This Theory Predicts The End of Crypto
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- čas přidán 3. 06. 2024
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Timestamps:
0:00 - introduction
1:45 - speculation
6:10 - sponsor
7:19 - debt
11:54 - fundamental value
Attribution:
TV Image by macrovector on Freepik
Made possible by research help from Oskar Matthey
Animations made by the awesome @IntoEurope
Neon sign from: www.neonlights.be/discount/M&M15
Narrated and produced by Dr. Joeri Schasfoort (VU Amsterdam)
Studio designed by Alex Moore Via www.dmsquaredagency.com
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Get in on the bottom floor of Joeri's new Dutch token 2LP.
Lol at least you didn’t say we’re going to zero. I give it till May to reach a bottom. If there is a final capitulation it’ll be the miners.
@@vardekpetrovic9716 The US dollar is used for purposes other than pump and dump schemes where that is the only value proposition for cryptocurrencies.
@@vardekpetrovic9716 Repeating Fed-hate talking points has nothing to do with the fact cryptocurrency is 100% dependent on conversion to other sovereign fiat currencies to have any price at all. And that price is 75% dependent on how well the pump scams are going.
Btw, politicians don't control the prices of anything, capital owners control both prices and wages. If you're dissatisfied with how prices rise faster than wages those are both 100% the authoritarian mandates of capital owners you should be advocating to change.
@@Bonanzaking I would have lost all respect if he predicted zero ha ha. Bears are painful, especially with SBF stealing billions from the space. Like a phoenix though, it will continue to rise from the ashes.
As Patrck Boyle put it: "Crypto is speedrunning financial markets history". And we are all priviledged to witness it in one lifetime.
Does this mean money itself is really worth zero?
Agreed. But I think Nicholas Weaver said it first.
@@jasonhaven7170 money is a means to exchange goods and services in a simpler way than bartering. The money issued by governments is backed by governments through their ability to tax activity. Crypto has nothing to do with this as it has no backer with an ability to extract money, goods or services from people, so it lacks any backstop.
@@lonyo5377 Every currency is ulimately backed by general trust that soeone else will be willing to exchnage it for goods and services. I belive that taxation dont bring any value to the currency. The value is set mostly by controlling the amout of currency in system and by enforcing monopol on it.
@@timkom2289 Taxation brings a lot of value to the currency. It creates a base demand for the currency to settle tax liabilities to the state.
Key takeway: Joeri tried to corner his local orange market
Unfortunately he failed. By the time he tried to sell back the oranges at a premium price, they already had gone bad. Customers were forced to buy apples instead.
Go Joey! We rooting for you
Calling weed groceries is somehow even more funny when a Dutchman does it.
Also I like that you mentioned monero as an example of a cryptocurrency with an actual fundamental value, youtube usually doesn't do nuance. I suspect that value is currently relatively low because monero is annoying to use, but if someone comes up with an equally private/secure but faster blockchain technology, that could actually justify a high valuation.
In the Netherlands, weed IS groceries
I had to pause the video because the grocery thing kept hitting me in waves. i couldn't pay attention lmao
Most coins have begun to roll out privacy features. Litecoin adopted mimble wimble, the hope is bitcoin will be able to get the upgrade. From the technical perspective I’m not sure how inferior or superior it is to what monero uses.
The idea for some coins was to get big enough they’d be able to upgrade the privacy aspects without putting a target on their back from governments.
Signal (the most private chat app) recently added MobileCoin to its feature list. MobileCoin is basically privacy of Monero and the speed of Stellar. But it's not without harsh criticism from prominent figures in software industry.
@@bneymanov I love signal as a messenger, but while i'm not a cryptography expert by any means, I'm a bit sceptic about how secure mobilecoin really is. Even the devs themselves admitted during the beta that it's not ideal, but it's the best compromise they see.
But I'm happy for it if it succeeds, the competition isn't exactly setting a high bar.
The Fundamentalist v. Speculator dichotomy, while a simplification, is a really useful tool for a layperson like myself to express and interact with these ideas. Thanks for doing such a good job communicating this Joeri, and thanks to everyone who works with you to make these videos possible!
Yeah it is a useful simplification. I fall into both camps in crypto currency. I’m speculating on bitcoin and have used it to make purchases. Me personally like to pull some of profits out directly for what I want out of the profits. Instead of converting it back into dollars and buying what it is that I want to buy I prefer to spend the crypto currency directly for what I’m buying. I hope that makes sense
While I wouldn’t argue that crypto isn’t speculative, I see stocks as fundamentally speculative as well.
The intrinsic value of stocks are generally much lower than what they’re selling for. Most of the popular stocks sell at 10-30 year’s earnings right now.
The idea of a stock being more intrinsically valuable is based on the company being liquidated and you getting a portion of your investment back or you being able to get a dividend as a portion of the earnings.
If you need to sell your shares in the future in order to profit, you’re speculating because you’re assuming someone else will want to buy your shares in the future at a higher price than you paid. That’s essentially the same premise same as crypto.
