6 ms·

It's pathetic that regulators haven't stopped this nonsense. These scams don't even last 6 months anymore, it's a joke

eatonphil 4y ago
The shorter the term the harder I would imagine it to be for regulators to act. Governments tend to do things at their own pace.
unyttigfjelltol 4y ago
It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.
- pid-1 4y ago
  IMO letting crypto die by itself is the best way to prove it sucks. If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities. Just let morons fail.
  - IdEntities 4y ago
    Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators. Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
- xvector 4y ago
  As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.
  - deleted 4y ago
    [deleted]
- DelaneyM 4y ago
  Plenty of countries have currencies which have a fixed exchange with USD, including my own (1 KYD = 1.2 USD). It just takes a shit-tonne of capital, and it helps to have a functioning internal economy and flexibility to be able to defend against malicious agents. I suspect there are other legal issues with creating an alternative currency in the us though, which is why these aren't currencies but securities. Which is still fine! A tethered coin is conceptually _similar_ to a 0-yield bond. Presenting it as being "safe" without it actually being so is the problem here.
  - nikanj 4y ago
    It’s trivial to mint tokens that are on a fixed rate to USD - assuming you are ready to keep the full amount of USD locked up somewhere. Disaster strikes when someone sees the mountain of money and thinks ”If we invest this money, we get to keep the gains”
    - MichaelBurge 4y ago
      It's not a theoretical problem, but there's a practical one: Banks themselves loan out the money, so a run on a stablecoin can cause a run on actual banks. And FDIC isn't enough to cover the full amount. This can be mitigated by using many banks, but it's hard to find banks willing to deal with cryptocurrency. So in practice all the deposits are at 1-2 banks. A stack of paper USD in a safe would work, but there's risk of theft/fire/etc.
- SilasX 4y ago
  That’s … what banks and credit card companies do all the time. The only true dollars are physical cash and accounts at the Federal reserve. Everything else is a derivative pegged to those.
- anamax 4y ago
  You mean like Disney Dollars?
  - unyttigfjelltol 4y ago
    Only if they were called USDD.
chx 4y ago
All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this. Look. Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money. But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam. Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system. So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose. And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.
- planetsprite 4y ago
  But what about crypto completely revolutionizing transactions, decentralizing the economy and providing a stable universally accessible data exchange medium? What about tracking the food you buy on the blockchain? What about web3? What about muh NFT monkeys?
  - gabereiser 4y ago
    What about flying cars and hoverboards? I’m sure those have been pitched to the public too. Making a claim does not make a truth.
- cmeacham98 4y ago
badkitty 4y ago
Let's be clear: YC needs to quit financing ponzi scams. Or better yet, be punished for it.
- dvt 4y ago
  Yawn, brand new account, take this virtue signaling back to reddit and give me a break: YC can invest in whatever they want to, it's their money. Stablecoin farming may not be sustainable, but it's not a Ponzi scheme, unless you have no idea how a Ponzi actually works.
  - ushakov 4y ago
    farming is literally a ponzi https://m.youtube.com/watch?v=C6nAxiym9oc https://m.youtube.com/watch?v=C6nAxiym9oc
  - Jasper_ 4y ago
    The thing is that a Stablecoin is either stable, and provides no returns, or it's volatile, and provides 15% returns. You can't have a stablegain that continually goes up in price, that's not stable then! Stablegains, by their own admission, only invested in stablecoins: https://stablegains.zendesk.com/hc/en-us/articles/4402687671185-Do-you-invest-in-volatile-cryptos-What-happens-if-crypto-markets-crash- https://stablegains.zendesk.com/hc/en-us/articles/4402687671... > We do not engage in speculation on the prices of volatile cryptocurrencies like Bitcoin or Ether. We only offer deposits in stablecoins whose value is pegged to one dollar. > Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable. This is hypocritical on its face. You can't have any returns if the assets are stable! Sure, YC can do whatever they want with its money, but we can all be very disappointed and sad that VC funds are engaging with any of this. YC has been slowly been losing their image for years now, along with the other VC firms, and this just cements it for me.
    - dvt 4y ago
      I completely agree with all of this. Stablecoin farming often uses a "secondary" coin which happens to be volatile (or some form of lending/leverage). The risk is obfuscated, but it's still there. My point was only that calling it a Ponzi is just lazy and wrong.
rvz 4y ago
> It's pathetic that regulators haven't stopped this nonsense. As a result of the ICO scams in 2017 for example the infamous Ethereum DAO hack, perhaps that is why at least in the US, the SEC banned unregistered ICOs [0]; more countries to follow. They have done 'something' about it, but it is not going to 'completely' stop otherwise they would have 'totally' banned all of them, including even registering an ICO with the SEC. I won't be surprised to see stable-coin regulations this year with only a few of them still surviving. [0] https://www.whitecase.com/publications/alert/regulation-initial-coin-offerings https://www.whitecase.com/publications/alert/regulation-init...
- ushakov 4y ago
  nowadays they don’t even do ICOs find a VC who’d buy coins at low prices and then dump into public by placing on Coinbase/Binance spend that VC cash on marketing

