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Comment by mjburgess | Hacker News Reader

Reminder: good estimates place the number of people in the cryptocoin system in the 100,000s. BTC can support c. 7 transactions/sec. Ethereum c. 20.

This is a scam. It's a self-organizing pyramid scheme. There is no "there" there -- the vitamins really arent a cure for cancer, and your friend telling you to buy a warehouse full is part of a cult of pushers who are desperate that their warehouses of vitamin pills (ie., tokens) doesn't become entirely unsellable.

All the numbers reported by the cryptocoin system are made up: these are manipulated markets with almost no buyers. "Market cap"s are inventions. The amount of actual liquidity in the system is tiny: people are looking for the exists. These exits are mugs called "hodlers", ideally, You, who'll buy their vitamins from them.

Usually, HN comments ought be somewhat more sober -- but I think this is now out of line. Sobriety in this matter is enabling a system of exploitation which should not be entertained by decent people.

View on HN

Cannot upvote it enough. This charade had gone on for far too long. The liquidity is coming from the poor, desperate people who have been sold a dream of eternal riches by the criminal scammers. Governments and law enforcement agencies must step in and put a stop to this planet destroying fraud.

> The liquidity is coming from the poor

Where are you getting this information? Have you experienced issues with liquidity when selling BTC or ETH?

One look at the Bitcoin and Cryptocurrency subs on Reddit and it is clear, many of the people still putting in money regularly in the crypto ponzi are the ones who can least afford to lose it.

That's not what liquidity means though. You could say that about /r/wallstreetbets too

Well indeed, crypto fanatics are stock touts for penny stocks.

The biggest liquidity scam here is tether -- that's where you accept one real dollar from a pigeon and turn it into 100s by creating a row in an excel spreadsheet called lol-wewillallbeinjail-soon.xlsx

That's the big real money pump into the system. Hopefully when tether fails, we can see past these manipulated numbers. ie., when people realise the 200bn+ they thought was there was 20bn, we may be able to estimate the actual amount of money being put in.

Casino chips. Actually worse than casino chips because at the end of the day you can't even redeem them for real money and go home.

The game is simple - create magic tokens, create "stable" magic chips. Wash trade tokens with magic chips, pump the price to moon. Lure naive idiots and unload magic tokens for real money. Laugh all the way to the bank while telling suckers to keep holding till eternity.

And just like casinos, you don't have to participate.. It seems to me that main difference between crypto and stocks is that crypto is on 24/7 and doesn't have built-in breaks when the market drops by 10%.

There's also the small thing that stocks correspond to a fraction of an actual company and cryptos just some silly bytes.

We do have to live with the consequences though: increased energy prices and greenhouse gases through cryptomining.

That depends on if proof of steak pans out, no?

Sounds yummy.

We wouldn't care a fig's leaf if it wasn't for the huge carbon footprint of the POW ponzis. If it was just a bunch of gamblers scamming each other over make believe internet bytes without setting the world on fire, we wouldn't mind. But when your little ponzi wastes energy equivalent to a small industrialized nation, the world has to do something about it.

Ok but BTC + ETH make up ~68% of the total crypto market cap, not these penny stocks. And yes, I realize that market cap means less and less as you go down the list of coins but that's kind of my point. It is a choice to go for the smaller ones (high risk, higher potential reward).

The sock puppet liquidity argument, which I have agreed with for almost the entire time that I've been around crypto, now unfortunately well past 10 years, may finally get its first no BS test due to pending liquidation action by the Mt.Gox government trustee.

This individual appears to be largely outside the influence of the cartel, at most couple hundred people with a further concentric core of four dozen or so, who control all the liquidity levers and self-reported "usage" and "transaction" metrics in the whole system. These would be the large, long-established and highly publicity-averse miners and the pools they (pretend not to) control, the only group that can afford to burn transaction fees the prop up usage metrics, because they are actually paying a substantial share of those fees to themselves.

Obviously the payout to the people impacted by the gox hack has been perpetually delayed, and there's no guarantee it will happen anytime soon, but certain legal milestones have been reached that will make it quite difficult to delay past this year. When it does happen, we'll see a genuine liquidity event - something north of 120,000 Bitcoins - happen over a very short time, although the trustee has not disclosed how they will manage to do this without completely tanking the market or otherwise introducing slippage that privileges the earliest recipients of the payout over later recipients. This isn't tge same as a in-on-the-game joker like Musk talking about buying and selling a billion dollars in crypto in the past tense, where there is no way to measure his words against the market. The addresses that hold the gox coins are known and monitored.

