The death of: Terra Luna - A METEORIC Crypto Disaster
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- เผยแพร่เมื่อ 6 มิ.ย. 2022
- Lets dive in for another "The Death Of" episode, today we focus on the crypto "Terra Luna" and ohh boy is it a mess...
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Watching crypto crashing videos has become my guilty pleasure.
Amen. When I need a break from world news but want to listen to reporting, crypto drama is my go to.
watching the stock market crash is my guilty pleasure.
I understand the pleasure part, but guilty? Idk about that
same. I don't even know anything about crypto or the blockchain but it's just fun to watch it crumble.
The problem with cryptocurrencies is that they aren't use as currencies, they are used as "stocks". Buy when the price is lower and sell when it is higher, automatically unstable.
They aren't currencies, they are the product itself.
that's because they can't be used as currencies. No one is accepting bitcoin or tether at the checkout line. why? because it's not backed by a solid foundation, like how fiat currencies are backed by governments, so its price is free to wildly fluctuate. You either transfer your crypto into another crypto that you think will do well or you cash out. The only time people use crypto to buy something is when they're purchasing illegal goods or services over the internet. There is no legal use case for crypto or NFTs.
@@_bits_and_bytes Exactly
"They aren't currencies, they are the product itself."
That's the crux of the matter, leaving aside the myriad technical issues that are the "whys" of what makes that the case in practice: the tokens are themselves the product in its entirety, and while they're *regulated* as if they're commodities - because people gave a lot of money to regulatory bodies to have them disregard reality - what they actually are is entirely unregulated securities... issued by "companies" that don't have any actual product or business plan or cash flow or service or anything, really... they just have the security.
Nothing at all underpins the value, but rampant speculation, and the madness of crowds; if you were to translate the current crypto marketplace into the stock marketplace... basically everyone involved would be facing jail time, because that shit's illegal when you try it with regulated securities.
@@matthewyoho5422 Yeah
@@_bits_and_bytes it doesn't need to be "backed by a solid foundation", USD's value is massively overinflated compared to how solidly it's "backed" and we may well see it come crashing down soon enough. The two reasons they aren't accepted is 1. because the price is unstable, if you start accepting bitcoins you could see the value soar, or you could see it crash and you're facing a fiscal shortfall that month and 2. Because it's not legally enforced that it has to be accepted.
If dumbasses who want to get rich quick stopped treating crypto as a speculative market it's possible we could see the value stabilise and more businesses start to adopt it. Then again when they do that that will likely cause the price to become unstable again so it sucks. Crypto is a decent idea on paper, the fact that fiat currencies are controlled by governments is the problem crypto seeks to fix, but getting people to behave like intelligence civilised creatures in modern western culture is goddamn impossible.
"Any system that can be taken down by a few people, out of spite, is not a very good system."
Well put.
But actually that's not the biggest problem with crypto. The biggest problem with crypto is that the people in control of it have a strong incentive to keep it unstable. They use pump and dump scheme constantly and to make massive purchases that they want to hide.
So it will never be a stable and legit form of transaction because the people who control it don't want it to be that.
I personally never understood the point of crypto. I mean you can already trade all major fiat currencies online without any issue so what problem is crypto really solving?
20% yearly return? That alone is a huge red flag.
If I want a 'stable coin' I'll go to an actual bank and get some actual coins.
Crypto is truely amazing. Like watching a bug zapper.
some had to die, for others to live, just like life xDSDASDDSA
So for a bit of context on how bad that "$1 million to 35c" collapse is:
Here in New Zealand, a basic single-line lotto ticket costs about NZ$7. Ignoring any payouts you would get for 2nd/3rd/etc division winnings, and focusing only on the $1 million 1st division prize. Your chances of winning 1st division are approximately 1 in 383,000. This works out to an average return of $2.6 per ticket bought, in the long run. If you took a million dollars, and spent it all on lotto tickets, your expected return would be somewhere in the region of $371,000 (and again, thats ignoring anything you'd be getting for the lower divisions)
Spending a million dollars on lotto is somehow a better investment than crypto.
