Cryptos make rich people richer, and are sold to poor people the same way lottery tickets are. ”Look at old Pete here, he used to be a loser like you, but he believed and now he’s got $millions in the bank”
Was recently watching "Becoming a god in central Florida", a Netflix sitcom about a fraudulent MLM scheme in the 90s. I was struck by how similar the vibe was to today's crypto community; anyone who wasn't making money or who questioned the value proposition of the overpriced cleaning products simply didn't understand, didn't believe hard enough, and those who refused to get involved were the enemy, their lack of belief viewed as an attack on the scheme ('no-coiners', anyone?)
I've said it before, but over here in Europe, a lot of the good ol' boys from the 80s/90s/00s MLM scene pivoted to crypto the second it hit the mainstream - if not before that.
If I were to invest in anything related to crypto today, I'd conduct the due-diligence of a lifetime before sinking a cent into the investment, even going as far as hiring private investigators to fine-comb through the people involved. I don't think any tech sector has more veteran con-men than crypto - these folks have been scamming people for a lifetime.
Same, I wouldn't put any money into crypto if I hadn't at least glanced at the code for it and understood the high-level value added. The amount of (non-technical) people I know who invested in dogecoin and shiba inu (and not in a memey way) is astounding
For sure. It really has become a more distributed lottery.
The people I know who are obsessed with slot machines and buying lottery tickets are the people I know that own dogecoin.
This whole thing gets more absurd as USD Coin and Binance USD climb to the top with Tether.
The whole space to me feels like such a massive waste of resources and brain power.
It's different in terms of inflation schedule, contract support and of course that it's not trying to be anything but a meme. Would you mind elaborating on your thoughts?
I guess I just don't think inflation schedule or contract support are particularly meaningful. And Doge is explicitly a meme, but all of them are implicitly a meme. People want crypto because they are bought into the viral idea of owning crypto. Unless you have a ransom to pay, nobody is buying it for its inherent utility.
I've seen people increasingly buy stablecoins to earn interest from lending them (higher rates than a bank or bond gives you), which I would argue is inherent utility. Plus, the idea of holding USD stablecoins in countries with poor banking infrastructure is gaining steam, which is inherent utility.
My best friend is Venezuelan and I assure you there are real humans in the world who get real value from a stable digital form of currency that doesn't require a central bank account. The only ones they can legally have are ones in their country, and the exchange rate for foreign currencies is a rigged price that doesn't reflect real inflation.
They're almost literally financially enslaved to their countries central bank, which devalues their only legal form of life savings by 25% every month by printing more and more (for government members) and no other country will give them banking access but their own, which has regulated against them using any alternative currencies than the one the central bank controls.
Just imagine if the US made it illegal to own any currency besides USD, and then started printing so much that you lost 90% of the value of your savings every 3-6 months.
They've experienced 10,000,000% inflation since 2014. That would turn someone's retirement account of $5,000,000 into $49.95.
The only option there is a digital store of wealth that doesn't discriminate against them based on their citizenship, unlike every central bank in the world. Otherwise, the rug is just constantly being pulled out from under you, and your only legal store of value is the things you can buy in the store and keep in your closet to sell later. Back to a financial system more primitive than in ancient Athens (400BC).
Americans benefit from a global banking structure that is rigged in their favor. Their government prints the global reserve currency, most countries in the world welcome them with open arms and offer banking solutions, and their hegemony is backed by hundreds of military bases armed with tanks, airplanes, and soldiers across the world, and miltiary ships across the seas.
It's very easy for all the rich tech people in this thread living in stable countries to denounce crypto as useless, because to them, right now, it is. But it is careless to denounce it as a concept.
The tweeter mentioned that it is a right wing tool. In the US that has a dirty connotation, and I agree that coming from the US, we can see first hand the dangers of unfettered right wing policy. But people coming from countries that have experienced extreme left wing governments that describe daily common horrors far worse than people peeing in bottles on Amazon's factory floors.
