It was supposed to be a financial revolution. Instead, crypto has become an environmentally disastrous gift to con artists, says academic David A Banks
Has intrinsic value due to scarcity, like a gold-standard currency (as opposed to today’s fiat currencies). So it can’t be devalued or manipulated by a central bank.
You don’t need to hold physical coins, or ask a 3rd party (like a bank) to store your money for you
Can be send instantly anywhere in the world, without going through expensive money-transfer agents
Money cannot be created out of nothing. If you want to loan somebody money, it has to really exist.
There are multiple important benefits. They may not all be important for you right now, but saying it doesn’t solve any problems at all is just ridiculous.
The people who say it’s a ponzi scheme are people who don’t know what ponzi schemes are.
it is influenced by the amount of investment put into it
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Whales actively manipulate the price for profit. It’s not a ponzi scheme. You’re confusing two different things. If you want a buzzword it’s a pump and dump.
This doesn’t affect only currencies but any commodity. Look at oil or food or land or gold. All have exactly the same problem you cite for bitcoin. In fact gold is a very good analogy for bitcoin. You can understand it better by thinking of it as “digital gold”.
We don’t need to get into the environmental aspects
Thanks. That’s a tired auld one.
your biggest stake holders now are the incredibly wealthy
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
If there’s a crypto out there that isn’t available for fiat investment
That’s a very good idea. How would it work? Have you seen been anything written about this already?
It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.
I thought this forum is about technology, and not religion.
and no one with real money being made is going to change the way it works now.
Of course, no one is going to change the way an existing currency works, that would cause major trouble. If you want a different type of cryptocurrency, it should start as a new project.
I thought this forum is about technology, and not religion.
Cryptocurrencies etc are religion at this stage, debating cryptobros is eerily similar to debating religious fanatics. You get a recital of the “truths of faith”, and any scratching off the surface and pointing out how they are demonstrably untrue gets people angry and start calling you names.
Plenty of threads here over the last few weeks that prove it.
If we are talking about most coins, then its definitely true that they are poorly run. But surely you can agree that there are at least a handful of technologically interesting crypto projects. For example Sia
And what exactly do you consider as “sinful impact”? Everything that you personally consider “bad” for some reason?
Has intrinsic value due to scarcity, like a gold-standard currency (as opposed to today’s fiat currencies).
In other words, it’s designed to provide pay-off to those who jump-in early, as long as they convince more people to jump in, and assuming they get out early enough.
So it can’t be devalued or manipulated by a central bank.
Well, I don’t what we call a thing that manipulates them. Sure, it’s not called a “central bank”. But clearly cryptocurrencies can be manipulated:
Also, with cash you also also technically don’t need physical coins. Banknotes are a thing, you know. 😜
Can be send instantly anywhere in the world, without going through expensive money-transfer agents
Well, as long as you pay the exorbitant transaction/gas fees (which are there because the supply of particular cryptocurrency is capped, and so some form of rewarding miners is needed, apparently), and if you can afford to wait sometimes days for the transaction to be confirmed.
Money cannot be created out of nothing. If you want to loan somebody money, it has to really exist.
I mentioned Tether above, in that exact context. Consider the following:
Tether only holds a part (a “fraction”) of the actual hard cash they would need to back it 1:1 with USD. You know how much? A whole 2.9%, last time they produced any numbers on it, as far as I can see. Everything else is commercial paper, bonds, etc. They are literally gambling on the stock market with their supposed “backing cash”. This is basically what the Big Banks were doing before the 2008 crash, by the way.
Congratulations, you just invented (badly) fractional reserve banking. One of the core things cryptobros pinky-promised never to do. 🤣
If all this is not “creating money out of nothing”, I don’t know what is. Think about it: one of the biggest cryptocurrencies out there, and pretty damn important one, literally just goes “I promise, just trust me” on the whole “every USDT is backed 1:1 by USD” thing, and everyone is just, you know, fine with that.
There are multiple important benefits. They may not all be important for you right now, but saying it doesn’t solve any problems at all is just ridiculous.