Regarding number of people actually using the system, do you have any good estimates in mind by chance? I'm seeing claims of 7% of Indians for example, which would be in the millions by itself.

https://triple-a.io/crypto-ownership-data/

Keep in mind that all the major source on crypto, including the top dozen popular textbooks I could find on amazon -- and many "academic" looking papers -- are written by people profoundly invested in selling crypto.

All crypto news is press releases from crypto companies. All crypto ideas are rehearsed sales pitches with no arguments or evidence. You should assume anything written on crypto which hypes it is a lie. You should investigate the site/author, and -- I'd predict -- you'll find that every single time it links back to people with profound economic incentives to lie to you.

For BTC, you have 400,000 addresses used daily transacting about 300,000 transactions. This is trivial to obtain as a public record. How many of those addresses are associated with only one individual?

If i wanted to simulate millions of users I could do so only with a trivial amount of money. What is a "user"? It's just an address. There are no "users" on the chain.

There are 70mil addresses on BTC, I believe. How fast could an interested party double that? Pretty quick.

These numbers, absent hard-hitting empirical data, should be regarded as fraud. They're made up, either at the level of the press release, or by technical manipulation. Eg., by moving lots of money around a few accounts to manipulate figures.

This is a system which maps, at least provably and publicly, to the entire daily economy of a small town. And it's energy usage is measured in 10^12

Even in a steel man argument I think someone would have to concede that BTC itself can not be the base layer most people, with a layer 2 like Lightning being necessary for scale which has it's own problems.

Unfortunately as you say it is hard to tell how much genuine usage there is. The only thing I would add is that while crypto is worse, I feel the same concern regarding misaligned incentives in regular finance.

In terms of address count, they're also as I understand intended to be use once[1]. On the other hand there's many people using the same wallet and transacting without ever leaving a exchange and causing a real transaction, though I probably wouldn't consider that as "counting" personally.

[1]https://en.bitcoin.it/wiki/Address_reuse

> Keep in mind that all the major source on crypto, including the top dozen popular textbooks I could find on amazon -- and many "academic" looking papers -- are written by people profoundly invested in selling crypto

> All crypto news is press releases from crypto companies

Again, you could say the same thing about people trying to prop up the capitalist system as they are heavily invested in it and own property, etc..

I could argue that people arguing against crypto are mainly people who are upset that they missed the boat on the biggest price gains. But you could also make that argument about the stock market/capitalism. So it's not a valid point.

> So it's not a valid point.

Economics textbooks are not written by people trying to hype an asset.

> you could say the same thing about people trying to prop up the capitalist system

Sure, and the heavily manipulated housing market, propped up by QE which dramatically inflated asset prices, is a major issue facing several large economies (eg., AU, UK esp.).

However homes, at the end of the day, are homes. If you're conned into overpaying 100,000 on a home whose value will drop 150k at some point because of obvious on-coming market corrections -- well, you still have a home.

Crypto's market correction is "to about zero". And there's no home left.

Crypto is a scam. These ideas are part of the scam. These whatabouts and fasle equivocations.

It's as much a homeopath saying, "what about big pharma?"

> Economics textbooks are not written by people trying to hype an asset

Even if economics textbooks are not written by the doomsayers for whatever reason, do you think banks and private companies are not doing PR blitzes for assets right before dumping them on us?

> If you're conned into overpaying 100,000 on a home whose value will drop 150k at some point because of obvious on-coming market corrections -- well, you still have a home

Well, at the end of the day you still have your ETH whether the price is $2k, 30 cents or $24k and you can use it to do public decentralized work across the L1 network. On which things like

You can also trade it or buy the VitaDAO token and vote on funding for translational research proposals

https://www.researchhub.com/paper/1266843/vitadao-whitepaper

Owners are very distinct from users. What percent of that 7% have ever bought or sold anything using crypto (other than when they obtained it)?

I tried to dig a little into how these numbers are being calculated. Most are based on surveys of Indian Internet users, which caters to selection bias of "internet users in India who want to earn money using surveys". Additionally, India has a 47% internet penetration, which most reports (citing the surveys) don't seem to be accounting for.

The-Ken[c] did a report about how the number of Crypto users in India seems to be over-reported, on two counts - Users have accounts at multiple exchanges (Double Counting) and Users who are in it for the Free Crypto:

> Estimates peak at an overly enthusiastic 100 million crypto owners, as claimed by broker discovery and comparison platform BrokerChooser, but the true number is likely a more conservative 10 to 15 million, according to three industry executives The Ken spoke with.

> “We work with an internal estimate of about 4 to 5 million regular users in India,” said an executive at crypto exchange ZebPay. [...] Notably, the exchange takes into account not just individuals who made trades in the last 30 days, but also app opens while calculating the number of regular users.

