11 ms·

Rusty Russell: The Corrosion of Ethics in Cryptocurrencies

90 points by JepZ 9y ago

ggm 9y ago
I certainly found my own state of mind deleteriously affected. The decision logic of buying and selling in a market of pure speculation is very strange. I wanted to believe it was at worst amoral but I am more and more convinced it has a corrosive immoral effect on me (at least) and I am glad I stopped. Every time I note that I got out ahead, it implicitly means somebody came out behind.
- sshine 9y ago
  I bought in at $800 and sold at $2000. It paid my rent and living expenses for half a year, getting a driver's license, and a trip to the US. A bigger idiot than me paid for that. Most importantly my early exit vaccinated me against FOMO. Now I feel bad for saying anything positive about cryptocurrencies when friends ask how they can buy in. If you're asking now, you're too big of an idiot to ever gain from it. I look forward to the day where cryptocurrencies are more commonly understood (and thus feared) and the technology isn't chronically lagging behind the hype.
  - icebraining 9y ago
    If you're asking now, you're too big of an idiot to ever gain from it. When you bought, someone else was saying the same thing about you :)
    - AlexandrB 9y ago
      > When you bought, someone else was saying the same thing about you :) This logic is flawless until one day the market collapses and we find out who the "greatest fools" are.
    - sshine 9y ago
      > When you bought, someone else was saying the same thing about you :) Thus the hierarchy of idiocy. I believe the decision, as someone who has studied CS and economics and became deeply interested in the white paper and the game-theoretic and macroeconomic consequences of cryptocurrencies, to buy post-MtGox (which I did) vs. everyone and their grandmother feeling FOMO (and quite literally expressing this as their motivation) as they seek to buy during last year's explosion in popularity, suggests quite different risk assessments, neither of which I can morally defend in retrospect.
  - arthurcolle 9y ago
    Alternatively one could say that you left a lot of money on the table by selling prematurely clearly, cryptocurrencies offer significant value over fiat currencies and their advantages will only continue to grow as development maturity surrounding the actual technology becomes more solidified
    - abakker 9y ago
      I think you are being downvotes for the word "clearly". I think that is an extraordinary claim and requires something to back it up. I'd say (and have said [0]) that the fiat value of cryptos is the least valuable part of this technology. 0: http://isg-one.com/research/research-detail-page/cryptocurrencies-from-fiat-to-fundamentals http://isg-one.com/research/research-detail-page/cryptocurre...
  - 3pt14159 9y ago
    It's not idiotic to buy something with a 95% chance of failure if the 5% chance has a 1000x return. I bought at $3 and I started selling at $200. I sold a ton at $1000. Then a little at $5k and the rest at around $15k. The entire time I held them I thought "the government will either ban or regulate this and they'll probably ban it" and you know what? It doesn't stop you from making money anyway. Now that's a fun story right? Look at smart 3pt14159. What you don't see is the other 7 things I did with 0 payoff whatsoever. I bought a ton of emoji .ws domains. Why? I dunno, I stupidly thought they'd be the only TLD that would render as emojis. I hindsight, of course not, and once the others came out I reduced the number of domains I controlled. Nobody sees the lost weeks and $$ there, unless I happen to bring it up in a comment like this. But the core idea behind both of those actions was this: Look for the low probability, high payoff investments. Unless you have $100m+ it's usually worth your time and most people don't have an intuitive grasp of inelastic supply curves and their impact on price.
    - Retric 9y ago
      I think you misunderstood the parent. At 2,000$ each they can't have 1000x returns. So the person buying at 2000$ is more likely to be a sucker than someone buying at 3$, but less likely than someone who buy's at 15,000$.
      - toomim 9y ago
        Sure they can: https://imgur.com/ag2kNr9 https://imgur.com/ag2kNr9
        Retric 9y ago
        That is pointing to 200 not 2000. Can it be worth significantly more than all the worlds checking accounts... no.
    - panarky 9y ago
      This is my investment allocation and it's worked well over the years. 95% in ultra-safe government bonds and bank CDs. 5% in ultra-high-risk moonshots. Cut the losers quickly and let the winners run.
- wallace_f 9y ago
  You might be interested in speaking with Janet Yellen, Ben Bernanke or Alan Greenspan. When the Fed printed 4 trillion dollars to bail out Wall St., they must have had some seriously good therapists on board to help with dealing with those unwanted feelings you mention. Well, I think they have even learned to enjoy those feelings otherwise they would have demanded changes to Wall St along with the value transfer from the American worker that they were given.
  - Daishiman 9y ago
    You know the banks have already paid out and the us government has actually made money in interests from them right?
    - kirillseva 9y ago
      The US government is not a business, its typical income is taxes. This policy of printing trillions of dollars to, essentially, give a loan to banks, all the while devaluing USD for every holder, sounds like a new form of taxation.
      - jgh 9y ago
        Was there actually any inflation caused by that? I keep seeing people saying inflation has been stagnant for a decade. I wonder what would have happened to the USD if the economy were allowed to implode the way it wanted to, perhaps the "inflation tax" would have been more desirable.
