You Can Forget About Crypto Now
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The use cases are niche; that's the thing. Venezuelans who avoid inflation and ordering illegal drugs are not a trillion-dollar business. All the legal/regulated areas mean competing with existing financial infrastructure, which is low margin and incredibly competitive.
So if you see the space as a whole, it never had the potential market to begin with to justify those valuations. It was fuelled by low-interest rates, speculators, and venture capital. It was, in retrospect, simply a bubble, and some people feared missing out after some became insanely rich with it.
Historically speaking it was nothing special: Tulips, new economy, real estate and now it was crypo.
When you are in it, invested people always tell you why it is different this time. The underlying economics stay the same; value creation is usually incremental and hard.
It was clearly this since 2016, imho
Bwahahaha!
You guys really need some humility, you'd think the stock market and by extension your collective portfolios, but particularly tech growth stocks losing +60% (including FAANGS) would do it, but until you guys get rolled into the mass tech layoffs and get a taste of what living precariously due to extermal economic crisis' is like will you understand what a self-serving bubble you've all been living in. The level of self-delusion isn't just cringe, it's honestly the cruel self serving narcissism that explains the 'how and why' the Valley looks like the cesspool that it does: financial inequality, mass poverty, rampant substance abuse and poor mental health are all the costs of entry so we tech titans can make billions of go-no where apps like Doordash burning VC money. But we get to tell ourselves we're above everyone else because we're rewarded with foosball and free snacks in our workplace.
With that said, a market correction was necessary and admittedly my timing was off (I felt a 50% correction was about right in early May, I felt it was the bottom), and we needed to clear out the mess just like the ICO craze; this is just next wave of mal-investment being cleared seen in a healthy market and if you want to know the truth: it's in bear markets that this is when the tech gets built--lots of exciting things are being built in layer 2, as well as continuing to reduce the network's energy use on fossil fuels. These yield farms were the biggest scams and we told people that NYKNYC for a reason.
But, you wouldn't know that because you've apparently convinced yourself that your clairvoyance has imbued you with a divine vision of some sort... seriously, stop drinking the kool-aid guys, it's why the satire in Silicon Valley (series) hit so close to home.
The only problem is that it’s displacement by a market resembling the crypto one currently in collapse would be worse in every single way.
Just take investment portfolio loss that you mention: a tech heavy portfolio that lost 60% this year, if the investor is long anyway, may recover a bit or completely by the time they need to cash out. I’m far ahead of any temporary losses over the decades.
In contrast, even a portfolio long on crypto is still irrevocably (mostly or completely) gone if it was held at the FTX exchange.
Turns out “too big to fail” may actually be a bit of a bug and a feature, while crypto has, for the foreseeable future, demonstrated it’s simply not worth saving. Considering the contagion FTX will have, it should be concerning that Binance might simply not have been stable enough itself to step in. It should concern anyone with holdings with Binance that they made such a big deal about stepping in and then backed out, possibly just could handle it on top of their own shaky foundation.
Maybe some current coins should have a future but the entire ecosystem surrounding them is rotten and needs to be torn down, the ground salted, and then filled with people less blinded by hype and shiny tech and more understanding of how a financial system interfaces with a real world economy and, the masses of people live in it every single day.
Because one should, how we went from the 90s Cypherpunk culture taking over SV to this is abysmal situation is stark and it can be attributed to this vile outlook on 'the other' who in their view didn't work hard enough to get to the right university, learn o code and get the right degree to paper signal mega corps or time the many financial crisis that makes their economic outlook as bleak as it is--especially for millennials and gen z who were sold a lie about what university would entail and have so much unpayable debt regardless of the outcome.
> Just take investment portfolio loss that you mention: a tech heavy portfolio that lost 60% this year, if the investor is long anyway, may recover a bit or completely by the time they need to cash out. I’m far ahead of any temporary losses over the decades.
First, it's +60%, netflix is still the loss leader in FAANG and hit a low of -72% from it's ATH in the early summer; there is nothing good to say about META either or the rest. Since other than Apple, who really should suffer more from perpetual zero covid policy uncertainty in Schenzen, should also be hurting by now since the Chips being made in the US will likely require higher end costs for their devices, but some how isn't...proving that the stock market can stay irrational longer than one individual can stay solvent.
> In contrast, even a portfolio long on crypto is still irrevocably (mostly or completely) gone if it was held at the FTX exchange.
Sure, but that is like saying that the entire model behind investing in publicly traded companies is entirely worthless because Robinhood wouldn't let you buy Gamestop; when the culpability lies solely wit Robinhood or FTX and similair custodial exchanges in this specific case. The mantra is and always has been in the Bitcoin community that you can only own those tokens if you are in sole possession of the private keys, and the entire history of exit scams has proven why.
Evey new adoption phase has people who get into these things headlong without asking why/how they function, most get burned in the process but learn the value of monetary sovereignty in the process it's like a stupid tax of sort among those ready to take personal responsibility and it's who who ultimately benefit the most from this. Yield farming was the most blatantly criminal since ICOs and it's actually good that they're being destroyed, whether it was 3-arrows, Celsius, or now FTX.
Hell, I'm probably more critical than you as I want YC backed Coinbase to get destroyed, too because of how bad practices they have and what a net negative they have been in all but maybe the first years of their existence and have been mired with a legacy of perpetual incompetence and maliciousness.
> Turns out “too big to fail” may actually be a bit of a bug and a feature, while crypto has, for the foreseeable future, demonstrated it’s simply not worth saving. Considering the contagion FTX will have, it should be concerning that Binance might simply not have been stable enough itself to step in. It should concern anyone with holdings with Binance that they made such a big deal about stepping in and then backed out, possibly just could handle it on top of their own shaky foundation.