> The situation is further exacerbated by exchanges offering joining bonuses and crypto rewards for signing up, like the Rs 100 worth of free bitcoin offered by crypto exchange CoinDCX.

> This lures users into creating an account—irrespective of whether they engage with it in the future or not—and helps the exchange pad up its user numbers.

A better source to consider is the Reserve Bank of India, which has made 2 interesting statements about the number of crypto investors in India.

1. RBI Governor Shaktikanta Das, Nov 2021: "With a reasonable amount of confidence, I can say the number of investors in the crypto market seems to be exaggerated. Adding that most of the buyers of cryptos in those platforms have anyway invested just between Rs 1,000 and Rs 3,000. (12-36USD). [a]

2. RBI Deputy Governor T Rabi Sankar, Feb 2022: "there is no data to justify how many investors have invested in these instruments and what is the amount of investment. Data informally gathered in November seems to indicate that crypto investments by Indians is nowhere near to being significant (although the pace of growth could make it a concern in future). This data showed that four out of five investor accounts held investments of less than ₹10,000 (122USD), with an average holding size of ₹1,566 (20USD). Wealth loss, if at all it is a possibility, is likely to affect only a small fraction of these investors." [b]

I also tried to dig into the original number from Triple-A (Which seems to have gotten a lot of traction because it was quoted in a policy-brief from UN-CTAD[5])

Here's where the number is coming from:

1. Triple-A, Crypto Firm, 2023 Figure[1] is 97.5M / 7.1% of India. The citation for this is their 2022 Report[4] (now deleted).

2. Finder.com, Stats Firm, latest figure is 29% based on a survey of 31k Indians[2]. 29% figure is based on self-selected participants, which are "internet, smartphone and Google AdMob users or Qualtrics research panel participants.".

3. Triple-A, Crypto Firm, 2022 Report[4], claims "over 100 million people, 7.30% of India" and cites HootSuite's Digital 2020 report along with Statista.

4. HootSuite numbers (survey backed), % of Internet Users aged 16 to 64 who own any form of cryptocurrency:

4.1 Digital 2023 - 16.8% [6]. Cites GWI-Q3-2022

4.2 Digital 2022 - 12.6% [7]. Cites GWI-Q3-2021

4.3 Digital 2023 - 7.1% [8] - *this seems to be the figure being used by Triple-A*, which ought to have an upper bound of 2.1% or so (63% of India is aged 15-64, with a 47% internet penetration). Cites GWI=Q3-2019.

HootSuite in turn cites GlobalWebIndex, which is again survey backed, and I couldn't find any clarity about the methodology.

5. Statista, Stats Firm, Paywalled[9]. This is again survey backed: "Which of these financial products and investments do you currently use/own? (multi-pick)". The figures shown here concern respondents who selected the option "Cryptocurrency (e.g. Bitcoin)". I found a citation for their 2020 Figure[10], which puts an upper bound on this at 12% or so.

[a]: https://bfsi.economictimes.indiatimes.com/news/fintech/numbe...

[b]: https://m.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=20870. Highly recommend reading this, as it tackles exactly the argument here ("so many Indians have already invested in cryptocurrencies and banning cryptocurrencies would lead to a loss of wealth for them. There are three reasons such arguments do not appear justified...")

[c]: https://the-ken.com/tokenised-edition/the-double-counting-fl...

[1]: https://triple-a.io/crypto-ownership-india-2022/

[2]: https://www.finder.com/in/finder-cryptocurrency-adoption-ind...

[3]: https://bitcoinke.io/wp-content/uploads/2021/10/Geography-of...

[4]: https://archive.is/icGl5

[5]: https://unctad.org/system/files/official-document/presspb202...

[6]: https://www.slideshare.net/DataReportal/digital-2023-india-f... Slide 48

[7]: https://www.slideshare.net/gangavidya/digital2022indiafebrua... Slide 47

[8]: https://www.slideshare.net/DataReportal/digital-2020-india-j... Slide 35

[9]: https://www.statista.com/statistics/1202468/global-cryptocur...

[10]: https://www.mdpi.com/2227-7390/9/24/3263

Thanks for doing the digging! It seems like whenever a static is dug into there are often a few asterisks necessary. "Lies, damned lies, and statistics" as they say. I wonder why Triple-A wouldn't use the 16.8% figure, which bounded would be 4.97%, other than negligence.

the Keynote in [b] is definitely an interesting read though it's a bit unfortunate more statistics regarding holding sizes aren't shared.

