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> long as that's possible, money will keep pouring into the system

This was an easy-money phenomenon. We have another rates announcement today. I expect crypto to respond like the clockwork leveraged risk asset it models.

> global gambling industry is half a trillion every year

This is a good analogy. It’s one I hear in legislative and regulatory halls in the U.S. and Europe, the money centres crypto depends on for its legal demand.

The VCs largely have downside protection. Retail with get screwed but it’s a risk asset; they always get screwed late cycle and we have resolution mechanisms for that. Crypto company employees, however, stand to be boned.

It’s unclear where the legal risk winds up. My bet is the first layer that has not been talking to lawyers so far. That includes dumb executives and naïve employees working for savvy ones.

Would stock markets be jumpy after rates announcement?

> Would stock markets be jumpy after rates announcement?

“Announcement effects appear somewhat ambiguous for the [British] stock market” [1].

For the last year, it’s largely been high P/E tech stocks that have reacted viciously to rates announcements. The rest of the market is less sensitive to small changes in rates (jargon: duration). And/or it’s better at pricing it in ex ante.

[1] https://www.sciencedirect.com/science/article/abs/pii/S10575...

> Crypto company employees, however, stand to be boned.

I'm not going to be crying any tears for them. If you got into this from a business perspective you have zero excuse for pretending that you are not also partially to blame for the outcome. They'll be lucky if they avoid jail time in some cases.

> Its absurdly easy to make a ton of money very fast in crypto

At least right now mainly be doing something illegal e.g. scamming, rug pulling, insider trading.

SEC and other regulators may be late to the party but are starting to put people in jail for this fast and easy money.

I turned 10k into 300k without doing any of the above in 6 months.

You need to fight your biases.

By timing the market on a coin hype cycle?

Pretty much - no “long term” passive investment in crypto.

Its a casino, but one with extremely good odds for players if you time it right.

As I understand it, either you're good at timing the market or you got lucky. If you got lucky, there's no reason to be so cocky. If you are good at timing the market why aren't you making a fortune on Wall Street?

(Unless you are making a fortune on Wall Street)

More moving parts on Wall St.

More competition.

Wall St "smart money" is still, comparatively speaking, clueless in cryptocurrency world.

There's no need to time the market when the market is flooded with cash. You didn't need to be smart or even lucky to make money on practically anything in late 2020-mid 2021.

The trick is knowing when to get out. And for that, simply managing your greed is enough.

Crypto is zero sum. For you to get 300k someone else got a loss of 300k.

Correction: for me to get 300k, many people had to aggregate 300k of losses across many different projects.

You make it sound like the market is two participants - me and the guy I took 300k from.

In reality, the market is broad as well as deep. You can lose $10 on one project, make $20 on another, and come out with $10 profit overall. Someone else can reverse that trade and come out with $10 profit as well.

Correct. But overall if you net out the cash flows, the crypto market does not create any new wealth (as opposed to the stock market). Old investors benefit by getting more new investors who themselves are always on the lookout for even greater fools.

Mathematician here - one who has been paid to write successful option models for Wall Street, for example.

Your argument is wildly wrong because you cannot add negative numbers and make a positive. You simply invent random transactions to come up with a desired outcome, and refuse to look at the big picture.

The whole cryptomarket is a negative sum game, because of the costs of electricity, bandwidth and personnel. For every dollar that goes into the whole cryptocurrency market to buy a coin, less than a dollar comes out, because some of that money is buying mining rigs and generator plants.

This is certain because there is a law of conservation of money in this case. Cryptocurrency neither creates nor destroys fiat currency, so the inputs and outputs have to net equal less than zero.

Why don't you try to come up with some sequence of actual transactions in a "toy" market with a small enough number of participants that you can work through it by hand, not forgetting to take out money from the pot for electricity, network, and personnel? You'll soon see that this network net destroys money - it doesn't create it.

If you don't believe it, I'll write you a math proof, but TBH if you don't understand the explanation above, you'll understand the math proof even less.

Here's a simple model:

A market of one token that was initially worth nothing 1 year ago but the market now sees has value - let's say $100 - because it has some genuine utility - various companies have said they will accept it as payment for a variety of different products.

If you add all the cashflows for trading on this token over the year, $100 has been made. In fact the only way for these cashflows to sum to zero is for the token to be worth zero.

Where did that value come from? It came from the increased utility of the token.

Is it zero sum though? Finance in general isn't - it allows people to invest and manage risk.

If I bought a bitcoin at $100 and sold it at $1,000 - who lost money trading with me? The person I bought it from because they could have kept it and made the money I made? No - they were happy to realise their own returns. The person I sold it to? Assuming they still have it, they hold something valued substantially above $1,000 and are quite happy.

The only way for this to be zero sum is if bitcoin has zero value. But bitcoin has at least some utility so now the market is just arguing over how much - and that value changes as bitcoin becomes more accepted / useful.

Cash flow analysis allows us to sidestep thinking about utility and price by drawing a circle around Bitcoin and calculating cash in minus cash out. The only cash in is new investors and the cash out is miners+old investors selling.

The only way the current crop of investors can make money is by getting even more newer investors (ie greater fools). Eventually such a scheme will fail because of the same reason that ponzi schemes fail.

Compare this to something like apple which has an additional cash in (ie the company's profits). So the apple investors can make money without needing more investors.

