This Is the Week Wall Street Went Nuts Over Cryptocurrencies (bloomberg.com) 180
Wall Street banks that weren't already on the bitcoin bandwagon appear to be piling on, or least eyeing seats, after the cryptocurrency surged to all-time highs this week on the way to $6,000. From a report: Analysts are working to keep up with demand from clients for information. UBS and Citigroup published extensive explainers on blockchain technology, while senior executives at JPMorgan Chase warmed to the cryptocurrency during the bank's third-quarter earnings call. The digital currency has risen more than fivefold after trading at less than $1,000 as recently as December, breaking the $5,000 mark this week and already targeting the next thousand-dollar level. Throughout its rise, the cryptocurrency shrugged off tighter regulations, feuding factions and warnings from the likes of JPMorgan's Jamie Dimon of fraud and an eventual price collapse.
Bubble! (Score:5, Insightful)
What is a 'Bubble'
A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset M and driven by exuberant market behavior.
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If you shout "bubble" a million times, there's a good chance you might be right, once.
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If there is a commodity whose trading value increases five-fold in under a year, and you shout “bubble” (just once), there is a good chance you might be right once.
Any questions?
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If there is an IPO whose trading value increases five-fold in under a year, and you shout “bubble” (just once), there is a good chance you might be right once. Just once.
Any questions?
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People are buying Bitcoin mainly because they think it's a way to make money fast. That is obviously not sustainable.
Re: Bubble! (Score:1)
It's a good way to grow money off the naive though. Buy, wait a short time and resell. Don't invest too much because I agree it will collapse but might as well ride the bubble for a bit. #capitalism
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Indeed.
A bitcoin is not a lump of gold. You can't actually do anything with it. Much like fiat money; its value is entirely a matter of agreement.
There is no good reason to believe that the value will continue to increase or hold steady over time. It, of course, might, but we are speculating entirely about human agreement, and not about a natural process of resource consumption.
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And what, exactly, were you planning to do with a lump of gold that would make it worth what you paid for it? Or do I want to know?
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Neither use of which comes close to making it worth $1300 an ounce. You can make breathtaking jewelry out of base metals--it's only "priceless" because of its gold content. Its use in microchips is severely limited because it's so hard to justify the cost of using it there.
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Gold is valuable because unlike most other versions of matter, is very difficult to corrupt and fairly rare.
Gold will remain after fires, earthquakes, floods .... It is slow to corrode (unlike silver)
It basically just outlasts people and is difficult to create or destroy which makes it very nice "fiat" currency. The down side is it is very heavy and difficult to move in quantities. Italian Job Physics not withstanding.
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Cryptocurrency also has all these advantages--it too is very difficult to corrupt, is fairly rare, and will remain after natural disasters. It even avoids the downside of being heavy.
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Cryptocurrency also has all these advantages--it too is very difficult to corrupt, is fairly rare, and will remain after natural disasters. It even avoids the downside of being heavy.
Crypto's rarity is simply an agreed upon constraint by its userbase. There's absolutely no reason it couldn't be forked to spew out more "coins", if most of the miners decided more is better than less, and updated to the new fork. To look at it another way, Bitcoin's rarity hinges on the same aspect of the human psyche which enabled Donald Trump to become president (as long as enough people agree to support something insane, it can happen).
Unless there's some crazy breakthrough in the cost of nuclear tran
Re:Bubble! (Score:4, Insightful)
Gold is very valuable because people have, throughout the past many hundreds of years, considered it very valuable. The fact that it is hard to mine, relatively easy to refine and store, etc. does help, but in the end the value of gold comes down to people's willingness to pay for it - and that willingness to pay for it has much more to do with its historical value than its current and future intrinsic worth, it's just a financial investment.
