It's wooden nickels, the Brooklyn Bridge and Bernie Madoff all taken to their ultimate logical conclusion --- something with no intrinsic value whatsoever (electrons) is being exchanged for real functioning currency.
But what really sets the crypto scam apart is the fact that no is really lying about the fundamental nature of the transaction.
No one is hiding the fact that by buying crypto, you are exchanging your legal working currency for nothing more than an entry in a database with no real guarantees of any kind --- legal or otherwise. No one is hiding the fact that with only moderate technical skill, anyone can create a similar database and mint their own version of Bitcoin.
All crypto really does is provide a quasi-viable excuse to entice people to lie to themselves about economic reality and what we call "money".
What's also incredible is the lack of government action on crypto. I mean, if something like crypto happened in the 60s, you can bet countries like the US would've banned "owning it" just like they did with gold.
Much much easier to ban a physical item like gold than crypto. Trying to ban crypto is like trying to ban p2p file sharing, except with much more serious implications as it would also kill a country's presence and innovation in the industry.
The most fascinating phenomenon of crypto arguments is that they never change.
Fifteen years ago you could find these same unintentionally ironic statements, where the most cutting criticisms of cryptocurrency are equally true of dollars and euros.
The only thing missing from this thread (so far) is mysticism about the money supply and confident assertions that dollars are somehow "backed" by the military or tax payments.
Seems like "backed by law" is just a synonym for the Latin "fiat", "let it be done", as in "the current regime decrees that this particular figment of our collective imagination is their preferred medium of exchange, which can, will, and always has changed throughout history to different socially constructed figments of the collective imagination".
Not to say that it's dumb or silly to align yourself with the current regime, even though we all know that it will, sooner or later, be replaced by something else. Maybe that's next year, or maybe it won't happen in my children's lifetimes.
But for me, I already have 95% of my life and wealth tightly coupled to the stability and durability of the current regime, and it doesn't seem completely mad to diversify a bit into something that might possibly have a chance of surviving a regime change, or could retain some value in the event the current regime decides to appropriate or restrict or sanction how I can spend or transfer wealth currently locked in their system.
Perhaps twenty years ago it was unimaginable that the current regime could end, or transmute into an totalitarian hellscape, or even just continue with the appearance of liberal democracy but be undermined by authoritarians.
If it's become easier to imagine scenarios like these in recent years, is it insane to want a 5% allocation to independent, uncorrelated, uncensorable assets to correspond to a 5% probability of previously unthinkable scenarios?
is it insane to want a 5% allocation to independent, uncorrelated, uncensorable assets ...
Yes --- when your "independent" assets have little to no history of success or stability beyond speculation, manipulation and promotion for questionable motives and arguably carries a much greater risk than the one you're looking to hedge against.
Crypto is one of the world's most volatile "assets". The only way it achieved any stability is through largely imaginary ties to fiat using "stable coins".
In other words, avoiding risk by adopting even more doesn't make much sense. "Smart money" doesn't buy into a startup with no real world product or assets in order to avoid risk.
Ask yourself this question --- why hasn't every profit driven bank and corporation offered their own crypto already? They have way more ability to promote it than bitcoin. The only reason they haven't is because they don't see any real advantage in the long run.
I'm not Venezuelan, are you? The fact that an unstable "legal tender" exists somewhere doesn't make all others the same and it doesn't make crypto a better or more stable alternative. The fact that some people are promoting it for person gain doesn't either.
The fiat money system also operates on faith, but that faith is in the government so by your definition that's ok I guess. It seems that the modern left is adopting the government as their own. Personally, I trust the government about the same amount as I trust big companies, not at all. In my view the current fiat money system is a very old legalized scam around which there is quite a lot of academic contortion and opaque jargon to try to justify its existence - funded by those who benefit from it. Unwinding the scam would be political suicide as it would crush the perceived wealth of the populus.
This is not to say that crypto isn't so infested with scams that they're now inseparable. I spread my trust around thinly across many countries, banks, and financial instruments with very little of it in crypto. My hopes is that crypto will mature and become boring but useful but do believe we're still a long way away from that.
