TikToker makes ‘scamcoin’ as a joke and within an hour it’s worth $70M
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edit, the more comprehensive comment: https://news.ycombinator.com/item?id=26968635
And due to news articles people have been buying? Everything seems to be a pump and dump but get out before everyone else does i guess.
https://www.bloomberg.com/opinion/articles/2021-04-20/hometo...
https://signalvnoise.com/posts/1941-press-release-37signals-...
E.g. I work on a Cross-chain bridge project (currently for BSC-Polygon) [0] and technically we have a market cap of 1.4m right now but practically the liquidity in exchanges is still just in the thousands so that's all you can cash out if you try to.
On the other hand, comparing e.g. ETH and BTC's market cap is a lot more useful since they have a lot of and comparable enough liquidity.
In reality they probably count on most people not circulating them.
As a refresher for folks, the term comes from stocks. For example, the Nuance stock was trading at $43.58 on April 9. Multiply that times the number of shares and you get about $13 billion. That's the market capitalization. This is a meaningful number because if another company wants to buy it, they'll have to pay at least that much. And indeed, when Microsoft bought it, they paid $19.7 billion. [1]
But commodities and currencies don't work that way. If you want to buy a little gold, you pay $57k/kilo. But if you want to buy all the gold? There's not enough money in the world. If you discover a mountain of gold, can you sell at that price? No way. In both cases, the price is a balance point between supply and demand at the moment. If you change supply or demand, you get big price swings. You can calculate "market cap" for USD or gold, but it's not a meaningful number.
That's even more true for cryptocurrencies. Dollars and gold at least flow freely. But supply of cryptocurrencies are, as this article shows, totally arbitrary. And demand, both actual and apparent, is heavily manipulated. Using the term "market cap" is just another way to make raw speculation look like investment.
[1] https://www.forbes.com/sites/joecornell/2021/04/20/microsoft...
Stocks are "very liquid" because, outside of some share classes, you could theoretically buy nearly all the stocks. Even more importantly, you could almost always sell your entire portfolio in a single day if you wanted to, for the vast majority of stocks.
BitCoin, is that "very liquid?" There are thousands of trades every day, but what would actually happen if someone tried to unload "all" of the coins? If Satoshi popped up and tried to sell their coins, which are nominally worth over $8 billion, could they do it? Almost certainly not.
Whether you believe something has value or not doesn't matter. Velocity and liquidity matter.
No Satoshi can't sell his billions in a day but he can milk the market for millions daily. The market is that mature _today_
It sort of does. We can talk about the monetary base, but it's not a great way to understand the value of an individual dollar because the whole isn't really meaningful in a precise way. A whole company can be purchased and still have value. That gives market cap, as a metric, grounding.
The metric works, it's just that people keep making false claims from it.
You don't, though. The price would change if you attempted to do so. You can buy a company because you offer the company a value for all their shares; if enough of their shareholders approve the deal, it's done.
You can't do the same with Bitcoin, or copper. Each requires reaching out to individual owners/producers, and the sales affect the price for the next purchase. If you tried to buy all BTC in existence, the price would go up. If you tried to offload a bunch, it'd crash.
It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.
Nobody said that. We clearly acknowledge that it is at least market cap.
The name cryptocurrency is a misnomer for many of the new generation blockchains. They are not just currencies and they're also not a commodity like gold. You can think of a currency like Ethereum more like a decentralized company offering infrastructure services. It also has aspects of a currency and of a commodity. It's a bit of everything.
> It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.
Same goes for any stock.
Reminds me of a joke:
Q. What do you call a dog without legs?
A. Doesn't matter, it won't come when you call.
You do get meaningful voting rights, but the governance process is quite a bit different from a traditional company.
- Buy N paintings form one artist for $1 million USD a piece.
- Put 1 painting up for auction.
- Have coconspirators bid the painting up to say $20 million.
- Buy your own painting for $20 million, and imply that your other paintings by the same artist are also worth $20 million.
- Donate a "$20 million" painting to an art museum (that maybe you control) & save $10 million in taxes.
