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I realize I’ll be in the minority here saying this but: Isn’t all crypto a pump and dump scheme? It has no intrinsic return, it only makes you money if someone

I realize I’ll be in the minority here saying this but: Isn’t all crypto a pump and dump scheme? It has no intrinsic return, it only makes you money if someone buys it from you at a higher price than you paid for it. It’s still barely used as money. Any actual utility imagined for cryptocurrency has yet to materialize in any significant quantity despite nearly a decade of tech bros telling me it’s coming any day. I’d bet less than 0.1% of good and services are actually bought with it. (Optimistic estimates are 0.2%). So it’s clearly not primarily used as currency. You can’t eat it and it doesn’t pay a dividend. It’s just people pumping and dumping and other people hoping to time their purchases and sales along with the pump and dumpers.

gwbas1c 2y ago
You're not in the minority. It's just that, until recently, the groupthink would downvote / flag comments like yours.
nyolfen 2y ago
it gives ordinary people the ability to discipline their central bank and preserve their own personal holdings. there are other uses but this is the one i care about. > I’d bet less than 0.1% of good and services are actually bought with it. (Optimistic estimates are 0.2%). this also applies to nearly every 'normal' currency
- lottin 2y ago
  Sorry, but you're delusional. Central banks are held accountable through a system of checks and balances and the rule of law.
  - mrighele 2y ago
    Plenty of countries have neither checks and balances nor rule of law.
    - lottin 2y ago
      Of course. And that is a problem that a cryptocurrency won't solve.
  - nyolfen 2y ago
    i'm sure that is deep solace when you lose half of your savings to inflation. btw not sure which central banks you're thinking of, but this checks and balances stuff does not apply to the fed at least; it is explicitly defined as independent (ie unaccountable).
    - lottin 2y ago
      Independent doesn't mean unaccountable. The Fed is accountable to the Congress.
      - nyolfen 2y ago
        accountable in the sense that it approves appointees and receives reports, not in the sense that congress or voters have any say in monetary policy decisions. this is literally the point of the fed, to put it outside of electoral politics so it is not subject to democracy.
        lottin 2y ago
        The Fed has a public mandate, and the Congress has the responsibility and the power to make sure that it fulfils such mandate. Therefore it is accountable and it is subject to democracy, and at the same time independent from the electoral cycle.
- mattmaroon 2y ago
  I mean, no. You could already just buy any other currency for that and you’d still be better off. Crypto, being a ponzi scheme, has price fluctuations that make it undesirable as a store of wealth. If somebody put all of their liquid assets in any major fiat currency and lost half of it in a couple months you’d be surprised. If that happened with a crypto currency you wouldn’t. Which goes back to my statement that any benefits beyond gambling are only theoretical and haven’t actually materialized in 15 years of being told it’s coming any day now.
  - nyolfen 2y ago
    > You could already just buy any other currency for that and you’d still be better off. Crypto, being a ponzi scheme, has price fluctuations that make it undesirable as a store of wealth. this is in fact the majority use-case when i refer to people disciplining their central banks -- savings are converted to stablecoins pegged to the dollar etc. there is no alternative system that ordinary people have access to; buying dollars at a foreign exchange business is regulated and incurs punitive fees to prevent this from happening.
lallysingh 2y ago
You'll end up in a slippery slope there, though. Lots of stocks don't pay dividends, and you can't eat them either. But one use is to get around currency controls / manipulation by the government. Not a big deal in EUR/USD countries, but some places limit how much money you can take with you outside, or occasionally invalidate their old currency for a new one altogether.
- lottin 2y ago
  Whether a stock pays dividends or not has no relevance to the stock returns.
- mschuster91 2y ago
  > You'll end up in a slippery slope there, though. Lots of stocks don't pay dividends, and you can't eat them either. If you get enough shares you can force a dissolution of the company and get paid the proceedings. Of course that only works for stocks that are not overvalued, but stocks in that territory are for gamblers only anyway.
  - kortilla 2y ago
    The stock of every healthy company is overvalued by that measure. The dissolution of the company resulting in the share value means there were 0 expected earnings.
- popcalc 2y ago
