All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this.
Look.
Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam.
Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system.
So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose.
And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.
> Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
Does this not describe CC fees/taxes/online marketplaces/etc? Or is your argument all those are scams as well?
I agree crypto projects are generally a scam but I fully disagree the reason for that is transaction fees (which I assume is what you're alluding to here as the "small cut").
> The coins themselves are worthless, but accrue "fees" in fiat (ex. when you exchange USD for UST).
But why are the coins worthless? I'm sure your answer would be "because they're a scam" (probably more indirectly, but it would boil down to that point). But your reasoning for why the coins are a scam involves them being worthless.
Also, this isn't even true but the standard definition of worth of something like "what the market is willing to pay for something".
The coins are worthless because they have no function outside of speculation.
>But your reasoning for why the coins are a scam involves them being worthless.
The coins are a scam because they are worthless but the conmen in the room are telling you that if you just hodl they will be worth a billion dollars. Just like buying seeds for a money tree is a scam. In other words, the coins themselves have as much utility as seeds for a money tree. Sure the market might be willing to pay for seeds for a money tree; but you and I both know that money trees don't exist and the market participants are paying for something that will be worthless in 10 years.
You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds. Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
> The coins are a scam because they are worthless but the conmen in the room are telling you that if you just hodl they will be worth a billion dollars.
So you agree with me the reason they are a scam has nothing to do with transaction fees??? Maybe you should re-read my initial comment.
> You are now one of those market participants twisting language because you are 100% convinced that you will begin harvesting benjamins in 10 years once you plant your money tree seeds.
I have never, am not currently, and do not plan to hold any cryptocurrency or invest in crypto-related projects. Thanks for projecting this onto me though!
> Once the tree matures and bears no fruit, will money seeds be a scam, or will it just be that your tree was a "Failed project", but the ecosystem of money tree seeds is 100% legitimate?
You really should go re-read my first comment - I never said anything close to this.
If you don’t think there is fundamental value in permissionless, uncensorable, peer-to-peer online money transfer that is not controlled by any government or any single entity at all then nothing anyone can say will be able to convince you otherwise.
Notice how what I just described does not match the vast majority of these “crypto” projects. That is because they are not crypto. They do not adhere to the ethos of crypto. They are scams. It’s very simple really. If there’s a company behind it, if there’s an ICO, if there’s a single identifiable leader which can be attacked by governments to bring the project down, then it is a scam.
Unfortunately some time in the mid-2010’s the scammers and grifters of traditional finance moved in and started playing all the same games that got regulated out of existence in the legacy markets. They will likely get regulated out of existence again in the crypto world and people like you will gloat about how it’s the end for crypto. But the real crypto projects, Bitcoin, Monero, etc. will keep chugging along and there is absolutely nothing that can stop them.
My imaginary investcoin [1] is not a scam though. It is backed by stocks and its value comes from the growth of stock market and from being usable as a decentralized mean of payment.
Only about 8% of the gold demand is from technology. The rest is used a speculation and for luxury goods which are only valuable because you expect someone to pay an equal amount of money or more than you did.
“Gold has two major shortcomings in that it is neither of much use nor productive. While gold does have some industrial and decorative purpose, the demand for these purposes is limited and unable to absorb the amount of new gold being mined. And if you own an ounce of gold for eternity, you still end up owning an ounce.” - Buffet
Sounds like you're describing the Visa/Mastercard duopoly that charges high interchange fees to merchants so they can bankroll their own rewards programs.
But what about crypto completely revolutionizing transactions, decentralizing the economy and providing a stable universally accessible data exchange medium? What about tracking the food you buy on the blockchain? What about web3? What about muh NFT monkeys?
> The problem is that users dive into it without understanding the risks. Also, there should be (and will be) more regulations around it.
Correct. Only a few cryptocurrency projects will survive and the several meme cryptocurrencies or non-compliant coins will wither away.
This is why some companies waited for regulatory clarity to enter back into the cryptocurrency markets. This is what the absolutist crypto-skeptics or absolutist crypto-maximalists won't tell you.
