Cryptocurrency Markets Tumble Following India Finance Minister Speech

[TJ Hooker]

So you're saying that a crypto backed by "tech" (I have no idea what that even is) is pretty much as good as a fiat currency backed by an entire nation? Mkay.

Nope, never said that. In fact, I explicitly stated I don't think the success of crypto as a whole depends on it becoming a replacement for fiat currency.

Also you haven't yet explained how a crypto can work in a world where no government accepts it. i.e. how do you think craptocurrencies can possibly be allowed to exist alongside an actual government-backed currency within the current legal framework? What government would allow this to occur in a significant fashion?

I already explained why I don't think it ultimately matters if governments recognize crypto as legal tender. A crypto token just needs to have value within its given network/ecosystem. And all it needs to do that is be able to be exchanged for something useful/desirable within that network.

For example, consider a video game that has in game currency which can be purchased with fiat currency. It doesn't matter if the government recognizes it, as long as it can be used to buy things which gamers care about, it will have real world value that can be measured in fiat.

A crypto asset could have similar value, but would hopefully have a much broader use case/user base than an in game currency. And that's what I mean by "tech". A blockchain solution that solves a real world problem and provides real world value to its users/customers. I gave an example of Sia cloud storage. Rather than relying on a single entity to store your data, which opens you to possible censorship and/or a single point of failure, you can use distributed solution in which you don't rely on any individual entity.

 

[berezini.2013]

The only thing that ecoins could be used for is illegal activities. there is no other application for it. And when something illegal gets shut down price of this will plummet again and again and again and again and again and again and again

 

[beayn]

Let it fall even lower , so the Card Prices drop for Gamers.

GPUs aren't used to mine Bitcoin, but they are used to mine other Cryptocurrencies. If Etherium drops to the point where the electricity used to mine costs more than the coin is worth, that could mean a lot of used cards on the market. The fans may need replacing, but they're otherwise be solid cards.

People keep commenting this, but it's always based on something they forget:

When bitcoin falls, so do these other currencies. Seriously, look at the charts, and it's lock step. So, if BTC falls, we still get what we want.

Edit: It's literally in the charts.... the fall may not be proportional, but larger BTC news has bearing on those markets for other eCoins, and thus far they have gone down almost in tandem with BTC. They may be different commodities, but they share an investor base and news in one does generally have bearing on the others.

It's actually worse for alt-coins than BTC since nearly all other coins are traded AGAINST bitcoin. If BTC goes down, the value of your coin goes down. On top of this, people sell to get out of the alt-coin, causing it to go down even further. If BTC goes down 15%, alts tend to drop 30% unless there's some other factor keeping it afloat. That's a 15% loss to the value of BTC and a 15% loss to people getting out and waiting in USDT to buy back in at a lower price.

 

[Zaporro]

Goood, goood! Let it fall even more. Crypto trading is perversion of blockchain technology. Something good turned into race for personal gains and pseudo stock market.

 

[nitrium]

The crapto's are tanking even more now. S**tCoin has lost roughly 2/3rds of its value from the all time high.
https://cryptowat.ch/

 

[bit_user]

As I said in a previous post, there are plenty of crypto assets that are backed by legitimate tech and use cases.

So you're saying that a crypto backed by "tech" (I have no idea what that even is) is pretty much as good as a fiat currency backed by an entire nation? Mkay.

Not sure it's what he meant, but when you ascribe value to a fiat currency, you're looking at the amount there is in circulation, the size of the government's economy, the inflation rate, and a belief that they can keep counterfeiting under control and won't start printing loads of it, overnight.

The equivalent trust in crypto would be that it can't be hacked (i.e. transactions being spoofed) - which would immediately kill a coin - and that there's (likewise) not some sort of runaway inflation potential.

Beyond that, you need to believe that others will continue to buy, hold, and accept the coin for goods and services of value. This part is where the speculation comes in, and it can be impacted by various government regulations involving mining, exchanges, and use of crypto coins.

So long as the underlying tech of a popular currency like BTC isn't hacked, I think it'll continue to have nonzero value - even if it's basically limited to being used by the criminal underground. Because it has no industrial or ornamental use use, it's likely always to be less stable than gold, whereas gold's unique chemical properties mean you can be pretty certain there will always be some demand for it.

Also you haven't yet explained how a crypto can work in a world where no government accepts it.

Governments don't have to accept it, or even allow exchanges in their jurisdiction. All you need is an exchange somewhere in the world that will exchange for USD/Euro. Of course, if all such exchanges are foreign, then actually doing anything with that money turns into a conventional money laundering problem. So, if all major governments banned exchanges, then it would significantly erode the value of crypto coins.

 

[nitrium]

I get everything you're saying and, like you say, that's a whole lot of "ifs" that investors are relying on. You did forget to mention that transactions can't be cleared when no one is mining BitCoin, since mining is the only activity right now that verifies the blockchain. How can the "value" of that particular currency hold if the price gets to a point where either it's not worth it to mine or when all the coins have been mined already? Wouldn't that directly result in there being no possible exchange of the "currency" with anyone anywhere for anything?

