This is how you get a 2008-type crash - loans which seem to be unrelated but are tied to a common market.
About 11% of Tether has been cashed out in the last month.
The real problem for Tether is simple. Why would anyone buy Tether at this point? There's zero upside potential, after all. And the competition, USDC and GUSD, looks better backed. So a steady outflow is to be expected. We're going to find out how strong their backing is.
Watch out for heavily promoted Tether-based "staking" schemes designed to prevent cash-out.
Tether, and "stablecoins" in general are known as the casino chips of Crypto. A way to exchange more volatile crypto for what is supposed to be essentially dollars without creating a taxable event. Assuming crypto is still something people want to trade, that's still a valuable service. Tether isn't supposed to be an investment. It's a money laundering scheme to facilitate the other investments outside of the taxable economy and outside of KYC regulation. Seen from that vantage point, staking pools and "potential upside" is actually not desirable.
I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.
If that's not the case, they have as much rope as they have ability to liquidate. IE they can keep buying their own coin to defend the price for as long as they can.
Imo, stablecoins are a good example of everyone knowing the score but systemic risk accrues regardless. Stabkecoins just the worst kind of risk. Low risk/reward on a daily basis. Risk of catastrophic collapse on a bad day. It's the type of risk that gets financial companies/complexes into trouble.
Backing by USD is not required. As you say, anything they can liquidate is good. Doesn't have to be USD. This works best when you are over-capitalised, ie when you have a thick equity cushion, so that when your assets go down in terms of USD, you still have enough balance sheet assets left to cover all your USD obligations.
You are right that trying to be stable makes things more systematically risky. If Tesla stock drops by 20% over night, some people are going to lose money, but the finance system won't collapse. If supposedly stable assets drop by 20%, everything can go wrong.
That's part of why government backed deposit insurance for banks and too-big-to-fail are problems.
[0] https://twitter.com/thelastbearsta1/status/14690072004965908...
What I find more believable is the commercial paper is actually from crypto hedge funds and exchanges incorporated in Hong Kong.[0]
[0] - https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
In August 2021 The Economist estimated Tether to be leveraged 383-to-1. That's incredibly unstable. https://www.economist.com/leaders/2021/08/07/why-regulators-...
How does this happen again 15 years later? Is it because we ineffectively dealt with 2008? A result of the repeal of Glass-Steagall? Or have we over regulated banking to the point the miscreants went underground to build things like crypto?
I don't get it. Crashing over and over doesn't seem good for anyone.
The answer on regulation is a mix, then. Some of it has been effective (if only at scaring off potential investor dangers completely), some of it is difficult, some of the response is underwhelming. So far there hasn't been a 2008-scale meltdown because it hasn't been a big enough market to have a domino effect, and I still don't think it is yet, so really now's the time to take preventive measures but it's not too late for that. It is too late to protect all the people who've lost big so far, but that is a much smaller number than those who suffered in 2008. In my opinion the movers and shakers who care about worldwide financial stability are tuning in around the right time and are overwhelmingly accepting that regulation is going to be necessary. I predict the EU and the US will both push some pretty solid efforts soon; EU through explicit regulation, US through maybe some legislation but definitely through better enforcement.
People are convinced that since its cryto, it won't be vulnerable to the same old issues that every other traded instrument has had since the south sea bubble/tulip mania.
the 2008 market crash was similar as you pointed out, in that it involved wholesale fraud (using a subset of good mortgages to market worthless ones) that were "validated" by ratings agencies.
Here, there were no real third parties to provide ratings. Just people saying "Look its crypto, you can loose because its backed by real something or other"
Hence they are not regulated.
So even keeping GS (which was limited to big banks and a few similar institutions) wouldn't have made any difference. Not that keeping it would necessarily have been a bad ide...
It didn't stop. Lehmans were thrown under the bus and business continued like there's no tomorrow with more and more financial instruments created and investment bankers putting their clients money in crap positions.
> I don't get it. Crashing over and over doesn't seem good for anyone.
There's money to be made on crashes, too. And if someone got rich before, they can patiently wait. There'll be money to be made before next crash, too. I doubt the pattern bothers them. Have you heared how Buffet assigns blame[1]?
Voila, instant correlation.
It's human nature to create and participate in systems that are untenable over time but are tempting for short-term speculation.
Normally, in advanced economies, we try to use regulation to prevent or limit these events. But crypto explicitly avoids regulation, so of course it's going to pop up there. It's got nothing to do with not cleaning up after 2008.
Cryptocurrency is a new asset class, of course it's going to go through some of the painful learning experiences that traditional finance has. I've been saying since 2013 that we're going to see the exact mistakes of finance repeated with cryptocurrency.
Very similar to Madoff's derivatives transactions. He was so big, but there little evidence of him transacting his main "strategy" in the market.
Eh, the problems in 2008 were ultimately caused by (many) central banks around the globe letting nominal gdp drop. All loans (and dividends etc) are ultimately paid out of aggregate nominal income; so obviously they are all correlated with nominal gdp: it's basically the same as aggregate nominal income.
Perhaps it's in the form of debt from exchanges. Tether could buy short-term notes from the exchanges paying them in Tether -- maybe at a slight premium to make sure the exchanges go along. The terms would stipulate that Tether could call the loan at any time allowing them to quickly pull Tether off the market as needed to maintain their peg.
How long the dance can go on would depend on the premium they've offered the exchanges and how much free Tether they've minted for themselves.
Obviously, this is all pure speculation.
Because the most liquid trading pairs and futures use USDT. The same companies who borrow USDT from Tether happen to be the same people who run exchanges or act as market makers.
Will it still be true next month or next year?
Seems to me the slow abandonment of Tether has become faster.
The interesting idea behind crypto once was to have a totally different system.
Yet in reality, with greedy apes on a spacerock, it was an unreachable Utopia
In contrast to other crypto currencies, nobody is holding it for speculation. I doubt anybody expects stable coins to be a better store of "dollar value" than the dollar itself.
Yet, someone holds those $150B worth of stable coins. Who and why?
> USDC has grown 20% with $10.6 billion more tokens in circulation. BUSD boosted up 22% — representing growth of $4.2 billion. USDT has shed about $4.1 billion, a 5% reduction, while DAI dwindled by 30% — from $8.9 billion to $6.2 billion.
If I am not mistaken, USDC (coinbase) is properly and regularly audited for proof-of-reserves?
Not so sure about Binance though.
