Dogecoin Co-Founder Calls Cryptocurrency a Scam to Help the Rich Get Richer
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However, don't we all, if we buy into the stock market, buy into shady businesses, tax evaders and corruption? So if the common knowledge investment tip is to buy into the stock market (through stock funds or whatever), maybe it should also include cryptocurrencies? I mean, in terms of what's a sound investment strategy for your savings.
It does seem overpriced right now and overdue for a correction, though it can remain irrational longer than you can remain solvent. Still, don't confuse the real merit with the hype. They both exist. It's less clear whether that exists at all for crypto.
Stocks are backed by real business activity. Can you name a successful major publicly-traded company (currently) which is actually just fictional business activity? (The finance industry might be the debatable exception depending on the definition of 'real' business activity).
Once shareholders find out that a business is actually just "pretend" business activity it's value tends to drop through the floor. See: Enron, Theranos, e.t.c.
Who is to say that hoarding user attention and online advertising is actually profitable? In a real monetary system where the money supply isn't in a constant state of rapid expansion.
> I remember a time over a decade ago (before the insane 0% monetary policy started) when they were struggling to turn a profit
Well they have been profitable since 3 years after incorporation, so we are talking over 20 years ago.
> The business model did not change much since then and yet now they are profitable.
Well the industry, their market share, the number of clients and the number of ads served grew, and they refined their business model throughout.
> Who is to say that hoarding user attention and online advertising is actually profitable?
Google, based on the excess profits they have generated across the last 20 years to become one of the most valuable companies in the world.
> where it's receiving special treatment due to its ability to hoard eyeballs.
In economics that's called a competitive advantage :) It's not a coincidence that it gets eyeballs, it's part of their whole business model.
The problem with looking at revenue numbers is that they ignore just how profoundly monetary policies affect the way the entire system works. A catfish may be a top predator in a lake, but put it in the ocean and it won't survive very long. The position of corporate proponents is to argue that a slight difference in salt content (I.e. interest rates) doesn't change anything when in fact it means the difference between life and death.
>> Well they have been profitable since 3 years after incorporation
Is it a coincidence that they started becoming profitable at approximately the same time as interest rates started to drop? If you compare interest rate charts with Google net income, there seems to be a strong correlation (with about 1 year delay for Google profits to react to changes in interest rates).
>> In economics that's called a competitive advantage
It's called having an unfair advantage by using your connections to governments to shape regulations and monetary policies to create an environment which benefits you and your large corporate customers from which you derive most of your income.
BTW, you don't have to believe me. We will find out soon. The Fed is basically giving corporations free money by the bucket loads now, it's a matter of time before hyperinflation kicks in and we get a revolution. They've made it such that there is no incentive for anyone to do any productive work so everyone will stop working and start scamming just like the corporations are doing. Clearly it works and everyone is getting away with it.
To be objective, crypto is largely treated by most people as a speculative asset today and its price action is also heavily manipulated. The one big difference is that at least you can mathematically verify how many units of crypto exist and there’s some measure of transparency that doesn’t exist in the stock market.
Despite centuries of supposed regulation and improvements the stock market is a crooked system where you don’t even have a clear picture of how many real shares are even floating about the marketplace. Think about that for a bit and compare that situation to crypto where any transaction can be verified.
But in general I’d argue that crypto is still so new that even smart people don’t really have an understanding of what it is yet. It’s not a speculative currency or ponzu scheme, at its core it’s a technology platform with many attributes that other systems devised by humans don’t yet have such as being trustless which is going to allow all kinds of new and previously impossible technology systems to exist.
Only IPOs have much of a direct effect. There may be a vanishingly tiny effect on investment raising the price to enable future cash flow, but you'd have to be buying in large volumes to do that.
On the other hand, being proactive in voting during AGMs can change a shady business into a legitimate one.