 

[Ninjawithagun]

Bitcoin is a farce. Hardly anyone accepts it as payment and it's now way too late to join as a private party and mine your own as there is no truly efficient way to do so without spending tens of thousands of dollars up front. And even then, there is no guarantee of profit whatsoever. Bitcoin is only for the rich to get richer. I love capitalism, but Bitcoin isn't it.

 

[Olle P]

There is nothing backing your official currency either.
Gold standard died 30 years ago or more.

True! USA went bancrupt by trying to send people to the moon while waging a war in Vietnam.
The net value of USA is still negative, if I'm not mistaken...

The word "cryptocurrency" is a bit of a misnomer, as many of them are not intended to ever function as "currency" in the common use of the word. ...

I disagree. It's currencies, just like USD, EUR or GBP, and also just like those it's not money.
BTC was invented with the expressed intention to act like a currency with no bills or coins, and no political influence/supervision.

... a currency's value can collapse if the Government//country backing it collapses - but you do realise that the entire fabric of society of said country must also collapse for this to occur(?).
... Why is the price of gold, for example, not given in bitcoin right now?

For historical reason the value of gold is tied to the USD while the value of Sterling silver is tied to the GBP ("One £ of silver").

Answer: because these things have next to zero stability given that rather than their "value" rising and falling based on actual tangible production and assets backed by an entire nation relative to the rest of the world, they're entirely determined by speculative gambling. Hardly something you could use to buy your groceries with.

The "gambling" part is fairly new in terms of crypto currencies.
Small national currencies have also earlier been subject to speculation with huge swings in their nominal value.

The only thing that ecoins could be used for is illegal activities. there is no other application for it. ...

Yes there is, as has been proven repeatedly!
There are really only two downsides compared to regular currencies:
1. They're small, and therefore volatile once speculation comes into play.
2. The exchange fees are ridiculusly high.
These two points have made some Swedish businesses to stop accepting BTC as payment.

 

[TJ Hooker]

You did forget to mention that transactions can't be cleared when no one is mining BitCoin, since mining is the only activity right now that verifies the blockchain. How can the "value" of that particular currency hold if the price gets to a point where either it's not worth it to mine or when all the coins have been mined already? Wouldn't that directly result in there being no possible exchange of the "currency" with anyone anywhere for anything?

The last bitcoin won't be mined until approximately 2140, so that's not exactly a pressing problem. If bitcoin is still in use at that time, a proposed solution is to increase transaction fees to pay miners.

The thing with mining is that the difficulty is dynamic. If it gets to the point where it's highly unprofitable and people stop, the difficulty will drop until it gets to the point where it becomes profitable again and things stabilize.

Spoiler

[quotemsg="TJ Hooker]The word "cryptocurrency" is a bit of a misnomer, as many of them are not intended to ever function as "currency" in the common use of the word. ...

I disagree. It's currencies, just like USD, EUR or GBP, and also just like those it's not money.
BTC was invented with the expressed intention to act like a currency with no bills or coins, and no political influence/supervision.[/quotemsg]
For bitcoin sure, it was definitely intended to be a currency, at least in the beginning. I was talking about the crypto market as a whole, with the various altcoins/tokens out there. They're all commonly referred to as cryptocurrencies, but many of them were never planned to be used in the way a fiat currency would.

Edit: This may just be a matter of semantics. When I talk about crypto being used as currency, I'm talking about it being used by the average joe to buy stuff as he goes about his day, with the same speed/fees/ease as using cash or a credit card to buy a cup of coffee. There are many crypto coins that have no intention of being used like this, and I'm skeptical bitcoin will ever get there either.

 

[nitrium]

The last bitcoin won't be mined until approximately 2140, so that's not exactly a pressing problem. If bitcoin is still in use at that time, a proposed solution is to increase transaction fees to pay miners.

The thing with mining is that the difficulty is dynamic. If it gets to the point where it's highly unprofitable and people stop, the difficulty will drop until it gets to the point where it becomes profitable again and things stabilize.

Oh ok, that's interesting. Ihe BitCoin blockchain has already gotten so long, that it takes on average 30 minutes to clear a transaction, and it's only going to go up from there. Again, I come back to my point: if it wants to be a "currency" it needs to behave like one and "price" stability is just one issue I have with it. Can you imagine waiting half an hour at a supermarket or gas station to clear payment when with actual money you can do so in literal seconds?
https://coincentral.com/how-long-do-bitcoin-transfers-take/

 

[TJ Hooker]

Like I said, bitcoin may never be suitable for high volume and/or low value transactions (something which a working currency should be able to be used for) but I don't think that necessarily invalidates it. That being said, many people even within the crypto community dislike bitcoin for the exact reasons you're talking about i.e. not practical to use as a digital currency as originally planned, and doesn't really have any other application or use case other than a 'store of value' (which it doesn't do very well either due to volatility). There are proposed changes to the protocol to address scaling issues and improve transaction times/fees, but it remains to be seen how the pan out. E.g. https://en.wikipedia.org/wiki/Lightning_Network

