
For every $1 of Bitcoin converted into cash, up to $25k of wealth is destroyed - paulpauper
https://greyenlightenment.com/for-every-1-of-bitcoin-converted-into-cash-up-to-25000-of-paper-wealth-is-destroyed/
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panarky
This is horseshit analysis of an intriguing concept.

Markets create wealth out of thin air and can destroy wealth with nothing to
show for it.

A lot of analysis of cryptocurrencies, stock markets and commodities wrongly
assumes that if an asset's value increases $1 billion, then $1 billion more
was purchased than sold.

But assets aren't bank accounts that store flows of money. Stuff is only worth
what people will trade for it, so markets routinely create and destroy wealth
independent of the money flows.

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thisisit
Irrespective of whether people agree to the analysis or not, it is interesting
that most replies focus on wealth destruction. All the while not checking the
actual heading, which is:

"for every $1 of Bitcoin converted into cash, up to $25,000 _of paper wealth_
is destroyed"

So, the blog writer is aware of what wealth is lost and it might not be
actual.

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loceng
Sorry but how is the wealth destroyed exactly? That wealth isn't destroyed,
it's transferred to the earlier adopters who sold the crypto-asset for legal
tender/currency. It's true that it's removed from the crypto-assets ecosystem,
the losses falling on those at the end of the Pyramid-Ponzi schemes.

~~~
loceng
Thanks for the 2 downvotes strangers - curious why and what vested interest
you likely have in crypto-assets structured as Pyramid-Ponzi schemes. Would
love to get a qualitative response instead of quantitative downvotes, the
whole point of conversation..

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blunte
Extrapolations upon extrapolations proves nothing.

Furthermore, the author selects moments in time to illustrate losses. But take
a one year or larger view, and one could argue that an enormous amount of
wealth was created overall.

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jsjohnst
Is there any actual proveable science or math behind this post, or did the
author just pull these numbers out their arse? I’m leaning towards the latter,
but I’m hoping someone more knowledgeable here can confirm.

~~~
asaph
"latter", not "later"

~~~
asaph
The mistake was corrected. Please stop punishing me with downvotes.

~~~
jsjohnst
> Please don't comment about the voting on comments. It never does any good,
> and it makes boring reading.

Also, you had downvotes before I fixed my typo (thanks btw!), so I doubt that
had anything to do with it.

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dumbfounder
It isn't destroyed, it is a temporary price change on that exchange. What a
terrible analysis.

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Grangar
Yes, this is how markets work.

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ve55
This entire post reads as incorrect and misleading to me. Here are some
examples that stood out:

>Based on the order book, instantly selling 100 Bitcoin ($1,000,000) on GDAX
will cause the price to instantly fall about 1%.

This is very misleading. Although the price would be 1% lower for a brief
moment, it would be brought back up by more orders from buyers and arbitrage
bots. As sellers market sell into the order book, additional orders are
placed, both on the buy and sell side. You cannot crash bitcoin that easily,
but you can absolutely flash crash it and lose your money like an idiot as it
goes back up instantly.

>GDAX is the biggest exchange by liquidity as measured by market order book
depth.

This is very misleading. If you lower the price on one, the others need to
follow, and arbitrage bots will assist in that. GDAX is nowhere near #1 on
volume as you can see on
[https://coinmarketcap.com/exchanges/volume/24-hour/](https://coinmarketcap.com/exchanges/volume/24-hour/).
The author mentions this later however seems to conclude that it will only
result in the price going down, instead of up.

>The recent $400 million Bitcoin purchase was likely done off an exchange.

There's no evidence that this buy actually occurred. People just noticed a
wallet had many bitcoins sent to it, and news outlets decided to report it as
'Anonymous Billionaire Stocks up on Bitcoin', because that's what news outlets
do.

>Overall, to reiterate, no one is making money with crypto currency anymore

This is obviously false. For every buyer there is a seller. Plenty of traders
have had large short positions for a large duration of the recent crashes and
have profited substantially. As far as Bitcoin goes, it's up 100% from where
it was just awhile ago, at the bottom of this most recent crash. I'm not
defending it as a revolutionary investment in 2018, but a LOT of people are
making money here and will continue to do so.

>Maybe I’m being too hard on him, but analysts need to be held accountable for
being wrong.

How would you prefer to hold them accountable? No analyst can be correct all
of the time, it's unreasonable to punish them for their opinion or prediction
being incorrect. No one is forced to invest based off of their advice.

The price of cryptocurrencies can be manipulated but not this easily. It
requires substantial amounts of money. The largest buys and sells are OTC
which don't affect the orderbooks. Just today Bitcoin has had over 6 BILLION
USD in volume ([https://coinmarketcap.com/](https://coinmarketcap.com/)). Your
1 million USD does not matter and the market doesn't care about it. I
understand the author has some negative sentiment towards Bitcoin either
becuase he lost money on it or he's upset at others that made money on it or
are otherwise too far on the hype train, but this post is still very
misleading or otherwise just false.

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anonyx69
FUD much?

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awptimus
someone failed thinking 101

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zajd
this is good for bitcoin

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edmanet
Still hodling here

