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Maybe the rubes can be exonerated for falling to the incessant hyping of crypto but a smart person should know all crypto is a scam because the Washington Post,

by chx 3y ago

Maybe the rubes can be exonerated for falling to the incessant hyping of crypto but a smart person should know all crypto is a scam because the Washington Post, the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015. In 2017 you had Preston Byrne challenging that article in that he considered the scam to be significantly different from a Ponzi and gave it a new name, a "Nakamoto scheme" (as an aside, Jorge Stolfi will continue the debate in 2020 where he considers the difference not to be significant and I find his arguments to be rather convincing). But he didn't, not for one second, challenged the fact it is a scam. Attack of the 50 Foot Blockchain came out in July 2017. There's no way to enter the crypto space without mens rea in 2019.

mathieuh 3y ago
As someone who’s never been into crypto, the general discourse when I look in crypto-related subreddits suggests that the very fact that mainstream media were calling it a Ponzi scheme is one of the reasons you should invest in crypto. It’s that “one simple trick (what they don’t want you to know)” kind of predatory advertising that seems to be what ensnares people. It’s adjacent to the hustle culture you see on social media where people with gleaming white teeth tell you they’ll make you rich
- Roark66 3y ago
  As someone who made lots of money on crypto early on, then didn't touch it for many years, made lots of money again and haven't touched it since I can tell you (and others) what is a winning strategy for "investing" in crypto. Consider it a VC investment. First, you gave to either understand the underlying technology, or someone you trust have to understand it sufficiently to be able to say "this is bullshit", or "this is a great novel idea that makes a lot of sense". Then you invest a bit of your really disposable income in it and don't touch it for a couple of years. Eventually you sell once you're happy with the price, or you forget about it and check few years later. Edit: also, it really is down to luck too. An idea might be great, but the people behind it can be scammers. Etc. Crypto is(or was) a very high reward, very high risk game. And for God's sake don't invest your life's savings in crypto!
  - chx 3y ago
    It's not an investment. You are gambling. And even worse, you are gambling by robbing the less informed. Make no mistake: every cent you made is a cent someone else lost -- even if they haven't realized their loss yet, it's there. And even worse, it's not a cent, it's a bit more because bitcoin is not even a zero sum game but a negative sum game and those are inherently scam. But, I guess, good for you?
    - leoedin 3y ago
      It's effectively a pyramid scheme in which the potential marks are everyone in the world. It's not that much of a surprise that crypto continues to have money pumped into it - there's an almost never ending supply of greater fools. Arguably the entire monetary system is also kind of like that - but it's got the benefit of true utility outside of speculation. It's a shame that most of the interesting crypto-as-money stuff - smart contracts, accessible to everyone financial APIs, pseudo-anonymous payments etc, has been completely dwarfed by the crypto-as-investment situation. Maybe it'll shake itself out long term, but I suspect the fundamental problems of unregulated "money" will be inescapable. It turns out there's a reason we have financial regulation.
      - lordfrito 3y ago
        > It's effectively a pyramid scheme in which the potential marks are everyone in the world. That's about as big as it gets, and pretty well explains the long legs this con continues to have. A lot of marks out there. The only thing bigger would be an interstellar "galactic-coin". God. I can only imagine the carnage. Seems like a great premise for a sci fi story.
