Author Topic: Cryptocurrencies  (Read 7144 times)

cherrypoptart

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Cryptocurrencies
« on: January 06, 2018, 10:34:12 PM »
I'm just wondering what people are thinking about cryptocurrencies including bitcoin but also all the altcoins springing up. I'm a bit impressed by how many seem to be dedicated to helping financially underserved peoples without access to traditional banking resources although I wonder how much of that is lip service as opposed to an authentic desire to help the poor around the world. Maybe it's a bit of both. It seems like there is a lot of opportunity here along with risk but of course the big money will often be made by the founders of these new altcoins. I wish I had the first clue how to make one. I'd probably call mine gnomes and make a trillion gnomes, locking up about half for the founders including myself and hope to see it go up from half a cent per gnome to over a dollar for each gnome at which point we'd all be multibillionaires. If anyone wants to start a cryptocurrency and wants some founders maybe we could all pull our resources and do it. It would have to have some sort of purpose, preferably altruistic. They already have one for micropayments to authors. That was a pretty good idea. That idea is probably just dreaming though as I understand you basically need a team of basically post-doctorate level programmers and engineers, but it's fun to dream. Whatever the long shot odds of getting rich on cryptocurrencies are they are probably better than the lotto. Of course there is the risk that it could all crash too and whatever you put in is lost but it seems like, for instance with bitcoin, even a small investment has the potential to make an awful lot of money. Is this the next tech bubble or is it legit?

TheDrake

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Re: Cryptocurrencies
« Reply #1 on: January 07, 2018, 03:53:07 PM »
I think it is only a matter of time before governments start cracking down on this.

G7 already made this statement a few years ago:

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In 2013 the G7's Financial Action Task Force issued the following statement in guidelines which may be applicable to companies involved in transmitting bitcoin and other currencies, "Internet-based payment services that allow third party funding from anonymous sources may face an increased risk of [money laundering/terrorist financing]." They concluded that this may "pose challenges to countries in [anti-money laundering/counter terrorist financing] regulation and supervision"

I think if enough people started actually making transactions in bitcoin or other crypto-currencies, what will happen is governments will start missing out on tax revenue that they normally expect to trace through centralized banking. This is the same reason that India removed large bills from circulation. They will then lean on the idea of stopping organized crime and terrorism to introduce curbs on its secretive nature. They will insist on having the "keys" to the money trail. The Swiss finally caved under this same pressure and agreed to open their books to international tax collectors.

Lots of the newer cryptocurrencies are trying to bank on making things even more anonymous than bitcoin. Bitcoin largely relies on obfuscation - you can't link an account with a user, but if you figure that out, you can find everyone they do business with. ZCash, Monero, Dash - they all seek to remove the traceability.

Personally, I wouldn't touch it as supplier or user. There just isn't enough history of stability. It's really just being treated as a commodity right now, but the demand side is just too hard to figure out. Gold has real uses for making products. Bitcoin (or other such) could one day just be supplanted by yet another crypto currency. So holding them would seem highly dangerous to me.

Making them? Unsurprisingly, you're not the first one to think of it. According to this site, there are 1384 of them.

https://coinmarketcap.com/

My favorite name might be Useless Ethereum Token

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The UET ICO transparently offers investors no value, so there will be no expectation of gains. No gains means few investors, few investors means few transactions, and few transactions means no Ethereum network lag—not to mention no depressing posts on /r/ethtrader about people losing all their savings!

I learned all about Ethereum smart contracts and Solidity over a weekend so I could launch this ICO. Most of the smart contract contract code is copied from GitHub and Stack Overflow posts, so it should be pretty much right… right?

and:

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Wait… is this a joke? Is it a scam?
Neither! This is real—and it's 100% transparent. You're literally giving your money to someone on the internet and getting completely useless tokens in return.

Will there be more chances to buy UET?
That's a great question! It totally depends on how the ICO performs in the beginning. If I don't make enough money to buy at least one flat-screen television, I'll probably keep the ICO open longer than initially stated.

According to the webpage, their crowdsale gathered $339,822.

For tokens that can't be used for anything, anywhere. Now, all those people had to do was to click through to the fully transparent web page. But they couldn't even manage that. No way I'm going near that kind of mania with real dollars to invest. BTW, just look at the chart for that garbage over the past week.


cherrypoptart

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Re: Cryptocurrencies
« Reply #2 on: January 09, 2018, 03:13:09 PM »
I appreciate all of that but I'm wondering if the same things couldn't have been said about bitcoin itself, and yet even if it wasn't rational to invest in it look at how much it has gone up anyway. This stuff doesn't seem to make any sense at all. Just making a currency out of nothing? And yet...

yossarian22c

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Re: Cryptocurrencies
« Reply #3 on: January 09, 2018, 04:21:52 PM »
I appreciate all of that but I'm wondering if the same things couldn't have been said about bitcoin itself, and yet even if it wasn't rational to invest in it look at how much it has gone up anyway. This stuff doesn't seem to make any sense at all. Just making a currency out of nothing? And yet...

Yep bitcoin is going to crash but the creator of it doesn't get the cash from new bitcoins, that goes to the miners.

TheDrake

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Re: Cryptocurrencies
« Reply #4 on: January 10, 2018, 09:57:51 AM »
It's the tulip craze all over again. Speculative bubbles can give you great returns. Some of the Dutch probably bought one bulb, sold quickly, and did great. Those that bought late and held on too long - some lost homes over it.

We'll wait and see, but I imagine that as the novelty of the opportunity wears off, there are going to be a lot of sad people holding at 5% of what they paid.

Seriati

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Re: Cryptocurrencies
« Reply #5 on: January 10, 2018, 11:29:41 AM »
I think if enough people started actually making transactions in bitcoin or other crypto-currencies, what will happen is governments will start missing out on tax revenue that they normally expect to trace through centralized banking.

Be very careful here.  Really you should report the income and pay taxes.   The way block chain works essentially provides a proven record of your transactions and income that is publically available.  Once a tax authority connects you to an account, they can literally look back through your entire income history and levy fines and put you in jail.

Also, lots and lots of scams in the space.  If it looks too good to be true, it literally is too good to be true.

TheDrake

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Re: Cryptocurrencies
« Reply #6 on: January 10, 2018, 12:58:09 PM »
True, bitcoin isn't very anonymous for the reasons you state.

The others are all working to solve this "problem" including Verge. Of course the flipside of public chain is that a Bad Guy can also unravel everything you did with bitcoin. Another reason not to use it.

TheDrake

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Re: Cryptocurrencies
« Reply #7 on: February 06, 2018, 05:23:47 PM »
And the traditional banking system is fighting back. Now starting to charge cash advance fees when people buy cryptocurrency through exchanges, or blocking credit card usage on coinbase and other exchanges outright.

TheDrake

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Re: Cryptocurrencies
« Reply #8 on: February 05, 2019, 10:38:48 AM »
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Quadriga has filed for creditor protection and estimates that about C$180m ($137m; £105m) in cryptocurrency coins is missing.

It has not been able to locate or secure its cryptocurrency reserves since Gerald Cotten died in December.

Cotten, 30, had sole responsibility for handling the funds and coins.

In court documents filed with the Nova Scotia Supreme Court on 31 January, his widow Jennifer Robertson, says the laptop on which Cotten "carried out the companies' business is encrypted and I do not know the password or recovery key".

article

Sweet. But wait.

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Zerononcense provided some sample withdrawal transaction ids that interlinked customers’ wallet addresses. The researchers found cluster wallets that were granting the customers’ withdrawal requests were waiting from deposits from other customers’ wallets. In some cases, the Quadriga cluster wallets had received funds from the portfolios of other crypto exchanges.

Therefore, it is likely that Quadriga was pitting traders’ positions against each other to fulfill deposit/withdrawal requests.

“QuadrigaCX did not have a designated hot or cold wallet to send the customer their funds,” wrote Zerononcense. “In specific, they were forced to aggregate funds from disparate, disorganized locations in order to ensure that the withdrawal was successful.”

article

And Bitcoin continues to fall.

D.W.

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Re: Cryptocurrencies
« Reply #9 on: February 05, 2019, 10:48:40 AM »
I'm far from an expert on any of this, but it's always struck me that bitcoins are working cross purpose.  The tech (blockchain) is all about transparency and accountability.  The usage is all about anonymity and avoiding "the man".  It's never made much sense to me. 

It's a bunch of people chasing some ideal who happen to be using interesting and widely applicable technology.  Then those who make their living gaming systems (as opposed to those mining on... gaming systems) caught on and decided to try and ride the wave/bubble.