  > Lots of stocks don't pay dividends, and you can't eat them either. Yes, you can. If you are an UHNWI your private banker who also manages your portfolio will organize cash loans to you and your family using the shares as collateral. It just shows up in your bank account and you pay your bills, go eat out and live off that tax free income. If you don't have major equity holdings (say a kleptocrat living in London who, coming from the wild-west has an aversion to publicly listed equities) your banker will do the same but using your real estate holdings, yachts, etc. as the collateral.
  - 2y ago
wmf 2y ago
Legally it's only a "pump and dump" if the people doing the pumping and the people doing the dumping are the same or working together. Otherwise it's just speculation.
seanw444 2y ago
That's the way most people use it now, yes. I'm also in the minority, in that I use Monero to pay for goods/services that accept Monero. That's it. Believe it or not, some of us use Monero as a matter of principle, not to do anything nefarious.
- popcalc 2y ago
  The only reason anyone accepts it from you as payment is because they believe one of a million speculating gamblers (who prefer to be called day-traders) will in turn take it off their hands for liquid cash. Also we cannot deny the impact Tether has on propping up all cryptocurrencies by way of printing USD value out of thin air. Imagine using BBBY shares as a store of value and you have pretty much the same situation.
  - seanw444 2y ago
    We haven't hit a tipping point where cryptocurrencies are actually needed for their intended purpose en masse. We live in peace and comfort, and not enough people in the first world are concerned about their digital transactions being used against them. When that changes, we will likely see shift from using bad CCs like Bitcoin for dumb pump and dumps, towards actually-useful CCs like Monero for daily transactions. However, if things change too drastically (the power grid goes down), then CCs are completely useless anyways and we'll be back to bartering. So I'll keep a good stock of Monero, and an even larger stock of things people value in a crisis. Guns, ammo, tools, food, water, medicine.
    - popcalc 2y ago
      >bartering A total myth. Only occurs in places where a peg is established to currency outside the environment, e.g. prisons. The very few anthropological examples of bartering occur between travelers who do not meet each other again for mutual fear of jealousy. Debt: The First 5,000 Years is required reading: https://annas-archive.org/md5/af5cf10f842d46b32a893be4ff52ba4d https://annas-archive.org/md5/af5cf10f842d46b32a893be4ff52ba... What happens after apocalypse is people return to providing goods and services on credit. Once every month a communal reckoning brings the community together and debts are cancelled out in a circle. If you have lived in a small eastern-European village filled with hen-farming babushkas, beekeepers and craftsmen as I have in Hungary you will recognize this to an extent even today. The commoner's social life and trade is inexorably linked. Even the wholesale traders who did make use of cash only settled using it once every few weeks or so, reminiscent of the hawala, fei chien (Chinese flying money), and other ancient mirror transfer systems. While debt was nominally denominated in it among peasants, only standing armies (Rome & USA), mercenaries, criminals, and nomadic peoples/traveling merchants ever held on to cash for longer than a moment. Acceptance of money to settle debts is the legitimacy of a state's monopoly on violence expressed in units. Why would I give you a sandwich for your monero in our fallout scenario? Monero is only worth anything today because someone will buy it from you for dollars. Why are dollars worth something? Because the U.S. Gov requires you to accept it for debts and they control the printing of it. If the government loses the ability to enforce that everything reliant on it falls with it. They are able to enforce it by way of the most powerful, violent standing army the world has seen.
samatman 2y ago
I doubt this comment will change your mind. But it should. https://news.ycombinator.com/item?id=33644090 https://news.ycombinator.com/item?id=33644090
- mattmaroon 2y ago
  Well, I do know remittances and other forms of cross-border payments are a use case and that’s lovely, but that’s not why Bitcoin is at $60,000. It’s at $60,000 because Americans gamble on it.
  - samatman 2y ago
    Yes so this: > Any actual utility imagined for cryptocurrency has yet to materialize in any significant quantity Is false, to the tune of billions in remittances per year. Normally when the number starts with a B we do consider that market significant. > It’s at $60,000 because Americans gamble on it. It's at $60,000 because speculative investors are taking a position on its future value being higher than its present value. You don't agree with that position and that's fine. To me, that position seems rational, looking at past performance, and considering the odds that the sort of financial instability which makes Bitcoin useful for remittances will increase over time. Clearly if you don't see it that way, you speculate on some other investment vehicle. Stocks perhaps. It's odd to take a look at a 15 year old growth curve which consistently pumps more than it dumps and call it a pump-and-dump scheme. But you do you.