If I buy a share of a company, I own it. Buy enough of it, I can control it. Same can not be said for crypto. If I buy a token of BTC it guarantees me no voting rights, no shareholder rights, no FDIC insurance, no insurance whatsoever. When comparing investment instruments, crypto is the worst of all of them, including timeshares.
A lot of companies will restrict voting rights to the top % of investors. Some may even sit on the board.
Yes, the general public retail stockholder doesn’t have a whole lot of power. I was just making a point about ownership and securities. If you own enough stock in a company, your vote Carrie’s weight.
> All crypto is a scam and it's so simple to see, it's astonishing anyone fell for this.
No, it is not.
Please try to set aside your hatred for all things crypto and understand that there is actual legitimate value in many of the crypto projects, and that the core proposition, that of decentralized peer to peer value transfer, is a legitimate and useful use case.
> decentralized peer to peer value transfer, is a legitimate and useful use case.
I would contest even this. People don't want to transfer "value" they want to transfer money, now to use, say, Bitcoin to transfer money you need to do the following steps:
1. Buy Bitcoin. Let's presume you are already set up with an exchange for this so all you need to do is transfer your money some way to the exchange.
2. Transfer Bitcoin and pay the transaction fee.
3. The receiver wants money. So let's again presume -- despite this is a much shakier presumption -- they are already set up with an exchange then they need to exchange Bitcoin to real money and transfer their money from the exchange to their bank account. I am not mentioning here if they tarry then the exchange rate in #1 and #3 differs -- that could be automated although as far as I am aware there's no service which currently does it.
Turns out the challenge is not #2 but the bank transfers in #1 and #3: integrating with every national banking system in the world. Wise (nee Transferwise) shows this can be done without Bitcoin, creating transparency and predictable fees.
This does not mention the criminal aspects of Bitcoin, I am focusing just on the transfer aspect.
When you send money through Wise to Argentina, what exchange rate is used? The bullshit one from the government or the blue dollar?
Can you hire someone working in Venezuela and pay them with Wise?
"Oh, they are underdeveloped countries", you will say. Okay, question: If you were in Greece 5 years ago and you wanted to get your money out, could Wise help you in any way?
There's no transfer of "value". There's a transfer of a ledger entry saying wallet 0xBA11C0CS has 1 unit of fantasy money. That ledger entry only has value to other people playing the fantasy money game.
Unless someone with vast capital assets is willing to accept units of fantasy money in trade for those assets, it has no real value besides hucksters finding Greater Fools.
Worse than cryptocurrency being fantasy money, it literally wastes an Argentina worth of power (and growing) every year. I doubt the entire global financial industry, including all mainframes, office buildings, corporate jets, and commuting workers uses even one Argentina with of power in a year. And the global financial industry is doing billions upon billions of transactions for trillions upon trillions of dollars.
Look.
Imagine an otherwise empty room with a table and a few chairs. A couple people come in with some money in their pockets and cards. They play a few round of a card game, some lose, some win. When they leave, the room as it was before so it is crystal clear the sum of their money couldn't change. Some won, some lost but overall the change is zero. This still doesn't change if, for convenience, during the game, they use plastic chips to count wins and losses and at the end they exchange it for money.
But if someone takes a small cut every time the plastic chips move then that person is guaranteed to win and everyone else together is guaranteed to lose. Now, a game where, without knowing anything about the game you can tell ahead of the time which group wins and which one loses is not a game, it's a scam.
Indeed, one of the best moves for players is not to play the game but to sell their chips -- and praise the game to increase the chance of a greater fool buying in. Those will sit on a greater loss than you did which might not materialize yet but it's certainly in the system.
So, any crypto"currency" with transaction fees is a scam. Those who collect transaction fees are guaranteed to win and the rest are guaranteed to lose.
And no, stocks aren't like this because they produce dividend. And no, gold is not like this either because there are uses of gold which transform your gold into higher value products than raw gold (integrated circuits, jewelry) which sell for real money. Neither can happen with crypto"currencies", there the only interfacing with real money is exchange.