That's at best conjecture on your part, and I'm pretty sure you benefited from these bailouts if you feel that way, most of us didn't so maybe you can see why we hold such views. CZ is a conman, and if he says 'fundus are safu' and you believe it because you wanted to keep your funds on there for trading purposes that is YOUR fault, not anyone else's, much less the networks that still remain functional despite the increase or decrease of market volatility.
> Maybe some current coins should have a future but the entire ecosystem surrounding them is rotten and needs to be torn down, the ground salted, and then filled with people less blinded by hype and shiny tech and more understanding of how a financial system interfaces with a real world economy and, the masses of people live in it every single day.
Personally speaking, other than Bitcoin and a few privacy coins like Monero I don't see anything worth much in the crypto currency ecosystem, ETH and Vitalik have been running the same scam as FTX due to cult of personality; but that is fine if we believe in truly free-markets, experimentation in the market place of ideas is critical for innovation, which means many will fail. You make it sound like VC isn't playing the same same where 99% of all startups fail.
My main contentions is that the way most of you see FTX as a 'crypto bro' who pontificates about saving the World by yield farming, when most of us told people it's the stupidest way to get rug-pulled, is ironic because that is who most of the non-tech World views Silicon Valley. Hence the the 'making the World a better place' meme when the Valley is the utter epitome of the dystopic techonocracy that cyberpunk genre is based on: in short, FTX and SBF is a tech bro more than he ever was a valued member of the Bitcoin or any crypto currency community for that matter. Like I said, I thought he was going to end up in a CIA/FBI black-site when he got involved in lobbying politicians before I was informed of his family's connections, at which point it was clear the ilk that makes for Stanford-ites.
Best return on an investment-related activity I've made so far in my life.
The primary problem with bubble economics is ethical, not utilitarian. Just like in a casino, every dollar you make in a bubble is a dollar someone else has lost (or will lose when they cash out too late).
If BTC would be extended with only one feature - transfering users funds not touched for a year to an auto lottery pool distributing funds to Bitcoin transaction makers randomly, BTC would become the biggest casino on earth.
BTC & crypto competes with these institutions. Why do you have cheaper international transfers now? Legacy fin infrastructure is a joke. That's why cryto took off so easily.
Soon you may have a fully digital dollar/eurodollar which itself already is a global & free to use digital ledger, just with centralised issuance and link to oil & US securities.
It doesn't feel different. The evangelists will hurt and the whole crypto industry is set back, the cynics gloat and revel in the schadenfreude and claim for the 748th time that crypto is dead... Until 12 months later when we do it all over again.
It's not the biggest, it's not the first, it won't be the last, it's nowhere near the most catastrophic. At least let the dust settle before making such bold declarations. Any such declaration at this point is more hope than expectation.
I could PROBABLY tolerate all these, if the headlines were something like "Bitcoin reaches all time low and new level of people are discouraged. Retail investors should be extra diligent." but...
"You can <do some fucking stupid thing that I'm not going to do> now"
Feels like its written for someone with the intelligence of a child who doesn't think on their own and needs to be spoon fed what to do. I have no idea how people can stand journalism like this.
This goes along with "Why <really bad thing> is actually good." Makes me cringe to the depths of my soul that even a single solitary person would click something like that.
> Now it’s hard to imagine a near- or even a medium-term future where crypto has a fraction of the influence it did six months ago.
Is he really that wrong?
The short term future for crypto looks pretty bad, there's no denying it.
I'd say the medium term isn't looking that great either.
...because of FTX? No, because the medium term outlook for the whole economy is pretty bleak, and no amount of rubbing your fingers together and finding some more magical tokens is going to fix that.
I think this article won't age particularly badly. It's basically saying someone screwed up, and they did.
/shrug
It's an everyone-for-themselves kind of project, in a massively connected and somewhat fragile physical and political ecosystem.
If you're one of the many with narcissistic tendencies who think more imaginary tokens make you a better person, and who resent the very idea of being massively connected - as opposed to a glorious sovereign individual of unlimited power and potential - it's definitely for you.
Which - coincidentally - is why it's surrounded by unsolved trust issues and scams.
But it's a terminal stage of capitalism world view, and on the way out. Not just because it's politically naive, unrealistic, and inherently unstable and untrustworthy, but also because ultimately it's physically unsustainable.
And that ultimately is going to become more and more obvious over the next couple of decades.
What crypto blowup was larger? The dust hasnt settled on FTX yet, but it seems likely that at least $10B was lost.
I think that by itself undermines you all on its own. There are some unique aspects here— crypto had been getting a bit more mainstream credibility and it will take long to rebuild than it did to build, but, as you said, the cycle will only repeat, and every time the collapses get bigger. Totalling up the last few months is topping $2Trillion.
If something is going to change there needs to be a fundamental reassessment of both the tech and the philosophy driving things.
That's rule number one in crypto and the very reason it motivates its existence: You shouldn't trust a 3rd party with your money.
Let the "crypto investors" learn this lesson first hand.
Even the sketchy product marketplaces are moving toward inevitably decentralized “n of m” payments where the buyer and seller can approve the payment in case the marketplace disappears.
Right now, trusting government looks like the better option. And crypto has done nothing but provide proof.
In my experience whenever some poses a convoluted leading question like this, it's because they have already decided the answer.
But let me try a simpler version:
> doesn't it still hold the promise of a... currency
Did it ever? Has any crypto ever actually been successfully used as a currency for something other than the black/grey market?
That's my own convoluted leading question, and I'm fairly confident the answer is no. But if you feel I'm wrong please share a counterexample.
