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A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The l

A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The latency of applications on the blockchain is atrocious. But more recently after learning from and interacting with people building in the space my assessment changed. There is an interesting intersection between tech, communities, and economics. There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did. Certainly, there are problems, but some things will live beyond the crash that is coming and change things in ways no one can be sure of. The internet started in the 1960s and was opened up commercially in 1989.[3] It feels like we are somewhere between 1995 and 2000. The energy feels similar with people trying to shove old paradigms into a new world, vaporware companies, and insane investments. I don’t think we’ve seen the top and it will likely make the crash of 2001 look small by comparison. I may be wrong, but if I’m not, it still is early. [1] https://bitfinexed.medium.com/tether-is-setting-a-new-standard-for-transparency-that-is-untethered-from-facts-deec42c473bb https://bitfinexed.medium.com/tether-is-setting-a-new-standa... [2] https://twitter.com/Foone/status/1457749433844568066 https://twitter.com/Foone/status/1457749433844568066 [3] https://en.wikipedia.org/wiki/History_of_the_Internet https://en.wikipedia.org/wiki/History_of_the_Internet

crehn 5y ago
> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did. Could you elaborate which gatekeepers it will disrupt?
- unityByFreedom 5y ago
  IMO social media needs competition but I don't think it will be disrupted by blockchain or decentralization. It will be disrupted by a continued pursuit of competition by doing things like supporting net neutrality. That keeps the playing field level and prevents current big players from becoming further entrenched. Big tech's monopolies are encouraged by lower-level-monopolies owned by Comcast and the other internet media conglomerates. To solve the problems higher in the tree we should get at the roots.
- tim333 5y ago
  It is somewhat disruptive to banks. You can invest stable coins and get interest for example which is higher than bank interest. And the operator doesn't need to spend a fortune applying for banking licenses for each country they operate in.
  - ahtihn 5y ago
    Try looking into why these investments have higher returns than a bank account. The risk profile isn't the same at all. If you want returns in traditional finance, you don't stick money in a bank account. You buy bonds and/or stocks.
  - doomrobo 5y ago
    Absolutely not. The reason bank interest is lower is because the FDIC ensures that you get your money if the bank stops existing. If the company backing your stablecoin stops existing, what are you left with? Nothing, of course This not disruptive. This is just normal investing with all the risks attached
    - bufferoverflow 5y ago
      FDIC doesn't have enough money to cover everyone in case of some really bad event. And FDIC is useless when your currency is devalued / hyoerinflated.
      - antifa 5y ago
        What's an example of an event where the FDIC needs to cover everyone, but the blockchain isn't taken offline or worse?
    - tim333 5y ago
      According to Nexo "Disrupting the financial system, one bit at a time." they have 3 million users on their saving platform. (https://nexo.io/about-us https://nexo.io/about-us). I haven't used them and am not recommending them but there seems to be something going on there.
dmitriid 5y ago
> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did Ah yes. How can we forget the community-audited and vetted smart contracts that ended up draining its users' wallets of all their money. Transparency!
- sabhiram 5y ago
  Well, as opposed to hearing "oops our black box implementation of your information got hacked", I honestly don't mind the trend of "read the contract, it is code". Sure it can be misleading, sure it can be intended to trick someone. However, code is law, and even backdoors are "code". Instead we should fix the backdoors so that code can be reasonable "law".
  - dmitriid 5y ago
    > Instead we should fix the backdoors so that code can be reasonable "law". There never will be. For the absolute vast majority of people, programmers included, these "contracts" will be a yet another blackbox. Moreover, it already is a blackbox even to the people who develop them, because they can't find errors in their own software and APIs.
somebodythere 5y ago
Every time a nascent technology bubble crashes (dot com, AI winter, crypto...) speculation gets reset, scams and projects with no future get wiped out, and the space gets healthier.
benreesman 5y ago
I have wondered for awhile why the crypto mega-whales in my vicinity are trading USDT at par or better over the last year or two. My conspiracy theory is that when insiders trade a distressed asset at par or better it’s often a bailout expectation that’s really being traded. Who has unimaginable access to financing, a “stablecoin” going so/so, and a primary line of business critically dependent on Tether, like, I don’t know, a massive exchange with the highest volume pairs all sharing USDT as quote?
