The entire crypto ecosystem is a ponzi
coppolacomment.com
coppolacomment.com
Now there are all manner of divergences from the above paragraph. Coins that are totally controlled and issued by a small group or company. Black box rules rather than transparent.
There are also huge trade offs with not having a central entity - lose your private key and lose your money for example.
Does this make the entire industry a Ponzi? No. There are legitimate uses for crypto, and even if I listed a whole bunch here the HN skeptics would disagree, but certainly buying drugs online is a real use case, which crypto excels at. You may say that’s morally wrong but it is still a use case, for better or worse.
No, the things you mentioned don’t. The argument the article made, that almost all the dollars and euros and yen crypto spits out come from investment, does.
That some people are buying drugs and financing terrorism or Pyongyang dilutes the Ponzi case. Those are examples of utility. But I’m not sure that’s the defence crypto was looking for.
One of these is almost certainly a fraud. The other provides utility, but largely in sidestepping money-laundering and banking rules.
If you believe as I do that government control of money is a mistake for many different reasons, then crypto is a revolutionary technology. If you say “Bitcoin has all the problems” then I refer you to monero.
If the current system is so flawless, why does this keep happening? Clearly the system is not flawless.
I myself am extremely technical and able to understand the crypto industry. I can separate scams from not-scams.
Similarly, the Machine Learning / AI industry is chock full of charlatans and scammers who have stolen billions from investors. For example, Watson from IBM is a hyped technology and product that has now been shuttered.
The unique element of crypto is a retail investor can put their life savings into a scam. This is unfortunate but not a reason to ban the tech.
Nothing stops a lower-class person from entering a casino or using a sports betting app and losing their house. The pearl clutching on HN is legendary.
Who pays taxes?
2. There is a cap on how much cash you can use in a transaction, in the West at least.
3. If XMR replaced fiat, ALL transactions would be anonymous.
By many accounts moving around and dealing with large values in cash is inconvenient and cumbersome compared with the relative ease of moving crytpo between holders.
To the point where cartels end up with literal huge piles of money in warehouses and resort to complicated operations to try and move it across borders.
But it's hard to claim that most governments around the world and competent and benevolent, and easy to get excited about people being able to bypass things from capital controls and ruinous inflation, to outright censorship and confiscations. Not that I think crypto would actually succeed, but I hope it does.
And because of the complexity, I doubt crypto will succeed in its goal. It might get regulated but then it's probably no better than banks, since it would be restricted from the uses a govt doesn't like similarly to money in a bank.
There's a single hoop, and it's Monero.
It always confuses me when people say that crypto doesn't excel at buying drugs online. Out of all the things crypto does and does not do well, that one shouldn't be in dispute.
It starts with digital services and it spiders out from there. Enthusiasts who own retail stores accept crypto as a novelty or marketing strategy, but in 25 years it could be much more common.
Silk Road was 11 years ago.
When?
If you have some other list of goods and services that people can repeatedly and reliably purchase using crypto, you can provide that to show that crypto is money. The earlier list is almost entirely crypto exchanges and vpns, which is hardly a useful list of goods and services for normal day to day products that people use.
If you can't purchase goods and services with crypto, crypto is not money.
Or do you mean "money is what you can use to pay your taxes"? That works to exclude crypto, at least for most of the world.
Doubly wrong since Amazon also accepts gift cards which can be bought with cash.
> Cash on Delivery is available as a payment method for fulfilled by Amazon and some seller fulfilled items. If you have Gift Card balance in your account, you can redeem it and pay the remaining amount using Cash on Delivery payment method.
[1] https://www.amazon.eg/-/en/gp/help/customer/display.html?nod...
[2] https://smile.amazon.com/b?ie=UTF8&node=19428273011&sa-no-re...
[3] https://www.usatoday.com/story/money/2019/09/18/can-you-shop...
Obviously Amazon supports system that let you convert cash into digital, but that's something else.
Cash is one form of USD, which is money.
In case you're wondering, a cash-only business accepts money too.
Careful with that sentence. It is applicable to paintings, stamps, and collecting in general. True that on those other cases you have a physical object, so it has a value (as opposed to nft) but usually it's far less. A Pokemon card costs almost nothing, but some people are willing to pay millions for it, so it "costs" millions.
Disclaimer: I still agree with your comment, I just think that the reason is more complex than that sentence.
