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This is also the story of cryptocurrencies. From Silk Road to ETF-wrapped investment products where no actual crypto ever moves when you trade it. For 99.9% of

by pavlov 2y ago

This is also the story of cryptocurrencies. From Silk Road to ETF-wrapped investment products where no actual crypto ever moves when you trade it. For 99.9% of crypto investors, the Patrician knows exactly what kind of horse they ride. Soon the deal will be complete. Starting next year there will be an acceptable level of securities fraud and pump-and-dumps in the US, with the SEC looking the other way while crypto banksters and their political allies con the public.

k__ 2y ago
I started in crypto just three years ago, and while it's a bit more alternative, overall it's just business. Sure, I get paid in all kinds of tokens, and it's nice to see some coins rise after I get paid, which makes freelancer work feel a tiiiiiny bit more like being and employee with stock. But it's just a job like any other. I write articles, I write code, I talk with clients, investors, users... And at the end of the day I get paid.
- staunton 2y ago
  There's ransomware hackers in some countries who also write reports while getting health insurance and paid parental leave...
  - k__ 2y ago
    Fair.
  - b112 2y ago
    You could say the same about anything, let's pick cars. "There are people driving cars to commit crimes, like bank robbery!" Oh no! Now all cars and their drivers are criminals, I suppose? Grandma driving to the grocery store surely is up to no good? I think the claim being attempted is that crypto is mostly used for crime. Yet is that true? How many transactions happened yesterday? And how many were nefarious?
    - danielheath 2y ago
      > I think the claim being attempted is that crypto is mostly used for crime. Yet is that true? I mean... whether it's true or not, it sure _looks true from the outside_. What it looks like from the outside has little bearing on the underlying reality, but it's extremely relevant to questions like "will I be viewed with suspicion for having worked with this" or "is my company likely to end up subject to restrictive regulation". Assuming (I genuinely do not know) that the crypto industry has got legitimate uses which are not dwarfed by illegitimate ones, it has got a _massive_ image problem - because "everyone knows" it's for crime.
    - staunton 2y ago
      I made no specific claim about "crypto" one way or the other. My point is that to decide if some activity is legal, or moral, etc., you have to look at what is actually done. It's not enough to look at whether the day-to-day work "feels like a normal job", or "looks like a normal job" from the outside. You can have a highly respectable job while interacting with people who all look like stereotypical movie mobsters (e.g. prison social worker). You can also sit in a respectable office all day wearing a nice suit while committing genocide.
      - Terr_ 2y ago
        > "He was just a little villain. An old-fashioned craftsman, making crimes one-off. The really unforgivable acts are committed by calm men in beautiful green silk rooms, who deal death wholesale, by the shipload, without lust, or anger, or desire, or any redeeming emotion to excuse them but cold fear of some pretended future. But the crimes they hope to prevent in that future are imaginary. The ones they commit in the present–they are real." -- Shards of Honor by Lois McMaster Bujold
        ElFitz 2y ago
        Totally unrelated. But first Discworld, now this? I need your book recommendations, or reading list :)
- pavlov 2y ago
  > “I get paid in all kinds of tokens, and it's nice to see some coins rise after I get paid, which makes freelancer work feel a tiiiiiny bit more like being an employee with stock.” This is the very definition of a security in US law. These tokens are unregulated penny stocks. (Of course you and your employers may be in another country and this doesn’t apply.) It certainly doesn’t seem like a big crime. And maybe your employers are the good guys. But everyone knows there are also tons of bad actors in crypto who sell junk tokens to retail investors who lose their savings. This happens all over the world: millions of Nigerians have invested in crypto, but it’s almost exclusively into tokens created by local influencers that end up being worthless in a few years. That’s the overwhelming global reality of crypto, not the stories of noble dissidents receiving Bitcoin.
  - deleted 2y ago
    [deleted]
  - k__ 2y ago
    Yes, it's mostly a shit show. NFTs, meme coins, etc. I don't understand most of that. I keep to my niche, build with stuff I think is interesting, and keep away from most of it.
- wpietri 2y ago
  Does it bother you that there's no actual value creation at the bottom of it? I used to work for financial traders, and while I was there I'd justify it to myself in the usual terms: the traditional commodities markets increase liquidity and keep prices low for people doing actually socially valuable things, like growing wheat or turning it into food. But honestly, even then that could have been accomplished with 1/10th of the effort and smarts that was put into trading, and it was mostly driven by greedy people and/or fools, so when I got out of that industry I was glad to be shut of it. Crypto strikes me as yet worse, in that there's no underlying value, just a circus of greed.