A little bit of sympathy for them and the real life saving use case the "right wing" tool of decentralised finance against the troubles they experience could go a long way.
All that said, I was very skeptical of the crypto community for a long time as well, because it is most of the same people who do MLM schemes. But real life experience has now made it impossible for me to ignore that the underlying tech has real humanitarian use cases as well, and those should be nurtured.
> My best friend is Venezuelan and I assure you there are real humans in the world who get real value from a stable digital form of currency that doesn't require a central bank account.
I have friends living in Venezuela, and one of them had to receive medical treatment that he could only afford thanks to a crypto transaction.
Yet, I assure you that crypto was completely irrelevant in that equation. Crypto's only role was ensuring a way for medical professionals in Venezuela to be paid through means other than domestic transactions and out of Venezuela regime's radar. This time around it was crypto, but it could as easily be a transfer to an offshore account. The end goal is the same.
And let's not fool ourselves into believing that people are in crypto to pay doctors.
A poor person could've invested $50 in Bitcoin when it was priced at $1. That poor person would now be a millionaire if they would've held on to that since. It is not all rich people marketing to poor people, or at least it didn't start that way.
I don't disagree in terms of rich people controlling the crypto ecosystem now. That is one aspect I'm not liking about crypto right now. Too much manipulation, although I think that's at least partly coming from the traditional institutions jumping in and playing the games they do with traditional markets. Plenty goes on behind the scenes in traditional markets, even though they are regulated, and yes, crypto has less regulation, so they probably can get away with more.
I love crypto technology but I think there's stuff going on behind the scenes that regular folk have no idea, and I'm starting to wonder if the grand ideas crypto people have are incorrect. I think the way it will succeed is when big institutions accumulate enough and then it's in their interest to manipulate the crypto market up. I.e. see banks in the Big Short accumulating enough of what Michael Burry was betting on all along, and at that point they revised the indices that track the housing markets, since it was in their interest to at that point.
In the end I don't think crypto is much different than what goes on in equity markets now. Rich people and big institutions control that market too. Meme stocks are essentially also lottery tickets. Way out of balance P/E ratios mean traditional fundamentals are out the window. It's all about momentum and trends now. The one difference, and a benefit I see for traditional markets, is the government will bail them out. The government would be fine if crypto crashes. I think that's the scary part about investing in crypto, but there is also higher potential for upside in crypto markets.
> and are sold to poor people the same way lottery tickets are.
Crypto has never been heavily marketed to poor people. They don't have the capital to buy in at any meaningful scale. The lottery ticket appeal is that you might win $10k or $1m off of a $1 or $2 ticket. There is no mass scale marketing effort pushing $1/$2 of Bitcoin or Dogecoin to poor people with that con-pitch. To this day poor people have barely any stake in the crypto world. For crypto, the lottery players are the small contingent of middle class persons that bother with it (which still isn't very many).
Actual lottery tickets on the other hand, are prominently marketed to poor people all over the place, front and center in many common stores.
Walk into an average convenience store or liquor store, you're telling me they have a large display of dozens of cryptos with updating price quotes appealing to poor people about how big the prizes are and how they can win a million dollars with a $2 ticket? Nope.
They are marketed to people in my experience who are relatively poor. I know a guy who has a problem making rent who has all of his savings (about 1k) in dogecoin or other gambles like individual stocks. I have also met a ton of service people like bartenders and waiters who are involved in crypto.
I have also met quite a few software engineers who are not poor but don' have nearly the level of wealth of the people manipulating these markets who have gotten involved with this stuff. These people aren't poor but relative to the scammers they are, and when they lose money in hurts. I know one engineer for example who lost his life savings on some alt coins in this mid thirties.
I know liquor stores with crypto ATMs with displays. If you log into paypal, you can buy crypto. They're absolutely marketing to people with not much money.
It's true that shitcoins are basically a casino but I don't think it's fair to generalize that to the entire cryptocurrency ecosystem. We have real projects that provide real innovations and uses such as Ethereum and Monero.
