[ThePhysicist]

So, my understanding of the current play in this space is as follows:

  - Create a large number of worthless cryptographic tokens.
  - Distribute around half of them as "freebies".
  - Keep the other half to yourself / distribute them among your investors.
  - Start a hype by injecting your investors money into your currency. 
  - Hope that people will start to trade/speculate with your currency, buying it for real monies.
  - As the trading volume ramps up, start extracting money from the system by exchanging your tokens for real monies.
  - Profit!

Is this about right? I mean it's quite ingenious as you seem to create money out of thin air, but I really can't wrap my head around how this isn't outlawed as an MLM scheme by governments.

[chrisco255]

- Create a large number of worthless C-corp shares for a company with zero revenue - Distribute 100% to the founders - Onboard new investors through a series of progressively higher valuations, diluting less and less with each subsequent round - Go public at a lofty, inflated valuation that leaves retail with little to zero chance at producing the 100x gains that early investors got to experience - Profit!

Money is simply a representation of value. If you can create value out of "thin air", or even the perception of value out of thin air, then you can make a profit. That much has always been true.

What gives the C-Corp shares value, particularly the ones that trade at very high P/E ratios? Speculation on future growth, speculation on potential dividends, speculation on favorable market conditions, speculation on quantitative easing bringing yet more trillions flowing into stock market, etc.

What's interesting to me, is that people think our US Federal Reserve fiat monetary system is not an MLM scheme in the same way. We know who profits from the existing system: the older participants who got in early. We know who's been totally screwed by the current system: millennials and Gen Zers who can't afford housing, saddled with debt, living with their parents in their 30s:

https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-...

[ac29]

> What gives the C-Corp shares value

A business is a productive asset. Cryptocurrency tokens are not.

[joshspankit]

Your definition of a business might be a “an organization that produces a product”, but that is not the legal definition. A business can even legally be a bundle of paperwork that owns someone’s nice car.

Business (noun) is not a productive asset.

[bradleybuda]

In the rare case that a business actually produces nothing, in bad faith, we call that a scam, and fraud, and people go to jail. The same standard does not exist for "tokens".

[joshspankit]

Sorry, this perspective is wrong on both counts:

1) There are literally millions of empty and bad-faith businesses that you never hear about because they successfully fly under the radar

2) People definitely (though, to your point: not the general public yet) call out some tokens as being scams. It’s much more of a “wild west” (aka: lots of dirty business going on that no one knows how to identify much less stop), but people in the space can pretty easily tell if a token has integrity or not. Look at Beeple, for example. I think most people who read the story would agree he’s not scamming.

[rsynnott]

No-one would buy shares in such a thing, tho. Unless they lied about what it was doing, but, well, ask Elizabeth Holmes how well that's going.

[drcongo]

Has Uber made a profit yet?

[JesseAldridge]

There is value in able to send and receive money more easily.

[nivertech]

That's a valid comparison.

The only difference is that C-corp shares are marketed to investors as securities, while Wordcoin is disguised as a so called cryptocurrency/tokens.

[neffy]

The government always plays catchup on these things, and now is a less than pristine time for financial supervision.

This seems to be the way this has always operated right the way back to Bitcoin - distribute tokens, and fund a market to provide initial "liquidity" until enough people are using it to maintain some semblance of value.

Fundamentally, the definition of money is a token of exchange that people are willing to use. What preferences one form of money over others is the government allowing/requiring tax payments in it. (Which presumably is now the case for bitcoin in El Salvador at least.) The easiest way to succeed at this is to provide funds to create a market - with the proviso that as more and more currencies get created, the "supply" part of the equation gets a bit out of hand. Something very similar happened with the 1840´s libertarian banking experiments in the US.

[thebean11]

I don't think Bitcoin is a good comparison. Anybody can mine Bitcoin and all nodes in the network enforce set rules for currency creation.