        doritos222 9y ago
        Points at stockmarket and property prices and China
        paulsutter 9y ago
        Asset inflation because of low interest rates. It’s made the rich much richer and put housing out of reach of many young people.
- icebraining 9y ago
  I never traded, but is it really different from any other competition? For you to win the gold, someone else had to settle for silver.
  - reificator 9y ago
    But in your analogy, nothing was lost. Sure the training didn't get the silver medalist into first place, but it's not as though that training somehow becomes useless.
    - dsacco 9y ago
      Trading activity is the same way. Individual pairs of bids and asks are zero sum, but the emergent behavior of the market is non-zero sum (liquidity, price discovery, efficiency, etc). Sure, one trader might lose, but the trade contributes a signal to the market, the effect of which is a gradual increase in overall value that benefits everyone. Categorically speaking, they are the same. The difference is one of degree: financial markets consist of many two-party competitions with material loss, and sports consist of multi-party or competition with non-material loss.
      - reificator 9y ago
        If cryptocurrencies don't follow the path of the Beanie Baby, sure.
- DennisP 9y ago
  That's only true if it's a zero-sum game. If it's a bubble that will crash to nothing then it's zero-sum, but if it actually grows into a major economic player then it's not.
  - Retric 9y ago
    Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing. Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely.
    - dsacco 9y ago
      > Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing. Yes it is. The frequency of events occurring in a specific measure of time is both mathematically and financially meaningful. In particular, the periodicity (if any) of such events is very important. > Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely. At this point you’re introducing new measurements, and you need to rigorously define the “game” to determine if it’s zero sum or not. Proving that a set of objects and their actions on each other is zero sum is very difficult because it’s very rare. As a trivially obvious example, for any integer n in the infinite set of all integers Z, there exists only one -n such that the sum of the pair is exactly 0. Most real world systems do not satisfy that property, and you’re sort of hand-waving to make it fit. When you model a bid and an ask, it satisfies a zero sum because trading is specifically designed to do that. But the aggregate activity of the market is not zero sum, because it results in net positive growth in aggregate financial value over time. > Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely. If you’re defining your game as the interactions comprising cryptocurrency mining and cryptocurrency trading, then mining generates net positive value in conjunction with trading. If it did not, it wouldn’t be sustainable due to gradual decay over time. Again, frequency and periodicity of profit and price movement here are meaningful. We don’t have to talk about what’s likely, because it’s demonstrated for us economically. The only way forward for you to assert that cryptocurrency trading or mining is negative sum or zero sum is by introducing new, reasonable interactions to the game and quantifying their relationships with the existing interactions.
- agumonkey 9y ago
  I had the same sensation. Felt like a ponzi tbh. But surprisingly it had two effects (totally unforeseen): - to avoid obsessing over something shallow I ended up focusing 2x times more on learning and coding, so vanity made me more active in a very significant way - if it turns into a passive income and I can leverage a bit more, I plan to give regular food money to homeless people. I find the idea of grabbing a few bucks from the cryptowealthy to the poorest fun and worthy. (robinhoodcoin) - also, when I do PE when reading charts so it's never totally wasted
- giancarlostoro 9y ago
  Not everyone is buying and selling, some are mining and selling, or mined and are now selling.
- darawk 9y ago
  That's not actually true. Economics is not zero sum, and neither are markets, provided that they continue to rise commensurate with economic productivity. It remains to be seen if cryptos will retain their high valuations, but presuming that they do, nobody needs to have 'lost' due to your trading activity.
  - Retric 9y ago
    That would imply an unlimited lifespan. Lasting say 100 years is not enough. If they die in 10,000 years then someone will lose out in 10,000 years.
    - darawk 9y ago
      That's not really how economic growth works. It's not zero sum. People who bought gold in the year 1500 didn't cause people today to 'lose'.
      - Retric 9y ago
        Sure they did, if they had invested in something productive the current economy and their descendants would be better off. Picture 500 years of interest vs a small bit of gold. Granted this assumes they buy the gold as an investment but if it's not sold for 500 years that seems reasonable. Except I am saying it goes to 0 so they don't actually get any gold. So, it's option A get nothing or option B possibly get something of value. I don't see how option A is better.
        dsacco 9y ago
