The biggest crypto lending company is a ponzi scheme
rorodi.substack.com
rorodi.substack.com
Crypto is probably the most brilliant scam in the history of mankind, because it combines plausible deniability with techno-obfuscation and meme-driven popularity to a degree that makes it nearly impossible for democratic governments to regulate (good on China for banning it!), and this state of affairs may continue for quite a while. But even if it doesn't all come crashing down in my lifetime, I still won't touch it with a ten-foot pole as a matter of principle, no matter the potential gains. There are some things I won't get involved with as a matter of principle, such as certain illegal drugs, even if they were legal.
EDIT: PS. I don't know much about celsius, and it might in fact be a ponzi. I'm referring to brushing off crypto as ponzi.
But... if you can build a datacenter in China with RMB, and pay chinese workers with RMB, and buy equipment and electricity with RMB, and get *bitcoin* out, then you've evaded the trap and liquified[1] your Chinese holdings.
It's not at all clear to me how much this hole has been closed, honestly. But it's possible this is still going on at a level high enough to explain crypto's continued expansion.
That said: duh, it's a bubble and it's coming down at some point. But there's real economics happening too.
[1] Or laundered, depending on how you swing.
[0] https://www.prnewswire.com/news-releases/former-google-ceo-e...
edit: removed my comment about Schmidt not really joining, I see it announced on his Twitter.
Crypto no doubt harbors shady characters, ponzi schemes, scams. You also can't deny that there are ideas which threaten state control, monetary policy, nationalistic ideals, religion its self. Just look at the magnitude of the conversation.
Its easy to dismiss me as the ramblings of somebody caught up in the scam. But when has it been a good idea to completely dismiss ideas which can shake the bedrock of society? I'm sure dinosaurs never thought an asteroid would cause them to go extinct either.
I ask the skeptics to take a Bayesian approach to skepticism. If you think in absolutes you can never accept new information. Move your skept-o-meter from 100% to 99% and allow yourself a fraction of a sliver of consideration. It might just be one of the most important things you have done.
Never? Sounds a mite like absolute thinking.
You know, a decade ago, I actually thought that cryptocurrency and blockchain were interesting ideas that might be well worth pursuing. But it has increasingly felt like a solution in search of a problem--it's hard to find any use cases that aren't already better solved with other solutions. And in these kinds of discussions, the cryptocurrency adherents themselves struggle to proffer any such problem that doesn't boil down to--as someone else put it--wanting to live in Galt's Gulch. Which isn't exactly a compelling problem for most of the world's population. And comments like yours aren't helping to move the needle in the direction you want it to move.
Skepticism considers the ways in which you assumptions could have plausible positive or negative outcomes.
I see the entirety of the DeFi "industry" being regulated to death considering how many of these protocols and DAOs behave exactly like securities or replicate existing legal structures; I see no reason that governments will not seek to regulate them the same way.
We can look at the claims of crypt enthusiasts as stores of value, which is coherent, for sure, but if we're willing to give it the benefit of doubt then we should consider other equally shaky technologies and tech scenes, which doesn't give me much hope by itself.
The place where crypto has, and will likely continue to show value, is in money laundering and tax and currency control evasion. There are all things that, while illegal, _definitely_ have value, so my lower bound here is the value of a digital instrument to bypass these controls, especially in countries in which such things are tightly regulated.
That's not an insignificant lower bound; it is at least as large as a big fraction of the remittance industry + shadow banking. It's just that it's really, really difficult to make an honest living in this industry.
Stephen Diehl is the most eloquent skeptic I've found (stephendiehl.com/blog.html). Much of the complaints point to unregistered securities fleecing retail (absolutely happening) or just overall complaints that humans are irrational (man yells at clouds). In light of his arguments, I still side on the perspective that this is genuinely new technology capable of giving the entire globe digital property rights. It's going to be a rocky road.
What would you pick? Sketchy native currency with a near guaranteed loss of 80%+ or a volatile crypto asset?
Phew. Yeah, we all felt that. In 2010.
Now while we're reminiscing the past, I know another one! Lets provocatively ask: Isn't the colossal energy wasting worth freedom and all? - So exciting, wasn't it? And don't get me started on Wikileaks donations!
Reality has moved on, and nothing screams ponzi scheme more, than followers repeating decade old talking points, aged like milk, into dogma. Lol, I am pretty sure the vast majority of people doesn't even want that idea of ancap freedom, unregulated markets and tax evasion.
(In the spirit of DRY, I think it is time we collectively write all an adversarial collaboration about crypto on some wiki page. Then I can at least just respond with a link to the rebuttal of the same tired and lazy arguments that crypto-skeptics make)
Sure. Theoretically. Are you suggesting "crypto" isn't almost entirely proof-of-work - de facto? You think those invested care for proof-of-stake? Lol.
> same tired and lazy arguments that crypto-skeptics make
HyDrOpOweR!1! (Deprecated in 2021)
But hey, I am all for the wiki. Actually, I wonder why that hasn't happened yet...
Anyway, I don't want to make the impression all innovation in crypto fanfiction in the last decade has been lost on me! For example, I do recognize, that Bitcoin isn't promoted as currency anymore - because it utterly sucks for transactions. It's "like Gold!" now, or something. Very progressive.
Enough to stake more than 8 Million ETH (about ~35 Billion dollars) [0]
> because it utterly sucks for transactions.
Again taking Bitcoin as a whole of crypto?
Yes, Bitcoin has failed as a currency. Yes, the "digital gold" narrative is bogus. Yes, there will be a lot of Bitcoin maxis who will have to deal with the terrible realization that their "sound money" is worthless. Can we move on now?
[0]: https://etherscan.io/address/0x00000000219ab540356cbb839cbe0...
Bitcoin is now used by El Salvador to avoid borrowing money from IMF. Is that also a ponzi scheme?
I don't know.
Naturally the first thing that happened was that all the scammers and get rich idiots moved in like with any powerful new technology.
It will surely take some time to get the real world usage up and the portion of moon boys/scammers down but it will happen nevertheless.
Except it's not. "Open" and "decentralized" are the false promises of crypto. The entire crypto market is dominated by centralized exchanges, criminal enterprises like Tether and Binance.
None of the exchanges influencing crypto is actually open about their business. Eg. They even try to fake audits as much as possible. Ponzi schemes, pump and dumps, fake code-audits that reveal 0day exploits at launch and other (sometimes insider) hacks everywhere! It really is a daily wild wild west show - https://rekt.news
I will never trust a currency, where malicious insiders can walk away anonymously with my money and blame it on a hack.
Sound stupid? That's how your statement looks to people who understand the space.
Linux and open source software started slow but every year run more of the world because they are a better way of building things
Crypto and decentralized finance is doing the same for the finance industry. There are already $250B in DeFi protocols (see http://defillama.com) all of which are open source, transparent and decentralized.
Celsius is not decentralized finance and does not represent crypto, it is a centralized opaque company which is literally the opposite.
Decentralized Finance is all open source and transparent, everything is written to a public blockchain and almost every piece of infrastructure you can go and look at the source code yourself.
It's a far better system than anything we've built so far because it's available for all to see the inner workings.
I'm surprised hacker news, a place that's supposed to be about intellectual curiosity, has been so ignorant and dismissive of this revolution underfoot for so long.
The author pretty much failed to do any research on DeFi investments (point 3 in the OP). Compound and Aave are just 2 of many places investors place their assets, and are definitely near the lower end of APYs. Badger, which Celsius has already said they used, offers much higher returns. So do other projects like e.g. Convex Finance.
Where do these high APYs come from? Well a lot of it is coming from incentives of these protocols and speculation in those native assets. But the author doesn't even know that, so I won't bother steelmanning his argument
I do know there are many ways to get those high ROIs in DeFi.
With zero evidence suggesting they are lying about returns, the charitable guess I can make is that they are getting high DeFi returns and giving their customers slightly lower ones after taking a cut.
Not the user facing side, but the backend/underlying part that generates the returns necessary to sustain those yields.
Specific vaults strats: https://medium.com/yearn-state-of-the-vaults/the-vaults-at-y...
Links to the actual contracts: https://yearn.watch/
They basically just say "we put it in a vault and harvest the rewards".
What I'm asking is where do the rewards come from. What is the underlying mechanism that makes this model sustainable.
If you invest in a REIT, tenants earn money through their business and pay rents. If you invest in a BDC, the BDC makes loans to businesses and collects interest. Relationship and risks are quite clear here.
If you're Bernie Madoff you generated high yields for investors for decades by taking money from one investor to pay another, and ultimately was not sustainable and bankrupted many people. For example.
So are DeFi yields like a BDC, or like a Bernie Madoff?
The sUSD yVault deposits sUSD into overcollateralized lending protocols and collects interest on loans to other users (who are presumably using Aave or CREAM as places to buy leverage to get super fucking long crypto). So the yield comes from other users paying interest to borrow sUSD.
When the explanation is too complex for anyone to really grasp or verify, realize that this is probably intentionally opaque in order to hide the fact that it is either hugely risky, built on a house of cards or it may be just outright fraud.
Background/Disclaimer: I'm long crypto and have significant assets in Gemini's Earn program, a regulated variant of crypto lending that pays 8% on their stablecoin, GUSD.
I found Celsius and Yearn to be too sketchy/inscrutable to bother with[1], so I'm not going to defend anything about them, only the narrower claim that (some) DeFi liquidity pools are a non-Ponzi, sane way to earn returns in some conditions.