No; I am genuinely undecided. On the one hand, I hear the arguments of bitcoin advocates from 5-10 years ago (Andreas Antonopoulos; authors of college-level courses on cryptocurrencies and bitcoin; as well as random podcasters); and they still make sense to me — which I tried to inject into the question, and which, you say, made it convoluted. On the other hand, I don't yet have a dog in the fight; I am just observing the space with some curiosity.
> Has any crypto ever actually been successfully used as a currency for something other than the black/grey market?
Genuine question: why is the use on a black or a grey market a put-down for a currency? Isn't it, on the contrary, a true testament to the value of a currency, if it is sought after, as a means of exchange, on a black market?
The lack of accountability in black market transactions is a feature. In regular transactions this is a hindrance.
The basic examples I can think of would be preventing funding terrorism or human trafficking - which I personally think is a net good. Or even more basically the ability to contest and reverse charges.
The meltdown of FTX is not orthogonal to bitcoin, it's an outright vulnerability of the system. You can't have a crypto exchange crash without underlying crypto tokens, period. If you're going to argue the merits of the design of crypto protocols, you must also acknowledge the failure to address this system of recklessness that drove the price of Bitcoin to astronomical heights only to crash.
The trustless nature of cryptocurrencies makes them susceptible to manipulation and there's nothing anyone can really do to mitigate that once it happens.
I am probably going to sound extremely naive and uneducated; but when we say "price of Bitcoin", don't we normally mean its value relative to fiat currencies? And isn't it true that our regular fiat currencies are inherently inflationary, and thus not a good long-term storage of value? Wouldn't the lack of trust in fiat currencies drive the price of Bitcoin too?
> Wouldn't the lack of trust in fiat currencies drive the price of Bitcoin too?
Only if the market believed that bitcoin is safer than fiat currency (which it's not). This is one aspect of the hyperinflation argument that gets overlooked. In order to have a hyperinflationary event, there must be an inherently more stable storage of value that everyone is trying to migrate to, which drives the value of the hyperinflated currency down. As it stands, fiat currencies are still way more trustworthy than crypto, primarily because crypto markets itself as a currency while being traded like a speculative asset. Currencies need to be stable in order to be trusted, bitcoin is not.
It seems like it's missing a word to me: without underlying crypto tokens what? Being used, getting lost, being stolen. If they're just there then I don't understand.
That's the end goal of this and it doesn't seem far fetched to me. The great libertarian experiment.
An FDIC-style framework, for example, would require exchanges to submit regular audits. The key difference between this and the proof-of-reserve stuff that Binance has been putting out is that a government auditor determines the outstanding risk of the reserves, not the entity themselves.
I'm a bit skeptical because crypto exchanges have largely been able to create these weird tokens that kind of act like corporate securities while not being actual corporate securities, and any regulatory intervention would put an end to that because that's where a ton of the risk was being laundered in the case of FTX.
Coinbase is probably the best example of an established exchange that's playing by the rules, but crypto enthusiasts hate it for that exact reason.
I guess it’s a good thing to pretend you can predict since you have a 50% chance of being right.
He has a massive pile of money.
That makes getting a great return hard - every investment opportunity has a saturation limit. You can invest a million dollars in a local McDonalds, but not a billion or a trillion. This makes finding a good job for every one of his many dollars impossible.
A theoretical super-investor who can buy the entire market will eventually get average returns, since they own everything.
Warren Buffett also said that if his pot was only a million dollars, he'd be able to generate 50% + annual returns by following his value investment strategy, for the inverse of the reasons outlined above.
Perhaps it is because he invests in unsexy things like chewing gum, insurance, furniture, and candy. (he has lately taken a stake in Apple, but that's the flashiest thing he's ever bought.)
My theory is that there is more money sloshing around, than there are good investment opportunities. Which is why we see so much money being pissed away on highly speculative gambles. The ultra-wealthy weirdos out there, so addicted to seeing their numbers rise, would rather risk losing it all on the 20% chance that they will “win”, than put their unfathomable wealth into providing clean water to third-world villages.
How is wake up even possible? Info Asymmetry is rising exponentially and the attention economy relies fully on propping up people who exploit the gap.
For me crypto was always Ponzi scheme and nothing more, but it is because I don't laundry money or sell drugs, so I am not the target for crypto.
What it really does is highlight inadequacies in education and discourse, and how intransparent "how things really work" (and by extension, what the tough problems are) can be even to intelligent people.
FDIC put people at ease about putting their money in bank. banking regulations created over years to protect people's money.
crypto bros preach about decentralized. what can go wrong?
With BTC/ETH/USDC it takes seconds. The whole process is entirely transparent. It doesn't get blocked if you reach some threshold. And the fees are smaller than with the traditional banking system.
And unlike with banks, anybody is allowed to open a new wallet. You don't have to get approval, which is difficult if you live in the streets or in a 3rd-world country.
I'm not endorsing the rest of crypto but having a trusted and transparent ledger for large transactions is nice.
Continued use of such a medium could over the long-term conceivably lead to widespread adoption, regulation, and a global currency. Fiat is disadvantaged when transactions cross borders.
I think we'll look back on this period as a painful learning process, which will set back such a digital currency by years. Perhaps it is inevitable, though, that some people will in the short-term exploit such situations for personal gain at the expense of the rest of us. Now we have to sort out the mess and wait.
It seems that both in the adtech (Facebook etc.) and crypto spaces, our industry has disgraced itself. We are at an incredible moment in history when our skills are pivotal - we're building the infrastructure of the modern world. We need to use our skills to improve things. The most obvious way to improve the situation is to carefully choose who we work for.
It doest't replace day-to-day payment but is pretty good for paying invoices.
Or the mysterious disappearance of literally billions from various exchanges?
