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1) Large numbers of people on this site regularly argue that the entire conceptual foundation of crypto is fraudulent and/or without merit, not simply overstate

by darawk 4y ago

1) Large numbers of people on this site regularly argue that the entire conceptual foundation of crypto is fraudulent and/or without merit, not simply overstated. 2) I don't think he's arguing that everyone who thinks crypto is a scam is that sort of person, he was saying that most people who have been scammed are. 3) Molly White's number's agree with OP's. $12 billion vs a market cap of $858B is roughly the same percentage identified in the article. And before you complain about the use of market cap as denominator, market cap is also the numerator being used by Molly White's analysis, so it's the correct denominator.

kokanee 4y ago
This seems to be one of the better responses to my comment. Thanks. Some thoughts in reply: 1) People should be more hesitant to speak in absolutes. Unfortunately it’s possible that having a nuanced take is inversely correlated with the tendency to post noisy comments online. Maybe, regardless of the underlying stance of “most” skeptics, some more honest dialogue is warranted. Point conceded. 2. Hm. If that’s the case, the author’s assertion that most people who have been scammed are the kinds of people who fall for scams is fair, but not going to change many minds. 3. This is discussed ad nauseam below, so I’ll just add a reminder that we’re debating the author’s statement that “big crypto projects are very rarely scams” as evidenced by his google search. He goes on to say that “Crypto is a few hundred interesting projects, plus a long tail of thousands of scams.” So, most crypto projects are safe if you just ignore most crypto projects and only consider the most dominant. Realized losses vs unrealized market cap aside, the dynamics that incentivize that long tail of scams are worth worrying about in my view.
- darawk 4y ago
  Thanks, agree with 1 and 2. For 3, I think his statement as written "big crypto projects are very rarely scams" is clearly not literally true in a meaningful sense, and it's right to criticize him for that. However, I think a weaker statement like "The people that complain that crypto projects are scams are overstating how dense the space is with scams" is probably more accurate. It's sort of hard to determine how to weight an analysis of the density of scams in a space. Certainly if you weight by project count, it'll be quite high. If you weight by market cap, it'll be considerably lower. But to your actual point, I agree worrying about scams in crypto is very important, and I read the OP as (admittedly, somewhat carelessly) trying to argue against the view that "all" or "nearly all" crypto projects are scams. I think a better way to state it might be something like: Post dotcom bubble pop a lot of people were saying "those internet companies were all scams", and they were right in some kind of media-attention-weighted sense, and maybe even some other senses. But there were certainly a lot of real and important companies there, and even a lot of near-real-and-important companies that were just a little ahead of their time and didn't make it, and I don't think it's fair to dismiss most of them as scams. I'd definitely say crypto is still in the pre-making-it stage of its lifecycle, and it remains to be seen whether any of these projects will end up being say, the Google or Amazon of this space, that survives the winter and goes on to do meaningful things. However, even if they all die, I think it's fair to say that e.g. Ethereum and Bitcoin were sincere attempts at building novel technology.
- stickfigure 4y ago
