# What is Celsius?



## Brendan Burgess

I am trying to get my head around the role of this company? 

Did people lend them their Bitcoin and get 17% interest? 

And they didn't think that was too good to be true? 

What did Celsius do with the coins they borrowed? 

Brendan


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## Brendan Burgess

I hadn't realised that it had caused other companies to freeze withdrawals as well

*Celsius is hurting the broader crypto market*​Celsius’s decision is rippling throughout the ailing crypto market. On June 13, the crypto exchange Binance halted bitcoin withdrawals on the heels of the Celsius news, and the prices of Bitcoin and Ether fell 11% and 13% respectively in the past day amid an industry-wide sell-off.


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## tecate

Ground covered before. Celsius is a centralised lending platform in the crypto space. That this could happen has long since been flagged within crypto. If people decide that the risk is worthwhile, that's their own free choice. Caitlin Long has been out in front of this since a couple of years already - stating repeatedly that it was a car crash waiting to happen.

__ https://twitter.com/i/web/status/1519823126153994240



Brendan Burgess said:


> I hadn't realised that it had caused other companies to freeze withdrawals as well



Not caused in the way that you're thinking or the way that the FT puts it. Binance suspended bitcoin withdrawals for 3.5 hours due to a technical issue relative to the confirmation of lower cost transactions on the bitcoin network. During that 3.5 hours other networks ( Ethereum or Binance's BNB blockchain) could have been used to withdraw the equivalent value of Bitcoin held on the platform if needed.


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## Duke of Marmalade

What a load of nonsense she talks.  Bitcoin is an 1.8% inflationary asset, she hasn’t a clue.  The price of latte in bitcoin has increased 300% in 10 months and that’s about the only commodity that trades in bitcoin.


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## tecate

Duke of Marmalade said:


> What a load of nonsense she talks.  Bitcoin is an 1.8% inflationary asset, she hasn’t a clue.  The price of latte in bitcoin has increased 300% in 10 months and that’s about the only commodity that trades in bitcoin.


Not going to bother - I've seen this nonsense from you before Duke. You know well that she's talking about the inbuilt monetary policy of Bitcoin that right now leaves it with an inflation rate of 1.8%.
You can have at it and go off and talk about something entirely different - with the cherry picked timeframes (I see that 10 months is the metric on this occasion :-D ) That's an entirely different conversation. As regards Long's statement, she's 100% accurate.


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## DazedInPontoon

Brendan Burgess said:


> Did people lend them their Bitcoin and get 17% interest?
> 
> And they didn't think that was too good to be true?


yup, and they've not been the only place offering rates that seemed too good to be true. Look at blockfi.com for example, from right on their homepage:  
"Your crypto can earn up to 15% APY with a BlockFi Interest Account (BIA). Interest accrues daily and is paid monthly. "


Brendan Burgess said:


> What did Celsius do with the coins they borrowed?


Not sure, but at least some of them are loaning it out.

Good post by Tecate above and like him I gave stuff like this a wide berth - not your keys not your coins. Once again the bear market will cleanse the ecosystem. 

Agree that the 1.8% must refer to the rate at which bitcoin circulating supply is increasing, it's actually been 1.77% over the past year to date if we want to be precise


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## Brendan Burgess

tecate said:


> You know well that she's talking about the inbuilt monetary policy of Bitcoin that right now leaves it with an inflation rate of 1.8%.



tecate - that doesn't make any sense? 

She, and you, seem to be confused about what inflation is.  Or else, you are redefining it. 









						What Is Inflation?
					

Inflation is a decrease in the purchasing power of money, reflected in a general increase in the prices of goods and services in an economy.




					www.investopedia.com
				




_Inflation is the decline of purchasing power of a given currency over time_

She seems to think it's the increase in the supply of a currency? 

The purchasing power of Bitcoin has been very volatile. 

You can buy less with Bitcoin today than you could have a year ago. But you can buy more with it than you could have 3 years ago. 

So deflation followed by inflation. 

Brendan


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## Brendan Burgess

Back to my original question. 

What is Celsius? 

I gather that people lend Celsius their Bitcoins and other cryptos.

What does Celsius do with them?  

Brendan


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## tecate

@Brendan Burgess : It's entirely clear what Caitlin Long was referring to - as DiP outlined in his post, she was referring to the inflation rate relative to the circulatory supply of bitcoin - in that context exclusively. To talk about it in another context is a different discussion entirely - and one that has been had countless times. I know that you're not a fan of discussions being repeated or going off topic so I'm sure you'll welcome discussion along the lines of what she was actually referring to ( it being central to the whole Celsius debacle).

And if we actually consider what she said without looking for the slightest, remote, embittered manner to declare her as clueless, she makes a very relevant point as it applies to the argument that there's no need to go looking for a yield on top of Bitcoin.



Brendan Burgess said:


> What is Celsius?



I thought I had answered that. Celsius is a centralised lending platform in the cryptocurrency space.



Brendan Burgess said:


> What does Celsius do with them?


One of two things: It uses those deposits to finance collateralised loans. It also shuffles its way far out the risk curve into risky lending and staking protocols and money markets in DeFi (or crypto assets or derivatives that proved risky due to a lack of liquidity). It was one of seven account holders that are blamed for starting the run on the Terra stablecoin a couple of weeks back.
Many have expressed the view that the choices the entity made in terms of investing depositors' funds were amateur and that with the right team, this need not happen. However, this outcome was always going to be a possibility and if it wasn't Celsius, it would have been one of the others ( BlockFi, Abra, Nexo, etc.).
It's not a great outcome to have depositors burnt in this way but in no way would it be reasonable for them to claim that they were not aware of the risks. For anyone who has spent more than 2 minutes in the space, it has been flagged by all and sundry as a risk. In the short term, it's painful for them and for the space as a whole. In the longer term, it may serve to dampen down the casino aspect of DeFi. As for Bitcoin, exactly because of the rationale that Long sets out, it will only serve to strengthen it at the cost of some of these casino coins and protocols developed to provide unsustainable yields.


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## ClubMan

tecate said:


> One of two things: It uses those deposits to finance collateralised loans. It also shuffles its way far out the risk curve into risky lending and staking protocols and money markets in DeFi (or crypto assets or derivatives that proved risky due to a lack of liquidity).


Can you, or anybody else, explain that in plain English please?


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## tecate

ClubMan said:


> Can you, or anybody else, explain that in plain English please?


I'll give it a go. (And you did ask - so you can only blame yourself! ).

Collateralised loans: As well as offering yield on deposits, Celsius clients can avail of collateralised loans. Someone may have a holding of Bitcoin or Ethereum (or other digital asset). They may not want to sell it but at the same time, they may want to borrow another asset - lets say a USD stablecoin - for a time, on the back of that collateral.

DeFi: When I have referred to DeFi in this thread, I'm referring to the emergence of a whole host of decentralized  money markets and protocols that have developed largely around Ethereum rather than Bitcoin.

Staking: On certain blockchains, coins are 'staked' as part of the governance model and security model for the blockchain. Through staking, a holder of a cryptocurrency commits their tokens to support the network and confirm/validate transactions. The tokenomics of the cryptocurrency have been designed so that they get a yield or reward for doing so.

So I referred to Celsius investing in a staking protocol. On the Ethereum blockchain, the network is in transition as it goes about implementing major fundamental changes to the network. There are two networks running in effect. ETH is being 'staked' on the new network - and once staked, it cannot be accessed until this project is completed. So if you have staked Ethereum, then it's not a liquid asset right now. To offer a solution to this, a derivative product called staked eth ( stETH ) was created. In principal, 1x  stETH = 1 x ETH.  This is (supposedly) liquid and can be traded freely. Following the collapse of the UST stablecoin last month, many actors in the space reassessed what they were invested in - with renewed focus on the importance of trading digital assets that are liquid and can be bought and sold with ease. Consequently, liquidity in the pools or markets where stETH is traded dried up and stETH depegged from ETH. Celsius is a holder - on the basis that it collects or benefits from the yield that is currently offered on staked Ethereum. However, it now finds that its an outsized holder of this derivative in a market where liquidity has dried up.


There is a complex web of other markets and protocols but lets stop with the example above - as they don't get any easier to explain. Also, the example I've given is pertinent to the Celsius debacle as it's the company's stETH position that is central to its current difficulties (although it has others).

If there's anything that's not clear from the explanation above, let me know and I'll try and clarify it.

Celsius may have been insolvent for a while already or it may simply have boxed itself into illiquid positions with the result that it currently can't meet redemptions.


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## Duke of Marmalade

There is no doubt whatsoever what Caitlin was talking about.  She said “inflation is the increase on the number of bitcoins available”. @DazedInPontoon says she “must” mean this, no “must” about it, she said so.
But she called this “inflation“ and unbelievably compared it to the 8-9% inflation we are currently seeing in fiat. Brendan has given the link to the Investopedia definition of “inflation“, but sure we all knew that anyway.  So does Caitlin but still she spouts cultist nonsense as we witness what Professor Roubini has termed the crypto death spiral.


