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The entire crypto ecosystem is a ponzi

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Re: The entire crypto ecosystem is a ponzi

#141

Post by monero-xmr »

carewell wrote: post #125
monero-xmr wrote: post #112

Earlier quoted context omitted.

Monero is digital cash. Cash is also used to buy drugs, but we do not ban it. I feel that financial privacy is a human right just like any other form of privacy. If you disagree then please post your last month’s bank statement in response to this comment.

I think parent commenter's argument is that it's hard to get excited about crypto just based on the fact that it allows some people buy drugs online. While millions of investors lose a ton of money to crypto scams.

The problem is HN is an exhausting circular firing squad when it comes to crypto. I could extol the benefits of private currency on philosophical and moral grounds but this won’t convince a lot of people. So I try to put it in more concrete terms and then it’s either criticized or brushed off.

If you believe as I do that government control of money is a mistake for many different reasons, then crypto is a revolutionary technology. If you say “Bitcoin has all the problems” then I refer you to monero.

Re: The entire crypto ecosystem is a ponzi

#142

Post by [deleted] »

[deleted] wrote: post #119
jtchang wrote: post #80

> For stable funding, what you really need is retail deposits I would disagree. For stable funding what you need is the belief that the underlying currency will continue to have value. The fact that BTC hasn't gone to zero means there are some people who still believe it has value.

[deleted]

[deleted]

Re: The entire crypto ecosystem is a ponzi

#143

Post by yesimahuman »

cedivad wrote: post #123

This 50 minutes-old post with 145 points has been nuked from the first page. And the second, and the third. lol.

I noticed that. What do you think the reason is for that? Protecting YC-invested crypto companies? It’s very unfortunate because it was a well written recap of recent events.

Re: The entire crypto ecosystem is a ponzi

#144

Post by vesinisa »

lrvick wrote: post #69
onethought wrote: post #50

Earlier quoted context omitted.

I mean communism looks pretty cool on paper too, the actual idea. But we seem to have had a real hard time implementing it. Could crypto be like that?

Except crypto actually works for its intended use cases. I use it constantly. Maybe it works poorly for traders but those of us actually using cryptoassets for privacy, inflation resistance, and censorship resistance ignore the scams and traders. Scams and traders dominate the conversation of most new technology. Same things happen in traditional markets. Cults of personality and false promises by corporations inflat…

> those of us actually using cryptoassets for [...] inflation resistance

Heh, gotta say cryptos have weathered their first real test as a hedge against rising global inflation (since early 2021) really well. Meaning, the rising interest rates have almost decimated dollar valuation of cryptos as the tech gold rush imploded.

Please do not mistake this article's author's concern as an attack on the libertarian fundamentals of cryptocurrency. The article is about how crypto has been marketed as an investment to retail consumers, and this space is simply wrought with terrible scams.

Re: The entire crypto ecosystem is a ponzi

#145

Post by mrkeen »

rosnd wrote: post #63
bb88 wrote: post #53

Earlier quoted context omitted.

Proclaiming that your intellectual opponents are ignorant without pointing out where they're wrong is a pretty common response from bitcoin maximalists these days.

Did you reply to the wrong comment? > Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme. This is indeed obvious to anyone who knows what both of those things are. He very clearly explained where they got it wrong.

Maybe the post was edited? I don't see the clear explanation.

Here's an exercise, I'll replace a bunch of words with their opposites, and present it as my counter argument:

"This is a great argument, and not clickbait. Obvious enough to anyone who actually understands how bitcoin, or eth work, it fits the definition of a ponzi scheme."

Are you convinced? Do you know where you got it wrong?

Re: The entire crypto ecosystem is a ponzi

#146

Post by dj_mc_merlin »

Excuse my financial ignorance but.. shouldn't it be immediately illegal to claim "46% risk-free return"? That is impossible. Asking people to give you money to do something that is clearly impossible (make a shitton of money sustainably from.. nothing?) is just fraud. Why can't they just get sued as soon as they put a website up that is inciting people to send them money under false pretenses?

Re: The entire crypto ecosystem is a ponzi

#147

Post by bb88 »

stephc_int13 wrote: post #86

The success of crypto is very strange/alien to me. The scam seems so obvious, and yet it "works". I guess that I tend to underestimate how many people love gambling with money and/or are attracted to get-rich-quick schemes. There is seemingly also a small fraction of true believers, idealists and evangelists who seem convinced that all of this could replace both states and banks without ending up much worse.