Crunch

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Re: Cryptocurrencies
« Reply #10 on: February 23, 2022, 09:54:56 AM »
Let's revisit the cryptocurrency conversation in light of Canada going full totalitarian. For those watch CNN, there were peaceful protests against vaccine mandates in Ottawa. Truckers got together and blocked some roads (just like BLM and other protestors do). It was a peaceful, mostly party like atmosphere. The reaction of the Trudeau regime was, to say the least, authoritarian:

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First the Ottawa police department got GoFundMe to confiscate donations with the intention of redirecting them to other causes, then after an outcry, they backed down to merely blocking the money for 7-10 days before refunding. That seemed like a draconian escalation completely at odds with the tens of millions of dollars raised for social justice causes during the protest summer of 2020. But at the time, I thought it was something another fund-raising platform – one less likely to collaborate with the Canadian authorities – could route around. And GiveSendGo indeed started doing just that.

Turns out the concern over the donations was quickly rendered insignificant, as just a few days later, the Canadian prime minister imposed martial law on the protestors. Through powers intended for catastrophic events, he took to freeze the bank accounts of both Canadian protestors and donors, to compulsorily demand that tow-truck operators clear the streets, and forced insurance companies to drop policies for the protestors.

The key focus here is freezing "the bank accounts of both Canadian protestors and donors". If you donated even a $1 to this, the Canadian government is coming after you and will lock you out of your bank. Think about what would happen if you could not access your savings/checking, and your bank credit card were unusable. You could not pay rent, buy food, get necessary medication, pay your heating bill, etc. As someone said, "there are no constitutional rights without the freedom to transact"

So now comes cryptocurrency. Yes, some are not so anonymous but some, like Zcash, are created with a specific focus on the coin holders and users being anonymous.

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Zcash affords private transactors the option of "selective disclosure", allowing a user to prove payment for auditing purposes. One such reason is to allow private transactors the choice to comply with anti-money laundering or tax regulations. "Transactions are auditable but disclosure is under the participant's control.

Is it truly anonymized? There may be ways to get into the blockchain and figure out where the money is going (based primarily on usage patterns) but it's not easy - your average bank is not going to invest much resources in that unless a totalitarian regime forces them to do it.

LetterRip

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Re: Cryptocurrencies
« Reply #11 on: February 23, 2022, 11:21:02 AM »
Criminal conspiracy to blockade trade routes causing a billion dollars of damage a day, then foreign interference in furtherance of the criminal conspiracy, then money laundering in furtherance of that conspiracy.

The money absolutely should have been seized.

If people get off with just their accounts frozen, they should count themselves enormously lucky. Personally I think maximum consequences should apply for those who engaged in the money laundering.  Should be a slam dunk case - really difficult to argue that an account set up just to launder money wasn't aware they were engaging in criminal activity.

If they had just been protesting and hadn't engaged in a criminal conspiracy no-one would care.

NobleHunter

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Re: Cryptocurrencies
« Reply #12 on: February 23, 2022, 11:23:01 AM »
Quote
Let's revisit the cryptocurrency conversation in light of Canada going full totalitarian. For those watch CNN, there were peaceful protests against vaccine mandates in Ottawa. Truckers got together and blocked some roads (just like BLM and other protestors do). It was a peaceful, mostly party like atmosphere. The reaction of the Trudeau regime was, to say the least, authoritarian:

It's worth noting that none of these statements are true.

LetterRip

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Re: Cryptocurrencies
« Reply #13 on: February 23, 2022, 11:25:55 AM »
As to annoymity,

If you buy crypto with a money trail (credit card, bank account) then it can usually be traced.

If you mined the crypto and don't have it somehow associated with your name (ie don't have a crypto wallet linked to your phone) then it can probably be anonymous from the origin - withdrawal/usage often requires ID or address or accounts that are tied to an individual.  So maintaining anonymity end to end is usually not feasible, and most people probably didn't acquire their crypto in an anonymous way.

TheDrake

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Re: Cryptocurrencies
« Reply #14 on: February 23, 2022, 12:13:02 PM »
There is an enormous difference between blocking roads for a march (sanctioned or unsanctioned) and occupying them for three weeks.

Wayward Son

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Re: Cryptocurrencies
« Reply #15 on: February 23, 2022, 12:15:53 PM »
Or occupying a park, which everyone can walk around, vs. blocking a major (or only) thoroughfare through an area.

Lloyd Perna

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Re: Cryptocurrencies
« Reply #16 on: February 23, 2022, 12:42:17 PM »

TheDrake

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Re: Cryptocurrencies
« Reply #17 on: February 23, 2022, 12:52:19 PM »
The Seattle CHAZ covered 6 city blocks!

https://en.wikipedia.org/wiki/Capitol_Hill_Occupied_Protest

What makes you think anyone supported that? FYI, police cleared them out after three weeks also.

edgmatt

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Re: Cryptocurrencies
« Reply #18 on: February 23, 2022, 11:07:17 PM »
I guess they should have burned and looted the town over the course of a few days instead.  Then the media would have called them heroes instead of terrorists.   ::) ::) ::)

Crunch

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Re: Cryptocurrencies
« Reply #19 on: February 24, 2022, 07:54:36 AM »
Criminal conspiracy to blockade trade routes causing a billion dollars of damage a day, then foreign interference in furtherance of the criminal conspiracy, then money laundering in furtherance of that conspiracy.

The money absolutely should have been seized.

If people get off with just their accounts frozen, they should count themselves enormously lucky. Personally I think maximum consequences should apply for those who engaged in the money laundering.  Should be a slam dunk case - really difficult to argue that an account set up just to launder money wasn't aware they were engaging in criminal activity.

If they had just been protesting and hadn't engaged in a criminal conspiracy no-one would care.

Everyone remember this when political opposition in America is treated this way. People like him will cheer when you’re taken off to the camps.

cherrypoptart

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Re: Cryptocurrencies
« Reply #20 on: May 12, 2022, 12:46:56 AM »
A while back I had thought about recommending some cryptos I was in but I didn't want be seen as some sort of pumper and dumper so I kept my mouth shut. They were Matic (Polygon), Chainlink, and the big one in the news now, Terra-Luna which was my favorite. Luckily I took out a nice chunk of change at around 70 though it didn't seem lucky at the time since it then went up to 100, but then it seemed lucky when it dropped back to 55, and then didn't seem lucky again as it went back up to 118, but now it seems very lucky since it's down to less than 50 cents. But that's the big thing now, the collapse of the Terra-Luna algorithmic stable coin. It's all over the news if anyone is interested.

Apparently, there was a well coordinated, very sophisticated, multi-pronged attack on the Terra-Luna system specifically designed to de-peg it and send it into the death spiral to make a lot of money shorting.

Questions: Could any laws have been broken by people who did it?

Any chance of recovery?

Obviously I'm not recommending anything now. It's a bloodbath out there.

Fenring

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Re: Cryptocurrencies
« Reply #21 on: May 12, 2022, 09:32:26 AM »
It strikes me as potentially funny if it were illegal to mess around with a not-real thing causing its not-real value to become some other value. Once you realize you've bought nothing except for the expectation that some other guy will want the nothing more than you do, it shouldn't come as a surprise if one day it just vanishes.

NobleHunter

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Re: Cryptocurrencies
« Reply #22 on: May 12, 2022, 09:44:54 AM »
I would be a little surprised if anything illegal happened. The whole point of crypto was to escape government regulation and control.

cherrypoptart

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Re: Cryptocurrencies
« Reply #23 on: May 12, 2022, 12:08:17 PM »
I'm thinking something along the lines of tortuous interference, though admittedly that would be a stretch. The lawsuit alone would be good for justice though because if the people who did the attack are revealed they are in for a lifetime of uncomfortable public attention. Australia and some other places have catch-all laws against outraging public decency. This would seem to qualify at least to get some court records on the books and some legal action even if it fails, just to find out who they are for the public record. Jurisdiction would of course be a challenge.

Fenring

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Re: Cryptocurrencies
« Reply #24 on: May 12, 2022, 01:08:54 PM »
I'm thinking something along the lines of tortuous interference, though admittedly that would be a stretch. The lawsuit alone would be good for justice though because if the people who did the attack are revealed they are in for a lifetime of uncomfortable public attention. Australia and some other places have catch-all laws against outraging public decency. This would seem to qualify at least to get some court records on the books and some legal action even if it fails, just to find out who they are for the public record. Jurisdiction would of course be a challenge.

Haha, all you would have to do is show that crypto is already a disruption of public decency and that argument goes out the window :)

It's sort of like, if people's fortunes are banking on a lie being treated as being true, and someone comes along and tells the truth, is that 'tortuous interference'? I know it's not a 1-to-1 analogy, but...

cherrypoptart

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Re: Cryptocurrencies
« Reply #25 on: May 12, 2022, 04:22:56 PM »
For now it's all conspiracy theory stuff but here's an interesting one. How plausible it is, I have no idea. But something like this seems to stretch the bounds of legality.


https://en.cryptonomist.ch/2022/05/12/what-happened-terra-luna-ust/

"From what seems to transpire, BlackRock and Citadel would first borrow 100,000 BTC from the Gemini platform and then trade 25,000 BTC in UST. When the time was right, they contacted Do Kwon, the co-founder of Terra, telling him that they were willing to sell a large amount of BTC in exchange for UST at a discounted price.