I don’t trust crypto either. My wealth and focus are entirely wrapped up in business ventures which are inflation resistant.
Also, the US is not the country it used to be so past performance shouldn’t be as indicative of future performance. Particularly the Nixon depegging (Nixon shock) from gold substantially changed the character of the market and the US economy. It takes a long time for the effects to be felt in full and it’s my position that a lot of the current problems originate from that event.
From an outsider to the US the US does not look stable, quite the opposite. It’s not even an old government.
My wealth and focus are entirely wrapped up in business ventures.
You're lying to yourself when you say you don't trust government.
Your wealth and business ventures are secured by the rule of law --- aka government.
It's a right wing mind virus that entices people to express distrust in government --- as they trust government with everything they do --- and vote for those actively trying to destroy the same trust.
If it makes you feel any better I used to trust the government, I did military software and was quite jingoistic. Peace through superior firepower etc. I figured ‘of course the government is good, people like me are working for them’. Then I got a good look at the realities from the inside, figured they were going to crush the middle class and that if I wished to escape that fate I would have to exit the middle class asap.
When I first heard the term 'fiat money system' I thought it was talking about bitcoin. The value exists because some crypto guy says it exists. That is the very definition of fiat.
After when I was corrected that they were talking about real currency my first thought was oh, this is a grift. Only scammers try to reverse the meaning of words like this.
The term fiat currency predates crypto by a truly substantial amount of time, it describes an idea which is as old as currency. There is no reversal of meaning, fiat is from Latin ‘let it be done’ it’s value is by decree.
> No one is hiding the fact that by buying crypto, you are exchanging your legal working currency for nothing more than an entry in a database with no real guarantees of any kind --- legal or otherwise
You just described the modern banking system. Yes, the government will give you guarantees for your stored funds to some extent, but when shit hits the fan, you are on your own (example 2008 financial crisis).
> All crypto really does is provide a quasi-viable excuse to entice people to lie to themselves about economic reality and what we call "money".
The same can be applied to the modern stock market. How many top players bring actual value, are sustainable, and can live more than 6 months without pumping stocks (and company valuation) through social media nonsense and other accounting tricks?
> You just described the modern banking system. Yes, the government will give you guarantees for your stored funds to some extent, but when shit hits the fan, you are on your own (example 2008 financial crisis).
How much money did your savings account lose in 2008? Or your checking account?
In 2008, who lost deposits in the US? Can you explain how, for example, Apple or Exxon are just pumping their stock and what the accounting tricks are?
I own stocks that pay me dividends - a share of the company profits. The company manufactures tangible goods, sells them to people, and then distributes some of the profits from these sales to shareholders. The shares I own are a claim on some portion of those profits.
There are plenty of companies that pay dividends. The logic behind stock buybacks is that it achieves a similar end for investors with favorable tax treatment.
In either case I am receiving some portion of the cash flows generated by a business. These cash flows are being generated independently of any stock market activity.
So tell me what claim on an underlying asset / cash flow does a cryptocurrency entitle me to?
The utility of a scarce token that can have ownership changed, permissionless (without a third party) to anyone, anywhere in the world, basically instantaneously. Some might call that "money".
How is it a scam if the people buying it know exactly what they're buying, and the code is all open source? The word "scam" implies someone is being misled.
How is cryptocurrency any more of a scam than fiat currency, ie. digits in the computer of some private bank or central bank?
> How is it a scam if the people buying it know exactly what they're buying, and the code is all open source? The word "scam" implies someone is being misled.
This is astonishing mental gymnastics. Take the average crypto investor and ask them how the blockchain works. Not marketing fluff: the actual steps in pseudo-code for literally any step of the process.
"The code is all there bro" is an astonishing amount of bad faith. Yeah, it is. Big deal. I've been a software developer for my entire adult life, but I don't work in cryptography, so I can't tell you a single damn thing about how blockchains work. The average investor in crypto, the influencers that peddle it, the whales that flooded the market with money? None of them understand it even slightly. I'd bet my life savings on it.