- Complain about tax hikes on the rich as the not-rich subsidize your art collection
[1] The Economics Of The Art Market: Why This Painting Isn't Worth $450 Million -- https://youtu.be/V5sOuET8UWA
I guess you'd have to spend $20 million on the painting, but you're buying it from yourself, so in reality you're only on the hook for the 2% fee from the auction house.
What people really do this for is insurance fraud. Buy some paintings for $1M each, get them appraised and insured for $20M each, then somebody "steals" them or you have a convenient structure fire and make the N*$20M insurance claim.
In this example, you get a $20M deduction and you don't have to realize the $19M gain.
Depending on how the shill purchase in the hypothetical is arranged, you might have realized a gain there... but then again, maybe you just pay the auction fees.
Original: Holding a year or not doesn't matter for donating appreciated assets, AIUI
Nope. Think of it this way:
- you lobby government to make charitable donations tax deductible, meaning you can reduce your income by the stated value of the donation
- you use the auction house hack to inflate the value of the painting from $1_000_000 USD to $20_000_000 USD buy buying it from yourself
- No one will buy your painting for $20_000_000 USD, so it's not really worth that in the open market, but the art museum (in your backyard & founded by you) will give you a receipt stating the art is worth $20_000_000 USD
- Unless you reduce your income, your tax rate is 50%, so you donate the inflated art piece (to your art museum in your backyard), give yourself a receipt for the donation
- You attach that receipt to your tax return, lowering your taxable income from $A_LOT to $A_LOT minus $20_000_000, which at a 50% tax rate saves you $10_000_000 in taxes
Isn't that a realization event right there?
Obviously, the described scheme could still work if you sold one painting to yourself, and then donated N paintings based on that valuation.
[1] https://www.fidelity.com/viewpoints/personal-finance/tax-bre...
Selling an item at auction and buying it yourself isn't exactly a charitable contribution.
This way you pay cap gains on 19 million but can offset 20 million of charity donations against the gain.
For example, if you bought $1 of a stock that appreciated to $1000 and they increased the capital gains rate to 60%, you wouldn't pay any taxes. The IRS would take in less money from the higher rate. Because even if you don't care about charity at all, you'd donate half the stock to a charity when you go to sell the other half and keep 50% of the money instead of 40%. The IRS would get nothing instead of whatever they got at the lower rate.
But the tax code is full of bizarre incentives and rich people not paying any taxes, so apparently this is one of them. (Which at least has the benefit of encouraging charitable donations.)
This is because the cost basis of assets "steps up" on the owner's death to the fair market value at that date - without any capital gains owed. So if you own $10m of non-dividend paying stock, you can comfortably borrow and spend $200k/yr against it, pay no income or capital gains taxes, and when you die your heirs don't owe any capital gains either and can sell off a portion to repay the loan.
For example: "Donating non-cash items to a charity will raise an audit flag if the value exceeds the $500 threshold for Form 8283, which the IRS always puts under close scrutiny. If you fail to value the donated item correctly, the IRS may deny your entire deduction, even if you underestimate the value."
https://budgeting.thenest.com/much-should-donate-charity-tax...
(Sometimes it is just bribery or money laundering, transferring worthless hard-to-value art for millions is ideal not just for tax fraud.)
Sure, the idea is that you only realize the gain on one work by the artist, and then can donate multiple. But even at one work “sold” and one donated its a win if you hold the piece for a year and a day before selling, since you (assuming you are at the top marginal rate for income and cap gains for simplicity) pay cap gains on $19 million @ 20% ($3.8 million) and then get a deduction of $20 million against income that would be taxed @ 37% (saving $7.4 million) for a net savings (even after the $2 million cost of purchasing the paintings) of $1.6 million.
That said the general premise is valid. The loophole comes from the fact that when you donate something, you don't have to pay capital gains on it, yet you can deduct the full value from your returns[1].
[1] "If you donate long-term appreciated assets like bonds, stocks or real estate to charity, you generally don’t have to pay capital gains, and you can take an income tax deduction for the full fair-market value." https://www.fidelitycharitable.org/guidance/charitable-tax-s...
Maybe before the cap, you could argue that the true combined marginal rate was lower than 50% since the deduction for the state income tax would offset some of the federal tax, but a $10k deduction doesn't matter much to someone who's making enough to be in the top income brackets.