I love it how magic words like "Algorithm" suddenly can make something from nothing. Honey, can you take the garbage out? Sure! I have an algorithm at work. The garbage practically takes itself out...anyday now.
After Do Kwon's last algo stablecoin did exactly the same thing, he allegedly acknowledged that all algorithmic stablecoins inevitably "return to zero". He acted philosophical about it as if it wasn't an admission that the whole thing is a ripoff.
Fish gotta swim. Bird gotta fly. Grifter gotta grift.
Yes and also no - it's not an "allegedly" that he acknowledged all algorithmic stable-coins inevitably return to zero, as the man quite literally said words to that effect, in an interview, recorded on video for posterity - in his own words:
"It's a cycle of life, you begin from nothing and go back to nothing. That's exactly where I want to be. So I think Terra is going to be a decentralized money standard across the entire blockchain, across all the blockchains. And I'm excited for Terraform Labs to contribute a significant portion of that early vision, but eventually, to go back to nothing."
From that same interview, he made it clear he wasn't being figurative in that statement about "going back to nothing":
"We have sort of a... something called a protocol Armageddon at the company. So what protocol Armageddon is is that's a kill switch, so whenever we feel like we're no longer in a position to be able to best serve the community, we pull the trigger and 24 hours we're gone. We burn all of our assets, we cut all of our ties, and it's nothing."
Where you're off base is alleging he made those sort of statements about his previous failed venture, as those things that he said on camera were all about the stable-coin Terra that he was the public face of: his involvement with a previous failed algorithmic stable-coin scheme was something that only came to light *as* Luna and Terra were already plummeting straight into the toilet, as he'd run that one while under a pseudonym along with another developer (calling themselves "Rick and Morty"). Do Kwon not only didn't publicly take credit for that failed project, while he was managing the Luna/Terra scheme, he'd actually *openly trash talked it on Twitter* for having failed, along side other algorithmic stable-coins that had (predictably) gone belly up, as if he were not in fact directly responsible for that one.
As you said, grifter gotta grift.
@@matthewyoho5422 OK that makes it worse. Effectively "sooner or later the rug must be pulled"
"if your stable coin crashes into a death spral of inflation, abandon ship to a more stable stable coin"
I love that crypto currencies are just Herbalife for tech-bros and they never realize it.
Dutch Tulips
It's worse than tulips. Because they KEEP falling for it.
I struggle to find any sympathy for those who've lost their money.
A stable coin - stable being the key word here - "promising" 20% return on investment per year. Yeah, and I've got a bridge to sell to you. There's no such thing as a free lunch, especially not in finance.
finding callums channel is one of the few positive things that happened to me during the pandemic. he goes in depth, but is still explaining enough of the basics so even i can follow. good stuff
thanks i really aprechiate the kind words
Yeah, and I feel he is like a Thunderf00t for that crypto-scam-stuff as well!
@@CallumUpton it really helps when everyone else throw jargons around like free candy.
+2 points just for your name alone. Such a memorable ff14 character. Think he was my fave in all of Endwalker and Shadowbringers. Well, Other than Emet. But it was still REALLY close.
@@CallumUpton Hey, how is your HEAVY CRYPTO LONG that you lorded circa spring 2022........go back and check your comments! Oooof! 😜
I'm glad you said that last part because I've had people defend crypto failings by immediately pointing to deliberate sabotage, and I really do not care if it was. I've followed enough real-world financial news to know that these are practically the same failings of the normal-ass financial system, which is enough for me to dismiss it as anything more than something that just wished to emulate it. (Also there's the other fact that nearly all crypto products are "copy the book report but change enough to fool the teacher.")
