[wintom]

The real issue with all the pump and dump, fear of missing out, and all the other crazy “mooning” is that it is ruining this whole space. It is creating a reality that all the haters of cryptocurrency have been talking about for a while.

Instead of focusing on building real applications with blockchain, programmable money, and changing the world everyone is focused on trading and get rich quick schemes. This stuff could change the world it is money ripped out of government hands and it could be baked into everything we do on the internet but I am not so sure that will happen anytime soon anymore.

I am very jaded with the whole space because of all this fraud.

[Sangermaine]

>It is creating a reality that all the haters of cryptocurrency have been talking about for a while.

Or you might have it backwards: it's reality crashing against the near-religious fantasies that crypto boosters held for ideological and other reasons.

[Waterluvian]

Yeah it feels like a real-time experiment on the necessity of regulation and oversight.

[IIAOPSW]

Here's the thing. You're walking in here all smug like "told you regulation was necessary." Meanwhile all the people who got into crypto because they don't like regulation aren't expressing any regrets. You're "I told you so" is falling flat.

You're trying to frame crypto-enthusists as hypocritical fair-weather libertarians that will change their mind just as soon as there's a scam or hack which affects them. Yet it never materializes. When exchanges get hacked you don't here "wahh let's get regulation". You hear "Don't keep money on exchanges".

[gdulli]

You sure took a lot of subtext out of that poster's 14 word comment.

[coding123]

While true, I tend to believe regulation then empowers this same kind of thing to happen, but legally and unreported at firms like JPMorgan, Goldman, Morgan-Stanley.

[jjoonathan]

Or: after centuries of iteration our current regulatory environment manages to prevent all but the largest, smartest, and toughest fraudsters from doing what they do, and we should focus on improving those regulations (e.g. by working to separate money and politics) rather than ripping them down on the off chance that for some poorly explained reason the market will behave better this time.

[CryptoPunk]

We don't really have mechanisms to iterate on regulations from a societal perspective. The body polity needs to be able to evaluate the effectiveness of regulations in order to iterate on them, and that's so far outside the capabilities of the voting public as to be unimaginable.

Public choice theory would suggest that the iteration is happening on the political and public manipulation front, with rent-seeking market incumbents growing more effective at selling the public on the need for steeper barriers to market participation, and persuading political representatives to institute such barriers.

The story of the "Money Services Round Table" would be a good example of this:

http://www.aarongreenspan.com/writing/20110510/in-fifty-days...

Some empirical evidence:

https://www.mercatus.org/system/files/McLaughlin-Regulation-...

[whataretensors]

-

[MereInterest]

You could make the exact same argument about the stock market. "Nobody is forcing people to invest in a stock as I'm artificially manipulating the price." Pulling a con doesn't automatically become moral just because it is done with a new tool.

Edit: whataretensor's comment was modified, which makes my comment seem quite out of place. The original text of the comment I was replying to was "Nobody is forcing anyone else to take part in these schemes. The people who would regulate this space seem to not understand it at all."

[CryptoPunk]

On the contrary, it shows how the market responds and evolves on its own without top-down enforcement.

These pump and dumps will eventually stop being effective, because in a situation where information flows freely, and there are no backstops or gatekeepers to protect investors from their own gullibility, natural selection and other bottom-up adaptive processes go to work.

You can even see the growing 'immunity' that investors have to these pump-and-dump schemes on cryptocurrency forums. People on the forums are much quicker to see through attempts at coordinated pumps now than even a few months ago. Letting things play out results in a more robust configuration than trying to guide the market from the top-down through the creation of powerful gatekeepers and laws that rob people of their agency.

[mschuster91]

> These pump and dumps will eventually stop being effective, because the market will adapt.

No, they will only stop when there are no more morons left to be milked.

[CryptoPunk]

That's one way in which the market adapts. Overprotecting children or investors is not in their long-term interest, or society's.

Ultimately it comes down to whether you think top down processes are more effective, or bottom up ones. I personally know some older people who wanted to invest in Ripple. They talked to me about it and I made them promise not to do so, and to always check with me before investing in any cryptocurrency. That's a bottom up adaptation that makes a couple individuals safer. Sure the government could have just banned them from investing in Ripple, but that's a crude (and Big-Brother-ish) solution that's going to have untold numbers of unintended consequences.