Because your taxable income is $20 million less after the donation, and the top marginal tax rate (if you're rich enough to be playing this kind of game) is 37%.
The waters get a bit muddier with the capital gains tax you might be paying on the original sale, but presumably with the right accountant you're still saving some millions, whether 3 or 8 or 10.
You also have to subtract the cost of the painting, unless you consider that a sunk cost (ie. you were already planning on buying the $10M painting)
High art is valuable because high art is expensive. I'm not losing $450 million when I buy a $450 million painting any more than I lose money when I buy a house.
This whole thing is a conspiracy theory created by judgemental people with null knowledge of art to complain about the latest modern art pieces and it spiraled out of control to an urban myth in the level of "the Facebook app is secretly using your microphone" or "vaccines give you tracking microchips".
Everything is made up and the example cited above is very close to the story of “For The Love of God” by Damien Hirst [0]
The sculpture is more of a pointer, or some direct object upon which could be acted the work of art which was the financing valuation and theoretical sale of the work
In most experiences, it starts with how anything is priced. How long did it take to make it and how much money did it take to do so. Plus some. And then what will someone pay for it.
But that’s just “most” and that never makes headlines or anecdotes
(I don't understand NFTs so I may be incorrect on details).
*edited, said “VC” prior
Now if they become worth $1 each and he sells them at that price then it is a taxable event. The threshold may have changed with respect to gifts but if the coins were worth $1 at the time they were initially transferred there may be a taxable event, I think it used to be $50k was tax free.
“The late Chairman Lee’s collection of antiques, Western paintings and works by Korean artists — approximately 23,000 pieces in total — will be donated to national organizations,” they said, in recognition of his passion for art collection and “his belief in the importance of passing on our cultural heritage to new generations.”
I wonder what the pieces will be valued at.
> You have zero-basis stock that is “really” worth $100, but that happens to be trading at $300 right now because the market doesn't know the bad news that you know. If you sell it, you get $300, pay 20% tax, keep $240, and go to prison for insider trading. Or you can wait until the news is public, sell it for $100, pay 20% tax, keep $80 and avoid prison.
> But if you donate it while it’s still trading at $300, you get a $300 tax deduction, which is worth $120, which is more than $80. And you don’t go to prison because you never traded the stock while you had inside information.
https://www.bloomberg.com/opinion/articles/2021-04-28/elon-m...
I have no clue why non-liquid donations are allowed. Stock with a clear market value (publicly traded) seems fine, but everything else should require an arm’s length transaction to liquidate the asset.
(And maybe you would be able to 1) book the donation in the year you initiate the sale to account for assets that take a long time to sell, and 2) still have gains exempt provided all proceeds are going towards a donation.)
The reason this scammy verbiage works is because it violates "linguistic norms". Congregations are "large" things in peoples minds, so when you claim to double it, the image that comes to mind is adding a substantial number. By violating these norms, you can lie without lying. It's a neat trick, the use of which has been mastered by the legal profession. But the technique clearly has wider applications, sadly.
Edit: I was wrong. It's "only" ~50% of Congress, assuming the numbers are roughly the same since 2016. source: https://www.vox.com/polyarchy/2016/6/30/12068490/too-many-la... That's still a huge number, compared to the % of general population who are lawyers. In the US there are 1.4M lawyers; if the pop is 350M then they are 0.4% of the population - and a much smaller fraction of the adult working population (roughly .02%).
Yeah, I mean - there's a reason people that write software are mostly engineers.
It’s a statistic, not a measure.
Go figure
"Tough shit, pay up."
Is there an IRS mechanism for rejecting an un-rejectable transfer?
1) Distribution schedule
2) Liquidity pool providers
3) Bots
1 is important because people can't sell it into liquidity if they never bought it first. How did they acquire it? Just minting it doesn't mean they have it, and without a liquidity pool they can't get it unless the token was sent to them by the issuer.
2 this is important because Automated Market Making systems (AMMs) allow for anyone to create a robust cross-routing and smart-routing exchange system for any asset with the click of a button. And when you create one of these, many bots look for them to immediately trade and distort the price. So the very first thing I did in response to this headline was look at the this asset on the AMM. The leading AMM on the BSC Blockchain is PancakeSwap. And you can see that many of the recent transactions on the block explorer are to a PancakeSwap SCAM liquidity pool. Who posted liquidity? The TikTok video suggests the guy doesn't own any or know how to sell any, so was he using a service that sets this up? What service is that because it seems pretty powerful and I want to know about it.
