I don't see the contagion spreading, unless some real crimes were also committed on the TradFi side of things. But unlike 2008, these crimes aren't institutional and will have real names attached to them.
The worst I see is crypto dying a firey death, people go to jail, and a new generation of avg greedy folk learn the hard truths about get rich quick schemes. All well deserved.
Frankly I'm relived to finally get this experiment behind us. The sooner it dies the better. The bigger it got the more avg folk that were going to get scammed.
Meanwhile the rest of us go back to our daily lives trying to figure out where to invest wisely.
fine gold coins, r/wallstreetbets, lottery tickets, and shares in "art masterworks"
Yeah it sucks average Joe's got suckered. I feel the pain.
But every generation brings a new group of greedy people that fall for get rich quick schemes, and they all usually learn there ain't no thing as a free ride the hard way. People like this won't listen to the warnings. "Have fun staying poor".
I'm sorry there's collateral damage. But people like this are going to get conned somewhere. Best these people learn a lesson, then they can be smarter with the rest of their lives.
Yeah, the media was all hype. Well guess what, the media isn't reality folks. And they're certainly not looking out for you. More timeless lessons to learn. Be careful who you trust.
Keep the government away from money!! Hey FBI someone stole my bitcoins!
So much old wisdom being re-learned right now. It's about time. The longer this was going to go on the more people were gonna get hurt.
No, she's supposed to read "8-18% per year guaranteed, no risk*" and say "there's no legal way that's possible and there are too many asterisks, I'll stay with Vanguard".
The parent comment is totally correct that innocent people were slammed from every angle to the point where even pro investors or techies couldn't see through the SCAM.
How is a person with early stage dementia supposed to differentiate between "new thing that's actually an incredibly wise investment decision" (i.e. Vanguard, popularized in the WSJ in the 1980s) versus "new thing that's actually mostly a scam" (i.e. most of crypto, popularized in the WSJ in the 2010s) when their once-trusted sources of information have failed them so miserably?
It's why the anti-crypto crowd has been so vocal. They're not haters. They're trying to warn others.
The frustration in that crowd is that you're ridiculed for your lack of faith. Hence the schadenfreude.
Not to pile on, but if one is getting financial advice from sporting event logos, it is yet another timeless lesson to learn not to do that.
The issue is that it became a defacto tool of choice for average fraudster to rehash old scams.
I am not feeling the pain, but I am also not celebrating. I want balance and getting SBF should bring some semblance of it ( semblance, because he should be not connected enough to make sufficient amount of connected people angry and vindictive ).
That and "it doesn't get any more useful as you add nodes, but you still have to add them or people can hack it".
That is is testable. I used it and whether it is more expensive appears to depend a lot how/when/what you use to facilitate it.. not completely unlike Transferwise, which is basically a broker of such services, which is how they can offer them at a relative low cost.
If I used it and found it useful, does that make me a criminal?
<< only useful for criminals, but isn't useful for them because their transaction history is public and forever" should be good enough.
What you seem to be saying is that crypto has properties that are useful and properties that are not useful. In a practical sense, that means it is just like any other payment type ( fedwire has speed over ACH in US; Zelle has convenience over SWIFT in US ). All of these leave some of sort of trace. Crypto's differentiating factor is that the ledger is public. It is both good and bad depending on what you want to achieve.
So, allow me to reframe the question, if only criminals use it, why do they do it if it is not useful to them. Your argument is a little flimsy.
<< That and "it doesn't get any more useful as you add nodes, but you still have to add them or people can hack it".
I agree in principle, but between all the hacks we have seen from all the other non-crypto companies over the past few years, I am not willing to hold crypto to a higher standard.
Probably whoever's on the other side of the transaction is. If you bought your BTC on localbitcoins you probably got them from a money launderer for instance. Nootropic companies are the most legal crypto users I'm aware of.
(And don't forget the costs of converting to/from crypto coins to get to the final good you purchased with the money you transferred.)
> So, allow me to reframe the question, if only criminals use it, why do they do it if it is not useful to them. Your argument is a little flimsy.
Criminals aren't very smart. If they were, they wouldn't be criminals, which is a very low-paying career.
> I agree in principle, but between all the hacks we have seen from all the other non-crypto companies over the past few years, I am not willing to hold crypto to a higher standard.