But at any rate, if capital starts to migrate to audited stablecoins from POS (and by that, I don't mean proof of stake) like Tether, sounds to me like a good thing.
I've only found attestations just like USDT, where did you see an audit?
From what I've seen so far in most cases "stable-" isn't really stable and currency definitely doesn't work like one.
Or am I just biased by sourcing my information from HN and only seeing the cases where crypto crashes and burns instead of all the successful ones no one here is talking about. Are there any?
It is never 100% risk free, though. The best way to maintain peg to dollar is just to hold the dollar. Many stablecoin holders are taking on this higher risk as they seek yield in protocols like Aave and dYdX, or to have ready liquidity to deploy this in the crypto investment market.
I despise shady accounting practices and I'm sure Tether is on par with a good american financial institution, but I highly doubt it they will ever default.
I know it's a long shot, but hear me out:
1. Their redemption process can be handled in a way to prevent an uncontrolled bank run. You can redeem 100.000 minimum, hence it's a not a retail bank run for sure. 2. They print the dollars for much of the old school crypto ecosystem, with all players acknowledging their importance. So unless the key players in the field want to take USDT down, it's not going down. Even the NYAG tried and gave them a penny fine instead.
And even the article here really lacks context. The USDT reedeming right now is tied to all the negative publicity in the media. I've traded through this current depeg (a week ago), that was purely speculative and generated by the panic. A twitter thread stared to report a depeg, and more and more people piled on the exchanges to swap USDT for BUSD and USDC. In the end a lot of USDT was redeemed, nothing happened, expect that some people made a lot of money on the panic itself (and the premium).
I've been hearing the same story for the past 6 years. USDT will fail, they don't have any backing, US will shut them down,.... And the world keeps on turning. Sorry to break it to you. Nothing is going to happen until key crypto players have a legit alternative that will keep the ecosystem alive.
DAI is said to have 150% over-collateralization. ETH & WBTC have dropped more than half. Let's say just off by 50%. USDP and others seem got wiped out. $150 x (43.8% + 32.1%/2 + 11.3%/2 + 0%) = ~$98. That means $150 of collateral is worth only ~$98 now, not enough to back $100 of DAI for 1-to-$1 redemption.
Looks like DAI is at the verge of de-pegging.
Isn't Tether's cap alone around 10 times that?
Is this an observable trend or just a small spike of an otherwise generally volatile phenomenon?
No one knows (or would admit publicly if they did, lots of money to be made if you do) what’ll be the linchpin causing a full blown run and a rapid decapitalization of remaining stablecoins. If and when it occurs, it will happen slowly, and then all of a sudden as counterparties race to the exits. Last folks out hold the bags.
https://www.kalzumeus.com/2022/05/20/tether-required-recapit...
Tether's cap is not the same as Tether's available liquidity to redeem the token. We don't know what's the limit of withdrawals they can handle in reality.
Used to be that you couldn't redeem unless you were a whale. Unless you weren't a US national. Unless you'd given 90-120 days notice. Unless there was a fee paid.
People literally put up bounties hunting any successful redemption of Tether. Especially since, and this is as true now, as it was then:
"Tether makes no guarantees, promises or arrangement that the Tether stablecoin is or will be redeemable in any way, shape or form."
Yes that's a fair point (and it's likely some of the other stablecoins share that problem), but still, isn't $7B a rather tiny portion of the overall stablecoin market cap?
Like if you short it and the price doesn't move (by design) are you out any money?
The price won't go up (by design) because nobody's going to spend too much money from their reserves to support a price over US$1.
But it's possible for the reserves to run dry in which case the price goes down and you win.
All of them should be trying to limit their exposure as much as possible as fast as possible.
We know from the CFTC settlement, and statements from Celsius CEO Alex Mashinsky, that Tether Inc has a history of issuing tethers and then accounting the loan itself as the backing for the issuance - literally just printing pseudo-money out of thin air.
I would first presume the tether "redemptions" were just cancellations of these loans. No dollars or other consideration left Tether Inc.
If you say something is worth 0.01BTC - you need to know the exact date. Otherwise it could be a >50% difference ($400+).
And honestly 4% is nothing in crypto world.
Can this problem be solved without crypto? Probably, but currently crypto is looking like the best way to be able to do this.
the problem with this idea is that this idea of a "different" system is just merely going to evolve back into what we have today. The fundamental needs of a financial system doesn't change much, and what we have today is fit for purpose (mostly - there's efficiency to be had and red tape to cut).
Depends. In the USA, yes, your banking system is utterly shite, despite the supposedly numerous volume of different banks who are supposedly able to innovate and compete.
But.
that red tape is there to prevent a bank from collapsing. Its been imposed as a reaction to numerous financial crises.
There loads of rules that govern how much money a bank can loan, and how much they have to have on hand and in what classes they need to store deposits in.
A bank can be wildly profitable if it doesn't care too much who it lends to. Riskier debts yield much greater interest. The problem is, as soon as confidence takes a knock, the entire bank collapses because the value they claim they have is not backed by any kind of liquid asset.
This is the same with crypto. A stable coin is wildly profitable when people are pouring cash into it. but all it takes is a small wobble, people rushing to convert the "coin" into another asset class, and the whole thing crashes. This might be because they really don't have enough reserves to cover the withdrawl, or it was fraud. They aren't regulated, so we'll probably not know.
and Open Banking has been working on this steadily in many countries.
When states and countries can just block your access to your bank accounts, because you're on the other side of interests, it gets...Interesting
With a decentralised approach, such actions would've needed to be implemented in the real world, not merely by the flick of a virtual lever.
It's like converting your office paperwork to digital. Highly efficient, but you might get hacked or lose your keys and lose it all at once.
It’s totally possible the whole thing is unworkable and dies out. Another option is that it survives in some niche area that provides value or just becomes entrenched like HFT.
And it’s possible a world changing blockchain startup hasn’t been invented yet. Any tech breakthroughs with processing power or storage could have a huge effect on blockchain.
I am pretty sure they won't though.
The same reason you would hold dollars in a bank account.
My local currency (GBP) is weak atm and falling against the dollar. I want to be able to use crypto services (easy transfers, buying/selling crypto, borrow/lend on DeFI), but I don't want any more exposure to the currently volatile crypto markets, so I hold a lot of USDC
Some of that USDC is being lent making ~2%, better than most banks. I can transfer it to someone else ~instantly and very cheap, instead of waiting 3-5 days for a bank transfer (I recently put some money in a crypto investment fund, transferred my investment in USDC)
Sure about that bit? This may be the perception – that holding your assets in 'the crypto system' avoids tax issues – but the taxman will disagree.
