The Great Crypto Grift May Be Unwinding
newyorker.com
newyorker.com
What can happen is that crypto could replace other forms of money. Governments will likely fight this tooth and nail however, because crypto is currently an anti-government technology.
Democratic governments represent the will of the people, and I don't think a technology can be pro-government or anti-government, it ultimately depends on what the people what. I think you are correct though for autocratic governments. Would you for example say that guns are clearly anti-government or pro-government?
How are people still this naive and indoctrinated. Me, earlier:
> You vote what you're told to vote by the media that the state and capital dominate entirely (Think about it: how would enough people even hear about an alternative idea or candidate that they don't deem in their interest?) If you're American you get to choose between two millionaires (or sometimes billionaires) with virtually identical economic politics chosen in advanced for you who can safely ignore you once they get elected. "Democracy."
Once we elect a small set of people to make decisions for us, a political class tends to emerge (those with resources and time to spend their days wooing people) and it is their will who is represented by government. The people simply select the least worst of those options.
Such as the will of the people for pot to remain technically illegal throughout the entire nation, or the will of the people for a president to be elected with a minority vote?
>Would you for example say that guns are clearly anti-government or pro-government?
Neither. Guns are a tool usable by a variety of actors for a variety of purposes. Banning guns (or restricting them in a way that isn't restricted to the government such as implementing a burdensome taxation scheme for automatic weapons or short barreled rifles/shotguns) in non-government hands is firmly pro-government, however. Banning guns for 'felons' who are only that way because they are enemies of the state (such as pot dealers or someone who 'vandalized' a government owned wall with a work of art a la California felony vandalism laws) is firmly pro-government.
Agree. Now replace guns with crypto and this is basically my position. There is obviously nuance for this kind of classification for any technology.
I do think governments will eventually turn against (at least anonymized like XMR) crypto, the same way they turned against bearer bonds/shares. Governments in the past 50 years have been extremely resistant to bearer-like certificates with extraordinarily high value density.
Yes, it is a protocol, but TCP/IP made many fortunes also. Even though it just moves bits around the globe.
If my bank goes under I’m protected by the FDIC. If Coinbase goes under they have the right to use my money to pay their creditors.
And to say nobody keeps bricks of gold at home, well just peruse reddit [0].
[1]: https://www.nytimes.com/2021/01/13/business/tens-of-billions...
It's also worth noting there are certain unique risks to exchanges that aren't really applicable to most bank accounts.
I can't help feeling that by the time that becomes relevant, those cryptocurrencies are quite likely to be worth very little anyway, as coinbase going under is (IMHO) quite likely to be correlated with a general cryptocurrency market crash.
Which will be correlated with a general market crash.
As we are going through one now, it seems to follow that cryptocurrencies should crash more as a lot of tech companies have actual value and make/offer things we want while cryptocurrencies do not.
And SIPC covers brokerage accounts up to $500k.
Spread it around in multiple banks and it's more money then I'm ever likely to accumulate in my savings. Although if you have that much money in the bank arguably you're missing out on much better returns in the market if you're young and have time on your side.
It might be not bad. For you.
Perhaps you are an American. Whenever your government prints more dollars, because the rest of the world holds dollar reserves, the value of those reserves go down. So everyone else in the world basically finances the US money printing.
So, if you are an American, the dollar is not bad. Its actually very, very good.
But for the rest of the world (96% of the world population), its pretty bad. It is used as means to transfer their wealth to US.
FTFY. It's not done out of philanthropy.
https://www.zdnet.com/article/ransomware-has-gone-down-becau...
Not really understanding this. If crypto is just moving wealth around, then how can "too many" people become crypto-rich?
>If too many people become crypto-rich and try to spend it on real-world assets, the assets will just inflate in price.
My point was that your logic is flawed. If crypto just moves wealth around vs creating it, as you also assert, then it won't materially change the number of wealthy people. Hence, it wouldn't be a mechanism for causing the inflation you predict.
What's the difference? My employer doesn't create money, they just move it from clients to me. We're both still getting money out of it.
When we look at all the crypto coins, the combines value creation is >1.2 Trillion USD as per https://coinmarketcap.com/.
Ignoring the hostility, what would you list as the realistic and adopted use-cases for crypto?
Oh, did you want legal ones?
> Buying drugs, laundering money, ransomware
over the internet. And I’m only being slightly facetious, these are serious industries. Bringing the coordination and scale of the internet to these activities is big business.
- illegal drug trafficking/sales - sex trafficking - immigration trafficking - child sexual abuse material sales - contract killing
If being opposed to these industries makes me into the "morality police", then I think you're delusional. You could make the same argument for any crime; that all laws are "morality policing".
These industries destroy an enormous number of lives and we should be crushing the people who profit from them.
Its massively telling how much this and other forums completely neglect that a world outside the west exists.
There are ways to make substantive points about this topic, but this way just leads to yet another tedious conflagration.
"Political power grows out of the barrel of a gun" - Mao
The infrastructure required to support these schemes - networks, energy, hardware - are all firmly under the control of those who have a firmer grasp on political realities on planet Earth than 'crypto' enthusiasts.