The regular financial system doesn't need to be 100% immune to hacking because it can undo transactions.
I did buy mine from Paypal so you might be onto something.
<< Criminals aren't very smart. If they were, they wouldn't be criminals, which is a very low-paying career.
Um. I would maybe call it a reverse survivor bias. As for the low paying claim, I suppose it depends on other factors, but we are currently commenting on an article, which discusses sums upwards of millions of dollars. Reality is refuting that claim unless you want to include everyone with a felony in that circle ( technically accurate, but I personally think financial fraud is its own world that lives outside petty criminal circles ). I am open to rebuttal.
<< The regular financial system doesn't need to be 100% immune to hacking because it can undo transactions.
Hmm. It technically can, but, for example, as some people in fraud cases unfortunately found out, once wire is sent out, getting it back is not as simple as pressing a button even for institutions within the same jurisdiction. You are not exactly wrong, but you are not right about it either.
I will admit that this is a first time I see that stated this way and I am a little confused. In a very practical sense, nothing is 100% immune if history is any indicator. If my router is hacked, the fact that I revert it to its prior state makes ok? The original issue remains in place. I am sorry, it is just an odd argument to make. Can you elaborate on what you meant?
>> Probably whoever's on the other side of the transaction is.
> I did buy mine from Paypal so you might be onto something.
Literal LOL. Thank you for that.
But again, I don't expect joe public to have enough understanding to navigate this stuff solo.
I agree that it is a cause and effect, but I worry that you may be mistaking one for the other.
You're 100% right. And in theory bitcoin is fine and will still work. The problem is the underlying mechanisms that attract fraud and crime into unregulated spaces.
1) I never thought crypto had that much utility for the average person. It does have a lot of utility for drug dealers, human traffickers, and organized crime.
2) Lack of regulation is a warning sign. Con men and fraudsters are probably mentally primed to spider sense financial spaces and loopholes LEOs are not paying attention to.
3) The above two points make crypto a superconducting magnet for criminals. In retrospect it's no wonder the space is full of bad players. Buying drugs was bitcoins first killer app. Pump and dump frauds were it's second.
4) At this point (as you were saying) "crypto" isn't what it started out as, or wanted to be. But the harsh reality is that it's likely irrevocably tainted, and any attempt to reboot would have to still contend with the above points.
5) Any attempt to cover the above points, and you just get a regular digital payment system that doesn't work well for criminals. Technology aside, the utility is no different than the dozen or so phone app instant payment systems already out there. What's the incentive of average Joe already using Zelle to pay his bills (at no cost) to jump ship into a new unproven digital currency? The problems being solved here are already solved.
"Crypto technology" can power a fed digital dollar, or Bank of America tokens (which is all your balance there is anyway). Such currencies are arguably better in every way due to regulation and clawback protections.
Crypto's only real utility turned out to be acting as the currency of last resort for criminals. Anyone legit has better options with FDIC protections. Everyone left has no where else to go. So any unregulated space will naturally evolve towards being full of bad players and crime.
The key lesson here is that the primary utility of any extra-governmental currency will always be that it operates as the currency of last resort for criminals. So in my mind, that kills the dream of crypto-anarcho-capitalism. It was an interesting experiment while it lasted. I don't see how it can recover.
As one last point. I came to this line of thinking and conclusion once before, dealing with Freenet and crypto-information space. Freenet is arguably the crypto-anarcho version of the WWW. Same goals, no government involvement, no censorship.
If you haven't followed it's history (been around over 20 years), the space is entirely polluted with CSAM, so much so that many of the idealistic early adopters have fled the space in disgust. [1] Same analogy applies here, Freenet, being the storage space of last resort for data so repulsive no government will allow you to have it, is a haven for the worst kinds of data imaginable.
At this point I'm convinced crypto-anarcho-anything will eventually simply become a magnet for crimes and reprehensible people. There's no place else that's safe for them to go, while the rest of us have safer/regulated spaces.
It's humans that killed the crypto dream. Technology can't solve all of our problems. We presently need, and will always need, human accountability in the loop.
Ok my last-last point. Seeing this play out multiple times now, I'm convinced that total anonymity on the internet is a cancer that must eliminated if digital society wants to move forward. The real world maintains peace/order/justice because we have real identities and real reputations. A similar system is needed in the digital world if we're to evolve past this stage where average people run the daily risk of being waylaid by digital highwaymen. The digital world is still in the medieval ages. The solutions that have allowed society to evolve and scale in the real world need to be implemented in the digital world before we can take it's potential to the next level.