3 bots. Across all AMMs many bots have cropped up that immediately look for any 5-figure liquidity pool and immediately bid them up. Its gotten so predictable that people create copy-cat liquidity pools just to capture funds in the more liquid token and pull liquidity as they have now collected more of the liquid asset than they started with and have less of the illiquid asset they were trying to sell. This is considered to be an actual scam and called a 'rug pull'.
In this case, it is more likely that he posted liquidity in this asset, bots immediately bid it up, which immediately got validation attention from other people and people kept bidding it up on low liquidity. Only a fraction of the tokens in existence are in the pool, and this price discovery is being extrapolated to the total value of the asset. If something less likely occurred, I would like to know what that is because the ramifications are even more enticing.
Uniswap 3.0 is coming out next week, so if it is as monumental as 2.0 last year, this summer should have just as much creativity as last summer, so you'll have plenty of things to criticize there. All the other AMMs came out after Uniswap 2.0 and have slight differences just using Uniswap 2.0 code. It is unlikely they will update exactly to Uniswap 3.0 but they'll follow the market.
This space moves extremely fast with lots of competitors if you know how to code and haven't been spending the last half a decade doing something meaningful like working for an ad-retargeting conglomerate while complaining about cryptocurrencies.
best line in this whole thread!
https://demonocracy.info/infographics/world/lqp/liquidity_py...
Kids are learning order books and depth charts because they _can_ Not because traditional finance gave a fuck about them or even tried to educate them.
For better or worse, that's the game in 2021.
At first we called them all scamcoins, shitcoins, then it became altcoins as the market matured
Now it's just all giant pools of liquidity to fuck around in. It doesn't matter what you think the value is. It's liquid or it isn't.
Currency was created because barter sucked, Cryptocurrency was created because some people didn't like some aspects of prevailing currencies, now the technology supporting cryptocurrencies has made barter not suck, so we're back to barter with just gigantic liquidity pools that can accurately route an order between two arbitrary assets and keep their prices in sync.
So if you're keeping up, barter doesn't suck any more and the market has accepted that, which is a game changer.
I was searching for a decent/academic review of Debt in order to post it here, but found one on Github [1] giving an itemised list of the book's main points, as seen from the reviewer's perspective, and containing a link at the top of the review to a .pdf of the book itself (on libcom.org and it seems to be complete).
Here are the opening paras from "what is money":
> The fundamental theories on which the modern science of political economy is based are these:
> That under primitive conditions men lived and live by barter;
> That as life becomes more complex barter no longer suffices as a method of exchanging commodities, and by common consent one particular commodity is fixed on which is generally acceptable, and which therefore, everyone will take in exchange for the things he produces or the services he renders and which each in turn can equally pass on to others in exchange for whatever he may want;
> That this commodity thus becomes a "medium of exchange and measure of value."
> That a sale is the exchange of a commodity for this intermediate commodity which is called "money;"
> That many different commodities have at various times and places served as this medium of exchange,—cattle, iron, salt, shells, dried cod, tobacco, sugar, nails, etc.;
> That gradually the metals, gold, silver, copper, and more especially the first two, came to be regarded as being by their inherent qualities more suitable for this purpose than any other commodities and these metals early became by common consent the only medium of exchange;
> That a certain fixed weight of one of these metals of a known fineness became a standard of value, and to guarantee this weight and quality it became incumbent on governments to issue pieces of metal stamped with their peculiar sign, the forging of which was punishable with severe penalties;
> That Emperors, Kings, Princes and their advisers vied with each other in the middle ages in swindling the people by debasing their coins, so that those who thought that they were obtaining a certain weight of gold or silver for their produce were, in reality, getting less, and that this situation produced serious evils among which were a depreciation of the value of money and a consequent rise of prices in proportion as the coinage became more and more debased in quality or light in weight;
> That to economize the use of the metals and to prevent their constant transport a machinery called "credit" has grown up in modern days, by means of which, instead of handing over a certain weight of metal at each transaction, a promise to do so is given, which under favorable circumstances has the same value as the metal itself. Credit is called a substitute for gold.