> How is cryptocurrency any more of a scam than fiat currency, ie. digits in the computer of some private bank or central bank?
A short, non-exhaustive list of differences:
- Crypto has basically zero consumer protections and makes the implementing of them extremely difficult by it's nature
- It is "anonymous" (actually pseudonymous) unless you are technically inclined enough to interact with the chain yourself, with your own software. "Normies" get to use platforms built by... somebody? Who maybe did it right? Probably. If they did it wrong though good luck getting your money back!
- Complete lack of any oversight of any regulatory body, which is a selling point, up until there actually are those, which are the large miners, stakeholders and exchanges
- Runaway deflation is not only a possibility, it is the goal of all of these projects, it's what "TO THE MOON!" means. They WANT that. After which and during their attempts to achieve it, the currency is useless as a currency because of the volatility in value.
- The system has demonstrated multiple times that all the "ownership is truly yours" rhetoric is thrown out the window when the real monied investors in the background have their assets taken from them, in a way that is not against the rules, but no worries we'll just rewrite history for them because they're rich, they can't lose or this whole scheme falls apart
Someone not understanding what they're buying when the information is all publicly available doesn't make it a scam. Again, a scam implies someone being "misled". If you buy some ecstasy and its laced with fentanyl, you were scammed (to say the least). If you buy ecstasy and you get ecstasy, you were not scammed as you got exactly what you asked for.
> The system has demonstrated multiple times that all the "ownership is truly yours" rhetoric is thrown out the window
In ethereum that only happened once back in 2016 when the DAO was hacked. In any case you're free to use Ethereum Classic.
Anyways you listed some legitimate concerns of cryptocurrencies, but none of them imply that crypto is a scam. Nobody is forced to use crypto, and anyone purchasing crypto should obviously do their own research and evaluate whether it makes sense for them. Crypto has legitimate use cases (eg. for people in countries with oppressive currency regimes) and many find it work the risks.
> Someone not understanding what they're buying when the information is all publicly available doesn't make it a scam.
Literally the entire basis of free market ideology is the notion that buyers and sellers operate on an equal footing and a presumption of good faith can be assumed, or at least, that's how it's been sold historically. So, so much of crypto is just outright lies. The notion that every member of a project, for instance, can all walk away rich is at face value a lie: because crypto cannot create wealth, merely move it, the people who cash out big on top can only do that because so many others have bought in on the bottom. It's just a techy retooling of a bigger fool's scam: you can only make money on the asset you've bought by finding a buyer to buy it at a higher price later. The only way you can conceptualize these things as a store of value is to presume an infinite chain of bigger fools ready to buy it at an ever increasing price, ad infinitum. Or, if you prefer to operate in reality, there will eventually be a bag holder, someone who holds something that is now worthless and cannot sell it.
Like, for example, all the people who hold Ethereum Classic, which is probably why it's worth a tenth what Ethereum is: because the principles of this technology don't fucking matter, what matters is the traction the coin has with the investor class, and the people who are in this to make money (which is the vast, vast majority of them) are going to follow the chains that the big stakeholders go to.
> Again, a scam implies someone being "misled". If you buy some ecstasy and its laced with fentanyl, you were scammed (to say the least). If you buy ecstasy and you get ecstasy, you were not scammed as you got exactly what you asked for.
And this again is exactly the attitude I absolutely loathe in the tech space. This notion that if you aren't smart enough or knowledgeable enough to see the bad shit coming, if you, by your very basic human nature can be taken advantage of by someone who knows more, than you apparently deserve to be. Buyer beware.
That attitude sucks ass. If the crypto guys were really about changing the world for the better, they would be building a financial system that is, yes, detached from the current, highly biased and corrupting one that is rife with problems, and on-boarding people with education. With understanding of the underlying tech, imparting knowledge about the failings and foibles of the systems they're replacing, and showing a new, better version, decoupled from the corrupting influences of governments they claim render fiat unusable. That's NOT what they've done here. They have not built a replacement financial system, they built a near exact copy of the current one, minus all manner of consumer protections, any insurance of value, with a singular goal: to recreate the structural inequities of the old system, with them on top. That's fucking it. That is the entire difference between fiat and crypto.