That’s my only problem with saying crypto is speculative but stocks aren’t. That may be true in some situations but definitely not all.
@@ThatonedudeCR12956 I think what Joeri was getting at in the video is that stocks have both speculative AND fundamental value. The assets of the company, expertise of its workers, the logistics and relationships they have with suppliers, the value of its outputs/products are all valuable things. That system and structure does have fundamental value in addition to the value of the physical property it owns. Yes, if the entire business falls apart that value will be reduced to just the physical property, but that's pretty rare.
Now compare that to crypto. What is the output of the system? A ledger to track what the system itself does. Is that valuable to anyone outside of the system? Not really, though many speculate that it could be used for useful things. But currently it's mostly being used for extremely speculative trading.
Obviously it is not crypto that is discredited but rather this channel. The viewers pay the price of bad advice.
He is forgetting what happens when fundamentalists see the "crash" as a sale on the price and buy even more.
This is what gives us the 4 year cycles in bitcoin that always increase.
Satoshi had already figured this out, and realized that one day, it would lead to full on world adoption over time.
Irony is they are using blockchain for storing the crypto but FTX doesn't even have a proper balance sheet. Perhaps they could have used some of the blockchain to record the transactions.
The other irony is that some folks tracking down FTX's own crypto holdings found they were likely overleveraged. What an odd world we live in.
it's never been about blockchains and decentralization... it's about separating fools with their money.
FTX doesn’t have a proper anything.
Why would they use a blockchain lol - super slow, doesn't scale and unnecessarily complex. It's like the highest effort way to make a write-only DB LOL
@@pearcake "private blockchains" could be much faster, even if that just a fancy name for a github repo.
"Markets can stay irrational longer than you can stay solvent." --John Maynard Keynes
Despite the economic downturn, I'm so happy😊. I have been earning $ 60,200 returns from my $7,000 investment every 13days.
I got 80% of my total portfolio in CRYPTO and it has been great Returns
Lol, all those role playing seemingly interacting bots under the opening comment are hilarious.
@@bosoerjadi2838 Honestly, anyone who is still foolish enough at this point to risk their money with crypto after all the chaos absolutely deserves to lose it all.
Mr gergely killed my dog and punched my nan. Also he stole all my money 😞
About crypto I always say: sure, the inadequacy of the central banks has played a huge role in most of our recent financial crises.
But designing a system with no central bank is like saying "most car accidents are caused by the brakes not being good enough, so we designed a car with no brakes".
I think that designing a system without central banks is much more like “We should produce our own brakes, because brakes that produced by others are cause of most of accidents.”
@@kaanyrd
To make the analogy with crypto correct, the production of brakes would then be produced by people hiding away abroad in mafia-run states like Cyprus, who have zero acccountability and a vested interest in screwing you over.
Those animated graphs are super helpful
I see several problems with current crypto:
1. Most general public still dont have a clue, how crypto works.
2. Its still young technology and many people are just eager to try a new toy.
3. So far there is not much use cases other than hold it and hope, that one day you might sell it for higher price. So basically its just a gambling.
Therefore the market is now plagued with all kinds of scams, pump&dump schemas etc.
Evetnually the real use cases will come (smart contracts on Etherum,Cardano seems promising), but we are not really there yet. And for now, any scamer bancrupcy is only benefical for crypto environment.
"Groceries" hahahaha Very Dutch of you!
Not all banks in 2008 were idiots up to their necks in debt. And the same goes for crypto now. Just now, since there's no government coming to save the bad players, they will go under. Arguably this should have happened in 2008 as well. This is a golden opportunity to show whether not having bail-outs is good or bad. So long as the debt-free players survive this, that would be a major win for crypto.
smartest comment award
It may not matter how well run these other groups are. As was stated about the comic speculation in the 90's: If you have 1 well run comic shop and 9 badly run ones in the same city, when the bottom drops, how many survive? The answer is none, because there aren't enough customers to service all of them and no matter how well you run your shop, the other nine are syphoning off too many customers for you to survive.
if it happened in 2008, the world would have entered a second great depression where the economic damage would have lasted longer and many countries wouldn't be able to recover.
@@btetirick Probably depends on how you define "well run". For crypto projects, anything that can run without the price of their token(s) affecting their operations is a mile above the rest.
And a lot of those have been around since before crypto was even worth talking about in the news, so I doubt they would care much about the bubble popping.
Your explanations are so clear man! You make me like economics even more as an economics major.
Have you watched Patrick Boyle - he is very informative and funny AF on economics czcams.com/video/zTFhnpf-IE0/video.html
Bro, if I could do it all over again I would have done economics. My dad told me “If you’re an accountant you’ll always have a job” so that’s what I did, but loved taking Econ and psych classes. Now I work frequently with economics/stats PhDs and am so interested in their work and thought processes. Stick with economics, but make sure to get your PhD from a good college, and the world will be your oyster. GL!
Imagine governments bailing out an asset whose only functional value comes from enabling illegal purchases, money laundering, and sanctions avoidance...