- bb88 5y ago
  What you've described is metastasized moral risk. We could argue that maybe some risk should be rewarded. But not all risk, such as spending billions in beanie babies as a corporate strategy.
  - benreesman 5y ago
    Eh, there are some important distinctions here. Pricing risk is an activity with fairly clear value, and as a result you can make a ton of money by being good at it. Assuming risk is something that every individual and organization does to one degree or another, and to the extent that they do so in a rational way it’s because they are pricing risk well or delegating that. Your use of the word moral makes me think that you might be talking about shifting risk off onto others. Keeping the upside in some more favorable ratio to handing others the downside is (IMHO) immoral but also one of two main ways that people get rich, the other being inheritance.
    - bb88 5y ago
      Oh pardon, I meant moral hazard.
- delaaxe 5y ago
  I mean Binance has BUSD no?
- tim333 5y ago
  The price of things like USDT are effectively set by Tether rather than the free market. If Tether have billions of US$ and offer in the market to buy back USDT at 1:1 then that's what they price will be near enough.
olalonde 5y ago
> A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The latency of applications on the blockchain is atrocious. But more recently after learning from and interacting with people building in the space my assessment changed. I feel like a lot of the cryptocurrency critics commit the "fallacy fallacy". That is, they have the following reasoning: people believe crypto is good because of X, X is false, therefore crypto is not good. Yes, there are a lot of people who are into crypto because they think it's a way to get rich quick. Yes, there are a lot of guru technical analysts who sell bullshit dreams on their Youtube channels. Yes, there are a lot of criminals who use cryptocurrency. Yes, crypto attracts a lot of charlatans and snake oil men. Yes, there are a lot unbacked stablecoins and shitcoins. Given the above, it's easy to dismiss all cryptocurrencies as a scam. But when you dig a bit deeper, you'll find that there is true technical and financial innovation. For me, Bitcoin's potential to be a programmable money without government or central authority is a very powerful idea. The idea that you can be your own bank and do p2p electronic money transfers without an intermediary. That has never been possible before. I could go on but my point is that even if there are many wrong reasons people like X, it doesn't necessarily mean that X is wrong/bad.
- WA 5y ago
  Nah, it’s like this: people believe crypto is good because of X, Y, Z, A, B and C. All of them are false, except for C in some odd circumstances. Therefore, the current state of crypto is not good.
- nly 5y ago
  Everyone doing P2P transfer and bypassing traditional banking institutions is a powerful idea... but ultimately everyone needs to agree on a single medium of exchange, otherwise efficient market pricing is too hard. And it's debatable whether fiat will ever whither and die. The Government will ultimately have to endorse a currency for tax purposes, and they'll always seek to control the inflationary environment so they can maintain a workable budget and keep public services afloat. Just a century ago or so, banking was only for large corporations. Commoners and small businesses all used cash and exchanging bits of valuable metal was the norm. I mean, believe it or not, we had good reasons to abandon that simpler system in the first place. Things are better now. Markets are more efficient.
saalweachter 5y ago
I'm sorry, I'm not trying to call you out personally, but this is itching my brain something fierce so I have to blurt it out, and hey, it's the internet. A little derailing never hurt anyone. It's amazing to me how universal the "I used to be a non-believer" line is in evangelism. From the classic "I used to be an atheist but I've been born again" to all the members of political party A claiming to have been a member of party B before seeing the light to technological evangelism. It just jumps out at you after awhile.
- mw888 5y ago
  That’s a nice little Kafka trap you’ve constructed to disregard the people who change their minds away from what you think. So every time someone changes their mind and uses their previous opinion as informative you are going to non-committally imply it’s “evangelism?”
  - z3c0 5y ago
    Seems like a reworking of the "everybody has an agenda" retort you see so often these days. It's a slippery slope that only leads to dying a curmudgeon, as all chances for new perspectives were rebuked as agendas/evangelism/propagandist/etc.
    - antifa 5y ago
      Or, it's a slippery slope that only leads to keeping all your BTC/ETH and missing out on what getting scammed 20 times a year feels like.
      - z3c0 5y ago
        Strange, I've managed to do all of that without being needlessly cynical.
