confusing to the people they sucker in. No different than any other pyramid scheme or Ponzi scheme."
Exactly. As you said, however, they have a huge added value: when the proverbial brown stuff hit the fan, they offer a whole world of excuses to dodge liabilities. Madoff didn't have this luxury ...
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Tuesday 17th May 2022 05:20 GMT DS999
Re: The only downside
They will, they are "stable" via different methods but other than the ones that claim to have actual dollar holdings for every dollar of claimed value (and we'll see which ones are lying and which aren't) they are all vulnerable.
I've seen more than a few allegations that Tether does not hold anything remotely close to the amount claimed, and that a run on somewhere between 1/4 and 1/3 of it would cause it to collapse, and that would be a much bigger event taking bitcoin well below $10K. Perhaps nearly to zero if it drives enough longtime holders to sell before the house of cards collapses.
Too bad there is a bag of popcorn icon, because that's what I'm grabbing when Tether starts going down.
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Tuesday 17th May 2022 15:24 GMT Arthur the cat
Re: The only downside
I'm not a crypto advocate, but would any bank survive a run of 25% of their deposits?
That's exactly what central banks in countries with their own currency are supposed to do - act as the final provider of liquidity. It helps if you realise that retail banks aren't really about money, they're liquidity transformers, turning the potentially short term liquidity of deposits into the long term liquidity of loans and mortgages. Unless they've royally screwed their lending policies(*) a bank run is simply a liquidity squeeze, which is where the central bank steps in.
(*) See: sub-prime mortgages.
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Tuesday 17th May 2022 21:28 GMT doublelayer
Re: The only downside
In some ways, yes, the bank would survive this. They would do it by making some panicky calls to the central bank, but that's why they have set up relationships with the central bank. If it ends there, a run like that doesn't kill a bank because they become more conservative to keep control of the 75% they've still got in loans and other investments. A while ago, they wouldn't withstand that, which is why banks are usually required to do at least some of this and often voluntarily do even more than that.
Why Tether should withstand it is different; they should withstand it because their product claims to be designed so that they have to withstand it. If I tell you that I'll store all your money and it's available to you whenever you ask, without waiting for me to move things around, then I have to do that. If I'm lying about doing it, then that's a problem. Doing that gives me nothing, which is why banks don't give you that guarantee. Tether said they'd set it up that way.
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Tuesday 17th May 2022 03:04 GMT Anonymous Coward
"Stable" Coins
All of this has happened before.
There's a semi-famous quote about the often tried, invariably failed Gold Standard and its other fixed-price cousins: "We don't use the Gold Standard. It’s not because we don't know about the gold standard, it's because we do."
This quote may be entirely apocryphal, but it is entirely appropriate. A currency pegged to a fixed value is an invitation for speculators to attempt to break the bank that backs that currency and underwrites the value.
Eventually the speculators will win.
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Tuesday 17th May 2022 05:19 GMT A Non e-mouse
Re: "Stable" Coins
A currency pegged to a fixed value is an invitation for speculators to attempt to break the bank that backs that currency and underwrites the value.
Eventually the speculators will win.
John Major and Norman Lamont have first hand experience of this on an infamous day of the week.
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Wednesday 18th May 2022 22:33 GMT Anonymous Coward
"I know of a horse that regularly gets stuck [...]"
That seems like a metastable condition - where the time taken to be fully in one or the other position is unpredictable.
In logic circuits it can happen when a changing input signal level breaks the set-up timing constraints of the next element. Often a problem with asynchronous inputs to clocked flip-flops.
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Tuesday 17th May 2022 05:02 GMT simonlb
And People Still Fall For This?
"...a savings protocol that at one point paid participants close to 20 percent interest on their investment."
Everything about that statement screams ponzi scheme to be avoided at all costs. There is absolutely nothing whatsoever stable or trustworthy about any cryptocurrency.
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Tuesday 17th May 2022 05:23 GMT DS999
Re: And People Still Fall For This?
What's old is new again. People believe it because they'll produce a graph of bitcoin value from inception to today, with a dashed line showing it going to a million bucks in a couple years. Suckers will think they can easily support paying out 20% interest from that but spare them from the volatility of actually holding bitcoin.
When I was a kid my dad gave me this nice diver's watch good to 660 feet. He got it when it put $10,000 in a bank in the Bahamas that paid a 10% interest rate (which was only a few percent higher than US banks were paying back then) but it went under and he lost that money. Fortunately he could easily afford to lose that, but he liked to tell me I was wearing a "$10,000 watch".
I used to wear that all the time, even in the shower or when swimming, because it was a diver's watch so obviously waterproof. Until one day when I saw water inside the crystal - turns out it was regular steel plated with a thin layer of silver, and a few years of wearing it caused my wrist to wear through that plating on the back. I didn't notice it starting to rust in the seam. Kind of fitting considering where it came from.
Only watch I ever wore, so at least I got that out of my system then instead of wasting money on a Rolex later in life lol!