* Financial infrastructure that is transparent and does not rely on corporate CEOs being honest: Enron, Lehman Brothers, and now FTX have shown that global regulators cannot be trusted to protect ordinary people when institutions are corrupted from the top. DeFi markets are fully transparent—with code and data being open and replicated thousands of times over—and users maintain custody of their assets at all times.
* Instantaneous settlement for payments and trades: With blockchain tech, vendors and merchants don't need to wait for credit-card payments to be deposited in their bank accounts—tokens are transferred in real-time. Traders don't need to wait for the proceeds of their sale to be wired to them two days after the trade takes place—settlement happens instantaneously with each DeFi trade. In some developed parts of the world, these settlement delays are slowly being fixed, but blockchain technology does this out of the box, today, and works everywhere.
* Security and automatic transfer of lending collateral: Overcollateralized DeFi loans hold collateral on-chain, and will instantly liquidate any outstanding loan that dips below the collateralization ratio. This is one reason that even through all the recent turbulence in crypto markets no one who leant money through DeFi on an overcollateralized basis—including, for instance, to Celsius—has lost money. (Note however that the courts have not yet ruled as to the disposition of these DeFi loans in bankruptcy cases.)
I think it's also important to differentiate between "crypto" and "blockchains". Cryptocurrencies are a type of application that can run on blockchains, and they play an important role by creating a unified market to reimburse providers for delivering the computation and storage services that blockchains depend upon. I would agree with those that believe that they have been overhyped, however.
Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster. Nobody is “waiting” for settlement. The transaction is done very fast.
Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper.
Sure, but this is market risk, not counter-party risk, and is unmitigated in traditional markets as well. Just look at how Apple stock was affected by Lehman Brothers’ failure.
> Cryptocurrency does not settle instantaneously, in fact credit cards are usually faster.
Come again? If you pay me for goods using crypto, I can spend that money immediately, pending finalization.
> Nobody is “waiting” for settlement. The transaction is done very fast.
Can a merchant spend its customers’ money immediately after running the credit card? No.
Money from a credit card transaction processed on a Friday will hit the merchant’s account on Monday or Tuesday.
> Defi collateralised loans have actually had several instances of losing money and whole schemes failing - ‘whales’ holding illiquid assets have taken out massive loans with no intention of repaying, and the collateral is sometimes only “over” on paper.
OK. Yes, if your underlying collateral is worthless, or if there isn’t a meaningful pricing mechanism or liquid market in which to sell the collateral, automatic liquidation of the loan won’t work, and a different approach must be taken.
Like with anything in the world, there are some basic preconditions required for the thing to work. “This technology is inappropriate for these particular use cases” is not a very strong argument against it.
That being said, I am unaware of these particular cases that you are referring to. If you could point them out to me, I would appreciate it.
Yep, but with cryptocurrency the entire market is a shitshow. Unless you can somehow prevent these folks from playing their games, you haven’t improved upon the situation you complain about.
> Can a merchant spend its customers’ money immediately after running the credit card? No.
I see you’ve never used Square, the answer is “Yes”
> Particular cases
There was the near-collapse of Solend, and shenanigans around it earlier in the year. Looks like they had another problem with bad debt due to oracle manipulation recently too. BendDAO, had issues earlier in the year.
Moola Market and Mango Market both experienced some sort of collateral manipulation attack that drained reserves.
New Free DAO lost a million or so in a flash loan attack… There have been a lot.
These examples are best categorized as hacks, though, which are important to distinguish from losses incurred due to bad debt.
The distinction is important because the question at stake is whether DeFi in general has value. If you look at more mainstream protocols like Aave, you don’t see these same problems. In the mid- to long-term, after the technology has stabilized, all the benefits of DeFi will accrue to users without the risks that you are pointing out.
With regards to Square: yes, you can get your money wired to you at the end of the day—if you are willing to pay an extra 1.5% fee.
This is more akin to very expensive financing—having an annualized interest rate in excess of 300%!—than “instantaneous settlement”. It’s also not standard. Square’s standard settlement process is as I described:
https://squareup.com/help/us/en/article/5438-next-business-d...
Also, I thought that not every single alt-coin is a ponzi-like fraud, but I will probably be disproven once again.
For different reasons: - easier & safer to store - much more stable than their countries own currency - not controlled by the regime
And they will likely keep using it, despite major crypto exchanges crashing down, or despite the unclear dangers of USDT.
It might seem like crypto is all the rage online, but most people don't actually live in this bubble.
Obviously not a proper sample or authoritative, but pretty easy way to counter “these countries love crypto.”
In Poland it's a mild slur meaning short man
Regarding the subject, it is indeed very popular. You can go to restaurants, car parts stores and clothing stores and find the Binance QR code prominently displayed.
And a LOT of freelancers working online have no way of receiving payments from abroad other than through Binance (verifying Paypal here because of currency controls). No one wants to receive the local currency.
I wouldn't say that you'll see grandmothers in the grocery store buying stuff with USDT, but it's definitely used.
Same with the "funding activists in repressive states" argument. Now you have a few centralized entities that can share data with the authorities. And they do, cf. Binance in Russia.
Ironically a CBDC from a powerful but non-cooperative state like China would probably be much safer for these people in Iran or Venezuela.
Yeah they do use a "dollar denominated stable coin": dollar bills under the mattress. Or just pegging transaction to USD/EUR etc and doing the conversion at transaction time
BTC might be useful for transferring money, but compared to existing mechanisms (legal or kinda legal), maybe not so much
https://restofworld.org/2022/argentina-nigeria-terra-crash/ ("From Argentina to Nigeria, people saw Terra as more stable than local currency. They lost everything")
20% APY in dollars was too good to be true.