        What you’re saying doesn’t make sense, because the price of a single asset is not a closed system - it exists in the market, which is full of variable interactions. Concretely: for any asset appreciating in value, you can earn interest on it. This interest comes at the cost of personal liquidity, but not personal value - indeed, interest and asset appreciation are going to be positively correlated. While the single dimension of buy and sell price for any asset can be negative sum if it depreciates after your purchase, whether or not the complete value of the asset is net positive or net negative is a function of 1) the quantifiable advantages, like (but not necessarily) dividends or risk reduction, and 2) the amount of time spent holding it. This second point is also why the frequency of price changes (and net change in any discrete measure of time) is a very important part of the analysis.
- ggm 9y ago
  I'm not going to deep-address comments on this note, but I think some people got to the same place I did. pure speculation might have been a bad way of saying it. I think most people speculating in coins and cryptocurrency right now are not setting future value price for a use case outside that gain. They are not usefully informing the market of sentiment over real goods, or services. The banks and fintech institutions who continue to discuss blockchain based ledger models have no interest in ICO and speculative gains on coins, they are going to deploy use-tokens for a system which is definedly NOT for speculation. for instance inter-bank settlement. Or providing (etherium contract style) certainty in payment for farm-to-mill delivery of forward priced goods. (If there is a market, a CFD in inter-bank settlement rate I don't think it expresses in the SDO units used to do the settlement), The forward price thing in wheat futures, is dependent on measurement at the mill of the specific quality of the goods presented, and the farmers get 90 day or worse settlement rate, and are stuck behind ruinous loan rates. So there, use of tokens which lock in a price model and commit the contract on completion without 90 day settlement delay are really good for the farmer. I certainly believe there is useful hedge functions in forward pricing expectations. Speculation on coins just doesn't feel like it has that dimension. Its gambling but instead of taking on "the house" its taking on somebody else. "Gamble responsibly" is one of those "half pregnant" statements which raises a wry smile but the underlying message is "you can't"
AstralStorm 9y ago
The real question is actually... who will lose?
thisisit 9y ago
While people agree on most of ICOs being scammy what is really disheartening to see is that many big names in cryptocurrency space end up being featured as "advisers". I have been told that these many of these guys are given lot of ICO coins for free or charge up to 10 btc.
- bitcoinmoney 9y ago
  it's called market signaling. I just read it from a previous HN post/commentary. Example: Once they use VB as their adviser everyone just thinks the coin will go to the moon. 99% of these ICOs really don't need a blockchain and are just selling a prepaid discounted giftcard where the discount is not determined until a maturity date and you don't even know if the company is there for you to redeem your giftcard.
ebbv 9y ago
The entire crypto coin world including BitCoin is totally awash in scams and heists. I know some devs like Rusty have the best of intentions and are true believers, but they are so vastly outnumbered it's not even funny. Being unregulated and so anonymous and transactions being largely irreversible, it's a utopia for bad actors. I was never a true believer, but even being skeptical things are worse in the cryptocoin world than I even thought they would get before the hype died down and it turned into whatever kind of niche hobby thing it's gonna be in the long term.
- Finnucane 9y ago
  System designed to turn lead into gold attracts charlatans. Act surprised.
  - freejulian 9y ago
    Bonds, stocks, and real estate are all collapsing as we speak. Have fun with that mindset. I've happily holding my bitcoin I've had for years, even buying more.
    - GhostVII 9y ago
      Which has collapsed more in the last month or two, Bitcoin, or the stock market?
lawn 9y ago
Absolutely. Just take a look at the developers behind Bitcoin Core. It's difficult to ignore the obvious conflicts of interests of doing everything to block on-chain scaling while their company's business model is off-chain solutions.
jgowdy 9y ago
In my humble opinion, burning fossil fuels to create electricity to “mine” this “currency” is unethical because it literally has no net gain to society, not even entertainment. The same goes for the manufacture of the electronics used to mine. You hear a lot of condemnation for businesses willing to pollute to create wealth, but many of those same people don’t see that cryptocurrency mining is exactly that.
- Gargoyle 9y ago
  What percentage of mining energy comes from burning fossil fuels?
  - matt4077 9y ago
    Transmission losses for sending electrical power across the large diagonal of china is <10%. That's the worst case scenario, because in reality most of China is densely populated and hydroelectric plants weren't build somewhere where they had to wait for bitcoin to come around to find demand for their electricity. Considering hydro power supposedly consumed by mining would be generated no matter what (the costs are largely fixed), almost all the power used by mining is ultimately produced by coal plants, which are the main source for adjustable electrical generation in China.
    - toomim 9y ago
      No, most bitcoin mines are located next to hydroelectric dams in China and the USA. There are no large transmission losses, because you don't need to transmit the power. In the USA, mines are mostly located in 3 counties in central Washington State, along the Columbia river. Power rates there are much cheaper (around 2.5¢/kW), which is the main incentive to put your mine there. Mining on coal is stupid because it's expensive and miners want to make a profit: https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source
      - matt4077 9y ago