Crypto Bros: "$Terra Luna$"
MMO Bros: "TERA? Luna Online?"
idk how can you hear "20% returns" and be like "oh that sounds legit, totally not a scam", if u put any money into it u deserve to have lost every cent
I mean I throw a little money around in crypto for fun, you have to think of it like sports betting and not smart investments though, and when you first buy anything just assume you're going to loose it. I'm not a Crypto Bro and think it's all really stupid, but there is money to be made in it because unfortunately it's a huge market.
The "charitable" argument that proponents made, to excuse the blatant Ponzi-nomics going on with that figure, was that "obviously the 20% return isn't something sustainable, that's just something they're doing initially as a sort of 'growth hack', in the hopes of getting large enough to be actually used as currency somewhere maybe; the rate would surely scale back to a more reasonable figure eventually".
The reality of course is that the man principally behind the entire project is someone who was publicly trash-talking, amongst other things, a previous failed algorithmic stable-coin project *literally started by him* as if that were not the case, so... the obvious scam was in fact the scam it obviously seemed to be: Do Kwon is a grifter.
It's almost like crypto is INTENDED to be a speculative market, rather than a replacement for a fiat system thousands of years old. Imagine an economy based on this!
I dread the day it becomes an economic system
fiat currency is actually a pretty young currency type. commodity based currency is the one that is thousands of years old.
Aren't they both fiat systems?
I agree but fiat is actually very recent but much obviously much better (as in it works and doesn't crash nearly as often)
@@theirDevil technically no. until recently all government issued money was only valuable because of the tangible wealth reserves of the government issuing it (usually their gold or silver stockpiles)
these days it's less and less relevant.
apropos of stable coins showing up constantly, trying to bandaid the concept, just after the terra luna collapse showed up there was an ad push for "seasonal tokens" (the video is there, but i'm not linking to it). juiciest quote: "the rules of each token have been arranged so that each token will face a higher demand and lower supply over the period when its price is intended to rise". basically, it's terrausd but 4 of them, swapping roles throughout the year.
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What makes the entire concept of crypto coins so baffling to me is the idea of having a COMPANY create and control what they deem CURRENCY.
I mean, entire nations do it, and those fail too lol
It's not as crazy as it sounds, private currency has been a thing before.
I mean, companies have had currency for a long time now. Coke Rewards, for instance. Points that you get from Coca-Cola buy purchasing goods, and can be spent to acquire special items from Coca-Cola.
mining and similar company's made their own money to pay the workers in the old times america they called them Company scrip, the idea being you do you job get them and then go to the bar, convinces store and so on (usually owned by the mining company) exchange them for goods and then the cycle repeats, this way the mining company's more or less have you trapped as if you tried to leave you would have no money.
@@Jeagan2002 None of those claímed to have any utility outside of the confines of the company. And the company itself was doing something else too. So, not really comparable.
You left out the part where someone had warned Do Kwon about exactly what happened happening and he called the person stupid. There was a lot that wwent on behind the scenes with this one and Do Kwon didn't help by being arrogant.
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"someone had warned Do Kwon about exactly what happened happening and he called the person stupid."
Not only that, but he then proceeded to taunt billionaires who had been following that conversation about the exploitable flaw in the system to "try it, and see what happens"; he also took out several bets on the value of Luna tanking before the year was over, after mocking someone claiming they'd start shorting Luna "at size" if it were to hit all time highs by, essentially, saying they were too poor to have any meaningful impact.
It was like Do Kwon was on a crusade to become the face of schadenfreude.
The initial crash of crypto value tends to be followed by a second crash of investor bodies falling off from high places. Though in this case it may also be "splash", as it involves the nearby han river.
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Gotta hand it to crypto enthusiasts. It only took them a decade to reinvent 1929's Black Tuesday
Just a little nitpick:
If the new investors pay forward, then it's a Ponzi scheme afaik... :)
Great video! Just a small thing - paying existing investors with new investors cash is a Ponzi Scheme, not a pyramid scheme :P
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The difference is more or less academic. If you call something a Ponzi scheme, you're emphasizing the chronological component - that money paid by new investors goes towards no purpose except to pay off old investors. If you call it a pyramid scheme, you're emphasizing the spatial component - that a buyer can only make money from an asset by selling to other people who haven't bought in. It's basically just two different ways of analyzing (or structuring) a scam that relies on selling a product with no underlying value.