Swapping $BTC for $USDC or whatever your tether of choice is is a 'taxable event'. You've sold one security in exchange for another. It doesn't matter that they're both crypto.
Now, it might be harder for the taxman to detect this event, which is a different thing.
But who is doing it? What is the use case?
IIUC:
a) exchanges for short-term liquidity
b) traders for whom going in and out of actual USD is a giant PITN
Are exchanges really holding stablecoins for this purpose?
Perfect for P2P on and off ramps too.
Also some countries such as Argentina have literally stolen the money of their citizens bank accounts in the past. So stable coins are more trustworthy than the banking system.
[1] https://bam.kalzumeus.com/archive/stablecoin-mechanisms-and-...
If someone is invested in e.g. Bitcoin and thinks they can sell the peak, turning it into $stablecoin is the easiest way, and the only compelling reason to then move that value into sovereign currencies is: you want to spend it, or there's reason to hedge on the stability of the peg. If you're planning to re-enter the market later, (actually stable) stablecoins are just as good, and are what a lot of these traders will have when they sell, so why do two additional transactions, even if they don't trigger taxable events, which they would.
I don't own stablecoins.
I do it; on Aave you can deposit USDC and borrow USDT against it, earning an interest on USDC and paying interest on the USDT. It currently costs me about 3 APR to short Tether. What's nice is that you can iterate the strategy, e.g. deposit 1000 USDC, borrow 950 USDT, swap this USDT for USDC, deposit the USDC, borrow more USDT...
https://app.aave.com/ offers "E-mode", which lets you borrow stablecoins worth up to 99 % of the stablecoins you deposited.
the fact that defi shorting is available is a great improvement. now there's only smart contract risk, which for aave is negligible compared to exchange risk.
if i had gone through with it, i would have paid 5 years of interest for close to no return, including in 2018 when crypto fell 90%.
also, if enough people are levered short, crypto traders could short squeeze you. the price just needs to go up temporarily.
also, there's counterparty risk. is the exchange you're trading on going to stay up if tether goes to 0? depends on which one.
My guess is you would want to short it without exposure to eth and then idk.. You could do the same with USDC.
Now about decentralization, I believe that most people hold their transactional crypto funds in a handful of exchanges and thus the dream of decentralized crypto transactions is rarely realized.
But most importantly why does the end user care if the transaction was decentralized or went through a series of transactions through one or more centralized intermediaries.
All people care is have funds that left place A showed up in place B
Now do the same thing with sending money to Russia. I just checked WISE. "We temporarily stopped sending money to Russia".
Yeah.. thanks..
a better way to frame your comment: why does the world use Stripe and PayPal when you can just go to your bank and ask them to setup a multi day long wire process from bank A to B for less fees?
My issue is that people don’t even need to see crypto actually succeeding at the use cases people talk about to be considered a good investment. People will invest in crypto regardless. I believe crypto does have value but the valuation in no way matches the actual present day value of the crypto or even a plausible projection of its future value. People just say “crypto to 100 trillion! Smart contracts!” and nobody has to see any real results that justify those numbers.
Why should I be impressed that something has potential? Many things have potential.
To me, it’s strange that you can agree that most cryptos are scams but don’t understand why there is so much hate for them.
Why is this necessary? I have banks in three countries and generally pay nothing to move money between them or to pay others. This really doesn't feel like a problem that needs to be solved except by those trying to avoid taxation.
You also have to pay transaction fees transferring crypto, it's build into the protocol.
It's not solved by real world implementations of any major blockchain.
> Sure 99% of crypto schemes are b.s and ponzi.
That second sentence explains the first, really.
Anyway, so the remittance industry is estimated to be USD 15.27 Billion as of 2021 so if you could tap into that market, you'd do pretty well. Or rather, you would, if you charged some sort of fee to use your services, so you need to charge some sort of a fee, which negates that advantage of using crypto. Coinbase makes it easy to get into crypto, but they do charge a fee for that.
There are at least a dozen countries that I can think of that have massive restrictions on how many flows in and out of the country, preventing people from being able to keep their money safe from raging dictators or changing rulers.
It's a lot more than 1%.
If I'm sending a remittance or similar paying $$$$ in fees is absolutely not desirable. And with current gas prices the cost of sending anything less than 50k is pretty comparable with just doing a wire transfer.
for payments over 10K the fees may be less than Wise or a wire, and faster.
for average users the end game is L2 and direct on- and off- ramps from CEX and services like Ramp, and more payment processors accepting crypto so off-ramps will not be always needed. fees in L2 are in cents.
wish i could frame this quote
The point I wanted to make is when you regulate too much you may encourage the growth of things that are unregulatable. Gambling and alcohol come to mind. I don't know that that's what happened, hence the question. Phrasing it another way, are we post-WW I (over regulated) or post-WW II (got it right, but you'll never be perfect)?
I believe that these exchanges/crypto funds are borrowing USDT with interest payable in USD and principle payable in USDT. This would incentivise borrowers to buy USDT when the peg breaks to the down side thus keeping USDT pegged to the dollar.
I think it would be more accurate to say that USDT is not backed by anything. The loans are backed by commercial paper but if the borrowers are not fulfilling these debts in USD in reality there is no backing.
I presume the incentives that stop the peg breaking to the down side will only hold as long as the exchanges/crypto funds stay liquid. If there is a sustained mass exodus out of USDT I predict things will get ugly.
The crypto community just like to co-opt all sorts of terms from economy to give themselves a veneer of faux credibility.
So if you wanted to redeem your assets from a private chain, wouldn't those trades need to interact with the company's holdings, rather than the wider marketplace?
I don't think it really matters what the underlying assets are. Once the bank runs, it'll probably run dry. "Equity cushions" don't work. The banks own shares suck as a hedge against a run. Assets do hedge against a run. But, once a run is truly happening... it's unlikely to stop. Eventually reserves run out. Assets, credit, etc. I don't buy the idea of assets "calming" a run. In a collapse, the assets are only good as a currency to literally pay out exiting holders.
That said, it's possible to keep the game going a long time. Decades even, depending on the levels of greed and luck.
Stablecoins are still new. The derivatives death star is still not fully operational.
Suppose you start a company with 1,000 kg of gold. No other assets, no liabilities. Currently, that gold is worth about 60 million USD.
Now you issue 1,000,000 'stable' tokens. Each can be redeemed for one USD. For simplicity, assume that you just give them away.
