Doesn't take much to spot the bullshit in: "Risk-free 7% APY in a time when every single noteworthy financial institution is offering less than 0.5%!"
I’m still sort of sad the focus hasn’t been on decent remittance systems, the true useful tool of crypto IMO.
One notable example of such a scheme was OneCoin (https://en.wikipedia.org/wiki/OneCoin), which wasn't even based on a blockchain.
I don't think we're living in a particularly unique time this way. The book Extraordinary Popular Delusions and the Madness of Crowds was written in 1841 and was already then packed full of stories not dissimilar to the current crypto bubble.
I don't mean to sound defeatist, though. We could do more to financially educate people in general, which would provide a better defense against such manias.
It feels worth noting that this book, as well as the wider idea of an abstract idea of crowd-induced mania in general it reinforces, is pseudoscientific with little credible evidence to support it.
It's origins lie much more in the political motivations and historical context of the authors: It is no coincidence that this book was written by a wealthy scotsman against the backdrop of the idea was first floated by an aristocrat during the upheavals and riots surrounding the introduction of capitalism, and that the idea was initially proposed by an aristocrat during the french revolution. They were both times where it was extraordinarily convenient to be able to dismiss engaging with the things the crowd was being driven by.
I'd urge against making the same mistake today. To me, it is impossible to separate the web3 mania from the historical context it happened in: Like 2008, it is a time of job insecurity, financial anxiety and distrust in systems with governments doing little to help. They are prime times for wishful thinking and people who want to take advantage of it.
The best non-regulatory fix I can think of would be socially enforcing that people stop profitting from convincing others into doing bad decision making.
It's not very easy though, since fraudsters only need to convince people once to make off with their profits, unlike a tradesman or manufacturer who needs to stay in business long-term.
It's not obvious to me that the currently popular web3/crypto approach of widely promoting these risky gambles gets us there.
I think people perceive that the opportunity to have a comfortable life doing a “regular job” is slipping away in favor of an upper middle class of professionals who enjoy stability, and an enlarged sub-middle class who are finding the traditional trappings of middle class stability hard to come by.
This widening class gap leaves many realizing that lifestyle improvements will require a significant step change, not just a bit more effort. So we see people gambling. Someone might be working hard and saving all they can and still only have $5k in savings. They look at the price of houses doubling and realize they’d need to save for another 50 years at this rate just for a down payment, so they say fuck it and buy some call options and NFTs instead.
The crypto schemes are very often rehashing of old scams and mistakes, they are not qualitatively different from penny stocks pump and dumps, pyramids and MLM schemes, ponzi schemes, tulip/cabbage patch/whatever mania, etc.
GP post is suggesting that demand for this kind of speculation was up, and if that's the case, many of these people in the "market" for scams and gambling might have been more attracted to crypto because it still had some veneer of safety/legitimacy about it.
Nobody could plausibly claim that now that the failures are finally coming to light, of course.
Edit: I would suggest this is largely a failure of the media, which had long treated crypto as legitimate by default despite having the resources to pay real experts to actually cover it critically. Of course, even had traditional media outlets been sounding the alarm, who knows if it would have mattered much - faith in media is very low right now (exactly because they so often get this sort of thing wrong).
This time, as the FTX mess shows, the blame is on """regulators""" and """sophisticated""" investors completely failing to do their job.
I cannot remember where I read it but the gist essentially was that you are either mastering the software or the software is mastering you. It jives with what you are saying.
This is, to some degree, true - Quant traders in finance work with data that is literally unavailable to regular traders or amateurs but when it comes to crypto sophisticated quants and Joe Bogsly are operating on a level playing field when it comes to access.
Additionally, countries that are not the United States have chronic bank instability problems that make the current crypto collapse look like a joke. Large percentages of bitcoin transactions are conducted in Vietnam.
When a new cool thing is happening, the next step to maturity and adoption is gift.
How many rent a bike startups have you seen in your city?
Same deal, not a terrible idea, pretty cool, people flock in but there will very likely only be one to three of those companies left standing.
Pretty sure Tether isn’t operating on a level field with Joe Schmoe.
Every time Tether has disclosed anything, it’s been caught lying [1]. That anyone thinks Tether has anything close to standard financial disclosure, or is anything but a fraud, is a testament to the ongoing problem of mainstream American financial illiteracy.
[1] https://ag.ny.gov/press-release/2021/attorney-general-james-...
I did not say that these are "standard financial disclosures". I said that they were forced by the courts to reveal all this documentation and that so far, Tether has for the most part maintained its peg.
This should indicate to you that everyone from Wall St to Main St thinks that Tether is doing things "well enough".
Tether has issued multiple audit reports by independent accountants, and sure- they may be suspect but the way in which they are suspect is the same way every other company's financial are suspect - which, last I checked, didn't stop Lehman Bros.
Not everyone that lost money did this to you though, seems unfair to judge most people who are just trying to get by because of a few assholes on the internet
I must say though that I don't and didn't own any crypto assets, and am not really well-versed in the web3.0 world, which might be why I am confused by your comment.
