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Crypto Facts - Decentralize Payments - Efficient, Low Cost, Fair, Clean - True or False? |
Nouriel Roubini (@Nouriel) - Professor at New York University (NYU)'s Stern School of Business, Chairman of Roubini Macro Associates and Co-Founder of Rosa & Roubini, Author of Crisis Economics. He was Senior Economist for International Affairs in the White House's Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.
Crypto eco-system includes thousands of chat rooms where cryptocrazies scheme daily to manipulate crypto prices: pump and dump; wash trades; spoofing; etc. All practices that are officially ILLEGAL/CRIMINAL. Mother of all scams. So why is SEC (Securities and Exchange Commission) asleep at the wheel and does nothing? -- 5 Feb 2018
Finally the SEC (Securities and Exchange Commission) is starting to warn investors about Initial Coin Scams... that web site was created by the SEC to show investors the obvious signs of such too-good-to-be-true-token-scams. Buy SEC tokens! Now! -- 16 May 2018
Cryptocurrencies changing the monetary world
When the U.S. Treasury prints a dollar bill, it only costs the government fractions of a penny to actually make a dollar bill or even a US$20 bill. But when the U.S. Treasury then transfers that US$1 bill to the Federal Reserve, who statutorily controls the money supply, it books it at US$1. This is known as seigniorage and the U.S. government gets almost a whole US$1 profit for a piece of paper - the US$1 bill.
Now that the US$1 is at the Federal Reserve, it charges a discount rate to banks who want to borrow that US$1 to get it out into the greater economy. The banks will then use that US$1 and loan it out to private individuals and companies charging interest at the prime rate or higher depending on the credit worthiness of the borrower. This can range from the current prime rate of 4.5% to the 20%+ charged if you are using a credit card.
At every step, the U.S. government, the central banks and the private banks all get a profit off of just getting a US$1 bill into the private economy. When that US$1 bill gets to us, the private individuals and companies, we end up bearing all the cost for the dissemination of that US$1. All other fiat currencies in other countries get disseminated similarly to this example for the U.S. dollar.
These costs continually increase as national governments continue printing money leading to inflation. Inflation is a defect of this system and is solely borne by us.
Cryptocurrencies and initial coin offerings are upending this monetary system and democratizing money for you and me. All the costs of fiat money and the associated inflation of prices will no longer underscore the price of everything we pay for. Instead, cryptocurrencies will stop inflation by being based only on a finite supply. There will be no costs to you and hidden profits to banks and governments.
(Source: Howey Coins Initial Coin Offering (ICO) Whitepaper, Investor Red Flags Scam Alert Parody by U.S. SEC (Securities and Exchange Commission))
Another whalepool recording scheming manipulation of crypto-currencies. A trader admitted personally to me: "it is not "illegal" to front run and pump and dump as these are not "securities" and thus not subject to securities laws". What a sleazy chutzpah! -- 5 May 2018
Facts Please writes:
BitMEX insiders caught in a web of lies - After months of rumours about misconduct behind the scenes, BitMEX founders have finally admitted (well, not quite) to giving unfair trading advantages to insiders...
As this paper shows wash trading, spoofing, front-running, price manipulating are standard operating practices in crypto-land and in crypto-exchanges. When will regulators wake up and start cracking down on these criminal activities? -- 21 Mai 2018
Stop the FUDGE! Crypto-zealots engage in daily FUDGE: vaporware, manipulation, obfuscation, bullshit
FUDGE: present or deal with (something) in a vague, noncommittal, or inadequate way, especially so as to conceal the truth or mislead. Synonyms: evade, avoid, dodge, skirt, duck -- 6 May 2018
Cryptozealots try to muzzle anyone critically dissecting the flaws of crypto-currencies by accusing him of spreading FUD (Fear, Uncertainty and Doubt) rather than rebut the critique. But cryptos engage instead in constant daily FUDGE. So anytime they call you FUD call them back FUDGE. -- 6 May 2018
Scalability with decentralization and security is crypto-FUDGE! -- 6 May 2018
Decentralization is crypto-FUDGE as exchanges, miners and developers are ALL becoming centralized oligopolies. Stop the crypto-FUDGE! -- 6 May 2018
Facts Please writes:
Bitcoin has the trifecta of centralization:
- Mining pools are an oligopoly.
- About 1000 whales own 40% of available bitcoin.
- Exchanges are centralized. Good luck to the bitcoin community in trying to decentralize all three. This is going to be painful!