Stamps and other collections are fun to collect and to have, regardless of their monetary value. (After all, people collect otherwise-worthless things like bottle caps, too.)
Cryptocurrencies have no substance to them, they are not interesting to look at, and while I suppose one could get a thrill out of simply knowing one has them, I very much doubt that there's more than a tiny handful of people for whom that would remain true if they were worth $0.
By now they’re a part of our history. I keep a professionally made, empty paper wallet as a souvenir from the 2010s. It’s a lot more tangible than some scrap of paper with 24 random words on it.
Well, it happened with baseball cards and comics, and then everything else. But let's go back to baseball cards. Why did some of them become so valuable? Just a guess but maybe its because they became rare, yet retained nostalgia value. Kids who bought them in the 20s and 30s treated them like the worthless scraps of cardboard that they were. Most were lost or destroyed. But decades later if they came across some they evoked a powerful emotion, maybe the sort of emotion I feel when see the login prompt on a Vic-20 maybe. So they started collecting them, and of course they had the most demand for the legendary players who they idolized as kids, so the value of those went up. After that, its mostly just people speculating. But there was a kernel of real value there to begin.
The very first comment on that use case is, "Please allow me to offer you a free rsync.net account, in perpetuity, for the backup portion of your requirements." [1] Saying that the use case for Monero is to compete with zero-cost services doesn't offer a compelling use-case for Monero.
And people do. There's a bitcoin ATM at my local liquor store. And a strip club downtown that takes bitcoin.
That's not what a ponzi scheme is.
In a ponzi scheme, there is a fictitious business model that's purported to be turning a profit, and its lack of profit is hidden by secretly using new inflows to pay off old investors.
In crypto, none of that is hidden. It's widely known that dollars cashed out by earlier investors come from the coffers of later investors. Since e.g. Bitcoin doesn't deceive people about being a profitable company, it's by definition not a ponzi scheme.
Edit: This is a discussion section. If you disagree with my comment, let's respectfully discuss it. I see a lot of voting and no replying.
You can speculate on the value of any currency. I’ve earned thousands extra this year by invoicing foreign currencies at the right time, at no loss of my customers.
Bitcoin only has value for me because of the things I can buy with Bitcoin. (Privacy preserving technology, online services, drugs, helping friends of friends get out of Ukraine.)
And it is somehow 'money' only when it suits projects and places like HN. [0] I'm sure any of you would immediately rush to sell 299 Ethereum right now, even if it ran through a Tornado.cash mixer, otherwise you would leave it alone if you believe that it isn't money or worth anything.
> If something only has value because you think you can sell it to the next sucker for more, it is a ponzi scheme.
That is not what a ponzi scheme is.
If anything a bigger part of the chaos in the cryptocurrency-space comes from people who want to believe.
It's a use case that doesn't solve the problem with trust. Parties have to trust each other or use escrow. So, it solves only the "government control" problem.
But I agree, crypto is not just a Ponzi scheme. It's an enormous investment into the world of criminals - individuals and organizations.
Any sufficiently complex system can have minor benefits while overall be considered extremely harmful. Cancer can make you lose weight. Nazi Germany built great highways.
Crypto is only trust. Without that social trust, there's no minimum value. That doesn't mean there is no value, just that the floor can go away, that the entire thing is much more volatile. So basically, gambling. This is not a value judgement btw, gambling and volatile assets can be fun and profitable; they are just not currencies.
IMO Bitcoin is superior to gold in nearly every single aspect. The only thing it doesn’t have is 5000 years of human belief in its worth.
If you understand logically why gold in 2022 has a monetary premium above its industrial value, then you can logically reason about Bitcoin and its value.
If you accept that Bitcoin has long term utility and value, then it isn’t a stretch to start analyzing other coins on similar valuation heuristics.
I can see that getting replicated for BC, but other crypto, not so much. A better, digital, asset than gold makes sense, but distributed, slow, state machines? Still don't get those...
In Bitcoin the lightning network is slowly but steadily making progress amongst the faithful. It is also a faster and cheaper network.
Monero is the currency I recommend heavily because it is privacy-by-default - anyone who uses Monero is not broadcasting their intentions. This is an extremely valuable aspect of financial freedom and it gives me long term faith in its utility.
