[Analemma_]

Cryptocurrencies are a brilliant scam. They are to the libertarian-ish programmer crowd what MLM pyramid schemes are to the working class: perfectly crafted to exploit the particular tendencies of its target. I mean, just think about the properties of the typical software engineer who gets into these things:

1. They tend to have more disposable income, i.e., they're fat marks

2. The Dunning-Kruger effect means they think they're too smart to fall for a scam

3. Their libertarian attitude means they probably won't make a fuss once they realize they've been scammed, and just passively accept it instead of involving law enforcement

4. Because every one uses different code, any anecdotes about past scams can always be waved off with "This one is different"

It's all so perfectly tuned to draw in an endless supply of suckers that I'm almost kicking myself for not thinking of it first.

[uncletammy]

I can't wait until I grow up and get the power to downvote comments like this which contribute nothing of value to the discussion. Your horse could not be more dead.

$34 billion dollars and many of the biggest names in finance and technology seem to think there's a little more to the story.

[corysama]

IMHO, Bitcoin is a more brilliant scam than GP gives it credit for. It was a scam that was designed to end up not a scam. IIRC, Bitcoin being a pyramid scheme was explicitly stated in the original design doc from Satoshi. The problem was that even though bitcoin could work well once it was widely adopted, it had a chicken-egg problem in the beginning. It had no value until it was widely adopted, but no rational person would adopt it until it had value.

The solution was to prime the pump with a pyramid scheme. By structuring the system to highly reward risk-taking early adopters, Bitcoin motivated millions of dollars of high-risk early investment which is worth billions today.

But, return on investment was only a nice side effect on the way to the end game. The end game was to get Bitcoin up and running as an exchange medium --only coincidentally as an investment vehicle. As an exchange medium, Bitcoin is not yet 100% solid. But, in general the plan has already worked. Someone in Haiti can exchange value with someone in the Ukraine and for once there is little that the games of the politicians or the banks can do to stand in their way. That was the real goal. A bunch of nerds gambling was just a necessary bit of fun on the way to setting that up.

[mmcwilliams]

You understand that the figure you quote, "$34 billion dollars" might seem like it carries a lot of weight, but it's also about $2B short of the amount invested in the largest Ponzi scheme uncovered in US history[0]. A lot of people seemed to think that investors in this scheme were too savvy to be duped, as well.

This doesn't mean that crypto currencies are inherently scams, but it is a terrible way of defending them.

[0] https://en.wikipedia.org/wiki/Bernard_Madoff#Size_of_loss_to...

[shrimp_emoji]

https://en.wikipedia.org/wiki/Satoshi_Nakamoto#Development_o...

>Timestamps for subsequent blocks indicate that Nakamoto did not try to mine all the early blocks solely for themselves in an effort to benefit from a Ponzi scheme.

But they could have.

>The public bitcoin transaction log shows that Nakamoto's known addresses contain roughly one million bitcoins. As of 7 February 2017, this is the equivalent of over US$1 billion.

Starting your own cryptocurrency doesn't seem like a bad way to make a buck (particularly provided it becomes as successful as bitcoin), all thanks (eventually) to "the biggest names in finance and technology".

Granted, there's a strong difference between "potential scam" and "scam" (hell, it's the difference between Torcoin and every legitimate, well-regulated non-crypto currency).

[Bartweiss]

> But they could have.

This seems sort of unfair. I mean, one of the things that has helped stabilize Bitcoin is that it wasn't controlled by a single entity, and many of the early blocks haven't gone anywhere. Several other cryptos have done poorly because some early consortium got too much control and everyone else backed off.

One advantage of the public transaction log is that it helps people judge whether they're being scammed this way. Nakamoto made a killing, certainly, but I also suspect that a sudden sell-off of the origin block would tank prices.

[cloakandswagger]

The original commenter belongs to a very persistent faction of people who openly mock and malign cryptocurrencies despite being completely unaffected by them

My only theory to date is these are sour grapes type folks who are upset that they've missed the bus in terms of crypto's fantastic investment value.

