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What if crypto (in whatever form) is the ultimate get rich quick scam/scheme and there is always a baseline number of people willing to dump their money into it

by danans 4y ago

What if crypto (in whatever form) is the ultimate get rich quick scam/scheme and there is always a baseline number of people willing to dump their money into it? Can an asset class be built on top of a seemingly endless hope of people hoping to get rich quick? Take out the asset class part, and it sounds a lot like a lottery, which is just a regulated get rich scheme (where most participants lose monetarily, but get "entertainment") that turns a reliable human fallibility into a social funding mechanism. Take out the social funding, and you have casinos, which also provide entertainment in exchange for the feeling you might get rich quick. Casino companies are publicly traded securities: https://www.cga.ct.gov/PS95/rpt/olr/htm/95-R-0426.htm https://www.cga.ct.gov/PS95/rpt/olr/htm/95-R-0426.htm Is there a form of crypto that could provide the same?

mherdeg 4y ago
The downside with the lottery is that it's state controlled; if a group of talented engineers finds a way to play to extract positive expected value from other bettors, stakeholders in the government will call this outcome unfair and shut it down ( https://www.mass.gov/doc/letter-to-state-treasurer-steven-grossman-regarding-the-lottery-july-2012/download https://www.mass.gov/doc/letter-to-state-treasurer-steven-gr... ). Even if, on average, money goes from gamblers to social good, people will complain that sophisticated bettors are extracting an "unfair" profit. By contrast, the crypto markets provide an efficient funnel from low-information gamblers to sophisticated engineers. As long as a fair chunk of the profits are channeled to effective altruism causes (which I think is the status quo?) it's a good deal.
- danans 4y ago
  > As long as a fair chunk of the profits are channeled to effective altruism causes (which I think is the status quo?) That's one heck of a qualification without a citation. The "altruism causes" channeled to would need to somehow outweigh the massive costs in terms of CO2 footprint and the loss of savings/security of an untold number of regular people (your "low-information gamblers") who bought into a big ponzi scheme. They can't be made whole (though society will definitionally pay for the subset who lost a significant portion of their life savings), but seems pretty legit to point a finger at those who scammed them.

by danans 4y ago

mherdeg 4y ago

The downside with the lottery is that it's state controlled; if a group of talented engineers finds a way to play to extract positive expected value from other bettors, stakeholders in the government will call this outcome unfair and shut it down ( https://www.mass.gov/doc/letter-to-state-treasurer-steven-grossman-regarding-the-lottery-july-2012/download https://www.mass.gov/doc/letter-to-state-treasurer-steven-gr... ). Even if, on average, money goes from gamblers to social good, people will complain that sophisticated bettors are extracting an "unfair" profit. By contrast, the crypto markets provide an efficient funnel from low-information gamblers to sophisticated engineers. As long as a fair chunk of the profits are channeled to effective altruism causes (which I think is the status quo?) it's a good deal.

danans 4y ago
> As long as a fair chunk of the profits are channeled to effective altruism causes (which I think is the status quo?) That's one heck of a qualification without a citation. The "altruism causes" channeled to would need to somehow outweigh the massive costs in terms of CO2 footprint and the loss of savings/security of an untold number of regular people (your "low-information gamblers") who bought into a big ponzi scheme. They can't be made whole (though society will definitionally pay for the subset who lost a significant portion of their life savings), but seems pretty legit to point a finger at those who scammed them.