Bitcoin: no angel investors, only Faustian bargains

The Something Awful Forums > Main > General Bullshit > Bitcoin: no angel investors, only Faustian bargains

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spunkshui: Oct 5, 2011

Mooseontheloose posted:

So...it's fiat currency?

No, its a ponzi scheme.

# ? Nov 22, 2021 17:41

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# ? May 30, 2024 03:25

chibi luda: Apr 17, 2013

how do i change my username tia

https://twitter.com/obj/status/1462836953888534528

# ? Nov 22, 2021 19:54

novamute: Jul 5, 2006; o o o

ikanreed posted:

To be honest, Bitcoin stabilizing in value without crashing is the worst possible outcome because it incentivizes perpetual mining.

I mean it isn't worse than it just continuing to climb until it eats the entire world economy. Mining rewards are cut in half every 4 years already so if the price doesn't keep climbing exponentially mining revenue will drop.

# ? Nov 22, 2021 20:30

CRUSTY MINGE: Mar 30, 2011; Peggy Hill
Foot Connoisseur

Goth Odell Beckham posted:

how do i change my username tia

https://twitter.com/obj/status/1462836953888534528

This reminds me of the "hacked twitter accts offer to double your buttcoins" scam last year that showed up on Bill Gates and Elon and maybe Obama's accounts.

Cashapp is shady as gently caress anyhow, if my gmail spam folder is to be believed.

# ? Nov 22, 2021 20:33

JammyB: May 23, 2001; I slept with Mary and Joseph never found out

ikanreed posted:

To be honest, Bitcoin stabilizing in value without crashing is the worst possible outcome because it incentivizes perpetual mining.

It can't really stabilise or reach a real equilibrium. There's always a net outflow of value due to the mining electricity costs, and the higher the price, the higher the outflow. It can only sustain itself with new money coming in constantly (or fake tether accounting).

# ? Nov 22, 2021 20:51

Gutcruncher: Apr 16, 2005; Go home and be a family man!

I�m proud to announce that I�m taking my entire paycheck in Chuck E. Cheese tokens

# ? Nov 22, 2021 20:58

Three Olives: Apr 10, 2005; Don't forget Hitler's contributions to medicine.

https://twitter.com/ConstitutionDAO/status/1461947432628011008

In shocking news, the plan to buy the copy of the Constitution with the blockchain didn't work out and is looking scammy...

# ? Nov 22, 2021 22:29

DerekSmartymans: Feb 14, 2005; The
Copacetic
Ascetic

ultrafilter posted:

If the bitcoin bonds are at all stinky--and they will be--then they're going to be extremely high yield.

Well, duh! :suspense:

High Yield because number always goes up!

# ? Nov 22, 2021 22:34

DerekSmartymans: Feb 14, 2005; The
Copacetic
Ascetic

crepeface posted:

the obvious answer is trains.

specific models even have massive fans so you're got a built in consumer base.

# ? Nov 22, 2021 22:43

Prurient Squid: Jul 21, 2008; Tiddy cat Buddha improving your day.

Gutcruncher posted:

I�m proud to announce that I�m taking my entire paycheck in Chuck E. Cheese tokens

I like to think your av is saying that.

# ? Nov 23, 2021 09:16

ultrafilter: Aug 23, 2007; It's okay if you have any questions.

More on those bitcoin bonds, from Matt Levine's newsletter. The last three paragraphs are a good summary if you don't feel like reading the whole thing.

quote:

First of all let�s just appreciate the words here, these are good words:

quote:
El Salvador has struck a deal with crypto firms Blockstream and iFinex to advance its efforts in the bitcoin market.

The country is set to issue so-called Bitcoin bonds to "accelerate hyperbitcoinization and bring about a new financial system on top of Bitcoin," according to Blockstream.

El Salvador could issue $1 billion worth of bitcoin bonds via Blockstream's Liquid Network. The proceeds of the bond issuance could support the development of volcano-powered bitcoin mining.

"This bond offering is something we think will be attractive to a wide range of investors ranging from cryptocurrency investors, investors seeking yield, HODLers, and ordinary people," Blockstream said in a blog post.

Hyperbitcoinization, volcano-powered Bitcoin mining, HODLers, it is the good stuff. People are apparently calling this a �Volcano Bond� and who am I to resist. Volcano Bond.