Bitcoins have negative intrinsic worth, but they've managed to hang on as the "cybercurrency of choice" even while they are hardly differentiable from dozens, maybe hundreds of alternate blockchain based cybercurrencies. The only thing propping up bitcoin is people's willingness to continue paying for it and mining it. It's worse than betting on Coke or Pepsi. But, then again, plenty of people got stinking filthy rich by investing in Coke, or Pepsi.
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There is no such thing. Find any jewel on the planet, it has a price value attached to it.
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There is no such thing. Find any jewel on the planet, it has a price value attached to it.
What is the price of the crown jewels of England?
For that matter, what is the price of the Hope Diamond?
Things do not have a price unless they are available to be sold.
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Somebody, somewhere, has a price listed for those items. Are they insured? Check their value there.
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3.5 billion pounds for the British Crown Jewels.
Hope Diamond? About 220 million at current market price per carat.
I am a certified GIA appraiser.
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There is no good reason to believe that the value will continue to increase or hold steady over time.
There actually is: Bitcoin is a fixed amount currency, with only about 21 million BTC available. If it popularity increases prices will go nowhere but up.
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Bitcoin is a fixed amount currency, with only about 21 million BTC available. If it popularity increases prices will go nowhere but up.
And that _if_ is the rub. If it becomes more popular you are indeed correct. If it doesn't then it's useless. As others have noted bitcoin is just a different flavor of Fiat currency - it has no intrinsic value. I
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In all fairness, nothing has intrinsic value. Not even gold.
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Bitcoin has intrinsic value above nominal fiat currencies, in that it is not influenced by central banking authorities or government programs that devalue currency. This makes it ... deflationary in nature, and hence the pricing spike.
The primary value in our current Fiat currency is that it is credit based value because it is inflationary. It is better to spend a dollar today, than save it for a marginal return that might not match the inflationary pressure on that currency. It is why most wealth is not ma
Re:Bubble! (Score:4, Interesting)
It is why most wealth is not maintained in currency form, but rather assets that increase in value faster than inflation.
Perhaps.... but imagine a world with a deflationary currency. In order for businesses to persuade you to invest in their business or their debts, the bar for investing will be a much greater return --- because the business will have to increase in value faster or pay in interest a rate of interest you expect to be greater than the rate at which the deflationary currency increases in value, thus the cost of capital will be high, and businesses will be more responsible and careful with $$$ they spend not to waste it, Whereas with an inflationary currency it is almost a "Given", that tangible commodities and businesses will become worth more currency over time.
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Perhaps.... but imagine a world with a deflationary currency.
No need, just read a book. Until the mid-thirties the US had one with the gold standard.
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With Deflationary currency, those people producing goods and services that others actually value will be rewarded. And the earning power of the youth will benefit them when they are elderly. Hence the saying ... "a penny saved is a penny earned", which unlike current fiat inflationary currency is meaningless.
Further, everyone knows what rampant inflation looks like, and why it leads to war and revolution. Nobody cared when it was runaway deflation, because holding a coin for two days doubled your wealth.
I'm
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Further, everyone knows what rampant inflation looks like, and why it leads to war and revolution. Nobody cared when it was runaway deflation, because holding a coin for two days doubled your wealth.
I'm pretty sure that we have no real idea what business looks like with deflationary currency. We can make educated assumptions. One thing is for sure, savings would be more beneficial than spending, and credit would largely be rare, rather than common.
Your "pretty sure" is simply wrong. In roughly the same historical period we saw an advanced economy get smacked by hyperinflation and fall into chaos then war, the USA itself was getting hammered by deflation. It was a wonderful time when American shoe factories laid off workers to starve in the streets while barefoot farmers were kicked off their farms, all to serve the idolatry of gold.
Gold fetishists have brainwashed certain people into believing that inflation is super scary while deflationary contra
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the USA itself was getting hammered by deflation. It was a wonderful time when American shoe factories laid off workers to starve in the streets while barefoot farmers were kicked off their farms
All that tells you is that economic downturns (Booms and Busts) happen.
And reminds that SUDDEN massive changes in price inflation / deflation are Bad, which
are different from having deflationary or inflationary exchange currencies.
