The problem with cryptocurrency in a nutshell

[Guest]

@medaille said:

@JimmyinSD said:

@medaille said:...

question for the crypto guys... who holds the cash in reserve for any given crypto?  I see the lack of reserve brought up often as a knock on the dollar,  but is there a vault somewhere that ensures that if I were to invest 100K in a given crypto,   and its value is still 100K in a year,  that I can call up and walk away with my 100K.  Or is it not really a currency but more like a stock,  where I can buy it at a certain level and will get what I get when I decide to sell if/when somebody is willing to buy?  is there any backing at all to crypto as there is when putting money into a Federally backed institution?

I’m not a crypto guy, but there is no one “crypto”.  There’s way too many projects, and they’re
all different in how they work, but I think most of these currencies are like
stocks in that they aren’t really backed by anything more than the faith of
other investors and your USD goes into the pocket of whoever sold you the crypto.  It’s not like a chunk
of silver which has intrinsic value if it’s melted down.  And it’s not like government backed fiat
currencies in that there’s no FDIC insurance plan for if some institution
steals your money, and there’s less regulations for those systems so far.  I think the IRS is pretty much treating them as
stocks.  Some crypto companies try to
back their crypto by buying and holding other assets, but I don’t think that’s
been super successful with these rapid market changes.  I think in the future there will be more room
for asset-backed cryptos.  Like maybe I
become an owner-member of a grocery store coop, and buy and own a percentage of
their inventory in USD, which would be the backing of the currency I use for
other transactions and if the money became worthless, the holder of the grocery-backed
currency would have access to those groceries.

thats what I was wondering,  if there was an over seeing body that was backing with gold/silver or what ever or if its just a blind faith thing.  its really worse than a stock since at least a company has a cash value that would hypothetically pay stock holders something if liquidated... but cypto is just smoke the way it sounds.

[Guest]

Modern day Ponzi scheme...follow the money trail.

[Guest]

@JimmyinSD said:

@medaille said:

@JimmyinSD said:

@medaille said:...

question for the crypto guys... who holds the cash in reserve for any given crypto?  I see the lack of reserve brought up often as a knock on the dollar,  but is there a vault somewhere that ensures that if I were to invest 100K in a given crypto,   and its value is still 100K in a year,  that I can call up and walk away with my 100K.  Or is it not really a currency but more like a stock,  where I can buy it at a certain level and will get what I get when I decide to sell if/when somebody is willing to buy?  is there any backing at all to crypto as there is when putting money into a Federally backed institution?

I’m not a crypto guy, but there is no one “crypto”.  There’s way too many projects, and they’re
all different in how they work, but I think most of these currencies are like
stocks in that they aren’t really backed by anything more than the faith of
other investors and your USD goes into the pocket of whoever sold you the crypto.  It’s not like a chunk
of silver which has intrinsic value if it’s melted down.  And it’s not like government backed fiat
currencies in that there’s no FDIC insurance plan for if some institution
steals your money, and there’s less regulations for those systems so far.  I think the IRS is pretty much treating them as
stocks.  Some crypto companies try to
back their crypto by buying and holding other assets, but I don’t think that’s
been super successful with these rapid market changes.  I think in the future there will be more room
for asset-backed cryptos.  Like maybe I
become an owner-member of a grocery store coop, and buy and own a percentage of
their inventory in USD, which would be the backing of the currency I use for
other transactions and if the money became worthless, the holder of the grocery-backed
currency would have access to those groceries.

thats what I was wondering,  if there was an over seeing body that was backing with gold/silver or what ever or if its just a blind faith thing.  its really worse than a stock since at least a company has a cash value that would hypothetically pay stock holders something if liquidated... but cypto is just smoke the way it sounds.

Like the federal reserve? 

[Guest]

https://www.bloomberg.com/news/articles/...m-the-past

[Guest]

@medaille said:

@StickyBun said:

@medaille said:

@StickyBun said:

@medaille said:

@comet52 said:

@JimmyinSD said:
Why are crypto people so defensive when asked simple questions?  I was just curious how losing a billion in one year for crypto compares to the average annual lost through bank robberies for real currency.  