    - nrdvana 3y ago
      It has real value for as long as there are people who need a currency that isn't controlled by a government. In other words, it's an investment in the working capital of the criminal underworld. (and tinfoil-hatters) The money you put in is probably used to commit crimes of some sort, and the money you take out was probably the result of some crime. But with coins like Bitcoin that have a distributed trust in all miners to maintain the algorithm, I don't think you can say it's a scam. The ones I think are truly scams are the "stablecoins" and "exchange tokens", which are nothing more than a fiat currency offered by an entity smaller than a government with less accountability than a government, and no way to ensure the value/supply/demand of their coin. So yes, I think FTX was a scam to the extent that they traded FTT while printing or consuming it however they liked.
- chx 3y ago
  Try the /r/buttcoin sub for a more informed opinion.
panarky 3y ago
>>> Did you fly to the Super Bowl in a private plane? > all crypto is a scam Most people think SBF spent all his customers' deposits on private jets and luxury condos, and blew the rest on shitcoin bets that went bad. But despite the insinuations of prosecutors, the PJ trips just don't add up to much in the scheme of things, and the real estate is still there and can be sold. Yes, some shitcoin bets were bad, but they're offset by investments that paid off like the Anthropic stake. It's likely that the only haircut depositors will have to take is the billion dollars in bankruptcy lawyer billings. > the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015 If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today. Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite.
- Freedom2 3y ago
  > Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite. I did and I had significant losses. What does that say about your statement?
  - icelancer 3y ago
    The price of Bitcoin in 2015 was ~$350. To have significant losses after buying at that price point would have taken very serious skill.
    - beefield 3y ago
      Could you elaborate a bit the "very serious skill" needed to store your bitcoin in e.g. Bitfinex or CuadrigaCX?
      - read_if_gay_ 3y ago
        Since it's apparently not obvious, long term holding your coins in a centralized exchange misses the entire point of crypto. Not understanding that takes some skill indeed.
pa7x1 3y ago
This critique is basically saying that cryptocurrencies have Ponzi-esque economics or more aptly named greater-fools economics. The argument being that as they have no cash-flows, any appreciation must come from future investors piling into the asset. I think this is a great optic to look at the problem as it focuses on the economic design, its sustainability, and its valuation in terms of future cash-flows. Nevertheless not all cryptocurrencies satisfy the above. The prime example being Ether. In the last year it has experienced -0.186% circulating supply inflation (i.e. it's non-dilutive to its holders) [1]. While the network has captured around USD 6.5M per day ~ 2400M per year in fees due to its usage as settlement layer which are paid to its stakers. Basically, it's cash-flow positive and does not rely on greater fools to sustain its economics. [1] https://ultrasound.money/ https://ultrasound.money/ [2] https://charts.coinmetrics.io/crypto-data/?config=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 https://charts.coinmetrics.io/crypto-data/?config=JTdCJTIybm...
- RandomLensman 3y ago
  What you are saying is you can invest Ether (i.e., stake it) and then might earn a return in Ether (not USD). Any appreciation of Ether vs USD still needs to come from outside demand for Ether.

