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Comment by cercatrova | Hacker News Reader

But...they shouldn't have invested more than they could afford to lose. This article gives no reasons why the author's thesis should be true, besides people being desperate.

> So “don’t invest more than you can afford to lose” is tough advice to swallow for the large group of people who are seeing the gleaming promises around crypto, but who also don’t _have_ money they can afford to lose.

So if they don't have money, then they shouldn't invest it in speculative investments like crypto.

> It’s apparently easy for people to castigate those who’ve just lost everything by repeating this refrain, in the same way it seems to be easy for people to only start pointing out the “obvious Ponzi” or “clear scam” projects only after everything crumbles.

No, people have been saying since the beginning that crypto is a scam, not after these scams happen. And even if it were after scams happening, there have been so many [0] that surely people would understand that future scams are likely.

Honestly, I have no sympathy for these people. If they want to be greedy and commit millions of dollars into these scams ([1] which the author hyperlinks to) then that's on them. Play stupid games, win stupid prizes, isn't that how the saying goes?

[0] https://web3isgoinggreat.com/

[1] https://old.reddit.com/r/Invest_Voyager/comments/vsj9nx/how_...

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I think Molly kinda buried the lede here which is that crypto companies and influencers explicitly encouraged people to invest money they could not afford to lose. The crypto "community" need to own up to this.

That is true, esp with Michael Saylors comment about mortgage your house to buy buy BTC…I am pro BTC, but that is utterly horrible advice.

That is indeed buried relative to many other points

Yep. Know an elderly couple that did exactly this, and so did their friends. It is shockingly common. They were all exploited. Someone should be held accountable.

...really? what were they hoping to gain? By the time you're elderly I feel like you should understand that there's no such thing as low risk high reward investing.

To beat inflation. Simple as that. Interest rates aren't moving in line with the rate of inflation, ergo running out of money before they croak becomes something to be concerned by, thus most folks make investments in retirement to compensate for this.

Lots of folks online saying that crypto is the only way to beat inflation. We both know that's bullshit, but with so many people huffing the laughing gas, it's easy to get taken in, especially with influencers and the Crypto.com Stadium et al.

I like this thought and buy the motivation, but why not stocks?

Stocks aren't anywhere near as hyped, and countries aren't making stocks into legal tender ala Bitcoin, and Chivo. Not that I'm advocating for any of this BTW.

It just seems like a perfect storm of massive hype, a lot of very convincing marketing, and the wind blowing in the right direction between a pandemic, Brexit, war, and a possible recession.

When desperate, and many big names are involved, it can obviously look quite seductive. Used to work in this predatory niche about 7 years ago. Never again.

I heavily disagree with this. My generation's elderly people cannot read nor write. Of my one grandparent who can read, they have an 8th grade education. Only a minority of 60+ people were literate worldwide, much less financially literate.

This also applies to my parents' generation, who grew up primarily subsistence farmers. They don't understand finances or markets or anything like crypto. They understand business investment as mutual actions of trust, where they lend their neighbor money and their neighbor buys something to benefit the town. Cryptocurrency hijacks those avenues of business investments by forming parasocial bonds and fake communities.

If I could underline your comment repeatedly, I would. We take our access to knowledge for granted.

"They understand business investment as mutual actions of trust, where they lend their neighbor money and their neighbor buys something to benefit the town. Cryptocurrency hijacks those avenues of business investments by forming parasocial bonds and fake communities."

Exactly. The crypto promoters built a community, acted trustworthy, and then they exploited it for an affinity scam.[1] The promoters gave the impression they were on your side. They weren't.

Just like Madoff.

[1] https://www.sec.gov/investor/pubs/affinity

Was there some form of coercion involved? How is taking a loan against your home to gamble on risky, speculative assets the fault of someone else?

If someone borrows against their home to try to double their money in stock trading or the casinos, were they exploited by Wall Street or Las Vegas?

> If someone borrows against their home to try to double their money in stock trading or the casinos, were they exploited by Wall Street or Las Vegas?

Actually, yes. There are laws regulating loans for the purchase of securities. Most jurisdiction ban lending for gambling.

1. Citation needed - which jurisdictions? This is certainly not true in the USA where you can use home equity for investment purposes multiple ways via HELOC, equity loan, or cash-out refi. Additionally, brokerages themselves offer margin, and margin investing/trading is a loan.