At current gold prices, your tokens are 60x over-capitalised. If the gold price collapses 90%, your tokens are still 6x over-capitalised. That's what I mean by an equity cushion.
A 'run' is everyone trying to redeem their tokens. If that happens, you just sell one million dollars worth of gold, and pay that obligation. You are not running out of anything here.
In historical practice in eg Scotland, the banks that issued private bank notes there kept an equity cushion of about 30% around. That means for every 70 pounds in liabilities, they had 100 pounds of assets on their balance sheet. (For comparison, in our example of 60x over-capitalisation, that's an equity cushion of 59/60 = ~98%. Or for the 6x over-capitalisation, it's 5/6 = ~83%.)
It's called an equity cushion, because on a balance sheet the excess of assets shows up at equity.
That equity on the books is very different from the banks shares. It's the difference between 'book value' and 'market value'. See https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile... for a table with price-to-book-values (PBV). You can also look up that value for any specific firm online.
> I don't think it really matters what the underlying assets are. Once the bank runs, it'll probably run dry.
That might be true in the most trivial sense: if a bank has plenty of underlying assets, like our example that was 6-60x over-capitalised, there will never be a run. So the 'once the bank runs' condition would never happen.
---
Technical detail: I completely avoided the question of reserves here. Mostly, because it's not actually very interesting. The bank will keep some reserves on hand, so that they can pay out routine redemptions immediately. They would be well advanced to follow the role model of the Scottish banks: their notes came with an 'option clause'.
The 'option clause' says that the bank can either redeem notes right away at par, or they can opt to 'pay' with a super-senior IOU that accumulates a punitive interest rate but that the bank can choose to pay back any time.
That option gives the bank time to liquidate assets, if they ever ran out of reserves. The punitive interest rate re-assures customers that the bank would not abuse that privilege it willy-nilly.
(Of course, that mechanism only helps with illiquidity. It does not protect against insolvency. But that's fine: it's better for the economy when insolvent companies cease operations.)
Obviously providing some service to even .01% of people or whatever is valuable. But at this point Bitcoin is valued like Google which is used by tens of percents of all people.
https://trade.kraken.com/charts/KRAKEN:USDT-USD
There's very good reason to do a lot of KYC and set limits on people who want to get USD for their USDT. The last person who tried to operate such a business was locked up in a US prison for nearly a decade. Good motivation to not deal with retail customers and the slow burn US justice system don't you think?
https://www.nytimes.com/2012/10/25/us/liberty-dollar-creator...
What you want to happen to void this criticism would get the Tether execs put in prison. Though I guess that's what some people here secretly want anyway.
I mean, it's not like they have, multiple times, lied to people about their financial backing, actively messed around with KYC and AML laws, and have had multiple judgments open against them, or their affiliations with other entities like Bitfinex, when they really were one and the same.
Oh wait, they HAVE done ALL of that.
If there were a way to have enough transparency that we had smaller crashes more frequently it would probably help to limit the damage to those who can afford to lose it.
The truth is that you can only push a correction so far out. It will happen eventually and the farther out you push it the worse it will be.
So no, don't think there is any way to see the actual backing.
I don't have any loyalty to a coin, so I'd love it if someone could say something against them so I can weigh the risks appropriately. :)
The US is already very much ahead of most countries in regulating but not outright banning crypto. It's closer to banning it than let's say Switzerland. With the way they consider any sale a taxable event if US regulations were better for let's say the retail crypto trader as a whole they would all massively move to US regulated exchanges like Coinbase but that would remove a lot of "natural" circuit breakers like bots or manual arbits.
If you think that sounds a lot like 2008, well, yes it is. Fortunately this time it's not gone even close to under the radar. Remember 2008 was built on a much safer financial product. Like, there were a lot of good mortgages in America, and for a while there was a healthy market for packaging them up in bonds, it just turned very sour when the bad mortgages started making up the bulk of new bonds issued to meet huge demand and more was wrung from the sponge in derivative products at the same time. The idea of a collapse was unheard-of; the market had quietly undergone huge changes with only a dozen or something people worldwide really taking notice. We're in here with a thread every few days on HN talking about the possibility of a 2008. That's a difference.
Some of the discussion of crypto regulation is more about the "prudential" side i.e. talking about some crypto entities as if they're deposit-taking institutions (like retail aka commercial banks). That's quite recent, I think it's what you're referring to by "influx of dollars ... back into government" i.e. getting them on the Federal Reserve system, getting deposit insurance, and having to be so heavily scrutinised any crypto CEO would have a heart attack in the first 20 minutes. In 2008, some commercial banks got too far into mortgage securities, failed and got bailed out. Some commercial banks doing deposits & loans got bailed out, and some even got nationalised. That protection mostly just worked as planned. Given the fact of bailouts, the risk of bailouts had to be readjusted, of course, so the new laws were about what commercial banks couldn't invest in. Lehmann was of course an investment bank. The main message is that the root causes of the crisis were not perpetrated by commercial banks, so all the new regulation around them was about trimming the risk of bad securities turning into systemic meltdowns. That's a relevant thing to worry about today but note that actual banks are pretty well protected and not really allowed to freewheel like some did in 2008. If your normal bank is investing your deposits in crypto, I would be surprised.
People worry about Coinbase because it's seen as a kind of commercial bank but not regulated as one, so it (1) gets to freewheel on investments & capital requirements like no other commercial bank in the country, and (2) has no deposit protection for those who use it. So risky twice over. Frankly I don't think Coinbase could survive with its current business model as a regulated bank, same way Uber wouldn't survive if it were forced to compete without favour & VC dried up, so forcing Coinbase to to be might trigger the very collapse being protected against (by stopping it investing in all the schemes that make it money, killing those schemes and causing knock-on), and look kinda bad. It's a tricky one. Maybe if there's enough securities enforcement against the things that are keeping the party going, the fraudulent portions can gracefully collapse on their own and the government won't have to cop the blame for bringing on the death of a pretty popular industry by prudential regulation.
Isn't it more that the crypto + companies with cult followings + chinese real estate bubbles simply have not yet popped? These assets are big enough to cause a sell-off in other areas. Maybe they haven't dipped low enough yet, or maybe the dips are gradual enough to be absorbed.
The killer app for decentralized finance so far is sidestepping laws. No wonder it's a den of snakes.