XMR is essentially a credit card where it's impossible for anyone to exploit your personal information for any purpose. It's already better than everything out there. The fact it enables some crime is merely a side effect. We need more technology like this. Technology that makes it literally impossible to abuse its users in any way.
This is my biggest problem for crypto. For us power users we are fine but for the average joe and my parents I would never let them hold their own keys. You here every day people getting scammed and hacked now imagine if they could lose all their life savings because they where not 100% tech savvy.
* Buying products/services anonymously, if you don't want to have your personally identifying information, like your credit card details, leaked one day when the website you purchased from is hacked.
* Making payments to parties underserved by banks, whether it's legal cannabis dispensaries, or Wikileaks when the credit card companies blockaded them.
* Triggering financial exchanges, without the friction (and risk of PII theft associated with the identity-based accounts that centralized custodians use) of signing up to a traditional online brokerage or exchange, via crypto transfers to self-executing smart contracts like decentralized exchanges.
A large chunk of society works this way. How many products are only trying to make crowds spend money uselessly so a group of educated wealthy people make another profit (until the next trend).
Crypto is yet-another-trading-market nothing new expect maybe marketing)
Crypto is money but this time I'm the one in power instead of the government! There are entrenched powers in the government system? No problem, we can become the entrenched power in the new cryptocurrency!
Literally nobody in the cryptocurrency space is thinking about how to make fiat fair and sustainable because they actually like the flaws of fiat and just want to amplify them for their own benefit.
How do you make sure fiat is backed by the necessary amount of real assets?
Without a concrete safeguard, we would eventually fall back into the debasement scenario again.
I believe this is the problem bitcoin is attempting to solve. The asset/value is inseparable from the monetary network which makes it easily auditable.
I find that native. People with billions have more power than me on bitcoin, they can play me like a toy. cryptocurrencies aren't perfect, maybe better than fiat .. and that remains to be seen IMO, it's only 10yo.
Some crypto like Dogecoin sure. However, some crypto is bets on tech - e.g. those that try to achieve something like DEXs or synthetic assets - not that different than investing in stock or startups.
Every retail instition I know of, and appears on CNBC (a place that bankers, hedge fund guys, Jimmy Prop guy Cramer (I actually feel for Cramer. I had no idea he was having migraines over half the days in a month.), etc.) are creating their own crypto.
They are all believers now.
It does seem like they are just in it to take money from the Retail Investors investors though like they always do. Meaning I have seen to many Bull to Bear Markets, and when the switch happens--it's the Retail investor that looses everything.
(I guess we will know how it all turns out in a few years. If I had Bitcoins, I would sell. The competition is almost exponential. New crypto are coming on daily. Every money licker wants their own crypto.)
I don't think Jim Cramer is creating his own crypto. Where did you hear that? I don't watch his show but a quick google search produced no results. He has said he has invested in Bitcoin and Ethereum, but also seemed to have gotten out as soon as they started to go down.
However, I don't disagree that retail investors may end up with issues with crypto, but I don't think traditional markets are necessarily safe for retail investors either. Big money controls both crypto and traditional markets. Governments can bail out traditional markets, but in the end big money gets most of the bailout, too. Traditional markets, at least right now, are less volatile than crypto, but things like March 2020 show that they aren't for certain, either. It sounds like we don't really disagree though since you referred to watching various bull and bear cycles.
- Business and work in general makes rich people richer. Remember that rich is very relative. You are a very wealthy person compared to a random person in some countryside in China.
- Considering the previous point, are you saying that people who have some money should not do anything to make more money? Should they stay the same, or should they become poorer? What do you advocate to do this? Prevent them from working? Take money from them forcefully?
All I hear from people in the crypto world is that you SHOULDN'T invest if you don't have money you're willing to lose. Crypto investment is a dream only for delusional people who want to get rich quick. If you do that then lose your money, you don't get to complain. You're free to choose, if you choose wrong, lose, and then not take responsibility for your choice and blame others, then you're truly a loser.