You have it oddly exactly backwards. I find that people that are not smart enough to understand Bitcoin generally respond by getting mad about Bitcoin or ignoring it.
People that first understand it eventually find Monero and BCH and start investing everything they can afford.
I don't understand the technical intricacies of Bitcoin, that's true. But that's not why I'm mad about it. I'm mad about it because it's socially corrosive. I'm mad about it because tons of people who had no way of knowing better were brought into it and lost everything. I'm mad about the reflexive syllogism that permeates all tech-centered spaces which seems to say:
"If you can be exploited, you deserve to be exploited."
How is it a scam if the people buying it know exactly what they're buying
It's scam in that you're being enticed to mislead yourself.
You're ignoring the obvious difference between "legal tender" and electrons. Most children understand that "monopoly money" isn't real "legal tender" --- but you don't?
Those running the crypto "marketplace" don't suffer from these sort of delusions.
It's funny because HN was initially supportive of Bitcoin when it first came out, but ever since it became popular has been vehemently against it.
It's like the reverse of that famous HN post when Dropbox was announced and the top comment was that this probably won't work: https://news.ycombinator.com/item?id=8863
Cryptocurrencies are scams in much the same way MLM schemes are scams. Everyone knows what they’re buying into. But their expectations of outcomes are greatly skewed by the vested interests of existing participants.
MLM schemes are a scam because the premise is that you'll make money, but there is no creation of value and the increase in value just comes from the increase in users. Once you saturate the market, the last people to get in are left holding the bag. They lose their money so someone else could get it.
Cryptocurrencies increase in value as more people use them, but they don't fall to zero as a result of becoming widespread, because their sole value isn't for speculation. They can also be used as a currency.
Now, some of these valuations have built into them the assumption that their use as a currency will ultimately become widespread, because otherwise they would be worth a lot less than they are. But less isn't the same as zero, and volatility doesn't matter if you are using it as a currency because then you're not holding enough of it for a long enough period of time to be exposed to a major change in value.
With a MLM scam the value doesn't just have volatility, when you run out of suckers the value crashes to zero forever. With cryptocurrency the speculators can lose their shirts and at the end of the day you can still buy Bitcoin with cash and then use it to pay for a VPN.
Avon, Amway, Vector, Mary Kay, etc have been fleecing suckers WAY longer than Bitcoin has existed. I don’t know where they your “MLM’s go to zero” idea is coming from. Sure, many MLMs go to zero. But so do many cryptocurrencies.
Avon et al are the people at the top of the pyramid. They don't go out of business, they keep running the scam until they get arrested or run out of suckers. And P.T. Barnum said something about the latter.
It's the suckers whose "investment" in one of these things goes to zero, which happens all the time.
There are cryptocurrencies that go to zero, but there are also government currencies that go to zero. They go to zero when people stop using them as a currency, not when they become so widespread that you've saturated the market for suckers.
Ah, I misunderstood. Touché, that is a fair distinction. It's hard to know how widespread leverage is used in crypto investments. One of the scary things about cryptocurrency investments is the lack of regulation, letting unsophisticated "investors" easily take on ludicrous amounts of risk. It's not uncommon to see 100x leverage offerings at crypto exchanges [1][2][3]. If used, it obviously can result in "investment goes to zero"—or worse—situations.
I feel like people should be made aware of the risks and if they haven't misled you about what's at stake, you're an adult and you can place your bets.
That isn't a scam, it's a gamble. It's the same as going to a brokerage and selling short, or buying a piece of land sight unseen. They are not allowed to lie to you. You are allowed to be an idiot and lose all your money.
It only seems to solve it in theory. However in a world of centralized mining where devs have high influence on how forks are treated, the double spend problem is still a problem. This is because what distinguishes forks can be their “validity”, not their proof-of-work, and fork validity is decided by humans and subject to politics and fraud.