    - deleted 2y ago
      [deleted]
TacticalCoder 2y ago
> I realize I’ll be in the minority here saying this but: Isn’t all crypto a pump and dump scheme? Bitcoin was created as a gigantic middle finger to the various governments, worldwide, ever printing more money out of thin air. This has been made very clear in the message encoded by Satoshi in Bitcoin's genesis block: "Chancellor on the brink of second bailout for banks" From there everybody was free to side with cypherpunk anarchists and to mine Bitcoins or to buy Bitcoins. Now I'm not disputing there have been lots of pump and dump. I'll list two examples... Without squinting too much the following for example is one kind of fraud: although SBF and FTX had already been exposed (by a famous short-seller) for the complete and utter scammy fraud they were, "journalists" at the NYT kept writing articles about SBF as if he was the second coming of Christ. Not surprisingly SBF had parents very well connected in NY and raising tens of millions for the dems. This, too me, is not far from a criminal organization (SBF/FTX/his parents and their accomplices at the NYT) actively defrauding people. One may dispute what's "pump and dump" (FTX was known to pump and dump a lot) but the NYT's articles certainly lured many into FTX, which pumped a great many shitcoins, and then, poof, all the money disappeared. Following that even, the very Chamath Palihapitiya said that VC from SV had to look very deep into the way they were functioning because they actively took part in a great many pump and dump of shitcoins (he criticized for example lessons being given as to how to create coins). It's nearly as if the biggest of the biggest of the pump and dumps were organized by well-known and well-respected entities and not by the cypherpunks who originally created Bitcoin no!? As for an actual usecase, I'll leave this here: - Turkey inflation rate in 2022: 72% - Venezuela inflation rate in 2022: 234% ("slowing" down from previous year) - US government public debt: soon to reach 36 *trillion* I think people who buy Bitcoin see it as the digital equivalent of physical gold. Now physical gold is something lots of HNer used to make lots of fun of in the past. They're probably not laughing that much now that central banks are stockpiling physical gold and that gold reached new all-time highs. So I'd suggest this: first wonder if you were one of these making fun of physical gold, thinking it was stupid. Then wonder if you were maybe wrong or not. Then wonder if "digital gold" is really that crazy of an idea?
- mattmaroon 2y ago
  Physical gold and crypto have very little in common. Gold price swings are extremely tame in comparison. It is a finite resource and it is actually quite useful (though admittedly, industrial usage alone does not account for its value.) And even still, it’s a dumb investment for most, and the central banks doing it are mostly small economies. If you were worried about rampant inflation or government default, you could hedge in any number of other ways that don’t routinely experience massive fluctuations and still pay interest. Economists thought buying gold was dumb for many decades, and still do. You can find some time periods if you look hard enough where gold outperformed the stock market but you have to really stretch to make a case that it’s a trend. https://www.reddit.com/r/FluentInFinance/comments/16upmcj/gold_vs_sp_500_over_the_last_3_decades/ https://www.reddit.com/r/FluentInFinance/comments/16upmcj/go...
EasyMark 2y ago
This argument is as old as cryptocurrency. Is collecting baseball cards as an investment pump and dump? Lots of people buy cards they expect might go up and then sell the later. Same with real estate. So no it’s not pump and dump, lots of people have made a legitimate fortune on it. Others well they pwned themselves. It’s kind of like realizing the stock market isn’t much more than a casino unless you buy vanguard 500 for the long haul, well crypto is similar.
- mattmaroon 2y ago
  Baseball cards are a great analogy. Yes, they have been pump and dumped. They also started off seeming valueless, became very valuable, and once people realized they could have made a lot of money from them, the market was flooded and people stopped throwing them out and its now been many decades since you could realistically profit from anything new. That’s about what I expect bitcoin will look like in the future. (Kind of already does.) If you bought them in the early days you made a fortune, now they’re mature and they’ll never rapidly appreciate again. Real estate has intrinsic value. Companies have inventive value (usually). Both of them can be used you give you a return even if you don’t sell.