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## Brendan Burgess

ClubMan said:


> Can you, or anybody else, explain that in plain English please?


Hi Clubman

This is what I think it means.

Celsius takes deposits in cryptocurrencies  - it pays 17% interest. 

It lends these to some customers  - I can't figure out how much it charges. I saw very low APRs somewhere.

It also invests those cryptos in risky projects. 

Now it's not in a position to refund the deposits. 

Brendan


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## Brendan Burgess

Agree with Duke

She described the increase in bitcoins as "inflation".   Sorry, but people can't just redefine commonly used words. 

That could be put down to  a slip of the tongue, if she had not gone on to compare it with actual inflation. 

But by comparing the increase in the supply of Bitcoin to actual inflation, she shows she has no idea what she is talking about in this aspect of her talk.  The rest may or may not make sense, I  don't know.

But if someone shows that they don't understand the basics, then it's hard to place any credibility in them when they are talking about issues which I don't really understand myself. 

Brendan


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## Duke of Marmalade

The supply of Bitcoin has increased 300% since 2010.  Caitlin would have us compare that to the say 20% inflation of the dollar over that period.  
In fact the price of 2 pizzas has fallen from 10,000 BTC to .002 BTC in that period; massive, massive deflation.


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## Rasputin

Celsius seems to be securities lending for crypto, increasing liquidity and facilitating short selling. If anyone was prepared to give me 17% for using my assets when I don't need them, the risks associated with that would be worth understanding fully, and it wouldn't take much to go wrong with the market for you to be scratching around wondering how you can get your assets back.  Securities lending never made it's way down to the average punter and only ever effecting institutionals, hedge funds, etc  The lack of regulation in this space is shocking, and one (of many) reasons to avoid it like the plague.


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## Duke of Marmalade

Not going to bother diving into things like "staking protocols".  But my instinct tells me that Defi is like everything else in crypto space, 99% about speculation.  
Conventional finance (CoFi) is about matching those what have the dosh with those that can put it to good use, a million miles away from DeFi, I suspect.


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## Brendan Burgess

Rasputin said:


> The lack of regulation in this space is shocking



There is a lack of regulation, but why is it shocking? 

Regulating something speculative like Bitcoin or a lender which pays 17% interest, gives it a credibility it does not deserve.

Those who will, inevitably, lose all their money, will claim that the regulators were asleep at the wheel, and demand to have their losses reimbursed by the taxpayer. 

The only regulation they should have is that they should be required to post a prominent warning "This is a highly speculative gamble and is not regulated. You are likely to lose all of your money." 

Brendan


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## tecate

Duke of Marmalade said:


> There is no doubt whatsoever what Caitlin was talking about.





Brendan Burgess said:


> Agree with Duke
> 
> But if someone shows that they don't understand the basics, then it's hard to place any credibility in them when they are talking about issues which I don't really understand myself.


You can both scream blue bloody murder - I'm not having any of it. It's as plain as day that her comments were in the specific context of the circulatory supply of bitcoin - and how Bitcoin's monetary policy in that respect is coded in to the digital currency. As regards people here claiming 'she hasn't a clue', she spent 10 years heading up a division at Credit Suisse and another 10 as MD of Morgan Stanley's pensions business. Here's ETF and mutual fund manager, Van Eck using exactly the same terminology. link


Rasputin said:


> Celsius seems to be securities lending for crypto, increasing liquidity and facilitating short selling. If anyone was prepared to give me 17% for using my assets when I don't need them, the risks associated with that would be worth understanding fully, and it wouldn't take much to go wrong with the market for you to be scratching around wondering how you can get your assets back.  Securities lending never made it's way down to the average punter and only ever effecting institutionals, hedge funds, etc  The lack of regulation in this space is shocking, and one (of many) reasons to avoid it like the plague.


Which is why it had been flagged from day one.


Duke of Marmalade said:


> Not going to bother diving into things like "staking protocols".  But my instinct tells me that Defi is like everything else in crypto space, 99% about speculation.
> Conventional finance (CoFi) is about matching those what have the dosh with those that can put it to good use, a million miles away from DeFi, I suspect.


I believe that those Ethereum-centric DeFi projects have been a wild experiment that I was quite happy to watch from the sidelines. I think its been riddled with hacks, scams and inadequately designed protocols. However, I also think that over the longer stretch, incredible innovation will emerge from it. I suspect its the reason why someone of Stanley Druckenmiller's stature tells John Collison that the blockchain space is the one to watch if you were starting out in the investing/finance game today. (Druckenmiller: "I will be surprised if blockchain isn't a real force in our economy 5-10 years from now". . . " challenging our financial companies and doing a lot of disruption").



Brendan Burgess said:


> Regulating something speculative like Bitcoin or a lender which pays 17% interest, gives it a credibility it does not deserve.


The rules baked in to Bitcoin are clear for all to see and beyond reproach. Bitcoin as a protocol is not in any way responsible for third party services built in its vicinity.



Brendan Burgess said:


> Those who will, inevitably, lose all their money, will claim that the regulators were asleep at the wheel, and demand to have their losses reimbursed by the taxpayer.
> 
> The only regulation they should have is that they should be required to post a prominent warning "This is a highly speculative gamble and is not regulated. You are likely to lose all of your money."


There may well be some that take that approach but that's neither here nor there as far as I'm concerned. Reason being is that this was flagged by all and sundry over a number of years at every turn.


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## DazedInPontoon

To add to what tecate wrote, there's another important point to note. No one will be diluting my bitcoin holding, or taking any of it to cover any losses related to Celsius. The issue is between Celsius and their customers.

Of course, I'll also acknowledge that if Celsius are liquidating large volumes of BTC it may be having an effect on the short term *price* either directly via them selling or indirectly through it causing bad sentiment through the market as a whole. It's hard to isolate the impact of Celsius given we were already in a bear market anyway, and the crazy week it has been in the markets in general due to the macro situation. But historically such events as Celsius have tended to matter little in the long run for bitcoin.

Off topic for this thread, but to me the far more interesting conversation to be had is about the macro picture - rising rates during a time of record government debt. June US inflation coming in at a new high of 8.6% despite the rate hike already, and people leaving stocks and bitcoin for a dollar that's losing that much to inflation. How long will people be happy to sit out in dollars? are we facing stagflation? will the government pressure the Fed to ease off as election time approaches?


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## tecate

DazedInPontoon said:


> To add to what tecate wrote, there's another important point to note. No one will be diluting my bitcoin holding, or taking any of it to cover any losses related to Celsius. The issue is between Celsius and their customers.


Absolutely - there are no bailouts in crypto.



DazedInPontoon said:


> But historically such events as Celsius have tended to matter little in the long run for bitcoin.


In calling this a couple of years in advance of it happening, Long claimed that all it would serve to do is reinforce and strengthen Bitcoin. Many Celsius 'investors' are more likely to be pursuing casino coins than fully appreciating what Bitcoin brings to the table.

These types of products are available within DeFi on a non-custodial basis but they're not in any way user friendly yet. Either they will benefit if they get the product offering right and/or Bitcoin benefits as people learn that there's power in the asset being self custodied and additional yield isn't a risk worth taking.



DazedInPontoon said:


> Off topic for this thread, but to me the far more interesting conversation to be had is about the macro picture - rising rates during a time of record government debt. June US inflation coming in at a new high of 8.6% despite the rate hike already, and people leaving stocks and bitcoin for a dollar that's losing that much to inflation. How long will people be happy to sit out in dollars? are we facing stagflation? will the government pressure the Fed to ease off as election time approaches?


The macro picture is wild. It would have been far easier to work out how Bitcoin plays out with the last 10 years macro. What we have in front of us right now makes the whole thing impossible to figure out (and Bitcoin is the least of it). Anyone interested in that would also be interested in Drukenmiller's interview that I linked to in the previous post.


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## Duke of Marmalade

@tecate Van Ecke is *defining *"inflation" of bitcoin as the change in its supply.  He's entitled to define inflation any way he wants but the common definition is the one Brendan has linked to - the change (specifically the fall) in the purchasing power of a currency.  For sure Caitlin starts talking about the same "inflation" as Van Ecke but then compares it to the completely different inflation of common usage the 8-9% currently applying to the dollar, showing a shocking level of ignorance for one with such credentials.  But she can be excused for a central dogma of the cult is that Van Ecke's definition of inflation is the same as the common definition.  Reminds one of how great minds can hold the most implausible religious beliefs.
Milton Friedman once said that "inflation is always and everywhere a function of the supply of a currency".  Meaning that increased supply fuels inflation.  So does bitcoin turn Milton on his head?  300% increase in supply since 2020 but a zillion% deflation.  1.7% current rate of supply increase but inflation running at c. 20% per day.
Not at all.  The key is that Milton is talking about a currency, a medium of exchange for which the rate of exchange with real goods and services is the be all and end all.  Bitcoin is not and never was a currency qua medium of exchange as was intended by its creator.  It is and always was a speculative bauble.