  - digging 2y ago
    The crypto industry is extremely untrustworthy, but for me, I don't think "there's no actual value creation at the bottom of it" is more true of e.g. Bitcoin than USD. Assume USD is somehow attached to food, shelter, and other necessities (for the record, I agree that it is, but only indirectly). Those necessities are the things we need, but we don't need money to create them. We just need energy and physical resources (which, technically, also just require energy). All money is an accounting system built on top of the physical processes that we use to grow, gather, hunt, cultivate, shape, and build matter. So there's nothing weird, to me, about money being built almost directly on top of energy usage. I think it makes sense. Most money is built on top of gold or other precious-but-unnecessary materials, which I can't say seems more attached to real value than energy. But even if we assume 1 unit of money is 1 day's worth of food, who's to say that unit of food is actually a necessity for the holder? That food is a specialized form of energy; energy which has been used and which can't be unused. The food itself is an accounting of entropy. But it (mostly) can't be converted into shelter or other necessities, only traded or stored. So, again, I don't see "this money is an accounting of energy used" as outlandish, but reasonable. Let me conclude, however, by roundly rebuking crypto grifters and the majority of the industry. They're generally not operating on the arguments I've made above anyway.
    - wpietri 2y ago
      All currencies are built on trust. The reason the wildcat banking era failed was lack of trust. The reason various national currencies failed was never about resources, but lack of trust in the government behind the currency. The USD has been a very strong currency because it's backed by a stable government with a strong economy and has a stoutly independent central bank, which has built up enormous trust as a custodian of the currency. I grant that the rhetoric of Bitcoin is about energy usage, but it doesn't work that way in practice. The most obvious use is the rise of Ethereum and its shift to proof of stake rather than proof of work. But there's plenty of other evidence. David Rosenthal has some good evidence there, like: https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.html https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.htm... https://blog.dshr.org/2024/05/sufficiently-decentralized.html https://blog.dshr.org/2024/05/sufficiently-decentralized.htm...
kerkeslager 2y ago
It's actually stranger than that. The legal cryptocurrencies are often worse than the ones that lack respectability. Take for example, Greyscale's Chainlink Trust. It would be hard to find a more respectable cryptocurrency investment, yet I did some analysis of it about a year ago, and concluded they were selling Chainlink to their customers at approximately 8x the price on Coinbase[1]. Chainlink isn't likely to pull an 8x an time soon, and even if it does, trust investors wouldn't see the benefit, because Greyscale can simply seize those gains. There are two one could think of this in traditional market terms: 1. You can think of Greyscale as an arbitrageur between on-chain Chainlink and trust shares, where they'll be trying to purchase Chainlink at times when the difference between on-chain Chainlink and trust Chainlink is maximized. 2. You could also think of Greyscale as being able to print "shares". They can't print shares for free (i.e. they are legally obligated to purchase on-chain Chainlink) but they control the supply part of the supply:demand ratio. They can simply purchase on-chain Chainlink when the supply:demand ratio for trust Chainlink is higher than on-chain Chainlink, which takes money from trust Chainlink investors by diluting their shares. In theory the market will trend toward rational (i.e. eventually on-chain and trust Chainlink will trend toward a value that is equal, adjusted for the value of legal integration) but until that happens Greyscale is positioned as the only player that can take advantage of that temporary irrationality. Cryptocurrency has always been an application of caveat emptor where the caveats can be hidden in the code or the economics, or both, but with the integration into the legal system, it's now possible for cryptocurrencies with solid code and economics to scam the public with legal caveats. The average person was always at a disadvantage with cryptocurrencies, but I fear with the addition of legal respectability, even someone like myself who can read the code and has a solid understanding of economics can no longer be sure of my crypto investments. I'm finding lately that options trading has the same high variance (high upside potential is why I wanted into crypto investing), without a lot of the parts I don't like. Particularly, I'm doing it with my Roth IRA money so even taxes are easy. [1] These numbers have almost certainly changed since I did this analysis--I know HNers like to correct people, but consider that before you correct me here.
- mrguyorama 2y ago
  >Cryptocurrency has always been an application of caveat emptor where the caveats can be hidden in the code or the economics, or both, but with the integration into the legal system, it's now possible for cryptocurrencies with solid code and economics to scam the public with legal caveats. In other words, a EULA?