Efficient, low cost, fair, clean crypto-trading is crypto-FUDGE. Rather manipulation, wash trading , spoofing, pump and dump schemes, suckering of the bagHODLers by the crypto-whales are the constant reality of daily crypto-trading. Stop the crypto-FUDGE! -- 6 May 2018
Stop the crypto-coiners bullshit! Anytime they scream FUD when you unveil their non-sense, pipe dreams, manipulation, obfuscation do call them for what they are: total FUDGE, crypto-FUDGE! Stop the crypto-FUDGE! #STOPCRYPTOFUDGE -- 6 May 2018
When they use the term FUD to shut you up as they have no real arguments against crypto-critiques, call their bluff and call them FUDGE, as they are only big baloney crypto-FUDGE. -- 10 May 2018
Facts Please writes:
"Stop the FUD" used to mean:
"Stop posting negative stuff about Bitcoin, I'm trying to make money here!"
Now it means
"Stop trying to warn people about this pump & dump, I'm trying to make money here!"
There are about 1 million holders of Bitcoin; 47 individuals hold about 30%, another 900 hold a further 20%, the next 10 000 about 25% and another million about 20%, with 5% being lost. So 0.1% represent about half the holdings of Bitcoin and 1% close to 80% -- 11 May 2018
The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China's and even the United States' wealth distribution look like that of a workers' paradise Bitcoin. Gini Coefficient: 0.88
How Bitcoin is like North Korea -- 11 May 2018
Facts Please writes:
The big lie of crypto is that things are decentralized.
It is indeed a big lie. Crypto is increasingly massively centralized and plutocratic: miners oligopoly, exchanges concentration, ownership of crypto-assets more unequal than North Korea, developers beings designers, cops, prosecutors and judges and pretending that code is law. -- 17 May 2018
Indeed Cryptoland is a whale-dominated plutocracy. Worse, like Trump, it is a plutocracy disguised in populist clothes (pretending to care about the poor and dispossed). So it is pluto-populism run by a bunch of pluto-populists enriching themselves by scamming clueless investors. -- 16 May 2018
"All of the top decentralized apps are still very much about speculation of value. Decentralized exchanges, casino games, pyramid schemes... are all around speculation". No useful decentralized app and the industry doesn't even clean up criminal pyramid schemes. Shame on Ethereum! -- 6 May 2018
50% of decentralized apps are decentralized exchanges (DEXs) that have no liquidity and transact useless tokens, 25% are silly games such as cryptokitties and 20% are ponzi pyramid schemes. So get the real facts on the junky "use cases" of Ethereum and stop living in your bubble. Can't bullshit me as I know my facts. -- 13 May 2018
Facts Please comments:
And exactly none of them are decentralized applications. [The contract blockchain service scripts are centralized, that is, owned and controlled by the single issuing / uploading company.]
Austrian Maximalist comments:
They have to start somewhere, building something that has never been build, and until bitcoin, didn't seam possible. They can't all be like gemini which just started trading zcash. Momentum is building, get on board or get out of the way.
And development is centralized too. Vitalik Buterin is "dictator for life" . And code ISN'T law as The Distributed Autonomous Organisation (DAO) showed: developers/dictators are police, prosecutors and judges at the same time. So they create their totally arbitrary law based on their whims -- 16 May 2018
The top bitcoin miner controls 25% of mining capacity. Top 3 miners control 55%. Top 6 control 74%. So bitcoin is NOT decentralized. It is HIGHLY centralized. -- 16 May 2018
Austrian Maximalist comments:
A few countries produce 99% of gold, does that mean that they can change gold? Or its supply? Or control who owns it?
Proof of work leads to miners' concentration whether it is ZCash or Bitcoin or Ethereum. The move of some cryptocurrencies to proof of stake will make that concentration risk even worse. One miner is already controlling 40% of Ethereum mining. And that oligopoly power will get worse with proof of stake. -- 15 May 2018
Facts Please comments:
Ethereum is pretty centralized in development and administration too. I think proof of stake will work best as acknowledging out loud that a stable, centrally managed platform is the best thing for its market, even if that's basically initial coin offering (ICO) scammers
Facts Please writes:
New research suggests that Bitcoin will account for 0.5 percent of the world's electricity demand by the end of this year. It doesn't sound like much, but that is roughly equivalent to the energy needs of Austria, a country of nearly nine million people.
What a total waste of energy that is awful and disastrous for the environment. And that is Bitcoin alone...add another 1600+ coins scams to the energy waste... -- 17 May 2018
The giant sucking hole of energy of crypto is getting wider by the day...an environmental disaster. Entire monster-big data centers repeating 100 000 times stupid games just to validate purchases of CryptoKitties. What a waste of energy. -- 17 May 2018
Facts Please writes:
"A single bitcoin transaction is so energy intensive that it could power the average U.S. household for a month." (If there weren't so many smart people saying bitcoin is brilliant, it would sound like the dumbest thing ever)
Austrian Maximalist (I) comments:
And the daily drive of any of your cars equals the energy consumption of one hundred Peruvian in a month :-).