That doesn't tell you anything in general about deflationary currencies or econom
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"Controlled"? What the fuck are you talking about?
https://en.wikipedia.org/wiki/... [wikipedia.org]
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Well, no, not really. Disclaimer: i'm not yet quite sold on the concept of crytpocurrencies, but i've been studying them for a while.
Bitcoin and other digital currencies do have utility and their value (specially in the case of Bitcoin) is derived from scarcity and the effort required to "mine" new currency. The main problem with BTC is that right now its market is minuscule and limited almost exclusively, as you explain, to value exchange. Relatively small operations can make its USD value change dramatica
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What happens when the cost of the computing resources required to generate more falls below the marginal selling price of a bitcoin? Its value starts a strictly decreasing spiral downward, along with all the other ones and none will ever recover value. Then any remaining holders are left holding empty virtual paper bags. This outcome isn't far off in practice certainly less than a decade, and likely just a few years if that.
Then there are other systemic issues due to the origin of its value in illegal acti
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What happens when the cost of the computing resources required to generate more falls below the marginal selling price of a bitcoin?
Nothing more than someone gaining money easily, but we'll likely never hit that point. The amount of BTC available for mining is fixed; by next year over 80% of it will already be mined. A conservative estimate is that the last block will be mined in 2140 (by virtue of the block reward halving frequency every four years), but it is posed to happen way before. Right now a new block is mined every 9% in average, which is already 10% faster than the estimate.
Then there are other systemic issues due to the origin of its value in illegal activities making it target for not just every imaginable regulation but making the holding itself illegal and subject to sentencing and fine/prison. This does happen and is targeted at stopping those illegal activities. For instance, try crossing an international border with a million in undeclared USD and see what happens.
You can cross an international border with a million
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What happens when the cost of the computing resources required to generate more falls below the marginal selling price of a bitcoin?
Chances are the people who bought those resources Already made their profit, because they did the calculations.
The marginal cost of continuing to operate that hardware is very small though, particularly in certain parts of China where they get free electricity.
At the point it becomes non-profitable to CONTINUE to operate bought and paid for miners, they either RAISE THE B
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A conservative estimate is that the last block will be mined in 2140
Not the last block.... the last block that pays out a direct reward. After that last block, mining is subsidized by the transaction fees alone.
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Try again [theguardian.com].
See: "A US jury indicted Alexander Vinnik on Wednesday after his arrest in a small beachside village in northern Greece on Tuesday, following an investigation led by the US justice department along with several other federal agencies and task forces.
Vinnik was described by the justice department as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011, which was allegedly used to launder more than $4bn for people involved in crimes ranging from computer hackin
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The ability to "mine" bitcoins is controlled. Originally people were using old low-end desktop PC's, then moved to high-end gaming PC's. The difficulty was increased. More people switched to GPU's which were 100x faster. The "difficulty" to mine bitcoins was then adjusted again. They moved to motherboards with 19 PCI slots. The difficulty was increased again. Some developers came out with bitcoin mining ASIC's (currently selling for $1900). Some users have struck gold simply by mining bitcoin hashcodes at r
Re:Bubble! (Score:5, Insightful)
Gold is not valuable because it is tangible; it is valuable because it is scarce. So is Bitcoin, BTW. Much like gold, as a currency it is inherently deflationary.
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My personal fingernail clippings are very scarce. But they are worthless since no one desires them.
The moment people realize the Bitcoin is simply a shared delusion then we will see who the greatest fool of investing lore is, exactly.
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Gold is not valuable because it is tangible; it is valuable because it is scarce. So is Bitcoin, BTW. Much like gold, as a currency it is inherently deflationary.