by pavlov 2y ago

k__ 2y ago

I started in crypto just three years ago, and while it's a bit more alternative, overall it's just business. Sure, I get paid in all kinds of tokens, and it's nice to see some coins rise after I get paid, which makes freelancer work feel a tiiiiiny bit more like being and employee with stock. But it's just a job like any other. I write articles, I write code, I talk with clients, investors, users... And at the end of the day I get paid.

staunton 2y ago
There's ransomware hackers in some countries who also write reports while getting health insurance and paid parental leave...
- k__ 2y ago
  Fair.
- b112 2y ago
  You could say the same about anything, let's pick cars. "There are people driving cars to commit crimes, like bank robbery!" Oh no! Now all cars and their drivers are criminals, I suppose? Grandma driving to the grocery store surely is up to no good? I think the claim being attempted is that crypto is mostly used for crime. Yet is that true? How many transactions happened yesterday? And how many were nefarious?
  - danielheath 2y ago
    > I think the claim being attempted is that crypto is mostly used for crime. Yet is that true? I mean... whether it's true or not, it sure _looks true from the outside_. What it looks like from the outside has little bearing on the underlying reality, but it's extremely relevant to questions like "will I be viewed with suspicion for having worked with this" or "is my company likely to end up subject to restrictive regulation". Assuming (I genuinely do not know) that the crypto industry has got legitimate uses which are not dwarfed by illegitimate ones, it has got a _massive_ image problem - because "everyone knows" it's for crime.
  - staunton 2y ago
    I made no specific claim about "crypto" one way or the other. My point is that to decide if some activity is legal, or moral, etc., you have to look at what is actually done. It's not enough to look at whether the day-to-day work "feels like a normal job", or "looks like a normal job" from the outside. You can have a highly respectable job while interacting with people who all look like stereotypical movie mobsters (e.g. prison social worker). You can also sit in a respectable office all day wearing a nice suit while committing genocide.
    - Terr_ 2y ago
      > "He was just a little villain. An old-fashioned craftsman, making crimes one-off. The really unforgivable acts are committed by calm men in beautiful green silk rooms, who deal death wholesale, by the shipload, without lust, or anger, or desire, or any redeeming emotion to excuse them but cold fear of some pretended future. But the crimes they hope to prevent in that future are imaginary. The ones they commit in the present–they are real." -- Shards of Honor by Lois McMaster Bujold
      - ElFitz 2y ago
        Totally unrelated. But first Discworld, now this? I need your book recommendations, or reading list :)
pavlov 2y ago
> “I get paid in all kinds of tokens, and it's nice to see some coins rise after I get paid, which makes freelancer work feel a tiiiiiny bit more like being an employee with stock.” This is the very definition of a security in US law. These tokens are unregulated penny stocks. (Of course you and your employers may be in another country and this doesn’t apply.) It certainly doesn’t seem like a big crime. And maybe your employers are the good guys. But everyone knows there are also tons of bad actors in crypto who sell junk tokens to retail investors who lose their savings. This happens all over the world: millions of Nigerians have invested in crypto, but it’s almost exclusively into tokens created by local influencers that end up being worthless in a few years. That’s the overwhelming global reality of crypto, not the stories of noble dissidents receiving Bitcoin.
- deleted 2y ago
  [deleted]
- k__ 2y ago
  Yes, it's mostly a shit show. NFTs, meme coins, etc. I don't understand most of that. I keep to my niche, build with stuff I think is interesting, and keep away from most of it.
wpietri 2y ago
Does it bother you that there's no actual value creation at the bottom of it? I used to work for financial traders, and while I was there I'd justify it to myself in the usual terms: the traditional commodities markets increase liquidity and keep prices low for people doing actually socially valuable things, like growing wheat or turning it into food. But honestly, even then that could have been accomplished with 1/10th of the effort and smarts that was put into trading, and it was mostly driven by greedy people and/or fools, so when I got out of that industry I was glad to be shut of it. Crypto strikes me as yet worse, in that there's no underlying value, just a circus of greed.
- digging 2y ago
  The crypto industry is extremely untrustworthy, but for me, I don't think "there's no actual value creation at the bottom of it" is more true of e.g. Bitcoin than USD. Assume USD is somehow attached to food, shelter, and other necessities (for the record, I agree that it is, but only indirectly). Those necessities are the things we need, but we don't need money to create them. We just need energy and physical resources (which, technically, also just require energy). All money is an accounting system built on top of the physical processes that we use to grow, gather, hunt, cultivate, shape, and build matter. So there's nothing weird, to me, about money being built almost directly on top of energy usage. I think it makes sense. Most money is built on top of gold or other precious-but-unnecessary materials, which I can't say seems more attached to real value than energy. But even if we assume 1 unit of money is 1 day's worth of food, who's to say that unit of food is actually a necessity for the holder? That food is a specialized form of energy; energy which has been used and which can't be unused. The food itself is an accounting of entropy. But it (mostly) can't be converted into shelter or other necessities, only traded or stored. So, again, I don't see "this money is an accounting of energy used" as outlandish, but reasonable. Let me conclude, however, by roundly rebuking crypto grifters and the majority of the industry. They're generally not operating on the arguments I've made above anyway.
  - wpietri 2y ago
    All currencies are built on trust. The reason the wildcat banking era failed was lack of trust. The reason various national currencies failed was never about resources, but lack of trust in the government behind the currency. The USD has been a very strong currency because it's backed by a stable government with a strong economy and has a stoutly independent central bank, which has built up enormous trust as a custodian of the currency. I grant that the rhetoric of Bitcoin is about energy usage, but it doesn't work that way in practice. The most obvious use is the rise of Ethereum and its shift to proof of stake rather than proof of work. But there's plenty of other evidence. David Rosenthal has some good evidence there, like: https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.html https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.htm... https://blog.dshr.org/2024/05/sufficiently-decentralized.html https://blog.dshr.org/2024/05/sufficiently-decentralized.htm...