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Tuesday 17th May 2022 07:05 GMT Tom 7
Re: And People Still Fall For This?
A yankee friend of my dads got a Rolex and it was pointed out to him that he was still wearing it while helping us wash up after another drunken dinner and he said 'Its waterproof to 660 feet' and my mum pointed out it was half full of washing up water. He indignantly returned it to the shop who refused to accept it leaked and said be must have left the button out. It took him an hour of argument for them to get a glass of water into which the watch was lowered and rapidly filled. About a year later it turned up in the shop again with 'no fault found' and he wisely demanded another glass of water for the faultless watch to bubble and fill.
Never have too much confidence in your product or you're whole company can look arseholey.
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Wednesday 18th May 2022 22:44 GMT Anonymous Coward
Re: And People Still Fall For This?
The Radio Club had a lecture by a man from a capacitor company - who brought along a few samples. He was asked about the durability of the value/rating markings . He was confident they would stand any wear and tear. A club member promptly used a finger and thumb to erase the markings. As a clock repairer he had the regular practice of winding mainsprings onto their drums.
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Tuesday 17th May 2022 07:19 GMT Paul Crawford
Re: And People Still Fall For This?
A friend of mine goes diving and he has little time for the claims of waterproof watches, most are only short term static pressure proof at best.
So '50m' really means it is OK to shower with it on. Though quite why you would not normally take it off is a mystery to me, I would rather be clean underneath!
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Tuesday 17th May 2022 09:24 GMT Pascal Monett
Agreed. A "waterproof" watch is just a watch that can withstand being in the rain or under a fawcet for a short moment. You dry it off and it'll continue ticking.
Divers do not use of-the-shelf watches. They use professional gear that can actually withstand the pressure of 5+ bars under water.
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Tuesday 17th May 2022 16:31 GMT Yet Another Anonymous coward
Japanese semiconductor plants demonstrated their faith in their environmental standards by putting $$$$ worth of Koi in ponds fed by the cleaned waste water.
A UK lab followed the same policy, only to have the whole lot killed the first time the local farmer muck spread and all the rain water runoff went into the ponds.
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Tuesday 17th May 2022 08:34 GMT DrXym
Re: And People Still Fall For This?
Welcome to the world of digital currency. It's all ponzis & pyramid schemes. Suckers have to buy in for others to exit with profit. Then it collapses and resets. The people profiting are those who can afford to buy in at the reset and kick off the BS & hype again, or the likes of Elon Musk who can shift the market with a tweet one way or the other.
And NFTs are a whole new level of scams. The "rug pull" is the classic one - selling bullshit NFTs and then disappearing with all the money.
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Tuesday 17th May 2022 22:05 GMT doublelayer
Re: And People Still Fall For This?
Yes, unless you do it very wrong, it's a more legal way to scam someone (you haven't lied about what they're going to get). If you advertise it as an investment too much, however, you could still find someone willing to test whether they can get a court to agree that you've stepped over the line. It wouldn't be the first thing advertised as an investment that had no value and no reason to expect people to keep wanting it.
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Tuesday 17th May 2022 22:07 GMT doublelayer
If they took out their money in Bitcoin, that still has value. They can exchange it for normal currency or keep it in Bitcoin without having to be in this particularly unstable thing, and if they were shorting it a while ago, they almost certainly did that. Bitcoin didn't have the same collapse as this did.
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Tuesday 17th May 2022 11:09 GMT Howard Sway
Look at the language used
gold standard for passive income
stablecoin
smart contract
All has the soothing ring of security and cleverness used by every conman since the dawn of time to lure their victims into believing it's wise and safe to part with their cash. The only way to really invest and make money is to put it into something that is ultimately driven by productive work, that does real life things for people. Because it's that work that adds the real value. Speculation on fictional coins and pictures of drooling cartoon monkeys can be safely said not to fall into this category, as nothing of use or desirability is ultimately produced.
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Wednesday 18th May 2022 21:56 GMT MachDiamond
If you have more money than brains
I get it. I see the value in having some anonymity in a financial transaction from time to time. In my life, I don't have the need. The electric company is keeping records, the county has me down for the property I own. The state knows about my cars and the tax man knows who has paid me how much and when. I have a few investments that are on the conservative side and all pay a dividend. Aside from a rainy day stash, I try to spend money strategically. The house and cars are paid in full. I am saving to put a new roof on the house and at the same time make provisions for adding solar panels to reduce my electric bills. Other technologies are going in to further reduce my expenditures on utilities. I pay my auto insurance in full when it's do to avoid interest and fees.
I don't see any value to me to make me want to fiddle with any sort of virtual currency. I have better, less risky places to invest for a gain or reduce liabilities. If I had the money sitting, I'd open a savings account and designate it as a reserve for auto liability and not have to pay for insurance anymore. That would be a chunk of change not flushed down the drain each year and there'd be a tiny bit of interest on it too (very little).