You should advertise on youtube then ;-) Lately it seems every youtube video I watch has endless steams of scammy "How do I invest to get good returns". "You should invest with fred johnson crypto, I made 100k off a 10k investment in 1 week".

> If "web2" hadn't shut off its own users from any semblance of ownership in the platforms, or had done more for privacy, web3 would have died in 2017.

Honestly nobody cares about these things. This is just a narrative that was grafted onto Web3 after the fact.

Yep. Considering how web2.0 hype was about AJAX and webpages with dynamic content that did not require reloading the page.

I care about these things and i've been in crypto since before gavin coined web3.

In fact most of the devs I know that started pre-2017 deeply care about these things. Many were around in the OWS groups back in the day, they transformed via bitcoin and now mostly work on eth projects. The cool thing is most of those people who were in it for political reason (rather than the newer investors looking to make quick money, and new devs looking for decent paid job) have made enough money to spend the rest of their lives working on this stuff regardless of it making them any richer.

I think we can outwork and outlast the cynics and keep building the things we think are cool. they hype will come and go, the fraudsters will sweep in during mania and con people regardless of our warnings, the authoritarians will try get the state to make it illegal, the google employees will keep complaining that its not innovative. we'll keep on working towards what we think is right.

I care about these things and left crypto over a decade ago.

By that timeline, you were in during 2009 - 2011. Bitcoin was developing. Bitcoin blockchain then was not privacy enhancing.

What were you involved in? And you missed a giant price run.

> And you missed a giant price run.

Thank you Captain Hindsight.

Wut? The prices have risen since? surprisepikachu.png

> I think we can outwork and outlast the cynics and keep building the things we think are cool.

It's been 13 years and 0 use cases better solved by crypto than any classical system.

But by all means, I'm sure OP will deliver - let's just wait.

Almost everyone I've met in crypto cares about these things.

Sure it is probably not even 1% of projects by number and there are plenty of frauds/scams (which are oviously illegal without any new laws) and even more just really terrible ideas (whatever happened to caveat emptor?), but there absolutely is a sizeable core of projects, founders, devs, and researchers that cares deeply about privacy, freedom from coprorate/government surveillance and control, open source and open protocols, and building a very different online, digital future than the one we are currently headed for.

I think that's worth the effort. Even if that might fail, and even with the collateral damage from scams and fraud (which, again, are already illegal). We accepted cars despite the deaths and injuries and pollution (which we also deal with legally and try to minimise without destroying the benefits of having cars), and they reshaped our society. I expect crypto and privacy tech. to do the same in time. It may even take as long.

the users never care

The builders do

If you’re in the tech field and aren’t worried about privacy, the. I don’t even know what to tell you.

privacy is a basically impossible thing to achieve, like trying to be invisible in all spectrums.

Doesn’t mean that you stop trying and hand it all over to Zuckerberg on a platter.

It also doesn't mean the solution to every problem is to start an MLM scheme around unregistered securities. Kind of a false dichotomy here. Sounds like the answer is to start services that cost human dollars that don't sell data - and definitely don't publish data on a public immutable pseudonymous ledger for all to see.

The problem is that as you said, when the rubber meets the road, the customers don't value privacy - and at the end of the day they're the ones paying.

All the major platforms were built without ownership and without privacy, and this didn't hurt them in the slightest from being some of the most valuable companies in human history. I'm not saying I like it either, btw.

Most blockchain tech is a disaster for privacy because it puts all your transactions on a public ledger for all to see. At least with web2 you can delete stuff you've posted.

> If "web2" hadn't shut off its own users from any semblance of ownership in the platforms

What are you talking about?

Do you have any say whatsoever how your data and content are used by, say, Facebook? Or what kind of content is allowed/disallowed?

> Do you have any say whatsoever how your data and content are used by, say, Facebook?

You're describing DRM. It doesn't exist for blockchain either - famously I can copy/paste NFTs all day long. And it's not clear whether most NFTs even provide any copyrights for the content they link to so you still don't even "own" the content in the legal sense.

That’s not web2.0 but rather a couple of companies. Nothing prevents anyone else from doing different things with their web applications, and more importantly there’s no indication that magical thinking about blockchains will somehow prevent that business model from continuing.

The blockchain design makes it even easier to mine peoples’ activity and prevents retroactive privacy improvements but, more importantly, the underlying problem is that people like not spending money. Various people have tried micropayments on the web but ads have less friction and don’t bother a sufficiently large group of people enough to pay more than advertisers, not to mention the precedent suggesting that sites will display ads to even paying customers.

Similarly, content hosting has the same failed promise. Blockchains are too inefficient to store the content, which is why all of the “web3” services are so commonly dependent on normal web companies. NFT pirates trying to steal artists’ work are routinely halted by takedown requests to Google, AWS, etc. There are services like IPFS which try to provide less centralized hosting but they’re expensive and have the same issues with most of the actual hosting being on ISPs who are legally required to honor things like DMCA or other illegal content requests.

Mastadon. The Fediverse.

> Its absurdly easy to make a ton of money very fast in crypto.

Not at all. It's easy for one person to make a lot of money _at the expense of another_. It's a less than zero sum game, though, so each net transaction _cost_ people money todal.

> Self-sovreignity, privacy, ownership - these are ideas worth pursuing.

The ability to evade government regulations and scrutiny is crime.

The underlying idea is that you don't like the laws on financial disclosure, so you want to "get around" them.

As an honest citizen, I see the desire to evade the securities laws as literally criminal intent, which it legally is.