By agreeing, Do Kwon drastically reduced the amount of UST liquidity in the market. At that point, BlackRock and Citadel began dumping all the remaining UST and BTC, triggering a cascade of sales on both assets.

And here comes the malfeasance. Both investment firms knew that Anchor was nothing more than a big Ponzi scheme, fueled by promises of high APYs at 20%. As a result, this sudden market crash would have triggered more withdrawals than the protocol could repay. In fact, according to Forbes, more than $5 billion UST would have been withdrawn from the platform, about a third of the entire market capitalization of the algorithmic stablecoin.

A kind of bank run that occurred during the Great Recession of 2008, which led to the failure of Lehman Brothers, one of the world’s largest investment banks at the time.

The excessive amount of withdrawals and selling then triggered aggressive selling on LUNA, resulting in a series of chain events that self-fueled UST’s de-peg process and complete market breakdown.

And that is how the “game” resulted in one of the greatest catastrophes in crypto and DeFi history, the failure of the entire Terra ecosystem.

All BlackRock and Citadel had to do was go to the market and reappear with the amount of the loan to be repaid at a more than discounted price, thus cashing in a nice margin to put in their pockets."

----------------------------------------------------------

Now BlackRock and Citadel as well as Gemini all deny any involvement. The point is though, if this was an attack of that nature, whoever did it, it seems like they would at least get sued. Whether the lawsuit is successful or not and where it could even take place is all up in the air, but people sue for less. British understatement there. But the first order of business would be finding out who, if anyone, was behind this. If anyone was behind it, there are in for a world of hurt if they can't keep their secret. The world has evolved a bit since Soros broke the Bank of England. If an investment company particularly a big one was involved, when social media gets people fired between the time they tell a racist joke on an airplane and the time that airplane lands, I can't imagine escaping with no consequences at all whether or not any laws were broken.

Fenring

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Re: Cryptocurrencies
« Reply #26 on: May 12, 2022, 04:38:01 PM »
Now BlackRock and Citadel as well as Gemini all deny any involvement. The point is though, if this was an attack of that nature, whoever did it, it seems like they would at least get sued. Whether the lawsuit is successful or not and where it could even take place is all up in the air, but people sue for less. British understatement there. But the first order of business would be finding out who, if anyone, was behind this. If anyone was behind it, there are in for a world of hurt if they can't keep their secret. The world has evolved a bit since Soros broke the Bank of England. If an investment company particularly a big one was involved, when social media gets people fired between the time they tell a racist joke on an airplane and the time that airplane lands, I can't imagine escaping with no consequences at all whether or not any laws were broken.

Dude, what are you talking about? Are you a Republican or a socialist? We are talking about people employing capital to make money by becoming winners. That is literally part of the design of a system where capital can be leveraged to outguess the market. Earlier I thought you were alluding to a hacker attack or something like that, but now it seems you're talking about a strong financial interest outmaneuvering Joe Q Public. I fail to see what you are actually objecting to.

Yes, pump and dump schemes in the stock market take advantage of investor ignorance, fear, and also create potential disinformation about the direction the market as a whole is moving. However the investor also has the opportunity to evaluate the company itself and decide whether the selloff is legit or not. If the company is solid then that's just an opportunity to buy in when it's down. In other words, the ignorance of the investor is rooted in, frankly, not having access to insider knowledge (I suspect insider trading is quite common), but this ignorance is not complete. Whereas in crypto there is no knowledge to have other than predictions of where the market will go. In other words if you mess with market perception of crypto you are actually messing with 100% of what dictates its 'value' in the first place. The analogy would be like if you not only started dumping Microsoft stock, but also bombed their headquarters during a board meeting. Or something like that. So any market manipulations done in crypto are more disruptive precisely because there is no real product. I would suggest avoiding getting into crypto if you find that fact disturbing.

cherrypoptart

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Re: Cryptocurrencies
« Reply #27 on: May 12, 2022, 05:01:17 PM »
If Do Kwon was tricked into a sale of UST for Bitcoin when the purpose of the purchase was to dump it all in a coordinated short sale attack in order to destroy the entire system which might have continued to operate just fine if someone with several hundred million dollars hadn't schemed up a way to take advantage of a flaw that could only be exploited by simultaneous hundred million dollar moves across multiple cryptos including bitcoin, UST, Luna, and Anchor, and success looks like what we see here with countless people losing their entire life savings and maybe even some suicides, I'm saying that even if it wasn't illegal that doesn't mean the people shouldn't be doxxed, publicly shamed, any companies they work for boycotted and given a piece of everyone's mind, and all the other things that happen nowadays whenever someone does something the least bit offensive. Someone says something racist, or not even racist but along the lines of VP Harris looks like she works for UPS because of her brown attire. That's not illegal. They still get fired. Maybe it's just me, but this seems like it's a lot worse than comparing the VP's clothes to a UPS uniform, so if anyone did this they deserve some public medicine.

Fenring

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Re: Cryptocurrencies
« Reply #28 on: May 12, 2022, 07:30:32 PM »
I still have no idea what you're complaining about. I've never before heard a Republican, of all people, complaining that a winner figured out a way to best the competition. Shouldn't they be applauded for their ingenuity? And more importantly, for the success that their efforts yielded? We're talking about the de-regulation party, after all. Winner takes all, stop holding back those who are more effective. That sort of thing.

Now I don't want to pidgeonhole you in with a blanket group label, but...well the party lines on this issue seem to be so well-defined (to my constant amazement) that I honestly do just assume you're generally in line with the right-wing ethos. So please correct me if I'm wrong about this. But so far it sounds like you're upset that something was not fair, which is a total reversal of the typical right-wing attitude about markets.

And like I mentioned before, and without trying to be mean about it, anyone purchasing a 100% speculative financial instrument that has no value other than the potential to offload it to someone else, should know the game they are getting into. I could make moral value judgements on this topic, but I'll avoid that and stick to the facts.

cherrypoptart

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Re: Cryptocurrencies
« Reply #29 on: May 12, 2022, 10:43:41 PM »
I guess every now and then the liberal side has their persuasive moments, so people don't necessarily have to let something slide just because it might be legal.

And that's still a might be in this case anyway. Until we know exactly what happened we won't know if any laws were broken. And once we know exactly what happened, if we ever do found out, that will mean we know the parties involved, and then we can make a determination about what legal consequences they should face as well as consequences outside the legal realm that the public in its infinite wisdom feel are appropriate.

This is no different from a company or individual doing something offensive. It doesn't have to be illegal. Flying a rainbow flag isn't illegal. Even Republicans feel free to express their outrage about a lot of things that are perfectly legal.

Seriati

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Re: Cryptocurrencies
« Reply #30 on: May 17, 2022, 03:28:22 PM »
I still have no idea what you're complaining about. I've never before heard a Republican, of all people, complaining that a winner figured out a way to best the competition. Shouldn't they be applauded for their ingenuity?

Not really.  I think you're confused about what being a Republican means.  As the transaction was described above, if Terra and Luna were securities the entire scheme would be illegal and the people behind most likely facing prison.  I don't think it's ethical to look at what's been made illegal for the stock markets, reverse engineer the circumstances the law was designed to protect against and then apply them to a "market" that is unregulated.  I don't think any major group of Republicans thinks that's okay.

Most of the traders at those big groups are hard core Democrats, not Republicans.  Which is why you see things that comply with the letter of the law while killing its spirit.

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And more importantly, for the success that their efforts yielded?

What success?  The reason we have the stock markets is to generate capital for operating businesses.  The entire financial overlay of "winning" in the market has almost nothing to do with the purpose of the markets, it's more of a consequence of creating a system that allows investment.  The only real benefit provided is that the trading market is supposed to cause the prices of the stocks to stay at their true value (as traders will buy below value and sell above).  When "techniques" distort the market to create fake divergences from the true value solely to benefit a clever person that's generally something that is promptly corrected and frequently made illegal.

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We're talking about the de-regulation party, after all. Winner takes all, stop holding back those who are more effective. That sort of thing.

De-regulation is about removing unnecessary, instrusive and contra-beneficial regulation.  It's never been about removing all regulation.