 

[haamiah]

Your all mistaken if you thing GPU´s will drop price, consider that with such high demand of GPU´s and yet producers dont keep up with it ?! they are the ones creating the high price with short production.
We might see growing offer on used cards and those ,yes , might drop in asked value and as someone said, it´s a risky market ,so people will aim for new GPU´s...so producers wont loose the chance of capital loss by lowering prices.
As for the drop of cryptocurrencies value, it´s nothing else than established forces trying to regain command of fiat control over peoples...they had a litlle taste of what cryptocurrencies can do to theyr established powers and they fear it so bad that they are using all theyr power to make it go away...but as Churchill said "we´ll never surrender" 😉

 

[bit_user]

As I said in a previous post, there are plenty of crypto assets that are backed by legitimate tech and use cases.

So you're saying that a crypto backed by "tech" (I have no idea what that even is) is pretty much as good as a fiat currency backed by an entire nation? Mkay.

Not sure it's what he meant, but when you ascribe value to a fiat currency, you're looking at the amount there is in circulation, the size of the government's economy, the inflation rate, and a belief that they can keep counterfeiting under control and won't start printing loads of it, overnight.

The equivalent trust in crypto would be that it can't be hacked (i.e. transactions being spoofed) - which would immediately kill a coin - and that there's (likewise) not some sort of runaway inflation potential.

Beyond that, you need to believe that others will continue to buy, hold, and accept the coin for goods and services of value. This part is where the speculation comes in, and it can be impacted by various government regulations involving mining, exchanges, and use of crypto coins.

Oops, there's one party I forgot to mention - one that many overlook, especially when lauding cryptocurrencies' "de-centralized" nature - the core developers. They update protocol and underlying software, potentially adding controversial features like SegWit, or not - as in the schism that eventually gave rise to Bitcoin Cash. They're human (as far as we know ; ) and are therefore subject to corruption, coercion, misjudgement, and complacency.

So, by holding - or even using - a given crytpocurrency, you're putting no insubstantial amount of faith in the core developers. This is a far smaller group of individuals than the decision makers in most governments. They're not elected, and - unlike the bureaucrats who actually run real central banks - you have no idea how much they actually know about either crypto or currencies. But we all know they're blazing new territory, in contrast to banking and conventional currencies that have been around (and studied) for quite a while.

This is actually what put me off Bitcoin - when the whole block size schism revealed how few decision makers there actually were, and how easily they shaped the future direction of the currency according to their whims and interests.

 

[pensive69]

the key here is that even if the Nations think block chain is useful, bitcoin and other digital currencies are secret and can't be easily taxed.
"death to digital currencies on the public level".
you'll have to mine and trade them in secret to be of use going forward.
no Nation will allow play in non taxable and non regulated space.

 

[Finstar]

As I said in a previous post, there are plenty of crypto assets that are backed by legitimate tech and use cases.

So you're saying that a crypto backed by "tech" (I have no idea what that even is) is pretty much as good as a fiat currency backed by an entire nation? Mkay.
Also you haven't yet explained how a crypto can work in a world where no government accepts it. i.e. how do you think craptocurrencies can possibly be allowed to exist alongside an actual government-backed currency within the current legal framework? What government would allow this to occur in a significant fashion? How would taxes be collected? If crypto's "value" is predicated on revolution, well I have a shiny bridge to sell you.

You seem to ignore that all nations backing the major fiat currencies are massively in debt.
Meaning that basically all major fiat currencies are backed by debt and trust that it'll be paid.
Compared to that the tech backing different crypto assets is as solid as bedrock.

 

[bit_user]

bitcoin and other digital currencies are secret and can't be easily taxed.

This is not correct. You can try to anonymize it, but one misstep is all it takes for 3-letter government agencies to find your entire trail - much worse than if you'd used real cash.

no Nation will allow play in non taxable and non regulated space.

More silliness. A lot of nations allow it. In the US, it's treated as an asset. You have to pay capital gains taxes on it, but you can also write down your losses if you sell for less than the cost basis.

 

[bit_user]

You seem to ignore that all nations backing the major fiat currencies are massively in debt.
Meaning that basically all major fiat currencies are backed by debt and trust that it'll be paid.

They're not backed by debt - they're backed by the nation state's need for its currency's value to remain stable. We then assume that they will manage their spending in a way that avoids inflation spiraling out of control. Usually, this is a sound assumption. Everyone can point to a handful of cases where a currency has become worthless, but there are usually warning signs.

Compared to that the tech backing different crypto assets is as solid as bedrock.

The two are not comparable. This feels dangerously close to trolling, but in case anyone isn't clear, let's try this one more time.

Like fiat currency, crpyto has no intrinsic value. Its value is entirely speculative, and there's no entity with a lot of assets, foreign reserves, or that controls how much is printed that's willing and able to prop it up.

The tech doesn't make it valuable - all it does is foreclose the threat of counterfeiting and double-spending.