Fools and their crypto
techcrunch.com
techcrunch.com
Cryptocurrencies created a completely anarchic monetary system, which people have used to layer investment systems on top of. Naturally, low hanging fruit scams and cons have arisen, and some form of governing structure will eventually be imposed, if not by actual governments, then by the community. Then more sophisticated abuses and negative externalities will arise, and ever more sophisticated regulations will be imposed by the community to thwart them.
In the end you may end up with something very much looking like a government, where people with connections and leverage in the governing structures get to decide the evolution of the rules, where a few players with disproportionate wealth or hashing power, help elect those people to committee positions. And once again, people will be looking to create systems to escape the defacto control and cronyism imposed on the system.
I guess what I'm saying is, nature abhors a vacuum, and given human nature, most systems will evolve to thwart the worse tendencies of the worst people, opening opportunities for others to capture power. So in the end, rather than seek to bring down our democratically elected government monetary systems via technology, we should seek to evolve them with ideas from technology.
Because booting out fiat currency and rebooting with crypto really just forces a painful relearning of all of the lessons we've learned in the last century of modern finance.
It is worth noting though, that ICOs are primarily a problem because there are a lot of hungry investors looking to 100x their returns, and don't have the tech background required to dissect a whitepaper. Protecting the gullible and uninformed from the manipulative is one of hardest tasks of any society, and the fight is never ending.
Take wash trading. How can you possibly ban wash trading? To do this you need to verify that identity of seller X != identity of seller Y. Even dismissing currencies that actively prohibit this verification (Monero), how do you possibly accomplish this in a decentralized currency?
Even without the identities issue, who is looking at bitcoin governance and thinking that deciding protocol changes with a decentralized electoral system is going to produce anything but gamesmanship and paralysis. Promising newcomer coins Abc will have the same issues once there's real money at stake.
And yes. Manipulation exist in the traditional monetary system. However, regulations raise the cost of manipulation to prohibitively high levels for most people. And yes, congress is dysfunctional. But underneath the chaos we have a set of fairly well established rules, and changing those rules didn't require forking the currency.
The problems with our economic system are political, not technological. What crypto brings to money is superfluous technology and even worse politics than we already have.
What crypto does to finance is eliminate more middle men than ever before and bring more transparency than ever before. The majority of people would consider that a good thing.
It doesn't mean the poor get wealthier or the rich get poorer, it just means things are more transparent, which creates a more level playing field.
Billions of dollars can't just go 'missing' like it can in the traditional fiat system for a variety of reasons - mainly because we're relying on humans to (a) be honest and (b) remember to manually file paperwork.
Crypto brings its own set of problems but like any form of technology, it will evolve over time so long as there are advantages to using it. And so long as it evolves, there'll always be new opportunities along with new casualties.
So we have more transparency with these completely opaque ICO situations where the company name and country of operation isn't even clear? Versus the highly regulated filing requirements and GAAP independent audit requirements of a public company? Huh?
No more than repeat offenders remind you of why Gulags exist. In your mind the hypothetical libertarian just doesn't want any regulation because he forgets that regulations have any good impact.
It's simply tone deaf.
> In the end you may end up with something very much looking like a government, where people with connections and leverage in the governing structures get to decide the evolution of the rules, where a few players with disproportionate wealth or hashing power, help elect those people to committee positions. And once again, people will be looking to create systems to escape the defacto control and cronyism imposed on the system.
There are 'good governments' and 'bad governments'. The rich and powerful try to game the system in both of them but there are much more effective in bad govts than in good govts.
So the question is, what separates a society which ends up with good governments (for example western societies) than societies which end up with bad governments (pretty much all the non-western societies).
This is precisely where the argument breaks down. According to libertarians, there is a reason X (whatever that might be) which separates good from bad governments. According to libertarians, that reason is 'economic freedom', the places where good govt exists, there is economic freedom, and places with bad government lacks economic freedom (even dictatorship like Singapore, UAE, or ex-dictatorships like S Korea are far better off than their non-economic free counterparts).
You may disagree what the cause 'X' is (according to alt-right that cause X is genetic-cultural environment, as places with good govt tend to be white westerners and places with bad govt tend to be non-white non-westerners).
But a plain denial of differences between good govts and bad govts is insane.