I’ll take issue with your last point. Many in crypto are evangelical about it, but follow up everything with a “DYOR” as if that absolves whatever their statement was.
Michael Saylor, the most visible corporate Bitcoin warrior, advised people to mortgage their homes and borrow as much as they could to buy Bitcoin at the literal top of the market (to the day).
The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01% - the millions of retail traders punting Dogecoin around are just trying to get rich and don’t give a damn about the tech or some greater cause. And that’s because that is how crypto is actually marketed to the masses.
Michael Saylor did say that, it's true. I am posting this, which is the original video, since I see the other comments link to a reddit post which has a modified, sensationalized version: https://www.youtube.com/watch?v=XgqC5_eugJI&t=4470s
I take issue with him telling individuals to accrue debt to acquire Bitcoin (companies I have less of an issue taking debt on). That's also the least reasonable part of the interview though. I think overall he makes a lot of good points as to why Bitcoin makes sense in the majority of the interview. However, I'm not one of those crypto people that only looks at one side of this. Yes, sometimes ridiculous things are suggested, but there is some good to this technology, too.
If you don't even know how to google for something as easy to find as a recording of Michael Saylor saying "go mortgage your house and buy Bitcoin with it" that you confidently "lol" and falsely deny that he said it, then how can you possibly claim that YOU are even remotely qualified to "DYOR"?
Yet you scoff at other people who don't bother to do THEIR own research. Without having done the slightest bit of research yourself about what you're proudly claiming in public.
Most people are too intellectually lazy to do their own research, as you just proved. YOU are the one making stuff up.
"Well Bitcoin's the best crypto asset. What's the second best? There is no second best. There is no second best crypto asset. There's a crypto asset that's called Bitcoin, right? Right. There is no second best, ok? But take all your money and buy Bitcoin. Then take all your time, figure out how to borrow money to buy more Bitcoin. Then take all your time and figure out what you can sell to buy Bitcoin. And if you absolutely love the thing that you don't want to sell it, GO MORTGAGE YOUR HOUSE AND BUY BITCOIN WITH IT. And if you've got a business that you love, because your family works for the business, because it's in your family for 37 years, and you can't bear to sell it, mortgage it, finance it, and convert the proceeds to the hardest money on earth, which is Bitcoin." -Michael Saylor
Does that leave any wiggle room for misinterpretation? DYOR: He said it.
> Well Bitcoin's the best crypto asset. What's the second best? There is no second best. There is no second best crypto asset. There's a crypto asset that's called Bitcoin, right? Right. There is no second best, ok? But take all your money and buy Bitcoin. Then take all your time, figure out how to borrow money to buy more Bitcoin. Then take all your time and figure out what you can sell to buy Bitcoin. And if you absolutely love the thing that you don't want to sell it, GO MORTGAGE YOUR HOUSE AND BUY BITCOIN WITH IT. And if you've got a business that you love, because your family works for the business, because it's in your family for 37 years, and you can't bear to sell it, mortgage it, finance it, and convert the proceeds to the hardest money on earth, which is Bitcoin.
Bitcoin people really are a piece of work, eh? The people at the top of the pyramid sure seem like totally legit, honest people don’t they…
Its fascinating to me people take what he says literally, probably because they need to argue against proponents of the things they hate.
If you ever watch any of his interviews he rationally examines monetary policy and his reasons for liking Bitcoin. He is an MIT graduate in (Aeronautics?) Engineering, and makes analogies to closed energy systems.
He's not just saying "buy bitcoin". He's doing it himself. He's actually borrowed billions of dollars against his company to make such bets. That's skin in the game. That's conviction, as real as it gets. Still, someone people will try to say he's manipulating the market, he's only doing this to pump and dump. Maybe, but his company's is public, and so his balance sheets are public. What bigger bet could you possibly make then borrowing billions of dollars you don't have?
What he's describing what his literal path, and what he's actually done, and how he got obsessed with Bitcoin. If you think he's advising people to invest money they don't have, then I'm afraid you aren't actually paying attention to the conversation.