The only comfort these people get is jeering from the sidelines in hopes that an eventual collapse will prove them "right"

[csydas]

There may be a faction that thrives on the pleasure in misery of others and specifically those who follow cryptocurrencies, but it's not hard to have major doubts about Bitcoin given it's tumultuous history up to the given point. The coin itself has had a rollercoaster of a valuation, pock-marked by fairly well trusted bit coin operations that just grabbed the money and ran with it.

The currency itself is beholden to a small group of dedicated miners and their whims, the fork has been looming over bitcoin for some time now, which is the only thing that seems to give any value to the other cryptocurrencies as if it forks it means a potential foothold for other services to get in.

Cryptocurrencies are a real mess, and for a awhile there, the fad was to attach a new cryptocurrency to whatever service you wanted to try and be "the next big thing", and it's always been ridiculous.

The idea of a decentralized currency isn't bad in and of itself, but there is a lot to laugh at in the current history of cryptocurrencies.

[Bartweiss]

> The idea of a decentralized currency isn't bad in and of itself, but there is a lot to laugh at in the current history of cryptocurrencies.

Ethereum seems like a good reminder of this. It has an air of being less seedy and more 'professional' than Bitcoin, with actually-pretty-cool "smart contract" tech. But... the first big project was the DAO, and we all know how that turned out. Robbery and a hard fork. And now the Gnosis auction just hit, and that went terribly and exactly counter to predictions about a "rational market".

Despite any philosophical argument, the actual history of cryptocurrencies is pretty ludicrous so far.

[cloakandswagger]

Shitting on emergent tech is completely antithetical to the ethos of the "hacker mindset".

A real hacker would recognize these are the early days of a new technology with incredible potential. Its tech is disruptive enough to already grow a marketcap measured in billions, I don't know what is gained from harping on all the early failures.

[csydas]

Because I don' t take it as harping on the tech - it's not the tech that's the problem, it's the hype and culture around it. There's tons of hype, many outright scams and ponzi schemes within bitcoin to point to, it's fraught with outright criminal activity just within trading, not to mention that it's the payment of choice for Ransomware.

The distributed ledger isn't what people are making fun of - it's the frantic rush and chaos around using it that is ridiculed, and in many cases, rightfully so.

Edited additional thought: Come to think of it, I don't think a lot of the new found SV culture is really as hackerish as it's made out to be - it's the same business stuff that cyberpunks in stories would snub their noses at and work to undermine, except it's masquerading as hacker culture - there's a very cool protocol underneath bit coin that probably will fundamentally change how we do "something" in the future. But what is everyone climbing over themselves about with Bitcoin? Get-rich-quick after get-rich-quick schemes and ridiculous business enterprises.

Silk road I got - buy whatever with crypto-currency, hard to trace, from hard to find sites on TOR, and a package arrives or a service is done. Cool! But that's not what the clamoring is about now, and it hasn't been for ages.

That's not a hackerish interest, that's business people playing with yet another asset to trade.

[Bartweiss]

> I don't know what is gained from harping on all the early failures.

Avoiding them in the future, perhaps? I wouldn't mock a mature technology for historical teething issues, that's pointless. But cryptocurrencies keep replaying the same errors and conflicts without seeming to learn a thing. I like the idea of cryptocurrency, but it's not going to succeed unless we learn from the (myriad, severe) mistakes of the past.

[microtherion]

> crypto's fantastic investment value

True, many crypto currencies are rapidly increasing in value (because of built in scarcity effects, and investor interest). But that very speculative attractiveness makes them quite unsuited as currency (because their value is unstable and generally deflationary). So you're left with a "commodity" that is unsuitable for anything but speculation. Those kinds of stories usually don't tend to end well.

[cloakandswagger]

You're right, it's a vehicle for speculation now. And when the tech matures and the price steadies, it will be, at the very least, a new store of value for diversifying wealth with, akin to bullion.

That is valuable to me and a lot of other people. Until that time comes, I'm happy to embrace the risk of early adoption and the many thousands of dollars it's made for me already.

[enraged_camel]

>>$34 billion dollars and many of the biggest names in finance and technology seem to think there's a little more to the story.

I'm sorry, but so fucking what? MLM was a $178 billion industry in 2013 and it has been growing. This doesn't make it Not A Scam.

