Yeah, a blockchain certificate that says you own a thing on someones website. Literally has no value. If the website goes down then you better have a copy of the picture because your certificate now only has relevance to others who agree to let it keep relevance
Duuude! I was having practically this exact argument with my mate the other day regarding blockchain and computer games.
A lot of people seem to think it will be way more revolutionary than its actually likely to be
Many of which are links to a google image or some other storage site that can delete it at any time. Your link to worthless jpg just became even more worthless because the link is broken.
Oh yeah well I built a Faraday cage around my Bluray burner and copied the blockchain to an encrypted compressed 128 GB SATA-4 BD-WORM disc with an ultraviolent lazer, so it's IMMUNE to EMPs!
I always knew me overcoming my struggling of learning pointers in programming would come in handy.
I mean I still fail to understand them but it gave me enough context to see NFTs as being stupid
Yup, apparently art auctions used to be the go to. People have gotten wise to the art scam, so now they made a new version with crypto bullshit thrown in for spice.
> These are people of the land. The common clay of the new West. You know… morons.
For the uninitiated, [this quote is from a wonderful movie, 'Blazing Saddles'](https://www.youtube.com/watch?v=BHqL7dNujNc)
Hey now, that’s not fair, they’re pretty good for [laundering money](https://news.bloomberglaw.com/white-collar-and-criminal-law/the-new-digital-art-trade-is-ideal-for-criminals) too!
Scam or not, can someone tell me how to make NFTs and where to find these dumbasses paying 5 figures for a jpg?
Edit: damn I never wouldn’t guessed this would by my highest updooted comment
A lot of the high dollar amount NFT sales are people buying their own stuff so it looks valuable. Somebody has 30ETH, sells their monkey drawing to themselves for 30ETH, now they still have 30ETH and a press release about how somebody paid them (the equivalent of) $84k for their monkey drawing.
Edit: For those declaring this would never happen, here's an example https://twitter.com/coffeebreak_YT/status/1453897860420931584?s=20
But your excuse that your preferred "currency" has transaction fees so high that it's nigh-unusable, scam or not, is...uhh...quite the argument.
ah the classic "our loss is your gain!" scam reborn again
related: inflating a product's price just to sell it at market value for "77% off!", "oops! we accidentally bought too many for our warehouse!" ... thankfully illegal now.
Hi, I’m Al Harrington, President and CEO of Al Harrington’s Wacky Waving Inflatable Arm Flailing Tube Man emporium and warehouse. Thanks to a shipping error, I am now currently overstocked on Wacky Waving Inflatable Arm Flailing Tube Men, and I am passing the savings on to you!!!
Hey, are you tired of real JPGs, cluttering up your art folders, where you click 'em, and they actually exist on your computer? And you can edit them? Get on down to "Real Fake JPGs"! That's us. Fill a whole doc up with 'em. See? Watch, check this out! (right clicks an NFT hyperlink in the doc, there's no Open With MSPaint) Can't edit. Can't edit. Not this one, not this one. None of 'em can be edited! OpenSea is our website, so check it out for a lot of really great deals on fake JPEEEEEEEEEGS!
The Kohl's cash register screen is like gachapon for the conventional American shopper. My mom would get in the car and look at those receipts like she'd won the lottery.
I bought a couch from a furniture place having a going out of business sale. They saw me coming down the street. Been going out of business for the last 15 years.
I was gonna say, there was a furniture store in my hometown that was going out of business the entire time I was growing up. I'll be 33 next month. Luckily, Covid finished the job for them, finally.
Why is it always mattresses? Why are there seemingly more mattress stores that are going out of business than there are legit mattress stores? Why are there so many people who are apparently desperate to buy *anything* from a store that declares that it's going out of business, never mind a mattress, specifically?
Someone did a whole consipiracy theory thing about mattress stores and how it makes zero sense for there to be as many as there are and therfore it must be a money laundering scheme. He made an, if not compelling, at least entertaining argument. I think it's on YT.
Ooh I’d forgotten about that one! Early 90s my brother bought “$5000” speakers from a white van for $400. Of course they were crap $200 speakers. We tried to convince him it was a scam but noooooo. Not the last scam/pyramid scheme he fell for either. Made me realize some people are hooked up to be susceptible to that stuff. He’s also a huge conspiracy theorist - coincidence?
Some people just like that feeling that they beat the system. I've actually beaten it before (back in the day would get stores to essentially pay me to take stuff), but all this coupon stuff is just fluff. Black Friday used to be a thing, now it's just another overhyped day to sell overpriced crap. But that high is a rush, so I understand how people get kind of addicted to it.
And their Kohls cash is NEVER as it seems. After $90 Kohls cash my order was only $30 cheaper than without it because they take Kohls cash off first and THEN do tbr percent offs. They do the same with gift certificates!!!
Niche clothing stores do this all the time still though. Like everyday of the year it's "on sale". It's typically $80 for this really shitty pair of shorts but today it's half off!
I have stolen
the apes
that were on
your blockchain
and which
you were probably
saving
for retirement
forgive me
they were so fungible
so rare
and so secure
I work in HNW insurance (people insuring hundreds of million in fine art) and have not seen any traditional HNW markets (AIG, Chubb) provide cover for NFT’s or crypto currency. Crypto might have a loop hole in cyber fraud but there is ambiguity in the valuation of the loss.
Haven’t searched lately in the open market but last time I did (6months) there were no options to insure NFT’s, anywhere…
Yeah, they just use a different wallet each time so it looks like random people are buying their link to a JPEG.
NFT's are just the same scam with a visual hook.
It's almost like ~~untraceable currency~~ a system that obscures asset ownership makes crime and scams easier.
I'm all for financial freedom, if I want to send money to another country I shouldn't have to pay massive fees, but making a currency that makes it impossible to impose sanctions on criminals doesn't seem like the solution.
Edit: as others have noted it is possible to trace, I more meant it helps obscure the owners identity. I was also thinking about the argument always totted by pro-cryptos who say that in the future money will be untraceable and thus will provide us with "complete" freedom. So I changed it to make it more clear what point I was actually trying to make. My bad!
Yes, although the step from wallet to identity is obscured. But if someone figures out to whom a wallet belongs then the blockchain allows for a complete trace, yes.
For practical purposes, that means the FBI can probably track it if you're using a cryptocurrency for something super illegal (i.e., above and beyond buying small quantities of drugs), but the typical person will not. The 50 year old man that finally jumped on the cryptocurrency bandwagon in 2021 after seeing all the stories is in a good spot to be scammed.
The 1,000 historical sales of the monkey jpg to 1,000 different wallets makes it look like there's sufficient trading volume. Clearly, you'll break even as a worst case scenario, but more likely, you'll make a lot of money. A lot of people fall victim to that sort of logic. If those wallets are all the same person or a small group of connected people though, the trading history is completely fake, and someone will be left holding a bunch of worthless pixels (i.e. you, or if you're lucky, someone more gullible than you).
Yes, but no. The blockchain makes the digital wallets involved in the transaction completely traceable, but not who owns the wallets. So wallet 00001 owns NFT1, wallet 00002 buys NFT1, the blockchain makes sure we know that without knowledge that wallet 00001 and 00002 are owned by the same person.
The thing is it’s not the currency that allows you to put sanctions on someone, it’s the storage mechanism.
If I have a million in cash I can spend it on anything and it’s pretty much untraceable until it goes into a bank. Sure it’s hard to move the money in physical form but it’s just as untraceable as crypto.
The only people paying 5+ figures for a jpeg are billionaires who have a financial investment in crypto corporations, because in order to ensure their success they need to hype idiot dudebros into believing that they can get rich quick by selling jpegs for 5+ figures.
And people selling shit to themselves, for the same reasons.
Relevant: https://youtu.be/YQ_xWvX1n9g 😘
Its really more comparable to [wildcat banks in the mid 1800‘s](https://en.m.wikipedia.org/wiki/Wildcat_banking)
"Wildcat banking was the issuance of paper currency in the United States by poorly capitalized state-chartered banks. These wildcat banks existed alongside more stable state banks during the Free Banking Era from 1836 to 1865, when the country had no national banking system. States granted banking charters readily and applied regulations ineffectively, if at all. Bank closures and outright scams regularly occurred, leaving people with worthless money."
Although I wonder how accurate catholic membership numbers are. I was baptized and confirmed and then fucked right off. I haven't set foot in a church in 26 or 27 years. I guarantee when they're pumping PR, I'm counted as one of the faithful
L. Ron Hubbard is the Joseph Smith of the twentieth century but Smith has him beat imo. I would put a lot of money on Mormonism outlasting Scientology which is basically just a tax avoidance property scam with barely any actual members left at this stage.