The key thing to remember is that all value is subjective. Someone will pay infinite money for a glass of water when they are dying of thirst and no money when they are drowning.
If a large portion of society values digital assets, then they have value. There is really nothing more complex than this for anyone to understand.
The scam seems so obvious, and yet it "works".
I guess that I tend to underestimate how many people love gambling with money and/or are attracted to get-rich-quick schemes.
There is seemingly also a small fraction of true believers, idealists and evangelists who seem convinced that all of this could replace both states and banks without ending up much worse.
1. The "mark" trades his dollars for something he/she thinks is of value, in Madoff's case it was a balance in the Madoff fund.
2. The fund increases the "balance" for the marks, making them think their money is actually increasing in value. This discourages people from wanting their money back. Meanwhile the actual dollars is squirrelled away to some series of numbered accounts.
3. The ponzi scheme is only exposed when there's a run, which happened to Madoff in 2008 during the financial crisis.
> There is seemingly also a small fraction of true believers, idealists and evangelists who seem convinced that all of this could replace both states and banks without ending up much worse.
I think a lot of that culture comes from staunch libertarian ideals and also the "free software" crowds, such as GPL enthusiasts. It just is not how human society works and will never work. I saw it in a thread in regarding a commonly used software library that has a GPL license. The author of the package said they would never consider any other license, even while the other thread posters were requesting a license that would allow them to use it in proprietary code but actually pay for that use. People were essentially stating that no one, other than hobbyists, will ever use the package because they can't in their jobs and companies but that they would be willing to pay for a non-GPL license, and the authors staunchly stood behind their ideals. Thus, no one uses it.
I feel cryptocurrencies are very similar. Taking a hardline approach to the decentralization means it will never be incorporated into anything other than hobbyist and enthusiast use.
I think it's insane that someone invented an algorithm to transfer value over the internet, without the involvement of a central party. Basically as soon as it has a tiny bit of value, you can transfer it, and so it has value.
It goes so far that you could store the private key in your head, and therefore use your head as basically a bank account, only accessible to you.
Plus, if you're living in Hong Kong and want to get paid for something the government thinks is illegal, you can always get paid in Monero, like this guy: https://news.ycombinator.com/item?id=31996612
Ok, you want to focus on all the scams and get-rich-quick schemes. It's more than that you know.
I am pretty sure that building an anonymous payment system for illegal trades is possible without crypto.
I have not seen a legitimate use of crypto yet. Not even once.
How? And then it turns out this system is owned by the FBI, like the ANOM phone. Oops.
At least with Monero you know it's peer reviewed, and can check what is running on your system.
You see that is the strange part here. There is a cool algorithmic solution, and HN says "Nah, some central authority could do that with software too".
Of course, for my part I certainly wouldn't be able to independently come up with proof of work chains, the major contribution of Satoshi. Something like Wei b-money with a super-peer network that broadcasts transactions and countersigns those that are legitimate/first. It wouldn't have the strong anti-double-spending features of Bitcoin, but it would work much as current proof of stake coins, as long as the super-peer cabal was not majority-compromised.
I know I could come up with it because I toyed with these concepts in the space of filesharing protocols before 2010, but decided the whole e-cash approach was too heavy. Always wondered what it could have led to if I implemented it back then.
Maybe because people here are more likely to understand it?
Edit: added a missing quote
I have a master's degree in CS, and I'm not able to understand it?
Of course Solidity developers of the latest rugpull DeFi know very well what they are doing, but they are unlikely to come out in the open and confess it. Some do anonymously though, go read some Coinfessions horror stories.
Understanding of what? The technical side? It seems HN seems hell bent over discussing all the scams and get-rich schemes, and completely discards the cool technology and things that it enables (see https://news.ycombinator.com/item?id=31996612 again, as stated before).
> the latest rugpull DeFi
Yep, exactly as I stated, focus on all the scams. That has absolutely nothing to do with technical expertise you know.
Edit: crypto is a cool technology, and has at least 1 use-case (see link above). Try to argue with that instead of sidetracking the discussion towards the scams and get-rich-quick schemes.
Those who understand the technical features can see there is nothing there to justify the hype, and rightly conclude it's largely a scam on a fundamental level.
> Those who understand the technical features can see there is nothing there to justify the hype,
I'm confused, is it bad tech or is it undesirable effects?