gwbas1c 2y ago

You're not in the minority. It's just that, until recently, the groupthink would downvote / flag comments like yours.

nyolfen 2y ago

it gives ordinary people the ability to discipline their central bank and preserve their own personal holdings. there are other uses but this is the one i care about. > I’d bet less than 0.1% of good and services are actually bought with it. (Optimistic estimates are 0.2%). this also applies to nearly every 'normal' currency

lottin 2y ago
Sorry, but you're delusional. Central banks are held accountable through a system of checks and balances and the rule of law.
- mrighele 2y ago
  Plenty of countries have neither checks and balances nor rule of law.
  - lottin 2y ago
    Of course. And that is a problem that a cryptocurrency won't solve.
- nyolfen 2y ago
  i'm sure that is deep solace when you lose half of your savings to inflation. btw not sure which central banks you're thinking of, but this checks and balances stuff does not apply to the fed at least; it is explicitly defined as independent (ie unaccountable).
  - lottin 2y ago
    Independent doesn't mean unaccountable. The Fed is accountable to the Congress.
    - nyolfen 2y ago
      accountable in the sense that it approves appointees and receives reports, not in the sense that congress or voters have any say in monetary policy decisions. this is literally the point of the fed, to put it outside of electoral politics so it is not subject to democracy.
      - lottin 2y ago
        The Fed has a public mandate, and the Congress has the responsibility and the power to make sure that it fulfils such mandate. Therefore it is accountable and it is subject to democracy, and at the same time independent from the electoral cycle.
mattmaroon 2y ago
I mean, no. You could already just buy any other currency for that and you’d still be better off. Crypto, being a ponzi scheme, has price fluctuations that make it undesirable as a store of wealth. If somebody put all of their liquid assets in any major fiat currency and lost half of it in a couple months you’d be surprised. If that happened with a crypto currency you wouldn’t. Which goes back to my statement that any benefits beyond gambling are only theoretical and haven’t actually materialized in 15 years of being told it’s coming any day now.
- nyolfen 2y ago
  > You could already just buy any other currency for that and you’d still be better off. Crypto, being a ponzi scheme, has price fluctuations that make it undesirable as a store of wealth. this is in fact the majority use-case when i refer to people disciplining their central banks -- savings are converted to stablecoins pegged to the dollar etc. there is no alternative system that ordinary people have access to; buying dollars at a foreign exchange business is regulated and incurs punitive fees to prevent this from happening.

lallysingh 2y ago

You'll end up in a slippery slope there, though. Lots of stocks don't pay dividends, and you can't eat them either. But one use is to get around currency controls / manipulation by the government. Not a big deal in EUR/USD countries, but some places limit how much money you can take with you outside, or occasionally invalidate their old currency for a new one altogether.

lottin 2y ago
Whether a stock pays dividends or not has no relevance to the stock returns.
mschuster91 2y ago
> You'll end up in a slippery slope there, though. Lots of stocks don't pay dividends, and you can't eat them either. If you get enough shares you can force a dissolution of the company and get paid the proceedings. Of course that only works for stocks that are not overvalued, but stocks in that territory are for gamblers only anyway.
- kortilla 2y ago
  The stock of every healthy company is overvalued by that measure. The dissolution of the company resulting in the share value means there were 0 expected earnings.
popcalc 2y ago
> Lots of stocks don't pay dividends, and you can't eat them either. Yes, you can. If you are an UHNWI your private banker who also manages your portfolio will organize cash loans to you and your family using the shares as collateral. It just shows up in your bank account and you pay your bills, go eat out and live off that tax free income. If you don't have major equity holdings (say a kleptocrat living in London who, coming from the wild-west has an aversion to publicly listed equities) your banker will do the same but using your real estate holdings, yachts, etc. as the collateral.
- 2y ago

wmf 2y ago

Legally it's only a "pump and dump" if the people doing the pumping and the people doing the dumping are the same or working together. Otherwise it's just speculation.