You're the same guy who was just denying he said what he actually did say, who didn't bother to do his own most basic simple research, and is falsely accusing OTHER people of making stuff up, which you were actually doing (and are still doing now).
NOW you're telling us he doesn't mean what he says he means, because you think you have some special insight into what he really meant, that contradicts his words you were just denying he said. Are you really expecting us to take you seriously?
So what is it? Do you believe he said it or not? Why did you think he didn't say it? Why did you think people who quoted him were making stuff up? Do you still stand by that?
So do you admit you were wrong, or not? What have you done to readjust your world view now that you realize you were wrong? Are you just digging in deeper?
You weren't just not "actually paying attention to the conversation", you're denying that the conversation took place, and then when I quoted it to you, you switched to gaslighting us about how he didn't actually mean what he literally said, now that your initial strategy of denying that he said it has fallen apart.
Do you think WE are not paying any attention to your side of the conversation, and forgot what you just said a few hours ago? Pick a lane, buddy.
"Lol he never said mortgage homes. You’re making that up." -doggosphere
"GO MORTGAGE YOUR HOUSE AND BUY BITCOIN WITH IT" -Michael Saylor
Do I have to to search through them all to give you soundbites of him saying less extreme advice like "invest an amount your comfortable with" (which is an actual quote.) Does the context of his speech even matter, or are you playing the social media game of clipping soundbites? Because that doesn't sound like you're actually giving anything else he says credit, you're providing no intellectual capital to this conversation. You're playing politics and news opinions.
The point is what are you trying to achieve by putting these one off quotes on blast? As if in the hundreds of interviews he's had, this is the most relevant and significant quote.
You're trying to cast dispersion on the popular characters behind Bitcoin because you hate Bitcoin, correct?
Edit to include the quote in above video:
"Okay, look, it's totally strange to have a financial instrument, which is scarce and capped, because you can print more tech stocks, you can print more bonds, you can mine more gold, you can issue more fiat currency. On the other hand, in the engineering world, when you're designing pneumatic systems or hydraulic systems, nobody ever built a pneumatic system with a leak, a hydraulic system with a leak. Your swimming pool doesn't even work with a leak, right? Everybody knows if there's a leak in the fuselage of the airplane, it's not going to fly, it's going to explode. So, you don't have a leak in a nuclear reactor. Do you ever try to go across the ocean and a ship with a leak?
Okay, the idea of a closed system is basic to every freshman in engineering. I'm an MIT engineer. We talk about something called adiabatic lapse. An adiabatic system is no leak. A closed system is when you have mass in the system that can either leave or can be added, and all you can do is inject energy. So, Bitcoin is the classic textbook closed system. There's 21 million coins, virtual bars of gold in the system. You can't remove any, you can't add any. There's no inflation.
On the other hand, what you can do is you can heat it up. If you're buying Bitcoin above the 4-year or the 200-week moving average, you're heating up the system. If you're buying it below the 200-week moving average, you're cooling down the system. The entire thing's like a massive monetary battery, a capacitor. It's storing energy. What we've done is created a system where I can take $100 million of monetary energy, I can put it into the Bitcoin network. It'll sit there for as long as you can imagine, and there's no power loss. That's the genius of it.
If I told you I was going to inject another million Bitcoin or two or three million Bitcoin, I'm bleeding off, I'm diluting the energy. So, when I describe it as a closed system, what I'm saying is for the first time in the history of man, we created a monetary energy network that will store the energy over time with no power loss. We've never had a money. We've never had a thing that could do that. Gold didn't do that. Copper, silver doesn't do that. Fiat doesn't do that. Stocks and bonds don't do that. So, it's really an engineering breakthrough.
But hey, he said the literal words "mortgage your house", so we'll just repeat those words out of context to show that he must be a sleazeball scumbag right.
My explanation is I don't take any remark as a literally as you do, especially in a disingenuous fashion meant to further a political argument.