The shorter the term the harder I would imagine it to be for regulators to act. Governments tend to do things at their own pace.

unyttigfjelltol 4y ago

It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.

pid-1 4y ago
IMO letting crypto die by itself is the best way to prove it sucks. If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities. Just let morons fail.
- IdEntities 4y ago
  Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators. Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."
xvector 4y ago
As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.
- deleted 4y ago
  [deleted]
DelaneyM 4y ago
Plenty of countries have currencies which have a fixed exchange with USD, including my own (1 KYD = 1.2 USD). It just takes a shit-tonne of capital, and it helps to have a functioning internal economy and flexibility to be able to defend against malicious agents. I suspect there are other legal issues with creating an alternative currency in the us though, which is why these aren't currencies but securities. Which is still fine! A tethered coin is conceptually _similar_ to a 0-yield bond. Presenting it as being "safe" without it actually being so is the problem here.
- nikanj 4y ago
  It’s trivial to mint tokens that are on a fixed rate to USD - assuming you are ready to keep the full amount of USD locked up somewhere. Disaster strikes when someone sees the mountain of money and thinks ”If we invest this money, we get to keep the gains”
  - MichaelBurge 4y ago
    It's not a theoretical problem, but there's a practical one: Banks themselves loan out the money, so a run on a stablecoin can cause a run on actual banks. And FDIC isn't enough to cover the full amount. This can be mitigated by using many banks, but it's hard to find banks willing to deal with cryptocurrency. So in practice all the deposits are at 1-2 banks. A stack of paper USD in a safe would work, but there's risk of theft/fire/etc.
SilasX 4y ago
That’s … what banks and credit card companies do all the time. The only true dollars are physical cash and accounts at the Federal reserve. Everything else is a derivative pegged to those.
anamax 4y ago
You mean like Disney Dollars?
- unyttigfjelltol 4y ago
  Only if they were called USDD.

chx 4y ago

All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this. Look. Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money. But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam. Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system. So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose. And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.

planetsprite 4y ago
But what about crypto completely revolutionizing transactions, decentralizing the economy and providing a stable universally accessible data exchange medium? What about tracking the food you buy on the blockchain? What about web3? What about muh NFT monkeys?
- gabereiser 4y ago
  What about flying cars and hoverboards? I’m sure those have been pitched to the public too. Making a claim does not make a truth.
cmeacham98 4y ago

badkitty 4y ago

Let's be clear: YC needs to quit financing ponzi scams. Or better yet, be punished for it.

dvt 4y ago
Yawn, brand new account, take this virtue signaling back to reddit and give me a break: YC can invest in whatever they want to, it's their money. Stablecoin farming may not be sustainable, but it's not a Ponzi scheme, unless you have no idea how a Ponzi actually works.
- ushakov 4y ago
  farming is literally a ponzi https://m.youtube.com/watch?v=C6nAxiym9oc https://m.youtube.com/watch?v=C6nAxiym9oc
- Jasper_ 4y ago
  The thing is that a Stablecoin is either stable, and provides no returns, or it's volatile, and provides 15% returns. You can't have a stablegain that continually goes up in price, that's not stable then! Stablegains, by their own admission, only invested in stablecoins: https://stablegains.zendesk.com/hc/en-us/articles/4402687671185-Do-you-invest-in-volatile-cryptos-What-happens-if-crypto-markets-crash- https://stablegains.zendesk.com/hc/en-us/articles/4402687671... > We do not engage in speculation on the prices of volatile cryptocurrencies like Bitcoin or Ether. We only offer deposits in stablecoins whose value is pegged to one dollar. > Regardless if crypto markets are soaring or crashing, the value of assets under our management remains stable. This is hypocritical on its face. You can't have any returns if the assets are stable! Sure, YC can do whatever they want with its money, but we can all be very disappointed and sad that VC funds are engaging with any of this. YC has been slowly been losing their image for years now, along with the other VC firms, and this just cements it for me.
  - dvt 4y ago
    I completely agree with all of this. Stablecoin farming often uses a "secondary" coin which happens to be volatile (or some form of lending/leverage). The risk is obfuscated, but it's still there. My point was only that calling it a Ponzi is just lazy and wrong.

rvz 4y ago

> It's pathetic that regulators haven't stopped this nonsense. As a result of the ICO scams in 2017 for example the infamous Ethereum DAO hack, perhaps that is why at least in the US, the SEC banned unregistered ICOs [0]; more countries to follow. They have done 'something' about it, but it is not going to 'completely' stop otherwise they would have 'totally' banned all of them, including even registering an ICO with the SEC. I won't be surprised to see stable-coin regulations this year with only a few of them still surviving. [0] https://www.whitecase.com/publications/alert/regulation-initial-coin-offerings https://www.whitecase.com/publications/alert/regulation-init...

ushakov 4y ago
nowadays they don’t even do ICOs find a VC who’d buy coins at low prices and then dump into public by placing on Coinbase/Binance spend that VC cash on marketing