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The biggest crypto lending company is a ponzi scheme

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Re: The biggest crypto lending company is a ponzi scheme

#261

Post by _xnmw »

nprz wrote: post #257
_xnmw wrote: post #202

For those who believe "crypto is too big to fail", or the genie is out of the bottle, or that crypto concepts have become so engrained and popular that it's not possible to stop, I'd like to point out that Bernie Madoff's Ponzi scam lasted for 30+ years. People built entire lives on his very professional-seeming "business". Scams can go on for a very long time, and very large numbers of people can build their whole l…

Eric Schmidt just joined ChainLink as a Strategic Advisor[0]. If crypto is such an obvious scam like so many hn readers believe to be the case, why would someone like Schmidt ruin his reputation by joining a crypto company? [0] https://www.prnewswire.com/news-releases/former-google-ceo-e...

Even Bernie Madoff had highly respectable people working with him.

edit: removed my comment about Schmidt not really joining, I see it announced on his Twitter.

Re: The biggest crypto lending company is a ponzi scheme

#262

Post by roywiggins »

adam_arthur wrote: post #258
roywiggins wrote: post #255

Earlier quoted context omitted.

Not every financial fraud is a Ponzi scheme, and it's silly to call everything a Ponzi. It sounds like Celsius probably is one, though.

"A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors" Explain how pump and dumping penny stocks doesn't apply? I agree that it's a bit different in nature than most Ponzi Schemes due to lack of central entity orchestrating it, but the net effect is the same in the end. You get in early, you win, you get in late, you lose. Even if we call it something else, it's c…

I'm talking about a hypothetical scheme where you get some capital from some investors, and then go out and pump and dump penny stocks onto other people who aren't your investors, and then return your winnings as interest to your investors. You are genuinely earning money for your investors (and defrauding other people).

In a Ponzi, you can't satisfy all your investors- you literally don't have the money you say you do. Eventually it will collapse and piss off most of your investors. But if you are really good at pumping and dumping you could in theory just keep doing that until you can't make money anymore, and then close up shop with a tidy profit for you and your investors.

They're both frauds, but they're different.

Re: The biggest crypto lending company is a ponzi scheme

#263

Post by [deleted] »

_xnmw wrote: post #202

For those who believe "crypto is too big to fail", or the genie is out of the bottle, or that crypto concepts have become so engrained and popular that it's not possible to stop, I'd like to point out that Bernie Madoff's Ponzi scam lasted for 30+ years. People built entire lives on his very professional-seeming "business". Scams can go on for a very long time, and very large numbers of people can build their whole l…

[deleted]

Re: The biggest crypto lending company is a ponzi scheme

#264

Post by throwaway405769 »

arcticbull wrote: post #176
WFHRenaissance wrote: post #19

Earlier quoted context omitted.

I'm not a huge fan of the the current cryptocurrency scene, but I think it will remain very useful as a medium of exchange and store of value in unstable parts of the globe for years to come.

Stablecoins will turn into CBDCs and CBDCs will serve that purpose. Bitcoin is down from 68K to 48K in the last what 3 weeks? Stores of value don't flail wildly and incoherently at the whims of a few whales, and given it supports 2-3 tx/sec using the energy of an entire country, it's a crap medium of exchange too. The future of crypto for anyone other than an anacap libertarian is CBDCs.

CBDCs have nothing to do with crypto. It's just PR by politicians.

Re: The biggest crypto lending company is a ponzi scheme

#265

Post by anonymoushn »

bhouston wrote: post #226
adam_arthur wrote: post #157

Earlier quoted context omitted.

I just glanced through these and don't see any explanation. They basically just say "we put it in a vault and harvest the rewards". What I'm asking is where do the rewards come from. What is the underlying mechanism that makes this model sustainable. If you invest in a REIT, tenants earn money through their business and pay rents. If you invest in a BDC, the BDC makes loans to businesses and collects interest. Relati…

I think the main answer to most of these questions is that everything works well as long as BTC and most others currencies continues to rapidly increase in value as a result of a lot of cash inflows into these cryptocurrencies. This papers over all of the fraud at least for now... When the explanation is too complex for anyone to really grasp or verify, realize that this is probably intentionally opaque in order to h…

Yeah, you'll see defi yields go a lot lower in a bear market. They were tiny for a couple months over the summer.

Re: The biggest crypto lending company is a ponzi scheme

#266

Post by gonehome »

arcticbull wrote: post #192
gonehome wrote: post #76

Earlier quoted context omitted.

Yep agreed, and other underlying applications (NFTs as evidence of group membership or ownership that can be easily owned and transferred, an auditable historical record) have a lot of value. The ability to hold decentralized state is a resilient way is pretty cool and a lot of the finance applications are better than legacy stuff - try sending large amounts of money around in the legacy system, expect to wait severa…

> try sending large amounts of money around in the legacy system Well, cryptos aren't really money so actually sending money via crypto requires transferring crypto from a bank to an exchange, making a purchase, withdrawing it to a destination wallet at an exchange, selling it, and transferring the proceeds to another account. That takes days , requires multiple transactions and costs boatloads of fees. By constraini…

> “ By constraining it to transfer of an intermediate representation you're not making a good faith representation of the process.”

