The world’s cryptocurrencies and NFTs and Dutch tulip markets all went into the shitter this week, with enormous losses in value in the weird janky digital “money” that seemed kind of fishy to most people. How bad was the collapse? Something called Luna that was worth $85 last week is suddenly worth a penny now, and that is apparently a really big deal, CNET reports. Big swings in cyrpto currencies like bitcoin and ether are “notoriously volatile assets reacting to tempestuous economic conditions.” But this Luna thing is like, bigger, and maybe you’ll understand the following two paragraphs:
What’s much more unusual, and much more important, is the collapse of the luna cryptocurrency and its associated TerraUSD (UST) stablecoin. You may not have heard of UST before, or know what a stablecoin is, but it’s a big deal. Billions of dollars in crypto wealth has been vaporized, sending shockwaves throughout the whole market.
There are two intertwined stories here: That of the UST stablecoin and that of luna, both of which are part of the Terra blockchain. The UST coin is designed to retain a value of one US dollar at all times, but depegged on Saturday and has since fallen to as low as 30 cents. Then there’s luna, the centerpiece of Terra’s ecosystem. Its value has collapsed in one of the most stunning crypto crashes ever recorded.
Can’t Geordi just reverse the polarity of the phase emitters and send a tachyon pulse into the temporal rift? That always did the trick in the old days.
Now, before you go getting your hopes up that this means the end of the crypto mining bidness, which uses extremely powerful computers to do math calculations that prove the computers’ worthiness to poop out more crypto, which eats up tons of (often coal-generated) electricity and is therefore a terrible thing for the planet, I need to tell you that nobody who follows this stuff thinks this is in any way the end of the crypto business. Well, shit.
We were going to try to summarize how the Terra / Luna thing went bad based on the CNET article, but it too went all tachyon and quantum and I couldn’t follow it, in that way that in grad school I’d think I was reading a paragraph of Derrida, but then realized I was wondering what to have for lunch, and most of the time it turned out to be the taco truck.
But I didn’t give up, dear reader! I abandoned my initial backup plan of listing all the possible alternative phrases to “down the shitter” and instead looked at the good old New York Times, which explains this week’s crash wiped out more than $300 billion in imaginary but also very real computer wealth, and that’s something I can more readily get my head around:
The moment of panic amounted to the worst reset in cryptocurrencies since Bitcoin plummeted 80 percent in 2018. But this time, the falling prices have broader impact because more people and institutions hold the currencies. Critics said the collapse was long overdue, while some traders compared the alarm and fear to the start of the 2008 financial crisis.
The crash, the Times says, is part of an overall trend of investors getting itchy about risk, what with war and inflation and interest rates, only moreso with crypto, which has fallen more steeply than stocks: The S&P 500 is down 18 percent in 2022, but Bitcoin is worth 40 percent less than it was at the start of the year. “In the last five days alone, Bitcoin has tumbled 20 percent, compared to a 5 percent decline in the S&P 500.”
The Times also explains that the TerraUSD implosion happened because for all the talk of its value being tied to the dollar, it wasn’t actually backed by other assets; its was tied to this Luna thing that was allegedly more stable, but wasn’t, and oopsie! The whole wobble even affected the value of another stablecoin called “Tether,” which actually is backed by cash and other assets, but it lost value from its usual one Tether thingy to one dollar rate. That was bad, although Tether at least recovered.
Reuters reports that today, after all that imploding, crypto is starting to stabilize, and that, hooray hooray, “broader financial markets have so far seen little knock-on effect from the cryptocurrency crash.” Terra, however, remains in the shitter, although it’s up from a penny to 11 cents today.
In conclusion, we can say with absolute confidence that in no time at all, crypto bros will have forgotten all of this and will continue to be insufferable. Or not. I’m just glad my money is safe where it’s always been, spent before I can invest it.
In conclusion, what do you get when you cross a mafioso with a deconstructionist?
An offer you can’t understand.
Hey, that works for crypto, too!
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