The perspective expressed of crypto as (reading between the lines) a tool of foreign governments to dollarize EMs is an interesting one. I would be curious if the average person would rather have the individual option of being able to hold other currencies risk and all or if they would prefer to collectively have restrictions for the health of their banking infrastructure as a whole, and how much interest there was in crypto as a means to hold dollars or something else other than rupees, or hoping for extremely high returns in order to then convert back to rupees.

"This could be actual dollarization if stablecoins linked to the US Dollar become widely used, and there is good reason to believe that that they would be popular if permitted."

"Most cryptocurrencies are owned by businesses of AEs; therefore, better adoption of cryptocurrencies would add to their growth and employment. Significantly, it might be of advantage to the AEs if cryptocurrencies replace emerging market (EM) currencies as that would give AEs a better strategic control on the EMEs."

"With one or more private currencies being allowed, there would be parallel currency system(s) in the country. Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy."

"They threaten the financial sovereignty of a country and make it susceptible to strategic manipulation by private corporates creating these currencies or Governments that control them."

"Almost all cryptocurrencies are priced in terms of Dollars (or potentially any of the freely convertible currencies). Wider adoption would actually result in wider use of these currencies. So cryptocurrencies are not a threat to convertible currencies as they are to the Rupee, which is not an international currency." (I believe the Rupee has since started to be used for international settlements[1])

[1]https://www.isas.nus.edu.sg/papers/indias-foreign-trade-poli...

> BTC can support c. 7 transactions/sec. Ethereum c. 20. This is a scam.

In 2022, US mined only 5.4gram of Gold per sec[1]. This is a scam.

Or not. Weighing BTC's utility based on how many transactions it supports per second is as pointless as measuring Gold's utility based on how much of it is mined per second.

[1] https://www.statista.com/statistics/238405/us-gold-productio...

Go away. Crypto chuds have been pushing the "currency" angle for a decade. But whenever you point out it doesn't work as a currency, the goalposts move and now its a store of value. But it's not even good at that.

I don't know any serious crypto user pushing BTC as a "currency" anymore, apart from Satoshi's original whitepaper. And I have been in crypto for many years. Everyone views BTC as digital Gold - an asset immune to government censorship.

Couldn't act further from your username.

Lightning supports unlimited transactions per second.

The original Bitcoin Whitepaper laid out multiple use cases:

* digital cash

* peer to peer transactions

* digital gold

* censorship resistant transactions

* hard money with fixed monetery policy and capped supply

* highly-decentralized with no single point of failure

Never did it promise to be a high throughput alternative to Visa for buying coffee

Nevertheless the Lightning Network has innovated in the space such that buying a coffee is now trivial using Bitcoin.

I am a crypto “chud” and I believe eventually Bitcoin will become a viable currency and a stable unit of account.

It isn’t that today as it is still a highly volatile asset class with rapidly growing adoption but we are still early.

For now it provides dissidents a viable option that is apolitical and cannot be easily censored.

It offers a hard-money alternative to fiat-money which can be arbitrarily inflated/diluted in value by centralized powers.

It offers a digital asset that is highly liquid, difficult to confiscate, and easy to access for the billions of unbanked throughout the world.

You may not see the use case for Bitcoin but that speaks more to your individual privilege as a citizen of a first world nation than it does for Bitcoin’s usefulness to millions or potentially billions of people around the world.

Gold is valuable when mined at 0 grams/second. Is Bitcoin valuable at 0 transactions/second? If not, how much slower than 7 transactions/second is acceptable? Why?

> It's a self-organizing pyramid scheme

> "Market cap"s are inventions. The amount of actual liquidity in the system is tiny

Is this different than the stock market? Or the banking sector? There are penny stocks, and there are bigger players.

It seems like in finance, sentiment is everything and it's a self-fulfilling prophecy.

> BTC can support c. 7 transactions/sec. Ethereum c. 20

Would you criticize the whole internet because dial-up was slow?

Oh, and regarding the vitamins:

High-dose vitamin C enhances cancer immunotherapy

https://www.science.org/doi/10.1126/scitranslmed.aay8707

It's all about the dose and delivery method, you can't just make blanket statements.

https://www.cancer.gov/research/key-initiatives/ras/ras-cent...

Note how the vitamins aren't sufficient, but they enhance traditional treatments. Seems relevant.

> Is this different than the stock market?

There's a scale from "there are buyers at this market cap" (eg., suprisingly, twitter)... to "there are no buyers at this market cap".

Consider if you and I start a business which sells shares in the business (and nothing else), and we sell 1/1000 shares for $1000 -- that makes our business $1m on paper.