Second let�s take a look at the termsheet, which as far as I can tell consists of tweeted photos of a young bearded man in a backwards white baseball cap who is also the president of El Salvador, standing in front of a PowerPoint slide while a roomful of crypto fans take pictures. That Powerpoint slide is the termsheet? I will summarize it briefly. (Coindesk summarizes it here, noting that �President Nayib Bukele told a raucous crowd� about the bonds, and the associated �Bitcoin City,� �in a Saturday night presentation at Bitcoin Week in El Salvador.�) The Volcano Bonds are a $1 billion bond, denominated in U.S. dollars, with a 10-year maturity in, apparently, January 2032. They pay 6.5% annual interest. El Salvador will invest half of the proceeds in �infrastructure build,� and put the rest into Bitcoin. It will hold those Bitcoins for five years, and then sell them over the remaining five years. If it makes money on those sales, then �50% of Bitcoin investment proceeds returned to investors once initial $500M Bitcoin investment is recovered.� �Blockstream models show at the end of the 10th year of the bond, the annual percentage yield will be 146% due to Bitcoin�s projected appreciation, [Blockstream Chief Strategy Officer Samson] Mow said, forecasting Bitcoin will hit the $1 million mark within five years,� sure. You can buy it in units as small as $100, and you can pay in dollars, Tether or Bitcoin.

Third, let�s ask, is this a good investment? I don�t know; it depends on whether (1) El Salvador pays you back and (2) Bitcoin goes up over the next 10 years. Helpfully there are other investments that depend on the same factors. For instance, you can just buy Bitcoin. Or El Salvador has other international bonds; you can buy them. One of them is a $500 million U.S. dollar bond issued in 2002 and maturing in April 2032, around the same time as the Volcano Bonds. It has a coupon of 8.25% per year. It is listed on the Luxembourg Stock Exchange and seems to trade at about 73 or 74 cents on the dollar. Call it the Non-Volcano Bond, for convenience.

If you had $100,000, you could buy $100,000 of the new Volcano Bond. Or you could do this trade:

Spend about $75,000 to buy $100,000 face amount of the Non-Volcano Bond; then
Spend $25,000 to buy $25,000 worth of Bitcoin.
I�m using round numbers here; the Non-Volcano Bond would actually cost you less than $75,000 at prices on my screen, though I�m not sure you could really get it at that price.

Now, the Volcano Bond pays you 6.5% interest, so you get $6,500 a year for 10 years. The Non-Volcano Bond pays 8.25% interest, so $8,250 a year for 10 years. So, advantage Non-Volcano.

At maturity, in 2032, the Non-Volcano Bond pays off $100,000, and the Volcano Bond pays off $100,000. (Or they both default, I mean; they are instruments of the same government and seem to have the same seniority and mature at almost the same time.) So this one is a draw.

The Volcano Bond invests a portion of your money in Bitcoin, locks it up for five years, and then liquidates the Bitcoin over the next five years and gives you half the appreciation. But you could do the same thing with the Bitcoin that you bought in the Non-Volcano Package. Let�s say for simplicity that Bitcoin doubles. Then El Salvador will have $1 billion of Bitcoin proceeds, or $500 million of appreciation; Volcano Bond holders will get half of that, or $250 million. Your share, with $100,000 of Volcano Bonds, comes to $25,000, on top of the principal and interest that you get back.

Meanwhile in the Non-Volcano Package you bought $25,000 worth of Bitcoin. So when Bitcoin doubles you have $50,000 of Bitcoin, on top of the principal and interest that you got back from the bonds. So, advantage Non-Volcano. Non-Volcano also wins for other Bitcoin growth, or decline, scenarios. If Bitcoin goes to $1 million, your $100,000 Volcano Bond will be worth about $491,700; your Non-Volcano Package will be worth about $516,700.

The Non-Volcano Package is a way to invest in Bitcoin plus the credit of El Salvador that is strictly better in every scenario than investing in the Volcano Bonds. Oh no wait sorry; from the termsheet, here you go:

quote:
Citizenship by investment qualification: Investments >= $100,000 will qualify investors for citizenship-by-investment applications after a five year term.

That�s only for the Volcano Bond. So if you are looking to buy El Salvador citizenship the Volcano Bond does have that advantage over the Non-Volcano Package.

The point I want to make here is that this is an example of market segmentation by standing in front of a PowerPoint presentation at a Bitcoin party wearing a backwards baseball cap. This is market segmentation by slapping a cool name � �Volcano Bond� � on a bond that is strictly worse than a readily available alternative. This is market segmentation by combining a normal thing with (1) crypto and (2) a huge markup, and then marketing it to crypto people who want to pay the huge markup not to buy crypto (they can just buy crypto!) but to buy into a crypto adventure.

I understand that I am being dense by writing all of this. The point of the Volcano Bonds is that they live on a crypto trading platform and people who like crypto will buy them and trade them with each other and feel a sense of kinship and community and fun. They are HODLers and whales, they get to hang out with the president of a country on a Saturday night, all this stuff. The specific terms of the financial investment don�t matter.