A bit simplistic. Gold is not only scarce but also doesn't rust. If you start with an amount of gold, you can pretty assume you will still have that amount of gold even if buried in the ground and otherwise exposed to elements for decades so long as it isn't stolen. It also happens to be considered pretty, hard to fake, capable of being used for gilding, easy to work, and these days has some industrial advantages over other more commonly used metals that it would be used for if not for the cost but sometime
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There will only ever be 21 million bitcoins. No matter how many copycats spring into existence that number will never change.
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There will only ever be 21 million bitcoins.
Actually, if everyone simply agreed to stop running the Bitcoin software and delete the blockchain from their computers, there'd be no Bitcoins. People could wake up tomorrow and decide gold is worth less than polystyrene, but the gold would still continue to exist. That's decentralization for you.
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Actually, if everyone simply agreed to stop running the Bitcoin software and delete the blockchain from their computers
Why would they do that?
Re: Bubble! (Score:2)
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Bitcoin being in the set of all cryptocurrencies is akin to Facebook being in the set of all social networks. Bitcoin has the network effect and the economic incentive of the participants to keep building on it. Bitcoin ran away with the crown the same way the longest chain runs away with the consensus every 10 minutes. Every day more miners invest in hardware strengthening the BTC blockchain, more owners take a stake, more businesses associate themselves accepting BTC as payment. True, there are many ersat
Re: Bubble! (Score:2)
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Bitcoin is artificially scarce.
Yes, it is designed that way. Its artificial scarcity is intrinsic - you cannot just switch it off.
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Yes, it is designed that way. Its artificial scarcity is intrinsic - you cannot just switch it off.
Actually, you can. Bitcoin is open source - feel free to modify it any way you like.
The difficulty is getting a majority of miners and end users to switch to your fork. It's already happened with "Bitcoin Cash".
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Re:Bubble! (Score:5, Interesting)
You can't categorically declare that Bitcoin's price is "unwarranted by the fundamentals of the asset". It's a new asset type and its fundamentals are yet to be determined. We're still feeling out Bitcoin's ultimate utility and long-term viability. Surges like this are inevitable.
We've gone through this process several times already. Each time people have declared it a "bubble", and yet... while each surge has been followed by a "crash", the average price after each crash has been significantly higher than the average price before the preceding surge. This was true at $2, $30, $200, $1200, and $4000. The long-term trend has been toward gradually increasing prices and less volatility.
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the post all-time-high "crash" isnt a "crash" because it's a profit taking exercise that gets the currency in the hands of new adopters.
The people who held the currency before the spike realize gains and cash them out. This causes a retraction as new adopters buy in, and then before long its time for a new series of gains, and then profit taking occurrs again.
this will happen multiple times as bitcoin has the potential to become a world wide relevant and daily traded store of value.
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Bitcoin's purpose is to transfer value, either in space or in time. It is not useful in itself, just like US dollars (the paper kind) are only useful in themselves for snorting white powder. Their usefulness comes in being able to trade for other things. Bitcoin is especially useful when the trade is over long distances with barriers in the way. Paper dollars are most useful in immediate local trade. They each have their niche.
Since the supply of bitcoins for immediate purchase is limited, their market
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Re: Bubble! (Score:1)
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Oh for fucks sakes (Score:3, Insightful)
Wall Street has always been a combination shell game and method for the ruling class to skim 50-60% off the economy without doing any real work, but this is just ridiculous. Come to think of it that's the only way I could see Crypto currency get a kind of legitimacy. I could see the ruling class forcing us to use it to buy stuff so they can skim even more off us working stiff's wages. Like credit cards but without the convenience and buyer protections.
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Its ok. Point to me where Bitcoin touched you.
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Literally made 20 grand on 500 dollars. Stay salty.
Did you sell your ETH? If not, you made nothing.
This is a fallacy even banks fall for, and that's one of the cause of the subprime crisis.
If you did sell enough ETH and really made money, well played, and don't it lose back.
So where can I go short on bitcoin? (Score:4, Insightful)
So in a functioning market, investors should be able to go long or short on an asset -- that is, it should be possible to assert that it will rise and to assert that it will fall (or if you're clever, buying options that assert the price will remain right where it is).
