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The Ponzi Career

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Re: The Ponzi Career

#41

Post by PragmaticPulp »

bko wrote: post #9

> As I mentioned in an earlier piece, these tokens are not simply "certificates of ownership"; they can be pre-programmed to behave in a certain way (for example, pay a dividend each time a predefined event happens). I don't get how you can pre-program a contact to pay a percentage of your earnings. Ethereum is very restricted as to what you can program. I don't think you can just write "check stock price of X on CNB…

> I don't get how you can pre-program a contact to pay a percentage of your earnings.

You can't. Any agreement like this would still require a traditional, real-world contract to carry any weight. The contract would specify that the holder of the NFT is entitled to the benefits of the contract. Even in a hypothetical world where everyone gets paid on the Ethereum blockchain, the person could simply open up a second ETH wallet and collect payments there, because crypto wallets aren't people.

The unspoken catch is that these contracts would likely include a provision that the NFT is null and void in the event that it's lost or stolen. People entering into contracts aren't eager to give up their rights to hacks when they can simply add a contractual provision that limits it.

The NFT exists because it's a convenient placeholder to represent something that can be traded with commonly accepted (relatively speaking) tools.

A real-world contract would still be necessary to put any weight behind these NFTs.

Re: The Ponzi Career

#42

Post by airza »

nemo44x wrote: post #30
airza wrote: post #7

The future outlined by these new and exciting investment vehicles is horrifying.

It is but you wonder if the instability of a career is even more horrifying? It is essentially like a farmer selling futures contracts on their crop. The yield of the crop and market conditions at harvest time are so uncertain that trading upside for stability becomes a smart bet. So one might think to themselves that they don’t feel certain about their ability to generate income for the next 20 years and sell a clai…

The entire line of thinking just seems to me like it is bending over backwards to avoid just... having income taxes and a social safety net.

Re: The Ponzi Career

#43

Post by PragmaticPulp »

llaolleh wrote: post #38
kingsuper20 wrote: post #21

I've run into that with doctors now and again. You'll meet a younger doctor who complains heavily about student debt and how impossible life in the US is. I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues.

Haha I love this. If we think about it in terms of pure game play, medicine is a part of the game where the strategy is to take on a massive amount of debt, high risk and uncertainty for incredible returns.

> medicine is a part of the game where the strategy is to take on a massive amount of debt, high risk and uncertainty for incredible returns.

Not really. It's exceedingly rare for someone to complete medical school and then not be able to find a relatively high-paying job if they want one.

The risk would be something like later deciding not to pursue a career in medicine, but that's a personal decision rather than an external risk.

Re: The Ponzi Career

#44

Post by danans »

bradleyjg wrote: post #31
danans wrote: post #16

Earlier quoted context omitted.

> The idea of selling contracts against future income is interesting Isn't that also basically what any interest bearing loan/mortgage is?

No, those are personal debts (in one case secured). There’s been on and off again interest for as long as I can remember about creating personal equity interests (i.e. the payout depends on how much the person earns). Now with blockchain(tm).

I agree that there is a difference in the collateral involved, but the collateral mostly functions as a risk adjuster (which is why mortgage rates are on average lower than personal loan rates: if a borrower defaults, the house can be sold to recover part of the principal).

At the end of the day, a mortgage is a contract that allows the borrower to purchase a home in exchange for a share of their future income, paid as interest on the loan.

Personal loans also already exist today. The primary difference in the scheme in the article is that it is blockchain-based, instead of bank-based, and the trust establishment mechanism between borrower and lender is based on personal marketing, not credit agencies.

Perhaps a bigger factor is that if the currency in which such a loan is offered is deflationary in the BTC style, it is a disadvantage to the borrower who will see the cost of their loan escalate over time, so this should be accounted for by lowering the interest rate.

Re: The Ponzi Career

#45

Post by bradleyjg »

PragmaticPulp wrote: post #36
kingsuper20 wrote: post #21

I've run into that with doctors now and again. You'll meet a younger doctor who complains heavily about student debt and how impossible life in the US is. I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues.

> I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues. Writing someone a check in exchange for their future earnings "from now on" is a terrible deal. You're essentially offering a loan that can never be paid back, yet requires payments forever . Loans are a good deal because the terms are known ahead of time, payments end when the principle is pa…

> What you're describing is just facetious and condescending to those with six-figure medical debt.