So far you have not named a single problem that cryptocurrencies actually solve. You mentioned a bunch of features some claim they presumably have, but not a single actual solved problem. It’s like saying “cars are great, they have wheels, and you don’t need a bus, and they come in all sorts of colors, too!” in response to a question “what problem do cars solve?”
The people who say it’s a ponzi scheme are people who don’t know what ponzi schemes are.
Well, Financial Times might actually have a reasonably good understanding what a Ponzi scheme is. And so, here we are. The whole article is basically this scene from The Office, and it’s finger-lickin’ good.
The more I think of it, the more I come to the conclusion that cryptobros looked at the banking system and broader financial sector, correctly figured out there are a bunch of serious problems with them, and then misidentified the underlying problem as technology used instead of greed.
They are basically focusing implementation details instead of figuring out how to fix the actual source of the problem.
I guess part of the idea way taking the power away from the greedy people, which fixes one small part of the problem.
Part of it was fixing the implementation details, which solves another part of the problem. But yes a purely technical solution is not enough on its own. Bitcoin is not a magic bullet to solve greed. My answer below talks a bit about that.
It’s way worse than that. Cryptocurrencies are a way to supercharge greedy and corrupt people, by giving them a powerful unregulated tool to play with. And all at a tiny cost of emitting thousands of tons of CO2 at a time when parts of India are already starting to become uninhabitable.
How many emissions do you think millions of bank employees cause with their cars, flights, heated houses, and general consumption? Particularly as most banks are located in the U.S, which has the highest pollution levels in the world. Surely thats much worse than mining farms.
Look, cryptobros have been pushing cryptocurrencies using cherry-picked “arguments” for years. I don’t see why this can only work one way?
On a more serious note, I am quite tired of the moving of goalposts practiced by cryptocurrency shills. “Oh, no, that only applies to some coins, not all of them!”, “hey, that one also only affects some blockchains!”, “no no, you can’t say that, there’s this <edge case> coin out there that happens to not have this one specific problem”.
Somehow problems they point out with the financial sector are supposed to apply to the whole sector, but problems with cryptocurrencies are only ever relevant to one very specific coin and in no way should reflect on the whole scene.
Give me a break. 🙄
Also, nice evasion there, just ignoring the main part of my post, which was: the fact that some other industry happens to generate emissions doesn’t make it okay to create a completely new source of emissions.
Well, I don’t what we call a thing that manipulates them. Sure, it’s not called a “central bank”. But clearly cryptocurrencies can be manipulated:
on a blockchain level (example, another example, and [https://web3isgoinggreat.com/single/juno-accidentally-transfers-36-million-in-seized-funds-to-inaccessible-wallet-address](Juno is thinking of doing this a second time in a row))
on voting power level (here, for example);
on “we will block you from doing any business” level, blacklisted wallets are a thing.
and on monetary “create money out of thin air” level — Tether always claimed that it’s backed 1:1 with cash; well, it isn’t.
Yes there are risks when you invest money in cryptocurrency, just like there are risks in every investment. The market is also much more volatile than stocks, so I wouldnt recommend to put your life savings there. And to be honest, I have never seen anyone suggest that.
Well, as long as you pay the exorbitant transaction/gas fees (which are there because the supply of particular cryptocurrency is capped, and so some form of rewarding miners is needed, apparently), and if you can afford to wait sometimes days for the transaction to be confirmed.
Yes, Bitcoin isnt really usable as a currency (unless you are rich). Has been the case for many years. There are many other coins that can be used instead.
I mentioned Tether above, in that exact context. Consider the following:
Tether is not a real cryptocurrency, exactly because a single company has full control over the supply. Again, I wouldnt recommend you to invest your money in Tether.
Oh and by the way: Tether was in turn used to manipulate Bitcoin prices.
Of course crypto markets are manipulated, just like stock markets are manipulated. If you dont know that then you are really gullible.
So far you have not named a single problem that cryptocurrencies actually solve. You mentioned a bunch of features some claim they presumably have, but not a single actual solved problem. It’s like saying “cars are great, they have wheels, and you don’t need a bus, and they come in all sorts of colors, too!” in response to a question “what problem do cars solve?”
If it doesnt solve any problem for you, then you can simply ignore the topic. The rest of us will still discuss about it.