        antifa 5y ago
        99% of random new cryptos have been scams or useless, so if anything the user was too generous with their politeness.
tim333 5y ago
A nitpick is that [2] isn't front running. Front running is where you figure an institution is going to buy lots of some stock and get a buy order of your own in first, typically done by brokers. Making fake trades to make the price look like it's going up can be called market manipulation in this case I think. This is also called painting the tape. A similar but slightly different scheme is wash trading where you basically sell an asset to yourself to make it look like that's the price and that there is trading volume going on. There's a lot of this kind of thing going on with NFTs.
lumost 5y ago
You know, it's funny. I've worked in and around analytics for a long time now, and I've had the thought that blockchain enables the following. 1) A common "universal" transaction data source 2) A shared, readable format So the thought occurred to me that as soon as blockchain apps/currencies became popular, people would want analytics on them. There would thus be a startup opportunity for unprecedented analytics visibility into transactional data from a third party without needing to build bespoke integrations into high security/compliance systems. If a blockchain backed currency was widely used, a third party could easily estimate the real-time sales flow of every brick and mortar store location. You could have real-time auditing and quarterly tracking of both public and private corporations available from a third party. Asset transfers, smart contracts, and their real world equivalents could be instantly monitored - allowing the early detection of emergent supply chain bottlenecks. The problem with all of this is that in the 5 years since I had this idea, the only use cases for BTC and other cryptos has been price speculation. The market for such analytics products is effectively zero.
- jcbrand 5y ago
  You were right, blockchain analytics was a great startup opportunity and there are already a bunch of companies, like Glassnode, doing blockchain analytics. You also seem to be missing a lot of interesting stuff happening with cryptos if you think it's exclusively price speculation.
  - lumost 5y ago
    GlassNode's tagline is "Time crypto market tops and bottoms.", I don't doubt that simply analyzing the exchanges is a valid market. But not one that I think is particularly large, particularly not when the exchanges can add their own analytics at any point.
- ptx 5y ago
  Making all their real-time sales data public, and thus available to their competitors, doesn't seem like something most companies would want. If the blockchain does enable this, wouldn't that just lead either to 1) companies not adopting blockchain, or 2) some solution for hiding the data and defeating third-party analytics?
TomSwirly 5y ago
And yet you still don't name any actual useful applications! The Ethereum world computer has 300,000 nodes, and yet has 1/5000 the computation power of a single Raspberry Pi 4. Except for actual cryptocurrencies, all the "web3" applications could use boring old 1980s vintage cryptography, be just as distributed, and run ten thousand times faster and cheaper. ---- So far the only way anyone has ever made any money from cryptocurrency is to sell it to someone for more fiat currency. In fact, in real terms, it has net lost money because of the huge amounts of electricity expended. So once people such as yourself purchase cryptocurrency, they know in their hearts that the only way they will make more is if further people buy into their Ponzi scheme. Therefore, your comment above.
doktorhladnjak 5y ago
The big question in my mind: is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped, that never really disappeared but became irrelevant as its real value became a commodity that found its way into the software of established companies.
- samhw 5y ago
  The worrying thing (for me) isn’t which one it is. The worrying thing is that so many people seem incapable of even making a creditable attempt at answering that question and analysing its fundamentals. This has opened my eyes to how many people only think through the prism of “well, this has got really popular lately, and the internet did that too, so this will be the next big thing even if I don’t know why!”. Survivorship bias is very very real.
  - SZJX 5y ago
    Or I guess many people are not dumb at all, they just simply want in and profit as long as the hype is still going and they (hope that they) are not left as the last people holding the bag. They might find all sorts of excuses to try to convince the others, even to some extent themselves, when they’re just fundamentally doing the above.
- CRConrad 5y ago
  > is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped ...and then returned a few decades later to be oversold and overhyped some more, this time as "Deep Learning" or "AI". Seems the alternatives on offer are scam or scam. (Or scam, scam, scam, ham, eggs, and scam.)