kerkeslager 2y ago

It's actually stranger than that. The legal cryptocurrencies are often worse than the ones that lack respectability. Take for example, Greyscale's Chainlink Trust. It would be hard to find a more respectable cryptocurrency investment, yet I did some analysis of it about a year ago, and concluded they were selling Chainlink to their customers at approximately 8x the price on Coinbase[1]. Chainlink isn't likely to pull an 8x an time soon, and even if it does, trust investors wouldn't see the benefit, because Greyscale can simply seize those gains. There are two one could think of this in traditional market terms: 1. You can think of Greyscale as an arbitrageur between on-chain Chainlink and trust shares, where they'll be trying to purchase Chainlink at times when the difference between on-chain Chainlink and trust Chainlink is maximized. 2. You could also think of Greyscale as being able to print "shares". They can't print shares for free (i.e. they are legally obligated to purchase on-chain Chainlink) but they control the supply part of the supply:demand ratio. They can simply purchase on-chain Chainlink when the supply:demand ratio for trust Chainlink is higher than on-chain Chainlink, which takes money from trust Chainlink investors by diluting their shares. In theory the market will trend toward rational (i.e. eventually on-chain and trust Chainlink will trend toward a value that is equal, adjusted for the value of legal integration) but until that happens Greyscale is positioned as the only player that can take advantage of that temporary irrationality. Cryptocurrency has always been an application of caveat emptor where the caveats can be hidden in the code or the economics, or both, but with the integration into the legal system, it's now possible for cryptocurrencies with solid code and economics to scam the public with legal caveats. The average person was always at a disadvantage with cryptocurrencies, but I fear with the addition of legal respectability, even someone like myself who can read the code and has a solid understanding of economics can no longer be sure of my crypto investments. I'm finding lately that options trading has the same high variance (high upside potential is why I wanted into crypto investing), without a lot of the parts I don't like. Particularly, I'm doing it with my Roth IRA money so even taxes are easy. [1] These numbers have almost certainly changed since I did this analysis--I know HNers like to correct people, but consider that before you correct me here.

mrguyorama 2y ago
>Cryptocurrency has always been an application of caveat emptor where the caveats can be hidden in the code or the economics, or both, but with the integration into the legal system, it's now possible for cryptocurrencies with solid code and economics to scam the public with legal caveats. In other words, a EULA?