Honestly, take a look at the list of rules the SEC is currently proposing.  https://www.sec.gov/rules/proposed.shtml  Many of these proposals are over 500 pages.  They're proposing to fundamentally reorder the entire stock market (and all the rules are grossly pro nanny state).  Many of the rules seek to reorder society and have little to do with the markets themselves.  For example, https://www.sec.gov/rules/proposed/2022/33-11042.pdf, which is 490 pages on proposed climate change "reporting" rules that attempt to force the private non-securities market to comply with climate change reporting via forcing the public companies to report on their private counterparty's compliance - climate change is not in the SEC's mandate and has next to nothing to do with its mandate.

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Now I don't want to pidgeonhole you in with a blanket group label, but...well the party lines on this issue seem to be so well-defined (to my constant amazement) that I honestly do just assume you're generally in line with the right-wing ethos. So please correct me if I'm wrong about this. But so far it sounds like you're upset that something was not fair, which is a total reversal of the typical right-wing attitude about markets.

I don't have a clue what you've been reading.  But the idea that right does not support free and fair markets says it wasn't remotely objective.  A lot of communist propaganda promotes the idea that free markets are completely unrestricted where only the victor survives.  That's never been the position of any major political party, honestly, I don't even think the libertarians get that far.

There is a major difference between the parties on what regulation level is appropriate.  I would characterize is that the Republicans are looking for regulation that honors the deals made by the parties and promotes things like disclosure to allow both parties to understand the deal so they can reach a fair deal representing their agreement on the topic.  Cheats are not acceptable.  The Democrats want even more, they want to control the actual deals that parties are allowed to make and to completely eliminate transactions that they view as unfair (whether or not the parties agree).  Disclosure is not just for balancing the information available to the parties, it's also for the government to monitor the deals and override them where it doesn't agree that the deal should have been entered into.

But that said it's not hard and fast between the parties.  For example, we have rules like the bar on enforcement of contracts with minors that are more consistent with the Democrat position and both parties support.  Or things like the tip based compensation rules that are more Republican style and still have significant support among Democrats (particularly Democrats earning tips). 

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And like I mentioned before, and without trying to be mean about it, anyone purchasing a 100% speculative financial instrument that has no value other than the potential to offload it to someone else, should know the game they are getting into. I could make moral value judgements on this topic, but I'll avoid that and stick to the facts.

I think there's some truth to what you said here, but there's also some "not truth" and I don't mean in a bad way necessarily.  There's currently two realities on this.  The first is that digital assets are inherently valueless hype-generated assets.  The second is that they actually do have value and that value is increasing and becoming more real as they layer more and more technologies on top of them.  At some point there will be virtual currency, and already things like smart contracts are a huge value add.  There's never been such an "open" system that let transactions for so many things occur without any kind of active broker.  While that doesn't dictate that any one digital asset has a value, it does mean that digital assets at a broad level have value.  How to ascribe it to one piece of the eco system or another is the question.

Fenring

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Re: Cryptocurrencies
« Reply #31 on: May 17, 2022, 04:35:45 PM »
Seriati,

I know I was painting right-wing opinion on markets in broad strokes, but my main point was to point out the irony in someone coming out on top in an otherwise kill or be killed market. The crypto market can literally only have winners if there are losers; it is zero sum. Your value can only go up if new customers enter the market who will pay more. From that standpoint you can't regulate it because there is nothing to regulate. You can ask for SEC declarations because there is really nothing to declare. No earnings. No subscribers. No growth. It's not even a product. Yes, the valuations can continue going up until kingdom come, in theory, so the claim that they have 'no value' has to be qualified to include the 'no intrinsic value' disclaimer. The technology behind it has value, and the hype is at least partially related to that, but the value is not related to that. You do not actually have a share in blockchain by buying crypto.

You are right that manipulating regulated stock prices would be illegal, but that is not just because there happens to be a rulebook, but more specifically because there are real value-calculations people need to make about an actual company, which include its future and so forth. A giant inexplicable selloff or negative indication could mean someone is essentially putting misleading information into the market about the realities of the company, like as if they had insider information, but really disinformation designed to fool other investors. But none of this could apply, or even should apply, when there is no real information to fool anyone about in crypto. The entire market is based on speculator sentiment, so if you can affect speculator sentiment in an advantageous way that is literally you making a 'real effect' in its 'real value'. The closest analogy in stocks would be if you caused an actual material loss to a company, like blowing up their factory, causing a cascading reduction in stock price. That's only illegal because arson is illegal; but it's not a 'stock manipulation' per se.

To summarize, I agree with you about contracts, and how the law should be designed to make sure contracts are transparent and honest. However in crypto the stated contract is basically "you buy this and pray someone later on wants to buy it for more." That's the actual contract in terms of transparency. What they may tell you is "guaranteed returns!" which is the actual thing that would be illegal if it was translated into regulated securities, since it would be an illegal ponzi scheme. So I personally view the malfeasance, if any, to be on the side of those distributing the coins, not those who mess around with them.


cherrypoptart

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Re: Cryptocurrencies
« Reply #32 on: May 17, 2022, 06:01:16 PM »
Should the perpetrators be able to get away with it with total anonymity though? Soros didn't when he crashed the pound and other currencies too. And now people can choose whether or not to do business with him or respect him as a person. But if Soros was just betting based on market conditions, this attack here was very different. It was directly, purposefully, with malice aforethought, causing the conditions.

Does the legality and morality depend a bit on who did it?

Was it some guy operating out of his mom's basement?

Was it a nation state like North Korea or Russia or Iran?

Was it a competitor in the crypto sphere or a competitor in the legacy financial sector that wanted to crash the market not just for a quick buck but to destroy an entire industry?

If you look at how this was done, it wasn't just someone shorting. There were massive dumps at key points that were specifically timed based on detailed knowledge of how and when the liquidity pools operate so as to sabotage them.

https://fortune.com/2022/05/13/terra-ust-stablecoin-crash-suspicious-potential-attack-george-soros/

https://twitter.com/OnChainWizard/status/1524123935570382851?s=20&t=y_2M1NHZFC7KosbqZiqF-g

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I hope that even if people don't approve of crypto they wouldn't expect people who lost their life savings to just shrug their shoulders and not concern themselves at all with who did it. If there was nothing wrong with it, the perp wouldn't right now be very afraid that the world might ever find out who they are.

The system was actually pretty solid if the only thing that could take it down was an attack of this magnitude and sophistication. Pretty solid. Not solid enough of course. But not the ponzi scheme it's made out to be.

All hope isn't lost though. Almost all hope is gone, but not 100%. At least Do Kwan is trying to compensate people by giving them stakes in the new Terra coin that won't have anything to do with being a stablecoin but is pretty much just another coin like the rest of them. A lot of coins are doing well enough and terra has a lot of talent and infrastructure still behind it. It's very remotely possible that people over the course of a few years people might get back 10% of what they lost from the highs. Maybe more. It's being compared a bit to the Ethereum hard fork and that worked out very well. This is a lot different of course but that doesn't mean it has to fail.

The debate right now is on fork versus burn. Obviously legacy holders want the fork whereas the people who now have a billion Lunas they picked up for a $100 would prefer the burn. The government of South Korea is looking into how it all went down too. If whoever did it can be found and malfeasance shown or even suspected the lawsuits will fly and probably more than lawsuits will be flying too regardless of whether or not any laws were broken. A guy already showed up to Do Kwan's residence asking for him when his wife answered the door and they now have police protection. If the attacker's identity is proven they may have a hard time enjoying their ill gotten gains. That's really the most anyone who lost can reasonably hope for now. I'm glad I took about 50x my initial investment off the table a while back but of course I wish I'd taken a lot more a bit sooner.

"I still have no idea what you're complaining about. I've never before heard a Republican, of all people, complaining that a winner figured out a way to best the competition. Shouldn't they be applauded for their ingenuity?"

There is going beyond the pale. Sometimes how far that is depends on the law and other times it depends on morality. And then there are even a few times when it's just decided by the mob.

If we want to talk about crypto being unregulated, approaching anarchy, then what regulates anarchy? Basically, the people directly. If that's all we have in this case, then so be it.

Seriati

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Re: Cryptocurrencies
« Reply #33 on: May 18, 2022, 12:07:08 PM »
Seriati,

I know I was painting right-wing opinion on markets in broad strokes, but my main point was to point out the irony in someone coming out on top in an otherwise kill or be killed market.

Fen, honestly, painting in "broad strokes" means advocating positions that are generally true but in a vague way without going into the details.  Your description of the "Republican position" is not painting with a broad stroke, it's painting with green paint and calling it orange.  Republicans favor the rule of law, and taking the view that they should support a "winner" without regards to the means used to win is actually reversing their views.  The Democrats are the party that favors an outcome without regard to the process used to achieve it.

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The crypto market can literally only have winners if there are losers; it is zero sum. Your value can only go up if new customers enter the market who will pay more.