crehn 5y ago

> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did. Could you elaborate which gatekeepers it will disrupt?

unityByFreedom 5y ago
IMO social media needs competition but I don't think it will be disrupted by blockchain or decentralization. It will be disrupted by a continued pursuit of competition by doing things like supporting net neutrality. That keeps the playing field level and prevents current big players from becoming further entrenched. Big tech's monopolies are encouraged by lower-level-monopolies owned by Comcast and the other internet media conglomerates. To solve the problems higher in the tree we should get at the roots.
tim333 5y ago
It is somewhat disruptive to banks. You can invest stable coins and get interest for example which is higher than bank interest. And the operator doesn't need to spend a fortune applying for banking licenses for each country they operate in.
- ahtihn 5y ago
  Try looking into why these investments have higher returns than a bank account. The risk profile isn't the same at all. If you want returns in traditional finance, you don't stick money in a bank account. You buy bonds and/or stocks.
- doomrobo 5y ago
  Absolutely not. The reason bank interest is lower is because the FDIC ensures that you get your money if the bank stops existing. If the company backing your stablecoin stops existing, what are you left with? Nothing, of course This not disruptive. This is just normal investing with all the risks attached
  - bufferoverflow 5y ago
    FDIC doesn't have enough money to cover everyone in case of some really bad event. And FDIC is useless when your currency is devalued / hyoerinflated.
    - antifa 5y ago
      What's an example of an event where the FDIC needs to cover everyone, but the blockchain isn't taken offline or worse?
  - tim333 5y ago
    According to Nexo "Disrupting the financial system, one bit at a time." they have 3 million users on their saving platform. (https://nexo.io/about-us https://nexo.io/about-us). I haven't used them and am not recommending them but there seems to be something going on there.

dmitriid 5y ago

> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did Ah yes. How can we forget the community-audited and vetted smart contracts that ended up draining its users' wallets of all their money. Transparency!

sabhiram 5y ago
Well, as opposed to hearing "oops our black box implementation of your information got hacked", I honestly don't mind the trend of "read the contract, it is code". Sure it can be misleading, sure it can be intended to trick someone. However, code is law, and even backdoors are "code". Instead we should fix the backdoors so that code can be reasonable "law".
- dmitriid 5y ago
  > Instead we should fix the backdoors so that code can be reasonable "law". There never will be. For the absolute vast majority of people, programmers included, these "contracts" will be a yet another blackbox. Moreover, it already is a blackbox even to the people who develop them, because they can't find errors in their own software and APIs.

somebodythere 5y ago

Every time a nascent technology bubble crashes (dot com, AI winter, crypto...) speculation gets reset, scams and projects with no future get wiped out, and the space gets healthier.

benreesman 5y ago

I have wondered for awhile why the crypto mega-whales in my vicinity are trading USDT at par or better over the last year or two. My conspiracy theory is that when insiders trade a distressed asset at par or better it’s often a bailout expectation that’s really being traded. Who has unimaginable access to financing, a “stablecoin” going so/so, and a primary line of business critically dependent on Tether, like, I don’t know, a massive exchange with the highest volume pairs all sharing USDT as quote?