2. This doesn't address the point of where the coercion was involved to make this "exploitation".

[0] https://www.lendingtree.com/home/home-equity/home-equity-inv....

[1]https://www.thebalance.com/can-i-invest-in-stocks-with-a-hom...

Non-purpose loans like SBLOC aren't allowed to be used to purchase or carry securities. I believe HELOC usually don't carry that restriction, so it would be legal. Probably a terrible idea, but legal.

> Actually, yes. There are laws regulating loans for the purchase of securities. Most jurisdiction ban lending for gambling.

How is Wall Street exploiting them in this case? It sounds like they are committing some sort of fraud (perhaps even criminal?) against the lender by breaking the terms the loan by investing in speculative assets.

Broadly speaking, if a bank lends you money and knows or should have known you were going to use it to gamble or buy securities, the regulators will ding them. The borrower may separately be pursued for fraud. But this is a known failure mode when it comes to human emotions and magic numbers. Some sociopaths just found new lipstick for slot machines.

You keep claiming this, without providing evidence. Home equity loans and lines of credit can be and are used for investment purposes.

It’s considered one of the worst ways to use home equity, but it’s absolutely legal for all parties involved

A lot of casinos offer lines of credit so this isn't true.

This attitude led to attestations like “accredited investors” that locked anyone but the top 3-4% out of private markets where the majority of wealth creation is happening

I'm not convinced a lot of opportunities open to accredited investors are that good. 2 and 20 takes a lot out of your returns.

But are you owning up to this ?

What do you mean?

GP wmf stated:

> The crypto "community" need to own up to this.

Whatever that means

Yes. Saying "don't invest more than you can afford to lose" while building an entire industry around convincing people to do exactly that is allowing these people to absolve themselves of responsibility by pointing out they offered a disclaimer at the start. It also fits in well with the generally libertarian nature of the crypto culture, allowing blame to lie with "personal responsibility" rather than grifting or scamming.

It's like when the tobacco industry sponsored ads to "prevent kids from smoking" while investing millions in targeting them anyway.

How is this different than trading equities on the stock market (a decidedly non-libertarian culture)? Stock brokerages provide the exact same disclaimers - equities are inherently high-risk assets in which you can lose everything you've put in.

I actually think the stock brokerages have done a similar thing -- it used to be that sophisticated and risky products like high leverage options were not available to retail traders who didn't have the money to lose, but with the rise of meme stocks and Robinhood things have changed. I'm not saying I think that's okay either.

And look, I'm not defending the current banking system. Should average people have no options while the wealthy can use complex derivatives to increase their wealth and power? Probably not. I'm just pointing out that the crypto world shouldn't be doing this specific thing.

I agree that brokerages have done similar lately, with massive ad campaigns targeting retail traders, gamifying their apps, and generally obfuscating the risks involved to less-informed individuals.

And as you mention in the second part, it is a very difficult and tricky balance between protecting retail traders while preventing them access to instruments that the wealthy can use to further increase wealth.

As an example, it used to be that USA-based customers could leverage trade (short trade or margin leverage long trade) on crypto exchanges, for example Kraken. However, due to regulatory pressure, Kraken now requires registering as an Eligible Contract Participant in order to margin/leverage trade - the key requirement being proof of $10M in discretionary assets.

On one hand, this is probably a net "good" - short trading or leveraged long trades are _extremely_ risky, with the former having infinite loss potential and the latter resulting in margin calls or a greater loss than the account is worth (i.e. you're in debt to the exchange). I have little doubt that retail traders would've lost more money were this restriction not in place.

On the other hand, this reeks of "you must be this rich to enter; peons need not apply". A wealthy person can 66

Stocks are assets. Ownership of an economic entity, that publishes a lot of financial data to the public, so we can establish value. Public companies are highly regulated with respect to this. Securities trading etc. are also regulated.

Crypto is magic made fantasy up numbers. At least with baseball cards, you get a baseball card.

You're proving the point. If a regulated industry like the equities market come with warnings that they are risky and you can lose your entire investment, it applies even moreso to crypto.

Also worth noting that ordinary investors were cheated by proxy through no effort of their own as the firms investing their money have taken crypto on to their investment portfolios.

If you believe entities* on the internet to do anything(that includes investment) you have bigger problem than some random crypto investments. A lot of parts of internet looks safe, but it's always one step away from a hack, so don't overestimate it safety.

Also people lie to get your money, that includes "celebrities" and companies.