Ex. Ball player says, "we're going to kill 'em tomorrow".
You: "omg this athlete says he's going to murder his opponents at the game tomorrow."
Me: "no he didn't lol."
You: "FULL STOP. Here's the quote. He literally said it. Did he not say the word "kill 'em"???? Why are you denying that he said he was going to kill people? Clearly he has communicated his intent and endorsement of murder, we need no further context for this speech. "
Of course there will be people who try to scam others into it. But how is this different from anything else in life? The world of investment is susceptible to scammers who prey on people's emotions. This is not crypto or capitalism, this just human nature and we've learned to spot it unless we're blinded by something else, and if not, then shit happens, life is not fair.
> The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01%
Where do you get your numbers?
> And that’s because that is how crypto is actually marketed to the masses.
Again, I don't see anyone "marketing" for it. People should understand what they're working with before selling their houses and "investing it" in bitcoin ffs. If they do that then they're dumb!
> Of course there will be people who try to scam others into it. But how is this different from anything else in life?
Because unlike everything else, crypto has been designed from the ground up such that society is unable to rectify the bad elements.
> Again, I don't see anyone "marketing" for it. People should understand what they're working with before selling their houses and "investing it" in bitcoin ffs. If they do that then they're dumb!
Aaaand there it is. A slightly longer form of “DYOR”. If you go around evangelizing something that turns out to be damaging, you’re not absolved of all responsibility simply because you add “not investment advice”. If people who promote crypto really didn’t intend it as investment advice, they wouldn’t say anything. The whole point is that maybe other people will pump your bags. And if it all goes sideways, then you can always point at “not investment advice” because the vast majority of promoters and traders don’t understand the first thing about what a blockchain is, much less “tokenomics” or smart contract code (and exploits).
You may be an expert, and not in it to get rich quick. But you’re naive if you can’t see that the huge majority around you are in it for very different reasons.
> But how is this different from anything else in life?
In other things in life, there are things like consumer protection. You can tell your credit card agency to refund you, you can use the judicial system to sue scammers. If you lose login secrets to your bank account, you can call the bank, they know who you are, the problem can be solved.
Crypto currency is designed from the ground up with the goal of eliminating all such centralized power and protection mechanisms. Anything that goes wrong is your fault and you have no recourse, and that is not a flaw that will be fixed, that is the most central thing in its design.
Society has protections for the weak, crypto is designed to remove those protections.
> Crypto currency is designed from the ground up with the goal of eliminating all such centralized power and protection mechanisms. Anything that goes wrong is your fault and you have no recourse, and that is not a flaw that will be fixed, that is the most central thing in its design.
This is hyperbolic. There are many insured custody services for cryptocurrencies, similar to fiat banks. Secure storage is a big topic in the crypto space, and it is certainly not a goal of cyptocurrencies to weaken protection mechanisms (centralized or otherwise).
Block size was a huge multi-year argument that split the BTC community. The current largest cryptocurrency is completely incapable of addressing small problems without enormous drama, let alone actually large problems. I have absolutely zero faith that the people in charge (unelected maintainers and miners) will be able to make appropriate policy changes over time.
Block size is a nuanced discussion and it was maybe a larger problem then you realize.
Argument for big blocks: Faster and cheaper transactions (lower fee), as well as more transactions per second. Can use more like cash, i.e. Bitcoin Cash. Everything should be done on-chain. They also argue that small blocks are a money grab from Blockstream so that the network is forced to adopt layer 2 solutions that Blockstream develops.
Argument for keeping block size the same ("small blocks"): Larger blocks means more hard drive space and bandwidth are required, and mining becomes more centralized based on those increased requirements. Big blocks are a money grab from the miners, since they make more money on bigger blocks. An additional concern is if the availability of hard drive space will increase in line with the growth of the network. They suggest to use the Bitcoin Core network more as a settlement layer and a store of value, and not everything needs to be on-chain. They suggest layer 2 solutions like the Lightning Network to use Bitcoin more like cash and enable fast transactions, as well as increase the number of transactions per second. I understand the Lightning Network has some caveats, but from what I've heard from institutions like NYDIG and Strike, that are already using it, it is already working as is.