  > the dynamics that incentivize that long tail of scams are worth worrying about in my view. Is this any different from the stock market? There are about 6000 companies listed on the NYSE and NASDAQ. According to [1] there are about 10,000 penny stocks traded OTC. Not every NYSE/NASDAQ company is legit and not every penny stock is a scam, but we're still looking at an awful lot of fraud out there. Seems like the incentives for financial fraud are obvious and eternal. [1] https://www.nytimes.com/2021/03/18/business/penny-stocks-trading.html https://www.nytimes.com/2021/03/18/business/penny-stocks-tra...
afpx 4y ago
There's definitely skepticism around here. A lot of people here were around when the Satoshi paper came out. The hype began almost instantly - let's disrupt governments with a utopian free-market! Everyone will have an equal say! And, people rolled their eyes because they knew that these systems follow power laws, and eventually the utopia will resemble the status quo. Around the same time, some people realized that bitcoin was deflationary. And, you had two groups: One started hoarding coins and pumping it, and the other group realized it was a pyramid and had too good a conscious to participate. And, the pumping continued until today. And, maybe some people are sour? Then, for 14 years, tons of money was dumped into it, and not much happened. It's still mainly used for black market goods. It still has terrible user interface. The transaction rate is still low. The transaction fees are high. And, it's too easy to have your coins stolen.
- stickfigure 4y ago
  This seems to be the exact line of thought that Scott is challenging. He agrees with you, "Yes, The Crypto Financial System Is Just Reinventing The Regular Financial System Except Worse In Every Way, And That’s Fine". If you live in a stable economy with good governance and a trustworthy financial system, you don't need crypto. Unfortunately, that does not describe everyone in the world. It may not even describe half of the world.
  - r00fus 4y ago
    If what you're saying is correct wouldn't the transaction costs / volume reflect increased usage for those "unserved" by a trustworthy financial system? ie, it's not fine.
    - stickfigure 4y ago
      I guess SA's opinion is close enough to my own that I'm willing to defend it in public. However, I don't understand your question/statement - can you restate it?
- darawk 4y ago
  > Then, for 14 years, tons of money was dumped into it, and not much happened. It's still mainly used for black market goods. It still has terrible user interface. The transaction rate is still low. The transaction fees are high. And, it's too easy to have your coins stolen. I agree that, in the case of Bitcoin specifically, it's still primarily used for black market goods (excluding speculation, of course), among relatively wealthy developed market users. However, there are a non-trivial number of genuine users among economies with less stable banking systems, as the OP points out. And it isn't true that fees are still high and tx rate is still low, the lightning network solves that problem. It hasn't seen super widespread adoption yet, but the technical problem, as far as fees and transaction rates, is essentially solved. What you are correct about though is that the UX is still pretty terrible for the average person. However, in some places, that UX is a better alternative than the one they have access to locally.
jqpabc123 4y ago
The crypto ladder of insanity: 1) Fiat is controlled by government --- we don't trust it. 2) I know --- let's build de-centralized, trustless money without government. 3) Yikes! Government must save us from the fraud hellscape we have naively created. 4) But wait --- isn't crypto with government oversight and control basically just fiat all over again? 5) Crypto isn't trustworthy, I think we'll just stick with fiat --- the unwashed masses. 6) Wait, without the masses on board, crypto can never be a real functioning currency. 7) I think we'll just stick with fiat --- cryptobros. I think we're currently at about step 4 or 5.