bb88 5y ago
What you've described is metastasized moral risk. We could argue that maybe some risk should be rewarded. But not all risk, such as spending billions in beanie babies as a corporate strategy.
- benreesman 5y ago
  Eh, there are some important distinctions here. Pricing risk is an activity with fairly clear value, and as a result you can make a ton of money by being good at it. Assuming risk is something that every individual and organization does to one degree or another, and to the extent that they do so in a rational way it’s because they are pricing risk well or delegating that. Your use of the word moral makes me think that you might be talking about shifting risk off onto others. Keeping the upside in some more favorable ratio to handing others the downside is (IMHO) immoral but also one of two main ways that people get rich, the other being inheritance.
  - bb88 5y ago
    Oh pardon, I meant moral hazard.
delaaxe 5y ago
I mean Binance has BUSD no?
tim333 5y ago
The price of things like USDT are effectively set by Tether rather than the free market. If Tether have billions of US$ and offer in the market to buy back USDT at 1:1 then that's what they price will be near enough.

olalonde 5y ago

> A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The latency of applications on the blockchain is atrocious. But more recently after learning from and interacting with people building in the space my assessment changed. I feel like a lot of the cryptocurrency critics commit the "fallacy fallacy". That is, they have the following reasoning: people believe crypto is good because of X, X is false, therefore crypto is not good. Yes, there are a lot of people who are into crypto because they think it's a way to get rich quick. Yes, there are a lot of guru technical analysts who sell bullshit dreams on their Youtube channels. Yes, there are a lot of criminals who use cryptocurrency. Yes, crypto attracts a lot of charlatans and snake oil men. Yes, there are a lot unbacked stablecoins and shitcoins. Given the above, it's easy to dismiss all cryptocurrencies as a scam. But when you dig a bit deeper, you'll find that there is true technical and financial innovation. For me, Bitcoin's potential to be a programmable money without government or central authority is a very powerful idea. The idea that you can be your own bank and do p2p electronic money transfers without an intermediary. That has never been possible before. I could go on but my point is that even if there are many wrong reasons people like X, it doesn't necessarily mean that X is wrong/bad.

WA 5y ago
Nah, it’s like this: people believe crypto is good because of X, Y, Z, A, B and C. All of them are false, except for C in some odd circumstances. Therefore, the current state of crypto is not good.
nly 5y ago
Everyone doing P2P transfer and bypassing traditional banking institutions is a powerful idea... but ultimately everyone needs to agree on a single medium of exchange, otherwise efficient market pricing is too hard. And it's debatable whether fiat will ever whither and die. The Government will ultimately have to endorse a currency for tax purposes, and they'll always seek to control the inflationary environment so they can maintain a workable budget and keep public services afloat. Just a century ago or so, banking was only for large corporations. Commoners and small businesses all used cash and exchanging bits of valuable metal was the norm. I mean, believe it or not, we had good reasons to abandon that simpler system in the first place. Things are better now. Markets are more efficient.

saalweachter 5y ago

I'm sorry, I'm not trying to call you out personally, but this is itching my brain something fierce so I have to blurt it out, and hey, it's the internet. A little derailing never hurt anyone. It's amazing to me how universal the "I used to be a non-believer" line is in evangelism. From the classic "I used to be an atheist but I've been born again" to all the members of political party A claiming to have been a member of party B before seeing the light to technological evangelism. It just jumps out at you after awhile.

mw888 5y ago
That’s a nice little Kafka trap you’ve constructed to disregard the people who change their minds away from what you think. So every time someone changes their mind and uses their previous opinion as informative you are going to non-committally imply it’s “evangelism?”
- z3c0 5y ago
  Seems like a reworking of the "everybody has an agenda" retort you see so often these days. It's a slippery slope that only leads to dying a curmudgeon, as all chances for new perspectives were rebuked as agendas/evangelism/propagandist/etc.
  - antifa 5y ago
    Or, it's a slippery slope that only leads to keeping all your BTC/ETH and missing out on what getting scammed 20 times a year feels like.
    - z3c0 5y ago
      Strange, I've managed to do all of that without being needlessly cynical.
      - antifa 5y ago
        99% of random new cryptos have been scams or useless, so if anything the user was too generous with their politeness.

