This brave world of unregulated opaque finance is just awesome, isn't it?
DeFi is much more transparent than traditional finance.
The biggest crypto lending company is a ponzi scheme
291–300 of 429 posts
Re: The biggest crypto lending company is a ponzi scheme
#292For 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…
Crypto speaks to aspects of humanity which people hold near and dear. Crypto no doubt harbors shady characters, ponzi schemes, scams. You also can't deny that there are ideas which threaten state control, monetary policy, nationalistic ideals, religion its self. Just look at the magnitude of the conversation. Its easy to dismiss me as the ramblings of somebody caught up in the scam. But when has it been a good idea t…
> If you think in absolutes you can never accept new information.
Never? Sounds a mite like absolute thinking.
Re: The biggest crypto lending company is a ponzi scheme
#293Earlier quoted context omitted.
So instead of actually debunking his arguments you published a handwavy reply? I very much think that if someone is offering insanely high ROIs but does not divulge how the value is created, you can safely assume it's a scam, and simply pointing out the disparity suffices as proof to me at least.
So, definitely not in defense of Celsius it smells funny to me as well. But the author doesn't seem to understand DeFi. I don't know how Celsius operates but if there's a genuine zero-knowledge proof of their operations then that is better than an actual audit. The author doesn't understand this and proceeds as if no audit actually happened. If the author instead spent some time researching the contents and the merit…
Like he said in TFA: the zk-proof only shows they have control of some funds, it doesn't say anything about the origin of those funds, much less about present and future obligations.
Re: The biggest crypto lending company is a ponzi scheme
#294Lending money (with interest obviously) is a ponzi scheme. It's not surprising to be honest, and this shouldn't be news. We've known this for literally thousands of years now. It has nothing to do with crypto currencies per se.
Can you explain the math on how lending money is a ponzi scheme? I don't entirely understand.
We saw what happened in the 2008 crash. Selling debt for debt, facilitated only by lending money at non zero interest, caused a huge chain to come to existence. Once the first domino tipped, everything came crashing down.
Re: The biggest crypto lending company is a ponzi scheme
#295Earlier quoted context omitted.
"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've seen that definition of Ponzi schemes a lot and it doesn't really explain how they work - you could say the same about, say, most of the stock market where the only way to exit your position is through funds from new investors. The defining feature of Ponzi schemes is that they pay out interest using the funds of new investors. It's important to understand this carefully because it's the reason Ponzis have to fa…
You get dividends from stocks, so new investors is not the only way.
Stocks that don't pay a dividend have promise of paying one in the future as their cash flows grow. That's the fundamental basis to all stock valuation. It's why people talk about P to FCF, PE, PS ratios. For growth stocks, hypothetically, how much in dividends could I get 30 years from now?
It's true that many investors don't consider what the fair value actually is, but that's how you end up in a bubble and the price disconnecting from the fundamentals never lasts forever.
Real estate more obvious and direct via rents.
But yeah, pump and dump kind of stocks where they far exceed their fundamental value are similar.
We can argue semantics and what defines a Ponzi scheme, all I'm saying is that crypto largely has no intrinsic value. Any value that's explained is always self referential in terms of other crypto.
Bitcoin has some small intrinsic value for illicit payments, or hedging inflation in countries without capital markets. You could argue the net intrinsic value is negative due to the environmental costs though. But outside of edge/fringe cases, all valuation relies on a greater fool effectively.
Even gold is still majority used for industrial purposes, despite also being seen as an investment vehicle.
Re: The biggest crypto lending company is a ponzi scheme
#296Earlier quoted context omitted.
if the company that serves the image your NFT links to goes away you can completely lose access to it
The NFT is the token, not the metadata. Of course there are projects with on chain metadata, and projects with on chain art as well. Also, many folks use IPFS pinning, so that does add some level of resilience as well, but yes not all NFTs are created equal.
most projects don't have on chain art or metadata, so the token is essentially a link to someone else's machine... if that machine goes away all you have is a token that represents something that no longer exists
Re: The biggest crypto lending company is a ponzi scheme
#297Given what this expose says about institutional lending not being able to account for high ROI, how is Gemini Earn[0] able to offer up to 8% on GUSD and slightly less on other coins? Gemini is audited and says all GUSD Earn backing funds are FDIC insured up to 250k. Definitely concerning. [0]: https://www.gemini.com/earn
From that page: For GUSD in Earn, while the U.S. dollar reserves backing the GUSD tokens are eligible for FDIC insurance, the GUSD tokens themselves are not insured, whether or not in Earn. I'm not sure how to parse that, but it doesn't sound reassuring?
Seems the correct way to parse that is "the GUSD tokens themselves are not insured, whether or not in Earn". The first clause is deliberate obfuscation, and is basically the same as a random member of the public saying "if you give me cash and I put it in my account, that account's FDIC insured" in the hope that this makes him sound like a financial intemediary and not a guy that's really keen for you to give him cash.
Re: The biggest crypto lending company is a ponzi scheme
#298I think a few posts here are conflating crypto currencies, NFTs and crypto lending in stablecoin for "too good to be true" interest. The article focuses on the last point, which rings absolutely true to me. Offering huge yields (> 8%) while removing the crypto volatility (dealing in stablecoin, effectively making all transactions and amounts look, to an external user, as if made with regular bank in dollars) cannot e…
In a sense I think the yields on stable coins are a reflection onto the user of value which would otherwise be captured by the banking industry. There are some assurances lost at the same time, and most would consider stablecoins less safe than a bank, but these are tradeoffs one makes when using stablecoins.
I am not sure of this (or maybe I misunderstood your point, sorry). Instead of retail clients, which could get a raw deal from the bank, we can look at inter-bank rates for a sanity check. And those rates, paid to non-retail customers (who know well how to derive a maximum risk-adjusted value) are still very, very low today. US Treasuries yield curve shows pay 0.3% for a 1-year and 1.5% for a 10-year.
While it is certainly harder for a company to get rates as low as US Gov't, solid businesses can get money for 2-3% and weak ones for 5-8% in as large a chunk as they want. Why would they spend a lot of effort chasing retail clients (which are a pain to deal with) and offering them way more?
Re: The biggest crypto lending company is a ponzi scheme
#299For 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…
Crypto is an open protocol for financial services/transactions running on decentralised hardware. Thats pretty cool and useful.
Naturally the first thing that happened was that all the scammers and get rich idiots moved in like with any powerful new technology.
It will surely take some time to get the real world usage up and the portion of moon boys/scammers down but it will happen nevertheless.
Re: The biggest crypto lending company is a ponzi scheme
#300Given what this expose says about institutional lending not being able to account for high ROI, how is Gemini Earn[0] able to offer up to 8% on GUSD and slightly less on other coins? Gemini is audited and says all GUSD Earn backing funds are FDIC insured up to 250k. Definitely concerning. [0]: https://www.gemini.com/earn
From that page: For GUSD in Earn, while the U.S. dollar reserves backing the GUSD tokens are eligible for FDIC insurance, the GUSD tokens themselves are not insured, whether or not in Earn. I'm not sure how to parse that, but it doesn't sound reassuring?
It means that Gemini is not responsible for the GUSD coins you purchased, but if you have 1 GUSD coin you can exchange it for 1 USD up to the FDIC limit.