*Most of the time you don't have idea if you talk to(or receive information from) real person, some hacker who hijacked their account, a program pretending to be a human(from emacs doctor to gpt3 and beyond), etc.

Personal responsibility is a thing. Where does this idea that everyone must be protected from themselves come from? More importantly, where does it end? Should your barber be held accountable for providing a bad stock tip too?

Yes, but accountability for spreading false information is a thing as well.

What if someone says to take some drug 'because it's safe' - when it's not?

I say let the lawsuits begin.

Or better yet, have some kind of basic regs.

Whenever anyone talks about 'health' or 'finance' in the commons, they had better be very clearly indicating that 'they don't know what the F they are talking about' and that people ought to 'talk to a doctor/accredited financial advisor' first and that 'following this advice could lead to illness/bankruptcy' etc..

I would love to see theses turds have to follow the same regs drug companies do: "This diarrhea medicine may cause X, Y, Z and A, B, C etc."

>What if someone says to take some drug 'because it's safe' - when it's not?

Well it depends on who it is (which goes back to personal responsibility). If I'm taking drugs that my barber recommended I deserve the same fate as if I buy the stocks or crypto he recommended.

Yes, but some people present themselves as being credible. Authors, bloggers, etc. make it their professional interest to give such advice.

The guy saying 'sell your home to buy BTC' is one such person.

We need credible groups and institutions.

How does that work though? Does the government need to regulate what we can talk about? Who determines who is "Credible"?

>The guy saying 'sell your home to buy BTC' is one such person.

Almost nobody did that though. Which means 99.99999999% of people saw that to be bad advice and acted accordingly. For the handful who decided it was a great idea, that's on them. We don't need to regulate the speech of everyone to protect the biggest idiots from themselves.

> crypto companies and influencers explicitly encouraged

This wasn't Jim Cramer or some vetted CNBC talking head talking P/E ratios or future earnings potential.

These are carefully-engineered social media accounts with follower counts blown up by obvious market-engineering campaigns.

Again, to OP's point, if you're putting your life savings into speculative investment X, from the word of a rando instagram "influencer", you get what you deserve. Anybody in 2022 who doesn't understand that most social media presences are carefully curated, engineered, and biased, is a fool.

Live or die by the word of the shoeshine boy, it's a tale as old as time. We all learned of 1637 and 1929 in high school history. If you didn't pay attention, that's on you.

You are aware that the author of the article created your first reference right? Under this light, it is entirely possible they work on shedding light on the scams to defend those that are financially desperate. Your comments seem to imply the author has not thought these things through when obviously their empathy to those falling prey is rather high. That being said, similar to you, I believe that greed induced blindness (get rich quick) is just as bad as the person running the scam. People need to feel the pain (both financially and socially) of thinking you can get 20% annual returns for free.

You say all this, but I know a disabled elderly couple who bought into it based on the hype and advice of people around them. Needless to say, all of them lost their money. Not everybody wants a "get rich quick" scheme, a decent chunk of folks just want to beat inflation and make sure they can afford to stay retired in their old age.

With how people were talking about crypto up until recently, you would think it was "better than gold" or "better than stocks" or "better than forex". Those were repeated commonly by many people who were in no position to be offering any kind of financial advice. Look at all the celebrities that got on board with pumping tokens. Look at the Staples Center being renamed as the Crypto.com Stadium. Look at world governments mulling over CDBCs. Look at El Salvador with Bitcoin and Chivo.

I'm not saying "crypto good, you are wrong", I am completely anti-cryptocurrency in its current form, there isn't one viable use for it, and that's without even getting into throughput speeds, scaling issues, or energy consumption. I am however saying that victim shaming is shady.

If they just wanted stability they should not have mortgaged their home to invest in something they did not understand

Fuck off, these were largely people who thought they were putting their life savings in with companies that were guaranteeing returns that were not outrageous, and were by and large being advertised as high interest savings accounts

They were doing what the “experts” were telling them was the right thing to do.

Fuck off with your victim blaming BS.

You don’t mortgage your house for a high interest savings account. It’s just stupid. Sure. They were manipulated. But there has to be some point at which adults are accountable for basic financial responsibility. You should not trust someone so much that you bet your home on it. That’s idiotic.

If you can’t hold someone accountable for such decisions you are basically saying they should not be allowed to manage their own finances. People need to have critical thinking skills.