Thank you for this video and it's examples. It was very articulate yet easily accessible. We need more of this.
I’m happy that Joeri is cashing in on the FTX debacle and I hope it brings traffic to his other excellent videos.
i am not. this google trends type of decision making is ruining content. as someone who know crypto market very well I am not impressed by the quality of research put into this video. makes me question now all of his content.
@@sergeymelkumov9232 I think Joeri did a fantastic job discussing crypto speculation and bubbles as a whole. There are better FTX specific videos out there for sure.
@@sergeymelkumov9232 ah a maulding crypto bro
@@alexgray2482 if being a former adviser to the minister for digital economy makes me a "maulding crypto bro" - sure, I am that.
After 13 years there still isn't any mainstream application for crypto other and reselling it.
I see no way, at least in the near future, that crypto can become a reserve currency. Reserve currencies need stability and wide acceptance, which crypto doesn't have currently. Also, if crypto did start to become a threat, the US would enact policies to prevent it from becoming a reserve currency since it want the dollar to keep that distinction.
Crypto was made into legal tender in El Salvador last year and they have consequently lost a lot of money, with the government finding it difficult to re-finance it's debt.
The strongest argument for crypto is the US's own mismanagement of the US dollar. Every artificial burst of inflation or Fed-triggered recession is another reason to store your wealth in a non-US dollar instrument, crypto or homes, or stocks. The thing is, its a lot harder to spend a house than to spend crypto. At the moment, crypto is only used for 'groceries', because its harder to spend than dollars, but that could change, if the technology improves, and the dollar declines.
Honestly this narrative of replacing fiat is just relegated to casuals and Bitcoin maxis. I work in the industry and speak to hundreds of team members from hundreds of protocols and none of them hold to this notion that crypto can replace fiat or that this is even a desirable thing in the first place.
Wait till CBDC's are pushed onto you. If they make it. I see several cryptocurrency becoming reserve currency's as long as they kan keep their decentralised nature.
Crypto is trash
Bitcoin is the only legit one.
There is a 6th positive feedback loop, the software hype cycle. Anytime a new technology comes there is a period where some devs and many in management get overhyped about the possibilities of the new tech and green light lots of stupid projects. Those projects crash and burn turning many away from using the tech. Then the devs who know what they are doing find legitimate uses for the tech and it starts to stabilize. We are in the crash and burn phase right now.
Ben Felix has a great video on this topic. For me he's like the investment advisor equivalent of m&m in his rigourous acidemic approach. czcams.com/video/UZnVt_CvL3k/video.html
Yeah, except Blockchain is a very niche technology with very few practical uses. All of crypto is founded on the misguided notion that there is anything special inherent to a blockchain when there, frankly, isn't. Technology for the sake of technology will fail. Technology only succeeds if there's a good reason to use it, and our current financial system with electronic payments is leagues faster, more stable, not prone to insane fluctuations, and better for the environment.
You explained financial stuff and I actually understood it. That's a first for me. You must be a great communicator.
Intuitively I knew all this, but you put it into words and images in a absolutely comprehensible way. Subcribed !
Awesome video (that's coming from a fellow economist). I also worry crypto's fundamental value may be affected by its price change. Nobody will want to hold it for long if it always depreciates. If I have just received payment for groceries or racketeering in bitcoin and its value declines before I can find somebody willing to accept it in exchange it for real money, I may seek alternatives. Just like hyperinflation episodes.
tbf that's why u have stablecoins
@@mohammadtariq6149
stable coins just don't work.
Asking people to hold cash so you can do crypto stuff is unlikely to work, as they have an incentive to use that money to invest in other things.
Algorithmic SC only work until they don't.
Exactly this. If people lose confidence in a currency do to massive speculation, the fundamental value of of that currency also evaporates. Crypto has no fundamental use other than facilitating certain transactions, and if people no longer accept those transactions due to a lack of trust, you end up with just a fancy looking bunch of useful numbers. You can eat an orange, you cannot eat a Bitcoin. Unless it's one of those goofy minted Bitcoins you see in stock photos. But I wouldn't recommend it.
But WHY would crypto ALWAYS depreciate, when very little new crypto is mined, while trillions of new dollars are printed ? Yes, in the now its going down, but it won't go down forever, because they are not making any more of it, and at some point the speculation leaves the marketplace (or hunkers down to await the usual and customary rebound, that has happened every four years since crypto was invented)
@@sprinkle61 The dollar is backed by the entire US economy (and much of the world economy), with the promises of the US government, so it's value is the from the fact that you can exchange it for just about any good or service. People will always take a dollar from you, since they know it can be safely used for further trade. So long as the total wealth in the economy grows roughly alongside those printed trillions, then the value ultimately remains. Even with current inflationary pressures, the future value of a dollar isn't especially questioned, because it's still largely expected to be temporary, and the change in value isn't enough to make it seem worthless, like you get in hyper inflation (insert anecdotes from post WW1 Germany).
