[MrMatt]

Many of the "innovators" and "entrepreneurs" involved in crypto and DeFi are con men and scam artists. During a tech bubble, people like this can get away with a lot because their techno-babble confuses others and people think... maybe there really is something to this. I know this because I've worked alongside people. Our lawyers used to go over each one of the entrepreneurs we encountered, rejecting each one, and at times we thought of phoning in tips to the US DoJ.

Like the tech bubble there are a lot of scammers out there, and people fall for it.
But there is some legitimately good technology being developed.

I'm not investing in crypto just like I didn't invest in a lot of the tech bubble, for a very simple reason. I don't see the valuation case.
I have no idea why a bitcoin is worth ANYTHING.

Are some of the technologies cool, or (potentially) useful, of course. But as an investment, I don't see it yet.

But remember a lot of people didn't see the value of new tech innovations, I still know people who think computers aren't useful.

 

[james4beach]

Like the tech bubble there are a lot of scammers out there, and people fall for it.
But there is some legitimately good technology being developed.

Yes there are tons of scammers that prey on every tech bubble. Whether it's crypto or anything else, lots of fraud, lots of con men, and lots of people ripped off.

 

[MrMatt]

Yes there are tons of scammers that prey on every tech bubble. Whether it's crypto or anything else, lots of fraud, lots of con men, and lots of people ripped off.

Agreed

The mere presence of scammers isn't enough to write off the entire technology itself as a scam.
Even if the technology itself isn't a scam, doesn't mean there are investment opportunities.

I think there is something there, but I don't see an investment thesis yet.

I remember learning how problematic x86 was, and how it was very likely a new RISC chip would take over.
I expected it to be DEC ALPHA. That would have been a bad investment.

For the same reason I think blockchain/crypto has a lot to offer, but I'm not sure if there is a reasonable investment yet.

I'm pretty proud I held out so long on Google, Amazon & Apple. Today they seem like no brainers, but at least I didn't buy Yahoo stock.

 

[m3s]

It's a scam guys. I've told you since my first post on this topic... the whole crypto space is a scam (of varying forms).

Was that before or after you bought the 2017 bull market peak?

Anyone who buys the peak would be convinced it's a scam rather than admit they simply fomo bought the peak on hype

There will be many years of criminal prosecution as the DoJ has recently stepped up investigations and enforcement of crypto operators. And when you look at something like a "stable" coin, what you don't see is the incredible leverage behind the scenes.

Even people in crypto say there are scams and that things like USDT should be regulated.

Many of the "innovators" and "entrepreneurs" involved in crypto and DeFi are con men and scam artists. During a tech bubble, people like this can get away with a lot because their techno-babble confuses others and people think... maybe there really is something to this. I know this because I've interacted with these "entrepreneurs" in my professional work. Our lawyers used to go over each one of the entrepreneurs we encountered, rejecting each one.

Ah yes like how IBM professionals "rejected" Steve Jobs and Bill Gates "entrepreneurs" working in their garage like chumps. It's a tale as old as time itself.

As if every single "entrepreneur" goes to james4beach lawyers to be accepted for some reason as the holy grail of all the is righteous

Face it if you bought BTC anytime other than the market cycle peak you would have a very different expert opinion

 

[james4beach]

There is talk of potential bankruptcy of Coinbase. Remember this is an unregulated space that lacks investor protections.

In a recent filing, Coinbase spelled out that client assets may not be protected in case of bankruptcy. Customers could be viewed as general unsecured creditors.

This means that if Coinbase goes bankrupt, clients may lose their crypto holdings as creditors might be able to seize client assets.

If you have significant amounts at Coinbase you might want to think about this situation as you could lose everything.

 

[m3s]

Don't store crypto in any central exchange

Not Coinbase, not Binance, not Quadriga, not Robinhood, not wealthsimple

There are many examples and reasons why it's a bad idea

 

[TomB16]

Crypto is a scam in that it's just a virtual commodity some guy created and called it currency. It became currency some years later when it became possible to purchase goods and services with it.

It seems to be working. As long as enough people believe in crypto, it will have value.

On the other hand, crypto is not an investment. Cash isn't, either. Trading crypto is like trading foreign currency. It's gambling.