Liquidity pools [2] function as automatic market makers, using their assets to allow traders to trade between two cryptocurrencies. As a liquidity provider, you lock up two cryptos in return for a cut of the fees it takes from traders; your cut is proportional to how much liquidity you contributed. Those pools expose an interface to the Eth network that lets anyone put one of the cryptos in and take the other out, with a pre-determined formula for how it figures the exchange rate. Its profitability comes from the extent to which this exchange (after accounting for both pool fees and Eth network fees) gives a better deal to traders than their other alternatives (like centralized exchanges).
Like any market maker, you face the risk of "impermanent loss" from the shift in relative value of the cryptos, as market makers make standing buy/sell offers which look stupid when the market moves against them. There are also setup fees and all the usual risks associated with smartcontracts. When you consider how long you have to leave them in the pool to make a profit, and those fixed setup fees, plus the opportunity costs of lending through other providers with less volatility[4], the returns (3-100%) just about barely compensate you for the risk.
I experimented with them starting about three months ago and made a presentation, for which you're welcome to see the slides (slide 7 summarizes the downsides):
https://docs.google.com/presentation/d/1BrMMbL5vOzdnkaPVj5mO...
Contra bhouston's claim [3], these LPs don't require ETH to perpetually gain value: as long as traders continue to use the pool, ETH could stay stagnant or even fall significantly and they will still pay a return, though a long-term fall would induce a big impermanent loss (in an ETH-stablecoin pool) that would take a while for fees to compensate you for. (Edit: Although I suppose you could argue that people won't keep trading between ETH and other tokens unless that speculation, in the aggregate, is merited -- but it's not a simple matter of the pools only being profitable as some kind of derivative of ETH's value.)
[1] In the case of Celsius, largely because of this: https://prohashing.com/guides/earning-interest-on-crypto
[2] I've mainly worked with Uniswap v3; some of the details may vary slightly in other protocols.
[3] https://news.ycombinator.com/item?id=29498814
[4] For example, Gemini will lend out your GRT tokens at 6.4%, so that's your minimal return for this to be a good idea.
These aren't loans that are made to acquire some intrinsic value, like buying a house, investing into growing a business and so on. People use this liquidity or take crypto loans to try to make more money elsewhere in crypto.
Is that right? Is there a tie to the real world in there?
To me, this appears quite unsustainable and prone to failure if a risk off event comes. How would crypto have performed during the GFC? It's fallen 80% before even in times where economy has been perfectly fine. The whole ecosystem is ripe to implode due to 0 intrinsic value to owning the tokens that would otherwise cushion a fall in value.
Even in a severe recession, cashflowing businesses have value, rental properties have value. Crypto has none that I can tell.
>Even though these are "fees" or "loans", the purpose is speculation. The whole web of connections in the flow of the money is rooted by people speculating to make money.
LPs don't have "fees", they just have regular fees, no need for scare quotes.
>These aren't loans that are made to acquire some intrinsic value, like buying a house, investing into growing a business and so on. People use this liquidity or take crypto loans to try to make more money elsewhere in crypto.
I don't have an special expertise on what the crypto loans on Gemini/Celsius are for, beyond what their literature says. However, everything you've said there applies just as well to (secured) margin loans that brokerages make. Do you have the same objections to those?
You can earn even more if you provide liquidity for riskier assets that have a higher chance of dropping in value.
The risks are impermanent loss and that the token you're providing liquidity for drops in value.
Yearn is a decentralized automated tool to find the platform that is giving the best returns and moving all the money they manage into it.
All of this is open source and on the blockchain.
Even though these are "fees" or "loans", the purpose is strictly speculation. It's not driven by intrinsic value, but people attempting to make money via speculation.
If I take a loan for a house, I can live in it. That's intrinsic value.
So the system only works to the extent that people are willing to pay for tokens without intrinsic value. Does not seem sustainable to me
If everyone suddenly decides they don't want to trade any more, then I'll find somewhere else to invest my money.
The crux of the OP’s argument to me is that The company and others in this space position the yields as being “in kind” to savings account yields despite it very much being a different risk ballgame. See the frequent hacks on https://rekt.news/ for example.
Do sites like Celsius explicitly claim to be as safe as insured savings banks? No of course not but they play a similar linguistic game of association to Tesla’s “autopilot” nomenclature.
As with most things do your own research and don’t risk what you can’t lose.
What's the ROI on staking ETH right now? Is it anywhere near the rate that they claim?
>selling covered calls
you're taking on risk when doing that. It works well until you get assigned, in which case you take a massive loss and unable to pay back your investors.
Selling naked calls has a lot more risk, see the blowup of optionsellers.com on naked natural gas options
The loss comes from the opportunity cost of what you could have sold the underlying asset for. That might or might not be "massive", but the potential is definitely there. At the end of the day you're picking up pennies in front of a steamroller. Maybe it even has expected value greater or equal to the advertised APY, but failing to disclose that and/or pretending like it's guaranteed is deceptive. I'd be pissed if I put my money into some sort of "savings account" with 8% APY, then get wiped out next time there's a spike/dip, because it turned out that they were using it to write covered calls.
I guess the charitable explanation for them raising capital as expensively as possible from randoms on the internet is they're feeling charitable themselves. I seem to remember that was how all the pre-crypto HYIP "investments" explained the generosity of their compounding daily return offers
Tether feels like the most likely POF based purely on the attention they're getting now, but nobody knows exactly how it will bust.
Anyway, I don't have much faith an operation ran by an old con artist and a 24-yr old actress would actually produce a valid zK-proof that covers their operations. That's the sort of thing you need a serious technical team for. So the article still stands in that regard.
Someone might be able to demonstrate to you that they have a $20k bank balance.
Audits are where you try to do a reasonable job of making sure they aren't also hiding the fact that they've got $50k in credit card debt lying around.
I don't know of a single reputable bank, hedge fund or publicly traded company that does that.
A huge number of places do have high returns from time to time. But any reputable firm points out that past returns do not guarantee future results. No reputable firm guarantees returns that high in the future.
The key is the guarantee.
Anyone who GUARANTEES returns that high in the future is suspect, and therefore must be more transparent than usual in order to clear the bar. The article indicates that Celsius was less transparent than usual in describing exactly how they made their high returns.
https://celsius.network/static/risk-disclosure.pdf
Which is a bit odd- there's no chance you might lose money? How are they making money without risking that the return might drop below 0?
Is this not the very definition of a ponzi scheme? The returns coming from "incentives" of these protocols and "speculation" in those native assets sounds very ponzi-like to me.
Of course hedge funds don't have steady 10% yields, they lose money when their risky bets don't pan out.
You will only ever make more money if somebody buys in after you.
Unlike stocks where owning a share entitles you to profit stream of the company (intrinsic value)
Like, if I set up a business "investing" in worthless penny stocks and somehow manage to generate returns, I'm not running a Ponzi. Maybe I'm pumping and dumping those penny stocks. It's still a scheme, it's just not a Ponzi- I am actually earning money for my investors! I'm defrauding other people, but I'm not defrauding my investors.
I'm not an expert in Celsius, perhaps it's structured a bit differently. But any system that relies on new investors paying out the old is structured akin to a Ponzi scheme, if there's no intrinsic value element to the speculation.
If AAPL pays a 10% dividend, huge numbers of people would buy it for the yield. The yield comes from their underlying business, not from investor money. This puts a floor on the price.
When your yield only comes from newer investors, that's not intrinsic value or sustainable
Explain how pump and dumping penny stocks doesn't apply? I agree that it's a bit different in nature than most Ponzi Schemes due to lack of central entity orchestrating it, but the net effect is the same in the end.
You get in early, you win, you get in late, you lose.
Even if we call it something else, it's clear the underlying mechanism and unsustainability of returns is the same.
In a Ponzi, you can't satisfy all your investors- you literally don't have the money you say you do. Eventually it will collapse and piss off most of your investors. But if you are really good at pumping and dumping you could in theory just keep doing that until you can't make money anymore, and then close up shop with a tidy profit for you and your investors.
They're both frauds, but they're different.
Stocks that don't pay a dividend have promise of paying one in the future as their cash flows grow. That's the fundamental basis to all stock valuation. It's why people talk about P to FCF, PE, PS ratios. For growth stocks, hypothetically, how much in dividends could I get 30 years from now?
It's true that many investors don't consider what the fair value actually is, but that's how you end up in a bubble and the price disconnecting from the fundamentals never lasts forever.
Real estate more obvious and direct via rents.
But yeah, pump and dump kind of stocks where they far exceed their fundamental value are similar.
We can argue semantics and what defines a Ponzi scheme, all I'm saying is that crypto largely has no intrinsic value. Any value that's explained is always self referential in terms of other crypto.
Bitcoin has some small intrinsic value for illicit payments, or hedging inflation in countries without capital markets. You could argue the net intrinsic value is negative due to the environmental costs though. But outside of edge/fringe cases, all valuation relies on a greater fool effectively.
Even gold is still majority used for industrial purposes, despite also being seen as an investment vehicle.
That's just market manipulation. Going on Twitter and saying "BTC to the moon!" isn't a Ponzi. It requires an actor (like Charles Ponzi) to take new investors' money and pay it to old. Bitconnect was Ponzi scheme, not in some abstract sense.
> You get in early, you win, you get in late, you lose.
So vague it applies to everything that pays interest...
If I buy a stock or a bond, I get the dividend payment regardless of when I get in. It doesn't require you to be early, just to accept what the current value proposition is.
You'll make more money if you time it right, but you get some intrinsic value from it even if no future investors ever come along.
Or more obviously, buying rental property. Cap rates change over time, but you always get some real return.
And "pump and dump" implies a coordinated scheme. Usually they'll create groups/networks and call for everybody to buy in. But they tend to frontrun the group. We can call that something other than Ponzi, but at the end of the day, the later buyers are paying off the earlier buyers, and it's zero sum.. the underlying relationship is the same
The promise of DeFi is that it's supposed to reduce risk for lenders by letting them see the assets of borrowers in real time. If the risk to lenders is lower but interest rates are higher then how can it not be a Ponzi scheme? There's literally no other possible explanation.