On the flip-side, since crypto's inherent value has been speculative, it tends to whipsaw around a lot as speculative bubbles fill and pop. This makes it incredibly un-useful as a legitimate currency since it's unreliable. If you accepted crypto for a transaction, you'd be essentially taking a gamble on what you'd get for it down the line, if you can even find a willing trader for it. Combine that with the fact that it's largely unregulated and most people no longer have confidence in it, and you end up in a situation where even it's core value (as a currency for stuff you can't buy easily with dollars) just vanishes. You might as well be trading Pokemon cards at that point.
this is normal for crypto though. crypto literally bubbles then crashes 85% every 3-5 years and exchanges collapse with it
Always nice to watch your videos, Joeri. Clear, brief and punctual with data. Keep up!
Thank you for your kind words Vladislav
Great analysis and insightful information! Thank you!!
Really good video. It will be interesting to see how crypto moves forward
This channel explain financial Master level stuff in a so simple way that Even if You are dumb, things get really clear👏👏 to Joeri and it's team.
Awesome video! So happy I found your channel!
SUBSCRIBED! I'm so happy CZcams recommended your channel. Your videos are interesting
I for one always thought that crypto became less appealing as it became more speculative. I first heard about it from a friend from Georgia who's country's currency was in a huge deflationary period, and it seemed like a good option for people in countries who's governments could not provide a stable currency. Then the speculators came and made crypto less stable therefore less valuable for the purpose I'd originally seen for it.
Seems to me that we could stabilize the entire financial system by prohibiting banks from accepting financial instruments as collateral for loans to buy financial instruments.
But in this system EVERYTHING is either born a financial instrument or financialized into one so nobody would be allowed credit to buy anything so everything stops ending the system. Plus, this particular disaster didn't take place in banks it's just one form of shadow banking Gordon Gecko uses to get around rules like the one you suggested.
@@TheGroovyJones reductive
@@nathanlevesque7812 No but he's right
The definition of "a financial instrument" is "Anything that you can sign a contract about that also costs money." So if you sign a loan agreement contract to get money to buy something, that thing is now "a thing you've signed a contract about that cost money" which means that it's, legally speaking, a financial instrument.
I try to grasp another Joeri video of eurodollar system and there brettwood is looming, so common(layman) sense says that could regress back to sorta gold standard system. I totally agree though, some fix needs to be done for that, coz in crypto this is in steroids and shows some ppl reckless to scam other ppl money and all life savings essentially.
@@effexon Something economists don't talk about is how this particular financial system is REQUIRED to grow constantly or it falls apart and dies. Using gold there is a limit on the amount of money available, a limit to growth. They had to leave that behind and create more and more debt to continue financial growth keeping the system going.
This was an excellent explanation, thank you I learned a lot!
Very good summary, and easy to understand!
I would argue by asking "what is the fundamental value of gold?" If we believe assets should be priced solely by its utility, then the market cap of gold would be magnitudes smaller. Yet we still agree that gold is valuable because of its 1) fixed supply, 2) Luster, 3) We all agree its valuable & 4) to a smaller extent its utility as a conductor.
The bull thesis for bitcoin is that it is a better version of gold as a store of value. Unlike gold, we know and can track EXACTLY how much bitcoin is in circulation (there are vast, unquantified amounts of untapped gold reserves in oceans etc.). Also unlike gold, it is easier and safer to store (on cold wallets) and send to others across the world.
Again just a disclaimer I don't own any bitcoin.
The best video on crypto recently. It’s all about the basic working of market fundamentals. Over leveraged. Sell sell sell. BOOM! That’s the sound of the graph bottoming out.
Wonderful explanation! Thank you Sir!
Your videos are very insightful
Very cool original content! A must see for every crypto enthousiast.
Thank you Peter!
A very insightful video. Many of the discussions I've had with friends who are 'pro' crypto always ended up with me asking them about the fundamental value of crypto. I always asked them to explain to me why A bitcoin should be worth 100k for example? I never got a satisfying answer beyond 'it's the future' or 'you just don't understand it'. This led me to not invest in crypto and I'm very happy I followed my gut.
Good for you.. as an economist myself, I've been able to ward most of the people around me from their extremely misguided intuitions regarding crypto, but not all of them. The "you told me and I should have listened" messages I've gotten make me feel very sad. I've always simplified it by asking: are you ok with substituting the word "investment" with "gamble"? If not, limit your exposure to a few fun-bucks, if any. Stay safe and continue being a critical thinker. If you can't manage to get a solid answer from people trying to sell you something, it's probably a bad idea to buy from them.
I've been asking the same questions since I was in college back in 2016 getting my degree in finance. I still haven't gotten a satisfactory answer. Joeri is correct. The entire industry is built on a house of cards.
Great video Joeri. Big fan from belgium. ;)
One problem with the fundamental value of crypto is the value of a unit of crypto doesn't directly relate to price like real goods do. It doesn't matter too much if the price of BTC is $10000 or $0.10. If I buy it to buy less legal substances or transfer money I will buy the amount I want in dollars, send it to the seller/recipient and they will leave the system by selling it out quickly at roughly that price. This means the value of an individual unit of crypto is based on the volume of use at the time, which doesn't speak well for the prospects of future increases.