And when it started to crash most of us quickly converted everything away from it. I lost a few bucks though.
But I had a friend who didn't know better back then who tried to apply the "HODL" meme and yes, he lost everything
It totally collapsed, but not a big deal, because you were smarter than others, so they took the loss in a zero-sum game ("who gets to take the remaining liquidity")?
Unfortunately, twitter does not provide a history of tweets/profiles I have visited; I hope they add something like reddit. Would really like to revisit this account now.
Crypto is no more of a Ponzi Scheme than Fiat currency is, the big difference is Fiat currency is back by threats of violence (aka government).
It’s different if you are under Venezuelan rule, it’s government is small, authoritarian and incompetent.
That's a delicate illusion and does not survive well when largish minorities declare the social contract void.
No, if voters don't like the result, they can still use force, anytime they like. Like what Belarusians did in 2020 after obviously rigged circus election (though their force was far from enough vs. their government-in-power backed by Russia).
Liberty is a well-armed lamb contesting the vote!”
-- Author Unknown
So that alone invalidates the idea that voting is "consent to be governed", saying that is like saying when a mugger that comes upon you with a demand of "your money or your life" means you "consented" to give the mugger you money when you hand it over.
Second people feel the force of government every day, most have assimilated this consent threat into their lives as just a part of living but even in the most "free" nations consent threat is there, did you fill out your tax return correctly... is that cop going to pull me over.... etc etc etc etc
The delicate illusion is that this consent overriding threat of violence by the state is somehow legitimate, ethical and moral
However so is the "responsibility" narrative. Both are over stating the importance and function of voting. One does not, and can not have a responsibility or obligation to choose between a Giant Douche and a Turd Sandwich [1].
Low participation rate is an indictment of the entire system.
There is no fix for that.
"Fiat" currency has a lot of people overseeing it, and armies protecting it. I'll take that over SBF any day.
Even with fiat's issues--for example, with a stroke of a pen, Biden can print and confiscate money and transfer it to privileged college borrowers, causing inflation--it still works better. In this case, our court system is slowing the process down
<<Checks US Debt Clock site>>>>
Fact Check: False.... not slowing down at all... US Government spending is still extreme irresponsible and fast approaching insolvency... but hey the courts stopped a 0.0000015% increase so yea.....
I find Bitcoin very intriguing because unlike TradFi it is not built in debt. Every dollar you have in your account is someone else's debt to you. Which is also the reason Bitcoin gets compared so much to gold! There is a fixed amount of nuggets and no debt is involved.
(Yes, I know that about 8% of the gold demand is actually driven by the technology sector, but the majority of gold's price is driven through pure speculation on... nothing productive! Gold's price is mostly driven by greed / price action.)
I think if you call gold or Bitcoin a Ponzi, you're using the wrong term. Greater Fool Theory is more fitting.
To break it down: If I have 1 dollar in my account, the bank owes me 1 dollar. And this goes all the way up.
When you have 1 dollar in your account, the bank still has the dollar! It's a liability owed to you.
Every financial asset is somebody else's liability. Every financial asset is similar to a promissory note. If you sign one, it is your liability, but it would be an asset for the note's holder. This is also true for your bank account. Your account statement is a promissory note that the bank owes you 1 dollar.
For most normal (non-techy) people, what's the allure of Bitcoin once you remove all the marketing? Perhaps gold indeed still relies on the greater fool, but that fool on average is still less of a fool than the greater fool who has too much "invested" in cryptocurrency.
For me, Bitcoin (and the whole disappearing creator act and hints of NSA involvement) has always been a tinfoil moment. This is the perfect mechanism for total economic awareness not the supposed virtues, such as anonymity, that it does not really have. The Ponzi schemes seem to have been permitted to establish the necessary infrastructure (mining, exchanges, etc.) and normalize the technology. Next stop should be the regulators post MSM preparatory media campaign (“Explainer: why we need crypto regulations today”). Then it will likely support CBDCs transactions (the CBDCs being the actual main event here btw). You will get a ‘wallet’ at birth and say goodbye to banks and remember that all you spendings are now recorded for posterity. (Remember “cash is bad” & is also a vector of nasty viruses).
If the big 5 scammers go to real jail — double digit billions of dollars are involved here — and don’t end up suiciding themselves, i will reconsider my current take on this entire affair.
However, S.Nakamoto was always anonymous and Bitcoin never stated to be anonymous, not even in the white paper. I think that the correct term here is pseudonymous.
P.S. To those suggesting regulation, do you realise that regulations are being crafted by people like these (SBF's family)? Is it really going to improve anything or just equalise it all with the absolute worst?
1. https://law.stanford.edu/directory/joseph-bankman/ 2. https://law.stanford.edu/directory/barbara-fried/
A couple a weeks ago I did a wire half way across the globe. It took almost 7 days for the money to arrive. With bitcoin? 60 minutes.
Remember when OnlyFans was in trouble because of the payments processors wanting to pull the rug? You probably don't and you probably are not aware how many people would have been impacted.
Do you watch porn? How many times have have sites that provide it been in trouble because of some puritan bs from the dark ages? Do you know this is the majority of the internet? Are you aware that a lot of innovations (the internet included) took off and became mainstream because of porn?
Do you know about civil asset forfeiture? How do you feel about losing everything you own just on the suspicion that maybe you did something?
You are a target for crypto. You believe you are not because of all the bs the media peddles. Stick with Bitcoin and ETH and treat it as a high risk investment and you'll be fine.
Apart from everything else, even if all crypto goes away tomorrow, the real innovation when it comes to crypto is the blockchain. Without the blockchain crypto is just digital money (and 90%+ of money is already digital - ie numbers in bank systems, ie not real).