It seems to me, crypto will make a lot of sense if/when governments start to fail. If I was in Russia right now, I would much prefer Bitcoin over Rubles.

I suspect crypto will become the go-to for SHTF market insurance, going forward; even over gold. On the other hand, there are so many scams and low business ethics in the crypto world, it will die without a major reason detre.

 

[m3s]

On the other hand, there are so many scams and low business ethics in the crypto world, it will die without a major reason detre.

People who don't buy or understand stocks would say the same thing

Stocks are very different to someone who studies them a lot than to someone who just reads some headlines about them but never actually bought any

It just shows that you don't know anything about it which is fine

 

[MrMatt]

Crypto is a scam in that it's just a virtual commodity some guy created and called it currency. It became currency some years later when it became possible to purchase goods and services with it.

It seems to be working. As long as enough people believe in crypto, it will have value.

On the other hand, crypto is not an investment. Cash isn't, either. Trading crypto is like trading foreign currency. It's gambling.

It seems to me, crypto will make a lot of sense if/when governments start to fail. If I was in Russia right now, I would much prefer Bitcoin over Rubles.

I suspect crypto will become the go-to for SHTF market insurance, going forward; even over gold. On the other hand, there are so many scams and low business ethics in the crypto world, it will die without a major reason detre.

Yeah, I don't buy into the crypto currency thing. I might be right or I might be wrong.

But what about dapps?
I think there is potentially real value in the technology.

FYI seeing value in the technology isn't the same as seeing an investment opportunity today.

 

[m3s]

But what about dapps?
I think there is potentially real value in the technology.

FYI seeing value in the technology isn't the same as seeing an investment opportunity today.

He said currency so he clearly doesn't even know what a dApp is yet.

I have several very large liquidity pairs in a DEX yielding well above 100%. There is risk of impermanent loss but I see it as an auto rebalancer that pays me. The taxes will be high but it will raise my cost base and get it over with. When/if crypto is too high I will switch to decentralized lending to lower the tax burden from constant churning high yields. But we should also have better vaults with yield optimizers by then using concentrated liquidity. Yields of course will come down as more people figure it out

Legacy traders would love this but don't know what they don't know. The finance people know it exists they just don't want you to know they know before they figure it out

 

[nathan79]

Yeah, I don't buy into the crypto currency thing. I might be right or I might be wrong.

But what about dapps?
I think there is potentially real value in the technology.

FYI seeing value in the technology isn't the same as seeing an investment opportunity today.

It sounds like you want all of the benefits of decentralization without the costs.

The value of the currency is what incentivizes mining or staking, which is what secures the network. If you eliminate the currency, you need to replace it with another incentive structure. Otherwise you're relying on third parties to finance the costs of running a validator while trusting them not to be bad actors. That's basically how the legacy financial system operates, which is obviously counter to the whole point of crypto.

Having a native currency is simply the most elegant solution for maintaining decentralization. It also facilitates transaction fees which is a proven way to reduce spam. It's much the same thing with dapps which require gas fees to execute.

 

[MrMatt]

It sounds like you want all of the benefits of decentralization without the costs.

No, I've been clear on this.
I see something useful, but I don't see the valuation case.

I understand that having an NFT system possible has worth, I don't see why ETH is worth $1 or $1000 to make it happen.

The value of the currency is what incentivizes mining or staking, which is what secures the network. If you eliminate the currency, you need to replace it with another incentive structure. Otherwise you're relying on third parties to finance the costs of running a validator while trusting them not to be bad actors. That's basically how the legacy financial system operates, which is obviously counter to the whole point of crypto.

Having a native currency is simply the most elegant solution for maintaining decentralization. It also facilitates transaction fees which is a proven way to reduce spam. It's much the same thing with dapps which require gas fees to execute.

My current position is IMO quite well thought out. I think there is something there, some of it is useful. I personally lack the metric/understanding to determine what any particular cryptocurrency should be worth.
Most of the valuation arguments are simply technical analysis, which is a pricing system I don't agree with.
I'm a value investor and being unable to determine the value of a single transaction it doesn't add up.

I've said for a while that the value of some is zero, others is non-zero, but I can't figure out how to price it. Which makes it a poor investment.