Austrian Maximalist (II) comments:
I wonder what these reports will look like once lightning network is at full steam though.
Facts Please comments:
Maybe the "smart people" aren't that smart, just greedy.
Facts Please writes:
The CryptoCandle - Burn it down because the markets's on fire
The most useful "use case" for Bitcoin looks like the CryptoCandle. So it is worth burning more energy than the entire country of Iceland to lit a sandal-wood candle and earn a 0.00001% of one Bitcoin. With "use cases" like this who needs enemies...? -- 17 May 2018
Apart from being a dumb game CryptoKitties has low and falling transactions. Compared to any good video game it has transaction volume that is 0.001% than any game. So dumb and failing. And that is the best success story that cryptozealots can cite for a decentralized app. With success like this... -- 13 May 2018
Facts Please comments:
And who's only value to players was literally a tulip mania, just replacing rare and unique bulbs with rare and unique cats.
The cryptocurrency community is intent on speed running 500 years of economic disasters.
Call Initial Coin Offerings (ICOs) for their true name: Initial Coin Scams (ICSs). 81% of them are scams to begin with. Another 11% are dead or failed. So barely 8% trade on an exchange and most of those are non-compliant securities skirting all securities laws -- 11 May 2018
ICOs are indeed the mother of all scams. 81% of them are scams to begin with. Another 11% are failed or gone dead. Even most of the 8% that make it to an exchange often cause large market losses to investors as they are weak, flimsy, vaporware ventures -- 5 May 2018
Only 95% of ICO ideas are shit? I say 99%.... -- 11 Apr 2018
Indeed almost of all tokens are "useless shitcoins" produced to scam clueless investors... -- 13 May 2018
Austrian Maximalist comments:
That's true. All shitcoins are worthless. But why can't you see the value of bitcoin itself which represents the store of value similar to gold with the payment infrastructure built into it with no central authority. Never been broken, no single bitcoin falsified.
Read my Project Syndicate Op-Ed on why tokens are non-compliant scams and why only reason to issue tokens can be to form an illegal cartel to gouge consumers. Study your Economics 101 before spewing this silly nonsense on every business needing its own currency. -- 13 May 2018
Two currency conversion and THREE costly transaction costs. Given volatility no one truly using crypto for transaction purposes would hold it; they would convert it back into fiat to avoid volatility and market risk. -- 7 May 2018
Facts Please comments:
And the process of buying cryptocurrency must be expensive: it requires a cash step, a few day wait, or the exchange is extending credit because cryptocurrencies are irreversible.
That people don't get that this makes cryptocurrencies not fit for purpose as currencies is :-(.
So called crypto-"currencies" aren't a means of payment (way too costly with three transaction costs), aren't a unit of account and aren't a stable or safe or secure store of value. Thus, they are NOT currencies. They are the mother of all rip-offs! -- 7 May 2018
Facts Please comments:
Unless you need to conduct illegal transactions, cryptocurrency transactions must include two currency conversion steps which grossly increase the cost. Going to cryptocurrency is particularly costly.
Cryptocurrencies are simply not fit for purpose as currencies.
Austrian Maximalist (I) comments:
I agree today but not tomorrow :).
Austrian Maximalist (II) comments:
It makes the assumption people want to convert to historic currencies!
Austrian Maximalist writes:
Why not put a hardware wallet in a bank vault and hide the recovery sheet in a secure second spot. Also use an additional randomized word for a bulletproof seed. Peeps with more wealth use bunkers, works fine.
Brilliant idea: tell every grandmother/grandfather to follow that "simple" six-steps security esoteric system for your crypto-wallet/key: or otherwise build a nuclear bomb proof bunker to store their crypto-wealth... -- 16 May 2018
Austrian Maximalist comments:
"Esoteric system"? All it takes is two hours of your life to achieve monetary sovereignty. Well worth the effort.
Facts Please writes:
The wealthy are hoarding $10 billion of Bitcoin in underground vaults on five continents.
So the high tech crypto innovation is to store your crypto-assets in underground vaults as the whole crypto-system is NOT secure. So we are back to the Stone Age as far as storing wealth is concerned. "Brilliant" crypto-revolution... -- 21 May 2018
Austrian Maximalist (I) comments:
Note that's one solution among many. Still provides better protection against fiat inflation.