Blockchain tech is here to stay.
It's perfectly reasonable for the party receiving the funds to ask for a proof that the money didn't come from human trafficking. But that should be a fully automated process in most cases, and no one but the receiving party should have anything to say.
Simply making illegal activity more burdensome with fiat money requires less effort than what's currently being spent on these processes.
Ignoring the week-long wire detail (which deserves an explanation because that doesn't resonate with my experience), depending on when you sent that transaction, your wire could've lost a decent amount of value due to the price instability of bitcoin. Losing 5% in a matter of minutes because everyone is panicking is not a good deal.
Every country could severely limit mining, and the supply would continue its steady velocity, whereas sometimes executive behavior spurs financial institutions to simply make the federal banks buy everything.
Fractional reserve banking is an inherently unstable system.
True federation is not.
Ethereum crossed a similar threshold at the merge reducing the calculus, but it's not clear to me if there are any more "difficulty bombs" built in where executive control can be expressed, say in the consensus layer where unilateral control can be expressed over supply.
No, I'm talking about the exchange rate. I don't care what bitcoin means internally or how it functions, I care about what it's worth on the market today and tomorrow, because there's no to way live in the purely crypto world.
That's the whole point of a currency, that you and I agree that some instrument of value will stay consistent enough to transact with. Crypto is just not there because the ecosystem is full of scams. You could design a perfectly federated system that's worthless because bad actors abuse the platform. If you build a system that assumes everyone is a criminal, then that's what you wind up building, a system in which everyone is a criminal.
Everyone and their dog hates Thiel nowadays but the ideas in the book ring true more than ever. Here is one of the questions asked in the book: “What important truth do very people agree with you on?”
Some people see the potential for crypto and believe in it. Most people think it's a scam. And it may eventually collapse and go to 0. But the point here is that for radical new things conventional ways of thinking rarely work out.
I think it’s hilarious that you think your wire was slow because of the geographical distance the message had to travel (“halfway across the world”) as opposed to the fact that it had to travel across jurisdictions with different laws.
If I want to send someone money within the US, for example, it’s near instantaneous, whether through a credit card/debit card purchase, Zelle/Venmo, PayPal, direct bank transfer, etc.
To the extent some forms of transfer require waiting a day it’s because, once again, banks do settlements once a day to reduce costs and to meet federal government regulations that prevent fraud and/or help keep the economy more stable.
Blockchain tech is significantly slower than decades old banking technology. You can go hours before someone mines something to close out a bunch of transactions. What slows down banking transactions is the very stuff the absence of which meant that $30bn of wealth evaporated overnight in FTX.
Condescending straw man here.
Being able to use BTC to do this, routing around the various jurisdictional settlement layers, is a huge practical improvement.
Those 7 days don't make society better, they're a drag on the economy and the wallets of anyone who doesn't have access to quicker mechanisms.
Your comment is also assuming funds would only be seized for a shared definition of "fraud, money laundering or terrorism" when that is not always the case. Preventing "terrorism" by placing embargoes on all individuals of disagreeable governments would seem like an overreach for many individuals with family overseas.
That's not a universal statement -- that calculus could change -- but this is the case for me in the developed world in 2022.
It's the least private system you could conceive.
I don’t see anything in the post you are replying to that indicates they believe this. They noted the distance, which makes clear many practical issues (it was not only another country but not in a trading or common regulation block like the EU).
It’s clear the amount of time involved is the obstacle the person had issue with. This seems like a use case for crypto (even if I personally would tend to just do the wire whenever practical).
They meant exactly that. The claim that blockchain is faster because of technology is obviously a complete strawman.
Where's the crypto with high stability and low changes? I guess stablecoins seem to fit that niche the most but they also seem very centralized and owned by specific companies?
You really think that billions were poured into the Internet infrastructure to deliver porn more efficiently?
https://www.businessinsider.com/how-porn-drives-innovation-i...
This idea that it’s both useful for large international transfers and a highly volatile investment also seems contradictory.
* Wire transfers
* Paying for porn
* Avoiding civil asset forfeiture
I think 99% of people watch free/ad-supported porn, and anyone concerned about civil asset forfeiture is likely either a criminal, or a conspiracy theorist and/or paranoid schizo (i.e. a small minority of the population).
Wire transfers are a legitimate use-case maybe. I don't really know much about that as I've never personally had to do it. But if that's the only legitimate use case for cryptocurrency, then it's probably a better idea to try and improve the efficiency of traditional wire transfers than to use fake money that's a magnet for fraud/scams/crimes.
> Blockchain tech is here to stay.
This I agree with. Blockchain as a general technology is useful, but not for financial products/services.
Wise or CurrencyFair take your money on a local account anywhere on the globe, and deposit it anywhere else with a local currency from a local account.
Rates are within 0.5% of the currency exchange, and no fixed or percentage fee, no wire fee since it’s all local accounts (it’s an example / please check the terms / this is not financial advice).
I honestly don’t see what’s there to save with crypto. Fees for credit card transactions are often 5 times above (2.5%).
Huh. You'd be surprised.
> anyone concerned about civil asset forfeiture is likely either a criminal, or a conspiracy theorist and/or paranoid schizo
This right here is the problem. Your argument goes along the lines of: I am doing nothing wrong/illegal therefore I have nothing to worry about. This assumes perfect laws, perfect law enforcement and following proper procedures. Sorry to burst your bubble but this is not how the real world works. You don't need to prove anything and you shouldn't just throw away your rights because you want to prove you're not schizo.
In the case you are a criminal, should the punishment fit the crime and should there be due process or are we just going to throw anyone that breaks a law, any law in jail and sentence them to death?