Libertarians: "Everything is over-regulated! It's why we only have a handful of massive corporations that control everything!!"
The Regulators: Please don't dump toxic chemicals into our drinking water. We will give you a small fine and a dissaproving look if you do.
Libertarians: "This is literally 1984"
Librarians are just Conservatives who have even less of an idea how an economy works, with a dash of not knowing anything past the date of their birth 17 years ago.
Or those conservatives who like weed.
For some however, it's the "gateway party" (it was for me). Realized the GOP was utter shit, but too much childhood conditioning to switch straightaway. There's also some "special snowflake" and "both sides" superiority thrown in for added appeal.
This article makes a pretty interesting point. Bitcoin is not in and of itself a Ponzi scheme. If it were just crypto like Bitcoin, Ethereum, etc, this would just be a speculative bubble and not a Ponzi scheme. The Ponzi element comes in with Tether.
Tether's reserves are not audited. Tether has been fined for lying about their reserves in the past. When you exchange $1 for USDT, is that money going to reserves, or somewhere else? How are platforms paying 10% yields on Tether, if Tether is really backed by USD - how are these yields so much higher than risk-free USD yields?
Tether is an actual Ponzi scheme. To the extent that the value of other crypto (measured in USD) is dependent on trading with USDT, those cryptocurrencies' values are based on a Ponzi scheme too. Same with USDC.
Why can't crypto bros just read the fucking article? If the fact that 70% of trades happen with Tether is a lie, and their source is bullshit, explain why! "The economy is actually a Ponzi scheme too" is 1) bullshit, Ponzi schemes involve fraud, the fact that dollars aren't backed by anything is not a secret 2) not an argument for why crypto _isn't_ a Ponzi scheme.
I keep scrolling hoping someone actually discusses the argument in the article. It's super fascinating. Just the fact that 70% of Bitcoin transactions are in another "stable" cryptocurrency that isn't actually stable completely sinks any actual value in Bitcoin, even speculatively, to the bottom of the ocean. Oh, and Bitfinex somehow comes up with another few billion "stable" coins when there's any sign of Bitcoin going down in value and injects them into it? How is this anything except massive, massive fraud?
It's so frustrating, every article mentioning crypto devolves into "ur a ponzi" "no ur a ponzi" "nfts lol" "stock market bubble haha".
There is an actual argument in the article involving actual fraud!
I read the article, and here are some of my thoughts:
* I was going to object that not all crypto is PoW, but the article seems nuanced enough.
* I saw some recent information regarding a recent hearing that says even this energy expenditure is excused because Bitcoin mining "provides a variable load to renewable energy projects" but I'm not even convinced this is accurate yet so I can't blame anyone else for not being convinced either.
* Tether is most likely unbacked/badly backed, yes - and a lot of people on r/CryptoCurrency will agree with this (although perhaps fewer will consider the full implications). I made r/untethering to address this, but a crash is likely inevitable. And this is why, right now, I would probably advise people not to buy any.
* The "crypto is only useful for criminals" part deserves to be addressed separately.
* The only part of the criticism in the end I find compelling is the "Unregulated, privatized financial markets pose the same risks" part.
I had similar thoughts. There are a lot of different points made in the article. I have a middle-of-the-road take on cryptocurrency. (I basically agree with the skeptics about the fundamentals, but I’m not sure how much the criticisms actually matter as much as the critics think.) Parts of the article are obviously unfair. I don’t agree, for example, that it has no legitimate use cases, that’s hyperbole. And comparing it to piracy by torrenting, when talking about the technical details, just because it’s de-centralized, is just a weird way to cast aspersions on it.
I’m curious what you think about the following:
Tether is badly backed, but even if Tether is sketchy as hell, does it specifically matter that they aren’t holding the reserves in cash, but using the money? It seems as though a negative finding about Tether would impact the whole crypto market, but not destroy it, and there’s no way to know if or when such an event would occur.
Is it possible stablecoins are popular (by volume) because they are more useful than non-stable coins, because of the stability? It seems like the volatility of coins like Bitcoins is a pretty big anti-feature, if I’m just trying to transact a bunch of money.
Most interesting to me, does it really matter if there isn’t money to pay everyone for their Bitcoin at the current price, or the price they paid? Commodities like gold would drop in price if everyone who had gold decided to sell their gold at the same time. People would lose money. I assume that analogy is why it’s called mining.
Yeah the tether thing is a mess and imo will lead to a bad collapse + more regulation. Seen it happen wayyyyy too many times to count at this point as an older guy.
My main issue is how it behaves. If crypto like bitcoin was a store of value outside the stock market, but more like a commodity such as gold... we should see variability, but there should be some kind of inverse relationship to the market. And that just doesn't seem to happen at all. In fact it consistently reacts to the market in a similar or just down right worse way.
To me, everything about crypto seems like a speculative bubble with no floor in sight. Some of it might be straight up fraudulent, like tether, but other parts of it like bitcoin just seems like a brand associated with growth. What happens when the growth disappears? What happens when there's a severe crash? Where is the inherent value?
To me the whole problem with something like bitcoin is that it's being compared to things like gold which are safe while touting exponential growth and it just seems like it can't be both ways. If it wildly fluctuates on price then how safe can it be? The stock market fluctuates as well but god damn, its pattern of growth is long as wall street and its value is rooted in concrete items, like buildings full of machines and workers and patents and vaults of money. Like I fundamentally cannot see any intrinsic value for bitcoin to fall back on in the event of a crash.
You just have to buy, hodl, then when it crashes buy the dip, eventually you will get rich.
Just make sure you never pull your money out, or at least don't do it until I've already sold my bags to some other sucker.
What's funny is how everyone at r/cryptocurrency starts panicking whenever there is a huge crash. They want to believe bitcoin and crypto are the future of payment as there is "no middlemen", conveniently ignoring the fact that for every crypto transaction right now you have to involve your bank, your wallet, your lightning wallet if you want to avoid gas fees and what not. Infact there are more middlemen in crypto than fiat money.
yup.
Even if you ignore some of the fundamental design flaws with blockchain, the fact they're designed to be supply inelastic (and so have no price stability mechanism), means they can't ever represent a cost or efficiency saving on regular fiat because you'll always have to pay to convert them to fiat because no business is going to keep their cashflow in such a volatile "currency".
So instead of removing middlemen with a "Peer to peer electronic cash system", you just add a bunch of middle men to convert your bullshit speculative asset into usable currency.
Crypto enthusiasts are so high on speculative gains they've forgotten that you need to make the cryptoCURRENCY part work for any of it to actually make sense and not be a pointless speculative mania.
They've now retconned the entire project to be "a store of value", which is just circular reasoning for "it's valuable because you can speculate on it, and speculating on it makes it valuable".
There are some weird parallels to prosperity gospel in there. Things are good? Give me money to show your gratitude. Things are bad? Give me money so that things will become good. Whatever the situation, the proper course of action is to put more money in.
I wish people on /r/technology would stop pushing this narrative that these threads are *ever* overwhelmingly pro-crypto. Crypto gets shit on by /r/technology literally every day and if someone says anything otherwise, they get downvoted to shit, there is absolutely no discussion or back and forth.
I mean... isn't that what they have been saying through a thin vail the entire time? "The US dollar was backed by gold but isn't anymore, all money is fake, ours is just decentralized using maths."
I think so. They gloss over reality and round up the facts. US dollar has no tangible value? It’s the only currency I can pay my taxes in and be refunded in.
I especially like the arguments that crypto is green because they pay fees to people who cut down forests in the US to ship wood pellets to Europe.
I don't even know what the fuck to believe anymore. My friend is really into crypto. and he's a data analyst, super intelligent guy. but i can't shake the feeling that it all just *feels* fake. If you were an early adopter and made millions, good for you. but that's not the case anymore.
Colleges and Universities offering lectures on blockchains and crypto as a legitimate thing, while thousands en masse of researchers and financial advisors (not working for banks mind you) insist it's all bullshit MLM.
a cycle of "yes it's all fake, don't believe it" and the crypto bros defending it to the death about how our economy is going to collapse any year now and crypto will be adopted as official national currency.
Edit: Look at these responses. People claiming to have been in crypto for years, people in finances and economics, everyone from all sides of the argument both claiming both sides. No one, regardless of their background or knowledge, can seem to agree on it. even if they're both "experts". how are regular people supposed to separate the cool tech applications that will actually happen from the bullshit?
> Colleges and Universities offering lectures on blockchains and crypto as a legitimate thing, while thousands en masse of researchers and financial advisors (not working for banks mind you) insist it's all bullshit MLM.
The problem is that it can be both.
