10 ms·

Crypto and NFT is one big ponzi scheme. Who on earth is spending $000,000s on a virtual ship? I sense it is a case of somebody close to the NFT or virtual worl

Crypto and NFT is one big ponzi scheme. Who on earth is spending $000,000s on a virtual ship? I sense it is a case of somebody close to the NFT or virtual world buying the asset and making out it is a great thing and then selling it on quickly. Many a scam involves somebody from the group buying something so the unwilling feel like it safe. As always, don't be left holding the baby.

edem 5y ago
You obviously don't understand any of this. Is USD not a ponzi scheme? Is Quantitative Easing not a ponzi scheme? Is MMT not a ponzi scheme?
- sharemywin 5y ago
  So, what your saying is cryto needs an army...
- serverholic 5y ago
  They are a ponzi scheme, the world is full of ponzi schemes. Stock market growth partly relies on young people getting educated about stocks in high school and college then investing. You literally have the previous generation indoctrinating the newest generation into the scheme.
- jodrellblank 5y ago
  Ponzi's scheme was that early investors got paid with the buy-in from the later investors, out to infinity, and the early investors crowing about how much money they made generated the hype for the later investors to buy in, and overall no value was added to the world to support any of this, it was exclusively a money-funnel from lots of late people to a few early people. It makes no sense to talk about USD being a Ponzi scheme because you can't exchange your $100 USD for someone else's $2000 USD, and later they exchange it for $4000 USD from people excited to pay $4000 USD for $100 USD in the hope they can sell $100 USD for $8000 USD in future. It's clearly madness. Anyone would pay approximately $100 USD for your $100 USD, all other things being equal (no money laundering, no additional services wink wink, and not thinking about century timescales where historic value or inflation comes into it, etc). While "wealth begets wealth" in many ways such as compound interest, simply holding $100 USD from years ago doesn't by itself give you any advantage over people in the present day. Holding BitCoin from 2012 does give you advantage over people in the present day, and that advantage comes not from any value BitCoin itself generates, but from the present day buyers seeing the increase in money the 2012 buyers got for no effort, and wanting part of it, so throwing more money at it than the 2012 buyers did. Quantitative Easing isn't a Ponzi scheme because you don't buy Quantitative Easing hoping you can sell your Quantititative Easing for more to new people interested in the hype of Quantitative Easing. Exchanging USD for steel, fashioning it into a steel bolt, and exchanging the bolt for more USD, is not a Ponzi scheme. Buying shares in a company, the company making steel bolts and becoming more valueable, and your share of it becoming more valuable, is not a Ponzi scheme. Exchanging USD for one BitCoin, then exchanging one BitCoin for significantly more USD, where that extra USD comes from the other person, who doesn't value the BitCoin but only hopes the BitCoin will increase in value in future, makes it very much like a Ponzi scheme. You can grow flowers in your garden, you can find someone to exchange their company shares for your flowers, that doesn't make flowers a currency. You can declare that USD is a currency with an army behind it, that doesn't make it a Ponzi scheme. The open question is whether BitCoin can get enough buy-in from people wanting to cash out for free money to generate a secondary market of people exchanging BitCoin for goods and services, large enough that when no more people want to buy in for the free-money aspect, people still want to buy-in for the practical use cases. Since most of the practical and legal use cases are well served by USD, the faff of exchanging USD for BitCoin to buy bolts and lose consumer protections instead of exchanging the USD for bolts seems value removing, not value adding.
mciancia 5y ago
> Who on earth is spending $000,000s on a virtual ship? Money laundering?
- Guest42 5y ago
  True, but it seems like there would be many better ways to do that...i.e. a not particularly successful simple business mixed with personal funds.
- agilob 5y ago
  https://mobile.twitter.com/Foone/status/1457749433844568066 https://mobile.twitter.com/Foone/status/1457749433844568066
  - zucker42 5y ago
    Very similar to the retro video game scam recently covered by Karl Jobst. (In that case, in short, the auction house and the game grading company are owned by associated people, who have seemingly organized a few sham sales for advertisement and then profited off of speculation).
MathYouF 5y ago
They call it a con because it involves instilling "confidence" in others. High sale prices are one way to inspire confidence in others. Whether that person thinks the sale price is a legitimate indication of value, or they think at least someone else down the line will believe that, is not always clear. Because of the nature of crypto anonymity, there's always at least some percent chance any given sale is a legitimate transaction between two unique and non-colluding parties, and vice versa.
AlwaysRock 5y ago
People still pay X,xxx or XX,xxx a month to rent Second Life property. Sure it seems silly to me but some people really like NFTs.
- moron4hire 5y ago
  And they do it without NFTs. So what does the blockchain add here?
  - initialized 5y ago
    composability, security, persistence, liquidity
    - moron4hire 5y ago
      NFT blockchains don't create composibility beyond anything that a regular, non-blockchain API would provide. NFTs are not secure or persistent. The asset at the URL could change at any time. Liquidity is a function of people, not of the underlying technical structure of the marketplace. This is tautological reasoning. "more people will use the NFT marketplace, creating more liquidity, because of the greater liquidity of the NFT marketplace."
    - micromacrofoot 5y ago
      if the company that serves the image your NFT links to goes away you can completely lose access to it
      - twox2 5y ago
        The NFT is the token, not the metadata. Of course there are projects with on chain metadata, and projects with on chain art as well. Also, many folks use IPFS pinning, so that does add some level of resilience as well, but yes not all NFTs are created equal.
        giantrobot 5y ago
ebiester 5y ago