seanw444 2y ago

That's the way most people use it now, yes. I'm also in the minority, in that I use Monero to pay for goods/services that accept Monero. That's it. Believe it or not, some of us use Monero as a matter of principle, not to do anything nefarious.

popcalc 2y ago
The only reason anyone accepts it from you as payment is because they believe one of a million speculating gamblers (who prefer to be called day-traders) will in turn take it off their hands for liquid cash. Also we cannot deny the impact Tether has on propping up all cryptocurrencies by way of printing USD value out of thin air. Imagine using BBBY shares as a store of value and you have pretty much the same situation.
- seanw444 2y ago
  We haven't hit a tipping point where cryptocurrencies are actually needed for their intended purpose en masse. We live in peace and comfort, and not enough people in the first world are concerned about their digital transactions being used against them. When that changes, we will likely see shift from using bad CCs like Bitcoin for dumb pump and dumps, towards actually-useful CCs like Monero for daily transactions. However, if things change too drastically (the power grid goes down), then CCs are completely useless anyways and we'll be back to bartering. So I'll keep a good stock of Monero, and an even larger stock of things people value in a crisis. Guns, ammo, tools, food, water, medicine.
  - popcalc 2y ago
    >bartering A total myth. Only occurs in places where a peg is established to currency outside the environment, e.g. prisons. The very few anthropological examples of bartering occur between travelers who do not meet each other again for mutual fear of jealousy. Debt: The First 5,000 Years is required reading: https://annas-archive.org/md5/af5cf10f842d46b32a893be4ff52ba4d https://annas-archive.org/md5/af5cf10f842d46b32a893be4ff52ba... What happens after apocalypse is people return to providing goods and services on credit. Once every month a communal reckoning brings the community together and debts are cancelled out in a circle. If you have lived in a small eastern-European village filled with hen-farming babushkas, beekeepers and craftsmen as I have in Hungary you will recognize this to an extent even today. The commoner's social life and trade is inexorably linked. Even the wholesale traders who did make use of cash only settled using it once every few weeks or so, reminiscent of the hawala, fei chien (Chinese flying money), and other ancient mirror transfer systems. While debt was nominally denominated in it among peasants, only standing armies (Rome & USA), mercenaries, criminals, and nomadic peoples/traveling merchants ever held on to cash for longer than a moment. Acceptance of money to settle debts is the legitimacy of a state's monopoly on violence expressed in units. Why would I give you a sandwich for your monero in our fallout scenario? Monero is only worth anything today because someone will buy it from you for dollars. Why are dollars worth something? Because the U.S. Gov requires you to accept it for debts and they control the printing of it. If the government loses the ability to enforce that everything reliant on it falls with it. They are able to enforce it by way of the most powerful, violent standing army the world has seen.

samatman 2y ago

I doubt this comment will change your mind. But it should. https://news.ycombinator.com/item?id=33644090 https://news.ycombinator.com/item?id=33644090

mattmaroon 2y ago
Well, I do know remittances and other forms of cross-border payments are a use case and that’s lovely, but that’s not why Bitcoin is at $60,000. It’s at $60,000 because Americans gamble on it.
- samatman 2y ago
  Yes so this: > Any actual utility imagined for cryptocurrency has yet to materialize in any significant quantity Is false, to the tune of billions in remittances per year. Normally when the number starts with a B we do consider that market significant. > It’s at $60,000 because Americans gamble on it. It's at $60,000 because speculative investors are taking a position on its future value being higher than its present value. You don't agree with that position and that's fine. To me, that position seems rational, looking at past performance, and considering the odds that the sort of financial instability which makes Bitcoin useful for remittances will increase over time. Clearly if you don't see it that way, you speculate on some other investment vehicle. Stocks perhaps. It's odd to take a look at a 15 year old growth curve which consistently pumps more than it dumps and call it a pump-and-dump scheme. But you do you.
  - deleted 2y ago
    [deleted]