90 points by JepZ 9y ago

ggm 9y ago

I certainly found my own state of mind deleteriously affected. The decision logic of buying and selling in a market of pure speculation is very strange. I wanted to believe it was at worst amoral but I am more and more convinced it has a corrosive immoral effect on me (at least) and I am glad I stopped. Every time I note that I got out ahead, it implicitly means somebody came out behind.

sshine 9y ago
I bought in at $800 and sold at $2000. It paid my rent and living expenses for half a year, getting a driver's license, and a trip to the US. A bigger idiot than me paid for that. Most importantly my early exit vaccinated me against FOMO. Now I feel bad for saying anything positive about cryptocurrencies when friends ask how they can buy in. If you're asking now, you're too big of an idiot to ever gain from it. I look forward to the day where cryptocurrencies are more commonly understood (and thus feared) and the technology isn't chronically lagging behind the hype.
- icebraining 9y ago
  If you're asking now, you're too big of an idiot to ever gain from it. When you bought, someone else was saying the same thing about you :)
  - AlexandrB 9y ago
    > When you bought, someone else was saying the same thing about you :) This logic is flawless until one day the market collapses and we find out who the "greatest fools" are.
  - sshine 9y ago
    > When you bought, someone else was saying the same thing about you :) Thus the hierarchy of idiocy. I believe the decision, as someone who has studied CS and economics and became deeply interested in the white paper and the game-theoretic and macroeconomic consequences of cryptocurrencies, to buy post-MtGox (which I did) vs. everyone and their grandmother feeling FOMO (and quite literally expressing this as their motivation) as they seek to buy during last year's explosion in popularity, suggests quite different risk assessments, neither of which I can morally defend in retrospect.
- arthurcolle 9y ago
  Alternatively one could say that you left a lot of money on the table by selling prematurely clearly, cryptocurrencies offer significant value over fiat currencies and their advantages will only continue to grow as development maturity surrounding the actual technology becomes more solidified
  - abakker 9y ago
    I think you are being downvotes for the word "clearly". I think that is an extraordinary claim and requires something to back it up. I'd say (and have said [0]) that the fiat value of cryptos is the least valuable part of this technology. 0: http://isg-one.com/research/research-detail-page/cryptocurrencies-from-fiat-to-fundamentals http://isg-one.com/research/research-detail-page/cryptocurre...
- 3pt14159 9y ago
  It's not idiotic to buy something with a 95% chance of failure if the 5% chance has a 1000x return. I bought at $3 and I started selling at $200. I sold a ton at $1000. Then a little at $5k and the rest at around $15k. The entire time I held them I thought "the government will either ban or regulate this and they'll probably ban it" and you know what? It doesn't stop you from making money anyway. Now that's a fun story right? Look at smart 3pt14159. What you don't see is the other 7 things I did with 0 payoff whatsoever. I bought a ton of emoji .ws domains. Why? I dunno, I stupidly thought they'd be the only TLD that would render as emojis. I hindsight, of course not, and once the others came out I reduced the number of domains I controlled. Nobody sees the lost weeks and $$ there, unless I happen to bring it up in a comment like this. But the core idea behind both of those actions was this: Look for the low probability, high payoff investments. Unless you have $100m+ it's usually worth your time and most people don't have an intuitive grasp of inelastic supply curves and their impact on price.
  - Retric 9y ago
    I think you misunderstood the parent. At 2,000$ each they can't have 1000x returns. So the person buying at 2000$ is more likely to be a sucker than someone buying at 3$, but less likely than someone who buy's at 15,000$.
    - toomim 9y ago
      Sure they can: https://imgur.com/ag2kNr9 https://imgur.com/ag2kNr9
      - Retric 9y ago
        That is pointing to 200 not 2000. Can it be worth significantly more than all the worlds checking accounts... no.
  - panarky 9y ago
    This is my investment allocation and it's worked well over the years. 95% in ultra-safe government bonds and bank CDs. 5% in ultra-high-risk moonshots. Cut the losers quickly and let the winners run.