Fine! Yes! Fine! People like to join clubs! People like to buy things for reasons other than their financial returns! It is weird to do this with a financial instrument! I feel like this is the main story of finance in 2021! �I bought that stock [bond, cryptocurrency, etc.] to be part of a cool club, not because it made financial sense�! I don�t know!

# ? Nov 23, 2021 16:56

jokes: Dec 20, 2012; Uh... Kupo?

If people understood finance or thought about what they were doing, they wouldn�t be buying crypto and going to crypto convention things. If they wanted to buy bonds and were serious about the investment, they wouldn�t be buying bonds that are at all involved with Crypto.

# ? Nov 23, 2021 17:01

Comfy Fleece Sweater: Apr 2, 2013; You see, but you do not observe.

I checked my Folding@home stats, and noticed the top #2 team is some crypto thing

I went to check, it's https://banano.cc/

A meme coin, looks like, but it does have some digs at the crypto "scene", a Carlos Mattos ref, etc

(Please don't join or get involved with it, I just found it amusing, I've not explored meme coins other than tangential exposure )

edit: If you want to use your GPU for something better than crypto, do join folding@home

https://foldingathome.org/
They updated their client and I think it's better at managing background work etc...

# ? Nov 23, 2021 17:21

ghosTTy: Sep 22, 2008

Bitcoin is going to the moon.

# ? Nov 23, 2021 17:47

Hammerite: Mar 9, 2007; And you don't remember what I said here, either, but it was pompous and stupid.; Jade Ear Joe

how many NFTs do you own Ghost Titty

# ? Nov 23, 2021 17:53

ryde: Sep 9, 2011; God I love young girls

Can't wait to see how many virgins are sacrificed to the Volcano Bond.

# ? Nov 23, 2021 18:19

Detective No. 27: Jun 7, 2006

https://twitter.com/BitcoinMagazine/status/1460701940615204870?t=KCeiiVPmuTXx3Pt-xei87Q&s=19

# ? Nov 23, 2021 18:39

Khorne: May 1, 2002

Detective No. 27 posted:

"bitcoin magazine"

# ? Nov 23, 2021 18:47

Mercury_Storm: Jun 12, 2003; *chomp chomp chomp*

If only beanie babies had corresponding NFTs the bubble never would have burst cause beanie fraud would have been UNPOSSIBLE

# ? Nov 23, 2021 18:52

jokes: Dec 20, 2012; Uh... Kupo?

Detective No. 27 posted:

https://twitter.com/BitcoinMagazine/status/1460701940615204870?t=KCeiiVPmuTXx3Pt-xei87Q&s=19

It�s so easy and efficient that�s why he uses that �come on� gesture and has no recourse if the beer misses his cup and also why he�s surprised and smiles when it works

# ? Nov 23, 2021 19:06

Gutcruncher: Apr 16, 2005; Go home and be a family man!

jokes posted:

It�s so easy and efficient that�s why he uses that �come on� gesture and has no recourse if the beer misses his cup and also why he�s surprised and smiles when it works

Sounds like you�re scared of change, boomer

# ? Nov 23, 2021 19:09

There Bias Two: Jan 13, 2009; I'm not a good person

Detective No. 27 posted:

https://twitter.com/BitcoinMagazine/status/1460701940615204870?t=KCeiiVPmuTXx3Pt-xei87Q&s=19

That seems incredibly slow and inefficient.

# ? Nov 23, 2021 19:11

Khorne: May 1, 2002

There Bias Two posted:

That seems incredibly slow and inefficient.

Imagine if you could tap to pay instead... or use a normal form on a webpage/app and press "ok".

# ? Nov 23, 2021 19:19

Bronze Fonz: Feb 14, 2019

Wish I didn't live in the stone age so I too could hodl my cup for the crypto beer on my way to Fyre Festival 2: BAYC Edition

I bet this bro gets all the crypto girls too!

# ? Nov 23, 2021 19:24

Paladinus: Jan 11, 2014; heyHEYYYY!!!

Khorne posted:

Imagine if you could tap to pay instead... or use a normal form on a webpage/app and press "ok".

But I want to wait 10x time on every transaction!

# ? Nov 23, 2021 19:25

Jose Valasquez: Apr 8, 2005

https://twitter.com/AFP/status/1463179283527045134

# ? Nov 23, 2021 19:34

jokes: Dec 20, 2012; Uh... Kupo?

It�s all digital money! I hate everything!

# ? Nov 23, 2021 19:36

Doctor_Fruitbat: Jun 2, 2013

The one thing we need to excise from bars is human contact.