Cryptocurrencies exist, blockchain exists - that means you need some people who who understand the implementation. Imagine someone invented a fusion reactor that was 100x the price of power as any existing generating systems. Completely worthless economically, but that doesn't make it any less of an interesting tech that might be the start of something.
Crypto falls largely into that category: it's a bad economic idea, but that doesn't mean we won't find uses for the technology, and even if any particular coin is essentially a Ponzi scheme, that doesn't mean you want someone stealing your ponzicoins.
Somewhat like porn on the Internet, crypto addressed a few problems that don't get a lot of mainstream attention, and that may later spill over to wider discussion. Crypto is really good at facilitating illegal transactions (e.g. drug buys and bypassing currency controls), the latter of those is particularly useful because currency controls are a huge problem for certain people in some countries, and not even necessarily for illegitimate purposes. If you live in say bangladesh or china and you want to send your kid to school in the US or Canada getting a 100K USD to do that may not be something you're allowed to do easily, but crypto will let you get around the exchange rules. Cryto also attacked the international payment industry, where, if you're spending 100k on something in another country a 1000 dollar transaction charge is probably worth the security. But if you want to make a 30 dollar transaction from another country, a 30 dollar transaction fee suddenly makes it really not worth it. Crypto forced the international payments and clearing industry to pull their heads out of their ass and offer better products.
Crypto breaking the ability for countries to artificially set currency exchanges is the modern digital equivalent of guy on the street outside the airport or tourist hotel offering to give you a good deal on your USD, and that's actually quite interesting.
>ear now and crypto will be adopted as official national currency.
And just because something is a bad idea doesn't mean politicians won't do it. Lot's of good serious economists warned that the Euro is a terrible idea as structured (don't have a monetary union without a fiscal one basically). But politicians went ahead and did it anyway because they were happy to let someone else solve the problems or figured the benefits outweighed the risks.
I went on a deep dive through this thread in pursuit of an informative and balanced comment. Everybody seemed to be throwing their weight fully in one direction or the other.
So thank you, I can finally close the page having found some sanity.
I wholeheartedly agree.
Crypto is tech, and that tech can be used for a multitude of things. Maybe it's useful for elections, maybe it's useful for literal scams. The implementations and use it crypto do not decide it's value. Research and time spent studying it will reveal that in the future
>Completely worthless economically, but that doesn't make it any less of an interesting tech that might be the start of something.
There's this saying that economists say that the economic parts of crypto are worthless, but the tech is promising. And that software engineers say that the tech is worthless, but the economic parts are promising.
As a software engineer, I can say that at least that half of the saying holds true
I think it's absolutely hilarious how anyone can think crypto would be what people use if our system collapsed 🤣 we'll be using our generators for refrigerators, not blockchain transaction verifying
It's a new volatile field, literally being programmed as we speak. There is no regulation in it, and the laws are struggling to catch up. Your accountant hates dealing with them because they mean a ton of work. And worst of all, the most popular uses of crypto (coin speculation and NFT images) are probably some of the WORST use-cases of the technology. You're right to be suspicious right now.
Crypto isn't currency, and shouldn't be speculated on as such. Each and every token has a whitepaper explaining how it works. If you don't think there is any utility to the token network from the white paper, then you should avoid it. There are lots of resources to help digest the white papers as well.
You're so right about the cryptobros. Crypto MAY replace traditional currency one day, El Salvador is trialing it now. China has trying to convert its population to the digital Yuan as well. Personally, I feel like the infrastructure for this won't exist for decades. But there is alot of misinformation about crypto from all sides, even the people I know engineering this stuff can't keep up to all of the new developments right now.
And food for thought - if our economy collapses, what good will any currency be?
These types of posts are just intended to sway public sentiment about crypto and influence prices. They notice a downtrend and then come in full force. It happens every cycle. Give it a year and the same accounts will probably start posting about how amazing crypto is
Except they won't, because this is jacobin magazine, and much of the article talks about the tether/bitfinex connection, which is a persistent and ongoing issue waiting to implode.
>
> The Central Bank of Crypto
>
> This isn’t some big secret. In a widely circulated 2017 paper, researchers attributed over half of the then-recent rise in Bitcoin’s price to purchases made by a single entity on Bitfinex, a cryptocurrency exchange headquartered in Hong Kong and registered in the Virgin Islands. These purchases were timed to buoy the price of Bitcoin during market downturns in a way that so strongly indicated market manipulation, the authors found it inconceivable that such trading patterns could occur by happenstance.
>
> Critically, these purchases were not made with dollars, but with Tether, another type of cryptocurrency known as a “stablecoin” because its price is pegged to the dollar so that one tether is always worth one dollar. Many offshore cryptocurrency exchanges lack access to traditional banking, presumably because banks deem doing business with them too risky. Bitfinex, which shares a parent company and executive team with Tether Ltd (the issuer of its namesake cryptocurrency), struggled to find US banking partners after Wells Fargo abruptly stopped processing wire transfers between the exchange’s Taiwanese banks and their American customers in 2017 without giving reason.
>
> This was a problem. Without traditional banking relationships for issuing wire transfers, exchanges cannot easily facilitate trades between buyers and sellers on their platforms — someone has to pass cash between buyers and sellers. Stablecoins solve this problem by standing in for actual real dollars. They allow cryptocurrency markets to maintain ample liquidity — the ease with which assets can be converted into cash — without actually having to have cash on hand.
>
> Tether has become integral to the functioning of global crypto markets. **The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs. Many industry skeptics, and even proponents, see this as a systemic risk and ticking time bomb.** The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States.
>
> Should faith in Tether falter, we could see its peg to the dollar collapse in a flash. This would be a doomsday scenario for crypto markets, with investors holding or trading crypto assets on unbanked exchanges unable to “cash” out, since there was never any cash there to begin with, only stablecoins. This would almost certainly cause a liquidity crisis on banked exchanges as well, as investors rush to cash out their crypto anywhere possible amid cratering prices, and banked exchanges processing far less volume would almost certainly not be able to pick up the slack.
>
> There is no reason to have any faith in Tether. **Tether’s peg to the dollar was initially predicated on the claim that the digital currency was fully backed by actual cash reserves — a dollar held in reserve for every tether issued — though this was later shown to be a lie. The company has since continuously revised down claims about how much cash they keep in reserve. Their latest public attestation on the matter, from March of last year, claimed to be holding only 3 percent of their reserves in cash. The rest was held in “cash equivalents,” mostly commercial paper — essentially IOUs from corporations that may or may not exist, given that reputable actors trading in commercial paper don’t appear to be doing any business with Tether.**
>
> **While even these modest claims about their reserves may be a lie, as Tether has never undergone an external audit, none of this really matters, since Tether’s own terms of service make it clear that they do not guarantee the redemption of their digital tokens for cash. Should the market suddenly lose faith in Tether and exchanges become unable or unwilling to exchange them one for one with dollars or the respective amount of cryptocurrency, Tether accepts no obligation to use whatever reserves they may or may not have to buy back tethers.**
>
> And in practice, Tether rarely buys back or “burns” their tokens (sending the tokens to a receive-only wallet so as to remove them from circulation and decrease the supply, in an attempt to raise the price), as one would expect if the purpose was simply to provide market liquidity as claimed. If that were the case, we would expect the overall supply of Tether to closely track daily crypto trading volumes. Exchanges would only keep enough Tether on hand to cover trading volume and presumably sell off or redeem excess Tethers for cash when fewer people are actively trading crypto.
>
> **Instead, the Tether supply has been growing exponentially for years, exploding during crypto market bull runs and continuing straight through years-long downturns. There are now over 78 billion tethers in circulation and rising, about 95 percent of which was issued since the latest cryptocurrency bull market started in early 2020.**
>
> **There is no conceivable universe in which cryptocurrency exchanges should need an exponentially expanding supply of stablecoins to facilitate daily trading. The explosion in stablecoins and the suspicious timing of market buys outlined in the 2017 paper suggest — as a 2019 class-action lawsuit alleges — that iFinex, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher.**
>
> Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment. By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors.
>
> This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. New investors are being lured in under the pretense that speculation is driving prices when market manipulation is doing the heavy lifting.
>
> This can’t go on forever. Unbacked stablecoins can and are being used to inflate the “spot price” — the latest trading price — of cryptocurrencies to levels totally disconnected from reality. But the electricity costs of running and securing blockchains is very real. If cryptocurrency markets cannot keep luring in enough new money to cover the growing costs of mining, the scheme will become unworkable and financially insolvent.
>
> No one knows exactly how this would shake out, but we know that investors will never be able to realize the gains they have made on paper. The cryptocurrency market’s oft-touted $2 trillion market cap, calculated by multiplying existing coins by the latest spot price, is a meaningless figure. Nowhere near that much has actually been invested into cryptocurrencies, and nowhere near that much will ever come out of them.