Art is a really weird market in general. The problem with NFT is that people are buying it as an investment rather than a work of art with its own merit of which appreciation might be one benefit. There's likely no museum backstop for most NFTs. (By which I mean that rich people buy art, sell it amongst themselves/have inflated art appraisals to raise the price, and donate to museums and claim as a tax writeoff.) See https://www.latimes.com/local/la-me-irs2mar02-story.html https://www.latimes.com/local/la-me-irs2mar02-story.html NFT as a concept will live - I can see them as placed alongside offline art as an online component that doubles as proof of ownership and lineage, and in the long run could be a major anti-counterfitting strategy.
- gonehome 5y ago
  I think the art is the wrong thing to focus on. The more novel piece is a ticket to community membership and a way to align incentives within that community. It can take the form of art, but doesn't really have to. That said, yeah regular art markets don't really make sense wrt value either.
  - micromacrofoot 5y ago
    art serves a similar purpose and the community is "being rich"
  - shiohime 5y ago
    This is what drives me to explore the NFT space - proof of ownership is a powerful concept. I'm creating a generative art project that leverages both art and proof of ownership to grant access to specific services, it's pretty neat and a really fun space to explore.
- physicsguy 5y ago
  > NFT as a concept will live I think we just need to wait until the first NFTs start disappearing because of the servers hosting the images shutting down. The actual images aren't stored in the blockchain, it's just a URL.
tomp 5y ago
How is spending $1 000 000 on a "virtual image" (NFT) any different than spending it on a Picasso? There are equivalent/superior copies of both readily available, but some people value provenance...
- moron4hire 5y ago
  NFTs only prove the first derivative of ownership. There is no mechanism within the blockchain that can prove that the person who minted the NFT owned the media associated with the NFT, e.g. there's nothing stopping you from minting an NFT claiming ownership of an actual Picasso. Which means that we have to fall back to the traditional system of legal contracts and physical possession to prove the ownership, at which point the NFT isn't adding anything. The NFT is also not the work in question. While there are some proof of concept works that have their binary data stored directly in the blockchain, the vast majority are just URLs to some other site, URLs that could die or change at any time. And there is no recourse within the blockchain itself to adjudicate the breach of trust that would represent. Which means, again, we have to fall back on the traditional system of legal contracts and courts to resolve disputes. In other words, the decentralized, "zero-trust" nature of NFTs completely undermines any concept of ownership that isn't a post-hoc rationalization designed to part fools from dollars.
  - selestify 5y ago
    All of what you mentioned was never meant to be the value-add of NFTs, which is namely that there's a trustless, verifiable record of transfer from the original creator (which yes, you have to verify is actually the person you think it is) to the current holder. When tied to physical possessions, it's one additional piece of evidence that the thing before you is likely genuine. When tied to digital entities, it's an unforgeable piece of bragging rights. There are a lot of fools in this market that don't understand the tech or its specific guarantees and non-guarantees, sure, but that doesn't mean NFTs aren't bringing anything new at all to the table.
    - moron4hire 5y ago
      So what I hear you saying is that NFT concept only works if everything becomes an NFT, immediately upon creation. Any hold-outs or delays gives room for fraudulent minting, which means you don't have a trustless system. You can't say that NFTs are a trustless system when the origin of the NFT requires trust. You might as well assume the "+ C" term in all integrals equals zero. It's just factually incorrect.
usehackernews 5y ago
Why do people on HN assume that if they don’t find something valuable, others shouldn’t either. I think of NFTs like car titles. Having the car title in your name is the only way to prove you own a car. Someone can burrow your car, and have it in their possession but that doesn’t make them the owner - the title does. When you buy a car, what you’re really buying is a little paper that says you’re the owner - without it, you’re just renting. NFTs work the same but for digital items. When you buy an NFT, you’re really buying the title for that artwork. Sure, people can copy and paste a JPEG, but they can’t take the title from you - Just like possesing a car without a title doesn’t make you the owner. The concept of an NFT isn’t absurd, it’s a digital version of a real world use case we all rely on daily to prove ownership.
- marcan_42 5y ago
  It's absurd because if you have a car, someone else doesn't have a car, and the car has intrinsic usefulness. Having the car in your name isn't valuable in and of itself; it's valuable because it allows you to claim the car as your own, and the car is useful and can only be moved, not copied. Having a JPEG as your own isn't valuable, because JPEGs can be infinitely copied at zero cost. The title for the artwork doesn't mean anything when anyone can duplicate it. If you want to spend money on art, why not commission some artwork from your favorite artist instead of throwing away money on procedurally generated garbage with a zillion transaction fees tacked on? At least that way the artwork might be something unique to you with a personal significance which makes it have more intrinsic value to you than it would to someone else.
  - rodiger 5y ago
    It's more about the token than the JPEG. Gated experiences, communities, in-game items, in-game art, etc is the driving force. And for digitally-native art, there's never been a better way to sell/trade it while preserving provenance. People are betting on the fact that we'll spend more and more of our time in digital spaces, and I don't think that's necessarily a bad bet.
    - 5y ago
meteorstorm 5y ago
Visa? https://www.cnbc.com/2021/08/23/visa-buys-cryptopunk-nft-for-150000.html https://www.cnbc.com/2021/08/23/visa-buys-cryptopunk-nft-for...
machiaweliczny 5y ago
Please learn about f2p business model and whale concept. Most f2p apps and many people behind them live from others paying $1M for some digital stuff. I think it's not super healthy but as long it's taxed I guess it's fine but that shows wealth inequality. Check "Genshin Impact" for prominient example.