Technical critics flatter themselves too much about their supposed understanding. It's political, not technical. We need crypto for the same reason why need to keep the cash economy alive.
> even if we accept the whole black-market use of crypto as legitimate, that's still a small fraction of the speculation-driven valuation.
So the major problem is the financial overvaluation relative to the real technical abilities, the minor problem is that even those features are predominately enablers of nefarious activities such as money laundry. The second problem is indeed a political objection of mine, but there is no contradiction with the technical lack of value which most HNers object to.
> We need crypto for the same reason why need to keep the cash economy alive.
But that's not the reason the crypto bubble inflated, far from it. We could talk about privacy enabling features inspired by crypto in electronic payment systems without trying to reinvent fiat currencies in the form of private money which we know full well are a bad idea.
Physical cash is to crypto what amateur rocketry is to sending ITAR info to North Korea, or personal handguns to nuclear proliferation: there is a scale where a certain behavior that is acceptable and beneficial at the individual level becomes a major problem for society as a whole.
If it is do obvious that all cryptocurrency is a scam, would you mind explaining why?
Do you think national currencies are also a scam?
National currencies, issued by states are not a scam.
Stocks can crash, and some of them are scams, but most of them are not, contrary to crypto.
Your dreamt of, decentralized system that was imagined by Satoshi is gone. It will either never exist anymore and be gangrened by said centralized exchanges (which are the only things that are artificially prop up the value of your coins), or it will go back to the days where you can pay 10 000 BTC for a pizza because someone decided it would be fun. ETH would be worthless without exchanges (because its current value is only propped up by "what bullshit can I sell that mimics real world services but without any legal repercussions when I commit fraud and exchange it for cash, disappearing in the Bahamas in the process?"), doge would be worthless, USDT would be worthless, etc.
A system that has no real world value will not exchange anything, unless scammers like Binance and FTX come in to sell get-rich-quick dreams to suckers and artificially bring in money and "volume". When 99% of your volume is just big traders sending money to one another and keeping the price high (because it makes cryptobros feel good when they see their big number go bigger), you don't have an economy, you have at best a really shit game of Monopoly.
What do you mean? There are tons of decentralized exchanges I can use to acquire cryptocurrency to buy drugs with.
the best I can tell is that you are saying that centralized institutions having extremely large influence is necessary? in which case I would disagree
some of your points are clear without the pejoratives
to your actual point, I dont think there is anything inherently necessary for exchanges to make price discovery. people do not need to custody their assets there for more than a few minutes, and properly run exchanges (not overleveraged, solvent) do this just fine
OTC desks never custody and are okay examples of this
We have. We learned to ban what crypto does and put people promoting it in jail.
We monitor large cash transactions, and don’t let randos print. We also restrict who can facilitate transmitting it and under what rules. We further made securities fraud, wire fraud and money laundering illegal, a trifecta of crimes most people working in crypto facilitate.
The state of transaction processing in this country is hot garbage. I'm not claiming that crypto is the answer, but I sure as hell don't think our society has arrived at any sort of best solution. I'm personally fine with a lot more "crime" (aka transactions you personally don't approve of) if it gets us a better financial system.
We should not regulate those that wish to hold their own assets.
If (old) people loose money, they will complain, legislators will notice, regulating policy will be implemented.
There is no point. Crypto is a fantasy.
Centralized entities (ie businesses) that are holding people’s funds absolutely should be regulated, and certainly more than the current state. The scammers in this space don’t have any real connection to the tech per se, they’ve just identified a relatively friction-free way to scam people.
“Crypto” itself (the tech) can’t be regulated, short of coordinating all countries to confiscate mining rigs/validators and make them seriously illegal, thus breaking the network.
So regulating the businesses does not invalidate the premise—it just protects people as they onboard funds.
There's a difference between regulating the institutions that hold crypto customer deposits, compared to regulating the crypto networks themselves.
Maybe it works poorly for traders but those of us actually using cryptoassets for privacy, inflation resistance, and censorship resistance ignore the scams and traders. Scams and traders dominate the conversation of most new technology. Same things happen in traditional markets.
Cults of personality and false promises by corporations inflate stock prices all the time. Takes a while to find the real price sometimes.
I was buying at $10, $1k, $10k, $60k, and everywhere between. I will be buying at 100k too.
Deflationary assets trend to be short term volatile, but long term up.