What is more likely that they figured out a way to "hack" the financial system to make such returns in a very safe fashion or that they are doing things behind the scenes which may be a little bit sketchy?
10% safe annual returns is a bit high if one thinks that the APY is reflection of how risky the investment is.
I keep seeing this for DeFi.
- So you put 1 fiat into the magic box, and 2 fiat comes out. Where did the 1 fiat profit come from?
- DeFi collateralized staking algorithms hash protocol incentives!
- Yeah whatever but no really, it's a closed system so all inputs and outputs need to sum up, where did the new fiat come from?
- YoU dOnT uNdErStAnD cRYpTo!!1!!
1. You put $1 of ETH into a new protocol, let’s say a new Decentralized Exchange on Ethereum that is paying a high amount of interest in order to attract liquidity to their protocol. The high interest is perhaps paid in ETH or maybe in a new token for the protocol.
2. Users flock to this new DEX, and actually use it, generating trading fees for the DEX, which drains activity from CEXs like Coinbase. If in step 1, the payment was made with a new token, perhaps that new token either earns a cut of trading fees, or gets governance rights over the DEX.
3. You either earned another $1 of ETH, or of the new token.
In the above example, it’s not a closed system anymore than the US economy is. A new company was created, which created real value by creating a better exchange which attracted users over CEXs. The company has value now it can payout because it generates trading fees and the equity/governance of the company is valuable. It bootstrapped that with protocol incentives.
That and unlike stablecoins the Fed doesn't pretend it's fully backed.
As someone new to DeFi, I found the article sparked new questions, even though as you said it wasn't deeply researched.
If Celcius is basically reinvesting into a bunch of other assets, it's possible, or even likely, that the high yield assets are too good to be true. That's where my concern would be. Is BadgerDAO rock solid? Compound? I would be curious to see expert analysis of these. Celcius is simply built on top.
I sense it is a case of somebody close to the NFT or virtual world buying the asset and making out it is a great thing and then selling it on quickly.
Many a scam involves somebody from the group buying something so the unwilling feel like it safe.
As always, don't be left holding the baby.
You literally have the previous generation indoctrinating the newest generation into the scheme.
While "wealth begets wealth" in many ways such as compound interest, simply holding $100 USD from years ago doesn't by itself give you any advantage over people in the present day. Holding BitCoin from 2012 does give you advantage over people in the present day, and that advantage comes not from any value BitCoin itself generates, but from the present day buyers seeing the increase in money the 2012 buyers got for no effort, and wanting part of it, so throwing more money at it than the 2012 buyers did. Quantitative Easing isn't a Ponzi scheme because you don't buy Quantitative Easing hoping you can sell your Quantititative Easing for more to new people interested in the hype of Quantitative Easing.
Exchanging USD for steel, fashioning it into a steel bolt, and exchanging the bolt for more USD, is not a Ponzi scheme. Buying shares in a company, the company making steel bolts and becoming more valueable, and your share of it becoming more valuable, is not a Ponzi scheme. Exchanging USD for one BitCoin, then exchanging one BitCoin for significantly more USD, where that extra USD comes from the other person, who doesn't value the BitCoin but only hopes the BitCoin will increase in value in future, makes it very much like a Ponzi scheme.
You can grow flowers in your garden, you can find someone to exchange their company shares for your flowers, that doesn't make flowers a currency. You can declare that USD is a currency with an army behind it, that doesn't make it a Ponzi scheme.
The open question is whether BitCoin can get enough buy-in from people wanting to cash out for free money to generate a secondary market of people exchanging BitCoin for goods and services, large enough that when no more people want to buy in for the free-money aspect, people still want to buy-in for the practical use cases. Since most of the practical and legal use cases are well served by USD, the faff of exchanging USD for BitCoin to buy bolts and lose consumer protections instead of exchanging the USD for bolts seems value removing, not value adding.
Money laundering?
High sale prices are one way to inspire confidence in others.
Whether that person thinks the sale price is a legitimate indication of value, or they think at least someone else down the line will believe that, is not always clear. Because of the nature of crypto anonymity, there's always at least some percent chance any given sale is a legitimate transaction between two unique and non-colluding parties, and vice versa.
There's likely no museum backstop for most NFTs. (By which I mean that rich people buy art, sell it amongst themselves/have inflated art appraisals to raise the price, and donate to museums and claim as a tax writeoff.) See https://www.latimes.com/local/la-me-irs2mar02-story.html
NFT as a concept will live - I can see them as placed alongside offline art as an online component that doubles as proof of ownership and lineage, and in the long run could be a major anti-counterfitting strategy.
That said, yeah regular art markets don't really make sense wrt value either.
I think we just need to wait until the first NFTs start disappearing because of the servers hosting the images shutting down. The actual images aren't stored in the blockchain, it's just a URL.
The NFT is also not the work in question. While there are some proof of concept works that have their binary data stored directly in the blockchain, the vast majority are just URLs to some other site, URLs that could die or change at any time. And there is no recourse within the blockchain itself to adjudicate the breach of trust that would represent. Which means, again, we have to fall back on the traditional system of legal contracts and courts to resolve disputes.
In other words, the decentralized, "zero-trust" nature of NFTs completely undermines any concept of ownership that isn't a post-hoc rationalization designed to part fools from dollars.
There are a lot of fools in this market that don't understand the tech or its specific guarantees and non-guarantees, sure, but that doesn't mean NFTs aren't bringing anything new at all to the table.
You can't say that NFTs are a trustless system when the origin of the NFT requires trust. You might as well assume the "+ C" term in all integrals equals zero. It's just factually incorrect.
No, as long as it's known that the address that created the NFT is owned by whichever public figure created the artwork, you're good to go.
> You can't say that NFTs are a trustless system when the origin of the NFT requires trust.
That's like saying PGP is not a trustless encryption scheme because you still have to trust that the person you're exchanging encrypted information with is who they say they are. Nobody (who is informed anyway) has made any sort of claim about PGP fixing that problem. It is entirely irrelevant to the value-add.
Now, whether you believe the value-add actually matters given the caveats is another topic of discussion, of course.
Nobody--who is informed--has given me any coherent description of what value add NFTs provide, period. These ever shifting sands of never-enumerated benefits.
What, exactly, did you mean when you said "the value-add of NFTs... is namely that there's a trustless, verifiable record of transfer"? You responded to my assertion that NFT ownership is not trustless by saying that wasn't the value-add, the value-add was that they were trustless.
It means you're criticizing something for the wrong reason. Criticizing PGP for not doing something it ever claimed to do is akin to criticizing NFTs for not doing something it ever claimed to do.
> Nobody--who is informed--has given me any coherent description of what value add NFTs provide, period.
Since I assume you're intelligent enough to understand, I can only assume that means you don't want to understand.
> What, exactly, did you mean when you said "the value-add of NFTs... is namely that there's a trustless, verifiable record of transfer"?
Meaning that so long as you can verify that the NFT was minted by who you think it was minted by, you don't have to trust any of the intermediaries that it passed through. It's like buying something that comes with a physical certificate of authenticity. In real life, you have to trust that the certificate itself was not forged by any of the people in the supply chain before it got to you. That's the part that an NFT solves.
The trust issues that an NFT does not solve (that also exists in real life):
1. Some rando Bob prints out their own certificate of authenticity and calls it "Bob's Certificate of Authenticity that This Painting is a Picasso." It's up to you to verify that Bob is someone whose opinion is worth respecting and trusting.
2. The physical product (if there is one) that the certificate of authenticity comes with is in fact the same physical product it originally came with. Not so much a problem with digital goods.
> You responded to my assertion that NFT ownership is not trustless by saying that wasn't the value-add, the value-add was that they were trustless.
Yes, because there are obviously multiple dimensions to the concept of trust, and for some reason you're conflating all of them.
I mean, it's really not a hard concept to wrap your mind around. Unless, of course, you'd prefer to keep looking down on NFTs as a form of status signaling, in which case do keep on pretending not to understand.
There are only so many "original" Picassos because Picasso is dead, but if we consider artwork that looks just as good as Picasso's, then the scarcity is entirely artificial and caused by provenance.
NFTs from a particular source will similarly become "truly" scarce once that source is dead.
There may be a difference in degree, in how hard it is to recreate a physical work versus a digital one. But it is not a difference in kind.
Look - MBS bought that fake Da Vinci for $450M or whatever. I don't think the majority of people buying $50M+ paintings are complete morons. Maybe they are.
> Look - MBS bought that fake Da Vinci for $450M or whatever.
Case in point. That's why you hire an expert (or perhaps even a team of experts) to help you out.
I will 100% grant that it's mostly about signaling and bragging rights. But NFTs are artificially scarce. Original work from Picasso is truly scarce.
> But NFTs are artificially scarce.
We're just going in circles now. Reread my previous response to why they're no more artificially scarce than Picassos.
Except that those are also scarce because they take the labor of expert hands to make too. People actually would pay money for known forgeries because of it. Absent copyright law and a desire to fund the artist, no one would pay for digital art because copies are as close to free as makes no difference.
The NFT took work to produce, sure, but it's just a number with some mathematical relationship to other numbers and means absolutely nothing without other systems agreeing that it means something. It creates work to be done where none needs to be done solely for the purpose of trying to fit a square peg (post-scarcity information) into a round hole (scarcity-based markets).
That's where you're mistaken. An NFT is distinct from the work that the NFT is tied to, which might not necessarily be digital.