Except this is contradicted by reality.  Crypto is at a fundamental level not zero sum.  For zero sum to exist your gain in value has to come at my expense.  I have to lose something real.  Crypto is fundamentally just confidence.  Confidence is not a finite resource and it's absolutely not zero sum.  Two crypto traders can trade crypto assets and cause both assets to increase in value.

What your grasping at is that value is still vapor-like.  While crypto is different than any other currencies, you can still ask yourself why people accept dollars in exchange for real goods.  It's not because the dollar itself has a value, its because of a long confidence that the dollar means something.  Is it really different if its a government that represents 300m people that says it has value, or 300 million people not represented by a government that say something has value?

Or maybe to explain it in tangible terms.  Why is the Mona Lisa considered to be such a valuable piece of art?  I wouldn't hang it on my wall.  And while a lot of people probably have a poster of it, is that because it's really something they enjoy or is it because they've been told they should enjoy it?  Is the Mona Lisa objectively more pleasing than pop art that people hang in their homes in generally far more prominent places?  The Mona Lisa's value is not inherent it's purely a matter of agreement of the masses.

There are lots of ways to ascribe value, and I'm struggling to grasp how crypto could ever be viewed as zero sum, when everyone could lose or everyone could gain based solely on confidence.

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From that standpoint you can't regulate it because there is nothing to regulate. You can ask for SEC declarations because there is really nothing to declare.

There are people to regulate.  That's pretty much how the SEC got control of the stock market.  Issuance of stock was completely private in most of history.  It probably was impossible to imagine the kinds of controls we think are second nature.  Crypto (at least past basic things like bitcoin) is heavily exposed because to have value it has to have hype and leaders and spokespersons.  All of those people could be directly regulated. 

Not to mention, crypto that can't move into the real world is pretty weak, and those are additional points of contact.

Not being able to identify an account holder on a platform is only a tiny, tiny, tiny piece of what is relevant to regulation (and only applies to some - not all - of these assets).

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No earnings. No subscribers. No growth. It's not even a product.

Terra-Luna - the example at hand - was paying 20% interest on deposits.  I grant you those earnings were not based on cash streams but rather based on rising confidence in all crypto assets.  But you could buy and sell them and take the profits in other currencies. 

As to subscribers, not sure what you even mean, there were hundreds of thousands of people holding the tokens.

Growth?  Actually a ton and not just in value.  The point of the Terra-Luna model was to create ever more linking utilities to the platform.  To add material features.  That happened and there were constantly more things available in their eco system.

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Yes, the valuations can continue going up until kingdom come, in theory, so the claim that they have 'no value' has to be qualified to include the 'no intrinsic value' disclaimer. The technology behind it has value, and the hype is at least partially related to that, but the value is not related to that. You do not actually have a share in blockchain by buying crypto.

You're getting closer, but I think you're basing this on how blockchain interacts with bitcoin and not so much on how other crypto assets operate.  There is a lot of hype, but the value inherent is in being able to buy and achieve things that you could not buy or achieve previously.  There's lots of evidence that's actually happening.  Take a look at the DAOs that are out there.  Some are just implementing exiting paper mechanics, but others are truly innovate in allowing a group to make collective decisions that are implementable in real time.

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You are right that manipulating regulated stock prices would be illegal, but that is not just because there happens to be a rulebook, but more specifically because there are real value-calculations people need to make about an actual company, which include its future and so forth.

In a perfect world sure.  However, a lot of a stock's value is tied into the same kind of confidence metrics.  They don't always reflect real changes in the underlying prospects or value.

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The entire market is based on speculator sentiment, so if you can affect speculator sentiment in an advantageous way that is literally you making a 'real effect' in its 'real value'.

And the market for years of Tesla wasn't?  The company had billion dollar valuations when it was producing hundreds of cars (total in a year).  Facebook had billions in valuation when its revenue stream was tiny.  Granted, there was a lot of potential there, but you're kidding yourself if you discount the potential that's currently in the crypto space.

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The closest analogy in stocks would be if you caused an actual material loss to a company, like blowing up their factory, causing a cascading reduction in stock price. That's only illegal because arson is illegal; but it's not a 'stock manipulation' per se.

Or you could just looked at what happened with Gamestop.  No factories blown, just a total meta-game strategy to catch out short sellers that had to close positions.

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To summarize, I agree with you about contracts, and how the law should be designed to make sure contracts are transparent and honest. However in crypto the stated contract is basically "you buy this and pray someone later on wants to buy it for more." That's the actual contract in terms of transparency.

Now that is painting with broad strokes.  Lol.

There so many kinds of digital assets, with so many different sets of statistics that a claim like that is kind of nonsense.  There are digital assets that are effectively no different that a pre-paid expense with a right to claim a good or service in the real world.  Absent the related operating company going toes up that's a real value. 

For others, the value they add is the ability to enter into things like smart contracts, where you effectively post the details of what you want and when it's objectively satisfied the payment is made and the contract closes.  Effectively a giant auction house of nearly unlimited scope and range.

Others are pure junk.  There's a lot of range.

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What they may tell you is "guaranteed returns!" which is the actual thing that would be illegal if it was translated into regulated securities, since it would be an illegal ponzi scheme. So I personally view the malfeasance, if any, to be on the side of those distributing the coins, not those who mess around with them.

It's only a ponzi scheme if it's not generating value and the primary source of returns is from new contributors.  The primary source of returns on digital assets is not from the redistribution of new contributions, but from the speculative swelling in the price.

yossarian22c

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Re: Cryptocurrencies
« Reply #34 on: May 18, 2022, 12:30:00 PM »
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What your grasping at is that value is still vapor-like.  While crypto is different than any other currencies, you can still ask yourself why people accept dollars in exchange for real goods.  It's not because the dollar itself has a value, its because of a long confidence that the dollar means something.  Is it really different if its a government that represents 300m people that says it has value, or 300 million people not represented by a government that say something has value?
...

Taxes. Taxes make dollars valuable. Everyone has to pay taxes, property, income, etc. Therefore dollars are a needed commodity for people and businesses. So yes, dollars are valuable and maintain a relatively stable value because a government backed by 300 million people says they are valuable and everyone needs to obtain some to participate in the economy. Most crypto is just the solution to some math problem that literally no one cares about. Crypto farming has real costs, huge amounts of electricity used on the server farms. But you are right that the only thing that gives any crypto value is that people think it has some value. Therefore it can all drop to zero tomorrow. Crypto's appeal has been deregulation/decentralization of currency. However because it lacks that fundamental aspect of being the accepted tender by governments no business or individual needs to acquire bitcoin, tera coin, etc. Thus each individual currency has only the value that the confidence it inspires. If you thought runs on banks were bad before the FDIC when they had deposits that were backed by local home and business loans. Just think what a run on crypto looks like. There is nothing behind those currencies besides some abstract mathematics. I'm actually surprised it took this long for some financial institution, hedge fund, trader, North Korean hackers, or other entity to figure out how to make money crashing one of these. Maybe they are just now getting enough money involved to attract the big sharks and for there to be mechanisms to "short" the currency. My advice would be to get out of crypto, particularly any that attracts enough attention that shorting can be achieved. If you can make money off of crashing something that's value is 100% speculation and the confidence of people trading it then it won't take too long for the sharks to figure out how to short it and crater its value.

Fenring

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Re: Cryptocurrencies
« Reply #35 on: May 18, 2022, 01:05:32 PM »
Taxes. Taxes make dollars valuable. Everyone has to pay taxes, property, income, etc. Therefore dollars are a needed commodity for people and businesses. So yes, dollars are valuable and maintain a relatively stable value because a government backed by 300 million people says they are valuable and everyone needs to obtain some to participate in the economy.

I'll try to go point by point later today for Seriati's replies, as I get where they are coming from but I strongly disagree. However part of my reply will be found in what yossarian wrote here. The fact that money is "legitimate" isn't just some ploy by 'the man' to 'control everything' but it's actually a necessary system of confidence in which actual life can be assured of some level of stability. You can tax it, you can track and control the money supply, and most importantly, you can mandate its use and acceptance. Anyone in the U.S. who refused to accept U.S. dollars for a transaction would risk having their business shut down or even possibly going to jail. So there is force backing up the currency, in plain terms. Without that force it's a free-for-all. And you can bet that despite the fake claims that crypto will end up being a real parallel currency (which so far it never really has been except in rare cases), if there was ever a real move for crypto to compete with the U.S. dollar in the U.S. it would be shut down immediately. There is no way the government would allow a competing currency they don't control; it would practically be a literal declaration of war against the government.

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If you thought runs on banks were bad before the FDIC when they had deposits that were backed by local home and business loans. Just think what a run on crypto looks like. There is nothing behind those currencies besides some abstract mathematics. I'm actually surprised it took this long for some financial institution, hedge fund, trader, North Korean hackers, or other entity to figure out how to make money crashing one of these.