This reminds me of that TV show/documentary "Too big to fail!"... if I remember correctly that was about real-estate
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I kinda love that Luna re-released under the ticker LNC because surely it would be lunacy to have anything to do with terra anymore.
I just joined the last seconds. From 1 million to 30 cents... well that could sum it up
callum i like your straightforwardness. I could listen to you talk about anything. make more content pleassssssse!
thanks! "the death of" series has been doing great, so definitely more to come!
I can't wait for the Tether version of this video
I really wonder, which idiots downvote your videos on these BS. I really like to know, if its just bots or real people, being either upset or having so much time while scamming others, to look up for yts calling them out. :)
Love you Callum.
Hey Callum, I just wanted to give you MASSIVE props here for the factual analysis and information sharing. I know that you are anti-crypto (or maybe crypto-sceptic is a better word?) so I was kind of worried when I saw this because I feared it'd just be you taking a massive dump on it. Instead I got a well researched, factual history of why the coin never could have worked, and eventually died. Very cool, and I'd sub if I wasn't already!
he still took a massive shat on it
@@toomanyaccounts Yeah, but not more than history did
@@sailorofmyvessel7890 why would you be worried that being anti-crypto (i.e, the morally, ethically and rationally correct stance) would make it less factual?
@@ecyor0 Because it's extremely easy to let our biases slip into essays like this. A clearly biased view risks 'radicalising' a sub culture that already is very radicalised and cult like even further.
it is a massive dump on it
Comment for the algorithm gods. Idk how anyone could trust an algorithmic stablecoin pegged to another coin the same people made up.
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You didnt quite get the pegging mechanism right. terraform labs was offering to always swap 1 ust for 1 dollar worth of luna and vice versa, with the idea that arbitrage traders would stabilize ust because they could make a profit on it. For example if ust falls to 99 cent, people could burn their ust for a dollar worth of luna and pocket the 1 cent. The hyperinflation came from a rapidly increasing amount of luna you could mint per 1 ust traded in
yeah as i say in the video i massively simplified it for those who arent crypto savy, but aprechiate the comment anyway! gives people the full breakdown if theyre looking for it :D
This isn't even a new idea... There's a bond contract that works the same way.. You buy the contract for $1k and can cash it in at any time for $1.5k in the company's stock... They're colloquially referred to as death spiral bonds in the market, because EVERY SINGLE ONE has ended in a death spiral that drops the company stock to $0...
Thanks for the coverage of Luna (LUNC) Crash
Great video and I liked your use of music during your telling of events
i keep seeing promises of money returned but it keeps being a closed system with nothing going on. just put your money in this box and there'll be more money in the box later i promise
always look forward to your breakdowns.
Love it when I get NFT ads on Callum's videos. It's hilarious.
7:50 although you can have bank runs with fiat you are much less likely to, it’s actually one of the main advantages of fiat over hard money because the central bank can just print fiat if a bank has problems with liquidity!
Most countries, and even the US, would have a huge problem doing this for one of their national banks. The Fed backstop is really just to reinforce the faith in the system, so a bank run is far less likely to occur in the first place. I think that if one of the Canada big 5 banks failed, Canada would probably become a banana republic.
"Stable coin" hahaha
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Im just happy to see callums face again xD
Actually really enjoy the editing in this video
@@jan-philippklein3593 thanks! ive bene trying something new with "the death of" series. glad people are liking it!
5:55 it's called a feedback loop
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Daaang Callum, you‘ve really upped your editing game with this one.👀
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9:36 - Ooh. I love how you can see it screaming to be stabilized in the graph like it's breaching for breath. And breaching again. And breaching. Breaching. . . Stillness.