Seriously hate to break these facts to you, but past/present/future reality is about systems of "authority", and not systems of "trust". An 'authority' gives you a digital ID, a social security card, a driver's license, etc. And this authority has political power and as to how it maintains its power, what Mao said.
[p.s. Let's grant that Unicorns are 'prettier' than generic horses. Fine. That does not alter the fact that unicorns are fictional. And no, sticking a paper mache horn colored in hashes on a horse does not make it a unicorn. (see 'scam', 'fraud', 'snake oil' for related matters.)]
More seriously: there are cryptographically sound schemes (like CT) that address CA compromise.
There's a nice visualization here[1].
[1]: https://certificate.transparency.dev/howctworks/#stepby
Merkle trees have made this more efficient and offered maybe more guarantees, but being able to have files be transferred in a distributed fashion but impervious to corruption is not a new invention.
The one thing cryptocurrencies have not figured out how to solve is the root problem of all PKI systems, which is establishing trust of identity.
I would gladly switch since the method I am currently using isn't exactly cheap.
How are you defining "middleman"? You can do this with any basic commitment scheme: take a cryptographically secure hash of your file and publish it somewhere that's either (1) trivially copyable, or (2) difficult to tamper with. Alternatively, you could do an online scheme where someone asks you for your proof and you present them with your hash after being challenged. That's a gross oversimplification, but it's the general idea.
(In general, "prove that a file existed" is not something that you often want to do in the real world. What is it you're actually trying to accomplish?)
A simple example of what I need without a middlemen.
A student writes a thesis. The last time he is allowed to modify the file is friday evening. He can now send the file via mail or deliver in person to prove that the thesis was finished by then. However he then trusts either the mail server administration or the person at the front desk. This is fine in most cases and works like this since decades. I however do not want to trust a person or company. I do not want ANY possible explanation how I could have archived it in a different way.
Certainly blockchains are more trustworthy, but acceptableness in court is a pretty low bar. I mean having something signed on paper in front of a notary is acceptable.
What cases are you involved with where a notary isn’t acceptable? Or a non-blockchain digital signature?
I’m involved in really high dollar amount contracts and we just use pki-based digital signatures with a time stamp. Of course the time stamp could be fraudulent, but so could the notary’s stamp. But its acceptable in court and stands up to litigation.
I also teach a class and would accept an email from the student as proof. To me that’s more reliable than me having to research some blockchain signature that I’m unfamiliar with.
These are hypothetical use cases and don’t solve a real problem. And they certainly don’t justify paying transaction fees as they are now. It’s cheaper to just pay DocuSign.
The example with the email in the court is a bad example because it is not the court's job to prove whether or not an email is fraudulent. It is the opposing counsel. Non digital evidence works the same way. This is why you have expert witnesses to verify or invalidate some evidence.
A better example would be real estate transactions. It would be best for everyone involved to move real estate transactions to the blockchain. I want to know that John Doe is the real owner of a house when I pay him $500k for the house. The government handles this with paper and their databases now but it would be far more efficient to do this on the blockchain.
But it’s good because it is acceptable, predictable, durable, and low cost. Blockchain is solving for a problem that doesn’t exist as there aren’t a ton of fraud cases in this area (accused nor proven). So perhaps there’s an argument for the new uses that would be possible without the risk of fraud but they aren’t brought up.
Blockchain is more expensive than PKI and digital signatures so why propose it over a simple government PKI issuer? If the goal is to be useful in courts then certainly a government issuer is better as it’s trusted.
In this case blockchain is inferior to just including PKI with every drivers license, passport, and government id.
> A better example would be real estate transactions. It would be best for everyone involved to move real estate transactions to the blockchain.
Not better for the consumer who has to pay more for this new feature.
This is already done by closing attorneys and title search companies. Forcing local counties in the US to provide APIs is much more effective than a blockchain because the county deed office is the legal authority. The issue isn’t trust, the issue is assess. In a world where counties aren’t the source of truth for deeds a blockchain would be nice, although having a single, National registrar would be better. But since you have to ask the county if John Doe is the real owner, blockchains don’t help with this. A simple free, http, unencrypted, rest api is needed.
As an engineer this bugs me because these problems are better solved with technologies other than blockchain.
I ran into one last week talking about concert tickets. Apparently we could fix the problems of ticketmaster dominance by using a blockchain. When I proposed that an API+DB system would do the job just as well, and we have an authority in the picture already (the venue operator) so distributed trust was overkill, I was told "good luck getting ticketmaster to use your API system".
Because apparently the data-structure and trust model now dictate how the market works, and if we just chant "blockchain" loud enough, that'll magically fix monopoly issues. It's very weird thinking.
I mean, sure, if we force ticket issuing, or the land registry or whatever onto a public blockchain solution, that would address some of the issues. But the improvement comes from the forcing, not the specific tech...
I agree with both points. For a while it seemed like small venues were using indie $1 ticket processing services that would basically just generate a QR code and keep everything cheap. But those seem to be going away as Ticketmaster just takes over and turns a $1 transaction into a $20 transaction.