But is there a buyer for that $1m? Well sure, there was for SBF. Until jail, of course -- but many bought his shares in his business which sells shares in his business.

This isnt unique to crypto... crypto is just the latest incarnation whose "productive valuation dial" is close to 0%.

It sounds like the only difference is scale. I have not experienced liquidity issues in practice, because I have avoided the tiny players in crypto.

Have you had liquidity issues selling ETH or BTC?

Regarding hodling, again I don't see how this is different than the stock market. You can try to time the market or you can just hold AAPL for 30 years, understanding that any point it could all come crashing down when you're looking away.

In my experience though, every time I have sold ETH (including at the local peak in Jan 2018) it would have always been more profitable to hold it for longer (since I didn't have an immediate use for the cash).

The reason the stock market grows is because businesses on that market grow. A factory opens another warehouse; apple invents a new phone. The reason to hold stock is just to wait until your ownership stake (stock) in the business is worth more because the business is more economically productive.

A crypto token cannot be economically more productive. The only means by which its value can increase is ponzi-economics, ie., by more people entering the system increasing the *apparent* future demand for that token.

When people stop entering the system, tomorrow -- or in a decade -- the whole thing collapses.

I understand the point you're trying to make but I'm not sure if you've actually proven it.

> A crypto token cannot be economically more productive

What about when ETH was upgraded to use less power? Or future upgrades to reduce transaction fees? Ditto for the other planned upgrades: https://twitter.com/VitalikButerin/status/158866978247136870...

Unless you are arguing that the whole network is worthless, so upgrading something worthless is still worthless? Is that what you're saying?

Regarding "The reason the stock market grows is because businesses on that market grow" isn't there also an opposite scenario, where more investments (into factories, etc..) get made by companies/individuals with cash reserves during a recession because prices have come down? https://www.businessofapps.com/data/apple-data/

Using AAPL as an example, company revenue has steadily been going up since at least 2005 (with Q1 2008 being a record quarter), so why wasn't it spared during the 2008 recession? Is it not because of meme-nomics in the stock market?

Similarly, why do people say "buy on the rumor, sell on the news" if stock market reflects business reality?

> When people stop entering the system, tomorrow -- or in a decade -- the whole thing collapses

Isn't that exactly what Marx predicted of the capitalist system as a whole? I again fail to see the difference between crypto and the rest of finance. If anything, crypto, seems like a more extreme version of the traditional system (https://en.wikipedia.org/wiki/Accelerationism)

Also, I don't think BTC/ETH would cease to function if the prices went down. You seem to be confusing the promises made by certain charlatans with the actual utility of these assets, which is that they are inherently traceable and can be used to avoid things like this: https://www.yahoo.com/video/pentagon-35-trillion-accounting-...

And I am aware that they are not the ONLY solution to this problem, but I don't see how you can argue that they have no utility at all.

Stock markets are poor indicators of the economic reality of underlying businesses because they're subject to some of the same issues crypto is -- but it has one "ruthless honesty mechanism" -- the need, over the medium term -- for businesses to actually grow & compete.

Insofar as private interests can manipulate these conditions, the numbers arent reliable either. Eg., many regard private equity as half-a-scam for these reasons: those numbers are also made up.

However, crypto is one of the most extreme cases of this pathology. It's a pure fiction: no t-shirts are being made; no apps being sold. My time today is as productive as it is tomorrow; no crypto will change that for me, or anyone.

Indeed, crypto is negative sum: money is being burned to run the mining. So, we're actually worse off. Crypto isnt zero value, in most cases, it's value is negative. Sell everything off, and some people will be owed money (mostly, the energy companies).

This is egregious. It's hard to overstate how dangerously stupid this is -- it's economic homeopathy.

The reason a BTC might be worth tomorrow is the same reason a beanie babby mightve been, or a misprinted stamp: just the belief that some other people want it.

Not that they do want it -- no, there arent enough people to sustain this belief. Just the appearance that enough people want it.

If i have 1,000,000 coffee beans and the first bean goes for a dollar, I can imagine myself a millionaire... until i try to sell the rest.

A significant reason that the hodl cultishness is pushed is precisely so people wont do this.

> no t-shirts are being made; no apps being sold

The T-shirt being made is that the transactions are traceable, verifiable, and the system is hard for one (state) actor to shut down or control. Again, I'm not arguing that crypto is the only way to get these benefits, but the idea that there is zero utility seems ludicrous.

> money is being burned to run the mining

But money is also wasted you call it with the traditional system: https://www.yahoo.com/video/pentagon-35-trillion-accounting-...

