BlockFi files for bankruptcy as FTX fallout spreads

The additional context here would be that easy money policies and cheap credit create the atmosphere for speculative bubbles. These are the products of financial central planning and regulation. Consumers have negative real rates on their savings accounts. There's nowhere to go, thus they are forced into riskier scenarios to preserve their wealth, much less achieve a yield.

Just as lumber has value as a construction material or baseball cards have value as a collectible, cryptocurrencies have utility for those of us willing to transact or create dapps. This may not be the majority of users, but there are some of us who perceive value here.

While I don't personally value baseball cards, I don't malign those who do. Value is subjective. Even if baseball cards enter into a tulip bubble, nobody is forcing me to buy them. Similarly, if people want regulated financial products there are plenty of options available.

There's no need to malign cryptocurrency or cryptocurrency users with wild generalizations. Different strokes for different folks. Live and let live. Not sure why this should be controversial in a liberal society. The demands for regulation are paternalistic and authoritarian. They are a few steps away from demanding that we, "Think of the children". See the posts elsewhere lamenting the average Joe, who can't be bothered to write a key phrase on a piece of paper. Just too technical for him.

In that context, the ponzi accusations are better understood as scaremongering. Deliberate misrepresentations comparable to "Reefer Madness" hysteria.

Both. If you take 900 reasonably skilled people and direct them towards nonsense for a few years, that is definite value lost to society. It sounds like $1 billion in actual cash was lost this way. And the buildings they were in could have housed useful activity, the computers they bought could have done useful things, etc.

Those people could have been doing useful things. And it sounds like their activities were worse than nonsense, they actually destroyed money they were given.

A buddy of mine had his phone SIM-hacked and his coinbase account drained. He was on the phone with coinbase trying to stop it while it was happening, and said they were beyond useless.

Criminals have lists of everyone with crypto on coinbase. They're cross-referencing this list with people with T-Mobile (usually), then pulling off SIM-hacks by buying off a store manager, or just grabbing the manager's laptop and running out of the store with it. At that point they have 10-15 minutes to take over as many SIMs as they can.

https://darknetdiaries.com/transcript/118/

> Unbelievable the amount of destruction of value here... it's just total carnage.

I don't see any other replies hypothesizing this in terms that rhyme with the dot com "bust" of 2000.

In late 90s, in addition to whatever product-market-fit from their "blue ocean strategies", the dot coms generally invested in and bought services from each other.

Wall St didn't look at where the dollars came from or went to the second or third step, they treated every company as if its revenue came from the customer marketplace.

Instead, a given VC dollar (or customer dollar) would get spent from that tech firm to its providers, who would give it to their providers, and then their providers, in turn. This way, the same single dollar would show up across a dozen balance sheets, each at 14x growing to 40x and eventually 100x multiples. So the 1 dollar instead of being, say, $40 of "value" for the one firm that got the dollar in from outside the ecosystem, that dollar would show up 12 x 40x or $480 of imagined uncorrelated "value".

By 1999, the public companies had caught on to where they could just give cash from public markets to dot com providers to turn around and purchase the public company's goods or services at a discount ( "strategic relationships"), with their own dollars then driving a 40x - 100x market value boost, generating more public dollars they could use to create more "customers".

Even if all these companies had legitimate products, when you looked under the hood, relatively few dollars were coming in from outside the private and public markets revenue multiple game. If some of these folks misstepped, and folks started having to unwind expected revenues, and in turn unwind their own spend, and letting the air out happens faster than they can keep their footing .... boom, you have a bust.

Today there are multiple sites tracing the actual flow of digital "currency" and seeing the same loops happening, where every agent in the loop is nominally valued as if generating revenue from outside, when instead, they're lock step in a circular flow.

Any interruption and ... dot com Y2K 2.0.

So less value destruction, more a glitch in the illusion big enough for non-experts to notice absence of outside value.

I mean, it is - you can put your cash under your mattress. But there is a reason you don't.