If venues just used Shopify then they’d have their db+api solution. But I think vendors like being able to 1) reduce their work, 2) blame Ticketmaster for all fees, and 3) make more money.
For the same reason vendors don’t use api+db, I don’t see them using a blockchain.
Another reason is that blockchains are forever and I don’t see the value in a huge blockchain with mostly garbage data of tickets sold 50 years ago. This seems like a really unnecessary expense for something simple like temporal transactions that are meaningless after the event.
An api+db can be flushed out so the storage costs are very low.
About the only arguable place is maybe escrow but the marginal increase in cost of traditional escrow vs blockchain seems insignificant vs the magnitudes of monies being discussed. Additionally, if I make a mistake and send things to the wrong account, with escrow & traditional banking I probably can unwind that transaction. With blockchain, not so much.
im not at all a blockchain proponent but i really see a usecase here. but then again i see even git as a blockchain so its not that it would be expensive or exciting to get it working. (Dubai reportedly uses blockchain for their property register)
this is actually a common attack vector in countries like Pakistan were someone falsifies a stamped court document that actually the current owner of a certain property is not valid because he bought it from someone who did not actually own the property. the rightful owner is therefor me. (called qabza in urdu)
Nicholas Weaver, Lecturer at UC Berkeley after 9 years of research in cryptocurrency, lectures on Cryptocurrency as part of CS161: Computer Security. He explains the history of the data structures, some implementation choices, then a bunch of obvious lies from Bitcoin hucksters debunked, security problems, more history/lies debunked, the fraud and bs, computational power, power consumption, blah blah, everything is there in one hour.
I think it could be a good thing to send to people so that they either come out of it knowing bitcoin is braindead or have to admit they're not capable of understanding it because they don't have the basic computer science knowledge :P
Technical knowledge gives you a menial job of auditing when it comes to Bitcoin. If you don’t have the economic sophistication and approach when discussing Bitcoin it only proves you are ignorant to what’s relevant.
"economic sophistication" This is just a baseless ad hominem and you have no knowledge about anyone's economic knowledge.
A bit hypocritical to complain about alleged hand-waving with hand-waving, no?
All of these could probably be done using a database, but it’s more about the trust aspect than the mechanics of storing data.
Crypto will succeed because the rich among us want it to. Crypto will succeed because the corrupt among us want it to. Crypto will succeed because the libertarians among us want it to. Crypto will succeed because it makes exit a reality.
How big of a success will it be? We’ll see.
Plenty of supply chain use cases already exist using private chains/ledgers — this will skew more toward public chains or hybrid solutions as demands for transparency amp up.
...why?
(In general, jamming is always a possibility with anything wireless. That is just not going to change. What might change is spoof resistance, which can be accomplished with schemes that are a lot simpler than anything DeFi can conjure. There's a decent amount of work on related schemes in the vehicle-to-vehicle communication space.)
Just because you want something to happen doesn't mean it will. Especially when you have to assume that we live in some fantasy world where nobody can be trusted and everything has to be done outside the influence of government (i.e. illegally) so we have to use a decentralized append-only database where nothing can be reversed because while you can trust nobody you also can trust people to not do decisions which need to be reversed.
>Crypto will succeed because it makes exit a reality
What does this even mean?
>Smart contracts, DAOs, payments, self-sovereign identity, tokenization of real world assets, a few security use-cases
these are all buzzwords or further tech that actually needs explaining as to what it's useful for (hint: it's nothing)
Society will evolve towards being trustless as the moneyed-class pursue sovereign citizenship and shop for preferential territory on a global scale. They will need a secure way to trustlessly store and exchange funds. Cryptocurrency literally exists nearly entirely for this reason.
Ignore the stupid coins.
This really isn’t that crazy of an idea though.
Read “The Sovereign Individual” by Davidson & Mogg. Written in 1999/2000.
Then I believe it is up to the rest of us to put a stop to this, rather than facilitate it.
Those who do so must be held to the same standards as those already resident.
In the UK recently we have seen (yet another) backlash against this in the form of the outcry against the wife of the Chancellor of the Exchequer, who was using "non-Domiciled" status to avoid masses of tax, despite having been resident in the country for multiple years.
I've no issue with people moving around, but moving around specifically to avoid contributing to the country you're actually residing in needs to be ended, and regulating cryptocurrency may have to be part of that.
If I’m paying taxes, I want it to go to something I care about. “Non-dom” status is blatant fraud for sure and I can’t entirely support that. But, shopping around for preferential territories is kind of what everyone is already doing, right? Imagine if your town made it illegal or expensive for you to move to a neighboring town? That’s the problem cryptocurrency is solving for the rich
Sure, it's solving a 'problem' for them, the 'problem' is that they have to follow the same rules as the little people. I can see why they might pursue such a thing, and as I say - it's incumbent upon the rest of us to stop that behaviour, and force them to contribute as others do.
Sure, in a state where the legislature/executive are captured by domestic industry, you’re right that that’s the case.
It’s clear you live in the USA.
Outside of the USA, governments tend to predate on wealth, and having globally portable money secured in accounts of your choosing is a huge asset.