As far as I'd go is investing in the supporting industries (ie to get rich during a gold rush, sell shovels). But their valuations don't add up either.
So I'm waiting, I'm okay with that, I bought Google late, Amazon late, Apple late, and they all worked out.
I also avoided buying a HUGE number of companies that didn't make it. So I'm going to wait until crypto space makes sense to me before I buy. I'll sacrifice the early returns for not losing it all.

 

[Thal81]

Crypto went down hard overnight. I think we're at the point now where people who bought during the 2021 run up will want to cut their losses, and people who bought before 2021 will want to sell to take some profit before this all goes to hell. IMHO there's no way but down from this point on. Strap your seatbelts, it's going to be spectacular!

 

[gardner]

Celsius App
I've been testing and using financial apps and I think CMFers could benefit from this one the most
[...]
Cons
No self custody - tokens are lent out

I loan to some protocols and the risk is in the code not default. The code either executes properly or it doesn't. The yield does reflect the risk and I manage the risk as I would anywhere else

Don't store crypto in any central exchange
Not Coinbase, not Binance, not Quadriga, not Robinhood, not wealthsimple
There are many examples and reasons why it's a bad idea

I guess you gave up on Celcius, then.

I am a bit confused how exactly one loans crypto for interest/commission yield without either delegating control to a "protocol" or some exchange-like entity or else at least taking the risk that a smart contract somewhere will burn your NFT or units regardless where they sit. In the past you've recommended Anchor Protocol and AFAICS this requires the "coin" to be on-deposit where it is fundamentally controlled by someone else.

 

[sags]

Breaking news.........the Terra blockchain has halted all transactions.

 

[m3s]

I guess you gave up on Celcius, then.

I am a bit confused how exactly one loans crypto for interest/commission yield without either delegating control to a "protocol" or some exchange-like entity or else at least taking the risk that a smart contract somewhere will burn your NFT or units regardless where they sit. In the past you've recommended Anchor Protocol and AFAICS this requires the "coin" to be on-deposit where it is fundamentally controlled by someone else.

There's both centralized services, such as Celsius and decentralized protocols that use smart contracts on a blockchain. They both have pros and cons

The centralized services are being investigated by the US and now you have to be an accredited investor to use them in the US. This is fine and I think regulation is required for these centralized services. Ideally they should pool some of that yield into some kind of insurance and that will come with time

For the decentralized protocols you need to deposit into a smart contract and you receive a token that can be sold, transferred and even deposited into an auto-compounding vault for another token. The yields are based on market supply demand and also typically include a governance token for the protocol

We are talking about lending so yes it is fundamentally controlled by someone else. The loans are over collateralized and liquidated automatically. The older a protocol is and the more value it contains the better. Untested closed source contracts are extremely risky

Anchor protocol was the lending protocol for UST which de-pegged this week. It will be important to read how that all plays out. Luckily I didn't have any funds in UST and I don't think anyone here did

 

[m3s]

Breaking news.........the Terra blockchain has halted all transactions.

Yea I wouldn't use any centralized chains that can be halted

Solana has halted several time. Now Terra. I would put Avalanche in that category. "SoLunAvax" the VC centralized chains

Bitcoin, Ethereum, Cardano etc are too decentralized to be halted

 

[m3s]

BTC dominance is climbing. It was 60% before the 2021 bull

 

[TomB16]

So, the innovation of money is no longer powered?

FWIW, I like the idea of alternate currencies.

The difference between trading crypto and chickens is that chickens have an inherent value. If someone wants to give you $1 per kg for your chickens, you can just live on drumsticks for a year. Crypto, on the other hand, is worth only what someone else will give you since a long string of pseudo-random numbers doesn't do anything for the world other than represent the idea of a unique virtual commodity.

Many people argue gold as a safe haven due to it's inherent value but the value of gold is far more arbitrary than many people seem to realize. Gold has real value connected to the cost of finding, extracting, and processing it into a usable metal and gold is needed in several industries but the gold price is mostly speculative with the real cost to produce being insignificant.

 

[gardner]

Breaking news.........the Terra blockchain has halted all transactions.

Tether's USDT became unteathered earlier today, to the tune of 5%, the largest variation from 1:1 so far. I expect there is a lot of angst at Tether.