Austrian Maximalist (II) comments:
Custody of Bitcoin private keys is still risky and expensive. This is the one and only of your crypto criticism that holds up. But we are still at the early stages.
Facts Please writes:
Rough survey from blockchain and cryptocurrency conferences in New York City (NYC) this week: Most people agree that a vast majority of the speakers and products on offer are bubble-icious junk. Roughly an equal number of people say that their speaker or product is not junk. Which camp is right?
Austrian Maximalist writes:
If it's not bitcoin, it's probably junk.
It is like the delusional La La Land where everyone is above average. While they are junky dwarfs. -- 16 May 2018
Facts Please writes:
Fifteen takeaways from #Consensus2018
- Shilling continues to be top use-case
- Funds are so Q4 2017
- Rolling-your-own-exchange is the new black
- SAFTs (Simple Agreement for Future Tokens) are still a thing even though they (probably) won't fly in the US
- No one really talks about actual DAU (Daily Active Users) / MAU (Monthly Active Users) numbers
- All of the recent "gender balanced" stories should be deleted, still 90% dudes
- No one seems to give a fuck about disgorgement†: publicly soliciting (likely) unregistered securities was permitted and carried out by pamphleteers and hired singers
- Avoid talking about future cash flows to by-pass securities regulation and also to avoid having to have a valid business model
- "BankersAgainstBitcoin" was fake... self-loathing from bitcoiners who are angry that the other people they pledged to hate came in and took their jobs
- Pre-conviction-as-a-service via turnkey ICO service providers
- Panelists still can't agree on definition of what a blockchain is, now trying to redefine a "security" and a "commodity"
- Price is the "least interesting" but most discussed topic as always
- Formula for enterprise consultancies: part performance art, part innovation theater and heavy doses of expectation mismanagement
- Memorize and fill in: "we're changing the blank blank of blank, raising $25 million, ridiculously undervalued and have no more allocation"
- Translate whitepaper into Mandarin -> rent lambos -> organize branded afterparty -> hire rapper for said party -> spam "special" invitations on telegram channel(s) -> mad gains on Binance
†: Disgorgement is repayment of ill-gotten gains that is imposed on wrongdoers by the courts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to those affected by the action. Disgorgement is a remedial civil action, rather than a punitive civil action.
It is rather a dislike of charlatans, con artists, scammers, trade manipulators, carnival barkers, swindlers, crypto-zealots, pluto-populists, i.e. self-serving plutocrats pretending to be populists who care about world poverty and financial inclusion. -- 17 May 2018
I trust reputable centralized institutions with a track record - central banks, corporations, democratic governments - rather than trustless game-based con artists who pretend to be decentralized but are rather centralized plutocrats in populist clothes, i.e. pluto-populists -- 16 May 2018
Austrian Maximalist (I) comments:
You can't stop this revolution. Bitcoin will herald a major overhaul to money and to finance. Nobody can stop this.
I trust math over people. I trust a trustless system.
Austrian Maximalist (II) comments:
Wells Fargo, Goldman Sachs, Lehman, Enron, Tyco... all upstanding companies. A decentralized-trustless system couldn't possibly work. I also remember the early internet days with people saying shopping on the internet would never work. How has that worked out?
Austrian Maximalist writes:
A true cryptocurrency is immune from bank runs and credit cycles. Only the fiat price is impacted.
There were huge asset and credit bubbles well before fiat currencies and central banks. And run against such bubbles. So same can occur in a hypothetical crypto world where there is no fiat currency. -- 13 May 2018
Austrian Maximalist comments:
Cryptocurrencies reduce the intensity of credit-fueled bubbles because it becomes impossible to loan cryptocurrencies you don't possess other than in IOU (I Owe You) form, which is how credit-fuelled bubbles are precipitated: by the bank creating deposits in your account to spend for an IOU (I Owe You).
Actually in a crypto world economic/financial disasters will be more virulent/frequent than today as, before fiat money and central banks, bubbles were bigger and more disastrous. Central banks were created to avoid runs via lender of last resort support. Crypto can't do that. -- 13 May 2018
Austrian Maximalist (I) comments:
When was the greatest depression the world confronted: before central banks and fiat currency, or after?
Austrian Maximalist (II) comments:
False. And embarrassing for you to say. It's like you don't know the basics of [Austrian school of] economic history.
Crypto-zealots know NOTHING about economics, money, central banks, banks, finance, economic history, financial crises, asset bubbles. But like all religious fanatics they claim to know it all better than scholars who studied this stuff for decades. Crypto-voodoo trumps Science -- 16 May 2018
Austrian Maximalist (I) comments:
Bitcoin was invented to prove these scholars wrong.