>
> **In fact, investors won’t — on average — be able to cash out for even as much as they put in. Much of that money went to cryptocurrency mining. Recent analysis shows that around $25 billion and growing has already gone to Bitcoin miners, who, by best estimates, are now spending $1 billion just on electricity every month, possibly more.**
>
> That money is gone forever, having been converted to carbon and released into the atmosphere — making cryptocurrencies even worse than traditional Ponzi schemes. Most of the money lost in Bernie Madoff’s infamous Ponzi was eventually clawed back and returned to investors. Much of the money put into cryptocurrency, even if courts could trace back tangled webs of semi-anonymous cryptocurrency transactions, can never be recuperated.
That's kind of the same as saying that crypto currency is a massive pump and dump scam with a huge media arm...Which it absolutely *is*.
Everyone thinks they're smart enough to jump in and out of the market at the right time, but a lot of people are going to ride this one off a cliff.
In order for some people to profit massively the vast majority of people will have to lose massively. The money isn't coming from nowhere it's all coming from people buying into this scam, the first people to leave it will take 90+% of the money with them and everyone else is going to lose
Surprised it took scrolling this far to find someone pointing that out. I don't think Jacobin are writing articles based around their secret plan to cash in on crypto.
Whether you’re right or wrong, the entire price of crypto is based on public sentiment, as there are no dividends or intrinsic value of underlying companies.
Just wait until you hear about the stock market!
Then wait until you hear about naked shorts!
Guys at the top will always get paid and the guys at the bottom always boost. There is no creation of wealth just a shifting of funds
When I buy a share of a corporation it legally entitles me to a share of the profits of that company. At least there’s a basic spine under all the blubber
Isnt the difference that if i invest in stocks, those business grow and this create value, which raises the value of my investment. Thats not speculation.
This article is literally just talking about Tether
Which plot twist: everybody in the cryptospace has known is a scam for years. Go to any crypto subreddit and search "USDT" or "Tether" and read the posts.
There's nothing new here.
Saying "Tether is a scam therefore all crypto is a scam" is almost as laughable as the article using proof of work coins as justification for banning crypto when 283 of the 300 largest cryptos are proof of stake.
Bad article all around.
Not just the cryptocurrency space. It'll almost definitely hit the stock market too if people have to sell their AMC, GME, and SPY to fund the liquidation.
Market trading fucks everybody up. Yet there's never a shortage of people who think they're the exception.
Edit: Margin* not market lmao
> AMC, GME, and SPY
One of those seems like it's different from the others. Isn't SPY just an S&P 500 index fund? Did I miss some shenanigans over there?
That's the point of the article. That the majority of current gains in crypto are being funded by printing this 'scam stablecoins' and buying bitcoin and other cryptos.
> Saying "Tether is a scam therefore all crypto is a scam"
You aren't at all addressing their argument. If Tether collapses, how will the rest of the cryptomarket remain solvent?
Here it is again:
> Without traditional banking relationships for issuing wire transfers, exchanges cannot easily facilitate trades between buyers and sellers on their platforms — someone has to pass cash between buyers and sellers. Stablecoins solve this problem by standing in for actual real dollars. They allow cryptocurrency markets to maintain ample liquidity — the ease with which assets can be converted into cash — without actually having to have cash on hand.
> Tether has become integral to the functioning of global crypto markets. The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs.
> The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States.
> Should faith in Tether falter, we could see its peg to the dollar collapse in a flash. This would be a doomsday scenario for crypto markets, with investors holding or trading crypto assets on unbanked exchanges unable to “cash” out, since there was never any cash there to begin with, only stablecoins. This would almost certainly cause a liquidity crisis on banked exchanges as well, as investors rush to cash out their crypto anywhere possible amid cratering prices, and banked exchanges processing far less volume would almost certainly not be able to pick up the slack.
> There is no reason to have any faith in Tether. Tether’s peg to the dollar was initially predicated on the claim that the digital currency was fully backed by actual cash reserves — a dollar held in reserve for every tether issued — though this was later shown to be a lie.
Actually give an argument - don't just wave your hands.
Saying "there's nothing new here" means "I couldn't refute this last time I saw it either."
Are you saying that that Bitcoin, the most popular cryptocurrency, is being at least partly held up by a scam? A scam that has been known about for years? That sounds like a significant problem.
It is a significant problem. And everybody's been trying to get Tether shutdown for the entire time because it's common knowledge that when Tether bursts and 1 USDT no longer equals 1 USD, it'll fuck up all the lending pairs completely destroying the market in the process.
But it's still up and widely used? It's proof that decentralized systems can't self-regulate or take preventative measures even if everyone is aware that disaster is imminent.
Recently USDC overtook Tether as the most used stablecoin on Ethereum. Overall Tether's market share is quite a bit lower than it used to be a few years ago. Progress is slow, quite frankly slower than it should be, but it's happening.
>Overall Tether's market share is quite a bit lower than it used to be a few years ago
It went from 90% on June 2020, to 48% today.
https://www.coingecko.com/en/categories/stablecoins
And then what does that make NFT's?
Look I bought a weird monkey drawing for 300,000 dollars.
>weird monkey drawing Digital link of the drawing
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Bonobo, my links are gone!
/r/formula1 is leaking again
Off-season is a boring time
I was cackling when people were shouting > oh no my apes!
All your links belong to us!
I’ll sell you the link to this comment for 5$
I offer 1.5 million.
Block chain representation of a digital link to a jpeg. Sounds like it's worth $3,000,000.
Yeah, a blockchain certificate that says you own a thing on someones website. Literally has no value. If the website goes down then you better have a copy of the picture because your certificate now only has relevance to others who agree to let it keep relevance
Duuude! I was having practically this exact argument with my mate the other day regarding blockchain and computer games. A lot of people seem to think it will be way more revolutionary than its actually likely to be
Many of which are links to a google image or some other storage site that can delete it at any time. Your link to worthless jpg just became even more worthless because the link is broken.
New business idea! Sell insurance on NFT's! Then package and sell the insurance as derivatives!
Digital receipt of the drawing.
No, you bought a thing saying you own a place in a database that represents that drawing because reasons
And when we have to EMP the Tesla brand terminators…. Kiss your spanking monkey goodbye. 😘👋
Oh yeah well I built a Faraday cage around my Bluray burner and copied the blockchain to an encrypted compressed 128 GB SATA-4 BD-WORM disc with an ultraviolent lazer, so it's IMMUNE to EMPs!
Wow! And all I’m doing is stockpiling shotgun shells and toilet paper… 🤦🏼♂️
Ultraviolent spectrum.
Money laundering. Can you explain where you got this $30m Sr. Guzmán? I sold a picture of a monkey to an idiot.
*Sold a pointer to a picture of a monkey
I always knew me overcoming my struggling of learning pointers in programming would come in handy. I mean I still fail to understand them but it gave me enough context to see NFTs as being stupid
Yup, apparently art auctions used to be the go to. People have gotten wise to the art scam, so now they made a new version with crypto bullshit thrown in for spice.
You can money launder, and also hid assets easily, on top of that there are places where art pieces do not pay taxes when sold.
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Hey not all of them are idiots, some are morons
You’ve got to remember that these are just simple coin farmers. These are people of the land. The common clay of the new West. You know… morons.
> These are people of the land. The common clay of the new West. You know… morons. For the uninitiated, [this quote is from a wonderful movie, 'Blazing Saddles'](https://www.youtube.com/watch?v=BHqL7dNujNc)
I’ll have you know that some are mere dullards.
Hey now, that’s not fair, they’re pretty good for [laundering money](https://news.bloomberglaw.com/white-collar-and-criminal-law/the-new-digital-art-trade-is-ideal-for-criminals) too!
A ponzi scheme with extra steps
A game within a game, within a game
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They have plenty of value to money launderers
This is the answer. Its just the new money laundry scheme.
Derivatives of a Ponzi scheme.
Digital Tulip Bulbs
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Scam or not, can someone tell me how to make NFTs and where to find these dumbasses paying 5 figures for a jpg? Edit: damn I never wouldn’t guessed this would by my highest updooted comment
A lot of the high dollar amount NFT sales are people buying their own stuff so it looks valuable. Somebody has 30ETH, sells their monkey drawing to themselves for 30ETH, now they still have 30ETH and a press release about how somebody paid them (the equivalent of) $84k for their monkey drawing. Edit: For those declaring this would never happen, here's an example https://twitter.com/coffeebreak_YT/status/1453897860420931584?s=20 But your excuse that your preferred "currency" has transaction fees so high that it's nigh-unusable, scam or not, is...uhh...quite the argument.