Crypto proponents are always trying to draw false equivalencies between crypto and the stock market to legitimize crypto (or de-legitimize stocks). However, stocks and crypto aren’t comparable.
Cryptocurrency is basically what you’d get if you took stocks and removed everything valuable about them (that is: removed the fractional ownership of the company and the company’s assets). For all the talk about blockchain and technology, crypto investors only really care about the symbol and the price it trades at. Without an underlying company behind the coin, cryptocurrency creators are freed from the hard work of creating a company. They just have to create the coin and sell it. They also don’t have to worry about anyone claiming the coin is overpriced, because it doesn’t represent anything.
With stocks, you’re actually buying a piece of an actual company. It doesn’t compare at all to crypto.
Because crypto doesn’t derive value from any underlying assets, it’s not a traditional investment. It’s basically the essence of speculative trend-following distilled into tradeable tokens. The value only goes up so long as the hype continues to increase and the market can find more believers to buy the coins, pushing the price higher. If you think investing in such a scheme is profitable, you have to believe that more people will continue to believe in the scheme in the future to continue the price growth. The risk is that people stop believing in the scheme and start withdrawing their money to place in other assets (traditional investments or the new hot cryptocurrency), which depresses the price and simultaneously makes it less attractive to new investors.
To a first order approximation, the only people using cryptocurrency as an actual currency are scammers, who promptly sell it once acquired because it's not primarily a currency. It's just an incredibly volatile, highly speculative asset.
https://www.bloomberg.com/news/features/2021-07-08/crypto-sc...
From their article:
"Tokensniffer, aptly named for Shit Coins, claims to have tracked 42,071 tokens and 2,250 scams or hacks. That was as of June 16. More than 200 supposed stings were logged by users during the first two weeks of June alone..."
So many formerly-good people have been corrupted by crypto greed.
It’s also a scam to launder money, destroy the environment, and gateway the youth into losing their holdings through asset trading. I hope the US follows China’s example and bans it outright.
Who do you think, in authoritarian countries, has most of the money?
The poor Venezuelans saving with Bitcoin benefit exists, but let’s call a spade a spade. It’s principally used for graft and sanctions/tax evasion by these countries’ elites.
It's quite a leap to say crypto is "principally used" for that. Bitcoin is seeing adoption for remittance payments in the poorest countries in our world.
Crypto is also allowing people to donate to activists in countries that deem these people "extremist groups" [0]
[0] https://www.reuters.com/world/europe/navalny-ally-urges-dono...
Not broadly. But within authoritarian countries, almost certainly yes.
You need to have wealth before losing it to becomes a problem. (For an analogy, look up how hard cash is distributed and used in authoritarian regimes. Hint: the poor Venezuelans have a tougher time getting U.S. dollars, too.)
Unless you want to use it for economic endeavors of course, but even then you don’t really need to permanently hold that much.
If you’re holding it because you think other people think the technology will make other people think (…) it’ll eventually be used for real payments increasing its price: That’s speculation.
Edit: and of course this question is being downvoted as well.
I've upvoted it.
That said most of crypto is a scam, just like most of dotcom 1.0 in 2000 was crap. The parallels are a near dead match, speaking from someone who was there. The vibe was the same. Was the internet a scam?
The thread doesn't prove any of the claims in the first tweet:
1. Inherently right-wing, hypercapitalistic. What's the source? Whitepaper? Source code?
2. Built primarily to amplify the wealth of its proponents. Again, what's the source for this claim of what motivated Satoshi? Look through the the Bitcoin Talk forum. You'll find nothing of the sort.
3. Tax avoidance, diminished regulatory oversight and artificially enforced scarcity. He's just described blue chip stocks.
Paying attention to notable people is all well and good. But they, like everyone else, have the same standards for evidence as the rest of us.
And if he invested during recent dev changes that Musk was tweeting about, that investment would be way underwater.
[1] https://cointelegraph.com/news/founder-of-8-4b-dogecoin-sold...