[birthday]

So in other words, banks reinvest in the next hot thing hoping to make a buck?

Seems analogous to what u say about crypto investing in the next hot new 'coin', which very well is just a proxy to people trying to build something of value.

[Closi]

Well the difference is that banks are highly regulated, and invest in a diverse portfolio of stocks, bonds and financial services which are usually expected to be underpinned by fundamental analysis. They are heavily audited and have strict rules about speculation.

The difference to some pretty much unregulated company that reinvests lots of its money in crypto because crypto has gone up in the past so ‘past performance must equal future growth right?’ is pretty obvious to me.

[oarabbus_]

Like the OP said, UST was paying 19.5% to depositors. In contrast borrowers were only charged ~13%. A regulated bank could choose to do this if they really wanted to.

So the main difference is really that banks run a sustainable model by charging borrowers more than they pay depositors (who are lenders in the fractional reserve model); by orders of magnitude. Being paid out more than is put in should've been a massive red flag to anyone who entertained the Luna ponzi.

[toolz]

> They are heavily audited and have strict rules about speculation.

If only these "heavy" audits and "strict" rules could stop the incessant corruption we see all around the globe in federally insured banks.

People who think crypto is shockingly bad just haven't been paying attention to banking. Sure, crypto is full of small scams and because of most of cryptos open fundamentals you can expect those scams will never grow into federally insured banks. That isn't the case for private banks who have been getting away with the worst scams for far longer than I've been alive.

[spinny]

> Well the difference is that banks are highly regulated ...

probably why there is so many instances of banks getting caught laundering money for criminal organizations by the billions

> They are heavily audited and have strict rules about speculation.

you can audit blockchains. you can't audit a bank's database and have to way for the next panama papers leak

[fennecfoxen]

Banks generally invest in something related to productive activity which is expected to provide an income stream. Crypto banks invest in something valued only for its popularity which is unrelated to productive activity.

All investments are speculative and involve some risk. But outside of crypto, few of them are purely so.