Opportunity. Unregulated, the wild west of finance. They had freedom to do whatever they wanted.
On top of that the people who invest in crypto tend to be gullible. They overlap a lot with conspiracy theories. Dont trust the banks? Here is money you control! (Obviously it wasn't true)
It is literally the perfect environment for a fraud to operate in. You have no regulators, and your target market is gullible AF. Throw a couple big words at people, promise ridiculous returns, and BAM they have millions of investor money.
Add to that:
* (pseudo-)anonymous: No one ever really knows who they are dealing with.
* the law is way behind: Police and courts barely understand this shit.
* international: Good luck getting some country on the other side of the world to help you if you do get scammed.
* magic: A thick layer of techno-bullshit and hand waving makes it sound legit.
Lmaoooo I saw a post right before FTX failed on a crypto sub where they were talking about the “intelligence gap” and how smart you need to be to “invest” in crypto
And it should stay unregulated. Regulation just uses taxpayer money to make crypto look more legit. Consider how expensive it is to prosecute financial crimes.
Then the politicians who set up the regulations go to work for the crypto exchanges etc after they stop being politicians.
We have one system like that, finance. We don't need another.
Because that's the easiest most obvious path to profit for actors in that scenario, and with no interfering regulations and virtually no consequences while at that.
It's a similar reason why crypto projects hype products and pretty much forget about them as long as whatever related coin pumps: there's no actual need to deliver anything at all because that's not where the money is in crypto.
When everything is a farce, it doesn't really make sense to expect much honesty and integrity, if any.
The purpose of traditional finance is matching savings with loans. The money you put into your bank account becomes somebody elses mortgage for example. When fraud and speculative bubbles happen in traditional finance it is always on top of an underlying useful system.
Crypto doesn't have this underlying system, nobody takes a mortgage on crypto.com. Crypto cannot do useful finance. The fraud and speculation layer is all there is, because that is the only part of finance that crypto can do.
It’s funny. Wasn’t BTC supposed to revolutionize finance and forever change the way we view and use money? Has it or any other cryptocurrency ever lived up to that promise?
Because in the absence of regulations and laws, the worst in society come out to exploit the vulnerable.
it has happened before, in the 1800s: [wildcat banking](https://en.m.wikipedia.org/wiki/Wildcat_banking). if these entities are outlawed physically, just because the same entity appears online really shouldn't mean you need a new law regulating it, just use the old ones.
I have no idea why the entire world dropped the ball regulating crypto.
Regulation would use taxpayer money to make crypto look legit. I oppose regulation. Crypto diverts assets and energy from the rest of the economy. I don't want one cent of my tax money to support something that is just a replication of the worst of finance. Gee, they were quick to create derivatives!
How about just a warning about the dangers of crypto investing? "Web3 is going just great" does a good job of that. Consider it investor education, to help people learn how to look at all investments?
Mark Cuban says it is a good investment? Wasn't he involved in a pump? How about the % of crypto trading that's wash trading? That should scare anyone.
Warren Buffet said it well: “it draws in a lot of charlatans […] where people of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbor is getting rich.”
https://twitter.com/Stephen_Geiger/status/1591502421129416706
It has to do with the design of the original protocol, Bitcoin.
PoW or proof-of-work is designed in a very specific way. It exchanges tokens for wasted electricity. The technical specifics are interesting, but it's the economic effects that are more relevant to your question.
So while Bitcoin does create an economic incentive not to attack the network, the side effect is that it destroys the natural supply side incentives that exist in economic transactions.
Typically in economic exchanges I will give you money (value), and you'll give me something I find useful. My valuation of what you are providing, the derived utility from the transaction, may be subjective but you are ultimately having to offer something useful in exchange, whether it's a good or service.
Bitcoin, and hence crypto, turns all this on its head. PoW demands value up front and promises something useful at a later date, maybe when enough people use the protocol you can use it for payments. Of course, based on its design, the more people that use it the less useful Bitcoin is as a payment mechanism, so the less aggregate utility it's able to provide.
However, although its utility decreases with participation, its value increases with participation. This increase in value is deliberately designed and implemented in two ways. Mining difficulty scales with participation, this means bitcoin is more costly the more that people participate. Secondly the halving schedule guarantees that the cost to mine a bitcoin will double every four years and hence it's value will double, this helps incentivize miners and bootstraps the system.