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## Brendan Burgess

tecate said:


> It's as plain as day that her comments were in the specific context of the circulatory supply of bitcoin - and how Bitcoin's monetary policy in that respect is coded in to the digital currency.



tecate

I just looked at what she said in the video.   And you may have heard something else. But she used the word "inflation" to mean the increase in the supply of Bitcoin.

I am worried for you. If you can't see that, it suggests that you are not critically evaluating comments on BTC due to your blind allegiance.  That can only spell trouble.

She got it wrong. You should admit that and evaluate whether the rest of what she says is credible.

Brendan


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## Duke of Marmalade

Anyway, Caitlin's argument was outrageous.  Holding bitcoin as an "asset" expected to lose value at 1.8% p.a. should be good enough for anyone, why chase yield?  Is she serious?  An expected loss of 1.8% per annum is adequate reward for holding an "asset" whose volatility/risk is off the Richter scale  And she was 10 years heading Morgan Stanley's pension business


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## Duke of Marmalade

So now the cult is blaming bitcoin's woes on the macro situation.  I thought bitcoin was meant to save us from Armageddon; this should be its day in the sun.


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## DazedInPontoon

Duke of Marmalade said:


> So now the cult is blaming bitcoin's woes on the macro situation.  I thought bitcoin was meant to save us from Armageddon; this should be its day in the sun.


Well yes, this is why it's interesting.


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## DazedInPontoon

Duke of Marmalade said:


> Holding bitcoin as an "asset" expected to lose value at 1.8% p.a


Here's how I think about it. For the simplest case if supply of bitcoin is increasing at 1.8% and to exclude other factors we assume 0 net change in bitcoin adoption, and a dollar inflation rate of 0, then bitcoin should lose value against the dollar at 1.8%.

If we change one parameter in that scenario, for example say the dollar is losing value at 8%, then bitcoin should increase 6.2% against the dollar.



> So does bitcoin turn Milton on his head?  300% increase in supply since 2020 but a zillion% deflation.


No because the variable in the equation that led to this was that the net change in adoption was massive, increasing by orders of magnitude in a decade.


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## tecate

Duke of Marmalade said:


> @tecate Van Ecke is *defining *"inflation" of bitcoin as the change in its supply.  He's *entitled* to define inflation any way he wants but the common definition is the one Brendan has linked to - the change (specifically the fall) in the purchasing power of a currency.





Brendan Burgess said:


> I just looked at what she said in the video.   And you may have heard something else. But she used the word "inflation" to mean the increase in the supply of Bitcoin.


Indeed she did Brendan - and as per the Duke, that's perfectly fine. 



Duke of Marmalade said:


> Milton Friedman once said that "inflation is always and everywhere a function of the supply of a currency". Meaning that increased supply fuels inflation


Friedman and Long are on precisely the same page. And its with a nod to Friedman that she tried to link and reference the 1.77% inflation in the circulatory supply of Bitcoin to the monetary phenomenon that Friedman is talking about relative to the US dollar. But how can she do that? With Bitcoin we know precisely what the circulatory supply is. With the US dollar (or euro, etc), we have NO EARTHLY IDEA - from one second to the next. We have to wait for the high priests to hold their FOMC meetings and declare if they're turning on or turning off the tap. That's what she was referencing and those were her intentions. You know this well - and it's bad bloody-mindedness that you've raised this and taken the thread completely off topic.




Duke of Marmalade said:


> Bitcoin is not and never was a currency qua medium of exchange as was intended by its creator. It is and always was a speculative bauble.



And with every passing day of these discussions, the realities you're so desperately clinging to are changing. Within the past ten days:
Deloitte: 85% of US merchants surveyed say enabling crypto payments is high priority
PayPal lets users transfer Bitcoin and Ethereum to external wallets
Lummis Gillibrand crypto bill will allow $200 exemption to facilitate crypto payments




Brendan Burgess said:


> I am worried for you. If you can't see that, it suggests that you are not critically evaluating comments on BTC due to your blind allegiance.  That can only spell trouble.
> 
> She got it wrong. You should admit that and evaluate whether the rest of what she says is credible.


See above Brendan. And as regards the 'critical evaluation' charge, that's a riot. You have not been a neutral in these discussions since the outset. You have repeatedly refused to acknowledge that there is a non-negligible prospect that Bitcoin continues to develop. You can believe that Bitcoin can ultimately fail and that its failure is the most likely outcome. However, to not acknowledge that outside possibility when it has been developing at pace in the five years you've been pushing back against it - demonstrates a complete lack of critical evaluation, terminating in a zero credibility conclusion.

What the Duke has gone on with is completely off topic. What Long mentioned - when considered in the context she sets it in - is entirely on topic. I pointed this out - but on we go - because I was right on the money from the get go i.e. the Duke looked for any old angle to discredit for the sake of it - and if that mean't taking Long's comments out of context, that was perfectly fine. There's your 'blind allegiance' to 100x'ing down on a position and belief of how the world works and how the likes of Bitcoin couldn't possibly work or belong.


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## Duke of Marmalade

DazedInPontoon said:


> Here's how I think about it. For the simplest case if supply of bitcoin is increasing at 1.8% and to exclude other factors we assume 0 net change in bitcoin adoption, and a dollar inflation rate of 0, then bitcoin should lose value against the dollar at 1.8%.
> 
> If we change one parameter in that scenario, for example say the dollar is losing value at 8%, then bitcoin should increase 6.2% against the dollar.


Well yeah, that's an explanation.  Is that what Caitlin meant?  Does anybody hold bitcoin with its massive volatility on that calculus?  The vast majority are holding bitcoin as a speculation for untold riches not a boring 1.8% inflation versus fiat's targeted 2% inflation.


DazedInPontoon said:


> No because the variable in the equation that led to this was that the net change in adoption was massive, increasing by orders of magnitude in a decade.


Adoption?  What exactly is that?  Bitcoin soared to 70k last year; was adoption a factor?  Is adoption in reverse responsible for current woes?  Adoption as a medium of exchange has been negligible.  So I presume you mean adoption as a speculative bauble.  Milton was not referring to speculative baubles, he was referring to currencies as mediums of exchange.

@tecate Brendan asked questions in OP about what Celsius did.  In the first reply, you show a video of a cult hero questioning why folk would want to earn any more than bitcoin's inbuilt inflationary slippage.  Debatable whether that addressed OP but between the two, it does make subsequent critique of the cult hero's credibility on topic.


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## Duke of Marmalade

Celsius Mission Statement said:
			
		

> _"Those other guys are driven by profits, margins, bonuses, and their own bottom line. And while all of these things are perfectly reasonable motivating factors to achieve success in business, we at Celsius are driven by a deeper, broader mission in which success is measured by our external impact rather than our internal bottom line."_



_Boss_ this doesn't quite explain what "these guys" do but it does show that they are well intentioned good guys.  And to be fair if their endeavours speed up the demise of crypto they will have done the human race a favour and achieved their deeper, broader mission.
This is more heart warming inspirational stuff:


			
				Celsius Mission Statement said:
			
		

> _"An economy where financial freedom doesn't come with a price tag. Where the interests of the people are put first. Where ethical behaviour is the baseline, and where everyone – and we mean everyone – has the opportunity to succeed financially. With a little bit of humanity and honesty, and the power of a digital currency that's as strong as it is accessible, we're ushering in the new economy today."_


These guys issued their own coins and cashed in $1.6 billion as part of their mission.  I mean who could begrudge folk with such noble aspirations a little bit of the evil mammon for themselves.


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## DazedInPontoon

This is apparently a fairly technical detailed description of what they were doing:









						Coin Metrics' State of the Network | Nate Maddrey | Substack
					

Crypto data for the decentralized economy. Click to read Coin Metrics' State of the Network, a Substack publication with tens of thousands of readers.




					coinmetrics.substack.com
				




You can click the "Let Me Read It First" link to avoid signing up.

It starts with an overview:



> Celsius posits itself as a “network” or “lender”, but in reality its market operations closely resemble that of a high-leverage hedge fund. User deposits are actively managed and deployed across DeFi lending platforms for its products to reach double-digit yields.
> 
> These DeFi lending markets enable liquidity providers to attain leverage by maintaining a Loan-To-Value (LTV) ratio called the _collateralization ratio_ in DeFi lingo. When prices collapse and the market value of the collateral flirts with that ratio, lenders must provide more liquidity or the loan might be liquidated and leverage unwound.