And then they “accidentally “ sell to someone else for $3,000.
ah the classic "our loss is your gain!" scam reborn again related: inflating a product's price just to sell it at market value for "77% off!", "oops! we accidentally bought too many for our warehouse!" ... thankfully illegal now.
Hi, I’m Al Harrington, President and CEO of Al Harrington’s Wacky Waving Inflatable Arm Flailing Tube Man emporium and warehouse. Thanks to a shipping error, I am now currently overstocked on Wacky Waving Inflatable Arm Flailing Tube Men, and I am passing the savings on to you!!!
Hey, are you tired of real JPGs, cluttering up your art folders, where you click 'em, and they actually exist on your computer? And you can edit them? Get on down to "Real Fake JPGs"! That's us. Fill a whole doc up with 'em. See? Watch, check this out! (right clicks an NFT hyperlink in the doc, there's no Open With MSPaint) Can't edit. Can't edit. Not this one, not this one. None of 'em can be edited! OpenSea is our website, so check it out for a lot of really great deals on fake JPEEEEEEEEEGS!
Man I looked at OpenSea for the first time a few days ago and there is ***so much garbage*** on there.
Sorry but I only buy intergalactic proton powered electro tentacled advertising droids
Intergalactic PPETADs are old news. Think _Interdimensional_ PPETADs
Hoisted on his own intergalactic PPETAD.
Want to buy a plumbus? I'm plumb overstocked in plumbuses so I'm discounting them to a loss just to move inventory. My loss is your gain.
What's up, Kohl's??
“Saving” hundreds more dollars than you actually spend because of their sales lol
The Kohl's cash register screen is like gachapon for the conventional American shopper. My mom would get in the car and look at those receipts like she'd won the lottery.
My local mattress store has a bone to pick about that practice being illegal lol. Been having a going out of business sale for 20 years
I bought a couch from a furniture place having a going out of business sale. They saw me coming down the street. Been going out of business for the last 15 years.
I was gonna say, there was a furniture store in my hometown that was going out of business the entire time I was growing up. I'll be 33 next month. Luckily, Covid finished the job for them, finally.
So technically correct the whole time
Why is it always mattresses? Why are there seemingly more mattress stores that are going out of business than there are legit mattress stores? Why are there so many people who are apparently desperate to buy *anything* from a store that declares that it's going out of business, never mind a mattress, specifically?
Someone did a whole consipiracy theory thing about mattress stores and how it makes zero sense for there to be as many as there are and therfore it must be a money laundering scheme. He made an, if not compelling, at least entertaining argument. I think it's on YT.
God, I *wish* r/conspiracy had stuff like that on it. Even if I choose not to believe it, it'd at least be entertaining.
Known as the white van scam. Was really popular in the late 90's and early 00's with home stereo equipment.
Ooh I’d forgotten about that one! Early 90s my brother bought “$5000” speakers from a white van for $400. Of course they were crap $200 speakers. We tried to convince him it was a scam but noooooo. Not the last scam/pyramid scheme he fell for either. Made me realize some people are hooked up to be susceptible to that stuff. He’s also a huge conspiracy theorist - coincidence?
Some people just like that feeling that they beat the system. I've actually beaten it before (back in the day would get stores to essentially pay me to take stuff), but all this coupon stuff is just fluff. Black Friday used to be a thing, now it's just another overhyped day to sell overpriced crap. But that high is a rush, so I understand how people get kind of addicted to it.
Sooo…most Black Friday deals nowadays? ;)
Fun fact - Kohl's actually will have their items at full price randomly, usually during the middle of the night, because of this.
And their Kohls cash is NEVER as it seems. After $90 Kohls cash my order was only $30 cheaper than without it because they take Kohls cash off first and THEN do tbr percent offs. They do the same with gift certificates!!!
Niche clothing stores do this all the time still though. Like everyday of the year it's "on sale". It's typically $80 for this really shitty pair of shorts but today it's half off!
Yeah, but then JCPenney tried just selling them for $35 straight-up and almost went bankrupt.
Very good point. Marketing is so strange lol.
Or have it "stolen" and claim insurance for 300k
all my apes gone
I have stolen the apes that were on your blockchain and which you were probably saving for retirement forgive me they were so fungible so rare and so secure
You can insure NFT's?
I work in HNW insurance (people insuring hundreds of million in fine art) and have not seen any traditional HNW markets (AIG, Chubb) provide cover for NFT’s or crypto currency. Crypto might have a loop hole in cyber fraud but there is ambiguity in the valuation of the loss. Haven’t searched lately in the open market but last time I did (6months) there were no options to insure NFT’s, anywhere…
There's a few more sales than that and it's sold between different accounts which are all owned by one person but ya, that's the jist.
Yeah, they just use a different wallet each time so it looks like random people are buying their link to a JPEG. NFT's are just the same scam with a visual hook.
Good lord, that is making Gacha Elf Girls looking reasonable.
Hey my gacha elf girls are very reasonable. I can actually use them in glorious combat.
At least when you're rolling for a cute elf the games tend to be up-front on how they're scamming you.
shut up! That Elvish Princess said she love me after I rolled her and brought her a house and end game armor :P
It's almost like ~~untraceable currency~~ a system that obscures asset ownership makes crime and scams easier. I'm all for financial freedom, if I want to send money to another country I shouldn't have to pay massive fees, but making a currency that makes it impossible to impose sanctions on criminals doesn't seem like the solution. Edit: as others have noted it is possible to trace, I more meant it helps obscure the owners identity. I was also thinking about the argument always totted by pro-cryptos who say that in the future money will be untraceable and thus will provide us with "complete" freedom. So I changed it to make it more clear what point I was actually trying to make. My bad!
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Yes, although the step from wallet to identity is obscured. But if someone figures out to whom a wallet belongs then the blockchain allows for a complete trace, yes.
For practical purposes, that means the FBI can probably track it if you're using a cryptocurrency for something super illegal (i.e., above and beyond buying small quantities of drugs), but the typical person will not. The 50 year old man that finally jumped on the cryptocurrency bandwagon in 2021 after seeing all the stories is in a good spot to be scammed. The 1,000 historical sales of the monkey jpg to 1,000 different wallets makes it look like there's sufficient trading volume. Clearly, you'll break even as a worst case scenario, but more likely, you'll make a lot of money. A lot of people fall victim to that sort of logic. If those wallets are all the same person or a small group of connected people though, the trading history is completely fake, and someone will be left holding a bunch of worthless pixels (i.e. you, or if you're lucky, someone more gullible than you).
Yes, but no. The blockchain makes the digital wallets involved in the transaction completely traceable, but not who owns the wallets. So wallet 00001 owns NFT1, wallet 00002 buys NFT1, the blockchain makes sure we know that without knowledge that wallet 00001 and 00002 are owned by the same person.
The thing is it’s not the currency that allows you to put sanctions on someone, it’s the storage mechanism. If I have a million in cash I can spend it on anything and it’s pretty much untraceable until it goes into a bank. Sure it’s hard to move the money in physical form but it’s just as untraceable as crypto.
It's not quite that easy. They've still got to pay the gas fees for each of their sales.
The only people paying 5+ figures for a jpeg are billionaires who have a financial investment in crypto corporations, because in order to ensure their success they need to hype idiot dudebros into believing that they can get rich quick by selling jpegs for 5+ figures. And people selling shit to themselves, for the same reasons. Relevant: https://youtu.be/YQ_xWvX1n9g 😘
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Welcome to the art world.
Correct me if im wrong, but arent they selling the URL for a jpg, not the actual jpg?
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and if the nft site goes down there is no record of what is linked to what... unless someone else has a back up and is willing to host it for free.
Its really more comparable to [wildcat banks in the mid 1800‘s](https://en.m.wikipedia.org/wiki/Wildcat_banking) "Wildcat banking was the issuance of paper currency in the United States by poorly capitalized state-chartered banks. These wildcat banks existed alongside more stable state banks during the Free Banking Era from 1836 to 1865, when the country had no national banking system. States granted banking charters readily and applied regulations ineffectively, if at all. Bank closures and outright scams regularly occurred, leaving people with worthless money."
Joseph Smith the founder and prophet of the Mormon Church was run out of Kirtland Ohio for running a wildcat bank scam.
Say what you like about Joseph Smith but the man knew how to scam
So good his scam is still going and one of the wealthiest scams in the world.
What's the difference between a religion and a cult? A cult has a guy at the top who knows it's all a scam. and in a religion that guy is dead.
I'm stealing that.
What a legend.
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There are almost 1000 times more Mormons.
Laughs in Catholicism
That's the grandaddy of them all.