You can copy a Picasso, but no matter how good your copy is, you can't copy the "original" quality of a Picasso. That's all an NFT is, representing the "originaL" quality of something.
The worth (or lack thereof) of copies is completely irrelevant.
Yep. Which raises the question: what exactly does the NFT provide? Is the work it points to in any way lesser through its absence? If no, then why does the NFT exist?
> You can copy a Picasso, but no matter how good your copy is, you can't copy the "original" quality of a Picasso.
There's a long philosophical argument to be made here involving the ship of Theseus, the teletransportation paradox, and frankly thousands of years of philosophy of identity. Let me attempt a short version: if you have two identical paintings, and lack external information as to their origin, can not either one (or both) be said to be the 'true' painting? If so, then what value is there in the information that 'proves' one is the 'original'? The origin-information, an NFT in this case, is a construction, an arbitrary assurance. What value has an NFT that points at nothing?
> The worth (or lack thereof) of copies is completely irrelevant.
I think we agree about what NFT's are, so the only real disagreement is about their value. Precisely because of the point above, I think we would both agree that their value is completely divorced from the value of what they point to, right? So the NFT's value must stand on its own without regard to the work it points to, right? Therefore, saying it represents the 'originalness' of a work cannot be where its value comes from because that is a derivation of value from the value of the work.
I assert that the value of an NFT is effectively 0. Anyone can make any NFT they want, and it might be unique, but uniqueness is not inherently valuable. Here's a UUID v4: 6dee29bc-8798-4560-ba13-de94bac69333. I generated it just now and it is the first and theoretically only time that UUID will ever be generated. Since I have generated this UUID, I have gone ahead and signed it with a private key and thus claim ownership of it. Here's a pastebin to the public key: https://pastebin.com/ddVJxvck and the signed UUID: https://pastebin.com/0MweD9qN. This is effectively an NFT. How much would you like to pay me to sign a certificate of ownership transfer to you?
Summing all up: The work that went into the creation of a thing is all that has value. NFTs can be created for basically free by literally anyone who wants to and therefore they have no value. Claims that an NFTs value comes from it pointing to something are bunk as we both agree the value of what it points to is irrelevant.
This is the crux of it, really. Why do art buyers care so much about what the “original” is? If the reproduction is so good that you need an external expert to tell you which is the original and which is the reproduction, then that basically means it’s not the aesthetic qualities that you’re paying millions for, but the “original” quality that you’re paying for.
This original quality, as I’ve noted, allows you to signal your wealth/cultural tastes and whatnot. Now, I agree with you in that I hardly find any value myself in that, but it’s apparently worth millions to other people who are not us.
In short, I only claim that NFTs are as ridiculous/non-ridiculous as the traditional art market. If you think the traditional art markets are also bunk, fair enough. What I take issue with is thinking that NFTs are a uniquely stupid phenomenon but expensive traditional art is a respectable one.
He even made two versions with the same title: https://en.wikipedia.org/wiki/Three_Musicians
I can't, but will happily pay anyone that can considerably more than the Ethereum gas fees involved in minting an NFT copy of something.
https://www.marcalexanderart.com/reproductions/
"own a museum quality reproduction of a great master’s painting that is indistinguishable from the original"
It'll look better on my wall though, which is why I'd consider commissioning it.
For related reasons, I suspect that whilst more people would flock to see the actual Sistine Chapel ceiling than one I commissioned for my living room, I'd still have an easier time wowing people with the living room artwork than a NFT with a gif, even if it was countersigned by the Vatican
It's almost like the important bit of the provenance for appreciation is in having the actual physical original the actual artist worked on, not a certificate saying you sent some money to someone on an aftermarket and exactly the same gif everybody else has
For example, consider a baseball or other trading card. Can be easily replicated/printed - yet certified authentic cards have value much more value. Why?
This isn't difficult to understand.
It is not artificially scarce. Picasso could've painted a Guernica every month for the rest of his life. Even then, he would've only painted a few thousand paintings. Instead of doing that, he painted the other thousands of paintings...
Any NFT could have infinite copies. You simply decide how artificially scarce you want it to be. Picasso could not have painted infinite Guernicas if he so chose.
You can buy a print of Picasso's works. The value doesn't come from the art. It comes from the fact that Picasso painted it.
It's the same way for collector guitars. People want guitars famous musicians played. There are plenty other versions of that exact guitar. But they weren't played by the famous musician. That's what makes it truly scarce.
In both cases, an artist merely places their “this is official” stamp on something that is effectively a copy, and limits the number of copies available based on the desired economics for their work. And the fact that the “official” version is worth more than a “fake”, is merely because humans value genuineness and provenance, even when the end product is indiscernibly different.
And that's the reason you don't see many lithographs selling for millions of dollars.
Still, the combined "wealth" of lithographs may very well be in the 10s if not 100s of billions.
Those people should stay away from NFTs, because theft is rampant[1].
> How is spending $1 000 000 on a "virtual image" (NFT) any different than spending it on a Picasso?
You own the Picasso but you don’t own the NFT image. Not in any way that matters. Your “ownership” of the virtual image via an NFT isn’t legally recognised and you have no rights to it. Especially not when the minter stole the image[1].
An NFT isn’t a virtual image, but a reference to it. Anyone else can download the same file for free and your purchase can be gone without recourse[2].
A more apt comparison would be spending $1,000,000 on a Picasso or a document that says you own the Moon.
[1]: https://www.vice.com/en/article/n7vxe7/people-are-stealing-a...
[2]: https://www.vice.com/en/article/pkdj79/peoples-expensive-nft...
NFTs are not secure or persistent. The asset at the URL could change at any time.
Liquidity is a function of people, not of the underlying technical structure of the marketplace. This is tautological reasoning. "more people will use the NFT marketplace, creating more liquidity, because of the greater liquidity of the NFT marketplace."
Not sure what you mean by this.
>security
The opposite in fact. If a hacker takes over your second life account and transfers your property you can bug customer support to get it back. If they compromise your secret key and transfer it over the blockchain you have no recourse. Unless the true source of ownership lives somewhere off blockchain and they invalidate and reissue it to the original owner, but then what purpose does blockchain/nft serve again?
>persistence
Already handled, obviously.
>liquidity
If second life wanted to offer liquidity they could(do?) without using an NFT. And if they don't want to offer liquidity than trading the digital asset as an NFT doesn't do you any good since there's no way to transfer ownership in second life.
> Not sure what you mean by this.
Yeah, I wasn't sure, either. My only clue was that there are some NFT proponents that talk about different applications using NFTs as content in the app. But that's just URLs. There's no need for the blockchain to do that. And when you start talking about things that go beyond simple aesthetics, like NFT game items/cards/weapons/etc., there are a lot of problems that either don't go away or are made worse by the fact that there is a supposed "real world value" and "ownership" tied to the objects.
There are a number of NFT Tradable Card Game projects in the works right now. And they sell themselves on the premise that players "own" the cards, and that the cards can be taken "elsewhere". But I think it pretty clearly starts to fall apart when you consider that digital TCG cards have no value outside of a game application in which you can play them, that said value is dependent on the game app not nerfing the card stats or the interpretation of the card stats, or debasing the value of existing cards by releasing new packs of more powerful cards, and that there is no incentive to any app accepting cards minted outside of their own structure.
Wizards of the Coast owns Magic the Gathering. I can't make MtG cards and call them MtG cards without violating WotC's trademark. I can't produce copies of MtG cards or the rules of MtG without violating WotC's copyright. Any cards I create that are not a part of MtG's ruleset are meaningless in the context of the cards inside MtG's ruleset. Regardless of those issues, WotC's incentives are to control the balance of the game in such a way that keeps people buying cards from them, so they have no incentive to interoperate with any of my cards, as they could potentially upset the balance of the game. And finally, WotC is well-known for deprecating old cards (if it's not usable in the game, then what value does it have?) and releasing new decks that make old decks worthless (a card's value is only definable in relation to how well it plays against other cards).
The NFT-ness of any of those cards doesn't change any of those issues. If anything, where MtG players can subvert WotC's shenanigans is in playing house-rules versions of the game. Which, again, won't be possible in an online, digital version because of copyright and trademark issues. So where physical TCGs have an out for groups of friendly players, because you have actual, physical ownership of those pieces of paper, NFT TCGs remove that ability, because they are useless outside of the context of a large, legally-targetable entity capable of deploying a competing application. It's as if you bought MtG cards, but the only place you were allowed to play with them were at WotC-sanctioned events.
And that doesn't get into the concept of the "value" of special versions of cards, like foil finishes, which are no different from standard versions of the cards outside of strict aesthetics. You may have bought a token that says you have access to play that foil card, but you don't have rights to the digital asset file, © WotC.
One of the key components of a concept of ownership is the ability to exclude others from access to the thing that is owned. NFTs do not provide any concept of exclusivity of the actual asset, only of the token. It becomes a Prisoners' Dillema in which the only way the system works is if no actors within it defect and take the assets without acknowledging the "legitimacy" of the token or the blockchain as an authority.
It's particularly funny to me to see the drain-swirling relationship to TCGs that crypto-* has had over the years. First with Mt. Gox (which was not a mountain named Gox, it was Magic The Gathering Online eXchange) becoming a crypto-exchange, then the controversies there, now NFT TCGs ala MtG.
I think of NFTs like car titles.
Having the car title in your name is the only way to prove you own a car. Someone can burrow your car, and have it in their possession but that doesn’t make them the owner - the title does. When you buy a car, what you’re really buying is a little paper that says you’re the owner - without it, you’re just renting.
NFTs work the same but for digital items. When you buy an NFT, you’re really buying the title for that artwork. Sure, people can copy and paste a JPEG, but they can’t take the title from you - Just like possesing a car without a title doesn’t make you the owner.