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## tecate

Duke of Marmalade said:


> _Boss_ this doesn't quite explain what "these guys" do but it does show that they are well intentioned good guys.  And to be fair if their endeavours speed up the demise of crypto they will have done the human race a favour and achieved their deeper, broader mission.
> This is more heart warming inspirational stuff:


I think the schadenfreude might  be clouding your judgement there a tad, Duke.   
Over the longer stretch, all this will do is make the likes of Bitcoin stronger.


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## Duke of Marmalade

tecate said:


> I think the schadenfreude might  be clouding your judgement there a tad, Duke.
> Over the longer stretch, all this will do is make the likes of Bitcoin stronger.


Keep the faith


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## tecate

Duke of Marmalade said:


> Keep the faith


Faith has nothing to do with it, Duke. We've seen this movie before. Misallocated capital gets rekt. Bad projects vapourise, Good projects tighten their belts, refocus and build out the tech.

'Faith' happens at 2pm EST when JP, your 'In God We Trust' high priest decides what way the wind is blowing.


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## tecate

Here's a recently published paper that underscores my point that Bitcoin is not going to be put down by this recent Celsius debacle:

How Brand Hive Minds Thrive: Understanding Bitcoin's Resilience

"Crises are often the moments that catapult decentralized brands into collective consciousness."


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## Duke of Marmalade

“Readings from tecate” said:
			
		

> As [undefined] puts it, the hive mind “is irredeemably social, unabashedly of many minds,” but it “decides as a whole when to swarm and where to  move. A hive possesses an intelligence that none of its parts does….”. The internet and the WWW have laid the infrastructure for the possibility of inscribing “human and artificial minds into one planetary soul” where “distributed, headless, emergent wholeness becomes the social ideal” [undefined]. The hive can collectively hold onto a memory longer than any individual node.



Now that’s a poke in the eye to doubters like me.


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## newirishman

Duke of Marmalade said:


> Now that’s a poke in the eye to doubters like me.


Hive Intelligence. Sure.

Or as Terry Pratchett would have put it:

*The IQ of a mob is the IQ of its most stupid member divided by the number of mobsters*


----------



## tecate

Duke of Marmalade said:


> Now that’s a poke in the eye to doubters like me.


I wouldn't be inclined to classify you as a 'doubter' Duke, given the absolute condescension on display here in early 2018 from you and others. The objective of the paper isn't to deal with someone's 'doubt' about Bitcoin generally (and it certainly can't deal with your condescension). It does investigate a line of thought surrounding Bitcoin's resilience though. 


newirishman said:


> Hive Intelligence. Sure.
> 
> Or as Terry Pratchett would have put it:
> 
> The IQ of a mob is the IQ of its most stupid member divided by the number of mobsters


And yet Bitcoin has had shocks and adaptive cycles that have dealt with those shocks - only making it more robust all the while. You dismiss hive intelligence yet you're participating in it right now. Anything web2-related implicates hive intelligence. Web3 takes it a step further.


----------



## Duke of Marmalade

@tecate's latest reading (#35) provides lots of pretentious and makey-up words (netnographic e.g.) to soothe the "faithful" (their term) in their hour of anguish (yep, good old schadenfreude).
The message that is drawn from the study of bees is that the bitcoin "brand" is resilient.  A somewhat less ambitious objective than that of Satoshi.
I surely will concede that one, without having to bother about how bees socialise with each other.  The bitcoin "brand" is here to stay, when kopykats like Ethereum and Ripple have long been forgotten.  Bitcoin will head the pantheon of monuments to man's capacity to be seduced by cults and the desire to make fortunes; right up there with those other brands - the South Sea Bubble and Tulipmania.


----------



## tecate

Duke of Marmalade said:


> @tecate's latest reading (#35) provides lots of pretentious and makey-up words (netnographic e.g.) to soothe the "faithful" (their term) in their hour of anguish (yep, good old schadenfreude).
> The message that is drawn from the study of bees is that the bitcoin "brand" is resilient.  A somewhat less ambitious objective than that of Satoshi.
> I surely will concede that one, without having to bother about how bees socialise with each other.  The bitcoin "brand" is here to stay, when kopykats like Ethereum and Ripple have long been forgotten.  Bitcoin will head the pantheon of monuments to man's capacity to be seduced by cults and the desire to make fortunes; right up there with those other brands - the South Sea Bubble and Tulipmania.a


As regards the 'anguish', there's no anguish here. I'm on record as stating price would retrace the best part of a year ago already. 

Go on then Duke - tell us we will never see $20,000 ever again.   ( like you had done once before ).


----------



## Duke of Marmalade

tecate said:


> As regards the 'anguish', there's no anguish here. I'm on record as stating price would retrace the best part of a year ago already.


Professor Roubini reckons that more than 50% of the bees are now nursing very big losses.  Maybe they take the stoic approach that it is all worth while in the general scheme of the bees' group social aspirations.


tecate said:


> Go on then Duke - tell us we will never see $20,000 ever again.   ( like you had done once before ).


Did I say that?  Hey I'm not proud, I got the short term outlook way, way wrong as did Professor Roubini and a host of Nobels.


----------



## tecate

Duke of Marmalade said:


> Professor Roubini reckons that more than 50% of the bees are now nursing very big losses.  Maybe they take the stoic approach that it is all worth while in the general scheme of the bees' group social aspirations.


This has happened numerous times already. Each time we had folks declare BTC dead on arrival. It goes up aggressively and it corrects viciously with nobody pressing pause or bailing anyone out (nobody suspending trading, nobody with their own printing press acting as buyer of last resort) but with its underlying network effect growing the whole time.




Duke of Marmalade said:


> Did I say that?  Hey I'm not proud, I got the short term outlook way, way wrong as did Professor Roubini and a host of Nobels.


Ok, but do you have it right this time? Will it never see $20k again? Because if you're saying that it's akin to the South Sea Bubble or Tulipmania - then that has to be what you're suggesting, right?


----------



## Duke of Marmalade

tecate said:


> Ok, but do you have it right this time? Will it never see $20k again? Because if you're saying that it's akin to the South Sea Bubble or Tulipmania - then that has to be what you're suggesting, right?


That is my ultimate prediction along with Professor Roubini and the Nobels but I haven’t shorted it since 2018 and I’m not shorting it now.


----------



## tecate

Duke of Marmalade said:


> That is my ultimate prediction along with Professor Roubini and the Nobels but I haven’t shorted it since 2018 and I’m not shorting it now.


Ok, but you are saying that it will never see $20k  again?


----------



## Brendan Burgess

tecate

He is clearly not saying that, so I am not sure why you keep asking a question he has answered. 

The ultimate destination of Bitcoin is zero.

But it has proved impossible to predict the path to zero and the timing. 

It may well bounce back over $20k on its path to zero.

Who knows?  The rational is hard enough to predict. The irrational is even harder. 

Brendan


----------



## tecate

Brendan Burgess said:


> He is clearly not saying that, so I am not sure why you keep asking a question he has answered.


Well, I do apologise Brendan if this is tedious for you - but clarity was precisely what I was after. He said it's the South Sea Bubble - but it must not be the South Sea Bubble if it's likely to rise above $20k again. Look at a graphical representation of the South Sea Bubble or Tulipmania and it is ONE big ass candle up, straight down and a flat line. It's not up and down 5x times whilst setting higher lows year on year. The closest thing to doing anything along those lines was Amazon ( which corrected 38% to 50% every year over a 12 year duration as people tried to figure out what it was ).



Brendan Burgess said:


> The ultimate destination of Bitcoin is zero.


That is an opinion you have expressed without acknowledgement of the fact that you could be wrong. I'm quite happy to accept that Bitcoin can die off but in no way do I see that as a likely outcome over the course of the next decade.


----------



## Duke of Marmalade

The bees are fairly buzzing - above 20k again.  But what makes me think that the whales have already made off with most of the honey.


----------



## tecate

Duke of Marmalade said:


> The bees are fairly buzzing - above 20k again.  But what makes me think that the whales have already made off with most of the honey.


Does this not puncture your South Sea Bubble claim?

Is that what happened with the 80% Netflix correction? How about all the other tech/growth stocks? Did the whales make off with all the money? Or are we just reserving a special place in hell for anything crypto-related and holding it to a higher standard than everything else? Who made off with all the honey when the gold bullion market in London had trading conveniently suspended by its Hong Kong based owners a few short weeks ago? Does the nutty professor (Roubini) or professor fax machine have any views on this?

The nutty professor has been calling Bitcoin DOA since $13/BTC. However, professor fax machine has outdone him - he's been calling Bitcoin DOA since $7/BTC. Clearly the grand Nobels are revered within their circle of Nobels.


__ https://twitter.com/i/web/status/1538665012553822211


----------



## Duke of Marmalade

tecate said:


> Does this not puncture your South Sea Bubble claim?