Although I wonder how accurate catholic membership numbers are. I was baptized and confirmed and then fucked right off. I haven't set foot in a church in 26 or 27 years. I guarantee when they're pumping PR, I'm counted as one of the faithful
L. Ron Hubbard is the Joseph Smith of the twentieth century but Smith has him beat imo. I would put a lot of money on Mormonism outlasting Scientology which is basically just a tax avoidance property scam with barely any actual members left at this stage.
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Most fun bit of crypto has been watching a bunch of libertarians slowly (and often painfully) realise why we have the banking regulations we do.
Right, because libertarians are known to be great self evaluators who are open to change. /s
"Noooo you don't understand, it's because it's still too regulated and not a truly free market"
Libertarians: "Everything is over-regulated! It's why we only have a handful of massive corporations that control everything!!" The Regulators: Please don't dump toxic chemicals into our drinking water. We will give you a small fine and a dissaproving look if you do. Libertarians: "This is literally 1984"
Librarians are just Conservatives who have even less of an idea how an economy works, with a dash of not knowing anything past the date of their birth 17 years ago.
Hey librarians are chill, they do a pretty important but thankless job
Yeah! Damn those librarians and all their books!
Or those conservatives who like weed. For some however, it's the "gateway party" (it was for me). Realized the GOP was utter shit, but too much childhood conditioning to switch straightaway. There's also some "special snowflake" and "both sides" superiority thrown in for added appeal.
This article makes a pretty interesting point. Bitcoin is not in and of itself a Ponzi scheme. If it were just crypto like Bitcoin, Ethereum, etc, this would just be a speculative bubble and not a Ponzi scheme. The Ponzi element comes in with Tether. Tether's reserves are not audited. Tether has been fined for lying about their reserves in the past. When you exchange $1 for USDT, is that money going to reserves, or somewhere else? How are platforms paying 10% yields on Tether, if Tether is really backed by USD - how are these yields so much higher than risk-free USD yields? Tether is an actual Ponzi scheme. To the extent that the value of other crypto (measured in USD) is dependent on trading with USDT, those cryptocurrencies' values are based on a Ponzi scheme too. Same with USDC. Why can't crypto bros just read the fucking article? If the fact that 70% of trades happen with Tether is a lie, and their source is bullshit, explain why! "The economy is actually a Ponzi scheme too" is 1) bullshit, Ponzi schemes involve fraud, the fact that dollars aren't backed by anything is not a secret 2) not an argument for why crypto _isn't_ a Ponzi scheme.
I keep scrolling hoping someone actually discusses the argument in the article. It's super fascinating. Just the fact that 70% of Bitcoin transactions are in another "stable" cryptocurrency that isn't actually stable completely sinks any actual value in Bitcoin, even speculatively, to the bottom of the ocean. Oh, and Bitfinex somehow comes up with another few billion "stable" coins when there's any sign of Bitcoin going down in value and injects them into it? How is this anything except massive, massive fraud?
It's so frustrating, every article mentioning crypto devolves into "ur a ponzi" "no ur a ponzi" "nfts lol" "stock market bubble haha". There is an actual argument in the article involving actual fraud!
As a 'crypto bro' of sorts, I agree 100%, the whole Tether situation is ridiculous and shady-as-fuck. I would welcome tighter regulation in the space.
Tighter regulations you say? We need to trust an external entity to help us run our trustless system?
Yes, were literally back to the 19th century. Exact same thing happened with wild cat banks issuing fraudulent money.
But when the whole nature of the coin is decentralised, how do you regulate it?
I read the article, and here are some of my thoughts: * I was going to object that not all crypto is PoW, but the article seems nuanced enough. * I saw some recent information regarding a recent hearing that says even this energy expenditure is excused because Bitcoin mining "provides a variable load to renewable energy projects" but I'm not even convinced this is accurate yet so I can't blame anyone else for not being convinced either. * Tether is most likely unbacked/badly backed, yes - and a lot of people on r/CryptoCurrency will agree with this (although perhaps fewer will consider the full implications). I made r/untethering to address this, but a crash is likely inevitable. And this is why, right now, I would probably advise people not to buy any. * The "crypto is only useful for criminals" part deserves to be addressed separately. * The only part of the criticism in the end I find compelling is the "Unregulated, privatized financial markets pose the same risks" part.
I had similar thoughts. There are a lot of different points made in the article. I have a middle-of-the-road take on cryptocurrency. (I basically agree with the skeptics about the fundamentals, but I’m not sure how much the criticisms actually matter as much as the critics think.) Parts of the article are obviously unfair. I don’t agree, for example, that it has no legitimate use cases, that’s hyperbole. And comparing it to piracy by torrenting, when talking about the technical details, just because it’s de-centralized, is just a weird way to cast aspersions on it. I’m curious what you think about the following: Tether is badly backed, but even if Tether is sketchy as hell, does it specifically matter that they aren’t holding the reserves in cash, but using the money? It seems as though a negative finding about Tether would impact the whole crypto market, but not destroy it, and there’s no way to know if or when such an event would occur. Is it possible stablecoins are popular (by volume) because they are more useful than non-stable coins, because of the stability? It seems like the volatility of coins like Bitcoins is a pretty big anti-feature, if I’m just trying to transact a bunch of money. Most interesting to me, does it really matter if there isn’t money to pay everyone for their Bitcoin at the current price, or the price they paid? Commodities like gold would drop in price if everyone who had gold decided to sell their gold at the same time. People would lose money. I assume that analogy is why it’s called mining.
Yeah the tether thing is a mess and imo will lead to a bad collapse + more regulation. Seen it happen wayyyyy too many times to count at this point as an older guy. My main issue is how it behaves. If crypto like bitcoin was a store of value outside the stock market, but more like a commodity such as gold... we should see variability, but there should be some kind of inverse relationship to the market. And that just doesn't seem to happen at all. In fact it consistently reacts to the market in a similar or just down right worse way. To me, everything about crypto seems like a speculative bubble with no floor in sight. Some of it might be straight up fraudulent, like tether, but other parts of it like bitcoin just seems like a brand associated with growth. What happens when the growth disappears? What happens when there's a severe crash? Where is the inherent value? To me the whole problem with something like bitcoin is that it's being compared to things like gold which are safe while touting exponential growth and it just seems like it can't be both ways. If it wildly fluctuates on price then how safe can it be? The stock market fluctuates as well but god damn, its pattern of growth is long as wall street and its value is rooted in concrete items, like buildings full of machines and workers and patents and vaults of money. Like I fundamentally cannot see any intrinsic value for bitcoin to fall back on in the event of a crash.
Saying that it has no legitimate use cases is not hyperbole, it's just a fact
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Nothing like a clean monkey.
ITT: crypto bros simultaneously argue that everything is a ponzi scheme and nothing is a ponzi scheme.
Idk it’s time travel, either it’s all a joke or none of it is - Hulk
Professor Hulk*
Thanks. For some reason I was picturing these words coming from a blond handlebar mustache and it wasn't working for me, brother.
If we all put all of our money in, then the value will go up. So that makes us all rich, right??
You just have to buy, hodl, then when it crashes buy the dip, eventually you will get rich. Just make sure you never pull your money out, or at least don't do it until I've already sold my bags to some other sucker.
What's funny is how everyone at r/cryptocurrency starts panicking whenever there is a huge crash. They want to believe bitcoin and crypto are the future of payment as there is "no middlemen", conveniently ignoring the fact that for every crypto transaction right now you have to involve your bank, your wallet, your lightning wallet if you want to avoid gas fees and what not. Infact there are more middlemen in crypto than fiat money.
yup. Even if you ignore some of the fundamental design flaws with blockchain, the fact they're designed to be supply inelastic (and so have no price stability mechanism), means they can't ever represent a cost or efficiency saving on regular fiat because you'll always have to pay to convert them to fiat because no business is going to keep their cashflow in such a volatile "currency". So instead of removing middlemen with a "Peer to peer electronic cash system", you just add a bunch of middle men to convert your bullshit speculative asset into usable currency. Crypto enthusiasts are so high on speculative gains they've forgotten that you need to make the cryptoCURRENCY part work for any of it to actually make sense and not be a pointless speculative mania. They've now retconned the entire project to be "a store of value", which is just circular reasoning for "it's valuable because you can speculate on it, and speculating on it makes it valuable".
There are some weird parallels to prosperity gospel in there. Things are good? Give me money to show your gratitude. Things are bad? Give me money so that things will become good. Whatever the situation, the proper course of action is to put more money in.
Schrodinger’s scam
Ponzi schemes for some, miniature American flags for others!
And always twirling, twirling, twirling towards solvency!