This is another hugely important point I would touch on for a more detailed reply. Looking back people are astonished that no one went to jail for the mortgage market scams going on leading to 2008. Crypto crashing will make that look like a picnic. How'd you like to see entire economies declare bankruptcy? Wars will be guaranteed, along with dictators. China will stay out of it since they were smart enough to ban crypto, so I guess they'll come out on top of that despite their current covid setbacks.

More later about why long-form zero sum can look like two-way growth in the short term (although my teaser is self-explanatory).

yossarian22c

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Re: Cryptocurrencies
« Reply #36 on: May 18, 2022, 03:17:21 PM »
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What they may tell you is "guaranteed returns!" which is the actual thing that would be illegal if it was translated into regulated securities, since it would be an illegal ponzi scheme. So I personally view the malfeasance, if any, to be on the side of those distributing the coins, not those who mess around with them.

It's only a ponzi scheme if it's not generating value and the primary source of returns is from new contributors.  The primary source of returns on digital assets is not from the redistribution of new contributions, but from the speculative swelling in the price.

The speculative swelling in price comes from new contributors. When the market/confidence goes away its worthless. So if new people quit contributing, the value/returns evaporate. Pretty close to a ponzi scheme. Not illegal because its pretty clear what people are buying so its not fraudulent the way a ponzi scheme is, but it can crash in exactly the same way. There is no value created by creating a bit coin. So the minute people quit buying in the value evaporates and the crypto currency collapses.

yossarian22c

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Re: Cryptocurrencies
« Reply #37 on: May 18, 2022, 03:38:45 PM »
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The entire market is based on speculator sentiment, so if you can affect speculator sentiment in an advantageous way that is literally you making a 'real effect' in its 'real value'.

And the market for years of Tesla wasn't?  The company had billion dollar valuations when it was producing hundreds of cars (total in a year).  Facebook had billions in valuation when its revenue stream was tiny.  Granted, there was a lot of potential there, but you're kidding yourself if you discount the potential that's currently in the crypto space.
...

Tesla had an electric car design that was years beyond any of the major auto companies. Facebook had hundreds of millions of daily users. Crypto has hype and only hype.

At times Tesla and Facebook were probably overvalued on a rational basis (Tesla probably still is). But they had real assets, real value, and a real business plan. Crypto again has hype and some obscure mathematics. Is it possible for that hype to maintain value, possibly. Maybe they can convince some country with a crumbling currency to adopt crypto as a currency. But until crypto gets currency status somewhere its just trading electronic bits on a block chain and hoping that someone in the future will pay you more for those bits on the block chain.

Mynnion

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Re: Cryptocurrencies
« Reply #38 on: May 18, 2022, 05:33:04 PM »
The only way I could see to truly set a value to crypto would be to tie it directly to computing time/power as a commodity.  The tangible "rental" associated with processing power could have real value with the right software.  Think SETI but with the processing power for sale. 

As it is someone claimed it had value and so it does but only as long as others share that view.  Frequent mass swings and thefts don't help promote confidence.

Seriati

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Re: Cryptocurrencies
« Reply #39 on: May 18, 2022, 05:53:37 PM »
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What your grasping at is that value is still vapor-like.  While crypto is different than any other currencies, you can still ask yourself why people accept dollars in exchange for real goods.  It's not because the dollar itself has a value, its because of a long confidence that the dollar means something.  Is it really different if its a government that represents 300m people that says it has value, or 300 million people not represented by a government that say something has value?
...

Taxes. Taxes make dollars valuable. Everyone has to pay taxes, property, income, etc. Therefore dollars are a needed commodity for people and businesses.

Your argument is that government issued currency's value is that the government accepts it back in satisfaction of tax payments.  That's so circular that it's scary. 

Honestly, if that were the basis for value the dollar would have died a long time ago.  People would hold and trade other assets and only convert to dollars when they had to for tax purposes.  In fact if that were the sole basis of value of the dollar it would be virtually impossible to calculate the value of the assets you actually receive and trade. 

You're literally asserting that taxes should be calculated as a percentage of the amount of the pre-paid tax credits you get paid for doing them.

While I get the logic on your position, being logical in this case doesn't make it real.  It's also not historical.  When dollars were created, they had to be backed by gold and other precious metals to establish a value.  They were not then (nor are they now) simply pre-paid tax credit vouchers.

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However because it lacks that fundamental aspect of being the accepted tender by governments no business or individual needs to acquire bitcoin, tera coin, etc. Thus each individual currency has only the value that the confidence it inspires.

By this measure Bitcoin would pass.  You can pay taxes in El Salvador with them.  The difference is that's paying with gold bullion, the country can't mint more Bitcoin, it can only transact in them.

I'll try to go point by point later today for Seriati's replies, as I get where they are coming from but I strongly disagree. However part of my reply will be found in what yossarian wrote here. The fact that money is "legitimate" isn't just some ploy by 'the man' to 'control everything' but it's actually a necessary system of confidence in which actual life can be assured of some level of stability.

I've never argued against confidence in currency being vital.  Go back and look at those long, long arguments I had with Pyrtolin where he argued the modern monetary position that a government could print virtually unlimited dollars to pay any bill and it would have no harmful effects (Biden apparently believed him, so now we have more inflation than we would otherwise have). 

But confidence in the US government's value is not the exclusive way to generate value.  I actually agree that crypto as currency (even as investment) is inherently flawed and that most of the gains you see today are illusory.

However, where I diverge is the seeming belief that its all vapor.  The future is probably not thousands of competing tokens that each do next to nothing, but rather a handful of dominant virtual eco-systems that are exchanged at varying rates based on the value of the tech that's actually inside of them.  I mean a "global dollar" can only arise if the stranglehold of individual countries over currency is broken.  More likely than not some group of countries or a international organization is going to get behind its own digital currency at some point (to allow them to maintain some form of control over currency) and then you'll have both factors pushing for that currency to become dominant. 

Either that or some crypto team will figure out a way to irrevocably tie real assets into crypto (i.e., a gold standard) and that will be a game changer.  Terra-Nova was close with it's tie in to the more robust Bitcoin eco-system, but it's not going to be full proof until they can tie into the real world.

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You can tax it, you can track and control the money supply, and most importantly, you can mandate its use and acceptance. Anyone in the U.S. who refused to accept U.S. dollars for a transaction would risk having their business shut down or even possibly going to jail.

There are multiple places in NYC that refuse to accept hard currency.

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And you can bet that despite the fake claims that crypto will end up being a real parallel currency (which so far it never really has been except in rare cases), if there was ever a real move for crypto to compete with the U.S. dollar in the U.S. it would be shut down immediately. There is no way the government would allow a competing currency they don't control; it would practically be a literal declaration of war against the government.

More likely the digital dollar will move out of the control of the middle men - the banks - and into direct digital interactions between the federal government and individuals.  Once that happens, there's no reason the US gov't can effectively acquire other digital assets at will just by issuing more currency, of course that puts the dollars into random hands, which isn't what they want.

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This is another hugely important point I would touch on for a more detailed reply. Looking back people are astonished that no one went to jail for the mortgage market scams going on leading to 2008.

Because generally speaking there were no crimes committed.  In most cases, such a trial would have just exposed that it was government policy that caused the problems.  For example, it was illegal in certain circumstances to ask about a borrower's ability to repay the loan.  The government did that on purpose.  It was illegal to not make loans to certain borrowers regardless of whether they were qualified - the government required demographic approvals that forced lending to people who were going to default.  That was good for the situation or for the borrowers.

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More later about why long-form zero sum can look like two-way growth in the short term (although my teaser is self-explanatory).

You can talk about it all you want, but this isn't a zero sum system.  There is no finite resource to allocate - its questionable whether there is any resource.

jc44

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Re: Cryptocurrencies
« Reply #40 on: May 19, 2022, 05:01:20 AM »
You can talk about it all you want, but this isn't a zero sum system.  There is no finite resource to allocate - its questionable whether there is any resource.
Not really true. Yes you can create any number of crypto currencies if you have buy-in from punters, but each currency is a finite resource - that is sort of the point - it gets exponentially more difficult to mine new coins as time goes on (along with the exponentially increasing energy requirements to mine them) and the infinite sum has a finite value (1 + 1/2 + 1/4 + 1/8... = 2).

yossarian22c

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Re: Cryptocurrencies
« Reply #41 on: May 19, 2022, 08:45:18 AM »
...
What your grasping at is that value is still vapor-like.  While crypto is different than any other currencies, you can still ask yourself why people accept dollars in exchange for real goods.  It's not because the dollar itself has a value, its because of a long confidence that the dollar means something.  Is it really different if its a government that represents 300m people that says it has value, or 300 million people not represented by a government that say something has value?
...