With Worldcoin the creator of this "orb" hardware has complete control of currency creation. I don't see any path towards decentralization here..

[nikanj]

Governments ultimately execute the wishes and wants of citizens at large, and voters have collectively given a resounding yea to get-rich-fast crypto lotteries.

[dragonwriter]

> Governments ultimately execute the wishes and wants of citizens at large

Not really; no (even theoretically democratic) has a flat distribution of citizen political power for that to be true in general; it is true in cases where the general opinion happens to be in line with elite opinion, or so strong as to overcome the power inequalities, but otherwise governments act according to elite opinion, not general popular will.

[vorpalhex]

Voters also like safety and not losing their entire net worth because they published a private key or got scammed.

[lijogdfljk]

Where? In some parts of the world, ahem, it sounds like that would infringe on our "freedoms".

[vorpalhex]

Name a functioning country that doesn't have chargebacks, small claims or commerce law.

[lijogdfljk]

Well i took from your reply that you challenged the notion that citizens have _not_ wanted the get-rich-quick crypto jazz.

I wasn't saying that chargebacks don't exist. I was saying that the government dictating that you cannot lose all your money in a foolish endeavor would, in some parts be seen as infringing on your "freedoms".

Force safety nets was the discussion, as i took it. And some countries are resoundingly against forced safety nets.

[vorpalhex]

Talking about the US specifically, the question comes down to infringing on liberties versus stopping scam behavior.

Everybody agreed it was a good thing when the Fed shut down several scam colleges and forcibly discharged all the debt students had taken on. People aren't really meant to evaluate whether colleges are "real".

On the other hand, gambling laws tend to be contested. Gambling is regulated - most Casinos don't cheat but may have unfair odds. People who support gambling argue that adults can make unwise decisions so long as we can assure Casinos are honest and post odds.

The alternative view re gambling is that gambling rewards part of the human brain that we are bad at regulating and the government should step in and prevent even "honest" gambling.

Both of those takes on gambling have merits. If you oppose gambling because it's unethical, would it be ok to ban people who collect trading cards at insane prices hoping to resell them? Likewise if you support gambling, don't you have to admit it's brought many to financial and family ruin?

The question re crypto is whether crypto is more like gambling or more like a scammy college. My position is that crypto is a scam, not an honest casino.

[rsynnott]

> I was saying that the government dictating that you cannot lose all your money in a foolish endeavor would, in some parts be seen as infringing on your "freedoms".

I mean, some people might think that, but every functioning state in the world has laws against fraud, at the very least, and generally various investor safeguarding laws beyond that.

[nikanj]

Lack of which is one of the main selling points of cryptos.

[jakelazaroff]

Have they? What is the percentage of people who own any sort of cryptocurrency?

[skybrian]

To be fair, Keeping a lot of stock for yourself and self-promotion is also how successful startup founders make money.

The pump and dump aspect is that the reasons given why anyone should value the token are flimsy. If they were solid then it would just be a good investment.

There is a mechanic at the heart of investment that, purified of anything resembling social worth, becomes a gambling game that people can play for fun, despite knowing that it has no other value.

[rootsudo]

This is how every other project has worked so far, yes.

[beckman466]

you've just described bitcoin - except it's missing the part about the uselessness and wastefulness of 'mining'

[haylem]

Well, in the case of Bitcoin, the value didn't come from nothing. The mining analogy itself was part of the concept.

There's definitely a wastefulness aspect that may have been underestimated, though...

[jcpham2]

Spot on! Tether on Garth!

[walrus01]

step 1) collect underpants

step 2) ???

step 3) profit!

[Justsignedup]

hey, what's step 2?

[agent327]

"marketing!"

It's always marketing, on the missing dots in this kind of list. Otherwise people don't know where they can buy whatever it is you are selling. Underpants, apparently, in this case.

[Justsignedup]

oh my god! this changes everything. If only the kids knew!

Also you're so very right.