> So universal is the belief in these theories among economists that they have grown to be considered almost as axioms which hardly require proof, and nothing is more noticeable in economic works than the scant historical evidence on which they rest, and the absence of critical examination of their worth.
[1] https://www.newmoneyhub.com/www/money/mitchell-innes/what-is...
[2] https://www.newmoneyhub.com/www/money/mitchell-innes/the-cre...
So the idea of "value" just goes by the board? People just make up "pools of liquidity" out of nothing and are instant billionaires?
And this is supposed to replace money?
Is it necessary to agree with a market just to participate in it?
In this type of exchange system, order books and market makers are replaced by liquidity pools, where individuals put up two assets (for example a liquid asset like Ethereum and a less liquid asset that they wish to have liquidity in). This process automatically spawns a smart contract from a smart contract factory, which has all the functions for maintaining that liquidity pool in perpetuity. The smart contract has no administrator and it allows other market participants to trade in that asset. The additional beauty is that the other market participants do not even need "Ethereum" the liquid side of the trading pair in order to buy the asset, as the smart contract factory will route whichever asset the trader owners between liquidity pools. For example, if they had Tether, the smart contract factory will find the Tether/Ethereum liquidity pool, and the Ethereum/NewToken liquidity pool and exchange it at the best price.
Also anybody else can add extra liquidity to the liquidity pool.
All liquidity pool providers earn trading fees from people that buy and sell. Turning them all into market makers.
The final point is that the market decided that these trading fees are not a good enough incentive to add liquidity to liquidity pools, so it is important to know that all liquidity pool providers actually receive a bearer token representing their share of the liquidity pool. Third parties have created additional financial products that allow depositing this bearer share and earning other assets for doing so. So people that want to passively earn have to provide liquidity and lock up that liquidity for some time, and it is working extremely well.
https://www.wsj.com/articles/dogecoin-is-a-joke-but-its-no-l...
https://www.marketwatch.com/story/the-cryptocurrency-dogecoi...
I for one will be laughing all the way to the bank if Doge reaches err... $200?
Further, most large trades don't take place on exchanges public orderbooks, but on private OTC desks with separate books, for this reason.
Generally, large buyers are matched OTC to large sellers at prices a little different to the on-market, but better than relying on on-market liquidity.
The same happens in traditional finance, or anywhere. For example, if a taxi company wants to buy 1000 cars, they won't attempt to get them from the local yard.
A lot of the commenters did not grasp basic economics.
I don't think wash trading is that prevalent (except for maybe in some minor books on Binance).
Where does that money come from? There isn’t a Doge Corporation backing this up that sells actual products and collects actual revenue.
The only way to become a millionaire through DogeCoin would be to invest $10,000 at the low and sell at the high. Who are you selling to? New entrants, hoping to get another 10X or 100X run-up, funded by even newer entrants, also hoping for their 10X and so on.
Everyone’s hoping to become a millionaire, but in reality they’re mostly just pumping money into a system to make the previous entrants millionaires.
With Doge specifically, a lot of people have lost money when they bought in at previous highs. Who did they buy from? Previous owners looking to exit before the music stops.
It’s not so much a joke as a game: Put money in, see how many other people you can trick into putting money in after you, and then sell them your coins before it all collapses.
used to be a thing as well.
But selling, and trading for goods, are equivalent. If you win big on a coin, it doesn't make a difference whether you sell your holdings for $200,000 USD to buy a Lamborghini or directly trade your holdings for the same car. Either way there are only so many Lambos to go around and lots of paper millionaires thinking they can buy one.
Are you looking at a different set of exchanges than I am? Neither Blockfi, Coinbase, nor Celsius support Doge.
https://www.theguardian.com/technology/2014/mar/27/nascar-do...
or: https://poocoin.app/tokens/0x00aa85e010204068b7cc2235800b2d8...
Not really liquid either :-) (it's down to 7m market cap from 12bn). A nice scam indeed !