Value is always decided by humans. The question is, is it decided in a distributed way via general consensus, or in a centralized way that exposes you to the whims of unaccountable bureaucrats?
Bitcoin devs can do whatever they want, except that there is no law putting them in charge so if they attempt to commit fraud they lose everyone's respect which was the only thing giving them any power, and they get replaced by someone else. Which they don't want, which keeps pressure on them to behave well.
Devs can commit fraud without anyone knowing is my point, actually. Picture a scenario like the 2013 Bitcoin fork but with a twist: a dev introduces a bug that allows a transaction to spend bitcoin without corresponding inputs, and triggers it while in the next block spending Bitcoin to buy a coffee, then after a few more blocks for confirmation, publicly announces the bug and the need to move off of the most-work chain. Miners and devs all agree that mining on top of the most-work chain with the bug doesn't make sense and move all the mining to a minority fork that has the bugfix. Minority fork overtakes the buggy fork. Malicious dev has his Bitcoin back and spends them a second time somewhere else. No one's the wiser.
We can argue about the game theory and what exactly would happen if this was attempted today, but the point remains that double spend is possible and the Bitcoin white paper does not address this issue because it assumes Bitcoin code is set in stone. As soon as you consider that the protocol evolves and is subject to human manipulation, the white paper's guarantees all go out the window. This includes the 21 million bitcoin "limit".
The white paper assumes that you don't have a malicious device. If someone can modify the code running your device, they don't need to double spend, they can just directly steal your cryptocurrency.
Yes, there are other ways of stealing besides double spends. We're in agreement there.
And I think we can both further agree that someone that isn't us modifies the code of the Bitcoin node we run on our devices. Unless you're still running Bitcoin 0.1, but then you're actually not on the "Bitcoin" network as we know it today. There are pressures outside of your control that make it so that you have to update your node, and you have to run new code you probably haven't reviewed or approved yourself.
The only way to make Bitcoin work as defined by Satoshi is to have the code be 100% perfect and then not touch it, and that ship sailed a long time ago.
What is this supposed to be a detriment relative to? If someone compromises your device then they can also transfer all of the money out of your bank account, use it to buy gold bullion and be on a beach in a non-extradition country before you get your next bank statement.
"Your bank will refund you for fraudulent charges" doesn't prevent fraud, it puts the cost of fraud insurance into the cost of banking. Which may be significantly less efficient when the user or anyone other than the bank is the lowest cost avoider for preventing fraud.
They also won't refund you for fraudulent charges unless you report them quickly enough.
You've drifted off-course. We were talking about whether or not double spends are possible in Bitcoin and now you're arguing about how banks deal with fraud refunds. peace!
It prevents double spends under a set of assumptions. One of the assumptions it makes is that the Bitcoin code on your device faithfully implements the system in the paper. It doesn't claim to be the thing that causes that assumption to be valid; you have to ensure that using separate means.
Therefore, Bitcoin code has to have been always free of bugs (malicious or accidental). That has not been the case and will not be the case. The assumption doesn't hold, and double spends are therefore possible.
Considering the _incredible_ amount of scams and rugpulls in the crypto space, some run multiple times by the same people, that would seem incredibly optimistic.
Ngl having a shared global decentralized database that’s you can develop on sounds pretty nice to me. Definitely wouldn’t call that a scam. Maybe it’s overvalued though…
As someone who’s dabbled in the art world, I think people underestimate how important provenance is to an art piece. Having a decentralized system that can automatically keep a paper trail and is seamlessly connected to an automated market/auction service is mind blowing for the art world. It’s basically automating two entire sub industries: the auction houses, and the appraisers. The NFTs don’t even need to stay digitally to be useful. The art world is experimenting a lot with printing these days, and the NFTs are just a method of being able to buy a print from the artist.
I think the problems started when people started treating crypto currencies as investments instead of, well, currencies. I think the BTC jump from low 100s into 6 digits territory is probably what precipitated the craze, making a lot of people go berserk and spawned a whole cottage industry.