The concept of an NFT isn’t absurd, it’s a digital version of a real world use case we all rely on daily to prove ownership.
Having a JPEG as your own isn't valuable, because JPEGs can be infinitely copied at zero cost. The title for the artwork doesn't mean anything when anyone can duplicate it.
If you want to spend money on art, why not commission some artwork from your favorite artist instead of throwing away money on procedurally generated garbage with a zillion transaction fees tacked on? At least that way the artwork might be something unique to you with a personal significance which makes it have more intrinsic value to you than it would to someone else.
People are betting on the fact that we'll spend more and more of our time in digital spaces, and I don't think that's necessarily a bad bet.
It is incredibly sad that anyone is working towards a future where a post-scarcity space is fully subdued by artificial scarcity.
It's a bunch of unnecessary synthetic scarcity. What the fuck is good about that? Why do you want to sign on to a model where you're going to be nickel and dimed for everything you see?
As a consumer why do you want to pay for things that have zero marginal cost? What value do you get for buying an NFT to an image or virtual item that costs nothing to reproduce? You're not buying the copyright or any exclusive license to the things.
Why would anyone ever buy an "experience" NFT for something they didn't experience? So they can be known to be a poser and a sucker so long as the blockchain exists?
NFTs are just a way to enforce a class system in a virtual environment where there's no inherent system of haves and have-nots. Not only that but it's a system where an infinitude of intermediaries can extract payment out of any secondary market. It's sad that you're excited to participate in such needless rent seeking.
I think it's more an economic incentive for digital creators who have historically been nickel and dimed every step of the way trying to monetize their work.
> As a consumer why do you want to pay for things that have zero marginal cost?
The value for a consumer is less about paying and more about earning (which sounds dystopic to some, but is very exciting imo). And beyond that, layered experiences mean you could get an item / art / skin / etc and carry it through disparate digital worlds. One could imagine a world where no longer are you playing one game with one set of items, but are instead able to carry your stuff into multiple experiences.
Another point here: NFTs don't have to come into existance through some payment. E.g. playing an MMO and boss drops are NFTs, or by watching some sports game you're given an NFT (or in that case more correctly referred to as a POAP (Proof of Attendance Protocol)). This likely has no monetary value, but is more a social signalling device to show you care about something / did something in the past.
> Why would anyone ever buy an "experience" NFT for something they didn't experience?
Here I'm referring to digital experiences like concerts, parties, tours, AMAs, etc. where there is some set of rules to obtain the entry pass (in NFT form).
> NFTs are just a way to enforce a class system in a virtual environment where there's no inherent system of haves and have-nots
If people could altruistically create high-quality content and earn a living that way I'd agree with you. But, as we've seen with microtransactions, the model is changing as the world spends more and more time in digital 'spaces.' There is value in paying creators, and you're welcome to not participate if this isn't your cup of tea
Overall I think we're coming into this with different images of the future- agree to disagree and I hope it's less dystopic than it could be.
This comes up all the time and is laughably naïve. What possible reason would Epic have to let you transfer a skin or player model to their game if you didn't pay them for it? Game DLC is already broken and consumer hostile. Assuming blockchains and NFTs will do anything to improve it is absurd.
> Here I'm referring to digital experiences like concerts, parties, tours, AMAs, etc. where there is some set of rules to obtain the entry pass (in NFT form).
An NFT has no utility here. Where's the secondary market of suckers wanting to buy an NFT for a thing they didn't experience? If there's no suckers further down the pyramid there's no point in an NFT. It's just an event ticket.
> If people could altruistically create high-quality content and earn a living that way I'd agree with you.
This is the core problem. You're positing a world where every system for some reason cares about things on some blockchain. You're trying to treat an entry on a blockchain like real physical ownership. All this does is port inequality and inequity to a virtual space where it does not naturally exist. Scarcity is not a sine qua non of virtual spaces.
That's just a recipe for a hypercapitalist exploitive hellscape. Join the metaverse! You'll be just as poor as in real life! Join the fun!
I don't understand. NFTs are not hooked up to the legal system of copyright, so how is it ensured that the "digital creators" are the ones that are rewarded? If you create an amazing image, what is to stop me getting the original NFT (by doing something like mining it? sorry I'm not familiar with the terminology) before you do and selling that on without rewarding you? Or, even if you did make the NFT first, what's to stop me altering one pixel or some irrelevant metadata of the image to allow a district NFT being created and selling that instead?
Another commenter said that NFTs are (sometimes? usually? always?) not even derived from the work itself but simply some URL that points at it. That crazy! What's to stop me making another URL for the same work (either hosting it separately or just redirecting to your URL) and making an NFT for that? What if my hosted version outlives yours? The whole idea is so totally ludicrous that I don't see how it's gotten this far.
Unless there's something huge I'm missing (which I'll admit is possible), it's obvious that NFTs are totally useless for this goal of rewarding digital creators. Traditional copyright, while flawed, at least makes an attempt at rewarding the creator of the actual work.
P.S. I find value in this tech but it is still in primitive phase in my perspective.
This is exactly why NFTs are different to a car title. If someone tries to use your car (the car which you have the title to) without your permission, then the police can intervene. (They often won't, but that's the principle.) In theory at least, they have no right to make use of that object.
If I own the NFT for a JPEG, there's nothing I can do to stop someone copying it, as you say. Not even an ineffective or theoretical method. That's just not part of the rights associated with an NFT to begin with.
In fact it's worse than that. The JPEG (or the image it represents) can still have copyright that someone can own and sell on independently of the NFT. That copyright is the actual analogue of a car title (though enforcement by the police is even less likely). You could have a NFT of a JPEG but not be allowed, in theory, to have a copy the JPEG itself!
Maybe Ultra High Net Worth Individuals who collect cars and $10M lakefront mansions across the world don't buy cars and houses to "use" them. But >99% of cars and houses are bought for use - not for a piece of paper to prove ownership.
Sure - the people buying $1M NFTs are probably Ultra High Net Worth Individuals (or complete frauds - maybe both?). But the majority of NFTs are not $1M - and the majority of people buying them are not Ultra High Net Worth Individuals.
You're not necessarily, though. When Jack Dorsey sold his first tweet as a NFT, it didn't infer any actual ownership rights. You couldn't even make him delete it.
A car's title holds specific legal weight. The only way NFTs do is if there's a contract, at which point you don't need the NFT anyways.
Everybody except a few conspiracy nuts believe a title is what it is supposed to be. Your friends and neighbors, your parents, the government, the courts, law enforcement, car dealers… but the only people who believe NFTs are what they are supposed to be are insiders.
If I try to keep in my garage without the ownership title, the police will come, take the car, give it to the owner, and put me in jail.
What does owning a NFT of a JPEG allow me to do that I cannot do with just a saved copy of the JPEG on my hard disk? (Selling the NFT itself doesn't count, for obvious reasons.)
The NFT is more like a car enthusiast club issuing stickers or badges to its members.
I think it's not super healthy but as long it's taxed I guess it's fine but that shows wealth inequality.
Check "Genshin Impact" for prominient example.
The article focuses on the last point, which rings absolutely true to me. Offering huge yields (> 8%) while removing the crypto volatility (dealing in stablecoin, effectively making all transactions and amounts look, to an external user, as if made with regular bank in dollars) cannot exist for a long time.
Either something fishy is going on, or there is a large risk that people using this schema are not aware of (e.g., "stablecoin yields if bitcoin stays in this band, otherwise you lose some money"), or both. My 2c.
While it is certainly harder for a company to get rates as low as US Gov't, solid businesses can get money for 2-3% and weak ones for 5-8% in as large a chunk as they want. Why would they spend a lot of effort chasing retail clients (which are a pain to deal with) and offering them way more?
I looked at these a few years ago when the 5%+ returns started popping up and they are all unregulated, not fdic insured, and seem to survive on bitcoin’s ever increasing rise.
If these returns were true then institutional investors would use them. But they do seem like they should have collapsed years ago.
Maybe they aren’t run by scam artists but by people who earnestly believe that they can make money by mining and pawn it off as returns.
But not being audited is such a terrible signal. It’s weird that anyone would genuinely buy into these.
After trying to raise money for arb strategies with higher returns than Celsius all year I'm really tired of hearing this.
Celsius is probably a scam, but the reasoning above is not why.
When something seems too good to be true, it could be that I know something that they rest of the world doesn’t. Or it could also be that it’s bullshit.
I'm not sure how to parse that, but it doesn't sound reassuring?
A detailed analysis of the various players in the space: https://prohashing.com/guides/earning-interest-on-crypto
[1] https://www.bloomberg.com/news/features/2021-10-07/crypto-my...
Yes, maybe some of these platforms and players are not legit. But constantly putting the entire crypto and DeFi world into the "shit-this-world-does-not-need" bucket is so tiering.
Are we reading the same article here? The only mention of defi is how celius' yields isn't consistent with returns on defi platforms. I'm not really seeing it as an indictment on defi.
How does one provide Bitcoin or Ethereum collateral? Wouldn't you have to give away your private key (maybe in escrow), or transfer coins to them?
Why wouldn't you just sell your coins at full value instead of using this "loan"?
You're not selling the coins, you're pawning them.
Also you wouldn't have to pay capital gains tax in countries that require that on crypto sales.
- People hope that the value of the underlying coins will rise in the meantime. (It may, of course, also fall but crypto enthusiasts usually don't worry too much about that)
- Quite often the volume available is not that high for many coins, so if it hovers around (say) USD 100 per coin but you want to sell 10 million coins, you would not be able to get 100*10 million is 1 billion USD for them. The market simply can't absorb that much, but if you use the coins as collateral you won't "sell" them and thus won't impact the market price.