Madoff is the ultimate example of a ponzi scheme done well.

1. The "mark" trades his dollars for something he/she thinks is of value, in Madoff's case it was a balance in the Madoff fund.

2. The fund increases the "balance" for the marks, making them think their money is actually increasing in value. This discourages people from wanting their money back. Meanwhile the actual dollars is squirrelled away to some series of numbered accounts.

3. The ponzi scheme is only exposed when there's a run, which happened to Madoff in 2008 during the financial crisis.

Re: The entire crypto ecosystem is a ponzi

#148

Post by everfree »

cornholio wrote: post #67
glennvtx wrote: post #16

This is a terrible argument, and clickbait. Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme. Most tech stocks fit the definition better. Just because a few centralized banks, (FTX, centralized crypto exchanges are banks) have failed, means nothing, since the original idea of cryptocurrency was to do away with centralized institutions like th…

The burden of proof is on the crypto promoters to demonstrate ability to create wealth. This was not the case up to now, the only thing crypto produced were speculative assets that have very little legitimate uses. For example, major cryptocurrencies like Bitcoin aim to replace state issued fiat currencies with privately issued currencies that have limited/fixed supply and no connection to the real economy. That's in…

> The burden of proof is on the crypto promoters to demonstrate ability to create wealth.

For crypto to be financially successful, strictly speaking it doesn't need to create wealth, it only needs to attract it.

Plenty of profitable businesses are arguably a net negative to society - tobacco, gambling, private prisons, ad agencies, data brokers - but that doesn't make them ponzi schemes.

Re: The entire crypto ecosystem is a ponzi

#149

Post by bmitc »

stephc_int13 wrote: post #86

The success of crypto is very strange/alien to me. The scam seems so obvious, and yet it "works". I guess that I tend to underestimate how many people love gambling with money and/or are attracted to get-rich-quick schemes. There is seemingly also a small fraction of true believers, idealists and evangelists who seem convinced that all of this could replace both states and banks without ending up much worse.

I think it's similar to the CDOs used in the housing crisis. You take something of little to no value, wrap it up with all sorts of complexity but then present it as this simple thing you can buy and trade that supposedly has value. People lap it up without understanding the underlying value, which is effectively none. Bitcoin takes up energy to be born. Thus, a bitcoin starts life with negative value. It only attains "value" by someone willing to exchange normal currencies for it. Then it increases in value when someone else pays more. But there is no backing value. Yes, fiat currencies no longer have a gold standard, but there is a ton of value backing the fiat currencies. The dollar is backed in value by the U.S. economy. Bitcoin and other cryptocurrencies are entirely ephemeral. I think I saw someone relate them to the Beanie Baby crazy. At least at the end of that craze, you had a Beanie Baby left, as opposed to ones and zeroes on a hard drive with cryptocurrencies.

> There is seemingly also a small fraction of true believers, idealists and evangelists who seem convinced that all of this could replace both states and banks without ending up much worse.

I think a lot of that culture comes from staunch libertarian ideals and also the "free software" crowds, such as GPL enthusiasts. It just is not how human society works and will never work. I saw it in a thread in regarding a commonly used software library that has a GPL license. The author of the package said they would never consider any other license, even while the other thread posters were requesting a license that would allow them to use it in proprietary code but actually pay for that use. People were essentially stating that no one, other than hobbyists, will ever use the package because they can't in their jobs and companies but that they would be willing to pay for a non-GPL license, and the authors staunchly stood behind their ideals. Thus, no one uses it.

I feel cryptocurrencies are very similar. Taking a hardline approach to the decentralization means it will never be incorporated into anything other than hobbyist and enthusiast use.

Re: The entire crypto ecosystem is a ponzi

#150

Post by tarkin2 »

There is, at least, some demand for crypto that relates to real-world economics.

It's an excellent intermediary currency. People use it successfully in hyper-inflationary countries and people use it to bypass currency transfer difficulties. These are definite and real use-cases.

The rest of the demand looks like pure and simple speculation based on faith that the other various claimed uses will come good, i.e. a ponzi.

It's not a complete ponzi, but I'd say about 80% of it is.

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