Are crypto banks insured by anybody up to a certain amount so if they are robbed the depositors are covered?

What people "investing" in crypto/ponzi really want is to sell their crypto to the next sucker so they can get rich in...wait for it... those hated awful old-fashioned US dollars!

Because you can't buy much with crypto outside of the black market.

There's a difference between people who
are investing and trying to get rich and people who want to see it succeed as a
currency.  You’re right that it’s not a
great currency right now, but it’s equally valid to say there isn’t a good
currency right now.  Maybe the USD is
better than crypto, but it’s obvious to all that the USD is on borrowed time as
we lose our monopoly on being the currency of oil purchases and it’s value is
so unstable that the only people who can afford homes are previous home owners
and large financial institutions, and people are rapidly changing jobs because
their raises aren’t covering inflation.


We need an answer out of this mess, rather than
sitting on our sinking ship laughing at that other sinking ship.  We’re a short period of time away from buying
all our Chinese goods from Amazon using Yuan.

Yes, crypto is going to save us all. The savior is cryptocurrency. Riiiight.

Is that at all what I said?

What you said is even worse, the USD is on borrowed time. Makes no sense. Crypto came about mostly so unscrupulous people can avoid dealing with regulation and a centralized bank. There are some with altruistic reasons, but its highly corruptible and completely and utterly volatile. Look at the multiple links I shared from Gates, Buffett, etc concerning crypto. It is a scam. 
People aren't changing job to 'cover inflation', they are changing jobs to have more control over their lives, more work life balance. Blame American corporations for the flood of Chinese goods, not the USD. Many of the people that got caught up in the Great Resignation are now being forced to go back to work because they are out of money. The housing market is going to have a slight correction upcoming, but places where people want to live will maintain their value. Housing inventories were at historic lows, that and people wanting leave major metro areas because of Covid gave it a big bump. The war in Ukraine has thrown a completely unexpected wrench in everything. 

Inflation was artificially suppressed for a long time. Along with interest rates. This too shall pass. 

Is the USD on borrowed time? 
I suppose it depends on what you mean. 
Will it still exist?  Yes.  Will it exist in the way it does now, where
the government can print trillions of dollars to spend on whatever and other governments
are forced to use it to buy oil, so they suck it out of circulation?  No.  The
US petrodollar era is ending.  Russia and
China have publicly declared that they are working together to dissolve the US
backed western hegemony and that the future will be multipolar in nature.  And it appears that many other nations support
this transition.  If other countries are
no longer forced to use USD, we will likely see those dollars returning back to
the US and losing value compared to the other world currencies.


Is the USD a good currency and not needing of competition?  I would argue that the USD and all other
fractional reserve banking fiat currencies have a key flaw that should be
concerning for us as users of that currency. 
They centralize money and power into the hands of the bankers while
forcing everyone else into debt.  The
bankers get richer and richer, while society gets more indebted over time.  The bankers then use that money to buy the government
and assets.  You can read “Modern Money
Mechanics” which is a document put out by the Federal Reserve and it describes
this process of money creation.  The
basic process is this:  A
person/corporation/government goes to a bank and asks for a loan.  The bank writes up a contract where you
promise to pay them back the money plus interest.  They then create the money and give it to
you.  Then as you them back the money is
destroyed.  However, once you finish
paying them back all the money they lent you, you still have more to pay them
because you have to also pay them interest. 
The only way for this money to be created is for someone to go into debt.  They go into debt, the money is created, and
now the money exists so you can finish paying off your loan.  The banks loan you money they don’t have,
charge you interest, and if you default, they get your asset which they sell to
someone else.  One of the side effects of
having this debt based money is that, we’re in a perpetual spiral of debt and
inflation.  If no one takes on new debt,
money is being removed from circulation because people are paying off their debts,
and we start to feel the pressure of there not being enough money in society.  People inevitably have to take on more debt
to survive.  They refinance the house, or
the government deficit spends, or whatever, but it injects new money into
circulation.  The percentage of our income
going to servicing debt is constantly increasing, which is combatted by more
and more debt.  You can very clearly see
this over time.  Back in like the 50s-60s,
a family could buy a house with one person working in 15 years.  Then we went off the gold standard.  My parents bought a house with both parents working
in 25-30 years.  My generation had to
wait an additional 5-10 years to be able to afford to buy a house.  GenZ will likely never be able to buy a house
until one of their parents/grandparents die and give them an inheritance or
something similar.  This is not a recent
trend.  This is a long, steady, predictable
trend.  Meanwhile, every year the largest
donators to congress is wall street and we can all see that congress doesn’t do
shit for us.  They only act for their lobbyists.