That's an edge case that isn't a concern for Americans who are most enthusiastic about crypto and most involved in the crypto revolution. This is pointed out often and the crypto enthusiasts don't get it. Crypto for most of us is YAGNI
YAGNI! Because you ain't gonna need it https://www.youtube.com/watch?v=fPJohxVLJu0
There's no reasoning to be had here.
I don't buy the argument that crypto lives in a vacuum. People valuing that asset are part of the global economy.
The question is, is crypto really as valuable as the crypto exchange markets claim, and do companies assign face value to these assets, or do they account for the amount of risk they deserve?
Value is not a single concept. The value of something to me is different to to you. And for both of us it changes over time. Value cannot really be defined, let alone measured.
So we are stuck with prices. And prices are sort of connected to value. But the connection is very non linear.
We can know the price of crypto (or gold or shares or credit default swaps). But it's value is purely a matter of personal taste...
There are probably no 100% cash-backed stablecoins.
>Jeremy Allaire @jerallaire 3/ As of 12:00pm EST Friday, May 13, 2022, the USDC reserve consisted of $11.6 billion cash (22.9%), $39.0 billion U.S. Treasuries (77.1%), for a total of $50.6 billion (100%), and there were 50.6 billion USDC in circulation
Par value or market value? If it’s the former the current value is surely less.
I remember feeling the frog water warming up when I first heard how "wrapped ETH" was another required fee in-between... craziness.
They are equivalent to a crypto that the market has lost faith in (both are worth nothing).
[1] https://triple-a.io/crypto-ownership/
[2] https://fortunly.com/statistics/cryptocurrency-statistics/#g...
Ethereum IS ALREADY an ecosystem of programmable money APIs, and it works TODAY.
> Smart contracts should be considered self-funded bug-bounty platforms.
What do you think it true anti-fragility in a system? Something that is built form the ground-up in a regulatory too-big-to-fail environment, or something that starts from the wilderness, gets beaten down multiple times, yet grows back up stronger than before.
That is true antifragility.
Most Americans - particularly those who grew up before globalization - underestimate the scale of global markets. The U.S. is about 4% of the world's population and about 15% of global GDP. Anything that's Internet-based and has truly global appeal will be significantly larger than anything we would've been familiar with pre-globalization. Hell, the product I work on has about 3B users, 10x the population of the United States.
I just never actually see evidence that crypto has taken over global finance or is well on its way to doing so.
On ramp and off ramp to fiat will kill you - whether through transaction fees or through slippage.
Let's say I am in US with 10k USD cash and I want a family in Ukraine (let's say somewhere safeish like Lviv) to have that 10k USD in hand.
Crypto is going to be more expensive than Western Union/Transferwise/SEPA/regular bank transfer/courier through friends.
That is the problem with crypto transfers - sure most crypto coins can be transferred cheaply.
However that "cheapness" only works as long as you stay in crypto verse.
Onramp via onjuno, convert to USDC, send to your polygon wallet, convert to jEUR on Jarvis, send jEUR to friends wallet, they offramp jEUR with 0 fees to their IBAN bank account in ukraine via mt.Pelerin.
You only pay the polygon token transfer fees here.
Times have changed since 2010!
> Anchor offers a principal-protected stablecoin savings product that pays depositors a stable interest rate. It achieves this by stabilizing the deposit interest rate with block rewards accruing to assets that are used to borrow stablecoins.
source: https://www.anchorprotocol.com/docs/anchor-v1.1.pdf
You literally cannot lose! And the gains are in a stablecoin (UST) so you don't even have to deal with the volitality of crypto
https://www.coindesk.com/price/terrausd/
Tradfi doesn't offer these kind of risk-free rates because they are greedy vampires, unlike your friendly smart defi devs.
...who wants to tell him?
https://fortune.com/2022/05/19/luna-terrausd-ust-algorithmic...
Zelle is between US banks only. some people live outside of the US, surprisingly.
So, for EU (23 countries) it's not a problem either.
Sending money between banks is both a technical and a regulatory issue (and crypto is discovering why regulations exist at great cost to crypto users). However, "instant money transfer between banks" is not an unsolved issue.
However, USDC is issued by a consortium spear headed by Coinbase which is a publicly traded US company that has a wealth of regulatory compliance hoops they jump through, and have routine independent auditors track the reserves of USDC.
But youre right in that there's elements of trust that you need to place.
How is that so? Do you also think that keeping cash under a mattress is safer that keeping it in a bank?
It's pretty simple risk logic.
Further, keeping funds in a non-custodial wallet entails a huge operational risk that you're glossing over entirely.
The OP was about the safety of "holding" fiat on a single exchange vs USDC on your wallet.
Your point about non-custodial wallet risk is a misonemer as this is purely about can you trust yourself more than trust an exchange.
And that's just in my neck of the woods, I'm sure I'm forgetting more.
it is like asking “Why Does PayPal Exist When We Have iBAN?” obviously some subset of the globe finds it more useful than iBAN transfers for their needs (like setting up an online shop).
God that whole process sounds painful.
In the Uk we would just transfer the money across with a bank transfer as all banks support instant transfers which have no fees (including between banks).
I almost typed audit-like. But I remembered they've pulled that shit before. "Attestations of balances" mean fuck-all when even back when they were denying the links between Bitfinex and Tether, the same people were countersigning loans between the two for both parties.
Oh, they did claim that they had had an audit done. But they couldn't release it to the public "because it was in Mandarin".
I very very very much doubt that 11-12% cash is in anyone's hand.
Tether isn't the only stablecoin. USDC, GUSD, DAI, LUSD, etc all have either attestations / audit reports (that are actually legitimate) or are overcollateralized with assets that can be seen on chain.
https://www.cnn.com/2022/04/14/politics/fbi-north-korea-hack...
Yes, it's costly to build an anti-fragile system. This is not a surprise to anyone.
Our current monetary system is not anti-fragile. We saw it in 2008. Because of these regulation safeguards you mention, moral hazard appeared and true safety has never been achieved.
Now to be clear, I am not saying this is the only way to build a monetary system. It's just one way.
>often the money is gone to North Korea. another flavored, subjective take. You link to one such case.
You are using multiple logical fallacies in your comment, I would re-evaluate what you actually want to discuss/learn and then respond accordingly. Currently it just seems like you are angry at something.
The only thing I used this crypto for is to sell it later (and gain something like 15 euro profit). Am I a user? By your statistics, still yes. Do I even matter? Still no.