Our cognitive biases will prefer the top-down solution, because it's easier to reason about, but I would argue that reason and evidence tells us that bottom-up works better in the long run. A billion micro-adaptations are exponentially better than a couple macro ones. The world is far more complex/detailed than any regulatory agency can handle.

==I'm rate limited, so responding to Sangermaine's comment below after this point==

>>What if, instead of these older people having to happen to personally know someone knowledgeable about crypto like yourself, or knowing how to find one and not get duped in some forum, there were regulations requiring public disclosure of various information regarding cryptocurrencies and their backers? You know, like we already have for securities? Then these older people could research this information and decide for themselves what to do, which seems to be what you advocate.

You're looking at current regulatory restrictions through rose-colored glasses. The current law requires far more than just disclosure. It also requires having a certain number of 'market professionals' (as determined by the regulatory agency) vet the offering, and for the agency itself to vet it and give it approval before the issuer can offer it to anyone other than the rich (accredited investors).

This inevitably leads to the cost of publicly offering a security to run into the millions of dollars.

There are massively negative unintended consequences from raising the financial barrier to capital raising. Just because they're not directly felt, doesn't mean they aren't just as impactful as the more direct negative consequences that such a blanket restriction would ameliorate.

Look, there are no perfect solutions. We have to think about this in terms of long-term impact, and trade-offs. The long-term result of preventing politicians from imposing laws that violate people's right to do with their own money what they wish, is the emergence of a relatively more vigilant investing public, that generally knows better that it has to do due diligence, and that through experience, some of it bitter, has developed relationships with individuals they can count on to help them with their investment decisions.

The alternative is that we create a centralized gatekeeper and presumably that will stop more scams, but that also stops more opportunities. We would be taking away people's agency, and replacing the billions of decisions that the investing public would have collectively done, with the much smaller set that a regulatory agency does when making judgements on what people are permitted to invest in.

>>"Allow everything" or "ban everything" aren't the only options, never have been, and in the real world aren't.

I never suggested allowing everything. I think fraud should not be allowed. But I don't think we should preemptively ban everything that falls within some broad class of economic activity that has not gotten the approval of some gatekeeper.

[mschuster91]

> Overprotecting children or investors is not in their long-term interest, or society's.

There's a reason why the term "accredited investor" exists: it designates people with high enough net worth that even in the event of total collapse of their speculation they will not be a burden to society. That society does overprotect institutional investors like banks is a different thing.

> Our cognitive biases will prefer the top-down solution, because it's easier to reason about, but I would argue that reason and evidence tells us that bottom-up works better in the long run.

Not in cases where basic human greed is involved. People involved in MLM schemes, for example, are known to even f..k up their family for personal gain. Greed is powerful and highly corrosive.

[jjoonathan]

Society has learned through long and bitter experience that ignoring this particular problem doesn't make it go away. It's exceedingly generous to call the supposition that ignoring it a bit longer will cause it to go away a "solution." I'd call it a pipe dream.

[sk5t]

Are you actually suggesting that government ought to let fraudsters / unregulated securities run amok? No legal framework for punishment or restitution?

[Sangermaine]

>They talked to me about it and I made them promise not to do so, and to always check with me before investing in any cryptocurrency. That's a bottom up adaptation that makes a couple individuals safer. Sure the government could have just banned them from investing in Ripple, but that's a crude (and Big-Brother-ish) solution that's going to have untold numbers of unintended consequences.

Your example is actually a perfect demonstration of how regulation could help. What if, instead of these older people having to happen to personally know someone knowledgeable about crypto like yourself, or knowing how to find one and not get duped in some forum, there were regulations requiring public disclosure of various information regarding cryptocurrencies and their backers? You know, like we already have for securities? Then these older people could research this information and decide for themselves what to do, which seems to be what you advocate.

This is the problem with ideological zealotry: it renders you unable to conceive of anyone as not being an ideological zealot. "Allow everything" or "ban everything" aren't the only options, never have been, and in the real world aren't. It's frustrating to discuss these issue with True Believers because the response is inevitably "Oh, so we should just ban everything then?"

[Sangermaine]

This comment is a perfect example of why committed libertarians make the best marks.

[CryptoPunk]

I'm not a "committed libertarian", even if I would be classified as a libertarian according to my views. Any ideological commitment is dangerous, whether that's to libertarianism, or anti-libertarian mixed-economics-ism.