So is the USD a good currency?  I mean if you want to spend more and more of
your life to pay off your

I promise I’m the biggest Ron Paul guy on this board. There are key parts where he and Austrian economics are wrong. The world runs on dollars and will run on them much longer then I would have accepted in 2008. 

If the dollar was going to collapse you wouldnt see all the other currencies in the world inflating at the same time like we are. Even crypto which was supposed to “solve” fiat has deflated or inflated depending on your opinion on the term (currency vs commodity) 

I’m in Africa right now. Wave a $1 arround and youre JD Rockefeller. 

I could see an issue when the world no longer uses petroleum, but we’re so far from that worldwide that it’s really not an issue. 

[Guest]

@StickyBun said:
https://www.bloomberg.com/news/articles/...m-the-past

"There's a sucker born every minute" is a phrase closely associated with P. T. Barnum, an American showman of the mid-19th century,
although there is no evidence
that he actually said it. Early examples of its use are found among gamblers and confidence tricksters.


 “A Fool and his
money are soon parted”


 


From article: 
The seeds that spawned the meltdown — greed, overuse of
leverage, a dogmatic belief in “number go up” — aren’t anything new. They’ve
been present when virtually every other asset bubble popped. In crypto, though,
and particularly at this exact moment, they are landing in a new and still
largely unregulated industry all at once, with boundaries blurred and fail safes
weakened by a conviction that everyone involved could get rich together. 



Ponzi
Scheme:In a Ponzi scheme, a con
artist offers investments that
promise very high returns with little or no risk to their victims. The returns
are said to originate from a business or a secret idea run by the con artist.
In reality, the business does not exist or the idea does not work. The con
artist pays the high returns promised to his earlier investors by using the
money obtained from later investors. Instead of engaging in a legitimate
business activity, the con artist attempts to attract new investors to make the
payments that were promised to earlier investors. The operator of the
scheme also diverts his clients' funds for his personal use.



 With little or no legitimate
earnings, Ponzi schemes require a constant flow of new money to survive. When
it becomes hard to recruit new investors, or when large numbers of existing
investors cash out, these schemes collapse. As a result, most investors
end up losing all or much of the money they invested.   In some cases, the operator of the
scheme may simply disappear with the money.


 
2019 - Canadian Crypto Ponzi Scheme - Gerald Cotten -
Quadriga.


TORONTO (Reuters) - Last
year’s collapse of Canadian cryptocurrency trading platform Quadriga CX was due
to a Ponzi scheme operated by founder Gerald Cotten, who died suddenly in
December 2018, the country’s biggest securities regulator said on Thursday.



Cotten died at age 30 from
complications of Crohn’s disease while volunteering at an orphanage in India,
according to the Facebook page of Quadriga CX, which announced his death in
January 2019.


 “What happened at Quadriga was
an old-fashioned fraud wrapped in modern technology,” staff at the Ontario
Securities Commission (OSC) wrote in a report.


 Richard Niedermayer, lawyer
for Cotten’s widow, Jennifer Robertson, did not immediately respond to a
request for comment.


Some 76,000 investors from
Canada and around the world collectively lost at least C$169 million ($124.2
million)


from the collapse of Quadriga
in 2019, the statement added.


 About C$115 million of that
was due to Cotten’s fraudulent trading, the regulator said.


