Crypto currency

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MagicEmperor
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Crypto currency

Post by MagicEmperor »

Hello, just curious anyone here into crypto currency? If so which ones do you own/recommend buying. Seems like everyone is into this now. :mrgreen:

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Kizyr
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Re: Crypto currency

Post by Kizyr »

Short answer: don't buy, it's entirely a grift.

I'll lay out the basic reasons to explain why it's a grift, since there's a lot of media/propaganda meant to get more people to buy into crypto since that's how the people already in the game make money off of newcomers (much like pyramid, multilevel marketing, or other schemes).

The most basic thing is this: there's a fundamental contradiction between using something as a currency and using it as an investment, and people trying to get you into crypto pretend like it's both.

For something to be useful as a currency (like dollars, pounds, yen, etc.) it needs to be generally accepted by a lot of people, and the value can't be volatile -- if, e.g., the coins you have are worth $10 today but could be worth $1000 next month, would you actually spend them or hold onto them 'til later? Would you expect anyone else to spend them or hold onto them to convert to a real currency later? This is why "crypto enthusiasts" don't talk about its use in paying for things, except in the theoretical sense -- they talk entirely about how much money you can get by investing, and that get-rich-off-crypto potential is what makes it useless as a currency.

Usually, someone trying to convince you to buy into crypto will talk about the get-rich-quick part and toss in some language about how it can totally be used as a currency (it can't be). Then they'll try to sound intelligent by throwing in buzzwords about the technology (blockchain and open-source software for mining) or basic concepts about money and banking, and if you're not convinced then act like you just must not understand.

To be clear, I'm a data scientist who works at a financial institution with a background in programming and economics... I understand both the tech and the money-and-banking aspect, and crypto enthusiasts almost universally know absolutely nothing about either the tech or the concept of money -- they've bought into the same propaganda, or are relying on other people being too intimidated to contradict them. Their tactic is to talk down to other people to get them to buy into the scam, because the more they maintain that fiction and the more people buy in, the higher value they can sell the cryptocurrencies they're holding onto other people before the bottom eventually falls out.

Granted, because we're a few years into this scam, there's a lot of people involved who fully believe their own propaganda. This is why so many people who are trying to get you into crypto sound like multi-level marketing sellers, talking about how you can earn $1000s/month just working from home and you can be your own boss, pointing to a few people who got rich as proof, etc.. It's also why there are so many bots now on Twitter and YouTube advertising crypto-trading (and now NFTs which use the same concept). So, well, treat it like any other get-rich-quick scheme and don't engage. (This also doesn't even get into how environmentally wasteful cryptocurrencies are -- the energy burn on mining and transactions basically eliminates the last decade of progress on wind/solar. The sooner they're done with as the scam they are, the better for everyone.)
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Imperial Knight
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Re: Crypto currency

Post by Imperial Knight »

This Twitter thread is specifically about NFTs but does a good job of explaining how they function as a scam.

https://twitter.com/Foone/status/1457749433844568066

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Sonic#
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Re: Crypto currency

Post by Sonic# »

As a non-financial expert who knows a thing or two about rhetoric, the language around NFTs and cryptocurrency also sets off warning bells for me:
  • The fact that ads exist to encourage you to buy cryptocurrency suggests they need to convince people to buy it to generate value, rather than it existing as an investment on its own merits. Kizyr mentions that it's marketed as both currency and investment. It also feels like a collectible or product. Do you really know what you're buying? Do they?
  • The tech pitch is nebulous. It uses blockchain. How is that an advantage? As Kizyr points out, most people can't explain the technology, let alone how it correlates to value. That makes it a buzzword, a marketing term, poised to inspire trust through people's trust of technological competence. But this trust is uninformed if you don't understand the word and you can't trust that the seller understands it.
  • It's volatile and plays on common perceptive fallacies. For every person you hear who bought into a cryptocurrency that gained value, there is someone else or many others who lost money. There is no good explanation for why value is gained or lost, except vague language like it got "hot" or someone famous tweeted about it. So the language around it is very much like gambling - it's high risk, unpredictable, and many people approach it with an inflated sense of confidence.
  • In line with that, when anything is like gambling, one question should be, "Who owns the house?" The house always wins, after all. Another question should be, "What compels the house to play fair?" Stock exchanges and the like are governed by regulations; do you know the regulations around cryptocurrency? If one of the attractions of cryptocurrency is that it is unregulated and therefore seems like it could be outrageously profitable, then you need to also recognize that the lack of regulation also means you are unprotected from loss, social engineering, untrue promises, and other things.
In short, advertisers want you to think crypto and NFTs are cool and have intrinsic value. Real investments don't advertise in these ways.
Sonic#