I think the value of crypto is that trust is not required to participate in the system and transact. You don't need to be second guessing every single person to benefit from this. It doesn't hurt to have a system that minimizes the consequences when trust is abused. It is a bit like the adage of wanting privacy even if you have nothing to hide. I might not want someone to have the option of stealing my money in a transaction, even if I don't think that they actually will.
The so called rich people are trying to get more rich by investing in dog coin, cat coin and other crazy stuff instead of using the brains for greater good of humanity like CRISPR etc
Beyond issues of PoW and energy consumption, the bigger crime is the brain cycles wasted getting rich trying to find the next shitty coin and chest thumping that they are rich.
I know it can be hard for even the most equanimous individual but See crypto rich as a lottery which was earned without much hardwork. only thump your chest when it is put to use for greater good
The thing to keep in mind for crypto is that the inherent inefficiency leads to high transaction costs that tend to make it a less viable option for legal activities.
How?
It's not like the characters movement will be on the block chain. You're not spending eth every time you attack a mob. It's not like everyone else's computers are running the ai for mobs. Are all the cinematics on the blockchain?
How the hell do you use an item from one game in another. It's not like the functionality from game in another. Whats to stop someone from publishing their own super-OP sword to the block chain and just ruining any game that supports it.
This makes zero sense when you spend any thought on it.
None of this has proven any value in the real world.
Libertarian wet dreams are the other side of the coin of communists' wet dreams: utopian, not based on reality, not feasible in our current reality.
Legal arbitration is only possible under a legal system, that is under a government, that has a military and other enforcement powers. Some bits proving that a contract is valid won't change that...
As usual from the cryptospace, it's all techno-babble built on a house of cards that hasn't given anything to reality except an easier way to transfer funds without KYC, so basically it's a wet dream for criminal activities: scams, drug deals and so on.
Ring me up when all these wet dreams become a reality, they've been repeated ad nauseam for quite a few years already and nothing has really materialised.
If crypto was self-regulating to disincentivize said bullshit, then it wouldn't be an issue.
Instead, the bullshit is a feature, not a bug, and thus overshadows any legit use cases of crypto by association.
Which are really what?
Disclosure: All of my crypto is in Solana :D
If he really believes BTC has no future, why wouldn't he invest in alternatives?
2. Investing in his vision is laudable, but a third party presenting said efforts as proof of BTC having no future should be called out due to the obvious conflict of interest.
If it goes up in value again, 2x or 10x its current value, will people who said it was a grift admit it was more than that?
I would bet money (fiat or digital) that, in either case, most people on either side will just say "I haven't been proven right yet", because it's just camps yelling at each other at this point.
I've called it a grift since 2017 so yeah. Being a grift has nothing to do with its price and everything to do with its fundamental structure.
- As a currency, it's garbage. Currencies are inflationary to incentivize spending. A deflationary currency incentives hoarding, and harms the economy by dropping velocity. All the worst periods in history have been deflationary, not inflationary. Currencies benefit from being able to respond to changes in population, to shocks, to changing demographics. And they shouldn't cost a fully-realized (inc. block reward) $200+ to transact.
- As a 'hedge against inflation,' it's garbage. In the most inflationary period in decades, it went from 69K to 28K. That's a drop of 60% in nominal terms. While the dollar dropped 9%. That means it dropped 69% in real dollar terms in a few months. RIP.
- As a 'store of value,' it's garbage. A store of value must be predictable. You should have a reasonable expectation that you can extract the same amount of value from it in the future. See above.
- It's an environmental catastrophe, wasting as much power as an entire nation (and yielding kilotons of e-waste per year) to achieve 6tps. Millions of times less efficient than Visa, or FedNow or RTP.
It has sufficient throughput at the L1 level to service a large flea market or a mid-sized Costco, not the world economy. Lightning is a nothing burger. It would take 75 years, 2/3 of a trillion dollars in fees, and the entire rest of the block reward to open a channel for everyone on earth. And LN has quadratic routing complexity meaning even if you did, it wouldn't be functional in the first place.
Even your example of smuggling money across the border doesn't make sense - you need to buy Bitcoin at one exchange in one country, then sell it at another exchange in another country in order to spend the value. That takes days, costs percentage points, exposes you to huge counter party risk and massive forex swings ... and KYC. And being a public ledger, both governments can fire up chainalysis and see exactly who moved it where. So even if they don't ask you questions as you move across the border, they'll follow up. Just give it time.
In exactly what narrative does it come across as 'fundamentally sound'?
Really…
Do people hoard value shares which have predictable returns that beat inflation?
Is most gold or property hoarded, or is it traded? (Either is expected to rise in “value” over time, expected that is by the average person).
I suspect most people try to get the best returns. Hoarding might occur in a depression, but otherwise the concept is questionable?
Of course, but those aren't currencies they're equities. That's what they're there for.
> Is most gold or property hoarded, or is it traded? (Either is expected to rise in “value” over time, expected that is by the average person).
Gold is shiny pebbles.