[jahewson]

I’m afraid that reality has been around for a lot longer than cryptocurrency and it was quite obvious to a great many people that an unregulated global financial market was going to result in massive fraud. After all it’s a big enough problem in regulated markets!

“Ripped out of the hands of government” means “ripped out of the hands of regulators” and history has taught us exactly what happens again and again in such situations.

[zitterbewegung]

The fraud will continue until we get more and more rules and regulation. I expect the governments will step in to regulate all of this. Once we have that we will have applications that work for the public .

But I think the real innovation will be in private blockchain systems . The Hyperledger group has some exciting technology . Taking business problems you know and seeing if it will work will be really exciting.

I recommend going through their free course https://courses.edx.org/courses/course-v1:LinuxFoundationX+L...

Even if you aren’t interested in private blockchain technology it gives you what you need to understand. From there you could just read the white papers of bitcoin and Ethereum .

[buttcoinslol]

What did you expect? Humans are greedy, full stop.

Also, governments will give up power over currency when they lose their monopoly on violence.. so .. never.

[laretluval]

The whole theory of cryptocurrency economics is based on the axiom that people are greedy. Do you really think people didn't realize this? The problem isn't that they didn't realize people are greedy, in fact they believe that more deeply than most. Rather their theories about what aggregate greediness would lead to were inaccurate at least in the short term.

[paulsutter]

Yes it’s like the 1999 dotcom bubble but worse.

Don’t worry though, soon it will be 2001. All the tourists will go home and the real work will continue.

Bram Cohen: https://gist.github.com/FredericJacobs/1614f8eb741532c3f2cb

[wsc981]

Just today I discovered Bram Cohen is actually working on a new crypto-currency in a company [0] he has setup. It should be interesting to see if he can create a better crypto that doesn't have all problems that he currently sees in Bitcoin and others. He's currently looking for devs with good algorithmic skills to join his company.

---

[0]: https://chia.network/

[Nursie]

Last I heard he was talking about proof of storage, which seems like it has the potential to do for hard drive prices what the others have done for graphics cards!

[bhouston]

> This stuff could change the world

We are in the dot com bubble of cryptocurrency. Real tech that has been overtaken by hype, momentum investing, and well scammers. I expect a similar type of situation to play out.

I feel like the non-existence USDT is going to be at the center of the coming crisis in cryptocurrency and I think that exchanges should face that head on, rather than letting it swallow them up. Exchanges should start to move away from USDT sooner rather than later.

[zerostar07]

Well good. If a cryptocoin is regulatable, its a failure. Let them be pumped and dumped until they re banned. It only brings the tech closer to what it has to be

[Theodores]

Many millions of people have sums of money from an inheritance or other windfall, this money sits in a bank and does not collect interest, even with low inflation it essentially depreciates. So along comes the crypto market and all of a sudden people are putting their savings in, hoping to make a quick buck on a rising market. They know it is a risk but they do it anyway.

This choice of 'scam coins' over 'fiat' is part religious cult and people get caught up believing more than they can understand about the holy blockchain, however, it also reflects badly on mainstream banking and how broken that is. Really it has been broken for at least a generation in that interest rates are dysfunctional-low.

Barely a day goes by without a scam coming to light that costs real USD, there is a ocean of difference between 'coin market value' and dollars of real money, but still this is lots of poor people losing their windfall savings. It can be a boyfriend or a brother that accesses the savings, so the purse strings are on that trust relationship. My top tip is to get into the divorce business as a lot of people are going to be arguing over 'where the bitcoin went'. They still probably won't be believing 'fiat' money is real so the carcasses left behind by the altcoin scammers should still be rich pickings for lawyers and estate agents.

Right now I am trying to think of how I could use the all wonderful blockchain to help plant trees in the Northern Forest, with an app so people could sponsor a tree and have it all tied in to some fashionable blockchain thing. In this way, in fifty years time, the bits of poetry and dedications people have left for the trees will still work as there will be no central server needed.

However, I don't quite see it. If I am to help plant five million trees by getting people to sponsor the things then the blockchain can wait. My clumsy database tables and the various joins will all be magic-beaned into blockchain sexy at another time, so the forest QR codes and AR poetry works in a decentralised way, for the next few millenia, right?

So maybe I should just roll with it, work with a few altcoin scammers that know the gig is a joke and scam a few million people into buying coins 'backed with saplings' and have them feverishly land grab the whole of the North of England, desperate to plant an extra Rowan tree here or there. In that way, when it all goes tits up, there will be a forest happily growing away.

