It was all fun and games while the crypto bubble was inflating. You basically could do no wrong, any mismanagement would be hidden away by the exponential appreciation of the underlying assets; just hodl until the next bull run and everything would be fine again.
When things stabilize and start going down, it's like the morning after the frat-party, bad things come to light. Crypto is fundamentally a negative sum game, it takes enormous resources to run and has generated a large number of self-minted millionaires that have cashed out and lamboed their earnings. There is very little actual marketable utility that crypto provides that could cover these large outlays, perhaps with the exception of facilitating money laundry and illegal transactions. I guess that's a business, but (hopefully) not a multi-trillion business suggested by the bubble's peak.
So it's inevitable the game must end with someone holding the bags.
The price keeps falling. It's like the bubble is already over. The biggest problem with crypto is it does not live of to its promises and does not solve any real world problems. It's a cool application of cryptography, but not something that will compete with the financial system or subvert tyrannical governments. It's sorta like a very expensive hobby that has enthralled the world. Whatever problem it does solve, does this mean it's worth $1 trillion still? Likely not.
Crypto was a play thing for people with too much money that didn't know what to do with it. The money dries up, the only use case for crypto (gambling) disappears.
Crypto is a dumpster fire scam. This is a bank run. This entire death of fiat trope (which is a convenient truth for the crypto world) was a way to generate exit liquidity for VC. Just look at all the equities and altcoins. Bitcoin and eth will be the last to fall, but fall they will.
Well, there was that entire huge NFT crypto scam bubble.
To a first and probably second approximation, crypto is only good for getting scammed and scamming others. There's a lot of overly credulous people in the field, which just attracts crime like a moth to a flame.
There's another issue that I don't see mentioned much here. I was contemplating writing a blog post about it.
Over the past year I've seen a serious decline in early stage angel investment. I've talked to a lot of people who have said similar things. What I've heard and in some cases observed is that it's all going to crypto. All the people who would be making speculative angel investments are now buying into cryptocurrency coins and ICOs in the hopes of riding the bubble.
This is really awful for two reasons:
(1) Few if any of these ICO systems have any utility at all, while many early stage startups end up creating things of actual value. It represents a shift in investment from value creation to pure speculation.
(2) When -- not if, but when -- this bubble pops, a lot of that wealth that could have been used to fund angel investment will be vaporized. Yes most startups fail but at least angel funding tends to support attempts at value creation. In this case we're losing tons of money to support nothing but the burning of coal to heat the atmosphere.
Everything else this article says is spot on-- any value that could be present in cryptocurrency is being harmed by its relentless appreciation. Hyper-deflation is not a desirable characteristic in a currency.
I lived through the dot.com bubble and that one was much less vapid. Even though many startups were over-funded and speculation ran the stock market into crazy land, a lot of actual value did get created. In this case I see almost none.
This whole thing feel like a reductio ad absurdium of financial capitalism, which ironically is the system Bitcoin was created to replace.
I wager once people have to start going back to work and all the free government money dries up, there will be a run on crypto to realize their gains en-masse, and this will trigger a massive wipe out for many latecomers.
Frankly, cryptocurrency being invented and created was a huge mistake for society at large. I hope the comeuppance isn't super destructive outside of cryptocurrency circles.
When profits are being made, who cares what happens to future generations.
Cryptocurrency is, for the most part, a contagion. We opened Pandora's box and the genie is out of the bottle. Short of some kind of cataclysmic black swan event, I'm not sure this insanity will end anytime soon. :(
Really unfortunate that a lot of crypto was just these rich dudes pumping and dumping, and all getting together to perform rug pulls on a bunch of 'retail investors'.
The problem with crypto is the same problem as always. Bad humans come along and destroy what could have been a good thing in an attempt to fill their bottomless empty pit of greed at the expense of everyone and everything else. Happens every time any human(s) try to create something that's meant to be beneficial for everyone - along come a few scammy ass-hats who decide they're gonna ruin it for everyone (by weaponizing it, turning it into a scam, or what-have-you), and inevitably a whole bunch more scammy ass-hats always gotta jump on that same bandwagon, increasing the momentum of the downfall. Yay, humans!