by darawk 4y ago

kokanee 4y ago

This seems to be one of the better responses to my comment. Thanks. Some thoughts in reply: 1) People should be more hesitant to speak in absolutes. Unfortunately it’s possible that having a nuanced take is inversely correlated with the tendency to post noisy comments online. Maybe, regardless of the underlying stance of “most” skeptics, some more honest dialogue is warranted. Point conceded. 2. Hm. If that’s the case, the author’s assertion that most people who have been scammed are the kinds of people who fall for scams is fair, but not going to change many minds. 3. This is discussed ad nauseam below, so I’ll just add a reminder that we’re debating the author’s statement that “big crypto projects are very rarely scams” as evidenced by his google search. He goes on to say that “Crypto is a few hundred interesting projects, plus a long tail of thousands of scams.” So, most crypto projects are safe if you just ignore most crypto projects and only consider the most dominant. Realized losses vs unrealized market cap aside, the dynamics that incentivize that long tail of scams are worth worrying about in my view.

darawk 4y ago
Thanks, agree with 1 and 2. For 3, I think his statement as written "big crypto projects are very rarely scams" is clearly not literally true in a meaningful sense, and it's right to criticize him for that. However, I think a weaker statement like "The people that complain that crypto projects are scams are overstating how dense the space is with scams" is probably more accurate. It's sort of hard to determine how to weight an analysis of the density of scams in a space. Certainly if you weight by project count, it'll be quite high. If you weight by market cap, it'll be considerably lower. But to your actual point, I agree worrying about scams in crypto is very important, and I read the OP as (admittedly, somewhat carelessly) trying to argue against the view that "all" or "nearly all" crypto projects are scams. I think a better way to state it might be something like: Post dotcom bubble pop a lot of people were saying "those internet companies were all scams", and they were right in some kind of media-attention-weighted sense, and maybe even some other senses. But there were certainly a lot of real and important companies there, and even a lot of near-real-and-important companies that were just a little ahead of their time and didn't make it, and I don't think it's fair to dismiss most of them as scams. I'd definitely say crypto is still in the pre-making-it stage of its lifecycle, and it remains to be seen whether any of these projects will end up being say, the Google or Amazon of this space, that survives the winter and goes on to do meaningful things. However, even if they all die, I think it's fair to say that e.g. Ethereum and Bitcoin were sincere attempts at building novel technology.
stickfigure 4y ago
> the dynamics that incentivize that long tail of scams are worth worrying about in my view. Is this any different from the stock market? There are about 6000 companies listed on the NYSE and NASDAQ. According to [1] there are about 10,000 penny stocks traded OTC. Not every NYSE/NASDAQ company is legit and not every penny stock is a scam, but we're still looking at an awful lot of fraud out there. Seems like the incentives for financial fraud are obvious and eternal. [1] https://www.nytimes.com/2021/03/18/business/penny-stocks-trading.html https://www.nytimes.com/2021/03/18/business/penny-stocks-tra...

afpx 4y ago

There's definitely skepticism around here. A lot of people here were around when the Satoshi paper came out. The hype began almost instantly - let's disrupt governments with a utopian free-market! Everyone will have an equal say! And, people rolled their eyes because they knew that these systems follow power laws, and eventually the utopia will resemble the status quo. Around the same time, some people realized that bitcoin was deflationary. And, you had two groups: One started hoarding coins and pumping it, and the other group realized it was a pyramid and had too good a conscious to participate. And, the pumping continued until today. And, maybe some people are sour? Then, for 14 years, tons of money was dumped into it, and not much happened. It's still mainly used for black market goods. It still has terrible user interface. The transaction rate is still low. The transaction fees are high. And, it's too easy to have your coins stolen.

stickfigure 4y ago
This seems to be the exact line of thought that Scott is challenging. He agrees with you, "Yes, The Crypto Financial System Is Just Reinventing The Regular Financial System Except Worse In Every Way, And That’s Fine". If you live in a stable economy with good governance and a trustworthy financial system, you don't need crypto. Unfortunately, that does not describe everyone in the world. It may not even describe half of the world.
- r00fus 4y ago
  If what you're saying is correct wouldn't the transaction costs / volume reflect increased usage for those "unserved" by a trustworthy financial system? ie, it's not fine.
  - stickfigure 4y ago
    I guess SA's opinion is close enough to my own that I'm willing to defend it in public. However, I don't understand your question/statement - can you restate it?
darawk 4y ago
> Then, for 14 years, tons of money was dumped into it, and not much happened. It's still mainly used for black market goods. It still has terrible user interface. The transaction rate is still low. The transaction fees are high. And, it's too easy to have your coins stolen. I agree that, in the case of Bitcoin specifically, it's still primarily used for black market goods (excluding speculation, of course), among relatively wealthy developed market users. However, there are a non-trivial number of genuine users among economies with less stable banking systems, as the OP points out. And it isn't true that fees are still high and tx rate is still low, the lightning network solves that problem. It hasn't seen super widespread adoption yet, but the technical problem, as far as fees and transaction rates, is essentially solved. What you are correct about though is that the UX is still pretty terrible for the average person. However, in some places, that UX is a better alternative than the one they have access to locally.

jqpabc123 4y ago

The crypto ladder of insanity: 1) Fiat is controlled by government --- we don't trust it. 2) I know --- let's build de-centralized, trustless money without government. 3) Yikes! Government must save us from the fraud hellscape we have naively created. 4) But wait --- isn't crypto with government oversight and control basically just fiat all over again? 5) Crypto isn't trustworthy, I think we'll just stick with fiat --- the unwashed masses. 6) Wait, without the masses on board, crypto can never be a real functioning currency. 7) I think we'll just stick with fiat --- cryptobros. I think we're currently at about step 4 or 5.