Or maybe an 'alt-coin' forest could work? 'Bitcoin Pine', 'Bitcoin Oak', 'Bitcoin Ash' - imagine the fun trading in the futures market.

[malmsteen]

In addition to my first comment... : The western-like environment is also the direct consequence of the "no regulation" aspect that crypto fans like so much. When there start being regulation everyone will leave the space precisely because there's not the hope anymore of making quick fast money...

[whataretensors]

It's not exactly fraud in the same sense as someone stealing money. It's a game that people are playing - which the pump and dumpers can lose.

A potential winning strategy is to wait until they tell you to buy and start selling.

[baxtr]

That’s why they announce the coin right before the pump

[laretluval]

You want money to be baked into everything we do on the internet?

[tetrahedr0n]

It already is. Today, the leading form of "money" used on the internet is your information to pay for your access to something.

Facebook, google, instagram, etc etc.

[malmsteen]

There's no "application" of blockchain. You'd be rather thanking thoses schemes because they are feeding the hype of what would be seems as a useless techno otherwise.

I mean come on, anything can be done without it and using blockchain just bring unessential minor improvements like decentralization that no one cares about. Prove me wrong ...

[simias]

I can think of one use for blockchains that can't easily be replicated otherwise (at least not with the same amount of security), it's proving that you knew something at some point in time. Putting something in the blockchain is like taking a picture of it with today's newspaper next to it so to speak, except you can't photoshop it.

If I made a groundbreaking discovery today, putting a sha-256 of it into the blockchain would be a very good proof later on that I actually owned it at this time.

But beyond that I agree with you. My (non-technical) girlfriend is looking into cryptocurrencies lately and she watches tons of youtube videos about it while doing her research (TEDx talks and the like). Easily 90% of the claims of "blockchain is going to revolutionize X" are easily dismissed either because the blockchain can't do what the person claims or there's an other, often simpler solution to this same issue. "Use the blockchain for food traceability", "use the blockchain to validate critical equipment firmware" etc... It sounds good as long as you don't think about it for more than 10 seconds.

The problem is that in order to realize that you need to have a rather deep technical knowledge about how the blockchain works, something 99% of people investing in crypto probably lack.

[acdha]

That still doesn’t require a full blockchain: 90s PGP with multiple signatures is all you need, or going really old school, mailing a copy to yourself using registered mail.

Imagine if a notary, post office, etc. set up a signing service: relational database, basic signatures for user-submitted hashes, etc. Not quite as good but much cheaper to run and much easier to have trusted by a court — I suspect most users would see no additional advantage by adding a blockchain.

[oarsinsync]

The change is in the trust model.

The centralised approach described requires that one trusts the database administrator. For a lot of things (probably the vast majority), this is good enough.

For the rest, there's decentralised distributed immutable ledgers.

[acdha]

Trust is an interesting topic: I think many people – and especially courts – would be actively disinclined to trust an anonymous blockchain but might be interested in one where it’s identified participants with reputations, liability, etc. Pay the USPS, Western Union, etc. and get a signature backed by insurance.

Trying to explain something like Bitcoin just seems like you’d have a hard time meeting reasonable doubt standards in a dispute but that’s not the only model.

[malmsteen]

Exactly, most people have done so for centuries. Of course with 99% reliability only, but no one cares about the 1% possibly added by blockchain (with a retarded additional computing burden to deal witg).

[bluecalm]

Publish a hash somewhere you can prove a date later, like a newspaper or w/e. Then if at any point you publish the text producing this hash you've just proven you had the text at the point of publishing the hash. Blockchain not needed.

[icebraining]

Or a letter to a fellow scientist:

In July of 1610 Galileo was still making discoveries faster than he could publish descriptions of them. On the 25th he discovered that Saturn was apparently situated between two smaller companions that always moved together. Wanting to establish his priority of discovery, but not yet ready to reveal what he had found, he sent to Kepler (and others) the following jumble of letters, which he informed them was a coded description of his latest discovery (...)

http://www.mathpages.com/home/kmath151/kmath151.htm

[kevinthew]

Yeah, crypto hype in fake technological improvements is part of this mess. People actually think there is intrinsic value in a public ledger (there isn't).