Don't get this but you have been banging on about it for a few posts.  No way have I been saying they are identical and no way would I state with any certainty any prognosis for the medium term bitcoin price.  But it’s ultimate destination is zero. Can’t understand why you were trying to lull me into a prediction that no rational observer could make.
Actually I am not an expert on the SSB but my understanding is that the promise was that untold real wealth would be found.  Once this wasn‘t found the bubble burst.
Bitcoin has made no such claims, in fact Satoshi conceded it had no intrinsic value.  We have no further information today than 8 months ago.  There is no reason why its value was 70k then and 20k today.  I don’t know what will eventually trigger it achieving a price equal to its intrinsic value, but that is where it must end no matter how much the bees buzz.


----------



## tecate

Duke of Marmalade said:


> Don't get this but you have been banging on about it for a few posts.  No way have I been saying they are identical and no way would I state with any certainty any prognosis for the medium term bitcoin price.


You compared it with the SSB - and if you're going to make that comparison, then you'll have to justify it. If you don't want me 'banging on' about it, then simply don't make the wayward comparison.



Duke of Marmalade said:


> Can’t understand why you were trying to lull me into a prediction that no rational observer could make.


See above - It's a well trodden path to find that yourself and Brendan won't confirm if Bitcoin will go to zero within a month/year/decade/100 years. And that's fine if you can't call it to the nearest 100 years. However, if you're going to compare it to the SSB, then I'm challenging that on the basis that in no way did the SSB rise and fall 4-5 times. Neither did Tulipmania. In no way are they fitting or appropriate comparisons.



Duke of Marmalade said:


> Bitcoin has made no such claims, in fact Satoshi conceded it had no intrinsic value.  We have no further information today than 8 months ago.  There is no reason why its value was 70k then and 20k today.


In a recent post on this thread, DiP clarified for you why Bitcoin - which has never claimed to produce a return - is going up in value - year on year (setting higher lows year on year) - adoption. That adoption is set against the backdrop of it being a finite asset. You'll grumble that there is no such adoption - and by comparison with where Bitcoin ( and this discussion ) was in early 2018, you will be 100% wrong.



Duke of Marmalade said:


> I don’t know what will eventually trigger it achieving a price equal to its intrinsic value, but that is where it must end no matter how much the bees buzz.


I've always stated that my thesis on Bitcoin could be wrong. What is not cool is that yourself and @Brendan Burgess speak in absolutes. There is no disgrace in getting something wrong. However, in speaking in absolutes, don't be surprised if this thing haunts the two of you.


----------



## Duke of Marmalade

“Economic Daily” :

As cryptocurrencies reel under the global downturn, Chinese state-run newspaper Economic Daily has warned investors that the price of leading cryptocurrency Bitcoin is "heading to zero".

The warning came as the cryptocurrency market continued to face meltdown with Bitcoin hovering around $21,000 per digital coin on Saturday -- a substantial drop from its record high of $68,000 in November last year.

"Bitcoin is nothing more than a string of digital codes, and its returns mainly come from buying low and selling high," the newspaper said.

"In the future, once investors' confidence collapses or when sovereign countries declare bitcoin illegal, it will return to its original value, which is utterly worthless," it added, reports South China Morning Post.


----------



## Rasputin

It could take longer than we think though - the evangelists and vested interests will never accept that the game is up, and we will need to get to a point where their influence can't hold back the tide and they just become irrelevant. There are still a lot of people who see this as another opportunity to buy the dip, and another chance to become a crypto millionaire. There are less and less of them, but it's definitely still there, and it wont end well for them.


----------



## DazedInPontoon

Rasputin said:


> There are less and less of them, but it's definitely still there, and it wont end well for them.


Less (sic) and less (sic) bitcoiners, really, you sure about that?


----------



## tecate

To anyone that is interested, this is a detailed run through on the risk management failures that led to the demise of crypto hedge fund Three Arrows Capital - and the crypto lenders (such as Celsius) that lent money to it.


Arthur Hayes / Number Three


----------



## newirishman

Oh well









						Crypto-lending biz Celsius accused of being a Ponzi scheme
					

That's stone cold




					www.theregister.com
				






> […] Now, one of its former asset managers has alleged in a filing to the New York County Supreme Court that this all devolved into nothing more than a grubby, unsustainable Ponzi scheme. Jason Stone, the CEO and founder of KeyFi, who managed billions of dollars worth of cryptocurrency investments on behalf of Celsius from August 2020 to March 2021, said Celsius began to fall apart when the prices of digital assets, such as Ethereum and Bitcoin, soared at the start of last year. […]


----------



## Duke of Marmalade

newirishman said:


> Oh well
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Crypto-lending biz Celsius accused of being a Ponzi scheme
> 
> 
> That's stone cold
> 
> 
> 
> 
> www.theregister.com


Interesting quote in there:


			
				Indian Reserve Bank said:
			
		

> India's Reserve Bank has offered a scathing assessment of cryptocurrencies in its latest financial stability report – saying the risks they create demand attention before they undermine established institutions.
> 
> "Cryptocurrencies are a clear danger," the report baldly declares in its Foreword, penned by Reserve Bank governor Shaktikanta Das. "Anything that derives value based on make believe, without any underlying [value], is just speculation under a sophisticated name."


Gives me a new caption for bitcoin - *utterly worthless make-believe.*
@tecate please don't be so totally predictable as to call me a Hindu Commie.


----------



## tecate

Duke of Marmalade said:


> Gives me a new caption for bitcoin - *utterly worthless make-believe.*
> @tecate please don't be so totally predictable as to call me a Hindu Commie.


I don't mind you quoting central banks or authoritarian, freedom suppressing, surveillance states and you coming up with *utterly worthless make-believe* as some sort of tar and feathering catch phrase, Duke. It kind of makes my point for me so I'll help you and bold it out.

 I did think that it was worth highlighting that you've relied upon the Chinese - and it's not because they're communist. It's the authoritarian, freedom-suppressing, censorship-loving, surveillance state that they're running that is just a tad problematic when you call their review of Bitcoin credible. You do realise that this is what you're doing every time you quote them in calling Bitcoin *'utterly worthless'*? It's complete validation for Bitcoin Duke - because Bitcoin is the opposite of freedom suppressing, the opposite of authoritarian. So please do continue to quote them in your desperation to scramble some sort of an attack on the decentralised crypto.

As for your Indian friends, well at least they're just another garden variety central bank. Turkeys don't vote for Christmas, Tell me, how many times has India banned Bitcoin, unbanned Bitcoin, re-banned Bitcoin, unbanned Bitcoin, etc? Why is that precisely? If it's such 'make believe' money, wouldn't it be easy for them to stick with their first decision? Did they say, 'this is make believe money, we haven't changed our minds but we are unbanning it now'? Why would they do that Duke?
Also, lets not let the CBI get all the plaudits here. A shout out to the Indian government who recently added some penal tax on crypto transactions -  a million thank-you's to it for driving the use of decentralized exchanges (DEXs). That's truly an advancement for crypto in India (and by implication, further afield also). 

Of course,  Deputy High Priest at the Bank of England, Jon Cuniffe, must be quite the rare turkey indeed. But no matter. Whereas you have to 'have faith' in these high priest central bankers in their alchemy, I don't. Programmable decentralised rules-based money doesn't need faith in clowns that you wrongly put on pedestals.

Do you have any other marketing ideas for sovereign monopoly money? I'd love to hear them.


----------



## Duke of Marmalade

@tecate I thought you understood what the DG of the BoE was saying.  Look, if you want to take that as a ringing endorsement of bitcoin, I shouldn't rain on your parade.
I do realise that I do not give due credit for the countries which have adopted bitcoin - El Salvador and the Central African Republic respectively 111th and 184th in world rankings on GDP per capita.  I wonder have we yet seen the first international settlement between these two in bitcoin, one of its supposed major features.


----------



## tecate

Duke of Marmalade said:


> @tecate I thought you understood what the DG of the BoI was saying.


I understand perfectly what your Deputy High Priest was saying. He said that out of the current crypto crash, some crypto-centric companies could become the next Amazon. I've pointed out to you that his view is very different to the other alchemists that you've told us you have to have complete faith in.



Duke of Marmalade said:


> if you want to take that as a ringing endorsement of bitcoin, I shouldn't rain on your parade.


You're the one that puts complete faith in these alchemists - not me. But be honest for at least one second. NEVER would you have suggested that such value could be created within crypto. Over the course of 5 years, you've never made such an admission. And before you go back over the same nonsense (i.e. he wasn't talking about cryptocurrencies), what precisely do you think these crypto startups are working with exactly?



Duke of Marmalade said:


> I do realise that I do not give due credit for the countries which have adopted bitcoin - El Salvador and the Central African Republic respectively 111th and 184th in world rankings on GDP per capita.



