171 episodes

Every day, we explore the world of crypto and blockchain in one minute and in plain English.

Crypto in Plain English - by cryptohunt.it cryptohunt

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Every day, we explore the world of crypto and blockchain in one minute and in plain English.

    Why Stablecoins are almost always a bad investment - Crypto in Plain English - Episode 171 - by cryptohunt.it

    Why Stablecoins are almost always a bad investment - Crypto in Plain English - Episode 171 - by cryptohunt.it

    Why Stablecoins are almost always a bad investment

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    As an avid listener of this podcast, you will have noticed: We have spent a lot of time explaining stable coins. This is somewhat of a passion for us: We love the idea, but we think the risks are not clearly communicated.

    So, what makes stable coins so risky? They are, after all, stable right?

    And that’s the problem. In theory they do represent a value that only fluctuates minimally. But many stablecoins have fundamental flaws: They may not be fully backed. Or their algorithms don’t hold up under pressure.

    Whatever the risk, the most important thing to realize is that there is no reward by design. You will never get MORE for them than you paid. But they can collapse, like TerraUSD did. And let’s take another look at Tether USD: The company refuses to tell you where the money is parked, yet it is the third largest cryptocurrency in the world.

    We want you to consider this: Risk with no reward. Is it worth it? We think maybe, for temporary money transfers or payments, but not to hold. But as always, do your own research - we are not here to give you investment advice, we want to teach you the basics to make the best decisions possible.

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    • 1 min
    TerraUSD meltdown, part 6: What’s next for Terra, Luna, and the world of stable coins? - Crypto in Plain English - Episode 170 - by cryptohunt.it

    TerraUSD meltdown, part 6: What’s next for Terra, Luna, and the world of stable coins? - Crypto in Plain English - Episode 170 - by cryptohunt.it

    TerraUSD meltdown, part 6: What’s next for Terra, Luna, and the world of stable coins?

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    Remember the last episode, a chilling history of mass withdrawals of Terra triggering the Terra and Luna coin collapses? Welcome to the last part of our one-week special. Today: What will happen now?

    First, let’s speculate about the future of the Terra Luna blockchain. The organization running it has spent billions of their reserve, trying to stabilize the system, and it was all for nothing. They have no more powder left and it is safe to assume that the blockchain is dead forever, as public confidence is destroyed.

    Second, let’s talk about stable coins in general. As a frequent listener of this podcast, you remember that not all stable coins are as stable as they claim to be. Yet, many investors put their life savings into them because they trusted the claims. It’s likely that governments will crack down and put a lot of pressure on those instruments.

    There will also be a wave of other collapses as investors are withdrawing from stable coins. If you have money parked in them, consider one thing: By definition, stable coins don’t appreciate in value. But if they collapse, you could lose everything. It’s a very single-sided risk.

    And lastly, this is a great reminder for us all: Knowing the history and understanding the complicated inner workings of crypto is really crucial to making good decisions. We hope that this podcast is giving you the inspiration to learn and the confidence to choose wisely.

    Thanks for listening to this special, and if you have any feedback or questions, email us at podcast@cryptohunt.it. We would love to answer your questions!

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    • 2 min
    TerraUSD meltdown, part 5: Who killed TerraUSD: Malicious attack, or simply a weak design? - Crypto in Plain English - Episode 169 - by cryptohunt.it

    TerraUSD meltdown, part 5: Who killed TerraUSD: Malicious attack, or simply a weak design? - Crypto in Plain English - Episode 169 - by cryptohunt.it

    TerraUSD meltdown, part 5: Who killed TerraUSD: Malicious attack, or simply a weak design?

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    Welcome back to part five of our one-week special on the TerraUSD collapse. Today: What caused the stable coin algorithms to stumble and lose the peg? If you haven’t followed from the beginning, please jump back a few minutes of listening time to episode 165.

    Last time we talked about the magic machine that exchanges eggs for dollar bills to stabilize egg prices. And we learned that this is exactly how TerraUSD worked - using a fixed exchange rate for Luna, it guaranteed the price of Terra.

    But we also said: A machine has its limits.

    And so did the Terra Luna stablecoin rubber band: A black swan event, one where many things happened at once, gave it a mighty kick and it lost balance.

    One major contributor was a project called Anchor Protocol. There, you could deposit Terra stablecoins for a crazy 20% interest, but as that became impossible to maintain, the project slashed interest rates overnight. People made a run for the 14 billion dollars parked there and flooded the Terra Luna stablecoin algorithm. As the machine couldn’t keep up, people were willing to take a discount on their stable coins to get out of the market, and that snapped the rubber band.

    But even worse: Now there was a ton of new Luna, printed by the machine when it exchanged Terra for it. The more Luna it created, the more the Luna price drove down. Eventually the panic crept into the general crypto market and everything dropped. In total, the market wiped out over $80bn dollars.

    And while there have been speculations about foul play, none of them have been proven. Some say it was a bad actor holding a massive short position. Others claimed popular hedge funds have something to do with it. But either are just conspiracy theories at this point.

    And it doesn’t really matter. What matters is that many investors had money in an ecosystem without knowing the real risks. So, in the next final episode, let’s talk about what’s next for Terra Luna, stablecoins, and what we can learn from it.