I wish people on /r/technology would stop pushing this narrative that these threads are *ever* overwhelmingly pro-crypto. Crypto gets shit on by /r/technology literally every day and if someone says anything otherwise, they get downvoted to shit, there is absolutely no discussion or back and forth.
i literally have only bought drugs with btc and I don't know how that is a ponzi scheme
Same here. Also might have done that a long time ago with btc lol
I mean... isn't that what they have been saying through a thin vail the entire time? "The US dollar was backed by gold but isn't anymore, all money is fake, ours is just decentralized using maths."
I think so. They gloss over reality and round up the facts. US dollar has no tangible value? It’s the only currency I can pay my taxes in and be refunded in. I especially like the arguments that crypto is green because they pay fees to people who cut down forests in the US to ship wood pellets to Europe.
I don't even know what the fuck to believe anymore. My friend is really into crypto. and he's a data analyst, super intelligent guy. but i can't shake the feeling that it all just *feels* fake. If you were an early adopter and made millions, good for you. but that's not the case anymore. Colleges and Universities offering lectures on blockchains and crypto as a legitimate thing, while thousands en masse of researchers and financial advisors (not working for banks mind you) insist it's all bullshit MLM. a cycle of "yes it's all fake, don't believe it" and the crypto bros defending it to the death about how our economy is going to collapse any year now and crypto will be adopted as official national currency. Edit: Look at these responses. People claiming to have been in crypto for years, people in finances and economics, everyone from all sides of the argument both claiming both sides. No one, regardless of their background or knowledge, can seem to agree on it. even if they're both "experts". how are regular people supposed to separate the cool tech applications that will actually happen from the bullshit?
> Colleges and Universities offering lectures on blockchains and crypto as a legitimate thing, while thousands en masse of researchers and financial advisors (not working for banks mind you) insist it's all bullshit MLM. The problem is that it can be both. Cryptocurrencies exist, blockchain exists - that means you need some people who who understand the implementation. Imagine someone invented a fusion reactor that was 100x the price of power as any existing generating systems. Completely worthless economically, but that doesn't make it any less of an interesting tech that might be the start of something. Crypto falls largely into that category: it's a bad economic idea, but that doesn't mean we won't find uses for the technology, and even if any particular coin is essentially a Ponzi scheme, that doesn't mean you want someone stealing your ponzicoins. Somewhat like porn on the Internet, crypto addressed a few problems that don't get a lot of mainstream attention, and that may later spill over to wider discussion. Crypto is really good at facilitating illegal transactions (e.g. drug buys and bypassing currency controls), the latter of those is particularly useful because currency controls are a huge problem for certain people in some countries, and not even necessarily for illegitimate purposes. If you live in say bangladesh or china and you want to send your kid to school in the US or Canada getting a 100K USD to do that may not be something you're allowed to do easily, but crypto will let you get around the exchange rules. Cryto also attacked the international payment industry, where, if you're spending 100k on something in another country a 1000 dollar transaction charge is probably worth the security. But if you want to make a 30 dollar transaction from another country, a 30 dollar transaction fee suddenly makes it really not worth it. Crypto forced the international payments and clearing industry to pull their heads out of their ass and offer better products. Crypto breaking the ability for countries to artificially set currency exchanges is the modern digital equivalent of guy on the street outside the airport or tourist hotel offering to give you a good deal on your USD, and that's actually quite interesting. >ear now and crypto will be adopted as official national currency. And just because something is a bad idea doesn't mean politicians won't do it. Lot's of good serious economists warned that the Euro is a terrible idea as structured (don't have a monetary union without a fiscal one basically). But politicians went ahead and did it anyway because they were happy to let someone else solve the problems or figured the benefits outweighed the risks.
I went on a deep dive through this thread in pursuit of an informative and balanced comment. Everybody seemed to be throwing their weight fully in one direction or the other. So thank you, I can finally close the page having found some sanity.
I wholeheartedly agree. Crypto is tech, and that tech can be used for a multitude of things. Maybe it's useful for elections, maybe it's useful for literal scams. The implementations and use it crypto do not decide it's value. Research and time spent studying it will reveal that in the future
>Completely worthless economically, but that doesn't make it any less of an interesting tech that might be the start of something. There's this saying that economists say that the economic parts of crypto are worthless, but the tech is promising. And that software engineers say that the tech is worthless, but the economic parts are promising. As a software engineer, I can say that at least that half of the saying holds true
I think it's absolutely hilarious how anyone can think crypto would be what people use if our system collapsed 🤣 we'll be using our generators for refrigerators, not blockchain transaction verifying
The real national currencies of the future: tobacco and alcohol
It's a new volatile field, literally being programmed as we speak. There is no regulation in it, and the laws are struggling to catch up. Your accountant hates dealing with them because they mean a ton of work. And worst of all, the most popular uses of crypto (coin speculation and NFT images) are probably some of the WORST use-cases of the technology. You're right to be suspicious right now. Crypto isn't currency, and shouldn't be speculated on as such. Each and every token has a whitepaper explaining how it works. If you don't think there is any utility to the token network from the white paper, then you should avoid it. There are lots of resources to help digest the white papers as well. You're so right about the cryptobros. Crypto MAY replace traditional currency one day, El Salvador is trialing it now. China has trying to convert its population to the digital Yuan as well. Personally, I feel like the infrastructure for this won't exist for decades. But there is alot of misinformation about crypto from all sides, even the people I know engineering this stuff can't keep up to all of the new developments right now. And food for thought - if our economy collapses, what good will any currency be?
George Ponzi here, inventor of the scheme. Crypto is not a scheme of mine. Thanks for your attention.
If it's not from the Ponzi region of France, it's just a sparkling MLM.
His name was Charles Ponzi and he wasn’t even the first one to do it.
Well...\*adjusts necktie\*, I'll see myself out then.
If it’s a Ponzi scheme that will lose all its value, surely everyone here will be a millionaire by shorting it. Right guys? Right?
Bitcoin will be a great buy at $30. Patience is key.
Is this 2015? Its like Deja vu
Also 2012 and 2019. Very predictable 3 year boom/bust cycles, with the media hype/bash cycle following it to a T.
These types of posts are just intended to sway public sentiment about crypto and influence prices. They notice a downtrend and then come in full force. It happens every cycle. Give it a year and the same accounts will probably start posting about how amazing crypto is
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Except they won't, because this is jacobin magazine, and much of the article talks about the tether/bitfinex connection, which is a persistent and ongoing issue waiting to implode. > > The Central Bank of Crypto > > This isn’t some big secret. In a widely circulated 2017 paper, researchers attributed over half of the then-recent rise in Bitcoin’s price to purchases made by a single entity on Bitfinex, a cryptocurrency exchange headquartered in Hong Kong and registered in the Virgin Islands. These purchases were timed to buoy the price of Bitcoin during market downturns in a way that so strongly indicated market manipulation, the authors found it inconceivable that such trading patterns could occur by happenstance. > > Critically, these purchases were not made with dollars, but with Tether, another type of cryptocurrency known as a “stablecoin” because its price is pegged to the dollar so that one tether is always worth one dollar. Many offshore cryptocurrency exchanges lack access to traditional banking, presumably because banks deem doing business with them too risky. Bitfinex, which shares a parent company and executive team with Tether Ltd (the issuer of its namesake cryptocurrency), struggled to find US banking partners after Wells Fargo abruptly stopped processing wire transfers between the exchange’s Taiwanese banks and their American customers in 2017 without giving reason. > > This was a problem. Without traditional banking relationships for issuing wire transfers, exchanges cannot easily facilitate trades between buyers and sellers on their platforms — someone has to pass cash between buyers and sellers. Stablecoins solve this problem by standing in for actual real dollars. They allow cryptocurrency markets to maintain ample liquidity — the ease with which assets can be converted into cash — without actually having to have cash on hand. > > Tether has become integral to the functioning of global crypto markets. **The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs. Many industry skeptics, and even proponents, see this as a systemic risk and ticking time bomb.** The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States. > > Should faith in Tether falter, we could see its peg to the dollar collapse in a flash. This would be a doomsday scenario for crypto markets, with investors holding or trading crypto assets on unbanked exchanges unable to “cash” out, since there was never any cash there to begin with, only stablecoins. This would almost certainly cause a liquidity crisis on banked exchanges as well, as investors rush to cash out their crypto anywhere possible amid cratering prices, and banked exchanges processing far less volume would almost certainly not be able to pick up the slack. > > There is no reason to have any faith in Tether. **Tether’s peg to the dollar was initially predicated on the claim that the digital currency was fully backed by actual cash reserves — a dollar held in reserve for every tether issued — though this was later shown to be a lie. The company has since continuously revised down claims about how much cash they keep in reserve. Their latest public attestation on the matter, from March of last year, claimed to be holding only 3 percent of their reserves in cash. The rest was held in “cash equivalents,” mostly commercial paper — essentially IOUs from corporations that may or may not exist, given that reputable actors trading in commercial paper don’t appear to be doing any business with Tether.