If someone wanders into the wilderness and gets mauled by a bear they’re a victim but it’s largely a fault of their poor judgement. And it’s absolutely fair to criticize their reasoning.

Yes you do. If you have the money to pay off your house, you are likely better off getting a very low interest rate mortgage (which you will be able to do as you can provide 100% security for the loan) and put your vast pile of money into a higher rate CD or similar. Or even some of it in low-medium risk index fund.

If you were a company, it would likely be seen as financial mismanagement not to do that. That's why companies that have more money than is possibly reasonable still have loans.

But anyway that's beside the point.

These people are not claiming to be victims due to crypto crashing, in fact many have their entire balance with Voyager in US dollars/USDC (which I just checked, is still 1:1 with USD). They are complaining that they went to withdraw the money that was in their account, and Voyager wouldn't let them, and then declared bankruptcy. Even at this point it would be more annoying than anything else, as Voyager had stated that they were FDIC insured so everyone's deposits were insured in the case that Voyager failed/declared bankruptcy.

Only then was it disclosed that Voyager had been lying about that, and in fact there was no deposit insurance, and they had stolen the content of everyone's accounts.

What you are saying is no different from, say, BofA declaring bankruptcy and that it wasn't actually FDIC insured so everyone has lost the money in their bank accounts; then I turn around and say that it's those people's fault as they didn't understand BofA's financials, and that the people who lost money didn't verify the FDIC insurance themselves. I sure as hell don't understand Wells Fargo's financials, and rely on them not lying about being FDIC insured.

> Yes you do. If you have the money to pay off your house, you are likely better off getting a very low interest rate mortgage (which you will be able to do as you can provide 100% security for the loan) and put your vast pile of money into a higher rate CD or similar. Or even some of it in low-medium risk index fund.

Typically small net returns with long tail risks that include you losing your home. Seems like garbage advice to me.

> These people are not claiming to be victims due to crypto crashing, in fact many have their entire balance with Voyager in US dollars/USDC (which I just checked, is still 1:1 with USD).

They gave money to a company they did not understand. The company lost the money. As far as I can tell the company only claimed that US dollars were insured not that it really matters.

> What you are saying is no different from, say, BofA declaring bankruptcy and that it wasn't actually FDIC insured so everyone has lost the money in their bank accounts; then I turn around and say that it's those people's fault as they didn't understand BofA's financials, and that the people who lost money didn't verify the FDIC insurance themselves. I sure as hell don't understand Wells Fargo's financials, and rely on them not lying about being FDIC insured.

Bank of America is a very old company subject to regulation and is not suggesting anything about big returns. Hardly comparable

By all means, let’s regulate companies. But let’s not pretend people aren’t accountable for validating their own investments.

It's not victim shaming to say, "You shouldn't invest more than you can afford to lose."

You can say that and still feel bad about the tragedies that are playing out around you.

I know someone who pulled all of his money out of the stock markets right as it was bottoming in 2009. The guy is not capable of making investment decisions. He's the kind of guy who falls for scams, quickly buys into conspiracy theories, etc. I'm not being condescending. It's just an honest assessment. I really don't know what we're supposed to do as a society for folks like him, though.

At the very least, I think public schools should have a mandatory financial literacy course that gives an overview of how to run your finances, and maybe a brief foray into things like iSeries bonds, etc. Extra points if it covers bubbles and busts and the psychology behind them, etc. Having read a few books on the subject, it was obvious we were in a bubble in the past few years. Literally all of the tropes I heard after the 2000 bubble were happening, from sports bars playing CNBC to random folks like a plumber boasting about trading Doge coin.

It's victim shaming to say that and not push for the behavior of people who, for instance, told reporters that Luna was doomed while happily making money off people using his platform to buy it to be criminalized and shamed:

From https://www.bitcoininsider.org/article/165364/sam-bankman-fr... sourcing a Bloomberg interview that itself seems to be paywalled:

-----

One of the most interesting phenomenon happening right now is the rise of Luna and UST. Luna has this Treasury Reserve consisting of a lot of Bitcoin, which seems a little dicey, but some people say any idea of an algorithmically-backed stablecoin is a perpetual motion machine – it’s only a matter of time before it fails. Do you believe there can be a truly decentralized stablecoin? What do you make of these projects?

SBF:

I do have some sympathy to the perpetual motion machine crowd here. They can serve some useful purposes, but if you do zoom out, right, and you say, this is a stablecoin, backed by volatile assets, what’s gonna happen in a big market move. Right? Like, you know how this plays out.