- Selling things of value can have tax implications in certain jurisdictions, which you can avoid by lending against those things instead.
Why not sell half of the crypto assets instead? On the assumption that suddenly your crypto can go to the moon?! It might equally well lose its value...
Doesn't change the point of your post though.
well… I mean…
The lender is basically long the underlying asset, which they could pay to hedge (likely impairing their 10-20% APY) or just hold, since crypto only goes up. The stablecoin depositor is ‘risk free’ in the sense that loans are secured against other crypto, but exposed to massive exchange rate risk. In a year 2BTC recovered from a default on 100k USD might be pittance or a windfall, but I wouldn’t take a strong position on which, at least not for 1200bps.
In general one wonders how many of these 10-20% APY crypto things are just mis-priced exchange rate risk/exposure. A hypothetical protocol/coin minting 10% if it’s overall volume per year would have no problem paying 10% nominal APY to holders. But, like investing in a bond issued in an foreign, inflating currency, one would expect the exchange rate to decline enough consume most of the nominal yield, leaving some real yield proportional to the other underlying risks. If the mechanism is sufficiently obscured, or lost in the frothy demand , borrowers might actually get outsized returns, for a while. If it’s not, they might be surprised when they try to take profit in fiat.
This is compounded by PoS systems where there are real rewards minted by holders to compensate for the costs of maintaining the network.
Tether claimed audits for years, too, and it was bullshit.
https://help.blockfi.com/hc/en-us/articles/360049344531-Why-... ("Unfortunately we're unable to offer the interest account in NY") and https://blockfi.com/licenses/ don't look too promising for this claim, either.
> Unfortunately we're unable to offer the interest account in NY.
> We're hopeful that some of the state rules and regulations surrounding crypto change in the near future so we will be able to offer our interest account in those states. Unfortunately BlockFi's hands are tied until those rules and regulations change as we take our Compliance extremely seriously.
[1] https://help.blockfi.com/hc/en-us/articles/360049344531-Why-...
Glad to see im not the only noticing this crap
Just to prove my point: Look at the P2P micro credit market (which works in the similar direction and out of the scope of fed regulated money market) where it is no big problem to get 12% APY on established P2P institutions.
Due to the nature of p2p lending sites the sites often have incentive to make it look good for the investor, as for them any activity on the platform brings fees in.
I think it is pretty logical that if some place makes consistent 12% to have that lowered along the years as investors will find the good places quite quickly and start competing for the price.
Crypto Lending services are just like banks in the sense that they pocket a spread. This article is incorrect in the sense that Celsius doesnt have much higher DeFi yield earning opportunities.
I can go fetch a highly volatile 60% right now (the rate is highly volatile but the principle is not necessarily highly volatile), actively managed, and offer users a super competitive 8-12%.
How can I find out and warn him (with more data)?
The problem is that cryptocurrency users exist precisely because they oppose all legislation on currency markets. So they will continue to be scammed over and over again, and be happy with it. It's just the cost of doing business, like drug dealers losing a few shipments to the feds.
Early adopters didn't like that the USD was influenced/controlled by one central entity, especially in the days of the 2008 financial crisis, when BTC was created.
I can't speak for all of crypto, but BTC's motivations didn't seem to revolve around "opposing all legislation", in some pursuit of anarcho-capitalism, but rather opposing currencies that are controlled/influenced by one central entity.
But to your original point, yes the most likely way that the scammers will be flushed out of the system is through regulation, just like all the other wild west phases of industries/concepts.
How can we forget new concepts and ideas such as "the Indian Removal Act"?
I wonder how productive that is. People fall for the same things all the time, i’m not sure a learning experience is getting us anything positive generally.
You mean the printing press, right?
Is that the royal "we", or do you mean to include other people that may or may not share your opinion?
> Now, an effort is underway to force the exchanges to report real numbers.
I can’t believe this isn’t fraud of some sort already
.....who uses the USD.
For sending money to friends in other countries, it is so much cheaper, faster, and more reliable than the traditional money-transfer options I had before.
For buying things around town, I have a debit card that draws from my USDC wallet. Currently, it's less convenient than my credit card, because I have to keep that account full enough to be used, and if I need to fill it up in the moment, it takes about five minutes to jump through all the hoops necessary to not incur any fees. But, as an early adopter I don't mind. Fixing that UX isn't the kind of thing that requires a major technological breakthrough.
USDC operates on multiple layer-1 blockchains, for example Algorand. When transferring USDC between Algorand wallets, the transaction takes a few seconds and costs a small fraction of a cent. Compare that to the shit show that is Western Union, or Small World Money Transfer, or wiring money between non-cooperative banks.
I also own ALGO coins. I could use these as a medium of exchange as well, but I don't, and it would make less sense to do so. Instead I think of these as stocks. Their value fluctuates with the market, and they allow me to vote in Algorand governance voting sessions. If I wanted to liquidate these assets, I would wait until the price went up and then convert them to USD or USDC. I wouldn't spend them with a debit card any more than I would spend stocks with a debit card.
Of course there is an additional use of ALGO's as a medium of exchange - transaction fees for executing smart contract transactions. I haven't found any compelling dApps yet, but in theory this will become another primary use case.
The only current usecase I'm aware of for crypto as a medium of exchange is for criminals, i.e. ransomware / extortion / etc.
Just wondering, what would it take for you (and others who share similar views) to change your mind about crypto? How long does the technology need to be around to be validated? Would you feel better about the space if it was regulated (which would bring scams, manipulation, and illicit activity down), or would you still think it's all nonsense?
The "change my mind" criterion for this would be actual price stability. That is, a significant market for goods and services which can be bought at a fixed crypto price over a period of a year or more with zero price variation. People getting paid salary in fixed crypto denominations. People taking out 10-year mortgages in fixed crypto denominations at interest rates comparable to fiat mortgages.
It is feasible that cryptocurrency might be more stable than, say, the Bolivar. It is not feasible that it will be more stable than the dollar.
If you want a really concrete use case, suppose you want to buy a new Macbook next year and you want to save on a weekly basis. If you'd done that over various periods over the last year you'd end up with between 150% and 70% of the price of the Macbook. Now, so long as "number go up" you're winning ...
See you in 5 years when Ethereum has flipped Bitcoin, then.
You may even have to wait until Ethereum forks again, honestly.
And even if we grant a Metcalfe exponential relationship between crypto prices and crypto participants, you're still running into the basic Ponzi scheme problem that if all your value comes from the price appreciation predicated on the number of HODLers growing, it'll hit that ceiling eventually. Which means it isn't a particularly great store of value, compared with something like a stock that generates future income regardless of whether new people enter the stock market or not
Also, if there's not enough Bitcoin ever going to be created for everyone alive even now to own just one (21 million max supply cap), and assuming the interest in it only increases over time, how would a ceiling ever be hit?
Facebook/Meta and Twitter getting more MAUs means that they sell more ads. Zuck would still be rich if nobody was willing or able to buy FB at all.
But if their only product was FB and TWTR stock, the only thing that stock did was allow you to hold, give or sell it, and the only argument for buying it was an entirely recursive argument that it was a store of value because people will value more in future because more of them will want to buy it because its a store of value and an appeal to Metcalfe's law for the valuation because stock markets are a bit like telecoms networks then yes, they would definitely be Ponzi schemes.
Question makes more sense flipped on his head: if you think everything that looks a little bit like a telecoms network in terms of having lots of participants obeys Metcalfe's law, then why aren't actual Ponzi schemes actually extremely valuable to participate in?
Yeah, good point there. I think the thing with a Ponzi scheme, the way I see it, is that I can't transfer a share of that Ponzi scheme across the world, 24/7. I could only hold it, and if it is a Ponzi scheme, it would eventually collapse. I do see value in the monetary transfer aspect to crypto as well, so that's part of it, and I personally don't think crypto will collapse, at least not Bitcoin, Ethereum, and probably several of the other major ones. The rest, I have no idea, and maybe some of those other altcoins could be considered Ponzi schemes. Definitely some of the altcoins are pump and dump schemes, if not Ponzis, and definitely some altcoins will collapse. I just don't think applying Ponzi scheme to the entire crypto ecosystem is fair.
Also, sorry, I edited the comment you responded to, so it changed a bit. I do wonder what you think about the ceiling I mentioned, in regards to that there's only 21 million Bitcoin ever going to be created, and that's not enough for everyone in the world to have even one full Bitcoin. If interest grows, and population continues to grow, then how would a ceiling ever be hit? I don't see that as a Ponzi scheme, I see that as interest in a scarce asset, that you can't make more of, while we are in an inflationary period, with governments printing money all around the world. Just wondering if you have any thoughts on that.
The way I'm thinking about it is that some people may want to hold Bitcoin forever, and just loan it out, to put it to use, while also having a deflationary asset in their portfolio.
"If interest grows" is the big if and "price go up" is a very, very bad reason for interest in one particular coin to continue growing indefinitely when faced with all the alternative ways for people to park their money, from technically superior coins to investments they can actually live in (some available for less than a cryptographic string!) or stuff that pays actual dividends and gives you legal claim to actual real world assets. And for all the FUD cryptoenthusiasts like to spread about government money printing, it's the "fiat" world that has all the mechanisms that link money supply growth with market demand and real world activity, ability to shrink the money supply if its growing too fast, and the crypto world where basically the entire supply of coins has been printed in a few years by a small number of people trying to get rich and those coins will continue to exist for as long as the blockchain is maintained whether people want to buy them or not.
* Is it a currency or an investment? None of the major coins seem usable as a currency to me, the values are too volatile.
* What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases.
* Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up.
More of an investment, for the time being.
* What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases.