Additionally this use case (trade crypto hoping for gains in actual fiat money) is the absolute vast majority of what crypto is used for. Is this replacing traditional finance? Ahahahaha, no. AliPay has a bigger impact on "traditional finance" than all of crypto now or ever.
when i'm not lp'ing, i see no reason to switch to usd so long as us-based attestations continue to be solid. the opportunity cost of being in usd on coinbase is missing lucrative nft deals.
If actual money is not involved, for example I trade my X with you for your Y, then it gets quite interesting. In the US there are generally two ways that tax law handles this. I don't know how far along the law is with fitting all the various cryptocurrency things into this.
One way is to treat it for tax purposes as if I sold X at its fair market value and you sold Y at its fair market value, and then I bought Y and you bought X. I'm taxes on my gains from that imputed sale, and take that price as my basis in Y. Similar for you.
The other way to treat it is as a non-realization event, putting off any tax consequences until I actually sell Y or trade it for something that gets handled as an imputed sale. My basis in Y is the same as the basis I had in X.
What determines which of these applies is whether or not the exchange is a "like-kind exchange". If the exchange is a like-kind exchange it gets the "swap basis" approach. If it is not like-kind it gets the "imputed sale" approach.
Sometimes this is clear cut. Suppose I bought an old guitar at garage sale 50 years ago for a couple dollars that is nowadays a valuable vintage guitar worth $100k, and 50 years ago you bought a new comic book that is now worth $100k to collectors.
If we trade, that would be an imputed sale because guitars and comic books are not like-kind.
When things are in the same category it gets much harder, and the case law is full of courts having to go deeply into philosophical questions of what makes things like-kind.
Say we trade paintings. Are all paintings like-kind? Or would a Monet not be like-kind with a Picasso because they are different artists and/or different styles? Is a male horse like kind with a female horse? Is an electric guitar like kind with an acoustic guitar? Is a comic book that is valuable because of the first appearance of a character like-kind with a comic book that is valuable because of who inked it?
In the spirit of US law (since crypto is t precisely classified), if you are a professional trader, you only pay taxes on your overall annual trading profits, not each individual trade. Same as how a a retail store doesn't have gains and losses on every individual item in inventory.
> explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency.[0]
Also, every crypto tax software does exactly what you say is not required. A bit of signal there.
[0] https://www.irs.gov/individuals/international-taxpayers/freq...
https://www.irs.gov/taxtopics/tc429
If you use one of the various mark-to-market rules, then you may well “only pay taxes on your overall annual trading profits”, but you pay it every year on unrealized gains too. Choose your poison.
If you are sending a fair bit of money, I very much doubt that.
I think the point they're trying to make is the current (lack of?) Global financial system is a joke.
Crypto is enabling something that has the value and utility of "money" with interconnectedness and simplicity of the Internet. How does that not click in ppls minds?
For the 7Billion ppl on earth, easy low fee international money transfers are a joke. And in this context low fee is 1-3%.
I can send $1B USDC for 60 cents using crypto.
And before anyone says "but you need to have crypto and a wallet and an exchange and a ..."
The same is true about email. You need to have a computer, and internet, and a email provider/server.
We take for granted the things that are already engraved in our lives, but it wasn't that long ago when someone could make the same argument about snail mail/fax vs email.
Secondly, no government is giving up control of their economy to Crypto miners and the "global financial system". It will not happen, it will be regulated until it is controlled (a state owned coin effectively). I certainly don't want anonymous miners or the whims of Crypto casino controlling the economy in the country i live.
At least with the current system I can vote for a government that has control of it's economic policy, even if that vote has minimal effect. Some control is better than none.
... for now
We've seen lots of the crypto exchanges fail to make exchanges for hours to days when things get hot
Official stock exchanges have a standard practice of halting trading in stocks when unusual events happen. Sometimes this cools the market and things get back to normal, sometimes the thing has gone to zero when
If Tether crashes to $0.01, I'd be a bit surprised if it didn't stop being convertible for a significant time.
the point is not to be a system that beats a single service for sending GBP from A to B in the UK. the point is a system that has a variety of uses and applications accessible by anybody, regardless of which country the user resides in.
even in countries with good banking like UK, many e-commerce companies will still choose Stripe VISA and PayPal to reach customers outside the UK and integrate a payment processor API. an online shop could offer crypto as a payment mechanism if they wanted to avoid using these companies and if it met their needs.
... so suggest that they use crypto, which for many, comes with an onerous fee too, to be timely. Your "buy from the shop" example better not be urgent, otherwise you're paying gas for someone to verify it, or it sits in the queue.
though eventually as these networks scale most users will be transacting and interacting with L2 rather than L1. fees in L2 are in cents on the dollar, transaction finality is often very quick, and security assumptions are typically good enough for most use cases.
https://www.useweb3.xyz/gas?source=ethgas.watch&referrer=eth...
The UK example just shows that a decentralised blockchain approach isn’t required to meet the use case you are describing - in fact it’s worse for the described use case in almost every metric.
Having a different, worse alternative isn’t exactly something to shout about.
whether it is better or worse for each of those depends who you ask and what their goals are, and also in what year you ask. ten years ago it was inconceivable to do these things with crypto, ten years from now it may be that these systems will continue to improve in terms of fees, privacy, scalability and user experience. consider the current cohort of users to be beta testers who are taking on additional risk and technical burden while the system continues to improve.
the EU and UK banking system is far better than the US but still it is not a global payment processor network and API, hence why the web even in EU and UK relies on Stripe, visa, Apple Pay and PayPal and their corporate and centralized infrastructures. building an alternative infra that is not based on a single corporate entity is net positive for the world long term
Crypto bros really have to drop the idea that it's going mainstream by allowing people to transfer money. Crypto is NOT easier or safer for anyone than a faster payment in the EU/UK. Unless you are doing something illegal.
> was in the destination account the next day
that’s probably CHAPS as well then as FP is within 2 hours. still a a lot slower than crypto’s 30-60 seconds, and extremely opaque process that could have taken additional days without any information to the customer.
but undoubtedly, both CHAPS and FP are very fast and inexpensive, and some of the best systems in the world for interbank transfers. unfortunately it only works from one UK bank to another UK bank, which makes up a small portion of global population. even within UK you will often have need to pay somebody who doesn’t have a UK bank.
and yes UK faster payments system is great but it is not yet the backbone of global payment processing. the world is larger than the UK and as we continue to connect globally online and become more digitally nomadic there will be more need to pay users outside of a UK-to-UK bank system.
Being an economist does not mean you automatically know how Circle (a payments company based in the US) issues the ERC-20 token that is called "USDC", or how the redemptions for that work.