Lots of interesting links there. But the pieces of your arguments are so diverse, there is no single coherent answer. In the technological field so diverse, you can always find bad things, if you are looking for them.
I’ll just answer the first and the last point.
In other words, it’s designed to provide pay-off to those who jump-in early, as long as they convince more people to jump in, and assuming they get out early enough.
Here you really are describing a Ponzi scheme. By this logic, every currency (with the possible exceptions of gold and bitcoin) are ponzi schemes. Central banks print banknotes (or X tokens) which are worthless. They only have value because people start to believe they have value. And the central banks use this confidence trick to make money. They more tokens/banknotes they print, the more money they make.
Financial Times might actually have a reasonably good understanding what a Ponzi scheme is
This does not describe a Ponzi scheme. It describes a fiat currency. “Ponzi was paying earlier investors using the investments of later investors”. He created an investment fund, not a currency. There is no way you could confuse those two things. And a pyramid scheme is also an unrelated thing. But you’re just as capable of looking this up as I am.
Except it is constantly manipulated by, for example, Elon Musk on Twitter and celebrities who then procede to rug pull. And it’s not even really decentralized, because when needed, the blockchain can be changed (like what happened with Ethereum years ago, that got split into two blockchains) or blocked (like what is happening now with Luna). But you also get all the cons of decentralization: you got robbed by an hacker? Well, fuck you, no one can do nothing about it. Someone sent a malicious NFT to your wallet without your consent? Too bad you clicked on it, now your wallet’s empty.
"Can be send instantly anywhere in the world, without going through expensive money-transfer agents
": except transitions on a blockchain are incredibly costly.
Yes there are risks with everything, and if its too risky for you thats okay. Others will keep using it. Btw blockchain transactions are only expensive with bitcoin and ethereum, most others are extremely cheap.
Yes there are risks with everything, and if its too risky for you thats okay. Others will keep using it.
Can they then please not make a big thing out of losing everything because of gambling in a cryptocassino? And maybe please do not ask the Fed to step in?
That’s what really gets me going. I don’t care what cryptobros do with their money and if they want to put it in a machine that spits out random amounts on the other end, be my guest. But can they please stop insisting on affecting everyone else in the world?
Can they then please not make a big thing out of losing everything because of gambling in a cryptocassino? And maybe please do not ask the Fed to step in?
I did not ask this so-called Fed anything. And of course some people will lose money, thats what happens in a market. If you want zero risk, play some video game instead.
Can they please stop appropriating artists’ works, or activists’ faces?
Yes it is very easy to copy or pirate digital art, big surprise. And some people combined that with cryptocurrency. Do you think no crime has ever been committed using us dollars?
That’s what really gets me going. I don’t care what cryptobros do with their money and if they want to put it in a machine that spits out random amounts on the other end, be my guest. But can they please stop insisting on affecting everyone else in the world?
It is obvious that you care a lot about “what cryptobros do with their money”. The only question is, why?
In this sense cryptocurrency is just like cash. It can be a blessing or a curse depending on your situation.
It’s possible to build a banking system, with chargebacks and insurance and all the rest, on top of any currency. It doesn’t exist AFAIK for bitcoin yet. But there’s nothing stopping governments or businesses from introducing it.
You could also argue that bitcoin doesn’t need any of that because it’s inherently more secure than the banking system. But that’s maybe another day’s argument.
None at all?!
There are multiple important benefits. They may not all be important for you right now, but saying it doesn’t solve any problems at all is just ridiculous.
The people who say it’s a ponzi scheme are people who don’t know what ponzi schemes are.
deleted by creator
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Thanks. That’s a tired auld one.
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
That’s a very good idea. How would it work? Have you seen been anything written about this already?
deleted by creator
It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.
I thought this forum is about technology, and not religion.
Of course, no one is going to change the way an existing currency works, that would cause major trouble. If you want a different type of cryptocurrency, it should start as a new project.
Cryptocurrencies etc are religion at this stage, debating cryptobros is eerily similar to debating religious fanatics. You get a recital of the “truths of faith”, and any scratching off the surface and pointing out how they are demonstrably untrue gets people angry and start calling you names.