TacticalCoder 2y ago

> I realize I’ll be in the minority here saying this but: Isn’t all crypto a pump and dump scheme? Bitcoin was created as a gigantic middle finger to the various governments, worldwide, ever printing more money out of thin air. This has been made very clear in the message encoded by Satoshi in Bitcoin's genesis block: "Chancellor on the brink of second bailout for banks" From there everybody was free to side with cypherpunk anarchists and to mine Bitcoins or to buy Bitcoins. Now I'm not disputing there have been lots of pump and dump. I'll list two examples... Without squinting too much the following for example is one kind of fraud: although SBF and FTX had already been exposed (by a famous short-seller) for the complete and utter scammy fraud they were, "journalists" at the NYT kept writing articles about SBF as if he was the second coming of Christ. Not surprisingly SBF had parents very well connected in NY and raising tens of millions for the dems. This, too me, is not far from a criminal organization (SBF/FTX/his parents and their accomplices at the NYT) actively defrauding people. One may dispute what's "pump and dump" (FTX was known to pump and dump a lot) but the NYT's articles certainly lured many into FTX, which pumped a great many shitcoins, and then, poof, all the money disappeared. Following that even, the very Chamath Palihapitiya said that VC from SV had to look very deep into the way they were functioning because they actively took part in a great many pump and dump of shitcoins (he criticized for example lessons being given as to how to create coins). It's nearly as if the biggest of the biggest of the pump and dumps were organized by well-known and well-respected entities and not by the cypherpunks who originally created Bitcoin no!? As for an actual usecase, I'll leave this here: - Turkey inflation rate in 2022: 72% - Venezuela inflation rate in 2022: 234% ("slowing" down from previous year) - US government public debt: soon to reach 36 *trillion* I think people who buy Bitcoin see it as the digital equivalent of physical gold. Now physical gold is something lots of HNer used to make lots of fun of in the past. They're probably not laughing that much now that central banks are stockpiling physical gold and that gold reached new all-time highs. So I'd suggest this: first wonder if you were one of these making fun of physical gold, thinking it was stupid. Then wonder if you were maybe wrong or not. Then wonder if "digital gold" is really that crazy of an idea?

mattmaroon 2y ago
Physical gold and crypto have very little in common. Gold price swings are extremely tame in comparison. It is a finite resource and it is actually quite useful (though admittedly, industrial usage alone does not account for its value.) And even still, it’s a dumb investment for most, and the central banks doing it are mostly small economies. If you were worried about rampant inflation or government default, you could hedge in any number of other ways that don’t routinely experience massive fluctuations and still pay interest. Economists thought buying gold was dumb for many decades, and still do. You can find some time periods if you look hard enough where gold outperformed the stock market but you have to really stretch to make a case that it’s a trend. https://www.reddit.com/r/FluentInFinance/comments/16upmcj/gold_vs_sp_500_over_the_last_3_decades/ https://www.reddit.com/r/FluentInFinance/comments/16upmcj/go...

EasyMark 2y ago

This argument is as old as cryptocurrency. Is collecting baseball cards as an investment pump and dump? Lots of people buy cards they expect might go up and then sell the later. Same with real estate. So no it’s not pump and dump, lots of people have made a legitimate fortune on it. Others well they pwned themselves. It’s kind of like realizing the stock market isn’t much more than a casino unless you buy vanguard 500 for the long haul, well crypto is similar.

mattmaroon 2y ago
Baseball cards are a great analogy. Yes, they have been pump and dumped. They also started off seeming valueless, became very valuable, and once people realized they could have made a lot of money from them, the market was flooded and people stopped throwing them out and its now been many decades since you could realistically profit from anything new. That’s about what I expect bitcoin will look like in the future. (Kind of already does.) If you bought them in the early days you made a fortune, now they’re mature and they’ll never rapidly appreciate again. Real estate has intrinsic value. Companies have inventive value (usually). Both of them can be used you give you a return even if you don’t sell.