Taxes. Taxes make dollars valuable. Everyone has to pay taxes, property, income, etc. Therefore dollars are a needed commodity for people and businesses.

Your argument is that government issued currency's value is that the government accepts it back in satisfaction of tax payments.  That's so circular that it's scary. 

Honestly, if that were the basis for value the dollar would have died a long time ago.  People would hold and trade other assets and only convert to dollars when they had to for tax purposes.  In fact if that were the sole basis of value of the dollar it would be virtually impossible to calculate the value of the assets you actually receive and trade. 
...

That is largely what people do. Well people and companies who have a large excess of dollars. They buy stocks, bonds, real estate, and other investments when they have a large excess of dollars. Warren Buffet doesn't have 40 billion dollars sitting in his bank account. He probably has a couple million (at most) in checking and savings accounts. He only converts those investment holdings to dollars when he needs dollars for taxes or for some other large purchase.

And taxes have always been a driver of value of currency, particularly paper currency.

See the British hut tax. This is how they introduced paper currency to their African colonies.

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The hut tax was a form of taxation introduced by British in their African possessions on a "per hut" (or other forms of household) basis. It was variously payable in money, labour, grain or stock and benefited the colonial authorities in four interconnected ways, by raising money; supporting the economic value of the local currency; broadening the newly introduced cash-based economy, which aided economic development; and integrating local communities into the new economic system.[1] Households which had primarily been rural ranchers or farmers proceeded to send members to work in the cities or on colonial government-sponsored construction projects to earn money to pay the tax.

https://en.wikipedia.org/wiki/Hut_tax

The paper currency was tradable and valuable because everyone needed it to pay their taxes in. Afterwards it gains an inherent value of its own based on the strength of the economy but the root value of a paper based currency system is taxes. It means there is always a demand for the paper to pay taxes. There are also lots of practical reasons why a currency based economy is much more practical than a barter based economy. But the underlying value of any currency is that citizens of that country need to trade for it in order to pay their taxes.

yossarian22c

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Re: Cryptocurrencies
« Reply #42 on: May 19, 2022, 09:05:24 AM »
Should the perpetrators be able to get away with it with total anonymity though? Soros didn't when he crashed the pound and other currencies too. And now people can choose whether or not to do business with him or respect him as a person. But if Soros was just betting based on market conditions, this attack here was very different. It was directly, purposefully, with malice aforethought, causing the conditions.

Does the legality and morality depend a bit on who did it?

Was it some guy operating out of his mom's basement?

Was it a nation state like North Korea or Russia or Iran?

Was it a competitor in the crypto sphere or a competitor in the legacy financial sector that wanted to crash the market not just for a quick buck but to destroy an entire industry?
...

Probably legal. It was immoral. But also inevitable. As soon as crypto became shortable and people could make money off its value crashing, someone was going to figure out how to crash it and make bank.

The entire industry just uses massive amounts of computing power and electricity to solve math problems no one cares about. Its unsustainable. I'm really sorry you lost money in this investment. It sucks. But the only people who make money in crypto are people who get in early, hype it and get out before it crashes. Its a nice idea that there could be an agreed upon currency (value exchange) that isn't dependent on a government for creation and backing. But without a government backing crypto is just a confidence game. It has value while people believe it has value and if that belief gets shaken the value drops, if the value drops, the confidence drops, causing a nasty price spiral that goes down to zero.

rightleft22

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Re: Cryptocurrencies
« Reply #43 on: May 19, 2022, 11:17:48 AM »
When someone forgets thier crypto currency password and loses access to the funds. What is lost? Where does the energy as represented by the currency go?

jc44

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Re: Cryptocurrencies
« Reply #44 on: May 19, 2022, 12:11:57 PM »
When someone forgets thier crypto currency password and loses access to the funds. What is lost? Where does the energy as represented by the currency go?
It doesn't go anywhere - it stays spent, inaccessible to everyone.

Fenring

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Re: Cryptocurrencies
« Reply #45 on: May 20, 2022, 02:49:53 PM »
Republicans favor the rule of law, and taking the view that they should support a "winner" without regards to the means used to win is actually reversing their views.  The Democrats are the party that favors an outcome without regard to the process used to achieve it.

FWIW if we're being clear I am talking about 'right-wing' in a broad-strokes manner, not Republicans. While some right-wingers are on the law side of things, many are not. For example among the mega-industrialists who tend to be right-wing John Birch types they are constantly pushing for less regulation and more freedom to conduct business as they see fit. The general MO there is "get out of my way", rather than "uphold the laws and ensure business is equitable". There are obviously others who are more on the law side. I would not outright paint right-wingers as being one or the other outright, but again, in the broad strokes right-wingers are typically in the "who are they to tell me what I can and can't do" camp while left-wing types are typically in the "hey they shouldn't be allowed to do that!" camp. Naturally the detailing will vary person to person. I am not really impugning either side as there are merits to each.

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Except this is contradicted by reality.  Crypto is at a fundamental level not zero sum.  For zero sum to exist your gain in value has to come at my expense.  I have to lose something real.

Zero sum long-term, not short term. If the guy holding the bag at the end if/when it goes to zero is counted as part of your transaction right now then you are profiting at his expense. This scenario can of course be avoided indefinitely, in theory, so the actual loser may never appear, or at least you never see him until he does.

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Crypto is fundamentally just confidence.  Confidence is not a finite resource and it's absolutely not zero sum.  Two crypto traders can trade crypto assets and cause both assets to increase in value.

Confidence can have a value in the market sense, but not in the instrinsic sense. So long as you're only talking about tickers on a screen then yes, crypto has value obviously. If you're asking what that value is based on obviously the answer is 'nothing'. It has value because people will pay you for it, that's it. Promising people returns on it is just as much as to say you're being promised people will believe tomorrow what they believe today. That's some promise! Contrast with a stock, where if for some reason the market value of a company's stock dropped to near-zero, the instrinsic value of the company will always be a reality that doesn't care about the stock. If the stock price drops too low due to 'lack of confidence' the company can just repurchase all its shares and go private again, or something to that effect. So there is no "uh ok! this is worthless now" scenario for a company doing real business.

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While crypto is different than any other currencies, you can still ask yourself why people accept dollars in exchange for real goods.  It's not because the dollar itself has a value, its because of a long confidence that the dollar means something.  Is it really different if its a government that represents 300m people that says it has value, or 300 million people not represented by a government that say something has value?

The fact that governments insist the currency has value means everything. It has a guarantor that, if that guarantor fails, you have bigger problems than your portfolio suffering. Furthermore, that guarantor will attack with actual force any parties trying to oppose or undermine this established currency. It matters a lot! If you want to be blunt about it, think of it like a mob gang using its own scrip. Why is their scrip worth something? Because they will kill you, that's why. And historically that's about as good a reason as any. Further, since the U.S. $ is still effectively the world's reserve currency that gives is a special place even among government-backed currencies. Crypto has none of these features, not on the utility side and not on the legitimacy side. It's basically all but useless other than as a collector's item, like other NFT's.

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Or maybe to explain it in tangible terms.  Why is the Mona Lisa considered to be such a valuable piece of art?

Because art has real, instrinsic qualities, that are objective and are physically built into the piece, to put it a certain way. A real man named Da Vinci painted the Mona Lisa; that's not a 'confidence' issue but a physical fact about its origin. It uses certain materials, has certain brush technique, has had a certain buy/sell history. These are real, non-made-up elements that are baked into its market price. Now if you were to ask me to explain why its current market price should be that value I would be stuck. I don't think there's a good explanation of why its current price need to be that price specifically. But it's absurd to ask why it's valuable at all.


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Is the Mona Lisa objectively more pleasing than pop art that people hang in their homes in generally far more prominent places?  The Mona Lisa's value is not inherent it's purely a matter of agreement of the masses.

Yes, and I guess Mozart's Requiem is "just as good" as Oops, I Did It Again, since both are just a popular vote of which they listen to more? But no, there are intrinsic engineering techniques that went into the composition of each, and while they are maybe both important in some historic sense, they aren't arbitrarily the same in terms of what their content is 'worth' artistically. Commercially, that's another matter. The Mona Lisa's value is definitely not just based on some agreement between snobs. If all the snobs currently alive died suddenly and all artwork was placed in a giant vault, and discovered again in 500 years, that would still be a valuable piece because of what it is.

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There are people to regulate.  That's pretty much how the SEC got control of the stock market.  Issuance of stock was completely private in most of history.  It probably was impossible to imagine the kinds of controls we think are second nature.  Crypto (at least past basic things like bitcoin) is heavily exposed because to have value it has to have hype and leaders and spokespersons.  All of those people could be directly regulated.

