Coinbase plans to add $500M worth of crypto to its balance sheet

So this one time the entire economy of Albania imploded requiring a bail-out from the IMF because everyone got into a massive Ponzi scheme. [1]

Interestingly enough, it happened at a period of serious political instability - switching over from communism to capitalism. This lack of confidence in social institutions caused people to seek refuge in snake oil salesmen.

There's an awful lot of parallels in this story.

Cryptocurrencies are really, super stupid currencies. They fly in the face of everything we know about modern economics. They're slow, they're expensive, they're deflationary. People don't spend deflationary things, and an economy is built on the idea of money changing hands. They're stupid assets because they're backed by nothing. They're not productive, and the biggest are negative-sum investment vehicles with value constantly skimmed off by miners.

Crypto advocates are basically the anti-vaxxers of finance. If I've learned one thing from history and "Extraordinary Popular Delusions and the Madness of Crowds" it's not to underestimate this kind of insanity.

So, with that in mind, let me address your question head on:

> Do most money managers want to buy casino chips?

I mean, most money managers in 2008 wanted people to buy mortgage-backed securities did they not?

> Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips?

85% of all trading volume is ersatz counterfeit dollars. [2] It really is an open question just how big this market actually is. If it wasn't there would be a Bitcoin ETF. This is in fact the reason there isn't one.

Instead you've got Michael Saylor's next hell-ride, brought to you by the gentleman who lost more money in one day than anyone to date in 2000 when it came to light he was cooking the company books. The MicroStrategy company books. He settled for $11M. [3]

[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...

[2] https://coinlib.io/coin/BTC/Bitcoin

[3] https://www.nytimes.com/2000/12/15/business/microstrategy-ch...

If you take the logical view that BTC et al today function more like assets than currencies, then an enormous number of actors in the equity markets are in the situation of buying an equity asset and benefiting if its price goes up (and often talking their own book as well).

Arcade tickets then. What are they worth? Who knows, see what you can buy with them.

Poker chips have 1:1 correspondence to dollars. So they're very different from shares and from cryptocurrencies.

Poker chips don't have earnings or pay dividends.

Negative yielding sovereign trash with CB's as the marginal bid (or majority of the bid in some "markets") or at worst, the latest shit coins that your customers (institutions and individuals alike) are giving you fiat for and at best…

I mean, Long Island Iced Tea -> Long Blockchain Company got the "yay" [sic] of Wall Street but the "nay" of "people who recognized that an Iced Tea company claiming they could magically reinvent their business around blockchain with no specifics as to how"; and subsequently it turns out that, actually, there was no business plan and it was an insider trading pump and dump move. I'm sure before the insider trading charges that the executives of the company were absolutely happy to have market approval and leases on yachts, as anyone would be.

I should say, I think Coinbase is relatively well situated to capitalize on crypto, and it's a real business. I also think it's pretty well situated to shrink and deleverage if there's a decline in the crypto market. I don't think they're a scam.

I just mean that using market approval as evidence that the market is real, not a scam, not a trend, or does something useful is foolish. The point-in-time correlation of market success and fundamental success is nearly 0, even if the long-term correlation is very high.

Recently see also: NFT mania. Surely you'd rather be the artist that gets paid $50 million for selling some bits even as the process is widely derided, since you the artist aren't the bag-holder later on when it turns out the bits aren't worth $50 million.

I know a dev (used to work from Leeds UK, i don't know where he is actually) who created a crypto with 2 friends for someone who had the "yay" of Wall street. Long story short, he collected 200k for a 3-month job as actual payment, and another 600k when he sold his shitcoins (that's what he shared in our alumni group at least), i think the shitcoin creator escaped with 3M and a lot of people actually lost money.

I thought it was funny and an actual tax on stupidity, but now i understand that it was targeted at poor and/or young people who did not really had to money to loose in these schemes.

Shocking to see how most criticism is just hand waving “technical and social issues” without citing any details.

And when they do those “issues” are almost all out of date and ignore current technology. Crypto uses too much energy ignores Ethereum converting to PoS in six months. Crypto has no practical use ignores $150 billion in decentralized finance applications today. Crypto is too slow and expensive to transfer ignores super high capacity L2s and rollups that are processing tens of billions in transactions today with essentially zero costs.