The difference with cryptocurrencies, and the part I find particularly exciting, is this time the structure is independent of nation states. Conceptually this is a big leap forward. I do agree with "meet the new boss, same as the old boss", that is likely the scenario. But even incremental improvements in objective rule of law have improved the human condition, and if cryptocurrencies can improve this in the financial realm that is a good thing.
Also not to imply that the whole space isn't rife with scams and foolish ideas at the moment, nor to imply nation states aren't going to plant a boot firmly on the head of the entire program as that well could happen. Because at the end of the day it sits on a platform that is ultimately controlled by nation states.
This is the real impact they will have in the long run: the technology will greatly expand the set of people and organizations who can issue a currency. Fiat will have a lot of competition that it didn't have before. Competition is bad for incumbents, but good for the rest of us.
So the libertarian dream will probably still be realized, just in a more measured manner than some frenzied speculators and early adopters would have you believe (which shouldn't come as a surprise at all).
At that time it'll gain momentum and thwart the current system.
Also, facebook had a huge amount of money to throw at marketing. That shouldn't be forgotten. They essentially bought success by spending that money, when lots of other social networks never were able to do so.
This is delusional. From Apple's Wikipedia:
"Between September 1977 and September 1980, yearly sales grew from $775,000 to $118 million, an average annual growth rate of 533%"
They were selling products that people wanted for profit. Comparing ICOs to this is ludicrous and seems to me to encapsulate the hazy thinking of this entire sector.
This part of the process is usually considered one of the first steps in a successful business.
You're absolutely right, of course. However, I'm reminded of this wonderful (recent) quote by Uber CEO Dara Khosrowshahi:
"Business is actually surprisingly good for everything that the company went through. The part of the business that is not going well is the profitability part. We have some details to work out."
https://www.axios.com/uber-ceo-1516627656-77c68a5a-6d42-4c85...
People actually want to press a button on their phone and have a car show up and take them somewhere seamlessly. Uber has been doing that since they launched.
Doing it profitably and sustainably is another question. But the basis of the enterprise isn't even a little confusing.
My point: a business without actual products people want to use is not viable (contrary to what some appear to think), but a business without profitability is not viable, either.
(you're right, Uber has a slick product, though arguably because they subsidise it.)
The consumer oriented blockchain-natively-dependent projects are not here yet because the protocol layer isn't mature enough.
This isn't just my opinion, but those of the "actual" investors in the blockchain space such as a16z and polychain.
I am preparing new products to match this demand.
Instead of bashing an entire line of business, maybe you should too.
I have proposed one possible solution to this problem here: https://news.ycombinator.com/item?id=16208325
Doing a google image search shows the head was specifically cut off for this page!
Yep. That's the state of cryptocurrencies. A picture is worth a thousand words.
In the last season one of the characters built an app called "SeeFood", a Shazam for food:
https://www.youtube.com/watch?v=FNyi3nAuLb0
The app ended being used at Periscope to detect penis which explains the ending for the website too.
(Unless you’re not in Europe or its cultural descendants)
If people thought otherwise then I guess my commenting skills are not that great.
By this logic we should be using tax payers money to compensate people who suffered losses in ICOs. And we should also use tax payers money to pay the bonuses of the ICO leading CEOs afterwards. How can this be: https://www.wsj.com/articles/in-a-blast-from-a-financial-cri...
Fraud still happens even in this space, but it's not a huge moonshot like an ICO would be in the best of circumstances (let alone the completely fraudulent make-money-fast type ICO scams.)
My thought on the CDO crisis and the somewhat nonchalant reaction from regulators, is that this was a sign that Wall Street needed more regulation in certain areas, their howls of protest on regulations that did appear post-2008 (eg Dodd-Frank) notwithstanding. It is worth noting that in the Savings and Loans scandal 20ish years earlier, people were jailed for selling fraudulent investment vehicles. The reaction to the CDO driven crisis in contrast was very weak IMHO.
They're already integrated into the legal system. What new laws are needed?
Considering that this is a mechanism that is predominantly used to fund projects or companies anyway, I don't think that's an irrational requirement.
what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient.
I'd hate to see a second useless set of laws be made, similar to "hate crimes" (a crime is a crime - except when you say a certain something or think a certain way?? wtf) but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??!
i am of the thought that not every guerilla ICO has to be brought to justice but the "rule of law" requires some semblance of respect and obedience and I've been to countries where everything is up for negotiation and no law is "rule". slippery slope. perception of authority should not be diluted if possible.
seems the nation state's reach has started to exceed it's grasp....