Heh, gotta say cryptos have weathered their first real test as a hedge against rising global inflation (since early 2021) really well. Meaning, the rising interest rates have almost decimated dollar valuation of cryptos as the tech gold rush imploded.
Please do not mistake this article's author's concern as an attack on the libertarian fundamentals of cryptocurrency. The article is about how crypto has been marketed as an investment to retail consumers, and this space is simply wrought with terrible scams.
Cryptocurrencies current landscape is just same as the current financial system indeed. Cypherpunk ideals are long gone.
(Also just to point out, Communism isn't an "alternative" to capitalism, but actually the conclusion to it... on paper) - That is, even if you're right, Capitalism is required to achieve communism... so it seems "hellscape" is the only way.
Same story in crypto. There will be shock and awe when Binance falls and plenty of people saying “real crypto has never been tried”.
Maybe the pattern is toltalitarian countries are going to be toltarian regardless of what they call themselves.
As far as crypto goes, there are like a billion different variations on the idea, most are scams, and i dont think i have ever heard anyone say "real crypto hasn't been tried" before this.
Australia, Sweden, Norway have been much better examples. Though their secret has been to not call it Communism/Socialism but instead something like "liberal democracy" or "democratic socialism".
Agree there is propaganda war that has been waged to ensure communism looks bad... which is why it's potentially a good parallel for crypto, as I think (potentially even literally not just metaphorically) the same vested interests are against it.
> Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme.
This is indeed obvious to anyone who knows what both of those things are. He very clearly explained where they got it wrong.
Same applies here.
> Saying "you don't understand something" is not an argument
It's a statement of fact.
Edit: I can't reply below due to HN ratelimits, so I will do so here.
>Saying "it's not" is not an argument, particularly when a good argument has just been laid out in front of you.
It's pretty clear that you haven't actually read the article we're discussing, it does not at any point attempt to explain how cryptocurrencies would meet the definition of a Ponzi scheme.
The part which comes closest is this, but you'd be delusional to call it a "good argument"
>There's already substantial evidence that the crypto space is infested with frauds, scams and ponzis. But I would go further. The entire crypto ecosystem is ponzi. The whole thing depends on ever more people parting with their savings and wages to pay the lunatic returns promised by the platforms to people who can provide the liquidity they so desperately need.
That's just not what a Ponzi scheme is!
I look forward to a good argument debunking the ponzi scheme thesis. Saying "it's not" is not an argument, particularly when a good argument has just been laid out in front of you.
Edited to add:
> It's pretty clear that you haven't actually read the article we're discussing, it does not at any point attempt to explain how cryptocurrencies would meet the definition of a Ponzi scheme.
Yeah that's not a good argument either. Since I did actually read it -- and it does.
Here's an exercise, I'll replace a bunch of words with their opposites, and present it as my counter argument:
"This is a great argument, and not clickbait. Obvious enough to anyone who actually understands how bitcoin, or eth work, it fits the definition of a ponzi scheme."
Are you convinced? Do you know where you got it wrong?
Cryptocurrency in general is not an investment promising profits, but a tool for payments (or a smart contract platform, whatever).
A Ponzi scheme is a fraud which takes money from investors, pretends to invest it in something profit-generating, but only pays out profits to earlier investors using funds from more recent investors.
Cryptocurrencies like bitcoin, ethereum or monero are nothing like a ponzi scheme. There's zero pretence that it would be a profitable investment. Who would even be paying you these ponzi-dividends?
It's utterly stupid to make me spell this out, presumably anyone making the claim that "The entire crypto ecosystem is a ponzi" should know what those things are.
I'll use the wikipedia definition for a ponzi scheme because it's simpler.
> A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.
It doesn't say dividends. It just says "pays profits". Those profits in dollars could be realized by the early investors selling their stake. No dividends needed -- though some would say "mining" is a dividend producing activity -- I'm not sure I would though.
You always have exactly the same amount of cryptocurrency, with no serious claim made by the authors as to why you should profit by merely owning some.
(Of course, it's a bit silly of me to use "cryptocurrency" as a general term when there certainly are cryptocurrencies which are ponzis. But I'm referring to the "serious" projects like Bitcoin, Ethereum or Monero)
Also, you forgot a crucial bit from the wikipedia page:
> Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
> leads victims to believe that profits are coming from legitimate business activity
I don't think this is true of any of the big cryptocurrencies.