It's fundamentally not worth much more than its industrial value (a tiny fraction of it's market value) and I wouldn't recommend anyone hold that either. It's not productive. It doesn't do anything but sit there, shiny, until consumed for industrial purposes.
> Hoarding might occur in a depression, but otherwise the concept is questionable?
Why would you spend something today if it's going to buy you more tomorrow? You wouldn't, to the extent possible. Thats why we separate short-term intentionally lossy store of value and medium of exchange (currency) and long-term store of value (equity, real estate, etc). We don't combine them due to their antithetical goals. Trying to do so is regressive.
Really? Doesn't seem like getting off the gold standard was so miraculous in preventing recessions. Spending is great for consumerist societies, but people who are allowed to save are allowed to make far better economic votes on what is valuable past short term pleasure. Inflation doesn't encourage spending, it kills saving and makes storing wealth something only the sophisticated and wealthy can achieve.
> As a 'hedge against inflation,' it's garbage. In the most inflationary period in decades, it went from 69K to 28K. That's a drop of 60% in nominal terms. While the dollar dropped 9%. That means it dropped 69% in real dollar terms in a few months. RIP.
Pathetic cherry picking. How about I do the same thing and I start in 2013 and end anytime in the past 8 years? Price discovery is an obvious reason you as a laymen should be aware of. On chain security scaling with price is one you could be forgiven for being ignorant of. Price and security do not greatly separate and Bitcoin actually needs time for adoption for fundamental reasons (not just waiting for people to understand it).
> - As a 'store of value,' it's garbage. A store of value must be predictable. You should have a reasonable expectation that you can extract the same amount of value from it in the future. See above.
Redundant and addressed.
> It's an environmental catastrophe, wasting as much power as an entire nation (and yielding kilotons of e-waste per year) to achieve 6tps. Millions of times less efficient than Visa, or FedNow or RTP
Bitcoin is not comparable to Visa. Bitcoin is final settlement. Huge banks and financial institutions only do final settlement once a week for a reason - its slow and expensive. Bitcoin is actually faster cheaper and easier than a wire transfer and it uses far, far less energy to do so securely.
> Lightning
Lightning isn't the only layer-2, and it isn't killed by routing complexity, it simply requires more centralized routing hubs, users don't just connect to all their friends directly. This is fine for payments small enough to justify it.
Other layer 2 solutions are custodial and semi-custodial, which, just like financial systems now, settle large amounts of transactions at one time. Even a fully custodied Bitcoin bank (with insurance) fulfills the promise of secure and sound money. It also makes that bank highly auditable and accountable.
Fundamentally sound means what it says. It means the most basic function is the best in its class, and that once the market realizes it the world will build around it.
I'd look back at the graphs. The wild inflationary and deflationary swings were dramatically worse on the gold standard. Because inflation doesn't depend on supply of currency but instead it is calculated from the price of goods.
> Inflation doesn't encourage spending, it kills saving and makes storing wealth something only the sophisticated and wealthy can achieve.
Same thing bud. And no, thanks for roboadvisors, anyone can save any spare capital via investments. Or series I bonds.
> Pathetic cherry picking. How about I do the same thing and I start in 2013 and end anytime in the past 8 years?
Pathetic cherry picking. How about you do it based on the percentage of people underwater. 40% of all bitcoin investors are now underwater. Unless you have a time machine, my number is far more relevant than yours. The entire country of El Salvador is down 40% from their investments.
How many people are underwater on the Series I bonds - an actual hedge against inflation? Nobody.
> Lightning isn't the only layer-2, and it isn't killed by routing complexity, it simply requires more centralized routing hubs, users don't just connect to all their friends directly. This is fine for payments small enough to justify it.
So you solve scaling with centralization, fundamentally invalidating the core value proposition of Bitcoin as per the whitepaper. I can do that too, with my dollars.
> Fundamentally sound means what it says. It means the most basic function is the best in its class, and that once the market realizes it the world will build around it.
Cool, but their assertion was garbage, and Bitcoin is fundamentally worse than pretty much everything it competes against, in every measurable way.
Not risk free. Plenty of people making conventional investments lost their savings and retirement during 2008. It's all dependent on the Fed and their discretion. Real stores of value are not.
> Pathetic cherry picking. How about you do it based on the percentage of people underwater. 40% of all bitcoin investors are now underwater. Unless you have a time machine, my number is far more relevant than yours. The entire country of El Salvador is down 40% from their investments. How many people are underwater on the Series I bonds - an actual hedge against inflation? Nobody.
Measured in dollar value? Of course people aren't underwater on their bonds against the dollar nominally - do you know what inflation means?
The rest of your garbage can be refuted by reminding you that Bitcoin is in price discovery mode. No shit an asset with a tenth the market cap of gold, that's only been around ten and a half years, that hasn't reached adoption, and whose security scales slowly with market cap is more volatile. The majority of investors throughout Bitcoin's history have enjoyed that volatility as the majority are in profit. But feel free to cherry pick the short term losers who are holding their coins at record highs.
I want to add one…
- there are at least 12 people that could absolutely destroy BTC in a variety of ways. Elon, some developers, some mining coop, whatever whoever, it’s not impossible. For example, what do you think would happen if the original Satoahi coins started to get used? Look how many / how much is there, it would be pandemonium. It’s a weak system that people want to trust, but there are no guns backing it up.