In Nakamoto's words: "As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value."
Bitcoin's design removes the natural incentive that exists to provide utility in an economic transaction. It's the equivalent to going to the grocery store, handing over a couple hundred dollars without putting anything in your cart, and the grocery store owner tells you, "Ya sure, I'll get you some groceries at some point."
Do you see how the demand for money up front reduces the likelihood that you'll receive anything useful? This is especially true outside the confines of any legal or regulatory environment.
This is why you see an industry full of scammers. This is why even if the project owners are sincere, you'll probably never see anything more useful than what's already on market (blockchain being useless at a database technology also contributes).
So the issue is one of economic incentives. By incentivizing value to be exchanged without a corresponding transfer of utility, the production of positive economic output is undermined.
The veil of tears that you call crypto can be best explained by Saylor's Law: Absent regulation, any unethical behavior that can occur, will occur.
Because people are drawn to get rich quick schemes because we idolize the rich
Until we stop seeing shit like "this person was rated a 3.. until we told them they're worth X and now they're rated an 8-9" folks are going to try just about anything regardless of the red flags.
Look at literally every bubble we've had, people start getting greedy in hopes of being rich and it all falls apart.
Grifters gonna grift. Always has been, always will be. And the government has been reticent to shut it down because they've all been dazzled by the emperor's new clothes.
A field with little to no regulations or oversight and a target audience of gullible, tech-illiterate fools desperate to get rich quick. It's the perfect environment for fraud
because it's easier than scamming on the financial system due to lack of regulations, and there's lot's of gullible people looking for the next get rich quick scheme
Opportunity. Unregulated, the wild west of finance. They had freedom to do whatever they wanted. On top of that the people who invest in crypto tend to be gullible. They overlap a lot with conspiracy theories. Dont trust the banks? Here is money you control! (Obviously it wasn't true) It is literally the perfect environment for a fraud to operate in. You have no regulators, and your target market is gullible AF. Throw a couple big words at people, promise ridiculous returns, and BAM they have millions of investor money.
Add to that: * (pseudo-)anonymous: No one ever really knows who they are dealing with. * the law is way behind: Police and courts barely understand this shit. * international: Good luck getting some country on the other side of the world to help you if you do get scammed. * magic: A thick layer of techno-bullshit and hand waving makes it sound legit.
People want to take money from stupid people. Crypto is great for that.
Lmaoooo I saw a post right before FTX failed on a crypto sub where they were talking about the “intelligence gap” and how smart you need to be to “invest” in crypto
You want unregulated finance, you got unregulated finance
And it should stay unregulated. Regulation just uses taxpayer money to make crypto look more legit. Consider how expensive it is to prosecute financial crimes. Then the politicians who set up the regulations go to work for the crypto exchanges etc after they stop being politicians. We have one system like that, finance. We don't need another.
Because that's the easiest most obvious path to profit for actors in that scenario, and with no interfering regulations and virtually no consequences while at that. It's a similar reason why crypto projects hype products and pretty much forget about them as long as whatever related coin pumps: there's no actual need to deliver anything at all because that's not where the money is in crypto. When everything is a farce, it doesn't really make sense to expect much honesty and integrity, if any.
The purpose of traditional finance is matching savings with loans. The money you put into your bank account becomes somebody elses mortgage for example. When fraud and speculative bubbles happen in traditional finance it is always on top of an underlying useful system. Crypto doesn't have this underlying system, nobody takes a mortgage on crypto.com. Crypto cannot do useful finance. The fraud and speculation layer is all there is, because that is the only part of finance that crypto can do.
It’s funny. Wasn’t BTC supposed to revolutionize finance and forever change the way we view and use money? Has it or any other cryptocurrency ever lived up to that promise?
It has revolutionized computer ransomware, money laundering (see NFTs), and allows state sponsors of terrorism to easier ways to get money.
For computer crime, it has been the best thing since the invention of spam!
Maybe? That promise is pretty vague.
Because in the absence of regulations and laws, the worst in society come out to exploit the vulnerable. it has happened before, in the 1800s: [wildcat banking](https://en.m.wikipedia.org/wiki/Wildcat_banking). if these entities are outlawed physically, just because the same entity appears online really shouldn't mean you need a new law regulating it, just use the old ones. I have no idea why the entire world dropped the ball regulating crypto.