You will buy my bitcoin at $400 000.
Austrian Maximalist (II) comments:
1 BTC today equal 1 BTC a year from now. Correct me if I'm wrong, but 1 USD today won't equal 1 USD a year from now.
Bob Shiller on Crypto: No one can explain how cryptocurrencies work. That mystery creates an aura of exclusivity and fills devotees with revolutionary zeal. None of this is new and as with past monetary innovations a compelling story may not be enough. -- 21 May 2018
Facts Please:
The Old Allure of New Money - The cryptocurrency revolution, which started with bitcoin in 2009, claims to be inventing new kinds of money. There are now nearly 2 000 cryptocurrencies, and millions of people worldwide are excited by them. What accounts for this enthusiasm, which so far remains undampened by warnings that the revolution is a sham?
Austrian Maximalist comments:
The ability to create decentralized consensus on the most secure networks in human history isn't new?
Austrian Maximalist writes:
[...] Cryptoeconomics empowers users of money to fork money supply in an equitable manner [...] Cryptocurrency creates (via #cryptoeconomics) private money which the users can understand, with forensic transparency as to its origin, with open invitation to participate in governance or engineering, to help design any aspect of a software money cryptoeconomy [...]
Most of your arguments ASSUME that a crypto financial system will be safer, more reliable, efficient, scalable, less costly, freer than current financial systems that have evolved over thousands of years. Those are ALL theoretical assumptions with NO empirical basis. Talk is cheap. -- 16 May 2018
I accept the correction. So the Flintstones had a more developed monetary system with a real money than the stone age barter system recommended by the crypto-supporters of a world of tokenization. So the Flintstones are financially more advanced and sophisticated than the cryptos! -- 14 May 2018
Austrian Maximalist comments:
The market is discovering which tokens are useful and which ones are not. Probably 99% tokens are useless, but is not yours or anyone's particular role to decide on that. It is the markets, the users, who are going to decide that and no one has the right to interfere on that.
Indeed the current financial system is super-sophisticated and safe for bank customers while crypto-systems are like going back to Stone Age of Barter (tokenization of all goods) and the security of Middle Age coin wallets. Indeed the retrograde Crypto-Barbarians are at the gate -- 16 May 2018
ATMs have strict limits to how much cash you can take out per day: a few hundreds dollars. Instead someone hacks your private key and ALL of your crypto-wealth is gone for good. And unlike bank accounts there is no trusted bank making you whole if someone hacked your account -- 16 May 2018
Austrian Maximalist comments:
In the case of fiat money, we will lose no matter what... quantitative easing (eventually) causes inflation and money is "stolen" from us without we even realizing. Bitcoin, and some cryptos, have capped the max limit algorithmically. Decentralize. Trustless.
Banks don't need a bailout to make me whole if my account is hacked. They have their internal funds for all fraud cases. And my deposit insurance, in case of bank insolvency, is paid for by fees paid by banks. And bubbles/financial crises were more severe before fiat money and central banks. -- 16 May 2018
Austrian Maximalist comments:
Oh yeah printing money out of thin air just to loan it out to earn interest on it. Let's give it a fancy name like quantitative easing. That’ll make everyone whole.
Regulators will soon crack down on use of cryptocurrencies in illegal and criminal activities. AML (Anti Money Laundering)/KYC (Know Your Customer) and securities laws will be enforced. As US Treasury Secretary Mnuchin recently said: We can't allow cryptocurrencies to become the next Swiss bank account. -- 13 May 2018
Austrian Maximalist (I) comments:
They can't stop someone from storing their own keys. Regulations can only control where crypto connects to fiat. If you have your own keys, you are your own "swiss bank".
Austrian Maximalist (II) comments:
Tell us, how they would stop it? The same way they stopped Bittorrent before? And it would be even harder to stop Bitcoin.
David Gerard (@DavidGerard) - Author of "Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts" and a Unix System Admin by day. He has blogged about music at Rocknerd.co.uk since 2001 and is a volunteer spokesman for Wikipedia, and is on the board of the RationalMedia Foundation, host of skeptical wiki RationalWiki.org.
"Not surprisingly, the most enthusiastic bitcoin and blockchain proponents are the ones who understand neither databases nor economics." -- 11 May 2018
The name of the routing problem the Lightning Network has to solve: the Canadian Traveller Problem, which is PSPACE-complete. -- 13 May 2018
Facts Please comments:
The biggest problem is that the devs think it will be ok in the real world to fail payments that can't find a route.
Or rather, they think that it will be ok in the early days and the problem will solve itself once there are enough people using the network. Like people will flock to use a network that randomly fails payments.