The value proposition of decentralized cryptocurrency remains the same whether the value is $62k or $0.62.
https://www.ycombinator.com/companies/stablegains
“EARN HIGH AND STABLE INTEREST FROM DEFI LENDING MARKETS”
Jesus…
These are private losses. We have lots of problems. It’s ludicrous to prioritise public resources for prosecuting those while led others into a bonfire.
Put a tax in place and yes, I would fully support public enforcement.
https://www.reuters.com/legal/government/sec-in-house-judges...
Risk of private action can be mitigated by making sure the victim's best recovery comes from selling their position along to a greater fool. At the end of this process the last bag holders individual losses are enough to not justify the cost of litigation. Costs which are all the greater for private individuals because they lack the governments power to investigate.
(and if fools run out a bit too soon, a bit of the initial income can be used to vacuum up the remainder)
Regulators are are also in bit of a spot because it's an entirely new beast. For most of the current use case crypto acts like unregistered security but in in some minor way it's also a currency. So regulators are biding their time because coming down with a heavy hand will attract a bad rep as big hedge funds are also getting into crypto.
Also, IMO current legal codes aren't good enough to tackle crypto at the moment, see this[1] for example. It's an active area of legal research so will take time to crystallise.
So these apps are slipping through this regulatory crack. Do they deserve to go to jail? I'm not so sure. But they do know what they are doing.
[1] https://www.imf.org/en/Publications/WP/Issues/2020/11/20/Leg...
It's relatively easy to deal with money-like substances that are precisely confined (closed-loop as they are called sometimes) such as carnival tokens, or Starbuck reward points. Problem starts when they start leaking into day-to-day finances.
I'm actually quite surprised that some of these scams (stablecoins being one example[2]) have been allowed to go on as long as they have.
[1] i.e. buying you at least a temporary reprieve as all you're winning is the argument that that particular law doesn't apply to you, not that they won't pass a new law and come after you using it.
[2] It sure looks to me like they're pretending to be defacto banks issuing their own defacto dollars and not so subtly assuring 'investors' a rate of return. The combination of these factors have historically been all but guaranteed to get damn near every agency of the govt on your ass.
What do you mean? It is still working and has an 18% APY for UST. UST may have failed to be a stable coin, but Anchor still works.
Bitcoin is not technically interesting - it is economically genius. Undergrad cryptographers have learnt enough to re-implement the Bitcoin protocol, but understanding the genius of the composition of those simple primitives is a practice of game theory and economics. Historians of money who know not how to program have far more authority than a bitter techie when it comes to analyzing Bitcoin.
Unless there was an actual crypto economy, but at this point, there's not much more than speculation.
It boomed and busted in 2017. Then wasn't going anywhere for years until central banks generated massive liquidity and all assets jumped (because cash went to zero and pushed everyone out on the risk curve). That's direct cause and effect.
Given the liquidity is being taken away, what is going to save the day for Crypto next? What would cause it to recover to previous highs? I don't think recovery is predestined.
Anyway, what is to say bitcoin shouldn't be $10,000? Or $1000? Or $1?
The latest crash is overhyped anyway, BTC is 30k and BAYC NFTs still have a ~200k floor. This isn’t some kind of capitulation to a new fundamental thesis, at least not yet. It feels far less wintery than some prior crashes that felt like BTC or ETH was on death’s door.
Yeah, bubbles make overvalued prices. Crashes occur. Losers fail. Winners gain bigger marketshare and mindshare.
Spectacular failures are actually a sign of a functioning market. The worst possible thing that could have happened last week would be the federal reserve offering Do Kwon a very cheap bridge loan to stabilize his section of the crypto economy, lest we risk broader market contagion.
Crypto failures are fast and painful as opposed to long and corrupt. This is a feature, not a bug.
Also, ironically, this author has spilled a fair amount of ink over all the market crises of the years. He wrote a whole book on the dot-com bust. The Luna saga was over in about 3 days.
> The list includes some traditional tactics for illicitly relieving rubes of their money, such as pump-and-dump schemes and phishing for passwords. It also describes new, more novel schemes, including the “pig butchering” crypto scam, which often involves an attractive person approaching you online and offering you spectacularly lucrative crypto investments.
Sure, I get these DMs on discord too. Don't fall for scammers. They were doing the same nonsense with "Double your Square Cash!" scams shortly before the crypto boom. Or offering great deals on "GPUs" during the shortage. This is not a crypto problem in the slightest and crypto probably makes these lower end scammers easy to prosecute.
> The over-all aim was to make crypto investing seem mainstream and draw in gullible investors who feared they were being left on the sidelines.
Does anyone seriously believe that etrade or robinhood advertising options trading to me is somehow different? There are constant commercials for precious metals and ETFs and all kinds of things.
I know a fair amount of bitcoin millionaires, all of whom were called "gullible investors" at the time.
What really bothers me is the incredible amount of ignorance I see in the comments section about crypto, blockchain technologies, poor understandings of economics, etc.