-----

Is there a word better than "despicable" for believing that at least some things in the ecosystem are a scam but still profiting off helping people get scammed by those things?

Why would you just feel bad about the tragedies and not also furious at these people happily making money off of the tragedies?

> Is there a word better than "despicable" for believing that at least some things in the ecosystem are a scam but still profiting off helping people get scammed by those things?

Well, he’s the richest ethical altruist out there, so it appears that’s the word for it.

Is that newspeak for "I know how to use your money better than you or the government"?

Laughing or making snide comments at people who aren't intelligent enough to realize that they've made an error is, at its rosiest, just bad sportsmanship. I do have sympathy for these people, and it is a failing of our education systems that people are not mentally well equipped enough to avoid gambling everything on poorly disguised scams.

It is victim blaming.

They put their retirement savings into “insured” accounts with “guaranteed” reasonable returns.

You say they should have known it was scams, but if they were scams why was the news filled with tales of the success of crypto, and tech sites and “influencers” all aggressively pushing crypto.

If these were scams then why wasn’t the news filled with them being shut down?

No these are people who, as far as they understood, were simply storing their savings in a “high” interest rate savings account. They weren’t throwing money around on coin base, or following micro trends. They were doing the right thing, and trying to limit the amount of value their savings were losing to inflation.

Remember the account values of many of these services were reported as still belonging to them. What happened was one morning they woke up to find out that the balance they were seeing was a lie as the companies had sold off their assets, and lost all their money, without their permission, and was refusing to let them withdraw it.

Then some asshole like you comes along and says that it’s their fault.

I have sympathy for all of them. Like the article says, some were greedy but all were lied to. The only thing they have left is a hard lesson learned.

On the flip side, the frauds, criminals, and liars that run the entire crypto circus can all die in a fire.

Some lies are so obvious that if you believe them you are at fault. Nigerian prince wants to send you 10 million dollars, but doesn't have the funds to cover wire transfer fee? Someone promises you to double your within a month with crypto? If you believe in any of those then you're clearly incapable of making your own life decisions, and your money will be put to much better use by the scammer who tricked you than by yourself.

If you believe in any of those then you're clearly incapable of making your own life decisions, and your money will be put to much better use by the scammer who tricked you than by yourself.

And yet here we are with a bunch of people who were wiped the fuck out by promises the crypto ponzi scheme Voyager deposits were FDIC insured.

Except customer's funds were considered loans to Voyager and it was Voyager's deposits that were protected, not their victims.

But I'm sure the criminals running Voyager are spending the money much more wisely than some grandma on a pension ever could.

> Voyager deposits were FDIC insured.

They were? Then everybody will be compensated.

Dude read, I get that you think the victims deserve to lose their savings because of course the dominant financial news for the last few years with no fraud charges was clearly a scam, right?

The voyager victims were repeatedly and explicitly told that their deposits were FDIC insured - they were literally doing the “right” thing and putting their money in a safe high[er] interest rate bank, and their money was insured if the company did collapse.

Except they were being lied to the entire time, and there was no such insurance, so all their “safe” savings are now gone, while the owners of the fund are rich.

But yeah, it was clearly the victims fault.

I can blame both.

Shame on crypto hucksters for lying and defrauding the common man but some blame is shared for betting so much with such little knowledge. If you have a house and/or a life savings and decide to bet it all on a get rich quick scheme then you get what you deserve. You have no sense and do not understand what you are doing. It is amazing that you even amassed a house or life savings to bet. You played yourself with your greed, envy, and pride.

These people weren't betting it all on a get rich quick scheme though. This was not putting money into something that lost market value. Their accounts still claimed to have a specific value, and then Voyager stopped letting them withdraw any of it.

What they did put their savings into an account that had a higher interest rat than a bank or credit union. The amount they were promised was lower than the normal interest rate for a normal bank savings account when I was a kid - again, not some promised massive return that you seem to think it was.

What you are saying is that anyone who has their money in a single bank is an idiot, because that bank or credit union could actually have been stealing their money, and be lying about having FDIC coverage.