edem 5y ago

You obviously don't understand any of this. Is USD not a ponzi scheme? Is Quantitative Easing not a ponzi scheme? Is MMT not a ponzi scheme?

sharemywin 5y ago
So, what your saying is cryto needs an army...
serverholic 5y ago
They are a ponzi scheme, the world is full of ponzi schemes. Stock market growth partly relies on young people getting educated about stocks in high school and college then investing. You literally have the previous generation indoctrinating the newest generation into the scheme.
jodrellblank 5y ago
Ponzi's scheme was that early investors got paid with the buy-in from the later investors, out to infinity, and the early investors crowing about how much money they made generated the hype for the later investors to buy in, and overall no value was added to the world to support any of this, it was exclusively a money-funnel from lots of late people to a few early people. It makes no sense to talk about USD being a Ponzi scheme because you can't exchange your $100 USD for someone else's $2000 USD, and later they exchange it for $4000 USD from people excited to pay $4000 USD for $100 USD in the hope they can sell $100 USD for $8000 USD in future. It's clearly madness. Anyone would pay approximately $100 USD for your $100 USD, all other things being equal (no money laundering, no additional services wink wink, and not thinking about century timescales where historic value or inflation comes into it, etc). While "wealth begets wealth" in many ways such as compound interest, simply holding $100 USD from years ago doesn't by itself give you any advantage over people in the present day. Holding BitCoin from 2012 does give you advantage over people in the present day, and that advantage comes not from any value BitCoin itself generates, but from the present day buyers seeing the increase in money the 2012 buyers got for no effort, and wanting part of it, so throwing more money at it than the 2012 buyers did. Quantitative Easing isn't a Ponzi scheme because you don't buy Quantitative Easing hoping you can sell your Quantititative Easing for more to new people interested in the hype of Quantitative Easing. Exchanging USD for steel, fashioning it into a steel bolt, and exchanging the bolt for more USD, is not a Ponzi scheme. Buying shares in a company, the company making steel bolts and becoming more valueable, and your share of it becoming more valuable, is not a Ponzi scheme. Exchanging USD for one BitCoin, then exchanging one BitCoin for significantly more USD, where that extra USD comes from the other person, who doesn't value the BitCoin but only hopes the BitCoin will increase in value in future, makes it very much like a Ponzi scheme. You can grow flowers in your garden, you can find someone to exchange their company shares for your flowers, that doesn't make flowers a currency. You can declare that USD is a currency with an army behind it, that doesn't make it a Ponzi scheme. The open question is whether BitCoin can get enough buy-in from people wanting to cash out for free money to generate a secondary market of people exchanging BitCoin for goods and services, large enough that when no more people want to buy in for the free-money aspect, people still want to buy-in for the practical use cases. Since most of the practical and legal use cases are well served by USD, the faff of exchanging USD for BitCoin to buy bolts and lose consumer protections instead of exchanging the USD for bolts seems value removing, not value adding.