Forget the art world, I come from a country known for fradulent degrees, land records and academic certificates. Simply being able to certify them globally would be very useful.
At the end of the day, it’s a database still wholly dependent on the correctness of the data being inputted. The blockchain Rube Goldberg machine cannot solve for that physical to digital interface. A MS Access database with a checksum would be every bit as valid a solution to the problem you’ve outlined at a fraction of the complexity.
Crypto doesn't have to be explicitly stopped or shut down to be consigned to niche cases.
In fifteen years Linux went from a hobbyist project in 1991 to a major infrastructure project underpinning the Internet; Golang started in 2009 and now is ubiquitous in the tech world. Plenty of analogous technologies exist that were created and flourished in fifteen years, and they did so by providing meaningful value without requiring universal adoption to become effective.
In contrast the Bitcoin paper was released in 2008 and blockchain still hasn't found the killer app that people outside of the crypto ecosystem rely on in some serious capacity. Fifteen years in blockchain tech is still slow, risky, and painful to use; scams abound and there's a distinct lack of boring, practical use cases that make blockchains a safe technology to use as foundational infrastructure.
What manifests as people trying to stop blockchains is typically regulatory bodies trying to stop money laundering or the sale of unregistered investments. This isn't some shadowy cabal trying to crush Bitcoin but institutions watching Celsius Network and FTX detonate and trying to catch up to keep people from getting burned.
So yes, the blockchain cat is out of the bag, but nobody cares. We are squarely in "put up or shut up" territory because enough time has passed for the tech to develop; if blockchains never catch on then it's because the tech just wasn't that useful to begin with.
> In contrast the Bitcoin paper was released in 2008 and blockchain still hasn't found the killer app that people outside of the crypto ecosystem rely on in some serious capacity. Fifteen years in blockchain tech is still slow, risky, and painful to use; scams abound and there's a distinct lack of boring, practical use cases that make blockchains a safe technology to use as foundational infrastructure.
There are more blockchains (not tokens) that exist beyond Bitcoin and are much faster and their use-case is worldwide, instant and extremely low-fee same-day payments.
> What manifests as people trying to stop blockchains is typically regulatory bodies trying to stop money laundering or the sale of unregistered investments. This isn't some shadowy cabal trying to crush Bitcoin but institutions watching Celsius Network and FTX detonate and trying to catch up to keep people from getting burned.
They already know they can't stop or ban it and these other blockchains, but they will go after the unregulated, non-conforming exchanges and have already introduced rules and regulations on the existing ones.
But I'm afraid it isn't going away like it or not.
> So yes, the blockchain cat is out of the bag, but nobody cares.
Except, you seem to care enough to complain about it here and until the next time it gets talked about again, which is why you replied in the first place.
> We are squarely in "put up or shut up" territory because enough time has passed for the tech to develop; if blockchains never catch on then it's because the tech just wasn't that useful to begin with.
Of course it is no wonder why companies like PayPal, VISA, Moneygram, TransferGo, Stripe, Checkout.com, etc still continue to use it in their products.
The tech itself isn’t scam. A way to certify ownership is important if you’re going to build a future where work is borderless, digital, and copyright enforcement/royalty collection has to be automated.
Scams get built on the tech, but that’s always been the case with any new tech.
That said, crypto culture and the speculative energy it breeds definitely incentivized scams. The culture needs a massive overhaul
It's wooden nickels, the Brooklyn Bridge and Bernie Madoff all taken to their ultimate logical conclusion --- something with no intrinsic value whatsoever (electrons) is being exchanged for real functioning currency.
But what really sets the crypto scam apart is the fact that no is really lying about the fundamental nature of the transaction.
No one is hiding the fact that by buying crypto, you are exchanging your legal working currency for nothing more than an entry in a database with no real guarantees of any kind --- legal or otherwise. No one is hiding the fact that with only moderate technical skill, anyone can create a similar database and mint their own version of Bitcoin.
All crypto really does is provide a quasi-viable excuse to entice people to lie to themselves about economic reality and what we call "money".