But it is not hard to see how some would view such laws as unfair. Intent can be difficult to prove and it requires interpretation; if you believe in clear cut and easily understandable laws, then naturally Hate Crimes and other such laws probably seem like a bad idea, and I get why that is frustrating and even intimidating with how fast gossip can travel. The system itself is built with release valves, but it's likely not much comfort for the wrongly accused.
I think that's a separate problem, however, which is just exacerbated by perceptions of laws like Hate Crimes as opposed to being caused by the laws themselves.
No, it's not the same when you can use pseudonyms and provide fake data with the intent of deceiving someone.
> what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient.
Fraud is not two voluntary parties interacting, it's one party stealing someone's money without their consent
> but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??!
Admittedly I'm not sure, but my off the cuff thought is that you seize assets and prevent cashing out. Any wallet associated with a dubious ICO could be tracked and anyone that facilitates transactions for them could be targeted. If an exchange facilitates their cashing out they will have their assets seized; if a tumbling service receives assets from those wallets they will be subject to criminal action; if a bank facilitates a cash out they will be banned from participating in the US financial system etc.
Honestly at the end of the day it doesn't really matter. At this rate ICOs will either be outright banned or anyone with half a brain will stay far away from them and the hype will die out.
- the actual identity of the people behind them is not known; they are often pretending to be developers with Eastern Europe;
- they are presumably outside of a jurisdiction that their victims would be familiar with.
This probably means that a simple fix could be to demand to verify and publish the identity of the people behind such projects. Whether a shell corporation based in the US could raise money without clarifying who actually owns them and whether that structure allows enforcing fraud is a more nuanced question that I cannot answer. But I can answer this: new laws are probably not the solution. Extradition treaties might help but are unlikely.
Internationally I suspect we need a better framework for handling cases where person in country A advertises securities in an organisation set up in country B to people in country C, via an organisation that operates in country D.
You could do it without?
It offers you nothing of what buying shares of the company will (except when explicitly specified in the token sale) : no dividend, no voting power...
Expecting to earn money by buying tokens in an ICO is pure speculation, as you expect the token to go up. But this goes against the real user's will to use the service: they want a fixed price (who wants to use a service which price changes every day?)
To sum up, buy tokens as you would buy presales in Kickstarter, to support the company, but don't expect to earn money with it if you really it to be a real service / product. And avoid ICO that make you the promise of earning quick money.
I wonder if there'd been a marketplace for reselling license tokens and a blockchain to keep track of these tokens, if I might have taken the plunge and purchased a number of these tokens with the expectation to make money from them when license costs went up?
1- Silly idea adjuncted with the blockchain label 2- No immediate answer to the question "How this is going to make money ?" 3- A white paper without substance, just a piece of marketing paper convincing you about the scheme with lots of use case diagrams etc 4- Ratio of advisors and other fuzzy titles / technical people at 10+
I've been following crypto space for a long time but can't think of any blockchain app like that. Only money making companies are exchanges which make money from fees because of the mania and all the people trying to flip tokens to make big bucks and quickly sell to other noobs, but exchanges are old fashioned companies with centralised databases and Java/.NET codebase, they are not actual dapps.
It's still early days. 2 years feels like a long time, but it's not that long.
The personal real-world benefits of the www were real and obvious and constantly improving. What has the blockchain actually done for people on a daily basis?
Dotcom bubble was 1997 to 2001.
Bitcoin white paper came out in 2008, first software release in 2009. With comparable development, we'd have expected an explosion of usage and applications from 2013 already (that didn't happen), and a bubble about 2016 to 2020 (that arguably did happen).
At any rate, the WWW was super useful (and was being extensively used) pre- and during the bubble. You cannot say the same about cryptocurrencies.
(And by the way, during the dotcom bubble there were several companies, such as Flooz and Beenz, offering digital currencies. They're all defunct now. If only they had been decentralised on the blockchain...)
Seriously, I must be writing a comment like this one at least two times a week lately on HN. I keep hearing "blockchain technology is here to stay, think of the possibilities!" and I say that it's already showing its limitations and people are scrambling to find real world use cases for them. See the Diamond Coin story the other day, or that Kodak Coin thing. When you look closely you realize that the technical side of things doesn't really hold up or could be achieved using good old non-buzzword technologies.