If you consider energy required to transact, cryptos are a less than zero sum game.
That's completely wrong, some chains like Solana use less energy to transact than VISA, so it's clear you have no idea what you're talking about. Ethereum is not representative of all of crypto
I think a good case can be made that the fundamental value for bitcoin is less than $1000, and quite probably below $500. Both of these figures are not significantly different from zero based on price movements at present. Hence valuation at present should be made on its speculative value, for which the tools of technical analysis are the most useful.
Can you explain how you've gotten to those numbers?
You are just making numbers up.
brilliant video. thanks!
This video is superb Dr. Schasfoort
I hope you are doing wel monetizing the channel and your other platforms and suscriptions
Going to spread the video and recommend the channel
Best success
If I may say my two bits worth: even if we will see a “bottom” anytime soon, I doubt anybody will be able to recognize it, and consequently even some “fundamentalists” will start dumping their cryptos since they have no idea of if, when and who will join the next crypto run. So I may dare to say that the bottom will be substantially lower than the fundamental value, going deeper as long as the instability will last and something will force a pivot and a new trend. Great analysis and insights!
No, it mainly depends on the american federal reserve
@@markcorrigan3930 can you elaborate that ?
@@markcorrigan3930 . Wrong.
As the saying goes… "There's a sucker born every minute".
As idiots once said, "The internet is over." Anyways, crypto is over...
Also “a fool and his money soon part”
Really nice analysis, thank you!
the usecase as a store of value is also fundamental Gold is also not used to buy and sell goods annd services
How dare Joeri compare apples and oranges!?
Unlike the traditional banking system, more and more centralised exchanges are showing "proof of reserves." The case for crypto as an improvement to the traditional financial system stems from the fact that most are NOT inflationary, and also they are decentralised. Unlike the current banks which use a fractional reserve banking system that is one bank run away from collapsing. The Fed now has no choice but to exponentially raise QE else (due to the lack of buyers for their debt) the Treasury defaults on its debt- leading to the bankruptcy of the US government.
Just a disclaimer I do not own any substantial amount of cryptocurrency, but I do believe that, despite the many speculative crypto projects, there are a handful that provide genuine and much needed utility.
Abd those proof of reserves are complete lies LoL
Bedankt
Great video, thanks!
Personally I think it's too soon to claim that this is the end. Of course it may be, but the crash in 2017 was even bigger than the current crash, so we are still in the expected volatility range.
I know it's still possible for this to be the end if other big companies keep collapsing, but I think it's too soon to claim that.
This will most likely be the beginning of regulation.
As long a sit doesn't use energy to mine bitcoins anymore
You do not know what you're talking about.
I think 3 things will keep crypto down for a long time this time. The first is the legacy of all this debt leaving a scar on the crypto market that takes time to heal. The second is possible govt. regulation and/or the implementation of central bank digital currencies (doesn't matter if they negate the whole point of crypto if they actually succeed). And the third is high interest rates sucking away all the money from all riskier assets, which would especially hurt crypto. Combined I think we're in for a sustained downturn for a while.
@@MarcoBonechi Only Bitcoin still does that. Even Ethereum, the second biggest crypto by market cap, recently switched to proof of stake, which drastically reduces energy consumption. And I mean drastically, literally by 99.95%!
Nice, love your videos!
thank you!
How can you see that Joeri is in the Netherlands/Belgium. December comes around ad all of a sudden the oranges/tangerines start popping up.
great video and I love the behavioral explanation.
Your video is a masterpiece, thank you!
How do you calculate the fundamental value of gold? Seems like it has never gone to zero but its largely useless for non financial activity
Gold does have use in electronics
And some space activity
It has little fundamental value outside of electronics. Everyone’s a speculator in gold market. The difference is people don’t tend to go into debt to buy gold. Even when gold value drops more speculators will move into the market to race back up.
@@amarminhas202 only around 8% of gold is used in electronics. easily googled fact. 55% is jewelerly (a declining market as new generation of consumers not very interested in this) and the rest is investment and central banks (essentially, speculation). more than 8% of L1 cryptos is actually used by the developers. with that logic, gold is more speculative than top-10 L1 crypto coins.
@@sergeymelkumov9232 I wasn't disputing that, the original commenter was asking about use cases
Congrats on calling the bottom.
