Crypto-Currency the legal pyramid scheme?

ttmott

PhD in OCD
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Apr 3, 2012
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I had a strategy meeting with my financial guys several years ago and the subject of "crypto" came up. I knew little about the investment, they took me through what it was about and how it was instituted and controlled. Then I asked the question what backed it up? What product was provided to the market that supported the investment. How did the investment impact the GDP? The answer was the investment depended upon social interest in the investment concept itself. Well, that said it all to me. Now with the debacle with FTX, I'm glad I stayed the traditional course. What's your take?
 
IMO retail exchanges and platforms are volatile high/risk/reward/loss - still maturing most are just a gamble. As seen with several exchanges combinations of social media hype, liquidity, loose controls, and bad actors it has ended bad for some and good for others. As the saying goes “if you don’t understand and know who the patsy is it’s you.”

Currently blockchains do have potential ledger value when operated/organized by consortiums and institutional partners/players.
 
Blockchain is being challenged in the same way Tesla was/is. Massively disruptive technology, global institutions that stand to lose a lot of control/influence/money if the change becomes mainstream.

Dealerships, States, the big automotive players have worked very hard to make it difficult for Tesla to penetrate their markets. Banks and governments will do the same for blockchain. They have to...

That's not the FTX story, of course, but more an overall thought on the technology...
 
IMO retail exchanges and platforms are volatile high/risk/reward/loss - still maturing most are just a gamble. As seen with several exchanges combinations of social media hype, liquidity, loose controls, and bad actors it has ended bad for some. As the saying goes “if you don’t understand and know who the patsy is it’s you.”

Currently blockchains do have potential ledger and monetary value when operated/organized by consortiums and institutional partners/players.
Blockchain is the security technology and the quantitative control. The monetary value (ledger as you say) is the demand for the investment nothing else. There is no product that the technology brings; it is a social investment. When Ford went to fifty cents per share in the mid 80's the company still had good value in infrastructure and workforce and for the wise investor it was a sound investment. You can't say the same for Crypto. That's my point.
 
Blockchain is the security technology and the quantitative control. The monetary value is the demand for the investment nothing else. There is no product that the technology brings it is a social investment. When Ford went to fifty cents per share in the mid 80's the company still had good value in infrastructure and workforce and for the wise investor it was a sound investment. You can't say the same for Crypto. That's my point.

Is this any different than a publicly traded financial institution such as Bank of America?
 
I day trade options and futures but never bought into the crypto hype. I looked at it the same as the OP, a pyramid scheme that would crash eventually. I did throw about $500-1000 in it and sold 1/2 when I doubled my money and still hold the rest but at this point I got my initial investment back so Im riding free shares now.
 
Is this any different than a publicly traded financial institution such as Bank of America?
You could say the same about insurance, right? But banks and insurance provide a quantifiable service that is a product and has value. Plus banks and insurance companies hold only the cash required by the FDIC and FTC - they invest the balance into long term equities. Yes a big difference..
 
I will admit that I bought some crypto. I still have a little over 3 Ethereum right now. Which I could get raid of and show a profit. That's how long I've had it. I'll also admit that I should have sold it by now. I never put anything in it that I couldn't afford to lose. If I would have sold all of it a year after I got in I would have more than tripled my $$$.
I'll agree that it is very hard to understand. I basically have the same thoughts as OP, but if you talk to the believers they pretty much say the technology is the product they bring to the market. Is this true? I don't know. I'm not smart enough to figure that out.
I don't really look at it as a long term INVESTMENT. I look at it as a gamble or get rich quick scheme (although I didn't put in enough to get rich, rich) . Like going to the casino, buying a lottery ticket, etc. If you get lucky enough to win then invest those winnings. To me investing is long term, put $ into something solid and pray for your 8% avg. over the life of the investment.
Back in 97' if I would have gambled my profit sharing ($55,000) on Amazon instead of investing it into a IRA I would be worth $5,125,985,088.00 right now, but no I chose the smart and responsible way...:Do_O:Do_O
 
Blockchain is being challenged in the same way Tesla was/is. Massively disruptive technology, global institutions that stand to lose a lot of control/influence/money if the change becomes mainstream.

Dealerships, States, the big automotive players have worked very hard to make it difficult for Tesla to penetrate their markets. Banks and governments will do the same for blockchain. They have to...

That's not the FTX story, of course, but more an overall thought on the technology...
Explain "blockchain" and why it's so good in layman's terms. Some of this stuff sounds like smoke and mirrors to me.

Years ago they said Amazon was going to eliminate "brick and mortar." From the looks of it, they are using more brick and mortar than anyone. Those places are huge.
 
Is this any different than a publicly traded financial institution such as Bank of America?
Bank of America has their real estate locations. They have a portfolio of of loans they service. Then there is the cash and investments. All assets to backup their intrinsic value.
 
Bank of America has their real estate locations. They have a portfolio of of loans they service. Then there is the cash and investments. All assets to backup their intrinsic value.

This is two fold: one is the technology and the other is a company/website/exchange of the same name.

Here is a decent definition:

A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.”

From what I read about the FTX fiasco it would be the equivalent a bank offering you a safe place to keep your money by depositing your money into an account - then once they had your money they used it for whatever they wanted with it.

Basically FTX convinced people to store their crypto funds on their exchange and once they had them they used it for there own purposes. If the crypto was stored off line in a private wallet this would not have happened.

-Kevin
 
Explain "blockchain" and why it's so good in layman's terms. Some of this stuff sounds like smoke and mirrors to me.

Years ago they said Amazon was going to eliminate "brick and mortar." From the looks of it, they are using more brick and mortar than anyone. Those places are huge.

If you want to really nerd-out for a few minutes:

https://en.wikipedia.org/wiki/Blockchain
 
Bank of America has their real estate locations. They have a portfolio of of loans they service. Then there is the cash and investments. All assets to backup their intrinsic value.

I was more intending to point out the "product" side of the argument in the initial post. Banks do not produce anything, they simply manage/control the transfer of something with a very, very low "intrinsic" value. Piles of cash can't be burned very effectively to stay warm :)
 
Crypto was and is ripe for fraud. Banking and securities regulation was put in place to protect the people from fraud. Its pretty well shown that crypto currencies and their markets need regulation.

Ignoring all the technology behind it, Crypto currencies that "IPO" fundamentally work like this:

You give them real US dollars, backed by the government of one of the wealthiest countries in the world.
They give you a digital promise you cannot see, backed by nothing at all except a "musical chairs" market of others that have given real money for electronic Monopoly money. There is absolutely nothing backing the "value" of any of them.

And to top it all of, that "currency" is held by an exchange that is unregulated and run by propeller heads with no capital requirements to back them up, and clearly no ability to be monitored. And it's being shown that some of those propeller heads are using the complexity to steal from "investors" on a massive scale.

I hear some people saying that it is no different than real currency that you cannot see except by signing into your bank. That's so naive.
 
This is two fold: one is the technology and the other is a company/website/exchange of the same name.

Here is a decent definition:

A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.”

-Kevin
Right. And my question is so what?
 

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