So now all the same old finance jerks are making money by manipulating a huge unregulated market to scam everyone (ponzi schemes, pump and dumps, outright theft, etc)… with the added bonus of wasting huge amounts of energy and making computer hardware scarce.
I would actually be surprised if the whole crypto ecosystem isn’t going to implode soon.
The thing is that it doesn’t create any value, it’s all a game of musical chairs.
I don’t care VCs holding the bags, but I do care about the retail “investors” that were naive. (I don’t care about the hfsp bros).
In a few years we will look back at the crypto space and we wonder why nobody intervened like nobody intervened with Madoff, despite multiple people warning about him.
The damage the crypto space has caused is just beyond redemption. To both people and the environment.
It’s time that this stuff is regulated to death. It will also kill the crypto ransom ware pipeline because of a lack of on/off ramps.
It was everything cryptocurrency - flim-flam, inflated values, the whole thing being based on hot air, technological pipe-dreams and unrealistic ideals.
Like it or not, this is the cryptocurrency ecosystem, and it has everything to do with cryptocurrency being an unregulated wild west of dodgy finance, scams and fraud. Cryptocurrency has enabled this stuff.
You might not like that this is where it's gone, but it is a direct consequence of the ideals of unregulated 'money'. The scammers and the chancers move in, because why wouldn't they? Create a system that is resistant to regulation and open to so much exploitation and they will exploit.
The problem with hoping for stable valuations is that very, very few people are interested in that, because they can't get rich off it. I too hope that all of this crap dies and cryptocurrency goes back to being a handful of cypherpunks swapping tokens around, because at that point the great ripoff and fraud on the general public will have come to an end.
Let's regulate all this the fuck out of existence. Sounds like everyone will be happy.
Modern crypto has to be the most ostentatious display of our generation’s detachment from reality and laze. I pray the big players pumping these like penny stocks on a much grander scale are eventually held accountable. While digital currency and decentralized finances are ideas societies should explore, modern crypto has served no other purpose than to funnel drug money and fund North Korea. I hope a crash becomes a reminder to at least some people that actual “value” involves natural resources being extracted and prepared with a lot of time and ingenuity required by humans, not thin air.
Crypto itself, or at least the bubble, was an unintended byproduct of low interest rates and lax securities enforcement. The low interest environment is intended to spurn the monied rich into investing in productive businesses, but "innovators" instead invented crypto assets and lauded them as the second coming of Mansa Musa, siphoning nearly a trillion dollars out of the productive economy. Clever crypto "innovators" recognized the monied rich's need to feed their insatiable craving for growth without doing any real work. Now that the government itself is providing that outlet, there's no reason for crypto to continue to exist.
VCs are pouring money into this space. Do they care about adoption? Nope. They know that this largely unregulated, liquidity challenged space that’s too technically complex for the average rube is the perfect ground to make wild, wild returns.
Unless something changes drastically on the regulation front, the story will repeat itself. VCs and early adopters will buy tokens in the “ice age”.
Come next cycle, the media will start hyping up crypto again, bringing the retail rubes pouring in. And then the VCs and early adopters will walk away with their 50x returns, leaving retail with the bags
When things stabilize and start going down, it's like the morning after the frat-party, bad things come to light. Crypto is fundamentally a negative sum game, it takes enormous resources to run and has generated a large number of self-minted millionaires that have cashed out and lamboed their earnings. There is very little actual marketable utility that crypto provides that could cover these large outlays, perhaps with the exception of facilitating money laundry and illegal transactions. I guess that's a business, but (hopefully) not a multi-trillion business suggested by the bubble's peak.
So it's inevitable the game must end with someone holding the bags.
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