"Than seyde Merlion, "Whethir lyke ye bettir the swerde othir the scawberde?" "I lyke bettir the swerde," seyde Arthure. "Ye ar the more unwyse, for the scawberde ys worth ten of the swerde; for whyles ye have the scawberde uppon you, ye shall lose no blood, be ye never so sore wounded. Therefore kepe well the scawberde allweyes with you." --- Le Morte Darthur, Sir Thomas Malory

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GhaleonOne
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Re: Crypto currency

Post by GhaleonOne »

As an artist who is selling more art than I make in my day job at this point, I will say NFTs have caught my eye for a while. I've never been interested in crypto whatsoever, but I personally know artists who have made over $100k off of NFTs. That said, it seems like so much work just to understand how all of it works, that I've stuck to selling my art in the physical format. I also feel like there is no real value in the NFT, at least coming from an artist. I don't see how a digital piece of art that's not even large in resolution in many cases can take the place of a physical piece of art you can hang in your home or office.

It's made for interesting reading over the past year trying to learn more about the concept, but also seems like a great way to lose a lot of money, and more importantly to me, lose a lot of valuable time trying to figure it out. Plus, I hate MLMs and pyramid schemes with a passion and it just seems shady in that way (like Kizyr said above).
-G1

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Alunissage
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Re: Crypto currency

Post by Alunissage »

G1! How have you been? What art???
(This also doesn't even get into how environmentally wasteful cryptocurrencies are -- the energy burn on mining and transactions basically eliminates the last decade of progress on wind/solar. The sooner they're done with as the scam they are, the better for everyone.)
This is the thing that makes me SO MAD about the whole thing. Like we need ANOTHER way for people to mess up the world out of selfishness.

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Kizyr
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Re: Crypto currency

Post by Kizyr »

Hey first, this article that's gotten shared a bit actually goes into the same things I was talking about earlier, though to much greater depth. It does use a lot of concepts in finance/money-and-banking and software, but it is accurate if you want to go way more in-depth: https://www.stephendiehl.com/blog/crypto-absurd.html

Now some specific responses...
Sonic# wrote:The fact that ads exist to encourage you to buy cryptocurrency suggests they need to convince people to buy it to generate value, rather than it existing as an investment on its own merits. Kizyr mentions that it's marketed as both currency and investment. It also feels like a collectible or product. Do you really know what you're buying? Do they?
Fun thing about this: the "collectible" market is also rife with the same kind of speculation. Beanie babies in the 90s were never actually that valuable in-and-of-themselves (i.e., they weren't valuable because of the rarity), but because of speculation that gave the idea you could sell them to someone else for more if you just waited -- until the market busted. Retro video games now are in the same bind: about 5 years ago saw the creation of online markets to speculate in them, so while we were growing up rare video games cost a lot because of the rarity, and now there's an entire fictitious market mean to keep the price going up (very lengthy video here that goes into the details if you're curious: https://www.youtube.com/watch?v=rvLFEh7V18A).
Sonic# wrote:Stock exchanges and the like are governed by regulations; do you know the regulations around cryptocurrency? If one of the attractions of cryptocurrency is that it is unregulated and therefore seems like it could be outrageously profitable, then you need to also recognize that the lack of regulation also means you are unprotected from loss, social engineering, untrue promises, and other things.
One thing that actually changed in the course of this whole discussion is that the IRS is going to start treating crypto-assets (cryptocurrencies and NFTs) as any other investment or currency -- which is throwing the crypto-market into a bit of an issue since they've been advocating that it's an investment and a currency but now can't deal with it being legally treated as such. Also, well, a lot of the more established trading companies ("banks" in a very loose sense of the word) are incorporated in common tax/legal havens like Bermuda, the Bahamas, and the Cayman Islands.
GhaleonOne wrote:That said, it seems like so much work just to understand how all of it works, that I've stuck to selling my art in the physical format. I also feel like there is no real value in the NFT, at least coming from an artist. I don't see how a digital piece of art that's not even large in resolution in many cases can take the place of a physical piece of art you can hang in your home or office.
I can't emphasize this enough: go with your instinct here and don't put money into something that makes no sense to you.

Your instinct is also right. NFTs are a scam, even though some people are making money off them for the time being (or more accurately, they're complicit in a con to get money from other people willing to pay $100k for something that is in effect worthless).

They're not actually useful for artwork, even digital artwork. The claim that I hear from NFT-promoters is that it gives you control over your artwork -- which, well, is both (a) a lie, and (b) something better achieved by copyrights. It's a lie since the NFT is an arbitrary digital... thing (the "token")... that is said to represent the ownership of the artwork in question -- but really has no legal basis to do so (hence the lie part). And there's already something that is legally enforceable where it counts, which is the copyright system that's been in place and recognized by courts for a few centuries now (hence the something better via copyrights part).
~Kizyr
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