When Cotten died, the platform
owed approximately C$215 million to clients, according to the OSC. Cotten also
siphoned off assets for personal use, transferring about C$24 million to
himself and Robertson between May 2016 and January 2018, the report said.


About C$34 million was
recovered by the bankruptcy trustee and paid to clients, it said. The trustee
also recovered assets from Robertson expected to be worth about C$12 million,
and Cotten returned about C$10 million to Quadriga in the months before his
death, it said.




 "There's a sucker born every minute" is a phrase closely associated with P. T. Barnum, an American showman of the mid-19th century,
although there is no evidence
that he actually said it. Early examples of its use are found among gamblers and confidence tricksters.


 “A Fool and his
money are soon parted”

[Guest]

@AGRforever said:

@medaille said:
 ...

I promise I’m the biggest Ron Paul guy on this board. There are key parts where he and Austrian economics are wrong. The world runs on dollars and will run on them much longer then I would have accepted in 2008. 

If the dollar was going to collapse you wouldnt see all the other currencies in the world inflating at the same time like we are. Even crypto which was supposed to “solve” fiat has deflated or inflated depending on your opinion on the term (currency vs commodity) 

I’m in Africa right now. Wave a $1 arround and youre JD Rockefeller. 

I could see an issue when the world no longer uses petroleum, but we’re so far from that worldwide that it’s really not an issue. 

The way I see it is that there is a group of bankers who’ve
helped every major country setup their central banks.  As long as all
the major countries and their central banks play nice, the system is
semi-stable.  Because all the major countries have the same fiat
system, and they generally inflate together and they collude together to ensure
that the system is stable.  This doesn’t work in 2
cases.  If you’re a small country and don’t want to participate in
this scheme, you’re going to get liberated and have freedom imposed on you, or
be economically isolated.  It also doesn’t work if the major
countries stop colluding together.  Both China and Russia have stated
that they want to stop being locked into the western banking and peterodollar
hegemonies and will work towards a multipolar system.  Much of the west
is heavily dependent on Russia for energy. 
Much of the world is heavily dependent on China for manufacturing.  When we locked Russia out of our financial
systems, China stepped up to provide them alternate technologies.  If
Russia and China want to force our hand, we don’t have much in the way of
stopping it without inducing a lot of burden on ourselves, and we’re not going
to liberate Russia or China.


And that’s completely outside the issue that as citizens, it’s
not good for us.  The system is designed to benefit the bankers and
their puppets and give them power over us.

[Guest]

Crypto winter claims new victim
ShareBy Theunis Bates, Editor at LinkedIn NewsUpdated 4 hours ago

Troubled crypto brokerage Voyager Digital has filed for Chapter 11 bankruptcy protection, becoming the latest casualty of the spiraling crisis in digital asset markets. The Toronto-listed company commenced bankruptcy proceedings at a federal court in Manhattan after losing more than $650 million on a loan to Three Arrows Capital, a crypto hedge fund that fell into liquidation last week. Voyager stated in its filing that it has more than 100,000 creditors and between $1 billion to $10 billion in assets. It has liabilities in the same range. Voyager last week froze all withdrawals, deposits and trading on its platform; other crypto firms, including Celsius and Babel Finance, have taken similar steps.The overall market capitalization of crypto assets has plummeted from about $3 trillion last November to less than $1 trillion today.

[Guest]

Just for reference here’s the amount of market capitalization
lost for various companies since the beginning of the year.


Apple:  641 Billion


Microsoft:  520 Billion


Alphabet:  404 Billion


Amazon:  571 Billion


Tesla:  519 Billion


 


The top 5 companies lost 2.655 Trillion in market capitalization
since the beginning of the year.

[Guest]

@medaille said:
Just for reference here’s the amount of market capitalization
lost for various companies since the beginning of the year.


Apple:  641 Billion


Microsoft:  520 Billion


Alphabet:  404 Billion


Amazon:  571 Billion


Tesla:  519 Billion


 


The top 5 companies lost 2.655 Trillion in market capitalization
since the beginning of the year.

Why?  Were they invested in crypto too? :p