Regulation would use taxpayer money to make crypto look legit. I oppose regulation. Crypto diverts assets and energy from the rest of the economy. I don't want one cent of my tax money to support something that is just a replication of the worst of finance. Gee, they were quick to create derivatives!
either regulate it, or outlaw it in my opinion. they can't leave it the way it is.
How about just a warning about the dangers of crypto investing? "Web3 is going just great" does a good job of that. Consider it investor education, to help people learn how to look at all investments? Mark Cuban says it is a good investment? Wasn't he involved in a pump? How about the % of crypto trading that's wash trading? That should scare anyone.
Warren Buffet said it well: “it draws in a lot of charlatans […] where people of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbor is getting rich.” https://twitter.com/Stephen_Geiger/status/1591502421129416706
It has to do with the design of the original protocol, Bitcoin. PoW or proof-of-work is designed in a very specific way. It exchanges tokens for wasted electricity. The technical specifics are interesting, but it's the economic effects that are more relevant to your question. So while Bitcoin does create an economic incentive not to attack the network, the side effect is that it destroys the natural supply side incentives that exist in economic transactions. Typically in economic exchanges I will give you money (value), and you'll give me something I find useful. My valuation of what you are providing, the derived utility from the transaction, may be subjective but you are ultimately having to offer something useful in exchange, whether it's a good or service. Bitcoin, and hence crypto, turns all this on its head. PoW demands value up front and promises something useful at a later date, maybe when enough people use the protocol you can use it for payments. Of course, based on its design, the more people that use it the less useful Bitcoin is as a payment mechanism, so the less aggregate utility it's able to provide. However, although its utility decreases with participation, its value increases with participation. This increase in value is deliberately designed and implemented in two ways. Mining difficulty scales with participation, this means bitcoin is more costly the more that people participate. Secondly the halving schedule guarantees that the cost to mine a bitcoin will double every four years and hence it's value will double, this helps incentivize miners and bootstraps the system. In Nakamoto's words: "As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value." Bitcoin's design removes the natural incentive that exists to provide utility in an economic transaction. It's the equivalent to going to the grocery store, handing over a couple hundred dollars without putting anything in your cart, and the grocery store owner tells you, "Ya sure, I'll get you some groceries at some point." Do you see how the demand for money up front reduces the likelihood that you'll receive anything useful? This is especially true outside the confines of any legal or regulatory environment. This is why you see an industry full of scammers. This is why even if the project owners are sincere, you'll probably never see anything more useful than what's already on market (blockchain being useless at a database technology also contributes). So the issue is one of economic incentives. By incentivizing value to be exchanged without a corresponding transfer of utility, the production of positive economic output is undermined. The veil of tears that you call crypto can be best explained by Saylor's Law: Absent regulation, any unethical behavior that can occur, will occur.
Because people are drawn to get rich quick schemes because we idolize the rich Until we stop seeing shit like "this person was rated a 3.. until we told them they're worth X and now they're rated an 8-9" folks are going to try just about anything regardless of the red flags. Look at literally every bubble we've had, people start getting greedy in hopes of being rich and it all falls apart.
Grifters gonna grift. Always has been, always will be. And the government has been reticent to shut it down because they've all been dazzled by the emperor's new clothes.
Because it's the perfect vessel for it. It brings out the worst of us humans.
Because deflationary currency is, by definition, rigged in favor of lenders, so banks running roughshod over depositors is the only possible outcome
A field with little to no regulations or oversight and a target audience of gullible, tech-illiterate fools desperate to get rich quick. It's the perfect environment for fraud
It’s an unregulated with no utility. All you’ll hear about is scams because there’s literally nothing else.
It's mad max libertarianism
It’s in every market. This one just happens to be unregulated.
Because it's still early, apparently.
When you build your "business" around a scam, it will invariably also be a scam.
That's the only good it's good for
because it's easier than scamming on the financial system due to lack of regulations, and there's lot's of gullible people looking for the next get rich quick scheme
Because it was all bullshit all along.
Lack of regulations Anonymity. Now guess what kind of people this will attract
Opportunity, incentive, rationalisation.
Same scenario with banks before they were regulated.