Yes, I've purchased like one thing with crypto and that was back when you couldn't buy hardware wallets with USD, so crypto was the only option.
* Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up.
Yes, I do compare the store of value use case similar to owning gold. Gold is just much harder to transport, send across the world, store, etc. Gold has also been trading sideways for about a year, so I don't think it really protects from inflation (someone correct me if I'm mistaken about that). I actually do own both gold and crypto, so I've been able to compare them first hand.
Also, crypto is super volatile, for sure, but if you think about it over a multi-year horizon, similar to how someone would invest in an S&P 500 index fund, then I think crypto will in general appreciate and the volatility should go down as more people hold it and consider it valuable. The idea is that it stabilizes as its market cap goes up. Also just want to call out that I consider Bitcoin its own thing, apart from the rest of crypto, since Bitcoin actually has a max supply cap. Many cryptocurrencies do not (they can essentially print money), or their max supply is so ridiculously high as to barely matter at all.
Thanks for responding! I like to hear about how people are thinking about this, beyond the point that it's only used for illicit activities.
That’s the rub isn’t it? They have absolutely zero intrinsic value, and any energy expended to mine them and give them value is a literal waste.
> what would it take for you (and others who share similar views) to change your mind about crypto
It would help if we could go a month without another DAO breaking.
Ultimately I have enough faith in the system that I want my money to be centralized.
It would be great if the demand was organic and driven by consumption. This could stabilize the price. Right now it's mostly speculative.
Also if people see value in it, vs other assets, wouldn't they want to hold it, so wouldn't value be stored in it? Curious if you have any thoughts about that.
But otherwise, yeah, if there's enough people to make the whales look comparatively smaller, it may get more stable.
I didn't say anything at all about crypto-as-a-store-of-value. Like any fiat currency, crypto has value iff people think it has value, no surprises there. At the moment, crypto's value is heavily tied to speculation about massive increases in its future value, which is not sustainable in the long term and is the biggest blocker for the medium-of-exchange usecase.
I have nothing against the idea of crypto - it's a good idea, especially with the stuff built on top of it around smart contracts, and the technology is neat - but until it stabilizes at predictable exchange rates it will never be used by the unsophisticated masses as a medium of exchange.
Also: Bitrefill.com, and that's without even running a search.
You may be impressed with both the offerings, and the currencies accepted. I know I was.
The ability to hold decentralized state is a resilient way is pretty cool and a lot of the finance applications are better than legacy stuff - try sending large amounts of money around in the legacy system, expect to wait several days for every action.
HN people can continue to cynically dismiss it, but the nice thing about economic bets is it doesn't really matter. Those that see the value will become rich anyway. There are always people dismissing any new thing - the value of that signal is near zero.
I'm excited about what kind incentive alignment we might be able to achieve with programmable money. The city coins stuff I think is pretty cool, maybe a way out of NIMBY type incentive problems. There's a ton of stuff that's being figured out on the frontier - it's exciting. Like I imagine the web was like in 1999 (with the good, and as potentially the case in the OP's article, the bad).
The legacy system (e.g. banks) aren’t sitting still either. In many parts of the world (Europe) a transaction is pretty much instant.
I still see the crypto tech being more capable long term, but the ux is still in its infancy.
Well, cryptos aren't really money so actually sending money via crypto requires transferring crypto from a bank to an exchange, making a purchase, withdrawing it to a destination wallet at an exchange, selling it, and transferring the proceeds to another account. That takes days, requires multiple transactions and costs boatloads of fees. By constraining it to transfer of an intermediate representation you're not making a good faith representation of the process.
Second, the only thing you can do better with crypto than a centralized exchange is crime, grift and regulatory arbitrage. What you're describing is the third. Sending money in any classic fintech system takes milliseconds. What takes longer sometimes is AML/KYC and security. Crypto pretends those don't exist. Like any other regulatory arbitrage you can certainly make things faster or cheaper, for instance by dumping chemical waste into lakes. Once again comparing a car to a little buggy with a 2-stroke engine and no catalytic converter on the basis of fuel efficiency is disingenuous too.
Anyways, sending "large amounts of money" isn't a problem most people have by definition. And if you actually do have large amounts of money, sending it around isn't an issue. I've had six-figure domestic wire transfers clear instantly with no questions asked from my brokerage account, free of charge, same day. The first time they called to check. I didn't mind.
Most of the world has free or nearly free instant transfers. Europe has SEPA, the UK has FPS, Canada has Interac e-transfers, Australia has NPP. The US is getting RTP and FedNow in 2023.
[edit] In fact, the cheapest way to move USDC from FTX to Coinbase is actually to request a free wire transfer from FTX to your bank account, and then either a free wire or ACH from your bank account to Coinbase. Saves $25.
Yeah, I’m betting on the future utility enabled by the tech, not what it can do right now. Similarly people said the web was useless in the 90s [0] when the future utility (imo) was obvious.
> “Second, the only thing you can do better with crypto than a centralized exchange is crime, grift and regulatory arbitrage.”
There are non-crime advantages to being able to use decentralized systems. These are most obvious in places with hostile governments and unstable currencies. The new stuff you can do with decentralized state and public auditable records is super new and the applications there I think will be really interesting.
> “ What takes longer sometimes is AML/KYC and security.”
Is this true? I thought there was a complex system of clearing houses, record updates, etc. a lot of which is done manually? Am I wrong?
> “Like any other regulatory arbitrage you can certainly make things faster or cheaper, for instance by dumping chemical waste into lakes. Once again comparing a car to a little buggy with a 2-stroke engine and no catalytic converter on the basis of fuel efficiency is disingenuous too.”
I think you’re failing to steelman this. It’s possible to build a lot of stuff to handle things like KYC in a way that’s better because of crypto tech. Imagine using an NFT as a pseudonymous ID that you KYC once and then can use anywhere unless it changes wallets. There are also likely better ways to determine credit worthiness than FICO enabled by the new stuff. A lot of your arguments feel like someone saying “ever heard of radio” when someone else says you can stream sports on the internet. I think you’re being a little myopic.
I guess we’ll see how it shakes out, but for better or worse I’m betting against you.
Blockchain is a database. Records at a bank are a database. There's no reason you can't just execute a SQL transaction to deduct from one and increment the other haha. That's not the slow part.
That's why every one of the systems I mentioned supports real-time 24/7 transfers: SEPA, FPS, NPP, Interac, RTP, FedNow, ISO20022. Not a blockchain in sight. Amazing right?
> It’s possible to build a lot of stuff to handle things like KYC in a way that’s better because of crypto tech.
It does not address KYC at all. KYC is built on top at the CEX level. If you have some concrete non-speculative way you think this is true, please share.
> I guess we’ll see how it shakes out, but for better or worse I’m betting against you.
I seriously doubt you're betting against me haha.
[edit] Any the reason settlement hasnt been addressed sooner is because thanks to the magic optimization of centralization and trust, you can just borrow the capital until settlement happens. I mean think about it, equity settlement is T+2 but yet somehow HFTs exist?
Remember the golden rule of blockchain: except in the case of regulatory arbitrage, grift and crime, if you think a blockchain is a better solution to a problem than any classical solution - you either don't know enough about crypto or you don't know enough about the problem.
> "Remember the golden rule of blockchain: except in the case of regulatory arbitrage, grift and crime, if you think a blockchain is a better solution to a problem than any classical solution - you either don't know enough about crypto or you don't know enough about the problem."
There's a real possibility here that you're way overconfident and wrong and this overconfidence will blind you from a lot of interesting stuff that's going on.
> "There's no reason you can't just execute a SQL transaction to deduct from one and increment the other haha. That's not the slow part."
Yeah - that's because that's ignoring the entire context of everything else required around that. The centralized systems, the manual trust, the integration problems between organizations. The sql update is not the issue.
It seems clear from your tone that you're not really curious about this so I'll just leave it here.
> "Not a blockchain in sight. Amazing right?"
Good for you - let's check back in 10yr.
> "I seriously doubt you're betting against me haha."
¯\_(ツ)_/¯
I'm always open to that possibility, and I spend a lot of time learning about blockchain technology. And I've spent the last 10 years working in fintech. Of the commenters here, I probably have more context than most on both.
> Yeah - that's because that's ignoring the entire context of everything else required around that. The centralized systems, the manual trust, the integration problems between organizations. The sql update is not the issue.
Correct, centralization and trust represent massive efficiencies.
Banks trust each other or can trust a central intermediary which is again why NPP, RTP, FedNow, SEPA, FPA all work instantly, basically free, without blockchain. Whereas moving USDC-ETH between two accounts costs $25.
> Good for you - let's check back in 10yr.
It's been 14 years and yet we have nothing to show for it except a whole pile of used up Kazakh and Xinjiang coal - and some really ugly twitter avatars. But yes, I'll wait, I'm sure OP will deliver by 2031.
You may be right in the end, but people with exposure to the industry at risk of disruption are often bad at recognizing it. See Ballmer at Microsoft mocking the iPhone, Blockbuster failing to adapt to Netflix, Borders failing to adapt to Kindle/Amazon etc.
That knowledge can provide context for accuracy, but it can also mislead or bias you against something that's changing rapidly.
> "Correct, centralization and trust represent massive efficiencies."
At a real cost. The web comparison would be decentralized underlying protocols vs. the centralized applications on top of them. "Web3" may allow a way to fix the things that lead to centralization at the application layer with UX that actually works. This is distinct from cryptocurrency, but there's some overlap. ETH cost should get reduced by ETH2 and sharding, the cost is representative of current transaction demand.
I'm not a crypto-anarchist, I think both systems will have complementary purposes. Programmable money is something new, knee-jerk dismissals of "it's all crime" are dumb imo.