Cryptocurrencies are amazing if you want to create a ponzi scheme or buy drugs online. For everything else there's Mastercard.
* private transactions: your identity need not be associated with donating to wikileaks or buying a sex toy
* irreversible: no chargebacks or transaction reversals
* unseizable: protection against civil forfeiture, IRS account seizures for "structuring", etc
* remittance: send any amount of funds anywhere in the world with minimum fees with no 3rd party ever having access to funds
* exit from corrupt monetary policies: see Argentina, Venezuela
But apparently these don't apply to you personally so it may be best to continue swiping your Mastercard™.
In a world where someone will steal your account if you so much as look the other way, this is a good thing?
Because paying taxes is for chumps.
Tell us more about those fees... You want your transaction to happen when?
Replace corrupt monetary policy with corrupt money. Flawless.
>private transactions: your identity need not be associated with donating to wikileaks or buying a sex toy
We have to define "private", currently my purchase history is not exactly public even though some trusted entities do have access to it.
In the same way I keep getting conflicting viewpoints about transactions on the blockchain. Are they public or not? I ask because every time I point out that cryptocurrencies are a dream come true for anybody who's trying to evade taxes, launder money or corrupt politicians I always have somebody telling me that it's not true because with enough effort you can track money on the public blockchain. So which one is it?
>irreversible: no chargebacks or transaction reversals
As a consumer this is an obvious negative. As a seller it might also be because people will be more afraid to send money to somebody without reputation. So good for Amazon but bad for the little guy selling home made socks on ebay.
>unseizable: protection against civil forfeiture, IRS account seizures for "structuring", etc
Ah yeah, the "my government has issues so the obvious solution is to get rid of it" line of thought. Maybe you should work on fixing these weird idiosyncrasies instead of trying to find a way around them, because maybe you're being honest but I can assure you that there's a long line of thugs behind you waiting to use your "protection" scheme to evade taxes and regulations. You can't have a working government if you make taxes "opt-out".
>remittance: send any amount of funds anywhere in the world with minimum fees with no 3rd party ever having access to funds
That's only valid if you don't need any guarantees whatsoever (like a pure donation without counterparts or sending money to somebody you trust). If you try to buy something from an untrusted source you'll want a 3rd party to provide arbitration. No chargeback, remember?
As for the "minimum fees" we'll see about that when some cryptocurrency is actually used "at scale" to do this.
>exit from corrupt monetary policies: see Argentina, Venezuela
I can't offer any rebuttal to this but I wonder how much good it'd do. Rich people would be able to exfiltrate their money more easily to other countries and poor people will convert their 0peso into 0BTC. I'd be really curious to read a serious study about how things would've changed in Venezuela if they had switched to BTC before the crisis. I don't really believe in magic bullets, the failings of the Venezuelan economy are multiple and go way beyond a choice of currency.
I can't shake the feeling that if you put money out of the hands of the government you effectively give all the economy power to the rich people and it's effectively harming democracy. You seem to have a very USA-centric point of view (judging by your examples above) so I ask you: when you look at the state of the USA and its government, do you really think "damn, I really wish rich people had more power"?
Netscape was formed in April of 1994 so we are talking about 9 months after creation they had revenue of 5mil. First website was launched at the end of December 1990 so less than 4.5 years before. Blockchain is significantly older at this point.
It's clear there's lots of unfounded disdain for crypto among certain software engineering camps as crypto is a combination of software engineering and financial engineering which is downright repulsive to certain purists.
If you step outside of this line of thinking and understand the power of a trading vehicle and it's ability to finance operations or fund research, that might shed some new light on things.
Not sure what running startups have to do with it (although have plenty of experience with them too), but comparing average startup with any ICO one is disingenuous. As far as I can tell there is little to show for so far if one ignores companies not aimed at cryptocurrencies ecosystem itself.
But more to the point, it has been 9 years since Bitcoin was released building on ideas that were even older. Tech is more complicated than building website mid-90s (although probably not as much as you seem to believe), but again is not that complicated to excuse lack of compelling products.
I am not saying those will not come, but "early days" is a piss-poor excuse.
I do, however, dislike your use of crypto as for an old fart like me this should be used for cryptography.
