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When I first learned about crypto currency on HN back in 2012 I was excited. It sounded like a fun technical project that could do good in the world. I bought s
by sputknick 9y ago
When I first learned about crypto currency on HN back in 2012 I was excited. It sounded like a fun technical project that could do good in the world. I bought some along the way, followed projects. Along the way it changed. Yesterday I saw a spam post on Reddit about joining a "pump and dump group", which I had to research. It's groups of people who coordinate a buy of a specific currency, spread false news about this currency to create a mania, drive up the price, sell it at a profit. Not only is this probably illegal, it's immoral. Maybe this is how people who were in the internet in 1992 felt in 2000?
- ruytlm 9y agoPump and dump schemes, among others, are a good example of why unregulated does not necessarily mean good.
- sputknick 9y agoAgreed, I think that's my favorite lesson from the crypto experiment. Sure there are people who use regulation as a gatekeeping function, or as a way to magnify their power, but regulations really do exist for the good of the people.
- 2muchcoffeeman 9y agoIt’s a bit like finding a piece of code that does something crazy. If you ask around, there could be a really good reason for it. I don’t think we’re going to have a usable crypto currency until economists get involved, or we simply relearn all the lessons we’ve learnt to date.
- VMG 9y agoYes, crypto is not complete until there are synthetic CDOs!
- sanxiyn 9y agoNow we at least have futures market, which is a progress.
- Agebor 9y agoCDOs are in the research phase currently: https://ethresear.ch/t/collateralized-debt-obligations-for-issuer-backed-tokens/525 https://ethresear.ch/t/collateralized-debt-obligations-for-i...
- tankenmate 9y agoYou can do CDOs in Ethereum today if you want.
- pfisch 9y agoI guess. I mean the regulated stock market has dark pools and super fast algorithms jumping in front of people's trades stealing from them. I actually feel like the playing field is more uneven between individuals and firms in the regulated stock market vs the btc exchanges. I also think the bitcoin exchanges are backroom dealing and insider trading, but I feel like they are less sophisticated vs the "legal" theft that is taking place on wall street. I mean bitcoin exchanges are certainly the wild west, but I honestly don't care if people want to run pump and dumps on unsophisticated investors. That is something you can pretty easily defend against by doing your own research. There are far more nefarious things going on on both bitcoin exchanges and the real stock market.
- jstanley 9y ago> I actually feel like the playing field is more uneven between individuals and firms in the regulated stock market vs the btc exchanges. This is definitely true. I first got into bitcoin as a way to do algotrading on an exchange without having to navigate whatever processes are required in order to be allowed to do so in "real" markets.
- codecamper 9y agoI agree. People who chase whatever is going up deserve to lose their shirt at least once.
- indubitable 9y ago"Hedge fund schemes, among others, are a good example of why regulated does not necessarily mean good." One extreme negative, or extreme positive, derivative of a view does not condemn nor justify it. You need to consider the merits as a whole, not with piecemeal bias confirmation or condemnation.
- dlau1 9y agoKeeping track of crypto amidst all the hype recently, it's abundantly clear to me that the recent explosion of speculation based trading is a signifier that cryptocurrency is a bubble just waiting to burst. I don't think this is bad in any right. It looks (and I grew up in the bay area through turn of the century) just like the dot com bubble. The promising part of this is that the underlying technologies being developed, a way to distribute information and business logic in a way where there is an indisputable fully traceable truth, is huge. I think of blockchain-like platforms like Ethereum as the ARPANET to our internet. The opportunities to supplant existing fully centralized systems such as stock exchanges, escrow systems, supply chain/provenance tracking, etc. with a fully decentralized or hybrid approach is huge. In the end though, I think it will come down to where governments draw the line in the sand. The sad but true reality is that the regulators with the guns will always have ultimate power.
- WillReplyfFood 9y agoThe interesting thing is to cash out now- and invest into the amazon of cryptocurrency, when all is going down.
- newsbinator 9y agoIf anybody knew what the Amazon of cryptocurrency is, we'd all be investing into it. For all we know that crypto is here, it just hasn't been evenly distributed yet.
- alphonsegaston 9y agoI’m pretty sure that’s what Ripple is trying to position themselves as. Whether they pull it off, who knows.
- newsbinator 9y agoEvery crypto is trying to position themselves as the survivor (by way of real world 'utility') for when the bubble bursts. They all want to be Amazon, rising from the ashes of a crashed market. Ripple's underdog challenger, Stellar XLM, is trying to claim the same mantle. So are thousands of other 'utility coins', of course, including ETH, XRB, VEN, ICX, and even the "privacy" coins, like Monero. The fact is this is uncharted territory. We don't know for sure whether we're at the leading or trailing edge of a bubble, and we don't know for sure that any, some, or most crypto will still be around in 5-10 years. Interesting times!