There is no end game where crypto speculators don't lose a lot of money.
loceng (im out of replies so typing response here): You mean like stocks? Every asset in existence has turnover with new buyers that take out the old. Early adopters get rewarded for taking the risk, this is nothing new.
Western Roman empire fell apart in part because of its inability to raise revenues. When states can't raise taxes to provide services, justice, and protection, private lords and strongmen fill the void.
In fact, it wouldn't be a "realworld" company at all.
It would just be electrons floating on the internet ether. It's only real purpose would be to entertain those who speculate that others can be convinced to make the same mistake they have made.
But to finally answer your question, the real difference between this sort of company and crypto is that sane investors would never buy stock in it.
In other words, you’d have to subtract everything of value and leave only the shares themselves. That’s essentially what crypto is: Shares of a finite number that can be moved around between accounts, but don’t represent anything other than themselves.
The reality is actually even more extreme and bizarre.
The company would have to avoid providing any real overall value to society while consuming large amounts of energy in some cases.
Crypto is a financial wonder; a virtual black hole that sucks in money and resources under the weight of it's own gravity.
When you buy a stock, you own part of that company, including all of the cash on their balance sheet, their inventory sitting on shelves, income from their business activities, any buildings they own, their IP, their brand, and so on. These are real, valuable things that are divided into ownership shares and sold to people.
Crypto removes all of the actual ownership of things and just skips straight to shares that don’t represent anything. Take stocks and subtract all of the actual underlying assets and value, and you basically have crypto as traded on the exchanges.
Remember that cryptocurrency has no notion of market price or exchange rate to USD. The exchange rate that everyone focuses on is not a function of the blockchain or cryptography. It’s purely a function of the exchanges
That's because there is no state which protects a legal system which would enforce the ownership rights of cryptos currently. Stocks on their own are also a just piece of paper
What happens is that people use tokens with varying degrees of de/centralization, and occasionally prefer them over the currencies of their own countries.
What happens to these people, and speculators, varies, and depends on the level of centralization, whether the central control is used in a manipulative way, and finally whether the crypto in question has economics grounded in real-world use cases which will drive demand independent of speculation.
I genuinely can't get it out of my head right now. It seems like anything and everything collectable is worth more, because people are desperate for safe stores of value. I used to buy, restore, and flip old woodworking tools, and as a hobby, I collect nes, snes, and n64 games/systems. The prices are getting outrageous, genuinely just outrageous. An older lathe that would've been <$100 two years ago just sold for ~$500 at a local auction. Games, game accessories, and other nintendo collectibles have almost doubled in price near me. It's ridiculous.
I can't shake the feeling that we're headed for a doom and gloom situation with massive unemployment, hunger, and human suffering in the near future.
I remember in the early 2000s when the internet really made finding collectibles easier, the old computer market got insane, like $1200 for a standard C64 on ebay, because more people were able to bid on it. Those prices eventually came back down to earth, $250-$300 for a nice one now.
There is a game economic theory guy on YouTube (German though) where he explains it: https://youtu.be/bokHl4zmbPg
Pretty cool!
I learn a lot by this sentence and I say it to myself over an over in our new and improved social media fueled world.
https://fred.stlouisfed.org/series/M1SL?fbclid=IwAR3qsddDi_D...
Uh oh ...
Having excess savings go into cryptocurrencies would be a stabilizing mechanism. It keeps it away from consumption, staving off inflation. And it keeps it away from financial assets, avoiding a generalized speculative boom. As long as cryptocurrencies remain decently segregated from the main financial system, the whole mechanism becomes a heat sink.
Just liquidated BTC to cover a down payment at my local bank where I've paid off mortgages already. The VP of the loan department completely understood why I wouldn't keep my money in their bank anymore.
https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
I'm not sure if this is really an accurate description for the whole blockchain-currency-foo tough.
IMO a better (or simpler) comparison might be with a game of musical chairs.
Definitely. Should end well.
Apparently you seek some sort of regulation to stop people writing mean things.
Apparently questioning why people are being negative = seeking regulation to stop them? Come on man.
I am just not entirely convinced that when shit hits the fan people will quietly take responsibility for their actions.
Indeed I have, why not just take them over and reimburse their creditors instead?
But really it's meant to be a ~, or ∼ if you insist on precise Unicode.