> and they remain unaware that other investors are the source of funds
Of course everyone knows this.
I'm willing to listen to where he's wrong, but saying it's due to a lack of understanding ain't it chief.
For example, major cryptocurrencies like Bitcoin aim to replace state issued fiat currencies with privately issued currencies that have limited/fixed supply and no connection to the real economy. That's insanely stupid and detrimental. They also aim to preserve privacy when teleporting billions across continents - a dangerous and anti-social feature no society needs.
The vast majority of ICOs and DeFi projects are just a way to do regulatory arbitrage - issue unregulated or lightly regulated securities that are excelent for speculation, but have close to non-existent real world utility. The same for NFTs, completely fictional wealth creation that was powered solely by the speculative search for greater fools.
The field as a whole, despite probably hundreds of billions in real wealth dumped into it by now, produces close to zero value for society, or even negative if we consider the impact of resource burn and facilitation of money laundry. It has spiraled into a pure speculative mania that destroys the lives of many retail investors: https://twitter.com/coinfessions
You're being straight up dishonest. Darknet Markets have been operating for over a decade now, they obviously have tons of legitimate uses and have created a plenty of wealth.
If the only utility of crypto is in facilitating illegal transactions, then prima facie anyone in crypto should be charged with money laundering.
For crypto to be financially successful, strictly speaking it doesn't need to create wealth, it only needs to attract it.
Plenty of profitable businesses are arguably a net negative to society - tobacco, gambling, private prisons, ad agencies, data brokers - but that doesn't make them ponzi schemes.
Speculative crypto assets are not intrinsically valuable, they have no desirable properties other than the ability to make you rich in the future by selling them to someone else. If investors would be guaranteed their crypto assets will not appreciate, the vast majority would dump them immediately. (so called stable coins are the exception, but they only make sense as a component of the crypto ecosystem, people need them as enablers of speculation).
You might argue that the need to hope for quick financial success is a basic human need, which crypto fulfills, so it does indeed provide value for its users; but by then it's indistinguishable from classic Ponzi schemes or gambling. It's in fact even more toxic than gambling, since it disguises as a form of wealth creation and legitimate investment, as opposed to a game of poker which every investor can recognize as zero sum.
Most tech stocks have a plausible explanation for future revenues, other than "the next investor will buy your chips for a higher price"
At the end of the day, crypto is likely only useful for one thing and that is an exchange of value and identity for AI/ML applications. Just like Splunk was search for machine data, crypto is payments for machine entities. Until that becomes a reality, the markets are just speculative and uninteresting. Ethereum especially, given no real thing occurs on that chain other than bad code and hacks that lose "investors" millions.
Lightning has been the best thing that has happened to crypto in a long time and the reason why is because it can scale Bitcoin to the numbers we need for large amounts of transactions between machine entities...
> CoinDesk reports: Just over 51%, or 24.6 million addresses of the total 47.9 million, are below purchase price on their investments, according to data provided by blockchain analytics firm IntoTheBlock. About 45% are in the money, which means they are boasting unrealized gains, while the rest are roughly at break-even.
This is the opposite of the canonical ecosystem [1].
The fact that the stock market has almost forgotten about dividends and bubble mechanics have taken over the tech sector isn't a real counter example. That is also bad.
And I'm just responding to the parent post who defended crypto by claiming tech stocks looked like more of a Ponzi than crypto. If you can see the bubble/ponzi-like behavior in the stock market, that isn't a defense of crypto (if you can't see the similarities in behavior between either of them, then I can't help you at all).
The widespread deception about FDIC insurance is really horrifying.
1. Tether: infinite money printer central bank
2. Exchanges: banks
3. Binance: too big to fail
4. BSC shitcoins: fully centralized currency
On the other hand, unlike the actual infinite money printer central bank, nobody forces you to use obvious scams like tether. You don't need to use a centralised exchange because smart contracts make it possible to use decentralised exchanges. Smart contracts allow you to do things on a small scale that would have required enormous institutions in the past. The ability for any individual to create their own tokens obviously allows institutions to do it too.
Since cryptocurrencies are more powerful than previous systems, it shouldn't be surprising that they support a superset of the scams that previously ran.