I like the jazzy background music. Very Frasier
wow the best economic video i ever come across great job
3 things can happen to Crypto: 1 it becomes totally destroyed and forgotten in history as a funny time. 2 most coins vanish and the few left rise in value, like a 2012 to 2019 increase in the S&P 500/US100 until the next crisis. 3 it just stays as a side show of insignificance where everybody is just apathetic to it and it becomes something regulated and used by hobbyist
4. We find more useful things to do with energy than using it to mine coins.
I say 3
@Omega Shange My theory is that Crypto is a solution looking for a problem. People don't believe in Money, they just use it, it is part of their lives. Crypto is something virtually created by virtual Gods, unless you believe in Gods, it has no value to you. Crypto's real value was on the Black Market, where the ability to trade value had been hampered by Governments. What has happened now, is that the Crypto creators... became replaced the Governments and they have been shady. Crypto to Zero is unlikely because like Jesus, there are a lot of believers. Point 3 is unlikely because Governments can't afford to regulate Crypto, it would cost way to much to monitor all the Crypto Currencies that are available. Point 2 is unlikely, because even this Air is valuable to humans, it is ubiquitous. Point 1 is unlikely, because people believe in Jesus and therefor some form of Crypto will survive. Basically I'm saying.... the points don't cover the real possibilities. My theory is that Crypto will be here forever but its value will be minimal and not stable enough for people to trust it as a currency. It will be a play toy, that the Black Market will try to work with, so they can trade, beyond the reach of Government.
@@ninamartin1084 Most coins are PoS and not PoW. Bitcoin is PoW, so was Ethereum, they recently switched to PoS. I might be wrong, but you're not completely informed
Number 3 is impossible to happen. It either goes to zero or it takes over the entire forex market. There's no in-between.
3:06 tells the story of oranges, shows tangerines. Can we still trust this man or was he bought by big oranges?))
Hehe. You got me.
10:35 damn right!
Superduidelijk!
It’s no surprise that crypto is crashing as the global economy is crashing and markets were crashing in late summer/early fall. Rich speculators parked their money in crypto and gold then as the market went down they sold off their positions. That created a downward cascade effect where firms like FTX get exposed.
Ironic when you consider that investors once pushed crypto as a *hedge* on the market.
This is the bit I find puzzling as a casual observer of crypto. I’d heard it sold as an inflation hedge. A currency which was the antidote to the hyperinflation on the horizon caused by money printing or whatever.
So with that in mind I was under the impression that crypto, specifically Bitcoin was built for this moment of high inflation. But it’s actually crashing like a tech stock. Either I got the wrong end of the stick about the benefits of crypto, or it’s not living up to its sales pitch.
Happy for anyone more informed to reply, there is a chance I’m mistaken in what I’m saying here. I never invested, I just have a hobby interest in economics
@@MarkFlik This was never true. Hedging against inflation is done by not owning money, eg by buying gold, oil or stocks. You can push this further by lending money to buy those assets: Once inflation rises, your debt devalues while your assets keep their value (and yes, i know that gold is a very risky investment; just a simple example for an investment that not tied to $ inflation).
Crypto was marketed as an inflation hedge but there are little to no fundamental reasons why it would increase in value with rising inflation on real currencies.
They pushed crypto as a hedge because they wanted to dump their crypto.
When it comes to unbacked digital currency, I tend to think of Tulips.
If you know a little about economic history (it helps to be Dutch here), you'll understand my meaning.
It actually does not compare well. If you research the tullip mania, you will see there was much less speculation going on than you might think and a lot of fundamental value; after all, tullips are beautiful and lets be honest, there wasnt much to spend money on otherwise. And the crash came mostly from an increase in supply, not from disappearing demand.
There certainly was some speculation going on but not even near as much as in the crypto/nft spaces.
WOW WHAT A NICE WELL EXPLAINED VIDEO
and who owns gold to buy at the grocery ? the fundamental value of btc is store of value the use as a medium of exchange will follow (is already growing very fast)
I used crypto for a loan. In America, private student loans interest rates are almost as expensive as credit card debt.
I'm glad that I managed to earn a little bit from the speculative bubble by mining and selling immediately 🥳 A friend of mine was really badly hurt by the promised high return of yield farming though 😥
Honest question. Which hurts him more? The skyrocketed price of GPU at that specific point, along with the electricity bill, or the lower yield after a few halving times, or both?
@@vidung1234 I was the one who mined. Rent includes electricity and it's super cheap here, plus it's cold so no difference if I'm using 1000W mining or 1000W heating.
He was into trading and yield farming. I haven't asked how much he lost or even talked about crypto, because I know from others that he had to borrow money from his mother to stay afloat with rent etc.
@@vidung1234 Probably what hurts the most is that yield farming was the buzz term used to cover up a series of ponzi schemes that popped this year.
@@nicholascarter9158 welp I always try to differentiate those with the people who actually mined, including the OG since 2013.
Thanks for the great explanation! I shared your video with a couple of friends that also found it very insightful.
One question we were left with after watching is why do you think crypto would crash now rather than later? Why do you think this time will be different from other dips we have previously seen in crypto prices?
If I understand correctly, your video argues that this moment is different because we are experiencing these feedback loops. For example at 10:39 you say "with crypto we are already well into this last phase". Can you elaborate on why you think that?
I figured I could find some more background info in your sources. The description links to your blog but there doesn't seem to be a post on this video. Did you already publish it?
I totally forgot to upload the source file . Will do so later today.
"to buy groceries" and shows a clip of a marijuana grow-op!
