Are we allowed to talk about Bitcoin?

Coinbase laying off 1,100 people, 18 percent of workforce. CEO says we appear to be entering a recession.

https://www.cnbc.com/2022/06/14/coi...xecs-prepare-for-recession-crypto-winter.html

 

It's actually more like 4,400 to 4,500 employees. As recently as a month to two months ago, they were planning on tripling that head count. I'm actually glad that they hadn't hired way more people who were destined to get laid off, on a lot of debt and projections of growing to infinity.

 

Two things I think are worth saying:

1) Bitcoin is still changing hands at $20K or $22K per coin. As recently as two years ago (before all of the liquidity that was unleashed turning the world into a casino), it was at $5K to $10K. And at that point it was already in a massive monetary-induced bubble, in my opinion at least. This is something playing out, not that has already played out. And it can happen in all kinds of ways. The thing to keep your focus on is the Fed and the other central banks around the world, and if they have lost control, yields in the debt market, which are leading the Fed now, not following it. If yields go up quickly, I can't see how bitcoin doesn't get hammered, and we are probably at the reverse liquidity point already, where that buy the dip mentality is gone and there are people who have suffered so much pain that they are done with it.

2) Just because a speculative bubble formed, doesn't mean that blockchain technology doesn't have a big future or that bitcoin (or some other blockchain vehicle) won't change our lives somehow. I don't have the answer to that, but as a decentralized payment mechanism, my sense is that it has some application. The world needs to catch up to it and drive its adoption, though, not the other way around. Just as when the dot-com bubble burst and a lot of companies went bust, it didn't mean that the Internet had no future. Look at where we are today.

 

He lost me at Celcius being like Vanguard, except for decentralized finance opportunities.

It's nothing like Vanguard, which is an investment manager and does not (can't legally) take the assets you entrust to them and lend fractionally against them, putting you at risk.

Celcius is really just an uncollateralized (enough, at least) fractional bank.

They were taking deposits of overvalued crypto assets (that got overvalued because of excessive leverage in the system) and lending using the overvaluations as collateral. In return, they were giving you a high yield. And people were taking way more risk than they understood, given the nature of the underlying assets.

This is nothing new. The Fed has kept us in an environment where people were earning .01 percent on a savings account, maybe slightly more in a money market or CD. Robbing savers to the benefit of debtors. If someone was offering you much greater than yield than that near zero percent you could get risk free, you could be sure there was a catch. Except just like always, nobody focused on what the catch would be, and they were soft selling the risks involved.

The same way that people were packaging mortgages that were inherently risky to offer higher returns to people in the form of CMOs in the mid 2000s and that ended when the overvaluation of the underlying assets started to come down.

This is a double whammy, because the reason that the crypto assets they were collateralizing were worth so much in the first place is that the environment had blown a bubble that sent their valuations soaring. Then, by fractionally lending and paying high yields against their borrowing of those crypto assets from their clients they were adding leverage on top of leverage.

This same exact story plays out over and over again, yet people seem to be surprised each time.

 

It actually demonstrates how nebulous and undefined what an NFT is to most people. She's not selling a nonfungible token, really. She's selling access to herself, as in, you will get livestreams with her, phone calls, her personal items, or an in-person meeting depending on the tier you buy (although I am wondering how you do that in-person meeting since she is being detained by ICE and is set to be deported).

She could sell that straight up to people, but if you slap the word NFT on it, it's like the people who slapped .com onto all kinds of non-dot-com things in 1998. I'm sure the kind of person who wants to buy a phone call with her doesn't really care much what you call it, though.

The cost of the cheapest one is essentially $120 at the current ethereum price. I'd love to see how many she actually sells.