You can read about it here: https://www.circle.com/en/usdc and here https://www.centre.io/usdc
You can see centralized and decentralized exchanges with USDC liquidity here: https://www.coingecko.com/en/coins/usd-coin#markets
Look, don't try derail the conversation. Your claim is that in the event that the issuer of USDC would fail to redeem the tokens, you could still redeem them elsewhere. Explain how that would work.
Sorry for the tone, internet discussion can sometimes spin off quite fast just because its a pseudonymous environment. Have a great day!
https://www.ato.gov.au/General/Other-languages/In-detail/Inf...
But be careful! Actually read what your local tax office puts out. Assume nothing: it can be very easy to get yourself in to trouble.
For example:
- You buy BTC @ $1
- You exchange BTC @ $11 for $RANDOM
- You just made $10 :-) and you owe the taxman ~$3 (if you're in Australia)
- $RANDOM falls to ~$0
- So you didn't actually make a material profit
- But you still owe the taxman $3! (though you might be able to claim some sort of offset on your material loss of $RANDOM; IANAA)
- Now multiply all amounts by 10,000 and be sad
It's analogous to selling any asset. You buy gold, you sell gold at a profit and buy silver. You owe tax on the sale of the gold; you assume you'll pay this from the value you now hold in silver. The price of silver plummets. You still owe the tax on the sale of the gold.
From what I understand, you have to actually realize your losses/gains if you want to claim tax on them. So if $RANDOM drops to ~$0 then you can't use it for capital losses until you trade it to another crypto (or cash). You could probably just trade $RANDOM to something else and then back to realize the losses.
As another Australian you should really speak to an accountant if you ain't going to claim that massive loss because this is either comically wrong or intentionally misleading advice.
It's just like any other capital gains event and very simple to grok.
In my country it is not taxable, only exchange to fiat currency is. (and this is explicitly mentioned).
If you wait you loose tax returns for the amount you invested in crypto (with each year you have it halved). Basically this is the same as in case of stock market. You don't pay taxes until you sell stock. And here stock is whole crypto market.
Example:
Sweden taxes your gains when you transact a cryptocurrency holding, also when you exchange from one cryptocurrency to another. [1]
Same for Denmark [2].
Check your relevant tax legislation for your local rules.
[1] https://skatteverket.se/privat/skatter/vardepapper/andratill...
There are many true horror stories of amateur traders going from in the green to losing more than they own. I don't know any place where what you describe is legal.
If this is your strategy (as in method to cheat with taxes) now is probably a good time to calculate how much you owe and put that aside into something less volatile, not to accidentally ruin your life.
I wonder how many other jokers are accidentally conducting life-ruining levels of tax fraud.
I might be wrong, but I believe the IRS views every transaction as a taxable event. Crypto -> crypto included.
Next it will be "but crypto will let you monetize your private data". Yeah no, it won't.
Say this is true, how amazing would that be for countries without existing banking infrastructure to easily access it?
This access is fast and cheap enough for unbanked people to access it.
These unbanked people would also have access to things like smartphones and computers because crypto doesn't exist in real world.
And yet those countries would not have banking infrastructure.
Nice. Nice.
Any such countries exist?
And that’s before we get to stuff like Luna, where the decentralised authorities took the centralised action of halting the chain entirely
Like them or hate them, I'm intrigued where the centralized line in the sand was crossed
But not so handy if you are an oligarch (or a dissident)
The validators of the Terra chain halted it. There's no switch that Kwon as an individual can flip.
There's no built-in way to verify that minted Tether can be verified to be backed. If there were, firstly there'd be no questions about the backing at all, it's all public on the blockchain, and second, it would revolutionary and actually useful to have a smart contract that can track real assets and not let them vanish from under it.
When we say Putin can press the red button obviously we don't mean a physical red button pressed by Putin himself. But he is the one coordinating.
How would paying in crypto avoid app store fees? Presumably you mean the Apple / Google App Stores, when Apple or Google will still want to take their 30%? How do you bypass that?
> purchasing digital assets like art
Who is using Crypto to purchase art? (Note: NFTs are not purchasing Art, you own some metadata that refers to a piece of art publicly hosted somewhere else). I can certinaly use my fiat currency to purchase both the rights to artworks, to purchase actual physical art pieces without having to jump through payment hoops, and even to purchase on-demand streaming of performance art. I cant really do any of that with Crypto without turning it back into regular fiat currency first (without searching out the tiny amount of places that accept crypto directly, but even then - whats the advantage to just paying in fiat?).
I mean I'm entirely unconvinced there is a compelling real use-case in anything listed here.
> ten years ago it was inconceivable to do these things with crypto, ten years from now it may be that these systems will continue to improve in terms of fees, privacy, scalability and user experience.
IMO if a technology is actually transformative, it will find a valid use case quicker than this. The only real use-cases I have seen seem to have been creating ponzi-schemes, effectively laundering money and speculative gambling on the price.
> you can just use cash?
this question sorta gets at one of the primary values of crypto, that it’s peer to peer, transferred non custodially and pseudonymous. many countries are moving away from cash into digital only forms of transactions, and having a system that upholds peer to peer transactions can be useful.
replace abortion in that example with other legally questionable actions depending on your state. maybe buying marijuana or psilocybin for medical purposes, paying somebody like Edward Snowden for giving a lecture, or purchasing a VPN subscription. for citizens who are rebelling against their state in some way, such as abortion rights protests, or climate activism like extinction rebellion, or a person that lives in a less democratic regime, it may be desirable to use certain crypto systems to mitigate state oversight.
https://www.nytimes.com/2022/05/14/style/abortion-crypto-don...
The point is it's not buying art though.
I can sell you an NFT of my house, and promise to only ever mint one NFT of my house, but that's different to selling you my house.
Actually, the Putin analogy is basically exactly what happens. Putin pushed the "red button" and everything else is a direct consequence.
That's not how it works with validator based PoS chains. Absolutely Kwon can "suggest" to do something, but has no omnipotent influence or control unlike your Putin analogy.
Validators are absolutely free to discuss, debate, and agree to whatever they think is best. Additionally, the validators in the active set with this power are put there mostly by the community of token holders.
> In fact, the requirement that you need good internet speed for crypto to run locally means it's even harder for a place without infrastructure to participate.
Internet costs less than $2 for monthly unlimited data.
You can find 300-500 Mbps broadband in small towns of country where you won't find roads or basic hospitals.