The point is that medical debt is a very good deal for the reasons you point out and because the doctor cartel in the US has forced prices up to dizzying heights.

Yet people bitching and moaning about having borrowed $300k at reasonable interest rates for the right to earn many millions with almost no risk (when was the last time you met an involuntarily unemployed doctor?) don’t acknowledge that.

Re: The Ponzi Career

#46

Post by paultopia »

sgt101 wrote: post #17

"Isn't this the same as traditional student debt or, worse, indentured servitude? Not really" Saying "not really" doesn't make something so. This is, literary indentured servitude. By definition.

Thank you. The indentured servitude character of this stuff is most clear when we look at the $ALEX example. Selling off a chunk of future autonomy and income in order to finance migration to a place with more economic opportunity is exactly what poor folks did circa the 17th and 18th centuries. Perhaps we should look at the history of how that went before replicating it.

Re: The Ponzi Career

#47

Post by PragmaticPulp »

peytn wrote: post #5

How do you tackle issues with manipulation? Can’t I get together with my friends and wash trade each other’s tokens?

Yes, wash trading should be assumed to be ubiquitous in the NFT space. It's too cheap and easy to create fake trades of NFTs to trust that transactions are all real.

The tokens described in this article don't necessarily depend on the sale price of the NFT, though. Instead, these NFTs would represent the beneficiary of real-world contracts. Whoever holds the NFT collects the future income of the person, as enforced by a real-world contract.

Of course, nothing stops them from wash trading these NFTs in an attempt to flip them.

Re: The Ponzi Career

#48

Post by bradleyjg »

danans wrote: post #44
bradleyjg wrote: post #31

Earlier quoted context omitted.

No, those are personal debts (in one case secured). There’s been on and off again interest for as long as I can remember about creating personal equity interests (i.e. the payout depends on how much the person earns). Now with blockchain(tm).

I agree that there is a difference in the collateral involved, but the collateral mostly functions as a risk adjuster (which is why mortgage rates are on average lower than personal loan rates: if a borrower defaults, the house can be sold to recover part of the principal). At the end of the day, a mortgage is a contract that allows the borrower to purchase a home in exchange for a share of their future income, paid…

The difference isn’t the collateral, a personal loan like a credit card is unsecured.

It’s how you calculate the payment. In a loan it doesn’t matter how much money I make, I owe what I owe.

In the proposed equity arrangement I owe a percentage of my income. If I don’t make anything, I don’t owe anything. If I’m the next Musk, I owe billions.

Re: The Ponzi Career

#49

Post by [deleted] »

danans wrote: post #44
bradleyjg wrote: post #31

Earlier quoted context omitted.

No, those are personal debts (in one case secured). There’s been on and off again interest for as long as I can remember about creating personal equity interests (i.e. the payout depends on how much the person earns). Now with blockchain(tm).

I agree that there is a difference in the collateral involved, but the collateral mostly functions as a risk adjuster (which is why mortgage rates are on average lower than personal loan rates: if a borrower defaults, the house can be sold to recover part of the principal). At the end of the day, a mortgage is a contract that allows the borrower to purchase a home in exchange for a share of their future income, paid…

[deleted]

Re: The Ponzi Career

#50

Post by ghaff »

PragmaticPulp wrote: post #36
kingsuper20 wrote: post #21

I've run into that with doctors now and again. You'll meet a younger doctor who complains heavily about student debt and how impossible life in the US is. I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues.

> I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues. Writing someone a check in exchange for their future earnings "from now on" is a terrible deal. You're essentially offering a loan that can never be paid back, yet requires payments forever . Loans are a good deal because the terms are known ahead of time, payments end when the principle is pa…

There is such a thing as a perpetual (consol) bond although it's rare. What happens is that, over time, inflation erodes the real value of the payments. (And at that point, it looks a lot like equity with a contractually fixed dividend payout. Debt and equity can look a lot like each other.)

And, if this is a lifetime thing, this is just a form of annuity which are fairly common. (Give someone $X and they promise to pay you $Y annually for your lifetime (or other term)). There are also annuities that track the value of some investment pool like an endowment.

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