These are great points and poignant question. My only disagreement is that crypto is not a scam industry. It has one clear use-case, and that use case is to help criminals and criminal organizations stow away money far away from government oversight. (thanks to @geuss for pointing this out).
That’s true. Crypto seems to have evolved from a convenient currency for criminals to a way for “entrepreneurs” to scam ordinary people.
None of them have the properties of a good currency. Nor do they generate cash flow, so they aren’t real investments. So in the best case, they are pure bubbles.
It is surprisingly easy to scam people into buying these economically worthless lines of code by simply repeating “DeFi”, “The Federal Reserve is evil” (for some unexplained reason), “You would have been a billionaire if you bought BitCoin in 2010”, “Don’t miss out”, “It’s the future”, “Don’t be a FUDer”.
This isn’t enough for these greedy “entrepreneurs”, so they have resorted to well-known financial scams. Ponzi Schemes (yield farming); Pump and Dump (most new cryptocurrencies); Pyramid Schemes (Web 3 “jobs”), and taking risky bets with deposits (FTX).
The result of all of this is that people waste their lives in an industry that can’t produce anything economically valuable, huge amounts of energy are wasted, and financial resources that could be invested in productive businesses sit in worthless lines of code.
And of course, many ordinary hard-working people lose their life savings.
Banks, P2P platforms, listed corporations, Private Equity Firms and VCs all invest in potentially economically valuable enterprises that could generate cash flow. Mainstream finance isn’t perfect, but crypto isn’t the answer. The loss in economic growth from the underinvestment caused by crypto is potentially considerable.
More crimes are committed with cash, is cash a scam too? Criminals prefer cash, because as it turns out, most crypto transactions are very trackable, unlike cash.
People who do on-chain analysis have tracked FTX’s crypto movements, something you would be unable to do with cash. It seems many here have a fundemental misunderstanding of cryptocurrency, and why it was invented in the first place.
Sam was using his own invented crypto that was basically worthless as collateral to borrow real money to then trade or buy politicians, or whatever else he was doing with it. His crypto coin was a scam, and he literally went on Bloomberg and bragged about his “Ponzi” scheme, using those words. More than a few people in the crypto community have been warning about Sam for months, but those people were mocked, ridiculed, and ignored.
What Sam did was completely against the ethos of crypto, (especially when he started lobbying for regulations and attempting to buy elections) just as what he did was against the ethos of EA.
It isn’t fair or reasonable to judge all of crypto by his actions, just as it wouldn’t be fair or reasonable to judge all of EA by Sam Bankman-Fried.
Hi Sam, thanks for writing this. I’m not sure why I got so many disagree votes. I don’t think crypto is a scam because criminals use it. I think they don’t have the properties of a good currency. Maybe some of the stablecoins have some of them. But many of them seem to have crashed, and the transaction costs don’t seem much better than traditional money transfers. It’s possible that the traceability of Blockchain is an advantage over government fiat currencies. But many businesses don’t want everything to be traceable. So this only seems like an advantage to the police.
Nor do they seem like a real investment because they don’t generate cash flow. They are just a sort of faith-based store in value like Gold. Is that wrong?
There are also many things in Web 3 that look like literal scams.
I listed: Ponzi Schemes (yield farming); Pump and Dump (most new cryptocurrencies); Pyramid Schemes (Web 3 “jobs”), and taking risky bets with deposits (FTX).
Yes, I agree with you regarding the Bloomberg interview. I linked this as evidence that he didn’t think he was helping his customers. It was quite a viral interview which is why I’m surprised more people in EA weren’t talking about it.
I can’t claim to be a crypto expert, but the whole thing looks pretty unethical to me when you see ordinary people regularly losing all of their money. I wish EA was less associated with what I see as a scam industry.
These are great points and poignant question. My only disagreement is that crypto is not a scam industry. It has one clear use-case, and that use case is to help criminals and criminal organizations stow away money far away from government oversight. (thanks to @geuss for pointing this out).
That’s true. Crypto seems to have evolved from a convenient currency for criminals to a way for “entrepreneurs” to scam ordinary people.
None of them have the properties of a good currency. Nor do they generate cash flow, so they aren’t real investments. So in the best case, they are pure bubbles.
It is surprisingly easy to scam people into buying these economically worthless lines of code by simply repeating “DeFi”, “The Federal Reserve is evil” (for some unexplained reason), “You would have been a billionaire if you bought BitCoin in 2010”, “Don’t miss out”, “It’s the future”, “Don’t be a FUDer”.
This isn’t enough for these greedy “entrepreneurs”, so they have resorted to well-known financial scams. Ponzi Schemes (yield farming); Pump and Dump (most new cryptocurrencies); Pyramid Schemes (Web 3 “jobs”), and taking risky bets with deposits (FTX).
The result of all of this is that people waste their lives in an industry that can’t produce anything economically valuable, huge amounts of energy are wasted, and financial resources that could be invested in productive businesses sit in worthless lines of code.
And of course, many ordinary hard-working people lose their life savings.
Banks, P2P platforms, listed corporations, Private Equity Firms and VCs all invest in potentially economically valuable enterprises that could generate cash flow. Mainstream finance isn’t perfect, but crypto isn’t the answer. The loss in economic growth from the underinvestment caused by crypto is potentially considerable.
More crimes are committed with cash, is cash a scam too? Criminals prefer cash, because as it turns out, most crypto transactions are very trackable, unlike cash.
People who do on-chain analysis have tracked FTX’s crypto movements, something you would be unable to do with cash. It seems many here have a fundemental misunderstanding of cryptocurrency, and why it was invented in the first place.
Sam was using his own invented crypto that was basically worthless as collateral to borrow real money to then trade or buy politicians, or whatever else he was doing with it. His crypto coin was a scam, and he literally went on Bloomberg and bragged about his “Ponzi” scheme, using those words. More than a few people in the crypto community have been warning about Sam for months, but those people were mocked, ridiculed, and ignored.
What Sam did was completely against the ethos of crypto, (especially when he started lobbying for regulations and attempting to buy elections) just as what he did was against the ethos of EA.
It isn’t fair or reasonable to judge all of crypto by his actions, just as it wouldn’t be fair or reasonable to judge all of EA by Sam Bankman-Fried.
Hi Sam, thanks for writing this. I’m not sure why I got so many disagree votes. I don’t think crypto is a scam because criminals use it. I think they don’t have the properties of a good currency. Maybe some of the stablecoins have some of them. But many of them seem to have crashed, and the transaction costs don’t seem much better than traditional money transfers. It’s possible that the traceability of Blockchain is an advantage over government fiat currencies. But many businesses don’t want everything to be traceable. So this only seems like an advantage to the police.
Nor do they seem like a real investment because they don’t generate cash flow. They are just a sort of faith-based store in value like Gold. Is that wrong?
There are also many things in Web 3 that look like literal scams.
I listed: Ponzi Schemes (yield farming); Pump and Dump (most new cryptocurrencies); Pyramid Schemes (Web 3 “jobs”), and taking risky bets with deposits (FTX).
Yes, I agree with you regarding the Bloomberg interview. I linked this as evidence that he didn’t think he was helping his customers. It was quite a viral interview which is why I’m surprised more people in EA weren’t talking about it.
I can’t claim to be a crypto expert, but the whole thing looks pretty unethical to me when you see ordinary people regularly losing all of their money. I wish EA was less associated with what I see as a scam industry.