Wtf HN. Do better. I feel like I'm watching my peers get old and resistant to change and dismissive of new technologies and exciting possibilities.
Also, if you appreciate my contrarian (for HN?) view and are looking to take on more risk, now is the time to build for web3. The people chasing easy money will give up and the people moving the tech forward will build while no one is watching.
>Does anyone seriously believe that etrade or robinhood advertising options trading to me is somehow different? There are constant commercials for precious metals and ETFs and all kinds of things.
Well they're equally bad in terms of being a scam, unless you are a hedge fund that has enough liquidity to even need options trading in the first place. Not sure what other conclusion you could come up with there.
>What really bothers me is the incredible amount of ignorance I see in the comments section about crypto, blockchain technologies, poor understandings of economics, etc.
Being bothered by the flaws of crypto does not equate to being uninformed. That kind of logic is what I expect from a car salesman, not HN.
Yes, that wasn't nice of me, but being told I'm old and resistant to change because I disagree with someone doesn't engender friendly interpretations.
No asset is a pure force for good nor evil, but there are material issues with crypto and pretending they're ONLY a technicality is convincing no-one.
The reason is because it's very closely related to gambling and triggers the same obsessive thinking as gambling does - based on my observations of how I felt and thought when I did some crypto investing - I found myself constantly checking prices and devoting huge amounts of thought to it - I even wrote a crypto trading bot to analyse strategies. If you know anyone into crypto you would know they talk about it non stop.
There are HUGE numbers of people who's brains are deeply involved with crypto. They'll be back for more.
Crypto had a big crash only recently - about 12 to 18 months ago I think, when Elon Musk made some comments that crashed the market. That crash was rapidly forgotten and people piled back in. Same thing will happen here.
Logic is not the driver of people's behavior.
Crypto is essentially legal, consensual large scale ponzi scheme participation - if you understand that then you might be able to win big.
The most amusing part is how the general public instinctively reacted to NFTs as thinking they were a scam, but they had so much news coverage and big numbers behind them that it became an Emperor has no clothes situation where it can't be a scam because too many people are agreeing with it. Only for it all to unravel and the public opinion returning to its just a scam.
The type of person who tries their hand at cryptocurrency speculation isn't much interested in learning or responsible investment. They are trying to get rich, thinking they will get ahead of the rest of the FOMO idiots. Most don't have the financial resources to consider low-return "safe" investments in mutual funds or the stock market, but they can buy a few *coins for a little bit of nothing and hope it goes up. The crypto-libertarians who see it as a solution to perceived problems with fiat currencies and/or government economic power doesn't seem to have much overlap with the "get rich quick" group.
The SEC just doubled their "cyber" enforcement staff. They're still working down the backlog from the ICO boom of 2018-2019, at the rate of about two scams per month.
I expect the hammer to come down on a number of Metaverse schemes which collected money, promised a fancy 3D virtual world, and failed to ship. That's where an unregistered public offering becomes fraud.
I think people are more rational than you give them credit, but, yes, emotion often informs and overrides our logic. Feelings, emotional intuition, biases, and prejudices color the lens of the eyes through which we see the world. Logic can be like prescription glasses or like Stevie Wonder glasses depending on how we check our priors.
> The reason is because it's very closely related to gambling and triggers the same obsessive thinking as gambling does - based on my observations of how I felt and thought when I did some crypto investing.
I noticed the same obsessive feeling and learned more about myself through that day trading. It was an expensive lesson however.
Except 12-18 months ago we weren't entering into a recession. So, although I am generally bullish on crypto, I am not so optimistic on things coming back to normal any time soon.
Remember the old adage folks - "the market can stay irrational longer than you can stay solvent".
I was also flooded with some really obvious bullshit... this crash is going to sweep the table clean. There is a chance it might come back cleaner and stronger than before. More mainstream maybe, with some regulation.
I think that points to the best recourse we have, after the next crash: it needs to be regulated into the dirt.
I suspect they'll aggressively take out stablecoins. They are the only real source of liquidity in crypto. Price action follows liquidity, so hopefully, any future swings will be much much smaller.
Less facetiously: there is nothing orderly about our current schemes. There is nothing particularly fair about them either, unless your definition of fairness is something closer to Thucydides' than a modern one. And predictable? Cryptocurrencies handily defeat our stock market in unpredictability. Not a great set of qualifications.
But then again, what if what I mean by ban is a "partial ban." Opportunities for misinterpretation abound!
"regulate it into the dirt" is commonly understood to mean the very real practice of placing so many restrictions/conditions on something that it becomes impractical to operate within the industry of whatever "it" is while explicitly not actually banning it outright.
I tend to agree that there's no reason it should exist, but I'm open to the idea that maybe there's a worthy purpose out there that I'm missing.
Not really. There are a lot of people holding, mining, DCA'ing into projects they believe in who have no trouble at all keeping it to themselves.
Your remarks about gambling are similarly projecting a portion of the community onto the rest. Those traders who treat it as a speculative asset are gambling as you say, and tend to be obsessive in the way you describe, but you seem not to be aware of everyone who deals with crypto differently than you did.