Honest question, is this a parody account?
So then the merit of a coin will be 'backed' by business fundamentals, i.e. is the business any good? So think of crypto-coins as shares, not this magic bean currency and everyone is a winner.
My stocks have increased as well and hold the majority of my investments, but they increased by 11% last year. My Cryptocurrency increased by 1153% in the same period of time. As long as that happens Cryptocurrency isn’t going away, even if it makes no sense.
It’s taking money from other people by selling useless shit, so it’s obviously not going to last forever.
S&P 500 rose 23% last year, maybe you just invest in an index fund.
I would not be totally against regulation and government intervention into blockchain space (and any other space as well). In fact, it would be really good for the space have reasonable but friendly regulation which would clean up space from outright scams.
Unfortunately, governments usually don't try to came up with reasonable regulation but rather killing regulation. One notable example is BitLicense which lead to mass exodus of cryptocurrency-related companies from New York.
Real life example of sad result of such regulation:
https://www.stellar.org/lumens/build/
> If you live in a restricted area — any country on the U.S. sanctions list, as well as the states of Alabama, Connecticut, Hawaii, New York, Vermont and Washington — regulations prevent us from sending you lumens. Unfortunately, therefore, residents of restricted areas are not eligible for an award.
This sentence is exact reason why I really hate regulators and people who are very enthusiastic about big government cracking down cryptocurrency space just because of few really stupid and obvious pump and dump scams on coins I've never heard of.
Fortunately, I don't live in New York and US. I'm rather give here examples familiar to Hacker News readers.
Another thing I hate about regulators is notion of accredited investor. Which says:
https://en.wikipedia.org/wiki/Accredited_investor#United_Sta...
> In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence
Which basically says - rich gets richer and you poor little guy is too stupid for participating in potentially highly lucrative deals.
I know what you will say - the governments try to protect ordinary people from scams. Don't you think it's a little overshoot??? Instead of keeping so high barrier of entry, the government could impose some sort of exams if you want to accredited investor. Or as alternative, make sure a person won't put more than 10% of early net income in high risk projects. That's what I would call friendly regulation.
So I see how government try to regulate (just practically ban things) and I tell - it's better having no regulation at all!
> Which basically says - rich gets richer and you poor little guy is too stupid for participating in potentially highly lucrative deals.
It's more along the lines of having enough money to weather the value of your investments disappearing.
It was a very small ICO, something close to 2 ETH.
How does a slow, expensive, global time-stamping service which cannot scale to billions or even tens of millions of users create a foundation for a sound business model to track all the food?
Then the whole thing imploded. On the 28th the scam shut down, leaving a website containing a single word: penis."
Google trends explains my point better than I ever could.
https://trends.google.com/trends/explore?date=today%205-y&q=...
In any case, crypto has been established as short for cryptography for far longer than any of these currencies existed. It is used in this way as a distinguisher in many contexts (e.g. crypto-phones, crypto-locker, crypto protocols, ....); calling "crypto-X" just "crypto" is unnecessarily ambiguous.
(either...or it's some guys pushing their agenda very hard in the last few weeks)
Clearly, people do actually care about others trying to coopt well-established language for their often fishy schemes.
All I'm saying is: If you're going to try to tell people to not change the language as people seem to want to change it, because you don't want the language to change, then prepare for complaining for a long time with no results.
(Perhaps linguistic coherence is more than we should expect from the cryptocurrency community, given that they have already inflicted upon themselves the utterly bizarre usage of "blockchain" as a mass noun.)
it has probably happened through out history where well established names get hijacked when something else get picked up by the general population. e.g.
hacker vs cracker.
drones (rc helicopters vs pilotless aircraft).
I agree with your wider point, but the antonym of broadband in networking context is actually baseband.
'Narrowband' is a good example of a word that came into use to fill a perceived gap in the lexicon. A gap which didn't really exist, but the word became more widely used because it was not challenged by people who should know better.
Another example is 'bandwidth' which has so many colloquial meanings now that it is unusable in any general context. It's just a collection of letters that can mean anything you want. Also 'hacker'.
This is not the evolution of languge, it is its destruction. Overloading words with so many contrary or ambiguous meanings that language fails at its primary purpose of conveying meaning and intent.
Says who?
I imagine this is one of the ways in which language evolves, for better or for worse.