"groceries" :D
Great Video = as a retired banker I got into Crypto to see what a potentially growing new industry was like. That said I really like your analysis and it is very logical and one that I wish more in crypto held. One should treat Crypto as a "Frontier Market" like investing in Africa or Vietnam.
Investing in Africa or Vietnam is a better investment than crypto at this point.
@@SmileZero Global warming might hamper development in Africa. But fiat printing might make crypto speculation more stable.
@@SmileZero I'd argue that after an 80% retracement to the downside, investing in crypto is not such a bad idea anymore; if we would have talked about investing in btc back when it was $69000, then yes, it would have been a better investment to buy into Africa or Vietnam.
Long ago used BTC to buy a few electronics (like an cryptography chip on a break out board!) but total volume less than $100 in 10 years. Then hackers wiped out my MtGox stash (and should be getting a hugely bigger payout from that 9 year old bankruptcy shortly!) Another big issue for Internet Cartoon Monkey Tokens are bugs in your smart contracts, especially on cross-chain bridges lately, which can allow hackers to wipe you out.
The key lesson learned for me is to not touch crypto with a 20 foot pole, not even to buy "groceries".
The end: I doubt it, could be but I doubt it.
Start of a long dark and cold winter? Absolutely.
Also, what did you think of the interview with Jeff Snider.
Yeah, the end ... it depends what you consider the end. I strongly suspect there will be another crypto cycle (not sure how big) at some point.
Loved the interview. Learned quite a bit from it myself, the difference between different treasury types. Very interesting. Will do some more research about that. Jeff and I agree on the basics. I wasn't fully convinced by some of his higher level conclusions. Still, I always enjoy talking to someone with a different worldview than most.
As idiots once said, "the internet is over." Anyways, crypto is over...
@@kevc5510 I don't remember people even claiming that. What happened in 2000 didn't discourage people from keep using the internet. I was an avid internet user at that time, and I didn't even notice that anything wrong happened.
@@luisoncpp Congrats, you were listening to the smart people.
Given how many drugs he was supposedly taking, Bankman-Fried is an appropriate last name for him.
bitcoins fundamental value is the energy + fixed capital + variable capital + expected profit rate for miners... as long as the value of bitcoin is greater than or equal to the costs of reproducing miners, then the network can be sustained and the price can fall to that level. However, below that price the value will drop to zero as even the ideologically driven (over profit driven) miners exit.
no, thats the production cost, not the fundamental value.
Horseshit also has the horses upkeep+food+storing+collecting the shit as cost, that does not mean it has those production cost as its fundamental value.
Good content a always
Crypto bros are hilarious. “When bitcoin is the worlds reserve currency” 😂
I’m buying and hodling at the moment with what I can miss every month. I keep a close eye on what is happening and see where this is going 😂
and where is this going?
@@simrans3675 at the moment pretty sideways 😊
@@filipweemaes1926 Then, what's the point of buying something so speculative only to have it go sideways :-)
@@simrans3675 actually I’m just investing a particular network because I believe in its future application. So I’m not in it for the money 💰
@@filipweemaes1926 Every investing is for future success (because you believe in its future application and hence will profit from it etc). This is not social, non profit work. Stop kidding yourself and me :-)
Joeri really should’ve used Jenga to articulate the five negative feedback loops TBF. Although you do miss out on the “house of cards” phrase.
M&M i like your version ... i like your vibe . Your material matches the vibe from the streets here in Romania ...
Im not a highly educated person on economy or whatever...but i have a fine tuned nose instead
I'm a software engineer at a company that contracts for a zero knowledge blockchain, and I'm not really sure how what I do fits into this. Our latest client feedback is that our project (a blockchain-secured voting platform) is really pushing the foundation forward. Maybe we're pushing on that fundamental value bar
Blockchain has much better future than just crypto. I personally believe crypto is meh, will most likely become irrelevant or won't be able to disrupt anything in long run.
@@earthling_parth Isn't blockchain dependant on crypto?
@@itsmederek1 Blockchains are a technology for tracking who owns something, and what all cryptos have in common is using a blockchain to track their purchases, but in theory you could replace your personal checkbook or a store's inventory management software with a blockchain.
There's no financial point to do that though: Blockchains stay open because coins pay them to track their coin speculations.
@@earthling_parth "Blockchain" and cryptocurrencies are a distinction without a meaningful difference. Cryptocurrencies are an essential part of what allows the public chain to function. Do not promote technologies you don't understand.
There's a good reason many experts in the software security field consider the tech to be a solution in search of a problem.
@@itsmederek1 No, it's the other way around, crypto is dependent upon the blockchain
Oh no Bitcoin is dead for the 400th time.
No you don't understand this time it's REALLY REALLY dead, I know they said that last time but this time it's real!
This video is going to age soo badly!!! And I say this as a serious fan of the channel overall.
It might be good to get some Bitcoin, just in case it catches on . -- Satoshi Nakamoto.
If you know, you know.