I spent two weeks digging through boxes and imaging hard drives before miraculously finding my wallet.dat from 2011 that I luckily hadn’t encrypted or even passworded lol.
Had 3.25btc in it (I remembered the .25. The extra 3 were a shock.). I ended up paying for my home down payment with it.
You shoulda seen my broker’s face when I showed up with almost entirely crypto to fund the mortgage. It took them several weeks to find a company who would be OK with crypto being fronted. I ended up having to come up with a way to prove it was mine which was fun. Had to back track through the blockchain tracking the history of the transactions, wallet address creation. Show I had the private keys etc. they finally accepted it as after a month of back and forth.
Then I didn’t cash out entirely when it spiked to $60k and now I am regretting that lol.
That rigamarole could have been easily avoid by converting the crypto to cash, which is trivial to prove is yours.
Did they end up accepting the crypto directly, or as cash?
I guess I should have clarified: I didn’t directly give them crypto. I was using it to cash out and pay cash with. But I had to prove ownership.
Also I didn’t have the luxury of waiting.
In US law this is a taxable event.
In the world of stock, we don't like multiple expansion as it's a sign that prices go up on grounds that are hard to reason about. Things going up without reason tend to come down for the same reasons.
Crypto has _zero_ growth. Crypto companies, however, that's a different story.
But sure, I'm sure you'll be right about what you perceive to be growth. There are still millions of gullible and half smart people waiting to get on board.
Are you familiar with the term Deflationary Asset?
Because buyers are valuing them more and more and not just in words but by actually with their money?
> Are you familiar with the term Deflationary Asset?
Yes. I also believe BTC will outperform gold over the next 10 years (both of those are deflationary assets).
Where is the growth?
Or, you get more USD for your BTC.
> Where is the growth?
In the amount of USD one can purchase with their bitcoins? Literally, that's what this whole subthread is about where someone used their long held bitcoin to do a downpayment. The growth in USD price of a bitcoin is what helped them do that.
New clothes on an age old story.
Day trading and crypto and freemium games fleece people digitally. It's all ephemeral. What holds people back?
It pains me to buy a lottery ticket, so I've never been tempted by these scams. But I imagine having everything online hacks player's inhibitors. eg I've read rants about how Robinhood and the like weaponize "dark patterns" to loot their players.
Not really, a bunch of "lost" crypto money isn't even "stolen"/"transfered" in the traditional sense, it's just lost as in "vanishes from the world because someone did a operational mistake" gone.
Even a dollar would have lost use ~20% loss over the past few years just sitting in a bank. The best place to store wealth is in assets not currency. People who stored their wealth in crypto are as silly as people who put savings in a bank except with more volatility like this. Crypto isn't a fad that has gone away, there is still demand for it except now all the exchange crashes will introduce regulation that will make it a safer bet than before. Trial by fire and all I guess.
You shouldn't bet or risk money either in stocks or crypto that you aren't prepared to lose. That's like the first-ish rule of investment isn't it?
There are also people who fly airplanes and cliff dive, but if my acquaintance Joe the whitecollar sales associate who lives two houses down from me starts telling me he is going to go solo flying or cliff diving for the first time with no experience, I will warn him off it in no uncertain terms.
As well, if he is talking about how much he is making on the side doing options trading, do you think I wouldn't tell him that it is a bad idea and he is going to end up most likely losing a great deal of money?
People who make these comparisons like you have are acting as if crypto is being marketed to wall street and not people like Joe.
You seem to have overlooked my statement about rule #1 it has to be money you can afford to lose and of course people will tell you the risk is tol high, you have to learn the hard way if you think you know better.
Did I know people who made out well playing the crypto market? One. Did I tell him to not do it? Nope, because he knows what he is doing.
The flipside of this is the 5 or so people in my direct personal sphere and hundreds if not thousands (if you count the lurkers who followed conversations I was having with individuals) online who have advocated for or expressed direct involvement or interesting in playing in crypto markets that I have advised against doing so, with a rare few heeding my warning but the overwhelming majority using circular logic, fallacies, personal attacks, and 'not-even-wrong' economic theories to justify putting a large portion of their income (sometimes even taking out loans) on it.
Please understand that the perspective I am trying to show the readers of my comments is my own.
It feels like telling someone about to jump into the shallow end of a swimming pool from a balcony that they are going to really hurt themselves and that the 2 feet of shallow water is not deep enough to buffer the fall, and them telling me I just don't understand and they use a new measuring system and the pool depth is in feet which is a made up measurement too so their measurement is just as valid and they can make it any depth they want to because they believe it and everyone else around does too.
Then they jump feet first and break their legs. A friend behind them says it is their own fault for going in feet first and dives head first and breaks his neck. Another friend says 'bad luck, but you know how many people break their neck walking to swimming pools measured in feet?' and jumps sideways and breaks his collarbone.
At that point 'welp, I tried'.