This is by far the most accurate and level-headed take I saw on HN regarding crypto. I am not completely sold on the remaining points, but it is hard for me to refute them ( and I do not have a way to see how things evolve from this point in time ).
In short, I think I agree with you.
I love the discussion here, people are smart, relatively civil, and have a lot of value to add to conversations. One of the few spaces I still learn anything significant from experts in their subjects. Much wisdom here.
And hey whether or not it's right it's still food for thought. Predicting the future is impossible. As I've gotten older I see the same meta-patterns played out again and again, so I try to look for those indicators. I get paid for it, so at least I'm not super terrible at it.
The similarities between what happened to Freenet and what is happening in crypto space are pretty profound. The common denominator is that building extra-governmental spaces just attracts criminals who have no where else to go. The worse the crime, the more attractive the extra-governmental space. The rest of us are not forced to go there, and those that do usually come home with their tail between their legs. It's a brutal space. There's a reason we have governments, the alternative is just terrible.
I'm glad you qualified that!
I think "total anonymity" is reasonable in many circumstances. Not everyone who needs to avoid being unmasked is a criminal.
So I didn't explicitly say it in my original post because I didn't want it to be too wordy, but yes it is pretty awful that some scammy bullshit was permitted to be advertised to average consumers as if it was a normal investment, and that as a result people will have invested in something that will (in my opinion) ultimately be worth nothing. I was horrified to see giant crypto.com adverts in my mid-sized Central-European city - since it means that many people will have assumed that this is just some new tech asset class (rather than a delicately balanced house of cards) and then effectively dumped some money into a black hole
Really? Maybe crypto media
Is it? It's just plain old avarice. When someone comes to you and says, "give me a coffer full of money, I'll bring you ten coffers back, don't ask too many questions", you know you're gambling, don't need to be a genius to see that.
My grandfather who had like six years of formal education and lived in a village of 300 people always told me to not invest money into anything that you don't understand. That's about the level of common sense required to dodge the crypto bullet. People got greedy, and wilfully ignored the shadiness because they wanted to earn outsized returns quickly without doing anything, that's about it.
That's not the situation however. The situation was "My relative that I trust and love, that has a successful career doing tech stuff, says this all is a good idea. Also I see people on all the big tv channels and major papers, including the WSJ, saying similar sounding things.
Consider that someone in that age bracket might have entirely not selfish reasons, like wanting to leave the best inheritance possible. How are they supposed to know all these crypto folks are different from a simple diversified portfolio, when apparently the same experts are hawking both?
You people still do not seem to understand the fundamental point: you see things from a vantage other people cannot, and it's insane to demand that every random member of society have this degree of sophistication about tech meets securities fraud, doubly so when major media outlets have been hyping this stuff for years uncritically.
It's not “cannot” but “choose not to”. Continuously throughout this process anyone with a high-school level econ education knew that cryptocurrencies were a high-risk investment and, in most cases, could not possibly deliver the advertised benefits. The fact that some people in the media hyped it up didn't mean that you couldn't listen to the many people in the media who urged caution, or remember that those same people hyping it up had a history of being wrong about other things as well. People _wanted_ to believe there was a way to make a ton of money without doing any real work and so they _chose_ only to listen to the bulls. Hopefully the lesson wasn't too expensive for most of them but it's important to remember that throughout this process there was no specialized education or skill needed to understand that meteoric returns are not sustainable long-term and speculation always involves risk. The same skills which kept your great grandfather from buying swamp land in Florida or “investing” in a 90mph carburetor design worked here, too.
That's the problem with the “My relative that I trust and love, that has a successful career doing tech stuff, says this all is a good idea.” stuff — it's tragic when that happened but those kind of sales pitches (and, let's be honest, that's what that was) were someone urging their relatives not to listen to the sober voices. We don't need to make excuses on behalf of the people who mislead their friends and family to make a buck.
If that sort of media did not have crypto to hype, it would be something else like hedge funds or Chinese Yuan or fintech or some amazing security where the risk is obscured. r/wallstreetbets had exactly the same sort of clickbait cheerleading and it is still going on to some extent.