I tried to find an estimate of how many dollars have gone into crypto mining so far, but was unable to find it. However, I would bet that it's less than 35 trillion dollars

BTC protocol can handle transactions off-chain. I cannot take any post that doesn't address that simple fact seriously, since you're just repeating talking points without any research or technical analysis.

I don't entirely buy the "no liquidity" argument. I can sell 10,000 ETH on-chain right now and have a 0.28% price impact. That settles in 12 seconds with finality in six minutes.

Guess how much Apple stock I can sell right now? Zero. Stock markets are currently closed and Apple cannot be traded. When they are open, I'm looking at a T+2 settlement window. That's not very liquid. One might even call it market manipulation to only open for trading 18% of the time, and of course to shut off trading at any other time on a whim.

The alleged "market cap" of ETH is presently: $236,692,623,586 .

Consider an IPO for a company which sells shares, there is no question "at what point does the share price collapse to zero" -- it has a price. The company is worth something: it has profit/loss, assets, etc.

Consider selling all ETH for USD -- the obvious question, to me, is: at what point does the price collapse to zero? 10% of them? 15%? 25.00000001%?

This is an extremely non-linear effect, after 20bn is sold it might just be the next dollar afterwards. Or 50bn. Or 15bn.

I suspect there's about 20-50bn of "real money" in the system, radically double (-double-double) counted by many participants (esp, eg., via tether).

If any coins on any chain were sold off at a high enough rate, perhaps so the total across the entire ecosystem were a trivial 10-20% of ETHs alleged "market cap" -- i think the whole thing goes to zero. At 18.9111123% there'll be no buyers at any price, everyone will realise, and bang goes the whole show.

You can't say that about apple; or any stock whose value derives from owning a business that has *actual assets.

ie., I think the fragility here, of this system and this posted numbers, is radically extreme in percentage terms. Yes, your $1m USD here or there will make no difference.

You’re basically just saying ETH itself isn’t an actual asset. However, it’s needed to use the Ethereum network.

I imagine you aren't joking... but this might well be a joke.

The ethereum network has no use, right? Nothing is priced in ethereum, no one needs ETH, nor will they ever.

Magic beans might be required to play the magic bean game -- casino chips are required by the casino, sure. But people enjoy gambling, there's an exchange of value -- a reason a person will work a day to make $100 and then trade it for an evening gambling.

But cryptocurrency networks do not have any reason to use them: nothing is priced in them, no govs tax in them, no businesses hold them, and so on.

There's smallish number of criminal gangs (and the like) who do have a use: a lot of crime today is priced in crypto. This gives highly anonymous networks an actual exchange value for their tokens. I suspect this minimal value will be targeted by relevant govs eventually, and disappear.

If you hold common stock in Apple, you have very little right to their assets in a ' collapse to zero' scenario. Preferred stock may have some floor price where the value of a company's assets prop it up, but not the common stock you buy on an exchange.

Ethereum, like Apple, has a dividend. You can stake ETH and earn rewards from the network. Granted, these rewards are accrued in ETH, but they are mostly based on gas fees that users pay the network, which has no dependency on the price of ETH. ETH is bought and sold with dollars so your dividend comes through with a thin layer of abstraction.

However, people don't buy Apple stock for it's asset value or its dividend. They buy it because of the huge TAM of Apple and promise of future growth. Similar to why people buy Ethereum's token.

Let's look at a different stock: DoorDash. They lose money hand over fist every quarter. They have very little assets, and again if you're a common stock holder those shares will be worth $0 when the company is liquidated. However it's still worth a nonzero sum because of speculation and future expectations of growing or turning a profit. Does that makes it a scam? Is their market cap fake because it can collapse to zero say any moment?

Seriously, bizarre posts like this are starting to sound more and more like conspiracy theories.

Well, a pyramid scheme is a kind of "automated conspiracy"

What else would you call, say, the NFT phenomenon?

NFTs are similar to art pieces. Why does a JPEG monkey cost millions? Why does a banana taped to a wall cost hundreds of thousands of dollars[1]? Why do paintings, which look like work of a 4 year old, sell for millions?

[1] https://www.statista.com/statistics/238405/us-gold-productio...

The NFT “phenomenon”? It’s a code template and API called the ERC721 standard, which can be used to secure, verify and transfer digital ownership on a distributed ledger.

There’s been so much done (and often right here on HN) to explain how crypto and NFTs are innovative, to link educational resources and list real world examples of legitimate use. As well as to resolve the various ideological controversies. Maybe it’s not quite common knowledge yet, but there’s no excuse in 2023 for being so clueless and, yet, assertive.