Now, many (most?) of the victims here had their entire balances in USDC - a coin that is still 1:1 with US dollars - they were told that their accounts were in US dollars. They were repeatedly told that their accounts were FDIC insured, and that the company had sufficient reserves to repay all balances. This was a publicly traded US company, and the CEO was a former etrade CEO. They had no reason to not believe any of those claims - after all, the SEC, etc exists specifically to prevent that kind of fraud, and surely claiming FDIC insurance when you don't have it would be called out by the FDIC.

So again, this was NOT people trying a get rich quick scheme, these were people who were trying to have their savings in a higher, though still entirely plausible, interest rate. They were not investing in anything risky - they were keeping, as far as they knew, US dollars - and even though it was actually USDC, USDC is still 1:1 with US dollar, so they should be able to withdraw those coins.

Stop trying to blame victims.

Stop trying to claim that they were "investing" in a get rich quick scheme.

Stop trying to claim that they "should have known" it was fraudulent.

Just stop.

Unless you can provide some kind of justification for your victim blaming that would not equally apply to me as all my cash is in accounts with Wells Fargo.

My old Master Sergeant in the Marines told us about one of his guys being blown to bits for messing with an IED when he was told repeatedly not to. He said that instead of feeling bad he laughed at how fucking stupid the guy must have been.

We are grown ass adults. How many warnings do you ignore before something bad happens?

In the spirit of my Master Sergeant I laugh at these imbeciles losing all of their money.

How many news reports and articles about people making money were there about crypto?

How many tech sites were filled with people talking about how crypto was going to change the world?

How many “influencers” and celebrities were advertising crypto?

How many Super Bowl ads?

How is a person who simply wants their savings account to make more interest than inflation meant to know that all of that was a scam? It’s not like these people and companies were being charged with fraud.

I'm not sure if this is intentional, but your first link, web3isgoinggreat.com, is a website by the same author as the article.

The statement in question is obviously true in a literal sense. It is–almost as obviously–used to convey more than just the literal meaning, usually in the sense of "they shouldn't blame anybody", "they shouldn't ask for help", or "they deserve this".

It is simply a basic question of humanity that people can get themselves into situations that are terrible in a way that is not proportional to whatever stupidity got them into it. Nobody would say the death penalty is appropriate for speeding, and we therefore help people who are injured in accidents. The details are obviously subjective: a blanket bailout for people losing money in these markets would strike me as inappropriate. But so does obvious glee at their suffering.

There are anecdotes, even in this very thread, of people mortgaging their house to invest into crypto. This isn't a case of off-the-cuff investments, one must knowingly and willingly mortgage their house to retrieve the money to put into an investment. At that point, one must take care of their own financial health if they do something so willingly.

To your speeding analogy, most of these people are losing proportionally. Unless they're margin trading, if they put in 500k from their house mortgage into a coin which crashes, they lose at most 500k, they don't lose more than that, which is a 1 to 1 proportional amount. Now on the other hand, there are some Robinhood traders who turn 5k into -750k [0], usually through options, and that is what I'd call disproportional, and I have some sympathy for that, often because those people didn't even know their losses could be so large.

[0] https://www.cbsnews.com/news/alex-kearns-robinhood-trader-su...

What market investment is not speculative?

Commodities? Forex? Stock market? Bonds? Rare art?

Investing is a horrible idea for laypeople

Housing costs are increasing faster than inflation

Hence, sad to say, it is becoming more the case that they key to homeownership in many cities is investing in something that grows faster than inflation as well

It’s (sadly) largely the reason why I think Robinhood became so popular

There's plenty of investments that aren't speculative. Speculative investments are high risk investments, not investments involving any degree of uncertainty. Bonds and broad market index funds are considered to not be speculative despite some degree of uncertainty about their future growth.

Broad market index funds are also speculative and high-risk, as many who lost 30-50%+ of their portfolio value when they needed it most during the 2008 GFC (or those who panic liquidated during the 2020 COVID crash) can attest to.

Government bonds are one of the few "safe" low-yield investments.

That is if the issuing gov does not also print a ton of cash to repay you, or default

Index funds are speculative, and yet safe enough for lay-people to invest in.

What am I missing? S&P is down 10% yearly, 17% YTD, no? When "safe" investments are looking worse than keeping your money in the bank getting hit with inflation, rational people start getting desperate and scams explode.

Anyone who has lived in emerging markets knows the sentence soon becomes "Don't invest in <previous safe investment> more than you can afford to lose."

And the last stage in such countries ends up being: "Don't put more dollars in your bank than you can afford to lose" (because your failing bank or country will confiscate it).