[pikzen]

If that can make you happy, I used that power to downvote you, as your does not add anything of value either. I also upvoted him, for being right :>

"X billion dollars can't be wrong" is also a dead horse. Appeal to authority and wealth is a terrible argument.

[esMazer]

your comment doesn't add anything of value

[throwaway6556]

Is anything of what he said untrue?

Yeah, I didn't think so either.

[hectorr]

A lot of them are, for the reasons you point out. But they really are not that different than other financial instruments in kind, just in maturity.

What does it mean to own a share of Snapchat, Facebook, or Google? You can't influence these companies, they don't pay dividends, so the value of a share is just whatever the mob wants to pay for it. Goes up on good news, down on bad. Bonds are even worse, that's just someone saying sure, I'll pay you back later. These things have law developed around them now, but didn't when they first emerged.

It all depends on your risk profile. If you have high risk tolerance, and think that you can mitigate some risk with being ahead of the market in technical and/or business skills, there is no reason not to get involved in these.

[pc86]

I take issue with your third point. Libertarianism does not in any way mean you won't avail yourself of law enforcement if you've been the victim of a crime.

I'm not a cryptocurrency guy, but what exactly about them would someone involve law enforcement for?

[Analemma_]

geofft's answer is funnier, but I think the more likely answer is this:

Realistically speaking, cryptocurrency-related crime is never going to stop being easy and profitable unless there is a massive increase in both a) government control over the internet and b) coordinated international law enforcement, since these crimes are usually international. Since libertarians typically oppose both, they are incentivized to make crypto-related crimes-- even when they're the victim-- seem like no big deal to avoid helping to fuel an outcry that might cause politicians to take action and bring about a) and b).

Granted, that's all quite speculative, but empirically, I have seen quite a few people get robbed blind of their cryptocoins and be remarkably sanguine about it, and I'm struggling to come up with another explanation.

[geofft]

Law enforcement is funded by taxation, which is theft. If you avail yourself of law enforcement, you are benefiting yourself from the proceeds of crime for personal gain.

[Bartweiss]

That's an anarcho-capitalist stance, sure. But very few programmers are an-caps, compared to the number of libertarians.

Most libertarians (and minarchists, and a lot of others) specifically accept basic law enforcement as a reasonable role of government. The whole "night watchman state" idea centers around defense, policing, and courts as legitimate government powers.

(Also, this is backwards even to an-caps. The taxation was theft, but availing yourself of services purchased is reasonable compensation since no one else is permitted to sell legal services.)

[geofft]

Sure, but is e.g. law enforcement in America a legitimate government power? People on all corners of the political spectrum believe that America's police is entirely too powerful and too militarized and solving all the wrong problems. They believe that even if there exists some law enforcement that is a legitimate purpose of government, the thing America has is definitely not that. If I think there's a good chance that this specific law enforcement organization respond to the cryptocoin spammer with a SWAT team and a CFAA prosecution, is it still legitimate for me to ask that department for help?

And if I'm trying to enforce laws against e.g. someone in another jurisdiction, I didn't pay for that. The funding for that police department was taken from people in that jurisdiction. I can see it being consistent to make use of services that my own tax dollars paid for, but is it legitimate to make use of services that other people's tax dollars paid for, without their consent?

[celticninja]

Generalising all cryptocurrencies​ as a scam kind of shows up your lack of knowledge.

[nyolfen]

> It's all so perfectly tuned to draw in an endless supply of suckers that I'm almost kicking myself for not thinking of it first.

well, clearly it's not too late to get in on the game ;)

[Kinnard]

> Cryptocurrencies are a brilliant scam.

Quite a bit too broad of a generalization.

[max_]

>Cryptocurrencies are a brilliant scam. They are to the libertarian-ish programmer crowd what MLM pyramid schemes are to the working class: perfectly crafted to exploit the particular tendencies of its target.

How is this different from the way Twitter makes no profits but lists on the stock exchange?

Or are startups also a scam?

[mmjaa]

You may as well just be describing software, in general.

This isn't a "crypto thing", yo.

All software has such utility.

You either care or you don't.