Vent if it helps you to cope, Duke. Whatever works. You've said that this Bitcoin thing has gone on longer than you had imagined it would. What you have never admitted is that since this became a topic of discussion here 5 years ago, everything about Bitcoin and its ecosystem has grown exponentially. You can try and play down the significance of two nation states adopting Bitcoin as an official currency all you want. The fact is that had such a thing been mentioned in 2018, I've no doubt that you would have said no way could that happen.




Duke of Marmalade said:


> I wonder have we yet seen the first international settlement between these two in bitcoin, one of its supposed major features.



You use the word 'supposed' and yet there is no denying the fact that it can be used for international settlement.

Here's Ruchir Sharma, the Chairman of Rockefeller Capital Management ($95 billion AUM) providing his thoughts on Bitcoin. Whilst your central banking friend said that a crypto startup could be the next Amazon, Sharma likens Bitcoin to Amazon. There's also a message for your alchemist friends at the Central Bank of India - Sharma says they can't control it. He also talks in terms of its use for payments and settlement - and provides references to its use in that respect in the Middle East. Lastly, he acknowledges that we will see further progress in terms of decreasing volatility as and when it emerges from this bear market.


But back to your marketing campaign sponsored by an authoritarian, censorship loving, freedom-suppressing, surveillance state -> Bitcoin is *"utterly useless*".


----------



## Duke of Marmalade

tecate said:


> But be honest for at least one second. NEVER would you have suggested that such value could be created within crypto. Over the course of 5 years, you've never made such an admission. And before you go back over the same nonsense (i.e. he wasn't talking about cryptocurrencies), what precisely do you think these crypto startups are working with exactly?


Ah! so you have twisted for yourself that he did actually mean the currencies and not the technology.  As I say, it would be unfair of me to try and disillusion you.
Did I predict Amazon? No.  Did you?  Do I think the DG is right that an equivalent of Amazon might arise from crypto technology?  I don't think so but I could be wrong as I was for Amazon.  The technology does actually add value and could spell a grim future for Lever Arch files, for example.
But I am not wrong that bitcoin (and all the others) are *utterly worthless make-believe* as currencies.


tecate said:


> Vent if it helps you to cope, Duke. Whatever works. You've said that this Bitcoin thing has gone on longer than you had imagined it would. What you have never admitted is that since this became a topic of discussion here 5 years ago, everything about Bitcoin and its ecosystem has grown exponentially. You can try and play down the significance of two nation states adopting Bitcoin as an official currency all you want. The fact is that had such a thing been mentioned in 2018, I've no doubt that you would have said no way could that happen.


I would have.  There are lots of things I would have said could not happen.  But if you think two tiny basket case economies with very dubious governance adopting bitcoin as an all-in bet for their impoverished citizenry outweighs the views of the leaders of 3 billion people ruled by two diametrically opposite ideologies; maybe you should pause to ask yourself are you indulging in a little self delusion.


----------



## tecate

Duke of Marmalade said:


> Ah! so you have twisted for yourself that he did actually mean the currencies and not the technology.  As I say, it would be unfair of me to try and disillusion you.


There's only one person doing the twisting here Duke - and it ain't me. How precisely is a crypto-startup to get to Amazon levels if there isn't crypto usage rising proportionately?




Duke of Marmalade said:


> Did I predict Amazon? No.  Did you?  Do I think the DG is right that an equivalent of Amazon might arise from crypto technology?  I don't think so but I could be wrong as I was for Amazon.  The technology does actually add value and could spell a grim future for Lever Arch files, for example.
> But I am not wrong that bitcoin (and all the others) are *utterly worthless make-believe* as currencies.


lol - so you're adding fine print now I see. Insofar as I remember, you are not conceding ANY use case for Bitcoin (aside from the lever arch file side swipe  ). Meanwhile this dude running the $95 billion wealth fund does seem to think that Bitcoin will rise in the same way as Amazon did. But he just manages wealth in the real world - he's not an academic or 'nobel' who can't run anything in the real world.




Duke of Marmalade said:


> I would have.  There are lots of things I would have said could not happen.  But if you think two tiny basket case economies with very dubious governance adopting bitcoin as an all-in bet for their impoverished nations outweighs the views of the leaders of 3 billion people ruled by two diametrically opposite ideologies; maybe you should pause to ask yourself are you indulging in a little self delusion.


Firstly there is no 'all-in' bet. Secondly, I went out of my way to bring to your attention that Bitcoin and its ecosystem has developed exponentially in every which way since discussions on the topic began here in late 2017/early 2018. Nation state adoption is only a small part of that progress.
And as regards leaning on an authoritarian, censorship-loving, freedom-suppressing, surveillance state, with your *'utterly worthless'* claim, all that means is that bitcoin is the nemesis of such a regime. I'm quite happy to help you shoot your argument in the foot on that one.
As regards accounting for the US in your argument, last I checked it hadn't banned Bitcoin? And no, it doesn't need to declare it as legal tender. It's being ushered in - in the US - relative to other use cases.


----------



## newirishman

anyway - what the Celsius example (and some of the article) shows is that one of them key ideas of blockchain and currencies based upon the technology (cutting out regulators, build trust relationships) doesn't (yet? Ever?) work.
I guess the reason why there's banks and regulators and rules and 3rd party clearing houses (and lawyers) because you can't trust anyone.
people will (try) to screw you over quicker than you can add and entry to the bleedin' ... edge ledger.
And if you already need to bring in 'adult supervision' anyways, you might as well stick with your Euro's and Dollars.

7, 8 years or so ago I took part in a discussion around replacing the hierarchical internet cert trust system with blockchain.
From a technical point of view, it wouldn't have been that tricky. Is it available, or at least a proper RFC? Well, no.
Sure, certs are good money for those on top of the chain, but again: adult supervision....


----------



## tecate

newirishman said:


> anyway - what the Celsius example (and some of the article) shows is that one of them key ideas of blockchain and currencies based upon the technology (cutting out regulators, build trust relationships) doesn't (yet? Ever?) work.


You're commenting on centralised third party crypto lenders - who were offering yield where there was no natural or sustainable yield to be had and whilst implementing the worst risk management. That is not commentary on a decentralized cryptocurrency such as Bitcoin. Its fundamentals remain intact. If you'd like to criticise those centralised third party crypto lenders, then I'll join in. However, conflating it with the likes of Bitcoin is not accurate in any way, shape or form. 

Other than that, what we've seen is that decentralised exchanges and protocols otherwise stood up fine during this drawdown. That said, these other L1/2 cryptos have plenty of work to be getting on with in terms of actual decentralisation or mechanism design (in the case of algorithmic stablecoins), etc.



newirishman said:


> I guess the reason why there's banks and regulators and rules and 3rd party clearing houses (and lawyers) because you can't trust anyone.
> people will (try) to screw you over quicker than you can add and entry to the bleedin' ... edge ledger.


Absolutely - which is why Bitcoin comes out stronger as a result of this centralised lending nonsense. It's why there's renewed interest in self custody - which is healthy for crypto generally. Otherwise, it encourages folks working on those other decentralised projects that implicate market making, lending protocols, etc. - to double down and improve upon  what they've built.

Centralised entitites will exist within crypto - but for precisely the reasons that you mentioned, they will have all the old legacy issues. That's a given. 



newirishman said:


> 7, 8 years or so ago I took part in a discussion around replacing the hierarchical internet cert trust system with blockchain.
> From a technical point of view, it wouldn't have been that tricky. Is it available, or at least a proper RFC? Well, no.
> Sure, certs are good money for those on top of the chain, but again: adult supervision....



My understanding is that work is ongoing on the various components required to make the internet truly decentralised. Clearly, this is not easy but it's a worthy goal. I'm sure they will get there eventually (and whether that involves blockchain-based solutions or something else, I don't care).


----------



## DazedInPontoon

newirishman said:


> anyway - what the Celsius example (and some of the article) shows is that one of them key ideas of blockchain and currencies based upon the technology (cutting out regulators, build trust relationships) doesn't (yet? Ever?) work.


nah, it shows that dependence on third parties to custody your assets introduces counter-party risk.

As an aside it's also a nice example against the economic statement that deflationary money is bad because no one will invest it.


newirishman said:


> I guess the reason why there's banks and regulators and rules and 3rd party clearing houses (and lawyers) because you can't trust anyone.
> people will (try) to screw you over quicker than you can add and entry to the bleedin' ... edge ledger.


One big reason is because with digital fiat you *always* need to trust someone else, with crypto it's a choice since you can self-custody it.


newirishman said:


> And if you already need to bring in 'adult supervision' anyways, you might as well stick with your Euro's and Dollars.


I'll say it again, you don't need to with crypto, but you can choose to.