Truthfully I don't know if it's either (a) possible, or (b) meaningful to regulate crypto. What kind of SEC declarations could crypto buyers/sellers actually produce? And technologically, is it even possible to stop people doing things with it at their will? Wasn't the whole point of crypto to go under the radar, stick it to the man (loosely speaking), and engage in transactions outside of the formal system? It would be kind of ironic for this area to become part of the system. I have no idea what's possible in that regard.

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Not to mention, crypto that can't move into the real world is pretty weak, and those are additional points of contact.

Yes, it is pretty weak, and this will not stop. At such a point as the government perceives a real move being made to bring crypto into regular purchasing experiences they will make a strong move to clamp down on it.

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Terra-Luna - the example at hand - was paying 20% interest on deposits.  I grant you those earnings were not based on cash streams but rather based on rising confidence in all crypto assets.  But you could buy and sell them and take the profits in other currencies.

As yossarian mentioned, this is structurally the same as a ponzi scheme. It's just MLM structured in a somewhat more transparent manner and not technically illegal. But so what? 

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As to subscribers, not sure what you even mean, there were hundreds of thousands of people holding the tokens.

By subscribers I mean real world assets generating revenue. The equivalent would be Netflix's stock price vs its subscriber base. Both are tanking right now, but they are separate things. A subscriber base is something a bank will take seriously as company value; it's something that exists in the real world assuring the solvency of your product.

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Growth?  Actually a ton and not just in value.  The point of the Terra-Luna model was to create ever more linking utilities to the platform.  To add material features.  That happened and there were constantly more things available in their eco system.

Stock price going up =/= growth. That's just a ticker changing numbers. Growth means real value is added. Now if some crypto platforms do offer real value beyond the tokens themselves, then at least in that case they would be offering a 'product' in addition to shares in the coin.

There is a lot of hype, but the value inherent is in being able to buy and achieve things that you could not buy or achieve previously.  There's lots of evidence that's actually happening.  Take a look at the DAOs that are out there.  Some are just implementing exiting paper mechanics, but others are truly innovate in allowing a group to make collective decisions that are implementable in real time.[/quote]

What you're describing is no different than the dot com bubble. People excited, new ways to do things, and all the rest. But it wasn't based on real value or earnings potential, the numbers were made up, and of course it popped. And even those were 'real' products, just not ones that could generate revenue yet.

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And the market for years of Tesla wasn't?  The company had billion dollar valuations when it was producing hundreds of cars (total in a year).  Facebook had billions in valuation when its revenue stream was tiny.  Granted, there was a lot of potential there, but you're kidding yourself if you discount the potential that's currently in the crypto space.

There is a kind of line where being an investor and being a gambler can intersect, and simply being part of a historic even can be worth money to people. Is going to Disney World a "bad investment"? No, you're willing to take the hit for the experience. Tesla has appeared to be a combination of the three. This does not make it equivalent to crypto, although there may be some overlap just like there is overlap in any events involving human psychology.

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It's only a ponzi scheme if it's not generating value and the primary source of returns is from new contributors.  The primary source of returns on digital assets is not from the redistribution of new contributions, but from the speculative swelling in the price.

I'm...uh...surprised you are making this distinction in order to show...actually I'm not sure what you're trying to show. That's it's not like a  ponzi scheme? Or that it's similar but better? Or just as bad but slightly different? I guess I don't see the point of this remark.

cherrypoptart

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Re: Cryptocurrencies
« Reply #46 on: May 20, 2022, 06:14:34 PM »
I'm not convinced yet that Terra-Luna was a ponzi scheme. My understanding is that the 20% was like an introductory rate to get in new people but it was going to be scaled back in a few months to a more sustainable rate. And there is also the matter of Do Kwan buying 3 billion dollars worth of bitcoin to somewhat collateralize the system and then using it all in an attempt, failed as it was, to save it. This downfall while painful may not have been inevitable.

For one thing, it depends on how it happened. There are still just conspiracy theories but if even some of them are true and this attack was planned using sabotage then I still think the attackers may yet regret their actions. Of course, it could have just all been a black swan situation with a series of unfortunate events all lining up in just the wrong way. But for instance, if Do Kwan got a large part of that 3 billion in bitcoin by an organization trading it for UST with the sole intention of dumping that UST at just the right time to collapse the price and cause the de-peg, in coordination with operating on multiple other attack vectors, then that's way beyond just playing the market. That's rising to the level of deceptive trade practices, perhaps not legally but definitely ethically. Basically he got tricked and betrayed along with millions of others. "Here we'll help you shore up the system." All with the intent of using the transaction to place weaknesses in the system by enhancing the effect of an attack on both UST and bitcoin to cause the cascade failure we saw. If something like that happened though it would mean that the perp is already known because they are the ones who traded the bitcoin for UST with the intention of a well timed dump and short sale attack. Investigations are ongoing by multiple governmental agencies in various countries including South Korea and the UK and I hope we find out more.

The other reason it's different from a ponzi scheme is that when a ponzi scheme collapses you generally get little to nothing and the perp runs away or heads to prison. Terra holders may still end up getting just that, and Do Kwan's legal situation may still be in the balance, but at least there is an effort at salvaging the situation with the pre-attack snapshot and compensating holders with the compromise that even those investing after the attack will get some compensation as well, admittedly in a new Terra system without UST but still better than nothing. They are trying to make things right. Of course trying doesn't necessarily mean success and this could fail spectacularly as well, but it seems different from the straight out ponzi scheme it's being made out to be, or if it is one then it's on a whole 'nother level. I guess time will tell.

cherrypoptart

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Re: Cryptocurrencies
« Reply #47 on: May 20, 2022, 06:31:58 PM »
 This downfall while painful may not have been inevitable and if it was inevitable still wasn't so because it was planned to be that way as a scam but instead just due to unintended system weaknesses vulnerable to exploitation by deep pocketed evil geniuses or an unlikely black swan event.


Fenring

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Re: Cryptocurrencies
« Reply #48 on: May 20, 2022, 06:49:50 PM »
Of course trying doesn't necessarily mean success and this could fail spectacularly as well, but it seems different from the straight out ponzi scheme it's being made out to be, or if it is one then it's on a whole 'nother level. I guess time will tell.

One of the things I think we should have learned by now is that given enough time new options will always be discovered to make 'free money'. People hear of an opportunity to get magical returns that beat the markets, risk free, and lots will always line up for this. It doesn't matter if it's too good to be true, they don't want to miss out on the winnings. Even if it smells fishy they know they won't be able to stand hearing their neighbor saying how much they made in the new venture. That's at least partially why dot com became so inflated: people legitimately felt they didn't want to miss out on the new future thing. Even worse than losing money in the market is the rue coming with knowing you failed to participate in an 'easy money' adventure. Most people aren't like Ben Graham who don't care what "Mr. Market" throws at you and are content to wait for something valuable. Missing out on an opportunity bothers many people a great deal.

So that's why it's easy to structure and execute all manner of MLM schemes, including ponzi schemes, but which can include all sorts of things no one has ever thought of yet. Sure, a new concept may be different from a ponzi scheme, maybe very complicated by comparison. The only real question is where the value in something comes from. If, as Seriati mentioned, it's purely based on confidence, then you have to decide whether you're buying a collectible (like MTG cards or collectible coins) or something with intrinsic value. I have no problem with buying collectibles, I've done it myself, and some (like Magic cards) have no real value since they're just mass printings of art and text, not an original artwork for instance. But they have a 'collectible value'. I don't think collectible value is identical with confidence value, because typically someone collects cards, coins, stamps, etc, knowing they have value, buying them based on that valuation, but they want it because they actually like it. You buy coins because you think coins are neat, they're a part of history, etc. So the aesthetic attraction is part of its value to you, personally. This is different from buying something exclusively based on perceived demand. One sees this in real markets too: why did you buy that condo, do you like it? Answer: it doesn't matter if I like it, I can sell it for more. That is a purely speculative purchase based zero on its value to you. But at least buying a condo is a tangible asset. Buying something that is intangible, has no real value (i.e. isn't like a recipe or software design), and additionally has no value to you personally, and is bought only because you can sell it to someone else, is pretty much the epitome of speculation based on perceived demand. So that takes it even further than it having collectible value.

Long story short, so long as one isn't jailed for it there will always be attempts at get rich quick schemes, and people that run them. If something seems like free money then I would suggest there is something fishy about it. Or put a different way, if it's not tied whatsoever to real economic growth then it's dangerous to consider it as having value - and more importantly, tying things with real value to the crypto. Even people who've never touched crypto can be destroyed by them, just like people ruined by synthetic CDO's even if they had never heard of them before.

LetterRip

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Re: Cryptocurrencies
« Reply #49 on: June 12, 2022, 10:28:57 PM »
BTC is crashing hard - 25,511 as of a short while ago. Down about 4500, since Friday.