How many laws do you break during a day? https://www.businessinsider.com/most-commonly-broken-laws-in... Should the government just come in an take all your stuff now because they suspect you've connected to an unsecured wifi? They don't even need to prove anything and poof... your stuff is gone. this is civil asset forfeiture. This is how dumb it is.
And how long does it take to convert the Bitcoin to money in the destination country?
SWIFT wires normally clear the same day. If it took seven days, your transaction was being held for legal reasons. It’s foolish to think that Bitcoin somehow solves this problem — it just moves the responsibility for inspecting transactions to the “off-ramp” exchange you’d be using in the destination country.
The issue here is the American puritan mindset being forced on the world due to the duopoly of Visa and Mastercard. Similar issues stem from American social media. Here in Europe I see ads in the subway from museums that would violate e.g. the nudity rules on Instagram.
What you want in a currency is fungiblity (if that’s an actual word) and a stable store of value.
What you get with crypto is a billion competing chains and a “high risk investment”.
To compensate for this you get exchanges who also share your view that customer deposits are a “high risk investment” instead of a warehousing operation which is their legal obligation.
Perhaps I’m not the target of crypto because I can see it for what it is and not the utopian dream people want you to see?
The US Dollar is a big scam too, if COVID didn't highlight that then... well, it doesn't really matter.
What COVID did is reveal what a currency actually is. It’s a bet on the reliability of the backers of the currency. In the case of the USD, that would be the US government and economy.
BTC only has value because people don’t seem to understand this basic fact of a currency.
In the meantime… the fed is reversing all of it that led us to where we are.
Keep your coins off 3rd party exchanges and 99% of this drama disappears.
People who want to go into crypto need an on-ramp / off-ramp like Coinbase.
Coinbase claims actual people really deposited at least $44 billion USD and that these USD are used to back the USDC stable coin emitted by Coinbase 1:1. But that doesn't tend to be mentioned here.
Coinbase's stock rose 20%+ after FTX's scam was exposed. So there are actual people out there thinking that, no, this is not the end of crypto and that Coinbase will actually benefit from the FTX and BlockFi (and hopefully many other) scammers' downfall.
I wish tether/iFinex/Bitfinex would die a quick and painful death and Coinbase were to completely replace them.
To me there's room for legit centralized players and I sincerely hope Coinbase is one of them and I wish them the best.
While the first time I hear about the FTX is when it collapses. And the first time I'm hearing about this "future trillionaire" is when I'm reading this article.
Collapse of mtgox was a big thing. Turned out to be at most just a blip in history of bitcoin. Same with any subsequent exchanges collapses.
Next truly significant event in Bitcoin world will be nothing short of full collapse of tether.
I'm tired of this mantra.
To me, crypto is starting to look less like the early internet, and more like the file-sharing mania of the late 90s early 00s, ie Napster, Kazaa, Limewire etc.
A very likely outcome is that crypto will continue to be around, like some of the file sharing services, but using them will be more and more irrelevant and frowned upon by most people, who prefer the ease of the legal media streaming platforms.
checks the need for different subscriptions for different shows and looks at my own library of purchased media for shows that disappeared for reasons
Are you sure about that analogy?
Yes, and some of these tokens, like BTC, allow this since "crypto was built". You can clone and build https://github.com/bitcoin/bitcoin and set up your own wallet. Noone will touch coins in it if you're careful. They can lose their value but they will still be there.
If you trust someone else to hold your wallet, which is more or less a necessity when you trade/exchange your coins, that's whole other ball game. But having all your money in bunch of wallets kept by a single entity that is not you, is just plain stupidity.
The word of the week is “contagion”: even if you did no business with FTX at all, even if you have your coins on a hard drive locked in the doomsday seed vault, crypto is crashing because investors are learning that the old system that protects wealth is necessary after all.
Say you have a small group of people who are all on the same page about what crypto is and how it should be integrated into society. Then another group comes along and recognizes it as an opportunity to pump and dump. The scammers create their markets and their tokens, driving the value up insanely until it all comes crashing down and innocent people lose everything.
There's really nothing the original group can do to stop the scammers because the entire point of crypto is that you're assuming everyone is a criminal anyway. It just doesn't work.
I thought it went like this: >PM announces tax cuts >no way those cuts can meet budget >panic in market for long maturity gilts >sudden spikes in benchmark rates are bad for everyone so BoE announces YCC
Did I miss something? Did Truss somehow take a swipe at the BoE? I'll be honest, I didn't pay super close attention.
What is the equivalent for storing dollars? How about gold?
I do exactly this with my dollars and it's worked out just fine. Modern society is based on trust. I don't want to have to inspect source code to ensure my wallet is secure.
Don't get me wrong, SBF is clearly a fool or a turd-burglar, but the ageist take is scummy, suspicious, and poisonous to the mind.
The problem is that they forgot the 1 against all adversarial nature of internet security. A trillion dollar empire set against one way of securing assets is in essence a trillion dollar bounty on breaking your security regime. And what was found? That the system was complex enough that most security "hacks" were mostly social engineering with a sprinkling of insecure gateways and passwords. Neither the users of wallets or the engineers of exchanges put in enough time and effort to secure their holdings in relation to the dollar values they held. Wild swings in the stability of coin values created arbitrage opportunities which made some users exceedingly rich, prompting more dumb money to enter the system. That's a bug, not a feature.
I still think there's value for crypto to evade censorship and manipulation of populations via legislation of the money supply. But that requires a whole slew of low level techs to maintain and verify transactions. At some level that may make it as onerous and bureaucratic as our current financial systems.
I just hope that this doesn't cause financial contagion in the traditional sectors.
People are way too gullible and already forgot about the previous scams.