There are a lot of crypto projects that people don't expect to moon, that effectively serve their purpose right now, and will just get better at it in the future. None of what you wrote is nearly as generally true as you made it out to be.
Thankfully there's cool stuff in the ecosystem that isn't a scam, but it's not newsworthy, so it doesn't go viral.
But given how online people are in general (and they're only likely to become more online in the future), it's natural they'll want digitally-native ways to organize themselves, represent ownership, qualify membership, etc.
The shift in concept required here is from viewing a token as "an investment" to viewing it as a form of legible social proof within its community context, which becomes more meaningful as communities grow beyond the "tipping point" where interpersonal proof (think webs-of-trust) is sufficient for coordination. NFTs (yes, they're still around!) are already serving this function for certain experimental communities (and even in less experimental ones, see POAPs).
In general, everything above is still in the experimental, live or die phase. We don't quite know where it's going. But it's pretty damn cool to watch if you're deeply invested in the internet as a medium (and as someone who "grew up online", I absolutely am).
* If it's a governance token system where more money == more power...well, I just don't think it's a good idea in general.
* If it's a system that tries to replicate the idea of one person/one vote, you have to have KYC (and re-KYC upon membership transfer) or it devolves into the first case. Then the entity doing KYC has centralized control over membership, so it seems like storing membership info on a ledger doesn't offer any benefits compared to just having a central membership database.
Regarding the former case, of money and power... this one is a little harder. In theory, if you're a part of some community, and a very rich person wanted to fuck up or infiltrate your community by leveraging their wealth, they could probably figure out a way to do it, crypto or not. At least in this case, the existing community members stand to reap some sort of benefit from it, in the sense that a new whale's buy-in will increase the value of their existing holdings. Then they can all cash out and start a new thing someplace else. It has a similar form and moral valence as neighborhood gentrification (but without the racialized element).
I tend to think most communities will solve this by having some external aim of coordination that discourages people from just speculating (which makes sense given that social proof exists relative to the community in question), even if the balance of power is determined based on buy-in. But again, I don't really know how it will play out in practice, if more regular people will actually take up these tools for non-speculation reasons, etc.
When I say coordination, I mean all sorts of collective decision-making and agency can take place using crypto as a medium, if someone has a vision and enough people are invested in making it happen, see: https://otherinter.net/research/squad-wealth/. Basically, if you need to get groups of people to align themselves and act in concert, and it's happening over the internet, crypto has the potential to make that happen. The technology is fundamentally social in nature, whereas an iPhone is fundamentally a personal object that happens to include some social tooling.
I don't know how it's going to look. Maybe groups will work together to purchase and maintain land. Maybe you'll see digital guilds or unions forming around creative niches. Regen (https://www.regen.network/) is working on communities for landowners who want to get carbon credits. It's really early. Maybe nothing will happen at all, and I'll look back on these posts with embarrassment. But it's exciting to work on projects building stuff that really doesn't exist yet, if only to see what happens.
(oh, and, people really aren't talking about this side of crypto at all. this is an entirely separate thing from bitcoin and defi)
I have seen very few people talking about the price of something in ETH without a parenthetical giving the current USD value.
Also, there are plenty of smart display companies popping up. Check out Infinite Objects or Atomic Forms.
really curious whether what they believe is anything other than “I’ll cash out before it tanks.”
Call me old fashioned, but I want to store my money in something safe and reliable like Beanie Babies.
but the fiat value of cryptocurrencies is a speculative bubble i'm sure. without belabouring the whataboutism that usually follows this argument.
lines between blockchain the tech and crypto the casino are blurry.
"but what about censorship" Circumventing government censorship is, by definition, illegal.
"but what about trustless" We do not live in a world where there is nobody that can be trusted. And if we did, why the hell would you want a currency where nothing can ever be reversed?
"but what about NFTs/smart contracts/DAO" All of these are useless and have resulted in nothing but blatant scams and illegal activity (because that's all cryptocurrency is useful for)
Cryptocurrencies have many great uses. You can gamble with them, you can buy drugs with them, you can pay ransom on software that just locked down your entire business for a day, as well as many other illegal activities. EVERY SINGLE OTHER USE, WITHOUT EXCEPTION, is something that centralized systems already do well. And if someone is trying to convince you otherwise, they are either trying to pass the bag to you or make you a part of their scam.
This is a good polemic line I’m stealing
What's with the dismissive, ignorant and hostile attitude? There are plenty of legal businesses that will accept cryptocurrencies - Mullvad VPN for example.
> Cryptocurrencies have many great uses. You can gamble with them, you can buy drugs with them [...]
Why are you surprised? Replace "cryptocurrencies" with "cash" and the same use cases apply, it's a currency after all, facilitating transactions is the core purpose of cryptocurrencies.
> EVERY SINGLE OTHER USE, WITHOUT EXCEPTION, is something that centralized systems already do well.
Yes, centralized systems handle most of our transactions just fine, most of the time. Do you expect people to have to argue in favor of choice while setting an impossibly high bar for any kind of competition?
Do you believe in freedom of speech?