mciancia 5y ago

> Who on earth is spending $000,000s on a virtual ship? Money laundering?

Guest42 5y ago
True, but it seems like there would be many better ways to do that...i.e. a not particularly successful simple business mixed with personal funds.
agilob 5y ago
https://mobile.twitter.com/Foone/status/1457749433844568066 https://mobile.twitter.com/Foone/status/1457749433844568066
- zucker42 5y ago
  Very similar to the retro video game scam recently covered by Karl Jobst. (In that case, in short, the auction house and the game grading company are owned by associated people, who have seemingly organized a few sham sales for advertisement and then profited off of speculation).

MathYouF 5y ago

They call it a con because it involves instilling "confidence" in others. High sale prices are one way to inspire confidence in others. Whether that person thinks the sale price is a legitimate indication of value, or they think at least someone else down the line will believe that, is not always clear. Because of the nature of crypto anonymity, there's always at least some percent chance any given sale is a legitimate transaction between two unique and non-colluding parties, and vice versa.

AlwaysRock 5y ago

People still pay X,xxx or XX,xxx a month to rent Second Life property. Sure it seems silly to me but some people really like NFTs.

moron4hire 5y ago
And they do it without NFTs. So what does the blockchain add here?
- initialized 5y ago
  composability, security, persistence, liquidity
  - moron4hire 5y ago
    NFT blockchains don't create composibility beyond anything that a regular, non-blockchain API would provide. NFTs are not secure or persistent. The asset at the URL could change at any time. Liquidity is a function of people, not of the underlying technical structure of the marketplace. This is tautological reasoning. "more people will use the NFT marketplace, creating more liquidity, because of the greater liquidity of the NFT marketplace."
  - micromacrofoot 5y ago
    if the company that serves the image your NFT links to goes away you can completely lose access to it
    - twox2 5y ago
      The NFT is the token, not the metadata. Of course there are projects with on chain metadata, and projects with on chain art as well. Also, many folks use IPFS pinning, so that does add some level of resilience as well, but yes not all NFTs are created equal.
      - giantrobot 5y ago

ebiester 5y ago

Art is a really weird market in general. The problem with NFT is that people are buying it as an investment rather than a work of art with its own merit of which appreciation might be one benefit. There's likely no museum backstop for most NFTs. (By which I mean that rich people buy art, sell it amongst themselves/have inflated art appraisals to raise the price, and donate to museums and claim as a tax writeoff.) See https://www.latimes.com/local/la-me-irs2mar02-story.html https://www.latimes.com/local/la-me-irs2mar02-story.html NFT as a concept will live - I can see them as placed alongside offline art as an online component that doubles as proof of ownership and lineage, and in the long run could be a major anti-counterfitting strategy.

gonehome 5y ago
I think the art is the wrong thing to focus on. The more novel piece is a ticket to community membership and a way to align incentives within that community. It can take the form of art, but doesn't really have to. That said, yeah regular art markets don't really make sense wrt value either.
- micromacrofoot 5y ago
  art serves a similar purpose and the community is "being rich"
- shiohime 5y ago
  This is what drives me to explore the NFT space - proof of ownership is a powerful concept. I'm creating a generative art project that leverages both art and proof of ownership to grant access to specific services, it's pretty neat and a really fun space to explore.
physicsguy 5y ago
> NFT as a concept will live I think we just need to wait until the first NFTs start disappearing because of the servers hosting the images shutting down. The actual images aren't stored in the blockchain, it's just a URL.