Until you reach this stage the number of scams increases exponentially.

Was the S&P 500 up or down and how much in 2021?

Is this really the line you are going to use to convince people to avoid scams?

I'd like you to meet Sam the Scammer: "If you would have bought bitcoin on this date in 2019 you would have been up 200% by now. You would have doubled your money in 3 years. literally."

Long term investment in the S&P500 has proven to be a good idea over decades. Things go up and down, but S&P generally has gone up on average for at least the last 50 years.

Since you asked, you seem to be missing the difference between these two distinctly different outcomes: (a) losing 10% to 17%, probably to make it back within a few years (b) losing 66%, 99%, or 99.99%, without any likely path to ever make the money back.

>probably to make it back within a few years

"probably"? Are you willing to be held criminally liable when the elderly take your advice and the S&P does not bend to your will for the next year or two due to say -- oh I don't know -- unforeseen world events?

edit: I was alluding to the possibility of c): not investing in the S&P or crypto for the duration and suffering inflation. which would have been better than a) and b) since inflation is added on top of both those losses.

I very genuinely don't understand what point you're making. Are you equating the risks of crypto and an S&P 500 index fund?

Not at all. The first post I replied to was saying index funds are safe for lay people to invest in. I'm saying index funds may not be safe for lay people to invest in in these extraordinary times. Crypto is way riskier than index funds, I agree.

Many of the people who lost more than they can afford to lose were naive, not greedy. I believe that's the author's main point.

The problem is that cryptocurrency purveyors have marketing budgets, and cryptocurrency skeptics do not. It's difficult for people to get the message that cryptocurrencies are a scam when the promoters are running superbowl advertisements, and the detractors can only comment on the internet.

> gives no reasons why the author's thesis should be true

I believe the author’s thesis is we need public resources to start holding promoters accountable. Criminally, if they defrauded. Financially if they were just dumb.

Nobody is seriously advocating for reïmbursing the victims. I wouldn’t go so far as to say they deserve what they got. But it’s their problem to solve.

Before this is over, we may see the heads of some crypto promoters on pikes in front of the People's Bank of China.[1]

"China has executed the former head of one of its biggest asset management companies who was convicted of corruption. ... The execution of Lai Xiaomin was carried out on Friday three weeks after the 58-year-old was sentenced to death by a court in Tianjin. Lai was found guilty of taking bribes amounting to Rmb1.8bn ($280m) over a 10-year period when he worked at Huarong Asset Management and before that at the China Banking Regulatory Commission. ... The court said Lai’s crimes had caused serious losses to the interests of the nation."

[1] https://www.tomshardware.com/news/china-crypto-illegal-priso...

[2] https://www.ft.com/content/820cf0ec-09a7-4d2e-a86d-897de725d...

Xi is personally a billionaire from graft [1][2].

We need actual prosecution around crypto in America. Not Beijing-style show trials.

[1] https://www.bloomberg.com/news/articles/2012-06-29/xi-jinpin...

[2] https://www.cbc.ca/amp/1.2504987

>And even if it were after scams happening, there have been so many [0] that surely people would understand that future scams are likely.

Pyramid schemes, ponzi schemes, and all sorts of other schemes would like a word with you. Scams can be around for a long, long time while still bilking plenty of people.

Plenty of the victims of this are people who invested in Real Companies that guaranteed 3-4% returns, which is higher than bank interest rates but also lower than, and ostensibly lower risk than, the stock market.

For many of the victims of the crypto scams index and retirement funds are unavailable or apparently higher risk than what the cryptobros have been claiming crypto as.

These victims aren’t being greedy or playing stupid games, they were simply trying to do the best they could with what they had - and all the cryptobros have been saying for a few years now - apparently supported by markets surging (often through wash sales and other fraud).

Or there were the people who were explicitly and repeatedly told that their deposits were FDIC insured, only to discover that that was also a lie.

Don’t fucking victim blame you PoS.

Anyone who "invests" in something with "guaranteed" returns is a fool in my eyes. There is no such thing as a guaranteed return, and I suppose no amount of fools will change that fact.

>I have no sympathy for these people.

A lot of everyday Joe's and Jane's put money into crypto. The amount of hype from crypto was pretty strong, including some governments adopting it.

You should have some sympathy for those people.

>This article gives no reasons why the author's thesis should be true, besides people being desperate.

It's not a thesis, it's just clickbait. No need to give it any credit or attention.

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