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Can you link some resources that would help one figure out which parts are legit and which parts are scammy? Every time this kind of thing is posted it's an adm

Can you link some resources that would help one figure out which parts are legit and which parts are scammy? Every time this kind of thing is posted it's an admonishment of others for "not doing they're homework", but I can't recall an instance where the aforementioned "homework" was actually provided. Indeed, from the reading that I've done, some of crypto's largest projects (Tether comes to mind) are plenty scammy. However they keep getting funding and many crypto insiders continue to use them. So should I trust the analysis or should I trust the crowd?

tromp 4y ago
Any project that financially rewards its creators feels like a cash grab to me. The handful of projects that are built from scratch [1] and don't involve any ICO/premine/instamine/devtax, which includes Bitcoin itself, are in principle legit. [1] https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHplJudr9kSGQYAoJvaKnfRhI4/edit#gid=0 https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHp...
- AlexandrB 4y ago
  They're still potentially subject to pump-and-dump dynamics though. The capital cost of doing the pump is just > $0. I do agree that these are at least more honest than projects where founders/VCs already own tons of pre-mined tokens.
- cwkoss 4y ago
  > Any project that financially rewards its creators feels like a cash grab to me. Are all non-crypto startup businesses 'cash grabs' in your opinion? Does that make them scams?
  - tromp 4y ago
    No, they're not. But they're not advertising themselves as public goods the way cryptocurrencies do. A "people's currency" should not concentrate wealth beyond what pre-exists in the fiat realm.
    - cwkoss 4y ago
      I think a very large proportion of startups overstate societal benefit...
  - AlexandrB 4y ago
    I think it's a mistake to compare crypto tokens to stocks. Stocks represent fractional ownership of an organization with assets and cash flow. Crypto tokens only represent ownership of... themselves. The closest analog is the commodity market (gold, oil, etc.). And indeed, if someone discovered an easily mineable "new gold", hoarded a bunch of it, then hyped it up on the market so they could dump their reserves at inflated prices I would call that scammy. Edit: Actually we don't have to imagine this scenario. The diamond cartel[1] does something very similar already and yes, it's a scam. [1] https://are.berkeley.edu/~sberto/debers.pdf https://are.berkeley.edu/~sberto/debers.pdf
- jabits 4y ago
  That is literally every equity IPO.
cwkoss 4y ago
I would say crypto's largest project is "Bitcoin" and would recommend reading the whitepaper (its surprisingly digestible). It is functioning as designed and successfully working as described for over a decade, so I think calling it a 'scam' would be a stretch. Everything in the crypto world is built off of the core decentralized consensus idea described by the whitepaper, so I think it's really the foundation of understanding everything else. My personal appraisals of other parts of the crypto space that aren't scams: Ethereum, Lightning Network, hardware wallets, Coinbase, Proof of Stake (may not like the incentives, but it can work as designed), DAOs (inherently risky because they have an implicit bug bounty for their total value, too risky for my taste, but glad they exist and people are learning how to make them more robust)
- AlexandrB 4y ago
  I think reading a whitepaper only gives you, at best, half the picture. However, because crypto tokens are fundamentally financial products, a whitepaper says little about whether a particular project using said technology is a scam. The long list of scammy ICOs and rug pulls is plenty of evidence of that. Ironically, while blockchain technology decentralizes the bookkeeping of digital assets, you often have to trust the intentions of a very small group of unaccountable individuals to not get taken advantage of by insider trading, front running, wash trading, rug pulls, and various other financial scams.

tromp 4y ago

Any project that financially rewards its creators feels like a cash grab to me. The handful of projects that are built from scratch [1] and don't involve any ICO/premine/instamine/devtax, which includes Bitcoin itself, are in principle legit. [1] https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHplJudr9kSGQYAoJvaKnfRhI4/edit#gid=0 https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHp...

AlexandrB 4y ago
They're still potentially subject to pump-and-dump dynamics though. The capital cost of doing the pump is just > $0. I do agree that these are at least more honest than projects where founders/VCs already own tons of pre-mined tokens.
cwkoss 4y ago
> Any project that financially rewards its creators feels like a cash grab to me. Are all non-crypto startup businesses 'cash grabs' in your opinion? Does that make them scams?
- tromp 4y ago
  No, they're not. But they're not advertising themselves as public goods the way cryptocurrencies do. A "people's currency" should not concentrate wealth beyond what pre-exists in the fiat realm.
  - cwkoss 4y ago
    I think a very large proportion of startups overstate societal benefit...
- AlexandrB 4y ago
  I think it's a mistake to compare crypto tokens to stocks. Stocks represent fractional ownership of an organization with assets and cash flow. Crypto tokens only represent ownership of... themselves. The closest analog is the commodity market (gold, oil, etc.). And indeed, if someone discovered an easily mineable "new gold", hoarded a bunch of it, then hyped it up on the market so they could dump their reserves at inflated prices I would call that scammy. Edit: Actually we don't have to imagine this scenario. The diamond cartel[1] does something very similar already and yes, it's a scam. [1] https://are.berkeley.edu/~sberto/debers.pdf https://are.berkeley.edu/~sberto/debers.pdf
jabits 4y ago
That is literally every equity IPO.

cwkoss 4y ago

I would say crypto's largest project is "Bitcoin" and would recommend reading the whitepaper (its surprisingly digestible). It is functioning as designed and successfully working as described for over a decade, so I think calling it a 'scam' would be a stretch. Everything in the crypto world is built off of the core decentralized consensus idea described by the whitepaper, so I think it's really the foundation of understanding everything else. My personal appraisals of other parts of the crypto space that aren't scams: Ethereum, Lightning Network, hardware wallets, Coinbase, Proof of Stake (may not like the incentives, but it can work as designed), DAOs (inherently risky because they have an implicit bug bounty for their total value, too risky for my taste, but glad they exist and people are learning how to make them more robust)

AlexandrB 4y ago
I think reading a whitepaper only gives you, at best, half the picture. However, because crypto tokens are fundamentally financial products, a whitepaper says little about whether a particular project using said technology is a scam. The long list of scammy ICOs and rug pulls is plenty of evidence of that. Ironically, while blockchain technology decentralizes the bookkeeping of digital assets, you often have to trust the intentions of a very small group of unaccountable individuals to not get taken advantage of by insider trading, front running, wash trading, rug pulls, and various other financial scams.