Yeah, I’m betting on the future utility enabled by the tech, not what it can do right now. Similarly people said the web was useless in the 90s [0] when the future utility (imo) was obvious.

> “Second, the only thing you can do better with crypto than a centralized exchange is crime, grift and regulatory arbitrage.”

There are non-crime advantages to being able to use decentralized systems. These are most obvious in places with hostile governments and unstable currencies. The new stuff you can do with decentralized state and public auditable records is super new and the applications there I think will be really interesting.

> “ What takes longer sometimes is AML/KYC and security.”

Is this true? I thought there was a complex system of clearing houses, record updates, etc. a lot of which is done manually? Am I wrong?

> “Like any other regulatory arbitrage you can certainly make things faster or cheaper, for instance by dumping chemical waste into lakes. Once again comparing a car to a little buggy with a 2-stroke engine and no catalytic converter on the basis of fuel efficiency is disingenuous too.”

I think you’re failing to steelman this. It’s possible to build a lot of stuff to handle things like KYC in a way that’s better because of crypto tech. Imagine using an NFT as a pseudonymous ID that you KYC once and then can use anywhere unless it changes wallets. There are also likely better ways to determine credit worthiness than FICO enabled by the new stuff. A lot of your arguments feel like someone saying “ever heard of radio” when someone else says you can stream sports on the internet. I think you’re being a little myopic.

I guess we’ll see how it shakes out, but for better or worse I’m betting against you.

[0]: https://youtu.be/lskpNmUl8yQ

Re: The biggest crypto lending company is a ponzi scheme

#267

Post by dqpb »

criddell wrote: post #29
WFHRenaissance wrote: post #19

Earlier quoted context omitted.

I'm not a huge fan of the the current cryptocurrency scene, but I think it will remain very useful as a medium of exchange and store of value in unstable parts of the globe for years to come.

It will remain a very useful medium of exchange? Are you saying that today it is a very useful medium of exchange? Are you using it that way?

I am. As a medium of exchange (buying things, sending people money), I only use USDC which is pinned to the US Dollar.

For sending money to friends in other countries, it is so much cheaper, faster, and more reliable than the traditional money-transfer options I had before.

For buying things around town, I have a debit card that draws from my USDC wallet. Currently, it's less convenient than my credit card, because I have to keep that account full enough to be used, and if I need to fill it up in the moment, it takes about five minutes to jump through all the hoops necessary to not incur any fees. But, as an early adopter I don't mind. Fixing that UX isn't the kind of thing that requires a major technological breakthrough.

USDC operates on multiple layer-1 blockchains, for example Algorand. When transferring USDC between Algorand wallets, the transaction takes a few seconds and costs a small fraction of a cent. Compare that to the shit show that is Western Union, or Small World Money Transfer, or wiring money between non-cooperative banks.

I also own ALGO coins. I could use these as a medium of exchange as well, but I don't, and it would make less sense to do so. Instead I think of these as stocks. Their value fluctuates with the market, and they allow me to vote in Algorand governance voting sessions. If I wanted to liquidate these assets, I would wait until the price went up and then convert them to USD or USDC. I wouldn't spend them with a debit card any more than I would spend stocks with a debit card.

Of course there is an additional use of ALGO's as a medium of exchange - transaction fees for executing smart contract transactions. I haven't found any compelling dApps yet, but in theory this will become another primary use case.

Re: The biggest crypto lending company is a ponzi scheme

#268

Post by throwaway405769 »

_xnmw wrote: post #261
nprz wrote: post #257

Earlier quoted context omitted.

Eric Schmidt just joined ChainLink as a Strategic Advisor[0]. If crypto is such an obvious scam like so many hn readers believe to be the case, why would someone like Schmidt ruin his reputation by joining a crypto company? [0] https://www.prnewswire.com/news-releases/former-google-ceo-e...

Even Bernie Madoff had highly respectable people working with him. edit: removed my comment about Schmidt not really joining, I see it announced on his Twitter.

This is so funny. You know, maybe you're just wrong and people that are smarter than you think differently. Have you considered that?

Re: The biggest crypto lending company is a ponzi scheme

#269

Post by Fiahil »

_xnmw wrote: post #261
nprz wrote: post #257

Earlier quoted context omitted.

Eric Schmidt just joined ChainLink as a Strategic Advisor[0]. If crypto is such an obvious scam like so many hn readers believe to be the case, why would someone like Schmidt ruin his reputation by joining a crypto company? [0] https://www.prnewswire.com/news-releases/former-google-ceo-e...

Even Bernie Madoff had highly respectable people working with him. edit: removed my comment about Schmidt not really joining, I see it announced on his Twitter.

I don't know... but I think you're wrong: https://twitter.com/ericschmidt/status/1468308027296075778

Re: The biggest crypto lending company is a ponzi scheme

#270

Post by dqpb »

_xnmw wrote: post #202

For those who believe "crypto is too big to fail", or the genie is out of the bottle, or that crypto concepts have become so engrained and popular that it's not possible to stop, I'd like to point out that Bernie Madoff's Ponzi scam lasted for 30+ years. People built entire lives on his very professional-seeming "business". Scams can go on for a very long time, and very large numbers of people can build their whole l…

What do you even mean by Crypto? It's like saying "Internet is probably the most brilliant scam in the history of mankind". It's so non-specific it's meaningless.
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