@@kernel8803 How will it recover? The era of cheap money is over.....that's what crypto relied on
@@simrans3675 I'll check back with you in a year or 2, down the line. As of right now bitcoin is $16,794
@@kernel8803 You didnt answer my Q. Let me ask again: "How will it recover? The era of cheap money is over.....that's what crypto relied on"
I am looking for a rational answer based on a sound thesis rather than "Oh, you hurt my feelings. It'll go up because it'll go up. Let's check in 2 years". Hardly a valid reason and just validates that most people buy it because 'Number Go up' greed they. have been fedd vs actually doing a deep analysis, investing based on a thesis and managing risk
Love the content as always Joeri but I think the echo in this video is a bit too much.
Seems to me stable coin use are the fundamental and the coins like Ethereum are the shares of that asset, the underlying validation network.
It's possible that Tether may act as a sort of "central bank" to keep crypto propped up. They have the ability to print USDT, and since outsiders aren't allowed to access their books, they can do so without actually having the reserves and nobody would be wiser.
Does this system sound familiar?
Except the federal reserve it's supported by the biggest goverment on earth , tether it is not
Ethereum is a decentralised computer basically. You can create applications on it, for whatever purpose you like, and everyone around the world will have access to them completely permissionless. And if it works properly this is censorship resistant and neutral. So no government, political party, or large corporation can change what you do on there. No idea what fundamental value that has exactly, but I think it's very versatile and useful.
For example: worldwide games with collectables you genuinely own yourself; money in your wallet in whatever currency you like that you have full custody over; concert tickets that stay in your wallet so artists can see who visited their concerts and airdrop art or music to them directly; on chain representations of for example carbon credits that are non falsifiable and easily traceable.
Having a worldwide programmable and transparent ledger that is non falsifiable is very useful for so many things, I think. But it's hard to say exactly what it's value is, since I think the vast majority of usecases still need to be build. But I think it won't disappear, and will keep adding more value to the world.
Cryptographically secured currencies and ledgers are useful technology, not just in the case of ethereum. It's still early days, but it will keep growing and keep showing more usecases I think :)
The concept is good but it has 2 technical downsides that prevents it from being useful:
1. Its computing power is too low for the cost. One single game console have more power than that entire network.
2. It's not possible to delete data from there. Eventually the governments will make that network illegal when people start leaking state secrets there.
Problem rith your first point is that it isn't a very efficient computer. Speed and efficiency is pretty much the currency I'm computing.
In its current state that is true. But ethereum is still being build, in 5-10 years when it is fully developed it will be much more efficient and much cheaper than it is now.
Take for example the recent upgrade to make it proof of stake instead of proof of work, that reduced energy costs by about 99%. Already one huge upgrade in efficiency!
@@thelazymanatee2506 on a mathematical level, blockchains trade efficiency for security. There are use cases where that's nice, but there will always be an efficiency gap.
Would you mind explaining why security and efficiency are at odds?
Great video, love the house of cards.
This channel sounds like the voice of reason among a ton of BS on these issues
Furthermore, it is and will in the future enable more efficient markets, as middlemen are removed and substituted by computation
How many times did you accidentally hit that card pyramid be honest 😜😂
Honestly ... zero times. But, it was really tricky to build and I was super nervous about hitting the table during the whole recording. It was such a relief when I could finally knock it over.
@@MoneyMacro Did you film it?
@@oohhboy-funhouse knocking it over? Yes. It's in the video
@@oohhboy-funhouse ah or failing to build it? Hehe, I couldn't do it. I had to ask my wife to make it. Didn't film that though.
I think the fundemental problem of crypto in general: it or has to try to become a form or currency or it just stays a speculative asset. Or it becomes a real currency, but that means it as to stabilize in value to be able to be a real store of value. Its hard to use a currency for anything when the value of that currency is super volatile. But to stabilize crypto would mean to have a mechanism that is big enough to have foreign currency reserves to stabilize the crypto currency.
Or, it stays a speculative asset. less volitality means less profits for crypto speculators, who will thus not be interested in having actual crypto currency stabilize and will thus favor speculative cryptos, keeping the idea in the general public that crypto can not be used as reliable currency. We see this in the huge market value differrence between specualtive cryptos and stablecoins (even though to be fair, most stablecoins have a hard time getting around the foreign currency reserve problem).
Nice, however your take here is only qualitative (a poll among followers cannot be reliable to have a grasp of the fundamental value of an asset class), and you should consider also the network effects: as more users - including speculators - participate in a system, the infrastructure of the market also improves and benefits the overall ecosystem. The payment options El Salvador is using now were not available in 2018.
It's not the end. It's a purge of the weak coins.
Lol
Great video. I'm still a believer of crypto in the sense that I believe in the future it represents, i.e decentralized finance, web3, etc. That being said, I will never put money that I can't afford to lose into this speculative market and I will never trade on margin. I hope our community has learned a much needed lesson and I look forward to a strong comeback when crypto's fundamental value rises when more services are offered, whether it's in the near future, or in 5 to 10 years.
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Crypto should never have been pushed as an investment vehicle.
Speculation kills everything it touches.
Love this lesson
Amazing video!