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Comment by mywaifuismeta | Hacker News Reader

It's kind of a Ponzi scheme, but not really since it's not (usually) orchestrated by one malicious entity. Instead, it's a collaborative community effort with the community doing marketing and driving the price. In other words, the dirty work if customer acquisition and advertising is outsourced. It's not so different from crazy startup valuations that are often a result of market forces and competition, with the hope of exiting through acquisition to generate returns before anyone notices not much of value actually exists.

It's a fun game to play, just like casinos are fun. In 99.9% of cases nothing of value is behind these protocols.

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Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry.

https://twitter.com/patdennis/status/1518637225789042688

What I don't like about this terminology is that I associate these "schemes" with a malicious actor. Someone trying to scam you. But often that's not the case with these crypto projects. Often, nobody is explicitly trying to scam anyone, but everyone looks out for themselves first and wants to make money, which inevitably results in other people losing money if they are too late.

If a traditional startup is valued at $10M, I'm sure many founders would choose abandon it and take $5M in cash if only they could. The difference is that the liquidity is not there, so the option doesn't exist. In crypto, protocol founders may not start the project with the goal of abandoning it, but once they can choose between cashing out with $5M by abandoning it, they take that route because they can. People then call this a "rug pull" or "ponzi scheme" but I don't think the intentions are the same.

I think the word valued is hiding a lot.

With startups, the "value" comes from investors who are willing to buy stock at a certain price with certain conditions, one of which is that the rule of law prevents you from stealing company money. If that law were not there, or could not be relied upon, investors would not be willing to invest at that price, and the "value" would be much less.

Or at least, that is my theory of how things should work, because crypto valuations seem to have proved me wrong.

You need to be able to see true malice through Hanlon's razor. Not every bad thing is just a stupid person, sometimes (often) it actually is people doing bad things on purpose.

Even if someone is so stupid that they design a Stablecoin backed by leverage that fails if the market goes down 20%, that is malice by negligence, because that stupid person should know that they do not have the capabilities to produce what they are promoting to people. If they are doing harm to society they must be stopped; motive is really not important.

If I squint, they are. They’ve already established what kind of person they are, now we are just haggling over the price.

> It's a fun game to play, just like casinos are fun. In 99.9% of cases nothing of value is behind these protocols.

It is a lot of fun until people start becoming homeless and consider ending their life.

https://www.reddit.com/r/terraluna/comments/un3w7t/i_lost_ov...

> It is a lot of fun until people start becoming homeless and consider ending their life.

It's still fun. People make bad decisions all over the world all the time. The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve.

> The fact you read and dwell on the consequences some people suffer over it is not a problem, for other people, to solve.

Unless those other people are the government. In which case it is their obligation to reasonably check predatory fraudulent activity, including ponzi schemes.

And unless those other people are simply concerned citizens who bring dubious schemes to the attention of the public at large.

> Unless those other people are the government.

> it is their (US government's) obligation to reasonably check predatory fraudulent activity

Crypto, by-in-large, is not predatory. Most fraud checks are after the fact. Fraud can be triaged, but there is no getting around the reality that there will always be people who don't value risk properly. Again, this is not a problem for other people to solve.

This is not a reason to pretend it's a larger issue that will affect your gambling experience.

> Crypto, by-in-large, is not predatory.

I disagree and believe crypto is by-in-large predatory. The crypto handbook seems to be:

1. create coin

2. promote coin and get people to 'invest' in it

3. move the 'invested' money ("rug pull") into your personal account

4. disappear or do it again

> there will always be people who don't value risk properly

This is true. But we cannot compare making a wrong call on the direction of highly regulated Microsoft stock with 'investing' our money with people who are almost certainly going to steal all of it with zero consequences.

> will affect your gambling experience

You call this gambling. But the crypto creators promote their coins as investments with 'exchanges' and so on.

Financial investments and gambling are both highly regulated industries but crypto is subject to regulations from neither.

> Financial investments and gambling are both highly regulated industries but crypto is subject to regulations from neither.

We are not arguing about if there is fraud or not because that is not the issue at hand, nor in dispute. Again, this has nothing to do with the original point. Other people's bad choices do not affect the enjoyment of gambling. GL with whatever.

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