wallace_f 9y ago
You might be interested in speaking with Janet Yellen, Ben Bernanke or Alan Greenspan. When the Fed printed 4 trillion dollars to bail out Wall St., they must have had some seriously good therapists on board to help with dealing with those unwanted feelings you mention. Well, I think they have even learned to enjoy those feelings otherwise they would have demanded changes to Wall St along with the value transfer from the American worker that they were given.
- Daishiman 9y ago
  You know the banks have already paid out and the us government has actually made money in interests from them right?
  - kirillseva 9y ago
    The US government is not a business, its typical income is taxes. This policy of printing trillions of dollars to, essentially, give a loan to banks, all the while devaluing USD for every holder, sounds like a new form of taxation.
    - jgh 9y ago
      Was there actually any inflation caused by that? I keep seeing people saying inflation has been stagnant for a decade. I wonder what would have happened to the USD if the economy were allowed to implode the way it wanted to, perhaps the "inflation tax" would have been more desirable.
      - doritos222 9y ago
        Points at stockmarket and property prices and China
      - paulsutter 9y ago
        Asset inflation because of low interest rates. It’s made the rich much richer and put housing out of reach of many young people.
icebraining 9y ago
I never traded, but is it really different from any other competition? For you to win the gold, someone else had to settle for silver.
- reificator 9y ago
  But in your analogy, nothing was lost. Sure the training didn't get the silver medalist into first place, but it's not as though that training somehow becomes useless.
  - dsacco 9y ago
    Trading activity is the same way. Individual pairs of bids and asks are zero sum, but the emergent behavior of the market is non-zero sum (liquidity, price discovery, efficiency, etc). Sure, one trader might lose, but the trade contributes a signal to the market, the effect of which is a gradual increase in overall value that benefits everyone. Categorically speaking, they are the same. The difference is one of degree: financial markets consist of many two-party competitions with material loss, and sports consist of multi-party or competition with non-material loss.
    - reificator 9y ago
      If cryptocurrencies don't follow the path of the Beanie Baby, sure.
DennisP 9y ago
That's only true if it's a zero-sum game. If it's a bubble that will crash to nothing then it's zero-sum, but if it actually grows into a major economic player then it's not.
- Retric 9y ago
  Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing. Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely.
  - dsacco 9y ago
    > Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing. Yes it is. The frequency of events occurring in a specific measure of time is both mathematically and financially meaningful. In particular, the periodicity (if any) of such events is very important. > Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely. At this point you’re introducing new measurements, and you need to rigorously define the “game” to determine if it’s zero sum or not. Proving that a set of objects and their actions on each other is zero sum is very difficult because it’s very rare. As a trivially obvious example, for any integer n in the infinite set of all integers Z, there exists only one -n such that the sum of the pair is exactly 0. Most real world systems do not satisfy that property, and you’re sort of hand-waving to make it fit. When you model a bid and an ask, it satisfies a zero sum because trading is specifically designed to do that. But the aggregate activity of the market is not zero sum, because it results in net positive growth in aggregate financial value over time. > Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely. If you’re defining your game as the interactions comprising cryptocurrency mining and cryptocurrency trading, then mining generates net positive value in conjunction with trading. If it did not, it wouldn’t be sustainable due to gradual decay over time. Again, frequency and periodicity of profit and price movement here are meaningful. We don’t have to talk about what’s likely, because it’s demonstrated for us economically. The only way forward for you to assert that cryptocurrency trading or mining is negative sum or zero sum is by introducing new, reasonable interactions to the game and quantifying their relationships with the existing interactions.