Plenty of threads here over the last few weeks that prove it.
deleted by creator
If we are talking about most coins, then its definitely true that they are poorly run. But surely you can agree that there are at least a handful of technologically interesting crypto projects. For example Sia
And what exactly do you consider as “sinful impact”? Everything that you personally consider “bad” for some reason?
deleted by creator
deleted by creator
I think the label “bad” is very clearly subjective. For example, gpu manufacturers clearly benefit from this.
deleted by creator
In other words, it’s designed to provide pay-off to those who jump-in early, as long as they convince more people to jump in, and assuming they get out early enough.
Well, I don’t what we call a thing that manipulates them. Sure, it’s not called a “central bank”. But clearly cryptocurrencies can be manipulated:
Not to mention manipulation by dudebros like Elon Musk, whose one tweet can just send cryptocurrencies up or down like a roller-coaster.
And yet pleny of cryptocurrency people ask 3rd parties to store their assets for them. Which leads to pain.
Also, with cash you also also technically don’t need physical coins. Banknotes are a thing, you know. 😜
Well, as long as you pay the exorbitant transaction/gas fees (which are there because the supply of particular cryptocurrency is capped, and so some form of rewarding miners is needed, apparently), and if you can afford to wait sometimes days for the transaction to be confirmed.
I mentioned Tether above, in that exact context. Consider the following:
Tether only holds a part (a “fraction”) of the actual hard cash they would need to back it 1:1 with USD. You know how much? A whole 2.9%, last time they produced any numbers on it, as far as I can see. Everything else is commercial paper, bonds, etc. They are literally gambling on the stock market with their supposed “backing cash”. This is basically what the Big Banks were doing before the 2008 crash, by the way.
Congratulations, you just invented (badly) fractional reserve banking. One of the core things cryptobros pinky-promised never to do. 🤣
No wonder people lost their minds when Tether de-pegged by roughly 5% this week!
Oh and by the way: Tether was in turn used to manipulate Bitcoin prices.
If all this is not “creating money out of nothing”, I don’t know what is. Think about it: one of the biggest cryptocurrencies out there, and pretty damn important one, literally just goes “I promise, just trust me” on the whole “every USDT is backed 1:1 by USD” thing, and everyone is just, you know, fine with that.
So far you have not named a single problem that cryptocurrencies actually solve. You mentioned a bunch of features some claim they presumably have, but not a single actual solved problem. It’s like saying “cars are great, they have wheels, and you don’t need a bus, and they come in all sorts of colors, too!” in response to a question “what problem do cars solve?”
Well, Financial Times might actually have a reasonably good understanding what a Ponzi scheme is. And so, here we are. The whole article is basically this scene from The Office, and it’s finger-lickin’ good.
The more I think of it, the more I come to the conclusion that cryptobros looked at the banking system and broader financial sector, correctly figured out there are a bunch of serious problems with them, and then misidentified the underlying problem as technology used instead of greed.
They are basically focusing implementation details instead of figuring out how to fix the actual source of the problem.
That’s a good way of looking at it.
I guess part of the idea way taking the power away from the greedy people, which fixes one small part of the problem.
Part of it was fixing the implementation details, which solves another part of the problem. But yes a purely technical solution is not enough on its own. Bitcoin is not a magic bullet to solve greed. My answer below talks a bit about that.
It’s way worse than that. Cryptocurrencies are a way to supercharge greedy and corrupt people, by giving them a powerful unregulated tool to play with. And all at a tiny cost of emitting thousands of tons of CO2 at a time when parts of India are already starting to become uninhabitable.
How many emissions do you think millions of bank employees cause with their cars, flights, heated houses, and general consumption? Particularly as most banks are located in the U.S, which has the highest pollution levels in the world. Surely thats much worse than mining farms.
This is hardly a reason to add more to that, is it?
Seriously. 🙄
Plus, the financial sector can process thousands of transactions globally per second. Bitcoin, on the other hand, about (checks notes) seven.
Here you go again, taking a weakness of a single cryptocurrency, and pretending that it applies to all coins. No point arguing with this nonsense.
Look, cryptobros have been pushing cryptocurrencies using cherry-picked “arguments” for years. I don’t see why this can only work one way?