I'm well aware of all that has been done to explain the ideas behind crypto, NFTs, and the rest of the ecosystem. I know what the boosters say and can do a decent job of explaining it in a pinch. I've been hearing about it here and elsewhere since 2009.

I also believe that the entire crypto ecosystem is a wasteful solution in search of a problem. And the biggest players in the space, over and over again have been proven to be criminal frauds trying to generate the next hype wave. Often through wash trading to make it appear that there is more of a market than there is.

The current wave of legal problems for Celsius, FTX, Binance and so on have started to reveal the lies that many expected all along. For example we've found out in court that the "attestations" long used by many were faked. (Not that this was a surprise given that, for example, Tether was revealed previously to have been faking its numbers.) To the extent that there actually was money, a lot of it was in now failed banks like Signature Bank. Or it is connected to money laundering, as happened with Tether. (See https://protos.com/did-tether-falsify-documents-to-fool-caut... for one of many places where that is reported.)

The sky-high valuations for cryptocurrencies these days are not believable. Yes, people trade that many tethers for a bitcoin, but good luck getting tethers redeemed. And most consumers had their money in fraudulent exchanges like FTX and Binance. They are learning the hard way the truth of, "Not your keys, not your crypto."

You say that there is no excuse in 2023 for being so clueless and, yet, assertive. I say that there is no excuse in 2023 for you being so dismissive about a field filled with Ponzi schemes, some of which have collapsed and others of which are still able to pretend to a solvency that they clearly don't have.

> I also believe that the entire crypto ecosystem is a wasteful solution in search of a problem.

It’s just embarrassing to write this when there are so many real world examples of solutions being solved right now by crypto, as well as many active users of crypto who couldn’t care less whether it solves a problem you, personally, have.

The fact that you see Celsius, FTX and binance as a paragon of crypto and decentralised finance shows just how little you’ve been paying attention. They are centralised, crypto-adjacent companies. Please look at Yearn, Aave, Curve, Uniswap, GMX, Gearbox, NFTfi, Illuvium, countless NFT gated communities, and news reports of people in the third world using blockchains to make emergency, life saving transactions. And then afterwards maybe your beliefs about crypto might be worth posting in public forums.

Good luck with your defi obsession, and we'll see which of the two of us is more embarrassed in a decade. You've offered no concrete evidence that there is any "there" there in crypto. But you can rattle off a bunch of projects. Yay, I guess?

Since you offered no evidence to counter what I said, I'll give an argument as low quality. Namely an argument from authority. I have about 200x the reputation that you do. I also have a background as a mathematician, a quarter century as a programmer, and used to work on Wall St.

Unless you provide actual EXAMPLES of real world examples of solutions ACTUALLY being solved by crypto, as well as reason to believe that the crypto ecosystem upon which those solutions rest is sustainable, I'm going to believe my knowledge, experience, and professional background over your fly by night content free crypto boosterism.

why you got to ridicule me for actually knowing about the conversation topic, framing it as obsessive?

https://www.youtube.com/watch?v=H-O3r2YMWJ4

https://www.youtube.com/watch?v=0uN46EsSBQw

https://news.ycombinator.com/item?id=32103472

https://news.ycombinator.com/item?id=35473327

congrats on your qualifications, tho

I'm bored, so I'll respond. But where to begin?

First, the most basic role of money is to be a medium of exchange. With reasonable overhead and in acceptable time, people need to be able to exchange money for goods and services. Crypto fails this in every practical way. If I want to buy pizza with bitcoin, my overhead exceeds the value of the pizza, the average time to make the purchase is longer than the average time to order, have it made, delivered, and get eaten by my family. (Have you ever SEEN hungry teenagers tear into pizza.) Also if people started trying to buy pizza with bitcoin, you'd quickly run into the problem that the maximum number of transactions per second on the bitcoin network is a fraction of the number of pizzas sold per second.

Yes, yes. This is all improvable. I've heard that for years. But these issues are not new, and haven't gone away.

OK, what next? You are making a big deal out of the fact that there are poor people in horrible third world countries who want to use crypto to escape authoritarian oversight. At best this is a red herring, I lean towards calling it disingenuous. A far more important use case for crypto is crooks trying to get paid for their ransomware attacks without themselves being caught by law enforcement. And the third world has benefitted far more from payment networks like M-PESA than all of crypto.

Besides, the single best way to help the poor people in horrible third world countries is to continue the worldwide economic progress of the last couple of centuries. Few understand how astonishing the improvement in human life is. Watch https://www.youtube.com/watch?v=jbkSRLYSojo for a 5 minute video demonstrating how dramatic it is.