[tim333]

Cryptocurrencies have proved popular for drug dealing, extortion and speculation/gambling. They will probably also help with tax evasion and money laundering. Those are applications of a sort if not very positive ones. The decentralization is necessary to put the above outside government control.

[malmsteen]

Yeah but you're not seriously saying that the killer app that everybody is waiting for in crypto is " being useful for criminals ". If so it will be banned everywhere soon like in China and blockchain is just dead.

[tetrahedr0n]

The applications are projects that require immutable data and wide distribution. Those developments haven't really been made yet.

Most of the discussion today about crypto developments is centered around bitcoin. But just because something utilizes a blockchain doesn't mean it has anything to do with bitcoin. Bitcoin was the first popular application built on top of a blockchain, and arguably the most radical.

[adamnemecek]

It allows you to opt out of the monetary system that's been imposed on you by your govt. This might be less of a big deal if you live in a developed country but it's a big deal if you live in an unstable country.

[bradleyjg]

Why not just hold most of your savings in dollars, euros, swiss franks, or whatever? Doesn't that just as effectively opt you opt?

[tim333]

Say hypothetically you lived in a place like Cuba where the government had banned things like renting out a room to foreigners or selling them a coffee as was the situation when I was there. Taking payment in the local currency would be kind of useless as you couldn't buy much with it and taking dollars, euros or whatever was illegal and could get you in prison if they caught you. However if your customer transferred some ether to a wallet you controlled with a private key but without your name on it it would be quite hard to catch or prove.

[bradleyjg]

Why would it be quite hard to catch or prove? How many fiber optic lines do you think go to Cuba? They could lock down the internet the same way China does. Maybe they haven't gotten around to it yet, but that's not a long term structural argument for the utility of cryptocoins its a temporary moment-in-time argument. Kind of like how at one point a big advantage of buying things on the web was that you didn't have to pay sales tax -- that's not anything inherent in the web, it was just an artifact of governments' lag.

[tim333]

Say your customers are us tourists and they send from a coinbase account to some ether address. Dunno how they'd track that.

I don't think it's a lag thing - decentralized cryptocurrencies are just hard for governments to stop. Similar how governments would like to stop people paying cash in hand and avoiding tax but have never really been able.

[adamnemecek]

Let’s say you have to leave the country with all your saving. I’d much more comfortable carrying it in btc than cash.

[bradleyjg]

You don't need to hold physical cash to hold USD. You could have a bank account in London, Geneva, Paris, or New York with your pounds, franks, euros, or dollars. If you need to leave the country, your savings are already outside of it. Just like your bitcoins.

The answer seems to be that repressive countries haven't yet put in place effective mechanisms to be repressive with respect to bitcoins. But there's zero reason intrinsic to bitcoin to expect that to continue. On the contrary, since everything is digital the choke points are easier to control, not harder.

[aaomidi]

How are you opening a bank account in a foreign country as a citizen from Iran?

There are use cases for big money transfer and just "storing" money in BTC, not really for daily transactions.

[lixtra]

Good luck opening a bank account in Geneva as a US citizen. Unless you bring really a lot of cash they won't touch you with a 5 ft pole.

[adamnemecek]

ofc But even opening an account abroad could be tricky.

The thing is that restricting bitcoin is really hard.

[cornholio]

Especially if your hoard is ill gotten according to the laws of most countries.

[empath75]

Instead you can put your money into a pyramid scheme run by gangsters.

[adamnemecek]

Kinda like the banking system?

[buttcoinslol]

Better the devil you know. FDIC and SIPC instill a lot more confidence in me (and every single rational investor) than uh Bitfinex or Kraken.

[adamnemecek]

Store it in an offline wallet.

[philipov]

You can't opt out of the monetary system that's been imposed on you by your govt, because your govt's desires are backed by the use of force[0]. Short of moving to a different country, paying off the enforcers, or going into open rebellion, everything else is a fantasy.

[0]: https://xkcd.com/538/

[tim333]

You can opt out to an extent by doing stuff offshore even without crypto.

[acdha]

That’s not an option for most people and it has huge risks. Try buying anything big with no disclosed income sources or living well beyond your means and you’ll be getting caught by the people looking for drugs dealers, smugglers, etc. Most countries are pretty good at that.

[philipov]

Yes, the gist of it is, you are not beholden to the monetary system if you have a lot of money. Tautological isn't quite the right word for this.

[troels]

So does foreign currency