On a more serious note, I am quite tired of the moving of goalposts practiced by cryptocurrency shills. “Oh, no, that only applies to some coins, not all of them!”, “hey, that one also only affects some blockchains!”, “no no, you can’t say that, there’s this <edge case> coin out there that happens to not have this one specific problem”.
Somehow problems they point out with the financial sector are supposed to apply to the whole sector, but problems with cryptocurrencies are only ever relevant to one very specific coin and in no way should reflect on the whole scene.
Give me a break. 🙄
Also, nice evasion there, just ignoring the main part of my post, which was: the fact that some other industry happens to generate emissions doesn’t make it okay to create a completely new source of emissions.
Yes there are risks when you invest money in cryptocurrency, just like there are risks in every investment. The market is also much more volatile than stocks, so I wouldnt recommend to put your life savings there. And to be honest, I have never seen anyone suggest that.
Yes, Bitcoin isnt really usable as a currency (unless you are rich). Has been the case for many years. There are many other coins that can be used instead.
Tether is not a real cryptocurrency, exactly because a single company has full control over the supply. Again, I wouldnt recommend you to invest your money in Tether.
Of course crypto markets are manipulated, just like stock markets are manipulated. If you dont know that then you are really gullible.
If it doesnt solve any problem for you, then you can simply ignore the topic. The rest of us will still discuss about it.
Lots of interesting links there. But the pieces of your arguments are so diverse, there is no single coherent answer. In the technological field so diverse, you can always find bad things, if you are looking for them.
I’ll just answer the first and the last point.
Here you really are describing a Ponzi scheme. By this logic, every currency (with the possible exceptions of gold and bitcoin) are ponzi schemes. Central banks print banknotes (or X tokens) which are worthless. They only have value because people start to believe they have value. And the central banks use this confidence trick to make money. They more tokens/banknotes they print, the more money they make.
This does not describe a Ponzi scheme. It describes a fiat currency. “Ponzi was paying earlier investors using the investments of later investors”. He created an investment fund, not a currency. There is no way you could confuse those two things. And a pyramid scheme is also an unrelated thing. But you’re just as capable of looking this up as I am.
Except it is constantly manipulated by, for example, Elon Musk on Twitter and celebrities who then procede to rug pull. And it’s not even really decentralized, because when needed, the blockchain can be changed (like what happened with Ethereum years ago, that got split into two blockchains) or blocked (like what is happening now with Luna). But you also get all the cons of decentralization: you got robbed by an hacker? Well, fuck you, no one can do nothing about it. Someone sent a malicious NFT to your wallet without your consent? Too bad you clicked on it, now your wallet’s empty.
"Can be send instantly anywhere in the world, without going through expensive money-transfer agents ": except transitions on a blockchain are incredibly costly.
Yes there are risks with everything, and if its too risky for you thats okay. Others will keep using it. Btw blockchain transactions are only expensive with bitcoin and ethereum, most others are extremely cheap.
Can they then please not make a big thing out of losing everything because of gambling in a cryptocassino? And maybe please do not ask the Fed to step in?
Can they please stop appropriating artists’ works, or activists’ faces?
That’s what really gets me going. I don’t care what cryptobros do with their money and if they want to put it in a machine that spits out random amounts on the other end, be my guest. But can they please stop insisting on affecting everyone else in the world?
I did not ask this so-called Fed anything. And of course some people will lose money, thats what happens in a market. If you want zero risk, play some video game instead.
Yes it is very easy to copy or pirate digital art, big surprise. And some people combined that with cryptocurrency. Do you think no crime has ever been committed using us dollars?
It is obvious that you care a lot about “what cryptobros do with their money”. The only question is, why?
It happened to bitcoin too.
In this sense cryptocurrency is just like cash. It can be a blessing or a curse depending on your situation.
It’s possible to build a banking system, with chargebacks and insurance and all the rest, on top of any currency. It doesn’t exist AFAIK for bitcoin yet. But there’s nothing stopping governments or businesses from introducing it.
You could also argue that bitcoin doesn’t need any of that because it’s inherently more secure than the banking system. But that’s maybe another day’s argument.