tomp 5y ago

How is spending $1 000 000 on a "virtual image" (NFT) any different than spending it on a Picasso? There are equivalent/superior copies of both readily available, but some people value provenance...

moron4hire 5y ago
NFTs only prove the first derivative of ownership. There is no mechanism within the blockchain that can prove that the person who minted the NFT owned the media associated with the NFT, e.g. there's nothing stopping you from minting an NFT claiming ownership of an actual Picasso. Which means that we have to fall back to the traditional system of legal contracts and physical possession to prove the ownership, at which point the NFT isn't adding anything. The NFT is also not the work in question. While there are some proof of concept works that have their binary data stored directly in the blockchain, the vast majority are just URLs to some other site, URLs that could die or change at any time. And there is no recourse within the blockchain itself to adjudicate the breach of trust that would represent. Which means, again, we have to fall back on the traditional system of legal contracts and courts to resolve disputes. In other words, the decentralized, "zero-trust" nature of NFTs completely undermines any concept of ownership that isn't a post-hoc rationalization designed to part fools from dollars.
- selestify 5y ago
  All of what you mentioned was never meant to be the value-add of NFTs, which is namely that there's a trustless, verifiable record of transfer from the original creator (which yes, you have to verify is actually the person you think it is) to the current holder. When tied to physical possessions, it's one additional piece of evidence that the thing before you is likely genuine. When tied to digital entities, it's an unforgeable piece of bragging rights. There are a lot of fools in this market that don't understand the tech or its specific guarantees and non-guarantees, sure, but that doesn't mean NFTs aren't bringing anything new at all to the table.
  - moron4hire 5y ago
    So what I hear you saying is that NFT concept only works if everything becomes an NFT, immediately upon creation. Any hold-outs or delays gives room for fraudulent minting, which means you don't have a trustless system. You can't say that NFTs are a trustless system when the origin of the NFT requires trust. You might as well assume the "+ C" term in all integrals equals zero. It's just factually incorrect.

usehackernews 5y ago

Why do people on HN assume that if they don’t find something valuable, others shouldn’t either. I think of NFTs like car titles. Having the car title in your name is the only way to prove you own a car. Someone can burrow your car, and have it in their possession but that doesn’t make them the owner - the title does. When you buy a car, what you’re really buying is a little paper that says you’re the owner - without it, you’re just renting. NFTs work the same but for digital items. When you buy an NFT, you’re really buying the title for that artwork. Sure, people can copy and paste a JPEG, but they can’t take the title from you - Just like possesing a car without a title doesn’t make you the owner. The concept of an NFT isn’t absurd, it’s a digital version of a real world use case we all rely on daily to prove ownership.

marcan_42 5y ago
It's absurd because if you have a car, someone else doesn't have a car, and the car has intrinsic usefulness. Having the car in your name isn't valuable in and of itself; it's valuable because it allows you to claim the car as your own, and the car is useful and can only be moved, not copied. Having a JPEG as your own isn't valuable, because JPEGs can be infinitely copied at zero cost. The title for the artwork doesn't mean anything when anyone can duplicate it. If you want to spend money on art, why not commission some artwork from your favorite artist instead of throwing away money on procedurally generated garbage with a zillion transaction fees tacked on? At least that way the artwork might be something unique to you with a personal significance which makes it have more intrinsic value to you than it would to someone else.
- rodiger 5y ago
  It's more about the token than the JPEG. Gated experiences, communities, in-game items, in-game art, etc is the driving force. And for digitally-native art, there's never been a better way to sell/trade it while preserving provenance. People are betting on the fact that we'll spend more and more of our time in digital spaces, and I don't think that's necessarily a bad bet.
  - 5y ago

meteorstorm 5y ago

Visa? https://www.cnbc.com/2021/08/23/visa-buys-cryptopunk-nft-for-150000.html https://www.cnbc.com/2021/08/23/visa-buys-cryptopunk-nft-for...

machiaweliczny 5y ago

Please learn about f2p business model and whale concept. Most f2p apps and many people behind them live from others paying $1M for some digital stuff. I think it's not super healthy but as long it's taxed I guess it's fine but that shows wealth inequality. Check "Genshin Impact" for prominient example.