They also support an unprecedented level of programmability, default to open api access, a new spectrum of choices for trust, the ability to run transactions across financial products from different providers, faster settlement, are based on actually modern methods of cryptography (unlike bank accounts), and have injected a massive amount of energy into some extremely interesting zero knowledge cryptography.
It's actually pretty surprising to me that the majority of 'hackers' on 'hackernews' don't seem more excited about the ability to create programmable tokens of their own.
It would be nice if at least one person would leapfrog all this 1850s US Frontier West banking history, which was dominated by frauds and theft, and offer us a system working under modern reforms: Glass–Steagall Act, Sarbanes–Oxley, similar rules-that-make-it-work from Europe. Best practices.
That remains to be seen (for example I'm crossing fingers Brian Armstrong, the CEO of Coinbase, which is an HN unicorn, ain't at the head of a ponzi) but meanwhile something is certain: SBF was running a Ponzi (guaranteeing insane returns using previous investors and people's money: yup, that's a plain ponzi).
And he was lying in nearly every single of his tweet, up to a few days before the downfall when he was tweeting that everything was fine. Or when he was saying the money was FDIC insured. Deleted the tweets? Too bad, people have copies of that.
To me it seems like quite some people are pushing this "every crypto is a ponzi" now that their poster ponzi boy got caught with the hand in the cookie jar.
But I'm not sure they'll succeed.
I think there could be a future where, just as energy and commodities are still a thing after the Enron ponzi, Bitcoin may still exist after FTX/Alameda ponzi.
BTC lost more money this year than people did by just holding cash even at 7% inflation.
Tether was banned by NY State from operating there, and also may be actually insolvent.
FTX went belly up due to a ponzi. QuadrigaCX did the same thing before it.
Rug pulls are common in the NFT world.
Smart contracts are written to be too smart for normal investor people to follow them. Or not smart enough to keep hackers from manipulating them.
I would disagree. For stable funding what you need is the belief that the underlying currency will continue to have value. The fact that BTC hasn't gone to zero means there are some people who still believe it has value.
It seems like owning a crypto token in a blockchain is conceptually the same as owning a share in a company. You purchase or mine a voting stake in that blockchain, correct? And the process by which new tokens can be minted is laid out ahead of time, like a gradual continuous stock split.
Are there fundamental differences that I'm missing, or has the genius of crypto been to put enough window dressing around the idea to avoid being regulated as a stock market or traditional corporate entity?
It's an excellent intermediary currency. People use it successfully in hyper-inflationary countries and people use it to bypass currency transfer difficulties. These are definite and real use-cases.
The rest of the demand looks like pure and simple speculation based on faith that the other various claimed uses will come good, i.e. a ponzi.
It's not a complete ponzi, but I'd say about 80% of it is.
But it isn't really. The crypto market goes in approx four year cycles and the number of greater fools goes up and down but things like bitcoin don't cease to exist, they just go up and down in price.
Rendering the mind of the regular normie incapacitated, unable to ascertain what is true and what is false.
does crypto is inescapable pyramid scheme, no. even when the landscape is full of scam it doesn't mean that stripe or bitwage or usdt who pay you in crypto to easy international transfer process, they make small cut in the transaction like any other transfers company, for the contrast the number of companies whose only proposition ins the pump and dump the value of their virtual games from shinucrypto to literal ponzi scheme like bitconect. i wish you understand what i say, i will clarify what i say if you need, English inst my first langues
summary of all crypto exchanges
> > This 50 minutes-old post with 145 points has been nuked from the first page.
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https://news.ycombinator.com/item?id=16020089
> dang on Dec 28, 2017
> ...
> We tend to call it the 'overheated discussion detector' these days, since it detects more than flamewars. However, that phrase is more awkward to say than 'flamewar detector'. If anyone can come up with a better name I'd love to hear it.
> Turning that software off is not an option, because HN would be overwhelmingly more dominated by flamewars if we did so. It's not primarily the individual threads that I fear, it's the systemic effects of having them be more dominant. HN exists most of all for the quieter, deeper, more out-of-the-way finds that would be the first to get excluded under such a regime. That would really be an existential risk to HN.
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This post got too much attention, too quickly, with too many votes and comments. Just look at all of the flagged, dead, green name, comments that have gotten significant downvotes too.
The moderation work needed to maintain the site if this isn't down ranked is in excess of the amount of value that the post brings to the site.