As far as I can see, a hypothetical person that wanted to bet that bitcoin would fall doesn't really have a vehicle by which to take that position.
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http://www.investopedia.com/ne... [investopedia.com]
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That is partially why the banks want to play.
This will end well...
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There are a number of exchanges where you can short it. https://www.bitmex.com/ is one of them.
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"investors should be able to go long or short on an asset"
Um...why? Those are derivatives. If you invest in a small company, i.e., not publicly traded, derivatives don't exist. You invest because you believe the company will increase in value. If you believe the opposite, you sell your investment.
Options, and indeed all derivatives, are mostly tools for the big investment houses and banks. In the best case, this is to hedge their bets, to limit potential losses. In the worst case, they use these tools to ma
Am I the only one that thinks (Score:2)
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So where can I go short on bitcoin?
Greetings to you. I am Mohammed Abacha,the son of the late Nigerian Head of State who died on the 8th of June 1998.
It is my great pleasure to write to you and present my business proposal for your consideration and possible acceptance which you will find mutually beneficial to both parties. In order to enable you to short the bitcoins... I will make the following proposition for you:
If you agree to wire $6500 to an agreed upon 3rd party in collateral at my Bank of new
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http://www.investopedia.com/ne... [investopedia.com]
Seems there are plenty of methods, no more difficult than shorting pretty much anything else.
That got 5 insightful? Slashdot, your standards are dropping
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Master, you are flesh! (Score:1)
...ITS WORKING!!!
-Lo Pan
Wall street... (Score:2)
Never a speculative bubble it didn't like.
Thank you slashdot (Score:3, Funny)
Back in 2011, Slashdot had a post about bitcoin. I thought it sounded interesting. So, I mined some and sent some money via dwolla to tradehill to mt.gox or something crazy like that and bought some. That $300 is now worth over $250k. I don't remember there being that many hater on the thread back then. If there were, I'm glad I didn't listen to them.
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Are you calling me a scammer? I've been on slashdot a lot longer than you have.
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Joining slashdot 18+ years ago was all part of my master plan to scam people today. I'm impressed how you unraveled my plan. You know what, I know that I'm not a scammer. I don't understand why you are labeling people as scammers without any proof. My point was that I'm super grateful that I read that article about bitcoin on slashdot back in the day. It's kind of insane that wasting time on slashdot has paid off for me.
Now imagine if I had a beowolf cluster of gpu miners back in 2011.
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Obviously Jzanu is a shill for the US Federal Reserve, possibly Janet Yellen herself. I'm confident in this assessment as I have exactly the same overwhelming amount of evidence he utilized in labeling everyone here who disagrees with him a scammer.
Re:Thank you slashdot (Score:5, Insightful)
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You're German, you own Europe, why aren't you creating your own reality with family and community? No, you're doing what you do best - get onto an American website and bitch and moan - in English - that the Americans are ruining everything. Everyone's sick of your shit. Fuck off, European.
The US fought the Cold War and risked nuclear annihilation on its own soil to keep the Russians out of Western Europe, and mitigated ethnic tensions in the region, and all we got in return was European complaining ab
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There is no problem selling $250k of bitcoin these days. In the last 24 hours, $150 million dollars worth of bitcoin was traded on gdax. That's just one exchange. I could sell $250k of bitcoin right now on gdax and the price of bitcoin would go down less than a dollar. There is a lot of liquidity in the bitcoin market.
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How so?
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That's an excellent point. Though, you do realize the US dollar is the petrodollar?
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The stock market has nothing to do with government finances.
That's like saying since you got a raise this year I can buy a bigger house. It makes no sense and isn't related.
Then again that is common currently idiots looking unrelated topics together and basing decisions off of that. Like autism and vaccines 100% false yet still.beloeved
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And he's supposed to be a Wharton-educated businessman. Jesus effin Christ.
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