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    • 2 min
    TerraUSD meltdown, part 4: TerraUSDs Fatal Flaw - Crypto in Plain English - Episode 168 - by cryptohunt.it

    TerraUSD meltdown, part 4: TerraUSDs Fatal Flaw - Crypto in Plain English - Episode 168 - by cryptohunt.it

    Episode 168: TerraUSD meltdown, part 4: TerraUSDs fatal flaw

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    Welcome to part four of our one-week special on the TerraUSD collapse. Today: How did TerraUSD collapse?

    Remember last episode, where we explained how an algorithmic machine can create a stable price for eggs between you and your friends? If not, jump back one episode to 167 because you’ll need the background.

    So now we understand that through the process of guaranteeing a stable exchange rate between eggs and dollars, and creating or destroying each in that exchange, we can stabilize prices.

    And that’s exactly how Terra worked. It has a sister currency called Luna and the two work just like those eggs and dollars. Get it? Terra - earth, grounded, stable. Luna - moon, space, volatile in value.

    The algorithm, just like your magic egg-dollar machine, is the rubber band between the two: It exchanges Terra for Luna and vice versa for a fixed rate, while destroying either one of the other in the process.

    But what could possibly go wrong? The system seems solid, doesn’t it?

    Well, say the unthinkable happens in our egg market: Overnight everyone turns into a vegan and wants to sell their eggs immediately. That machine would have to act very fast. Destroy egg! Print dollar! Destroy egg! Print dollar!

    But every machine has its limits. So did the Terra Luna exchange algorithm. It collapsed under the weight of too many requests to exchange.

    In the next episode: Let’s look at the history of what exactly happened on May 9th 2022, and why the Terra Luna machine was flooded with withdrawal requests.

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    • 2 min
    TerraUSD meltdown, part 3: How TerraUSD worked - the story of the magic egg-dollar machine - Crypto in Plain English - Episode 167 - by cryptohunt.it

    TerraUSD meltdown, part 3: How TerraUSD worked - the story of the magic egg-dollar machine - Crypto in Plain English - Episode 167 - by cryptohunt.it

    TerraUSD meltdown, part 3: How TerraUSD worked - the story of  the magic egg-dollar machine

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    Welcome to part three of our one-week special on the TerraUSD collapse. Today: How did TerraUSD actually work before it collapsed?

    The people behind Terra wanted to create a stable coin for easy online payments. And a decision was made: Let’s use a self-stabilizing algorithm instead of central reserves.

    So, let’s look under the hood and explain how that works… with an analogy as always. Let’s go!

    Say that you and your friends agree that – from now on – one egg is always worth one dollar. You all keep your promise for a while and trade happily, until one friend gets tired of eggs and wants to dump them all for 80 cents a piece. Suddenly, the entire market adjusts, and egg prices aren't stable anymore.

    So you invent a really powerful machine: It can create eggs, destroy eggs, print dollar bills, and burn dollar bills.

    And the machine operates by two basic laws:

    Law one: If you give it a dollar, it burns it and creates you an egg.

    Law two: If you give it an egg, it destroys it, and prints you a dollar.

    Immediately, everyone would see the opportunity: Buy those cheap eggs directly from your friend for 80 cents, and exchange them for a full dollar through the machine. They just made 20 cents, a 25% profit!

    Bankers call this arbitrage and they love it. Once they are in on the action, there are soon only eggs worth $1 left for sale. And whenever a small discount pops up again, the bankers will make sure to close that.

    Your magic machine just created stable-eggs. And it’s exactly like that algorithm that powered TerraUSD.

    And in the next episode, we’ll look at the machine's fatal flaw.

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    • 2 min
    TerraUSD meltdown, part 2: What is an algorithmic stablecoin? - Crypto in Plain English - Episode 166 - by cryptohunt.it

    TerraUSD meltdown, part 2: What is an algorithmic stablecoin? - Crypto in Plain English - Episode 166 - by cryptohunt.it

    TerraUSD meltdown, part 2: What is an algorithmic stablecoin?

    Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

    Remember the last episode about a peg, the rubber band that keeps a stablecoin stable? Welcome to part two of our one-week special on the TerraUSD collapse. Today: How does an algorithmic stablecoin actually work?

    Let’s remember the rubber band analogy. If the value of a stable coin moves too high, the rubber band has to snap back, and the same happens in the opposite direction.

    There are two types of stable coins: Collateralized and algorithmic. Collateralized coins are easy to understand: There is real money in a central reserve backing them, and whenever someone wants to exchange a stablecoin back, the real money gets taken from the reserve.

    Algorithmic stablecoins are different. They use computer code to balance their price automatically. The most simple ones just create more of their own coins - which decreases the price - or invalidate existing ones - which increases the price.

    But since computer code can do much more complicated things, people have also built far crazier mechanisms into stable coins. The problem is that these work in 99.9% of the real-world use cases, but in those rare moments of extreme tension, the rubber band tears and the system collapses.

    And that’s exactly what happened with TerraUSD. The algorithm tripped, fell on its nose, and kicked off a snowball that turned into an avalanche. So, in the next episode, let’s look behind the curtains of how TerraUSD was working to understand what went wrong.

    Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.


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    Send in a voice message: https://anchor.fm/cryptohunt/message

    • 1 min

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