- pfisch 9y agoHow did it change? People have been scamming with bitcoins forever. Mt. Gox was a scam exchange. There were a bunch of people scamming even before that.
- sputknick 9y agoI see it as different. Mt Gox was a legitimate business, with honest employees who were poor at implementing security. Someone saw an opportunity and stole. That exists even with regulation. My issue is with the rise of people who's intent from the beginning is to decieve. Similar to the scam coins that will never deliver a working product.
- pfisch 9y agohttps://bitcointalk.org/index.php?topic=100514.0 https://bitcointalk.org/index.php?topic=100514.0 Look at all these btc ponzi schemes from 2012 Also I thought Mt Gox had a bot buying tons of btc on their own exchange pumping the price.
- sputknick 9y agoOh wow, I didn't know the scamming went back that far. On the other hand... With Ponzi schemes, isn't it obvious from the start what they are? Maybe I give humanity too much credit.
- mercer 9y agoI think the what a lot of people don't realize about ponzi schemes or pyramid schemes, or scams in general, is they don't rely purely or necessarily on fooling the 'victim'. Very often greed is enough of a motivator. I've experienced at least one really big country-spanning pyramid scheme where lots of people participated, completely aware that it was a pyramid scheme. They just figured they'd be able to 'get out' before the thing would collapse. Obviously that often didn't work out...
- lmm 9y ago
- omegaham 9y agoOn the bright side, the idiots who join these groups hoping to scam others tend to lose their shirts as well. The person orchestrating the pump-and-dump scheme bought the currency at $X per coin in question long before, and he's using the people in the group as patsies. "Buy the coins at $X + $Y, and the rise in price will make it so that you can sell the coins to some other idiot for $Y + $Z!" If there aren't enough "outsider" idiots to buy the coins for $Y + $Z before the correction happens, the "insider" idiots lose their shirts. The original person, of course, makes a tidy profit. --- I learned this the hard way playing Runescape as a 16-year-old. 2007 was an interesting time for that game.
- aphextron 9y ago>I learned this the hard way playing Runescape as a 16-year-old. 2007 was an interesting time for that game. Playing that game over the years was the most thorough education in trusting strangers on the internet anyone could ever need
- zeusk 9y agoFor me, it was an introduction to basic finance topics like abitrage and trading; also the enormous scope of scams people can pull. I made my fortune in high frequency trading of rune sets after they introduced Grand Exchange and steel smelting prior to it.
- shiado 9y agoI was one of those assholes that ran a bot farm to devalue your labour. RS was a great place to learn about the race to the bottom, economies of scale, and other random economic topics as well.
- omegaham 9y agoThe most interesting part of RS was that the more raw the product, the more it was worth - you could get more XP out of it. And before the Grand Exchange, buying in bulk cost more than buying small amounts, because buying large amounts of materials required you to sit on World 1 spamming "buying iron ore whatever each" for hours.
- United857 9y agoThe vast majority of crypto will ultimately collapse, just like the vast majority of dot coms failed and crashed the entire market. But... those that survived with solid fundamentals have often gone on to thrive spectacularly -- e.g. Google, Amazon. I can see something similar ultimately happening in the crypto space.
- samsonradu 9y agoYeah, heard this 100 times already. But why does it have to be like the dot com? What if it just stays a niche market for 50 years? What you say implies that crypto is as full of potential as the internet was to make it possible for businesses to grow as big as Google, Amazon. Not mentioning of course a lot of other factors that made Google, Amazon big like political influence, globalisation, lack of competition/regulation in certain areas etc. Not trying to be pessimistic but genuinely curious why so many people make the analogy to the dot com period.
- kindfellow92 9y ago> Not trying to be pessimistic but genuinely curious why so many people make the analogy to the dot com period. Because most people are not creative nor critical thinkers and the extent of their brilliance is superficial pattern matching. To most people the dot-com bubble seems to fit all the patterns so by their logic it must have the same outcome. If you think critically about the differences of the crypto craze and the dot-com era, you’ll see how irrational it is to make a strong comparison. Bitcoin is not Pets.com. Bitcoin is Google.
- adrianmsmith 9y agoI don’t think Bitcoin is Google, with the limit of 7 transactions per second, it just can’t scale enough to be the Google of currencies.
- kindfellow92 9y agoDo you think the only thing that makes cryptocurrencies valuable is transaction rate?
- cheeze 9y agoPump and dumps as well as these groups were definitely around in 2012. I agree that cryptocurrencies have drastically changed (IMO for the worse) but pump and dumps on shitcoins are nothing new.