agumonkey 9y ago
I had the same sensation. Felt like a ponzi tbh. But surprisingly it had two effects (totally unforeseen): - to avoid obsessing over something shallow I ended up focusing 2x times more on learning and coding, so vanity made me more active in a very significant way - if it turns into a passive income and I can leverage a bit more, I plan to give regular food money to homeless people. I find the idea of grabbing a few bucks from the cryptowealthy to the poorest fun and worthy. (robinhoodcoin) - also, when I do PE when reading charts so it's never totally wasted
giancarlostoro 9y ago
Not everyone is buying and selling, some are mining and selling, or mined and are now selling.
darawk 9y ago
That's not actually true. Economics is not zero sum, and neither are markets, provided that they continue to rise commensurate with economic productivity. It remains to be seen if cryptos will retain their high valuations, but presuming that they do, nobody needs to have 'lost' due to your trading activity.
- Retric 9y ago
  That would imply an unlimited lifespan. Lasting say 100 years is not enough. If they die in 10,000 years then someone will lose out in 10,000 years.
  - darawk 9y ago
    That's not really how economic growth works. It's not zero sum. People who bought gold in the year 1500 didn't cause people today to 'lose'.
    - Retric 9y ago
      Sure they did, if they had invested in something productive the current economy and their descendants would be better off. Picture 500 years of interest vs a small bit of gold. Granted this assumes they buy the gold as an investment but if it's not sold for 500 years that seems reasonable. Except I am saying it goes to 0 so they don't actually get any gold. So, it's option A get nothing or option B possibly get something of value. I don't see how option A is better.
      - dsacco 9y ago
        What you’re saying doesn’t make sense, because the price of a single asset is not a closed system - it exists in the market, which is full of variable interactions. Concretely: for any asset appreciating in value, you can earn interest on it. This interest comes at the cost of personal liquidity, but not personal value - indeed, interest and asset appreciation are going to be positively correlated. While the single dimension of buy and sell price for any asset can be negative sum if it depreciates after your purchase, whether or not the complete value of the asset is net positive or net negative is a function of 1) the quantifiable advantages, like (but not necessarily) dividends or risk reduction, and 2) the amount of time spent holding it. This second point is also why the frequency of price changes (and net change in any discrete measure of time) is a very important part of the analysis.
ggm 9y ago
I'm not going to deep-address comments on this note, but I think some people got to the same place I did. pure speculation might have been a bad way of saying it. I think most people speculating in coins and cryptocurrency right now are not setting future value price for a use case outside that gain. They are not usefully informing the market of sentiment over real goods, or services. The banks and fintech institutions who continue to discuss blockchain based ledger models have no interest in ICO and speculative gains on coins, they are going to deploy use-tokens for a system which is definedly NOT for speculation. for instance inter-bank settlement. Or providing (etherium contract style) certainty in payment for farm-to-mill delivery of forward priced goods. (If there is a market, a CFD in inter-bank settlement rate I don't think it expresses in the SDO units used to do the settlement), The forward price thing in wheat futures, is dependent on measurement at the mill of the specific quality of the goods presented, and the farmers get 90 day or worse settlement rate, and are stuck behind ruinous loan rates. So there, use of tokens which lock in a price model and commit the contract on completion without 90 day settlement delay are really good for the farmer. I certainly believe there is useful hedge functions in forward pricing expectations. Speculation on coins just doesn't feel like it has that dimension. Its gambling but instead of taking on "the house" its taking on somebody else. "Gamble responsibly" is one of those "half pregnant" statements which raises a wry smile but the underlying message is "you can't"