You have 1 share of Stock A and I have 1 share of Stock B. We both paid 1 USD for each of our different stocks.
Now I want Stock A and you want Stock B, so we'll trade with each other, and lucky us, both stocks are now valued at 2 USD per share.
After performing this trade, ask yourself these questions (from my perspective, or swap A and B for yours, it's the same either way):
* Have I held Stock B?
* What did I pay for Stock B?
* Do I now hold Stock B?
* Why not?
* What did I sell it for?
* And how much was that valued?
* So then how much did I gain?
* How much is owed in tax?
Unless your local tax law specifies "cashing out" not only as a taxable event, but the only taxable event, which I assure you it does not for stocks, the correct answers are as below. The equivalent to what you seem to describe for crypto would be transferring money in and out of the exchange where you trade stocks, and it would be ludicrous if this was the taxable event, which it isn't - but this is a common misconception among amateur crypto traders.
* I did hold 1 Stock B.
* I paid 1 USD for it.
* I don't hold it anymore.
* My dog did not eat it, so I must have sold it, which I did.
* I sold it for 1 Stock A and it was valued at 2 USD at the time of the transaction.
* 1 USD of value was gained at the time I sold from the time I bought.
* I owe a percentage of the 1 USD of value gained, depending on the capital gains tax rate, which differs.
I'd ask the local tax office anonymously. Not knowing doesn't fly as an excuse, everyone says that and it doesn't matter if it's true. Where is this place, if you don't mind?
Bonus question, what if we trade 1 DOGE for 1 Stock C? Is that different? What about 1 DOGE for 1 USD? What about 1 DOGE for 1 token backed by 1 USD? What about 1 Stock C for 1 token backed by 1 USD? Somehow it seems to get more complicated with "cashing out" laws, not less. Also I don't believe they exist, but I'd like to know too if they do anywhere.
Which country are you talking about here?
That conversion is the sale of property. The IRS doesn't care whether you receive payment for your BTC in DOGE, USD, or corn futures; you divested funds from BTC, and the difference between what the BTC was worth at the time of acquisition VS sale is a capital gain or loss.
So it seems from the outside that stablecoins exist primarily to take advantage of grey areas in taxation legislation - and possibly also KYC/AML legislation - which allow investors in certain jurisdictions to avoid taxable events which would otherwise occur when trading.
Building a business model on dodging taxes isn't a great look, is it?
banking is a radically different design philosophy than a protocol where all addresses and transactions are treated equally regardless of wealth, class, and other social factors like race and family connections.
"Oh, that's not a useful system, because there are limits."
"Well, when you get near those limits the bank starts to work with you so those are still not roadblocks."
"Oh, well that's just because they prefer the rich to the poor."
No, you miss the point. At lower amounts, it's a non-issue because you're not hitting limits. At the point where you are hitting limits, it's facilitated to smooth those things. End result is that there should be few issues, regardless of amounts.
But actually smart phones and internet access is surprisingly high in sub Saharan africa where they primarily still use SMS trading.
And yes, crypto is starting to catch on out there as an alternative.
Keyword: some.
Also, banking over SMS was a thing long before crypto.
> But actually smart phones and internet access is surprisingly high in sub Saharan africa where they primarily still use SMS trading.
Then it will be swallowed by something smilar to AliPay. Not by crypto.
I think there's a lot of value in being slightly harder to oppress by the political classes or arse-covering and uncaring bank managers.
You can have some money in cash, some amount in real estate, gold, crypto...
Depends on how much you have etc. But it's not a "everything has to be crypto" or nothing may.
It's not just the rampantly emotional and repetivie crypto hate on HN that's absurd, it's also the sheer narrow follishness of so many of the arguments that's rather galling.
Apart from that, with a decentralised system it's way more complicated for others (!) to fuck up and lock your bank accounts.
But to be frank: I found the idea intriguing, never was invested at all. I am also not greedy and apart from taxes for my house I could sustain myself for a couple of months, maybe even 1-2 years without access to my bank accounts
most private clients are getting cushy services such as better lending and interest rates, faster payment times, better wealth management services.
but I digress. the banks are useful obviously, despite their flaws, and in the EU and UK the banks tend to be some of the best in the world. this is not to say banks as a whole are useless, but banking systems on average across the globe have many aspects that fall short of our ideals. crypto does not fill all of those, and has plenty of flaws and issues as well, but it does excel in certain areas and at the very least provide a competition that forces us to more closely consider the pitfalls of our typical financial structures.
So, you buy 100 USDC for $100 - you report that in your tax information (for use in following years tax deduction).
Then some time ago, you sell 110 USDC for $120, you pay tax for the amount $120 - $100 (unless the $100 was used year earlier, then you can use just $50 as a cost).
If you didn't report any costs (meaning buying crypto) you pay tax for the whole $120 amount.
> I use these to buy some crypto-currency. 6 months later, I sell the crypto-currency for USDC, making a 10% profit. I
In every tax jurisdiction I know of in the world, this is a taxable transaction.
No, each coin is equivalent to a stock. A transaction involving swapping one coin to another is a taxable event in every country I'm aware of.
Example for Poland: http://lexplorers.pl/en/polish-taxation-rules-virtual-curren...
German law is even better, you don't pay any tax for selling digital currencies if you hold it for at least a year.
> German law is even better, you don't pay any tax for selling digital currencies if you hold it for at least a year.
That's absolutely not the case - gains are treated as income if held over a year, not tax free. Coinbase has a really solid article on it [0]
[0] https://help.coinbase.com/en/coinbase/taxes-reports-and-fina...
SMS is less useful than a lot of things. It doesn't mean that crypto is the solution, or that it won't get replaced by something more useful.
As for "cash on-ramps", it just shows that there's nothing inherently useful in crypto that can't be solved by other means. These are centralised points that people explicitly trust to handle their money. It's nothing new, and once societies stabilise they inevitably re-discover/re-implement all the rules and regulations you're so dismissive of (such as KYC rules).
> If you look into this, such as the Gates Foundations research on payments and remittance in bankless societies, you’d see that crypto
Let's see what Bill Gates himself says about crypto: https://www.reddit.com/r/IAmA/comments/ut7yj0/im_bill_gates_...
As for Poland see Google translate page of official guidance from goverment: https://www-podatki-gov-pl.translate.goog/pit/rozliczenie-ze...
I poked around on Google and it looks like it is similar to France where crypto swap is also not taxable. (but I don't pay taxes there so it might be more complicated).
edit: I see you're asking the same question as me! Sorry!