Moving on, crypto is nowhere near as decentralized as boosters claim. A handful of central players are responsible for owning most crypto, doing most mining, and so on. Moxie, the lead developer behind Signal (great app, BTW), decided to experiment with NFTs. What he found was shocking. First, we are one website hack away from, say, all bored apes turning into pictures of shit. Second, his experiment verifying accidentally pissed off a couple of companies that everyone else uses to get their view of the blockchain. The result? The contents of the blockchain notwithstanding, his NFT disappeared! See https://moxie.org/2022/01/07/web3-first-impressions.html for more details of his experiments.

Moving on, all of the defi platforms that you named have something big in common. They are riding on the back of a bubble inflated by fraudulent Ponzi schemes, controlled by a handful of people. They use all sorts of phrases like "arbitrage" and "yield farming". But all those are simply euphemisms that round to "Ponzi". Without the fraud, the whole ecosystem implodes. Because it rests on nothing real.

Oh, sure. Defi offers automated trading protocols to allow you to do things like hedge risks. Automated trading strategies have an important role in our world. But they have limits. For example when everyone tries to hedge the same risks with the same trading strategy, it doesn't work. The traditional finance world learned that the hard way on Monday, October 19, 1987, and has had periodic reminders since. It won't work better in the defi world.

Another limitation of automation is that if someone figures out how to exploit it, your money disappears arbitrarily fast. Crypto enthusiasts treat the regular heists of large amounts of crypto as teething pains. But actually they are an intrinsic part of the platform that can't be eliminated. Once you eliminate the Ponzi underpinning, crypto trading strategies do what you don't want it to, and don't do what you do want it to. You lose both ways.

Moving on, every crypto enthusiast that I have met has an understanding of finance that pays attention to SOME of the stakeholders, and not others. There are a lot of hidden stakeholders in finance, and you ignore them at your peril. The excellent series https://www.bitsaboutmoney.com/ says a lot about that topic.

One of the big ones is government. Crypto enthusiasts think that they have taken government out of the equation, and that this is a good thing. They are wrong on both counts.

First of all the things we actually need, like pizzas, are in the power of governments to control. The mediums of exchange that people actually use, like fiat currency, are also in the power of governments. And, failing all else, governments can send men with guns and lock you up. In fact they regularly do this to people. You aren't getting rid of governments, you have to figure out how to coexist with them.

The result is that if you and the government disagree about where the government's jurisdiction ends, the government is usually right. For example https://twitter.com/AFTXcreditor/status/1653883349021106179 shows FTX attempting to claw back $3.9 billion from Genesis that happened on "irreversible" blockchains. At this point, this is just redistributing the losses. But the people at the heart of crypto are admitting here that these "irreversible" transactions are actually reversible in practice. Oops.

Going the other way, governments are at least somewhat responsive to the people (more so now than historically, and they vary widely). And those regulatory regimes that you don't like incorporate a lot of real world experience. Are they perfect? No! But they also work out better on average in real use cases than crypto does.

And finally, about ridicule. You're the one who first went to saying that everyone who disagrees with you is "embarrassing themselves" with their ignorance. Which you did repeatedly and rudely. Until you have the common decency to apologize for your past behavior, it is sheer unmitigated gall for you to complain about anyone else's.

Now I just demonstrated that I am far from ignorant. And that it is possible to be both educated on the topic and come to the opinion that this Kool-Aid is poisonous. Hopefully you learned something from the experience. And hopefully you improve your behavior.

I'm not sure at what point in life, someone with your HN score ends up dismissing reality (examples of people making real use of blockchains) in favour of contrived logic (inventing absurd scenarios like buying pizza with layer 1 blockchains, preaching the upsides of a taliban regime and bringing up the industrial revolution in order to move the goal post), but I sure hope it won't happen to me.

> the opinion that this Kool-Aid is poisonous

my opinion is that it's a certain type of person who is the poison

Well...

You've shown no evidence of being willing to engage in thinking about reality. Instead you always look for the most facile dismissal possible of the received party line for your brand of crypto enthusiasm.

So you don't have to worry about becoming a person who winds up dismissing reality. You're already there. Enjoy feeling rich from the Ponzi schemes that you're part of, right until the reality that you're ignoring slaps you in the face.

And that ends this attempt at conversation. Feel free to have the last word. I'm not engaging further.

Most people rejected His message.

They hated mjburgess because He told them the truth.

The amount of actual goods and non-crypto-related actual services purchased with crypto in the last year probably wouldn't fill a high school basketball court.

People who get paid in crypto immediately turn it into real money because the only thing it's used for is building virtual pyramidal constructs.

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