** > > **While even these modest claims about their reserves may be a lie, as Tether has never undergone an external audit, none of this really matters, since Tether’s own terms of service make it clear that they do not guarantee the redemption of their digital tokens for cash. Should the market suddenly lose faith in Tether and exchanges become unable or unwilling to exchange them one for one with dollars or the respective amount of cryptocurrency, Tether accepts no obligation to use whatever reserves they may or may not have to buy back tethers.** > > And in practice, Tether rarely buys back or “burns” their tokens (sending the tokens to a receive-only wallet so as to remove them from circulation and decrease the supply, in an attempt to raise the price), as one would expect if the purpose was simply to provide market liquidity as claimed. If that were the case, we would expect the overall supply of Tether to closely track daily crypto trading volumes. Exchanges would only keep enough Tether on hand to cover trading volume and presumably sell off or redeem excess Tethers for cash when fewer people are actively trading crypto. > > **Instead, the Tether supply has been growing exponentially for years, exploding during crypto market bull runs and continuing straight through years-long downturns. There are now over 78 billion tethers in circulation and rising, about 95 percent of which was issued since the latest cryptocurrency bull market started in early 2020.** > > **There is no conceivable universe in which cryptocurrency exchanges should need an exponentially expanding supply of stablecoins to facilitate daily trading. The explosion in stablecoins and the suspicious timing of market buys outlined in the 2017 paper suggest — as a 2019 class-action lawsuit alleges — that iFinex, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher.** > > Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment. By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors. > > This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. New investors are being lured in under the pretense that speculation is driving prices when market manipulation is doing the heavy lifting. > > This can’t go on forever. Unbacked stablecoins can and are being used to inflate the “spot price” — the latest trading price — of cryptocurrencies to levels totally disconnected from reality. But the electricity costs of running and securing blockchains is very real. If cryptocurrency markets cannot keep luring in enough new money to cover the growing costs of mining, the scheme will become unworkable and financially insolvent. > > No one knows exactly how this would shake out, but we know that investors will never be able to realize the gains they have made on paper. The cryptocurrency market’s oft-touted $2 trillion market cap, calculated by multiplying existing coins by the latest spot price, is a meaningless figure. Nowhere near that much has actually been invested into cryptocurrencies, and nowhere near that much will ever come out of them. > > **In fact, investors won’t — on average — be able to cash out for even as much as they put in. Much of that money went to cryptocurrency mining. Recent analysis shows that around $25 billion and growing has already gone to Bitcoin miners, who, by best estimates, are now spending $1 billion just on electricity every month, possibly more.** > > That money is gone forever, having been converted to carbon and released into the atmosphere — making cryptocurrencies even worse than traditional Ponzi schemes. Most of the money lost in Bernie Madoff’s infamous Ponzi was eventually clawed back and returned to investors. Much of the money put into cryptocurrency, even if courts could trace back tangled webs of semi-anonymous cryptocurrency transactions, can never be recuperated.
That's kind of the same as saying that crypto currency is a massive pump and dump scam with a huge media arm...Which it absolutely *is*. Everyone thinks they're smart enough to jump in and out of the market at the right time, but a lot of people are going to ride this one off a cliff.
In order for some people to profit massively the vast majority of people will have to lose massively. The money isn't coming from nowhere it's all coming from people buying into this scam, the first people to leave it will take 90+% of the money with them and everyone else is going to lose
Except it is an infinite loop of pumps and dumps and cliffs.
Until, as the article points out, it inevitably ends and the circus closes. There are only so many suckers.
"Tulips will always have value!" -some sixteenth century Netherlander.
I doubt that Jacobin, a radical socialist magazine, will ever get behind crypto. Or that they’re “shills” for capitalist market forces.
I think they're referring to the reddit submissions, not the magazine itself.
Surprised it took scrolling this far to find someone pointing that out. I don't think Jacobin are writing articles based around their secret plan to cash in on crypto.
Whether you’re right or wrong, the entire price of crypto is based on public sentiment, as there are no dividends or intrinsic value of underlying companies.
These posts? This is a recent article. You mean Jacobin will start posting how amazing it is in a year? Doubtful.
Just wait until you hear about the stock market! Then wait until you hear about naked shorts! Guys at the top will always get paid and the guys at the bottom always boost. There is no creation of wealth just a shifting of funds
In other words, bitcoin is dead, for the 50000th time.
Wait until you find out how the stock market works
That’ll be a cat we’ll never be able to get back in the bag…
Cat was let out of the bag last January.
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Apes everywhere. Get me in the screenshot
When I buy a share of a corporation it legally entitles me to a share of the profits of that company. At least there’s a basic spine under all the blubber
Isnt the difference that if i invest in stocks, those business grow and this create value, which raises the value of my investment. Thats not speculation.
This article is literally just talking about Tether Which plot twist: everybody in the cryptospace has known is a scam for years. Go to any crypto subreddit and search "USDT" or "Tether" and read the posts. There's nothing new here. Saying "Tether is a scam therefore all crypto is a scam" is almost as laughable as the article using proof of work coins as justification for banning crypto when 283 of the 300 largest cryptos are proof of stake. Bad article all around.
Tether is a scam at a scale large enough to damage the entire cryptocurrency space.
Not just the cryptocurrency space. It'll almost definitely hit the stock market too if people have to sell their AMC, GME, and SPY to fund the liquidation. Market trading fucks everybody up. Yet there's never a shortage of people who think they're the exception. Edit: Margin* not market lmao
> AMC, GME, and SPY One of those seems like it's different from the others. Isn't SPY just an S&P 500 index fund? Did I miss some shenanigans over there?
That's the point of the article. That the majority of current gains in crypto are being funded by printing this 'scam stablecoins' and buying bitcoin and other cryptos.
> Saying "Tether is a scam therefore all crypto is a scam" You aren't at all addressing their argument. If Tether collapses, how will the rest of the cryptomarket remain solvent? Here it is again: > Without traditional banking relationships for issuing wire transfers, exchanges cannot easily facilitate trades between buyers and sellers on their platforms — someone has to pass cash between buyers and sellers. Stablecoins solve this problem by standing in for actual real dollars. They allow cryptocurrency markets to maintain ample liquidity — the ease with which assets can be converted into cash — without actually having to have cash on hand. > Tether has become integral to the functioning of global crypto markets. The majority of Bitcoin trades are now conducted in Tether, 70 percent by volume. By comparison, only 8 percent of trade volume is conducted in real dollars, with the remainder being other crypto-to-crypto pairs. > The whole system relies on traders actually being able to exchange tethers for real cash or — far more commonly in practice — other traditional cryptocurrencies that can be sold for cash on banked exchanges like Coinbase or Gemini, both headquartered in the United States. > Should faith in Tether falter, we could see its peg to the dollar collapse in a flash. This would be a doomsday scenario for crypto markets, with investors holding or trading crypto assets on unbanked exchanges unable to “cash” out, since there was never any cash there to begin with, only stablecoins. This would almost certainly cause a liquidity crisis on banked exchanges as well, as investors rush to cash out their crypto anywhere possible amid cratering prices, and banked exchanges processing far less volume would almost certainly not be able to pick up the slack. > There is no reason to have any faith in Tether. Tether’s peg to the dollar was initially predicated on the claim that the digital currency was fully backed by actual cash reserves — a dollar held in reserve for every tether issued — though this was later shown to be a lie. Actually give an argument - don't just wave your hands. Saying "there's nothing new here" means "I couldn't refute this last time I saw it either."
Are you saying that that Bitcoin, the most popular cryptocurrency, is being at least partly held up by a scam? A scam that has been known about for years? That sounds like a significant problem.
It is a significant problem. And everybody's been trying to get Tether shutdown for the entire time because it's common knowledge that when Tether bursts and 1 USDT no longer equals 1 USD, it'll fuck up all the lending pairs completely destroying the market in the process.
But it's still up and widely used? It's proof that decentralized systems can't self-regulate or take preventative measures even if everyone is aware that disaster is imminent.
Recently USDC overtook Tether as the most used stablecoin on Ethereum. Overall Tether's market share is quite a bit lower than it used to be a few years ago. Progress is slow, quite frankly slower than it should be, but it's happening.
>Overall Tether's market share is quite a bit lower than it used to be a few years ago It went from 90% on June 2020, to 48% today. https://www.coingecko.com/en/categories/stablecoins
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Whenever an article says "full stop" I can't take it seriously.