tim333 5y ago

A nitpick is that [2] isn't front running. Front running is where you figure an institution is going to buy lots of some stock and get a buy order of your own in first, typically done by brokers. Making fake trades to make the price look like it's going up can be called market manipulation in this case I think. This is also called painting the tape. A similar but slightly different scheme is wash trading where you basically sell an asset to yourself to make it look like that's the price and that there is trading volume going on. There's a lot of this kind of thing going on with NFTs.

lumost 5y ago

You know, it's funny. I've worked in and around analytics for a long time now, and I've had the thought that blockchain enables the following. 1) A common "universal" transaction data source 2) A shared, readable format So the thought occurred to me that as soon as blockchain apps/currencies became popular, people would want analytics on them. There would thus be a startup opportunity for unprecedented analytics visibility into transactional data from a third party without needing to build bespoke integrations into high security/compliance systems. If a blockchain backed currency was widely used, a third party could easily estimate the real-time sales flow of every brick and mortar store location. You could have real-time auditing and quarterly tracking of both public and private corporations available from a third party. Asset transfers, smart contracts, and their real world equivalents could be instantly monitored - allowing the early detection of emergent supply chain bottlenecks. The problem with all of this is that in the 5 years since I had this idea, the only use cases for BTC and other cryptos has been price speculation. The market for such analytics products is effectively zero.

jcbrand 5y ago
You were right, blockchain analytics was a great startup opportunity and there are already a bunch of companies, like Glassnode, doing blockchain analytics. You also seem to be missing a lot of interesting stuff happening with cryptos if you think it's exclusively price speculation.
- lumost 5y ago
  GlassNode's tagline is "Time crypto market tops and bottoms.", I don't doubt that simply analyzing the exchanges is a valid market. But not one that I think is particularly large, particularly not when the exchanges can add their own analytics at any point.
ptx 5y ago
Making all their real-time sales data public, and thus available to their competitors, doesn't seem like something most companies would want. If the blockchain does enable this, wouldn't that just lead either to 1) companies not adopting blockchain, or 2) some solution for hiding the data and defeating third-party analytics?

TomSwirly 5y ago

And yet you still don't name any actual useful applications! The Ethereum world computer has 300,000 nodes, and yet has 1/5000 the computation power of a single Raspberry Pi 4. Except for actual cryptocurrencies, all the "web3" applications could use boring old 1980s vintage cryptography, be just as distributed, and run ten thousand times faster and cheaper. ---- So far the only way anyone has ever made any money from cryptocurrency is to sell it to someone for more fiat currency. In fact, in real terms, it has net lost money because of the huge amounts of electricity expended. So once people such as yourself purchase cryptocurrency, they know in their hearts that the only way they will make more is if further people buy into their Ponzi scheme. Therefore, your comment above.

doktorhladnjak 5y ago

The big question in my mind: is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped, that never really disappeared but became irrelevant as its real value became a commodity that found its way into the software of established companies.

samhw 5y ago
The worrying thing (for me) isn’t which one it is. The worrying thing is that so many people seem incapable of even making a creditable attempt at answering that question and analysing its fundamentals. This has opened my eyes to how many people only think through the prism of “well, this has got really popular lately, and the internet did that too, so this will be the next big thing even if I don’t know why!”. Survivorship bias is very very real.
- SZJX 5y ago
  Or I guess many people are not dumb at all, they just simply want in and profit as long as the hype is still going and they (hope that they) are not left as the last people holding the bag. They might find all sorts of excuses to try to convince the others, even to some extent themselves, when they’re just fundamentally doing the above.
CRConrad 5y ago
> is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped ...and then returned a few decades later to be oversold and overhyped some more, this time as "Deep Learning" or "AI". Seems the alternatives on offer are scam or scam. (Or scam, scam, scam, ham, eggs, and scam.)