That's a lovely narrative except I work in fintechs exposed to crypto.
> ... That knowledge can provide context for accuracy, but it can also mislead or bias you against something that's changing rapidly.
And as I said I spend a lot of time researching so that I can have informed discussions.
> At a real cost. The web comparison would be decentralized underlying protocols vs. the centralized applications on top of them. "Web3" may allow a way to fix the things that lead to centralization at the application layer with UX that actually works.
The real cost of PoW blockchain is the electricity consumption and e-waste production of a country, and the cost of all blockchains is a system absolutely rife with corruption and scams.
You're just describing APIs, which we've had forever.
I'm tempted to start keeping track of how many hundreds of negative comments about crypto HN generates each day, every day. It doesn't really come across as confidence to me.
You find me one thing, just one thing, that crypto is better at than a traditional solution and I'll be all over it. 14 years and counting. 0 killer apps.
So despite what you say, you will not be “all over it”. You have no interest in changing your mind or in engaging in genuine discussion.
You won’t even update “14yrs” which is just a clear factual error.
[0]: getting wealth out of a corrupt country for one
Do you have a concrete example that wouldn't (a) be suitably handled by Wise, Xoom or a wire transfer and (b) isn't out of a sanctioned country and (b) isn't out of a country where the transfer fee would be prohibitive? If so, could you quantify?
Is it even good for this? You have to buy the coins from someone else, meaning if you did it domestically you're still net the same level of welfare. If you traded them internationally, you can just buy USD.
This is yet another hand-wavey claim, and what I asked for was something concrete, tangible, measurable.
> You won’t even update “14yrs” which is just a clear factual error.
2008 to 2022. Just rounding by a couple months.
> So despite what you say, you will not be “all over it”. You have no interest in changing your mind or in engaging in genuine discussion.
I have no interest in slapping crypto on the back when it hasn't done anything but crime, grift and regulatory arbitrage. Bitcoin is the official currency of the alt-right and yes, it's now older than your average high schooler. [1] Just one, concrete application is all I ask.
[1] https://chicago.suntimes.com/2021/9/30/22703200/bitcoin-cryp...
Stored wealth, memorized seed words and regenerated on the other side.
There was also an interview with someone relying on BTC in Venezuela too because their currency is worse.
You’re rounding by multiple years, especially if you consider ETH.
Also: https://www.matthuang.com/bitcoin_for_the_open_minded_skepti...
Of course its possible for one or two people to benefit but net net the Ukranians either (a) traded amongst themselves in which case the net welfare stayed the exact same or (b) they traded with people abroad in which case they could have chosen literally any asset on earth, many of which outperformed Bitcoin and other cryptos.
> There was also an interview with someone relying on BTC in Venezuela too because their currency is worse.
An anecdote is not a substitute for data, and Venezuela decided to dollarize, not bitcoinize. 66% of transactions in Venezuela are USD denominated now due to a groundswell of popular support. [1] They didn't bitcoinize. Because the dollar is better.
> You’re rounding by multiple years, especially if you consider ETH.
I'm rounding by a few months. That there are recent developments doesn't roll forward the clock on launch day. The iPhone launched at the same time as Bitcoin. That's what a killer product looks like.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
It’s hard to get dollars in Venezuela which is why this guy was relying on BTC. I never claimed BTC was superior to the dollar.
The iPhone is a product, Bitcoin (really blockchain and programmable money more broadly) is more akin to the web in 1996. It’s a protocol for money.
You can believe what you want, the nice thing about economic bets is it doesn’t matter.
Crypto is too old to play this card.
Could you have gotten rich off investing in Enron? Sure, it made some people fantastically rich. That doesn't mean Enron was a sound company.
Nothing with the word "currency" can experience 5 digit deflation and call itself anything but a failure in that regard. Nothing cynical about that take, and it's a useful signal for those who expect to treat it as a currency.
You’re right of course, my point was not that cynicism is always false, but that people are cynically dismissive about everything so it holds zero signal.
It’s basically the Sagan quip, “They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.”
BTC is more like some sort of asset class than a currency imo [0], but there are others that are more suited to currency.
[0]: https://www.matthuang.com/bitcoin_for_the_open_minded_skepti...
But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses
The dismissiveness is often a signal, that was his point.
BTC has grown too far to be compared to Columbus setting out anyways, it's reached widespread access and accessibility, there are public companies devoted to it's access, BTC ETFs, etc.
We've reached the point where the cynicism is backed by reality. I think the fact we're now abandoning the currency pipedream for the most well known cryptocurrency says it all.
The point is to keep in mind that just because people are laughing doesn't mean you're a genius, but people do also mock people doing great things.
Elon Musk is another easy example, look at the HN dismissal of Tesla and SpaceX over the years - even in the face of obvious massive success. You basically have to dismiss the naysayers and evaluate things for yourself.
... why? Any point of view, pro or against, should be evaluated for substance.
Telsa naysayers were going on about things like "the quality sucks" "Promising FSD today is incredibly stupid", etc... well they were right? Quality has been varying depending on which part of the car you look like in a very "one step forward two steps back" way, FSD hardware did end up changing and the FSD beta is a farce, etc.
The only naysayers to dismiss are people who can't justify their position, but the same also goes for people who support something without being able to justify it. The problem isn't "naysaying", it's not saying anything at all.
I'd argue the problem is often overconfidence everywhere mixed with people who don't know what they're talking about.
I agree that stuff needs to be evaluated for substance, I just think there tends to be a pretty extreme status-quo bias by default so a naysayer is more likely to be wrong because of that.
The future of crypto for anyone other than an anacap libertarian is CBDCs.
CBDC's _might_ fill that void, but governments would need to treat it as infrastructure and not exercise some of the power that companies like Visa enjoy (blocking otherwise legal transactions).
To be fair, crypto hasn't really stepped up as being fantastic even for those fringe goods (insufficient adoption, painful user experience), but some utility still exists.
Yep, I agree.
> CBDC's _might_ fill that void, but governments would need to treat it as infrastructure and not exercise some of the power that companies like Visa enjoy (blocking otherwise legal transactions).
I'll be the first to say that the current legacy financial system is no panacea. Visa and Mastercard should be infrastructure just as you say. In my opinion, they should be required by law not to discriminate against any legal transactions and have safe harbor.
That said ACH carries all legal transactions without discrimination. I don't know why CBDCs wouldn't do the same.
What we need isn't crypto, it's payment network neutrality. The legacy financial system needs a refactor, but crypto ain't it. It's strictly worse in every way.
The funny thing is, I clicked on a few articles about NFT's and the metaverse because I was interested in the programming behind it and now my morning feed is filled with articles about "How to invest in crypto!", "We can tell you how to beat th crypto market!", "Check out these super looking graphs of crypto prices!".
Both markets have some degree of irrationality, and the parent did not show that cryptos have more of it to justify preference of the regular market over crypto.
There are structural problems at play. It's completely impossible for there to be an escape velocity of irrationality where Ponzi schemes can become legitimate. All you're able to observe is that people with more money than YOU are still playing. That's not the same as escape velocity: the real money is still waiting for its cue to throw the Ponzi scheme under the buss, and you will not get warning of this.
https://techcrunch.com/2019/01/29/facebook-project-atlas/?gu...
https://techcrunch.com/2019/02/21/facebook-removes-onavo/
https://www.pcmag.com/news/7-vpn-services-found-recording-us...
I wouldn't have a problem with this if there wasn't so much inequality at the human level. A schoolteacher should not be struggling to pay their rent when obvious bullshit NFTs are selling for hundreds of thousands of dollars and startups with barely a product and no revenue are raising A rounds.
This is the most important financial lesson of the pandemic for me.
There is something deeply wrong with many parts of our economy and financial system, any one who is an expert in any specific area will tell you that things seem weird and don't make sense.
A great example of this is ad tech. I've worked in ad tech for many years and strongly agree with Tim Hwang's Subprime Attention Crisis. Everything is a house of cards, fraud (intentional or not) is wide spread.
However one thing that Hwang (or anyone pointing out that our systems are houses of cards, scams, or otherwise unsound) fails to answer is the question "what makes it fall apart?"
I'm a huge fan of at least the film version of the Big Short, which does a great job exploring the 2008 financial crisis and how unstable our financial system can be. But it's important to recognize that a key part of everyone's discovery isn't just realizing "this is all bullshit" it's realizing precisely when and why reality will come crashing in. There's even a great scene where Michael Burry calls the major banks and realizes that they essentially won't let the market collapse until they get their piece, that they can essentially push back reality a bit until they get theirs.
So crypto may be unquestionably a ponzi scheme, but what will make that scheme fall apart? ad tech might be mostly bs, but what will make everyone stop paying into it? stock prices maybe completely out of line with reality (with inflation and cash injections who even knows) but what will force them to face reality?
We may all be living in la la land, a wild fever dream, but pointing out you're in a dream doesn't always make you wake up. The question is "what precisely will wake us up". And for all the things that seem very wrong with our current world, I have yet to hear anyone give a concise answer or even guess as to what this is. If the pandemic didn't knock over our house of cards, I'm not entirely sure what will or when it will happen. If Wile E. Coyote never looks down after running of a cliff, will he still fall?
Rates like these are absolutely possible to get using Defi, futures and so on. One example of doing it risk free (staying delta neutral) is by selling crypto futures contracts and buying the underlying asset to hedge.
With that said, lenders like Celsius, Nexo, Crypto.com etc. should have transparent audits for sure. Same goes for stablecoin providers. Everyone pretty much agrees on this.
with 200% collateral? I'm pretty sure they can. I don't know what's it's like in hte US, but in the eurozone, long term home loans are around 1% , and even short term consumer loans are between 1-3%