by chx 3y ago

mathieuh 3y ago

As someone who’s never been into crypto, the general discourse when I look in crypto-related subreddits suggests that the very fact that mainstream media were calling it a Ponzi scheme is one of the reasons you should invest in crypto. It’s that “one simple trick (what they don’t want you to know)” kind of predatory advertising that seems to be what ensnares people. It’s adjacent to the hustle culture you see on social media where people with gleaming white teeth tell you they’ll make you rich

Roark66 3y ago
As someone who made lots of money on crypto early on, then didn't touch it for many years, made lots of money again and haven't touched it since I can tell you (and others) what is a winning strategy for "investing" in crypto. Consider it a VC investment. First, you gave to either understand the underlying technology, or someone you trust have to understand it sufficiently to be able to say "this is bullshit", or "this is a great novel idea that makes a lot of sense". Then you invest a bit of your really disposable income in it and don't touch it for a couple of years. Eventually you sell once you're happy with the price, or you forget about it and check few years later. Edit: also, it really is down to luck too. An idea might be great, but the people behind it can be scammers. Etc. Crypto is(or was) a very high reward, very high risk game. And for God's sake don't invest your life's savings in crypto!
- chx 3y ago
  It's not an investment. You are gambling. And even worse, you are gambling by robbing the less informed. Make no mistake: every cent you made is a cent someone else lost -- even if they haven't realized their loss yet, it's there. And even worse, it's not a cent, it's a bit more because bitcoin is not even a zero sum game but a negative sum game and those are inherently scam. But, I guess, good for you?
  - leoedin 3y ago
    It's effectively a pyramid scheme in which the potential marks are everyone in the world. It's not that much of a surprise that crypto continues to have money pumped into it - there's an almost never ending supply of greater fools. Arguably the entire monetary system is also kind of like that - but it's got the benefit of true utility outside of speculation. It's a shame that most of the interesting crypto-as-money stuff - smart contracts, accessible to everyone financial APIs, pseudo-anonymous payments etc, has been completely dwarfed by the crypto-as-investment situation. Maybe it'll shake itself out long term, but I suspect the fundamental problems of unregulated "money" will be inescapable. It turns out there's a reason we have financial regulation.
    - lordfrito 3y ago
      > It's effectively a pyramid scheme in which the potential marks are everyone in the world. That's about as big as it gets, and pretty well explains the long legs this con continues to have. A lot of marks out there. The only thing bigger would be an interstellar "galactic-coin". God. I can only imagine the carnage. Seems like a great premise for a sci fi story.
  - nrdvana 3y ago
    It has real value for as long as there are people who need a currency that isn't controlled by a government. In other words, it's an investment in the working capital of the criminal underworld. (and tinfoil-hatters) The money you put in is probably used to commit crimes of some sort, and the money you take out was probably the result of some crime. But with coins like Bitcoin that have a distributed trust in all miners to maintain the algorithm, I don't think you can say it's a scam. The ones I think are truly scams are the "stablecoins" and "exchange tokens", which are nothing more than a fiat currency offered by an entity smaller than a government with less accountability than a government, and no way to ensure the value/supply/demand of their coin. So yes, I think FTX was a scam to the extent that they traded FTT while printing or consuming it however they liked.
chx 3y ago
Try the /r/buttcoin sub for a more informed opinion.

panarky 3y ago

>>> Did you fly to the Super Bowl in a private plane? > all crypto is a scam Most people think SBF spent all his customers' deposits on private jets and luxury condos, and blew the rest on shitcoin bets that went bad. But despite the insinuations of prosecutors, the PJ trips just don't add up to much in the scheme of things, and the real estate is still there and can be sold. Yes, some shitcoin bets were bad, but they're offset by investments that paid off like the Anthropic stake. It's likely that the only haircut depositors will have to take is the billion dollars in bankruptcy lawyer billings. > the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015 If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today. Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite.

Freedom2 3y ago
> Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite. I did and I had significant losses. What does that say about your statement?
- icelancer 3y ago
  The price of Bitcoin in 2015 was ~$350. To have significant losses after buying at that price point would have taken very serious skill.
  - beefield 3y ago
    Could you elaborate a bit the "very serious skill" needed to store your bitcoin in e.g. Bitfinex or CuadrigaCX?
    - read_if_gay_ 3y ago
      Since it's apparently not obvious, long term holding your coins in a centralized exchange misses the entire point of crypto. Not understanding that takes some skill indeed.

pa7x1 3y ago

This critique is basically saying that cryptocurrencies have Ponzi-esque economics or more aptly named greater-fools economics. The argument being that as they have no cash-flows, any appreciation must come from future investors piling into the asset. I think this is a great optic to look at the problem as it focuses on the economic design, its sustainability, and its valuation in terms of future cash-flows. Nevertheless not all cryptocurrencies satisfy the above. The prime example being Ether. In the last year it has experienced -0.186% circulating supply inflation (i.e. it's non-dilutive to its holders) [1]. While the network has captured around USD 6.5M per day ~ 2400M per year in fees due to its usage as settlement layer which are paid to its stakers. Basically, it's cash-flow positive and does not rely on greater fools to sustain its economics. [1] https://ultrasound.money/ https://ultrasound.money/ [2] https://charts.coinmetrics.io/crypto-data/?config=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 https://charts.coinmetrics.io/crypto-data/?config=JTdCJTIybm...

RandomLensman 3y ago
What you are saying is you can invest Ether (i.e., stake it) and then might earn a return in Ether (not USD). Any appreciation of Ether vs USD still needs to come from outside demand for Ether.