----------



## Duke of Marmalade

@tecate You don't listen to me.  I have always said that bitcoin does everything it claims regarding digital entries on a blockchain.  Rock solid ownership, instantly transferrable across borders, finite supply, censorship free, decentralised.  Tick, tick, tick...  The problem is that the digital entries are *utterly worthless make-believe.*  I presume the DG means the technology might some day actually apply to something of worth (like CBDC) but honestly I do not know what his vision entailed - it certainly did not entail bitcoin becoming the next Amazon - but hey, dream on!
@DazedInPontoon I have not heard the economic statement that no one would invest in a currency whose purchasing power would increase.  The opposite statement certainly.


----------



## DazedInPontoon

Duke of Marmalade said:


> @DazedInPontoon I have not heard the economic statement that no one would invest in a currency whose purchasing power would increase. The opposite statement certainly.


No, I meant the idea people/entities holding a deflationary currency would not invest it in other things.


----------



## tecate

Duke of Marmalade said:


> @tecate You don't listen to me.  I have always said that bitcoin does everything it claims regarding digital entries on a blockchain.  Rock solid ownership, instantly transferrable across borders, finite supply, censorship free, decentralised.  Tick, tick, tick...  The problem is that the digital entries are *utterly worthless make-believe.*


The trouble is I spend too much time listening to you. What I said was that you don't credit Bitcoin with any use case - and what you've done with your response is to suggest I've misunderstood you - and then say the very same thing with a different collection of words.




Duke of Marmalade said:


> I presume the DG means the technology might some day actually apply to something of worth (like CBDC) but honestly I do not know what his vision entailed - it certainly did not entail bitcoin becoming the next Amazon


You keep claiming I suggested he said 'Bitcoin will become the next Amazon' when I'm on record as saying he didn't a gazillion times. Other than that, how precisely is a current crypto startup which is struggling through the bear market likely to get to Amazon status on the back of a  CBDC that doesn't even exist yet? Oh wait your friends in Beijing kind of have one almost out in the wild. Maybe that's what you mean - CommieCoin.


----------



## tecate

DazedInPontoon said:


> No, I meant the idea people/entities holding a deflationary currency would not invest it in other things.



Bitcoin represents base layer money - that people can self custody and not have stolen from them (either through inflation or a bank failure, currency failure, government failure/seizure, etc.). It allows people to retain value that they've likely accumulated through their own hard work. Beyond that, it's reasonable to consider that other investment options that go further out the risk curve will be considered by the very same people.

Those DeFI options may be built directly on top of Bitcoin - or they may be built (as per the majority of current examples) on another blockchain.


----------



## Duke of Marmalade

DazedInPontoon said:


> No, I meant the idea people/entities holding a deflationary currency would not invest it in other things.


Apologies.  That point was made by some lady that @tecate linked us to. I think she was arguing who needs Celsius with a currency with a low inbuilt inflation.


----------



## Duke of Marmalade

@tecate I see no use case for bitcoin as a currency.  But I understand the open source can be used for facilitating such things as smart contracts.  I have never denied it.  It is a genuine added value but it is difficult to see how holders of bitcoin will derive any revenue from these use cases.


----------



## tecate

Duke of Marmalade said:


> Apologies.  That point was made by some lady that @tecate linked us to. I think she was arguing who needs Celsius with a currency with a low inbuilt inflation.


You're referring to Caitlin Long, CEO and founder of Custodia Bank.  Her argument is that there is sufficient upside in having a position in Bitcoin as it goes through the phases of adoption without going way out the risk curve and placing funds with the likes of Celsius who engage in fractionally reserving deposits and using leverage....as she alludes to in this Twitter thread here.  It makes for a good read - and is equally relevant to other commodities like gold where the conventional system misrepresents by issuing paper products with no underlying to meet them. The recent crypto lender insolvencies will see a greater proportion of folks self custodying - which is important in tackling rehypothecation and leverage.


Duke of Marmalade said:


> @tecate I see no use case for bitcoin as a currency.  But I understand the open source can be used for facilitating such things as smart contracts.  I have never denied it.  It is a genuine added value but it is difficult to see how holders of bitcoin will derive any revenue from these use cases.


What use case do you see coming out of smart contracts relative to Bitcoin? Just so that you are aware, Bitcoin isn't really regarded as a smart contract blockchain as the code is very limited (deliberately so) although a recent code update may lead to greater scope for smart contracts on Bitcoin. Ethereum has been the dominant smart contract network thus far (although it's still not a done deal that this is where all smart contract development will continue going forward).
As far as I'm concerned, Bitcoin still continues in its development as a means of payment and international settlement, a store of value and a hedge against the fiat system. It's also a risk-off asset by design even if it's being treated as a risk-on asset right now...this will change.


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## Duke of Marmalade

@tecate I tried to follow Caitlin's Twitter conversation.  I don't like Twitter - its very abbreviated style (RV etc.) makes it difficult for a non Millennial like myself to follow.
I get the impression that in December she was predicting some Celsius style disaster, is that correct?  If so, she got that right.
She argues that leverage increases supply and thus reduces price.  Was she predicting that on the shake-out of leverage that bitcoin would rise to its "natural" price.  If so, she got that badly wrong.


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## tecate

Duke of Marmalade said:


> @tecate I tried to follow Caitlin's Twitter conversation.  I don't like Twitter - its very abbreviated style (RV etc.) makes it difficult for a non Millennial like myself to follow.
> I get the impression that in December she was predicting some Celsius style disaster, is that correct?  If so, she got that right.


She's been harping on about rehypothecation / leverage relative to Bitcoin for years. That Twitter thread is from December - but here's a Forbes article she wrote on the subject in 2018.


Duke of Marmalade said:


> She argues that leverage increases supply and thus reduces price.  Was she predicting that on the shake-out of leverage that bitcoin would rise to its "natural" price.  If so, she got that badly wrong.


I think she's thinking on a more long term basis here. It stands to reason if Bitcoin is fractionally reserved then it's not half as finite as it should be. This is how gold was captured by the banking set. Most people believe that there isn't enough underlying to cover all paper gold products.


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## Duke of Marmalade

tecate said:


> I think she's thinking on a more long term basis here. It stands to reason if Bitcoin is fractionally reserved then it's not half as finite as it should be. This is how gold was captured by the banking set. Most people believe that there isn't enough underlying to cover all paper gold products.


It certainly opens up an interesting area for debate.  But how can you prevent uncovered positions (and therefore enhanced supply) in a decentralised environment?


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## tecate

Duke of Marmalade said:


> It certainly opens up an interesting area for debate.  But how can you prevent uncovered positions (and therefore enhanced supply) in a decentralised environment?


You mean in a centralised environment? Any Bitcoin on-chain is verifiable. Tweets 7-15 in her tweet thread cover it. 

On a side note, do the Chinese also think that Bitcoin is '*utterly worthless*' in this situation that is happening in China right now?


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## Duke of Marmalade

tecate said:


> You mean in a centralised environment


No.  As I understand it she is asking that the leverage in bitcoin should be less than 1:1.  The blockchain or its miners or the protocol can't ensure that - by definition the leveraged positions are off chain.  It is the sort of control that needs a central authority like the SEC or the Fed, anathema to the cult.  But I may have that wrong.  What is she looking for in regard to controlling the leverage?


tecate said:


> On a side note, do the Chinese also think that Bitcoin is '*utterly worthless*' in this situation that is happening in China right now?


Please do we really want to be dragged into citing incidents from China, El Salvador, The Central African Republic or anywhere else?  I'm giving that rabbit hole a miss, but keep digging if that's where you get your kicks.


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## tecate

Duke of Marmalade said:


> No.  As I understand it she is asking that the leverage in bitcoin should be less than 1:1.  The blockchain or its miners or the protocol can't ensure that - by definition the leveraged positions are off chain.  It is the sort of control that needs a central authority like the SEC or the Fed, anathema to the cult.  But I may have that wrong.  What is she looking for in regard to controlling the leverage?


I think there's a misunderstanding here. I'm saying that this type of shenanigans is a feature of centralised entities. And in considering that, see her tweets 7-15. She believes that given the fact that Bitcoin will have a higher retail element with a much higher level of self custody, they're going to get caught out from time to time with this (or one time in a very big way). I think it will also be possible to put 'proof of reserve' type systems in place - given that Bitcoin can be easily audited.

Just as an aside, it's a common misunderstanding that everyone in this space is against regulation. That's not the case. There's nothing wrong with centralised entities being regulated provided said regulation makes sense. Long has worked with law/policy-makers in Wyoming to create progressive digital asset regulation that forbids rehypothecation of digital assets.



Duke of Marmalade said:


> Please do we really want to be dragged into citing incidents from China, El Salvador, The Central African Republic or anywhere else?  I'm giving that rabbit hole a miss, but keep digging if that's where you get your kicks.I'l


I think it's a very reasonable and important point, Duke. The regime that is telling us that Bitcoin is '*utterly worthless*' is then supporting a regional bank in defaulting on people's life savings and crushing their right to protest. I'll answer the question for you and for them. In this situation, self custodying Bitcoin would be *utterly priceless*.