There's something weirdly cozy and relaxing about your voice, your videos are good asmr.
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2:53 I think you meant Ponzi scheme
p.s.: loved the video
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Thank you very much for explaining the thing in a very good way!!
The reality of this situation is that no one bothered to look at the ice-berg they where going into because they were making money. But when the ship sank... 🤧 (we know the rest)
Shame.
Crypto as a whole is going into an iceberg and that doesn't stop a lot of well informing people from drooling over the potential of the tech, even a lot of scamtubers are talking in those words. It's no different.
Brilliant Video
What a rollercoaster.
Terra was never on the way to the top...
Loved the video Callum, depth you’ve gone into and why it was doomed was some of the best put together content on the situation I’ve seen subbed and look forward to more videos!
hmm every dying crypto is a good crypto
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I'm still new to crypto but Ive been against it ever since for few years now, some of the terms are foreign to me but you break it down pretty good
1:34 look at the graph the guy in the stock footage is holding. one arrow pointing at the Y axis just says "Label the Y axis" and one arrow says "Vertical Axis". there are some serious failings in the stock video graph game.
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Looks like a blurry mess to me but I'll take your word for it
Good journalism 👍
"Some of them stay around a little longer before showing their cracks." Well I suppose that's a good description for a lot of these coins.... They wait to moon the suckers that invested in them longer so that the people who made the coins can rug pull more.
If only they gave 2% or even 1% yearly and used the money made to secure medium to low interest loans like a real bank
Love the editing
Yo what's good Callum, just wanted to say that watching your videos makes me wish I still had hair, cause yours is glorious
Thanks for the video
This is so fascinating.
BRAVO!!
Shoutout to the madmen that bought after it dropped to 0 tho, it went up 2100% the next day for a while lol.
Did any of them sell or did they wait for the next spike?
@@llewelynshingler2173 No clue, I just saw it on binance and was like wow someone must be rich now.
Lol, my friend went wild after he realized that price spike but when he tried to sell the market told him Luna was in maintenance, later they claimed that the price spike was a 'mistaken display'.
@@acecream8568 Really? That sucks I considered getting it at 0 but I didn't want to get into a market so f*cked lol
@@farfa2937 Moral of story. Dead coins are a bad investment.
Not a big twitch person, but commenting for the algorithm!
Which is good, as this is not Twitch
Surprised this didn't work out as the name sounded so cool
And I thought mortgage rates doubling fucked me over, this would’ve ended me for sure
I just leave your channel on all day now
1 million dollar to 35 cents in 48 hours?
That's terrafying...
and it's not just that there wasnt enough USD to back it up, their systems also kept failing and a lot of people were trapped despite being there on time etc, a complete catastrophe!
"and it's not just that there wasnt enough USD to back it up"
If by "not enough" you mean "literally none whatsoever", then yes: other so called "stable-coins" like Tether have at least (initially) pretended to be backed by real world assets to maintain their whole "1 token = 1 dollarydoo" shtick, which is a whole can of worms all by itself as those claims have been demonstrated to be either provably untrue or simply completely unverifiable equivalents of "trust me, bro", but what underpins the value of algorithmic stable-coins is just... nothing at all - they're all characterized by an attempt to create stable value from essentially thin air, via "the power of math" alone, the algorithm itself is the backing.
The history of these projects all eventually leading to death spirals, as Callum points out, in a *sensible* marketplace of ideas, really should have conveyed the message by now that "this is a bad idea that's doomed to failure", but the crypto space is a total clown world so folks just keep right on trying.
Shows why currencies need goverment backing. Also shows why bitcoins needs the same laws applied to them as stocks to prevent them becoming useless.
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Who was doing the shadow puppets on the wall behind Callum about halfway through the video?
The shadow cabal
@@zafool4997 I effing love you. ❤️
That was brilliant.