# ? Nov 23, 2021 19:41

Blotto_Otter: Aug 16, 2013

There Bias Two posted:

That seems incredibly slow and inefficient.

since the wait time could still be measured in "seconds" rather than "minutes" or "hours", I'm gonna climb out on a limb and assume there wasn't actually anything happening on the blockchain, and it was all handled by some (centralized) third-party payment processor that was just shuffling numbers between accounts on its own internal ledgers.

so... the same thing that happens with a credit card payment, except slower, and unregulated

# ? Nov 23, 2021 19:58

BigBadSteve: Apr 29, 2009

Jose Valasquez posted:

https://twitter.com/AFP/status/1463179283527045134

# ? Nov 23, 2021 20:11

CaptainSarcastic: Jul 6, 2013

ghosTTy posted:

Bitcoin is going to the moon.

I don't care where it goes as long as it leaves the planet.

# ? Nov 23, 2021 20:21

Sashimi: Dec 26, 2008; College Slice

Jose Valasquez posted:

https://twitter.com/AFP/status/1463179283527045134

This is good for Bitcoin.

# ? Nov 23, 2021 21:05

Strong Sauce: Jul 2, 2003; You know I am not really your father.

Blotto_Otter posted:

since the wait time could still be measured in "seconds" rather than "minutes" or "hours", I'm gonna climb out on a limb and assume there wasn't actually anything happening on the blockchain, and it was all handled by some (centralized) third-party payment processor that was just shuffling numbers between accounts on its own internal ledgers.

so... the same thing that happens with a credit card payment, except slower, and unregulated

worse, they were doing it on lightning network, which have their own issues... but you can finally buy beer! no other way you could previously buy beer.

# ? Nov 23, 2021 21:13

There Bias Two: Jan 13, 2009; I'm not a good person

Jose Valasquez posted:

https://twitter.com/AFP/status/1463179283527045134

I'm curious how their digital money will be any different from regular money, given that plenty of it already only exists in a database somewhere.

# ? Nov 23, 2021 21:17

Random Stranger: Nov 27, 2009

There Bias Two posted:

I'm curious how their digital money will be any different from regular money, given that plenty of it already only exists in a database somewhere.

India actually has a problem with their wealthy hoarding Scrooge McDuck style piles of cash so they can do everything untraceably. A few years back they tried to address this by announcing that they were switching out higher denomination bills and in one month the old bills would be worthless. Anyone who wanted to pop by the bank could exchange their money no questions asked, but of course the government would then know who they were and how much money they had and they would need to pay their taxes. Cue a month of chaos as the wealthy try crazy schemes to get the new bills but hide how much they have while everyone else gets stampeded by a hundred people showing up to change the money a small amount at a time from all the hoards.

# ? Nov 23, 2021 21:40

kw0134: Apr 19, 2003; I buy feet pics🍆

India has a huge undocumented market, yeah. So the idea I assume will be they issue a more traceable "token" which for all practical purposes is the same as whatever you do with a debit card, but now they can actually try to track, tax, and maybe regulate better. The demonetization scheme didn't work out all that well in the event because of numerous loopholes, so it was hugely disruptive for no real gain. Maybe this will work better for them, but I won't hold my breath.

# ? Nov 23, 2021 22:17

DerekSmartymans: Feb 14, 2005; The
Copacetic
Ascetic

ghosTTy posted:

Bitcoin is going to the moon.

Goddamn I don�t care where they go , as long as it�s away!

# ? Nov 24, 2021 02:34

syntaxfunction: Oct 27, 2010

Heh, look at all you jealous chumps. I've invested while you all ummed and erred and wasted time and money. You were busy looking down on crypto while I was getting it made.

I have it all. Bitcoin. Etherium. NFTs. Other ones. I could cash out at any time and be a loving billionaire.

Why don't I? Because if I hold forever then currency as we know it will disappear, and then everyone will *have* to use Bitcoin/Eth/NFTs/Doge/Any alternative. Once people have scattered to the winds then my fairly centralised investments will become defacto currency for the real world.

So instead of cashing out for billions I can use right now, I'm biding my time in my wankpod. I'm biding my time so I can become a billionaire later, provided I bet on the right brand. Billionaire now? No! Billionaire later.

Chumps :smug:

# ? Nov 24, 2021 02:43

jokes: Dec 20, 2012; Uh... Kupo?

If you�re so rich send me money

# ? Nov 24, 2021 02:45

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# ? May 30, 2024 03:25

syntaxfunction: Oct 27, 2010

jokes posted:

If you�re so rich send me money

No. Because then I'm less rich. Should have invested early on despite red flags and warnings, like me.

It was my brazen boldness and uninformed courage that made me the potential possible billionaire today. I want a decentralised and fair economy for all, but more for me. Every is equal, but I'm a little more equal.

# ? Nov 24, 2021 02:46

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