- olalonde 9y agoI'd argue that there is no Bitcoin community to speak of anymore (just like there isn't an "internet community"). The technology evolved a bit but it is still essentially the same.
- c3534l 9y ago> Not only is this probably illegal Definitely illegal.
- elsewhen 9y agodo you have any insight for how this is illegal considering that cryptocurrencies are currently unregulated.
- aiCeivi9 9y agoLack of regulations doesn't matter, they could be still charged under generic fraud & deception laws, it is just harder. It was the same with MLM - new laws or explicit bans were introduced as it was too hard to prosecute with existing legal framework.
- c3534l 9y agoBecause I can no longer edit this post, I just wanted to say that I tried doing research and I'm less sure than I was initially. But I will add that just because the SEC currently does very little regulation of crypto, that doesn't mean that federal laws don't apply to it. It just means you're more likely to get away with it and there's more uncertainty about what's allowed and how crypto is thought of legally.
- Cthulhu_ 9y ago> Not only is this probably illegal, it's immoral. But it's decentralized~. Bitcoin was initially hyped by "crypto-anarchists", to be free of government regulation, transfer costs, etc - well that's what you get. Something something cake and eating. The only cryptocurrencies that will prevail within the next five years are the regulated ones. The rest will be used for shady purposes like tax evasion and paying for ransomware, and they'll get hit hard regularly by hacked or dodgy exchanges. I'm fairly sure the current crypto exchanges operate as a ponzi scheme right now, they won't be able to convert back to fiat with enough volume.
- gonzo41 9y agoThe interesting thing to consider about bitcoins is its value isn't all hype, The cost of electricity use to produce them adds a value to it. Strengthens that emotional bond for the owners. Provides a feedback loop for users etc. It's just sad this tech will end up being used mostly for black money.
- konschubert 9y ago> The cost of electricity use to produce them adds a value to it. That's not true. What makes you think so?
- aussie1233 9y agoYou should reach Satoshi' s whitepaper to understand that.
- zach43 9y agoCan you provide a summary of Satoshi’s argument here? I’m failing to see how the usage of electricity, which is an entropy-losing process, leads to added value through bitcoin
- konschubert 9y agoI think I understand Bitcoin well enough to detect that you don't know what you're talking about. One could argue that a higher current difficulty increases trust in very recent transactions, thereby raising the unitility of Bitcoin as a medium of exchange (ha!) and thus affecting the price. But that effect is small and we're talking about the difficulty during the last 10 blocks, at most. Anything before that is for the past.
- wu-ikkyu 9y ago>The cost of electricity use to produce them adds a value to it. This is a sunk-cost, not added value.
- aussie1233 9y ago
- mkirklions 9y agoWe got our first 0.01 bitcoin in 2011. Libertarian conference, wife gave her email, got crypto. I literally was stealing Gary Johnson's nametag during this time. Bought my first whole bitcoin in 2015. Until the end of last year, I had a good feeling about crypto. The alt-coin madness has me scared for family and friends. They arent listening when I tell them Bitcoin and diversify. They go all-in on pump and dump new coins like TRON and IOTA. Im actually scared.
- teekert 9y agoI see it too, I even have family asking for spare accounts on exchanges! All exchanges are overloaded, not allowing for new accounts, it's crazy.. I just keep telling them: treat it like a casino, don't put money in you can't live without, say goodbye to your money at day 1. That said, IOTA is actually pretty interesting from a technical standpoint, you should read about the Tangle ;)
- mkirklions 9y agoIOTA would be fine, but how many other coins have 0 transaction fees now? While I dont own any Raiblocks, they are using like 7 severs to confirm. Supposedly fixes all fee/speed problems. I worry most about the ownership of non-mined coins. The founders nearly always pre-mine or grant themselves significant amounts of coins. The faucet that is crypto mining is all based on work/energy.
- teekert 9y agoI don't understand how this is immoral. Everybody knows that everybody is just in it because they hope someone else will come along later and pay more for a coin than they did. Who cares about pump and dump and pyramid schemes? Someone dumb enough to put money she/he can't miss into the system is probably also dumb enough to put said money into a gambling machine or any other scheme (prince from Sudan?). Meanwhile people have fun and true innovations may come out (the crypto of monero/zcash combined with the master-node structure of DASH or a Tangle based system like IOTA). Why all the emotion? Literally everywhere on the internet and classic media people say: Don't do it, it's a bubble. If people can't listen, they need to feel, if you don't allow people to feel they become unhappy anyway, they may even be driven to TOR based decentralized exchanges where they are even more likely to get schemed.