Cryptobros:
Fiat currency has no inherent value and is unstable so I'm gonna invest in crypto
Also cryptobros:
We are gonna peg crypto to fiat and call it "stablecoin"
It's almost as if there's a reason fiat money works the way it does. It's been hilarious to watch crypto speedrun the last 300 years of finance and act like it's new
The term is "mint" minting is the creation of a token where as mining is using proof of work algorithms to support the blockchain where you are possibly rewarded with newly minted coin(s)
Crypto engineering bank collapses in cyberspace.
The moon is indeed a harsh mistress.
Whats funny is a guy tried to get my boss into terra luna like 5k and he said no but was thinking about it till i said it crashed and burned
The irony of getting an ad for nft while watching this.
Big burn tonight
Cryptocurrency, more like cryptostock am I rite gamers?
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In short, "to the floor!"
The idea that you could have a cryptocurrency with no source of value outside of people choosing to give them money and the price of the coin stabilized by fancy math rather than the amount of assets on hand is just so ridiculous, I can't understand how people keep giving algorithmic stablecoins money. A lot of crypto stuff doesn't make sense but algorithmic stablecoins are just pure magical thinking money from nothing bullshit and it's baffling people pretend it could ever work.
It doesnt work with real currency’s why would it work with crypto currency’s?
So saying that “so much value was wiped out” isn’t quite right, is it?! All of that value that Lost dude just disappear, it was more or less divested from that “stock” and so…. No but I guess that’s right since the value of the item is purely speculative, and so if you’re the last to cash out you’re holding the bag… idk, it’s crazy that instruments like this exist, where the only value is literally the value other ppl put into it. No assets, no contracts or relationships with other institutions, just a big bag of money to put your cash in and then HOPE to get back out. Fuck that’s illogical
remember all those coins were purchased for $1 as it was pegged at that price, so this truly is a case of money being wiped out
"It's not a pyramid scheme, it's a reverse funnel system."
-Sweet Dee Reynold
Great explanation, I think u are being too kind, 'terra luna investors', more like 'gamblers', 'marks' or 'bag holders'!
The problem is this is viewed as investments not as money.
It's bad investments, and poor money.
This is why I refuse to play along with these made up currencies. Getting this stuff is like buying a stick in a company that doesn't exist and hoping others buy it too so you can make money. No thanks.
When I hear "20% return guaranteed, safe coin", I know it's fishy.
The sad truth is that this reflects the real world political system to some big degree.
Terra ( LUNA ),..should have owned Masternodes, its the only way to hold assets
When Crypto first started I honestly looked at it as a possible Money Sink… and I was correct! Unfortunately it’s a sink because of scams. hahaha.
Some banks are cheaper on interest than others but none of them Yeild 20%.
This is because money needs to come from somewhere and if something doesn't generate profits it shouldn't have a yield. If it does you should be extremely skeptical.
The volatility of those things would be so much more fun if it was sometimes the other way around. But I never hear about people who go in with a few cents and get millions.
It's almost like crypto and other assets with only speculative value can't actually store value long term.
Screw crypto... NEVER
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*hugs* all round :3x I know... I bet no one was expecting me to say THAT >:3x
Hugs!
@@oliver_twistor Well ok, if you insist ^.^ x
@Whátsäpp♰⓵⓺⓵⓺⓶⓪⓶⓵⓶⓻⓷ OI spam account that's impersonating Callum...stop. It's really scummy, but if there's a person in control of this account, you already know that :/
it's sad you had to explain what a bank run was. I shouldn't be surprised crypto people are that clueless but man
be a Do Kwon not a Don't Kwon.
so when do we get to go live on the crypto island?
Let’s not feel bad for any crypto people. They gambled. They did NOTHING to get that money. On top of that, their hunger for riches led them to make the poor decisions. Go invent. Go create. I got a 3D printing and painting company and do an extra 1.2k a month. I’m not trying to own a lambo. I’m trying to live like my ancestors did. Nice a chill life with upward mobility.