Note that in some respects, the Federal Reserve already operates a digital currency pegged to the dollar, but it's accessible only to chartered banks. Every US bank (depository institution) has accounts with the FRB that constitute those banks' reserves, and through which interbank transfers of "hard" dollars (base money - that is, dollars issued by the FRB, as compared to those created by bank lending - is ultimately effected. Those accounts are functionally digital dollars.
Despite dang constantly asking people to not boast.
Outside of the HN bubble, I see a lot of people into crypto who are all posting: "I told you so".
As simple as: "Your keys, your coins".
We're talking about Bloomberg, Sequoia Capital and oh so many others coming up with hit pieces up until a few days ago about how SBF was a "philantropic genius". The issue is not cryptocurrencies here. The issue is scammers and the financial world having, once again, turned a complete blind eye to people running scams.
Cryptocurrencies are just an excuse here.
Isn't the bigger story how, every single time scammers, be it people packaging synthetic CDOs and selling them to investors as AAA investments before the subprime crisis or the SBF of this world, there are big names lauding these products as creation from geniuses?
There were people calling out SBF as a fraud. A trader pointed out, more than a month ago, that the only picture of the CTO, called "Wang" (most common family name in the world: 65 million people have that family name), was a picture taken from behind.
That same person noticed that one of the person high up the chain in the SBF fraud was already linked to an only poker scandal where the poker site was defrauding users.
Meanwhile Bloomberg was lauding SBF as the biggest genius of our time.
Why isn't that the story?
Why isn't the story about Gary Gensler being accused by a congressman of working hand in hand with FTX/Alameda to allow FTX to acquire a monopoly on crypto exchange by regulatory capture? All the while a colleague of Gary Gensler is the father of Alameda's 28 years-old CEO.
Serious people: wake up.
I'm not the one making these accusations. A US congressman is accusing Gary Gensler, the very chair of the SEC, of allegedly working with (for?) SBF.
But, no, according to most of HN the culprits are... People who want something else than a currency of which the central banks can print trillions of at will?
We're talking about officials and politicians receving $40 millions in donation from a fraudsters and "respected" magazines presenting that fraudster as one of the biggest genius of our times.
That's the real story.
But, no, let's focus instead on the angle: "Cryptocurrencies are dead now".
I'm sure that the corrupt officials, politicians and the very dubious players who lauded SBF as a genius do love that angle.
Congressman is a republican. I don't like republicans, but I recognize their words are disregarded by non-overtly-rightwing media. Admittedly some Rs spew lots of bullshit so I get that, but it would be nice if serious reporters would look into serious claims like this.
The Gary Gensler angle on this is very interesting and thus far everyone but 4chan tinfoilers has been mum about it.
- decentralized, distributed consensus mechanisms are valuable, clever pieces of tech. (The fact that the first major invention of this tech was by an anonymous person who disappeared should be far more alarming than the world seems to think it is)
- Using blockchains to create digital scarcity is a valuable, clever application of the tech. I expect these to become the default for things like event tickets within 10 years despite all the noise and bullshit around NFTs. That being said: NFTs do not in any way make shitty art valuable/not shitty. The bust of NFT art following the boom was so so so painfully obvious, I don’t understand how so many people got hoodwinked save for humanity’s propensity to be greedy.
- I think the value of cryptocurrencies is way way higher to non-western countries (very much not America) because it’s a border-less/government-less means of transferring value. For places like South America and Africa where the local economies are weak/volatile, the ability to transact in a medium that exists globally should be a great idea. America has a trustworthy financial system, there’s no real need for alternatives (I get that banks and the fed are their own ball of fuckery frequently, but in general, we aren’t Venezuela for example. A dollar is a dollar, it works pretty well almost anywhere).
The issues are:
- for this cryptocurrency mechanism to work as a real currency, it needs to be non-volatile, which would kill the opportunity to speculate (and therefore kill western interests/greed). I need to wake up in my village with the same amount of money I went to sleep with. Basically no crypto projects can offer that guarantee right now (ignoring stable coins)
- It’s highly adversarial to government interests, so they’ll stifle it however possible in general Projects like Algorand and Chia are super interesting because of the tech and decentralization goals of them. The vast majority of these projects are just utopian libertarian bullshit that gets absolutely rocked when applied to the real world. Also, humans are just very greedy most of the time, so an unregulated space with relatively low friction on-ramps and the promise of wild returns will of course be abused and lead to spectacular blowouts like the last few months have brought.
The tech will continue, and things will rev back up over the next 3-5 years.
Lastly: Crypto still has a terrible user experience across the board. Arcane address hashes, basically no recourse if you make a typo, all the projects selling their inner tech and economic concepts that are just gibberish unless you’re a PhD (translated: doesn’t matter, no one actually cares).
Crypto desperately needs to be Uber-ified. I don’t mean what Uber has become, I mean what it was when it launched: an app with a button and a text field, you typed in where you wanted to go, and a clean slick car picked you up and got you there like magic. They weren’t advertising their routing and matching algorithms, the product was “feel like a rich guy at the push of a button”. Crypto needs a few of these.
meanwhile Chia Network has launched a new capability called Offers, a native peer-to-peer exchange capability. No counterparty risk. No middleman custodian. No additional fees.
Offers allow “Makers” and “Takers” – buyers and sellers – to seamlessly create and accept trade offers all from the privacy of their Chia wallet. Offers allow two people who have never met to propose and complete a trade in a way that neither side can cheat and does not need escrow. This also empowers users to self-custody while making trades, meaning buyers and sellers retain control of their private keys and coins without counterparty risk, middleman custodians, and trading fees. By contrast, centralized exchanges require users to transfer digital assets to an exchange account, creating a potential security risk.