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## Duke of Marmalade

@tecate well I suppose a 70% hit is better than 100%.  One up for bitcoin, it beats deposits in some obscure Chinese bank.


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## DazedInPontoon

Duke of Marmalade said:


> It certainly opens up an interesting area for debate.  But how can you prevent uncovered positions (and therefore enhanced supply) in a decentralised environment?


One neat thing is that the nature of crypto allows for proving "proof of reserves" to the public in an easier way than most anything else. So if a company is really saying that have all client funds on reserve they should be proving it. Kraken is one such exchange that does: https://www.kraken.com/proof-of-reserves

This allows clients to confirm themselves that their are reserves backing their balance on the exchange.


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## tecate

Duke of Marmalade said:


> @tecate well I suppose a 70% hit is better than 100%.  One up for bitcoin, it beats deposits in some obscure Chinese bank.


That's disingenuous Duke. Once again, for the gazillionth time, you're cherry picking the worst of timeframes. Bitcoin yearly lows tell a different story:
2012: $4 2013: $65 2014: $200 2015: $185 2016: $365 2017: $780 2018: $3,200 2019: $3,350 2020: $3,800 2021: $27,734

Firstly, we're talking about 4 banks - not one. In what way are these banks 'obscure'? They may be 'obscure'  to you as you don't live in Henan Province, China. Bitcoin is a global asset - what happens in other corners of the world is entirely relevant. And particularly so in a discussion where you are relying on the views of the Chinese regime re. Bitcoin whilst its foot soldiers stamp out protest from the deposit holders that have lost their life savings in these cases.


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## Duke of Marmalade

DazedInPontoon said:


> One neat thing is that the nature of crypto allows for proving "proof of reserves" to the public in an easier way than most anything else. So if a company is really saying that have all client funds on reserve they should be proving it. Kraken is one such exchange that does: https://www.kraken.com/proof-of-reserves
> 
> This allows clients to confirm themselves that their are reserves backing their balance on the exchange.


It's getting slightly above my pay grade.  I was fascinated by Caitlin's Twitter to the extent that I was able to follow it and by @tecate's own comment. Bitcoin is not immune from the evils of "fractional reserving".


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## DazedInPontoon

Yeah bitcoin itself won't stop a company taking bitcoin deposits from customers and then doing risky, stupid or fraudulent things with those deposits. You'll want to avoid that through one or more of: regulation, crypto-audits and avoiding the companies entirely via self-custody. This has been obvious and at the forefront since the Mt. Gox disaster.


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## tecate

Duke of Marmalade said:


> and by @tecate's own comment. Bitcoin is not immune from the evils of "fractional reserving".


More than happy to acknowledge that, Duke - and surprised it has taken until now for it to come up. Having Wall Street latch on to BTC is something of a poisoned chalice. But then, whether the crypto space is to embrace that or not is irrelevant. Bitcoin doesn't discriminate against its userbase - and so they were always going to get involved. 
There is an upside in terms of it making regulation roll that much easier. However, if they manage to capture it as they've done with gold, then it becomes much more impotent. I think that it should be ok though - as it is far more auditable than gold (or the commodities that are equally manipulated) and a much larger proportion is going to end up self-custodied.


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## Duke of Marmalade

@tecate you accuse me of being selective in citing bitcoin’s current plight. Yet you cite 4 micky mouse banks in Henan province, presumably supplied by cult central.  You should have been a politician.


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## tecate

Duke of Marmalade said:


> @tecate you accuse me of being selective in citing bitcoin’s current plight.


lol. There's so much wrong with that sentence, I don't know where to start. I _accused_ you? News to me, Duke. However, last I checked this is a discussion board - and if you post here, there's a good chance that someone or other will respond to what you've posted.
I don't know what the 'being selective' is about? If you mean, I questioned the soundness of you relying on the views of the Chinese Communist Party, as a regime that's authoritarian, anti-freedom, pro-censorship and runs a surveillance state, they're not likely to have anything good to say about Bitcoin.
And as regards Bitcoin's 'current plight', you won't find any post from me referring to Bitcoin having a 'current plight'. It's fundamentally as sound as it ever was. And as regards its ecosystem, that's a 1000x better than it was in the 2018 bear market.
I'm a little concerned that all your attention is consumed by Bitcoin. It might be worthy revisiting your thinking on inflation. i recall a discussion here 18 months ago when you scoffed at the notion of inflation being an issue - saying you wouldn't take your counsel on that from someone off reddit. You said that 2% would be on the high side.  Eurozone inflation is at its highest rate ever at 8.6%. Meanwhile, the Euro is at its lowest point against the dollar in 20 years.



Duke of Marmalade said:


> Yet you cite 4 micky mouse banks in Henan province, presumably supplied by cult central.


Henan province has a population of 95 million people. I cited a report published on ccn.com. Here's another report from the BBC. According to the BBC, $6 billion worth of customer deposits were frozen - affecting 100s of thousands of ordinary people. On top of freezing their accounts, the local authorities responded with violence when those depositors protested. These are your friends in the CCP who say that Bitcoin is *'utterly worthless'*. Now if you want to try and whitewash that by suggesting that it's mickey mouse stuff, go right ahead comrade marmalade.


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## Brendan Burgess

sell, sell, sell. Conor Pope has spoken.    









						Is this the end of the road for cryptocurrencies?
					

In the News podcast: Is a fall of more than 60 per cent in the value of virtual money a blip or the end of the road?




					www.irishtimes.com


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## tecate

Brendan Burgess said:


> sell, sell, sell. Conor Pope has spoken.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Is this the end of the road for cryptocurrencies?
> 
> 
> In the News podcast: Is a fall of more than 60 per cent in the value of virtual money a blip or the end of the road?
> 
> 
> 
> 
> www.irishtimes.com


lol


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## Duke of Marmalade

tecate said:


> lol. There's so much wrong with that sentence, I don't know where to start. I _accused_ you? News to me, Duke.


You said I was cherry-picking (bitcoin timeframes).  I paraphrase that as you "accused me of being selective".  Gosh, I would need a cult spiritual director to vet my posts.


tecate said:


> I cited a report published on ccn.com.


If you say you picked up this story from watching ccn.com and it was not referred to you by cult central or a fellow cultist, then I must say you have a lot of time on your hands.


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## Duke of Marmalade

Brendan Burgess said:


> sell, sell, sell. Conor Pope has spoken.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Is this the end of the road for cryptocurrencies?
> 
> 
> In the News podcast: Is a fall of more than 60 per cent in the value of virtual money a blip or the end of the road?
> 
> 
> 
> 
> www.irishtimes.com


_Boss_, how do I get to see what the deposit selling professor has to say on bitcoin?


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## tecate

Duke of Marmalade said:


> You said I was cherry-picking (bitcoin timeframes).  I paraphrase that as you "accused me of being selective".


Somehow the Duke can only work back from a market top. It's a simple statement of fact - you've been doing it over the course of five years.



Duke of Marmalade said:


> If you say you picked up this story from watching ccn.com and it was not referred to you by cult central or a fellow cultist, then I must say you have a lot of time on your hands.


So I have a 'lot of time on my hands' as I came across a story that was picked up by CNN? Whatever you say, Duke. So Duke I saw that piece on CNN and I thought it would be relevant in response to what you brought to this discussion from the South China Morning Post! Now, riddle me this - do you have the SCMP delivered with the Irish Times of a morning? 
Thanks for the feedback - I do agree that CNN is a very bad use of my time although I don't think switching to the SCMP is going to be helpful. But maybe its because the SCMP has a better crossword? Is that the attraction, comrade?


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## newirishman

So Celsius files for bankruptcy. 



> […] In its latest statement, Celsius said it has both estimated assets and liabilities anywhere between $1 billion to $10 billion. […]



which translates as: we have absolutely no idea what we were doing, and surely you don’t need to do accounts when running a successful crypto business.


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## Brendan Burgess

Duke of Marmalade said:


> the deposit selling professor has to say on bitcoin?



Hi Duke
That is Conor Pope in the Irish Times.

The deposit selling professor was Brian Lucey

Brendan


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## Duke of Marmalade

Brendan Burgess said:


> Hi Duke
> That is Conor Pope in the Irish Times.
> 
> The deposit selling professor was Brian Lucey
> 
> Brendan


He refers to some talk to be given by Brian Lucey


			
				Conor Pope said:
			
		

> Brian Lucey is economics professor at Trinity College and he has been following the evolution of crypto assets.
> 
> He talks to In The News about the rise and fall, and fall and fall, of virtual money and pores over the runes - or should that be ruins - to see what might come next.


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