All I'm saying is maybe it's not just a small problem. The decisions affect a global network and some of the decisions were said to potentially cause major problems.
It was a nuanced discussion. It isn't a trivial problem. I'm keenly aware of the details. There are clear pros and cons, as you described.
The point is that there are much bigger problems in a worldwide currency than block size. In comparison, block size is small potatoes. And the block size problem split the community into two that hate each other. They don't just disagree, but consider the other side to be actively sabotaging the system.
Yeah, I don't like the tribalism either. I see this with Democrats and Republicans in the US, too. One side thinks they are right. That seems to be a human thing. I do hope that progress can still be made.
You are right though, it is a bit ridiculous. What would you have them working on instead, just wondering? Fixing the environmental issues? Adoption? What else?
Protection mechanisms do not need to be "layer 1" (on-chain) solutions, though. There are many possible forms these could take. For example, a multisig wallet gives you very secure cold storage of your BTC/whatever.
How about all the elements/layers added to the traditional financial system that probably a lot of folks here don't understand to a deep degree? We're not comparing apples to apples. Cryptocurrency is a new technology. We are a decade in. Maybe we should let it mature a bit and see what it turns into?
Or Bitcoin was fine to start with and hasn't had a good enough reason to change yet. People can disagree, some did, forked the code, and went on their way.
> how is this different from anything else in life?
There is a high concentration of scamming around cryptos. There are the obvious thefts and frauds. But a good fraction of crypto businesses make their money pushing tokens in a manner remarkably similar to pump and dumps.
That said, for the reasons described here (crypto being a wealth transfer to the wealthy), I think it is here to stay.
You're talking about fixed or restricted-supply cryptocurrencies, which do indeed almost always have some Ponzi aspect. These might represent a majority of the current cryptocurrency landscape, but isn't close to being a fundamental truth.
Algorithmic stablecoins like RAI[1] don't have a Ponzi component to them, for instance. You use the dApp and that's it.
Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price of ETH which in turn determines the collateralization rate of RAI.
> Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price.
What kind of logical fallacy are you trying to make here? If someone sets up an exchange for bananas/pokemon cards and it ends up grossing a majority of the global banana trading volume, that doesn't mean the price of bananas is suddenly backed by pokemon cards.
Furthermore, the mechanism through which Reflexer maintains the stablecoin's price is independent from the collateral asset. It works just as well whether the collateral asset is traded against USDT or fiat.
No, but if you had a banana farm you would be very very wary of pokemon cards turning out to be a ponzi. Bananas are nice and would be worth something regardless, but would they be worth quite as much if people weren't fraudulently printing pokemon cards to buy bananas? How much of the perceived value of bananas is a mirage caused by fradulent pokemon cards? We may never know before the house of pokemon cards collapse and the rubble clears.
The stability of U.S. dollars without the hassle of opening a bank account. Which, generously, means faster transaction times; realistically, skipping AML.
Given Tether doesn't actually hold much cash, it's more akin to a money market fund that pays no interest.
It'd be better for the discussion if you expanded on what your jargon means when someone doesn't understand it. Your comment is more of a conversation stopper...
The base meaning of stablecoin is simply a coin which has a stable value.
The mechanism through which that stability is achieved is often 1:1 redeemability for another stable asset through a central portal, but that's orthogonal to the concept of a stablecoin itself.
I didn't feel the need to expound on this as I specified "algorithmic stablecoin" in my comment and provided a link to the project's homepage which features a short FAQ entry answering that very question:
> RAI is actually one of the first stablecoins. What most people call "stablecoins" are actually pegged coins. Pegged coins are oscillating around a specific value (usually pegged to fiat coins such as USD, EUR etc). RAI, on the other hand, is not pegged to anything. The system behind RAI only cares about the market price getting as close as possible to the redemption price.