AstralStorm 9y ago

The real question is actually... who will lose?

thisisit 9y ago

While people agree on most of ICOs being scammy what is really disheartening to see is that many big names in cryptocurrency space end up being featured as "advisers". I have been told that these many of these guys are given lot of ICO coins for free or charge up to 10 btc.

bitcoinmoney 9y ago
it's called market signaling. I just read it from a previous HN post/commentary. Example: Once they use VB as their adviser everyone just thinks the coin will go to the moon. 99% of these ICOs really don't need a blockchain and are just selling a prepaid discounted giftcard where the discount is not determined until a maturity date and you don't even know if the company is there for you to redeem your giftcard.

ebbv 9y ago

The entire crypto coin world including BitCoin is totally awash in scams and heists. I know some devs like Rusty have the best of intentions and are true believers, but they are so vastly outnumbered it's not even funny. Being unregulated and so anonymous and transactions being largely irreversible, it's a utopia for bad actors. I was never a true believer, but even being skeptical things are worse in the cryptocoin world than I even thought they would get before the hype died down and it turned into whatever kind of niche hobby thing it's gonna be in the long term.

Finnucane 9y ago
System designed to turn lead into gold attracts charlatans. Act surprised.
- freejulian 9y ago
  Bonds, stocks, and real estate are all collapsing as we speak. Have fun with that mindset. I've happily holding my bitcoin I've had for years, even buying more.
  - GhostVII 9y ago
    Which has collapsed more in the last month or two, Bitcoin, or the stock market?

lawn 9y ago

Absolutely. Just take a look at the developers behind Bitcoin Core. It's difficult to ignore the obvious conflicts of interests of doing everything to block on-chain scaling while their company's business model is off-chain solutions.

jgowdy 9y ago

In my humble opinion, burning fossil fuels to create electricity to “mine” this “currency” is unethical because it literally has no net gain to society, not even entertainment. The same goes for the manufacture of the electronics used to mine. You hear a lot of condemnation for businesses willing to pollute to create wealth, but many of those same people don’t see that cryptocurrency mining is exactly that.

Gargoyle 9y ago
What percentage of mining energy comes from burning fossil fuels?
- matt4077 9y ago
  Transmission losses for sending electrical power across the large diagonal of china is <10%. That's the worst case scenario, because in reality most of China is densely populated and hydroelectric plants weren't build somewhere where they had to wait for bitcoin to come around to find demand for their electricity. Considering hydro power supposedly consumed by mining would be generated no matter what (the costs are largely fixed), almost all the power used by mining is ultimately produced by coal plants, which are the main source for adjustable electrical generation in China.
  - toomim 9y ago
    No, most bitcoin mines are located next to hydroelectric dams in China and the USA. There are no large transmission losses, because you don't need to transmit the power. In the USA, mines are mostly located in 3 counties in central Washington State, along the Columbia river. Power rates there are much cheaper (around 2.5¢/kW), which is the main incentive to put your mine there. Mining on coal is stupid because it's expensive and miners want to make a profit: https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source
    - matt4077 9y ago