[neotek]

Why does it seem like every single crypto company inevitably engages in shady business practices and ends up collapsing in a scandal? How hard can it be to just make a shitload of money taking your skim from trades or lending at appropriate rates for an appropriate return?

[JumpCrisscross]

> Why does it seem like every single crypto company inevitably engages in shady business practices

It doesn’t sound like Binance is engaging in widespread sanctions evasion. They dropped their Iranian users. Seven users found a workaround. They were later caught and banned. Replace Binance with HSBC and it would be unsurprising, actually Binance did better, and the comments would be conspiracy theories about regulators being lax on violators.

[morley]

This is stating the obvious, the HN community generally leans against blockchain. That coupled with negative news traveling further than positive news means that HN mostly sees negative stories, and comments on both positive and negative stories tend to skew negative.

[hnthrow1010]

It's not simply a matter of "leaning against blockchains", that's like saying you're "leaning against bogosort". Anyone with even a basic knowledge of distributed systems can see that blockchains are a useless technology that can't actually fulfill any of the promises being made around them. They just don't work, they're a fraud. Binance is a centralized service that operates off a normal database.

[logicalmonster]

> This is stating the obvious, the HN community generally leans against blockchain.

I wouldn't describe it as a lean against crypto: the unfortunate thing is that some people have a viewpoint about crypto more akin to a fiery hate. There's an intensity to this emotion for some reason. I'm not sure if it's resentment by some for missing an opportunity to make money, but some people here can't talk objectively about crypto for some reason.

For what its worth, I think it's just fine to like or dislike crypto and weigh its merits reasonably, but there's too much emotion here to have good conversations about the possibilities.

[hnthrow1010]

>but some people here can't talk objectively about crypto for some reason.

To the contrary: It's the crypto people who can't talk objectively about blockchains, because every single "invention" they come up with has some kind of money-making scheme attached to it. There's very little talk of blockchains without the crypto tokens attached, because a blockchain without that is just an ordinary boring old distributed database, and that isn't fun to them. Every time I try to talk about that among a group of crypto enthusiasts, I either get ignored or the conversation fizzles. Even you're doing the thing where you assume that someone must not want to talk about it because they missed out on the opportunity to make money. That whole mentality is toxic and illustrates the ponzi-like nature of the scheme; those who got in first can make a lot of money from cashing out early, everyone else will get stuck holding the bag.

[logicalmonster]

> There's very little talk of blockchains without the crypto tokens attached, because a blockchain without that is just an ordinary boring old distributed database, and that isn't fun to them.

I'm not sure how it's possible to talk about the benefits of a blockchain without talking about the tokens in some way. Incentives matter when it comes to real-world policy and human behavior. You might be asking for something impossible to create a situation where you feel that you always win the argument.

When it comes to the benefits of the tokens, I'm not referring to mere price speculation among the 101,001 random Internet coins and tokens, which I can understand being jaded by, but about how utility tokens can provide something very valuable in the process.

To give one example: in the case of Oracles and specifically Chainlink (ticker: LINK), the tokens not only power the network, but can provide a concept called crypto-economic security. This means that the cost of compromising the network should exceed the potential value gained from doing so. This whole concept is remarkably fascinating from a Computer Science/Security/Philosophy/Economics perspective and should be a game-changer when it comes to getting any kind of distributed application accurate input. There's a bunch of very interesting problems like this all throughout the crypto landscape.

I understand that it feels like price speculation drowns out much of the discussion, but if you're not finding interesting computer science problems and solutions within crypto, you might not be looking hard enough or thinking hard enough about where the world is heading.

[aaaaaaaaata]

> There's very little talk of blockchains without the crypto tokens attached

There's very little talk of financial systems without the dollars attached.

Parties needs incentive to keep operating the chains. These vary. Many are financial.

[55555]

Because the exchange business is winner-take-all, roughly, due to the beneficial nature of greater liquidity. This means if any competitor is shady, a race to the bottom begins. And crypto has many competitors who are willing to be shady. If you demand a passport scan from every new registered user, another exchange will grow faster and enjoy deeper liquidity. And this is essentially how Binance won the great exchange war, by turning a blind eye and having balls of steel. US-domiciled exchanges never had a chance (the fiat gateway market is a different niche).

[toolz]

Because normal people will click on crypto scams. They're scared of what they don't understand - are you aware of how many billions of dollars of fines every single major bank pays routinely?

Probably not, because that's boring and doesn't make headlines you see as often.

8 of the top 10 most penalized companies in the world are banks that have nothing to do with crypto.

[ourmandave]

Can't fine what you don't regulate. Is anyone watching the cryptocurrency ponzi casinos?

[toolz]

crypto isn't unregulated by any stretch of the imagination. If you steal someones crypto that's illegal just as if you stole someones hot new kids toy that is in a relatively unregulated market.

If we're using ponzi scheme definition loosely enough to label most of the "scams" of crypto as a ponzi scheme, then literally the entire stock market is a ponzi scheme - how else would you pay investors more if you weren't making money off of new investors paying more for the exact same stock?

Are there a metric ton of scams in crypto? Sure, same for stocks - just look at penny stock pump n dumps. They're everywhere. Regulation didn't stop them or maybe even reduce them. The solution to this is to only buy into companies or crypto that have serious missions with serious investors and to stop pretending the gamblers losing money on penny stocks or small-cap crypto are victims. They aren't victims any more than the government sponsored casino/lottery users are victims. Which, maybe those people are victims, but society has accepted that as legitimate, so why would we put unbalanced expectations on crypto when society has deemed these other, quite equivalent forms of gambling as legit?

[hnthrow1010]

>then literally the entire stock market is a ponzi scheme - how else would you pay investors more if you weren't making money off of new investors paying more for the exact same stock?

No, this is very wrong and is based on a fundamental misunderstanding of stocks that seems to be going around in crypto circles. The stockholders make money from the actual, real profits of the company, either through dividends or buybacks. The entirety of crypto is like if everything were an unregulated penny stock in a company that openly announces they have no profits and they have no plan to ever make profits.

[toolz]

> real profits of the company, either through dividends or buybacks.

The majority of my profits in the stock market have been through asset appreciation. Just take S&P500, a very widely invested in fund - the average dividend yield is 4% while the average return is 12% - which means for that very common stock the majority of the profit came from appreciation.

This doesn't address buybacks, which is a pointless variable as buybacks are nothing more than "new investments" coming in to buy the exact same stock at a different price.

[hnthrow1010]

>which means for that very common stock the majority of the profit came from appreciation.

And you can see from the last few months how that's still an inherently risky attitude towards investing. I agree, buybacks are also a questionable scheme that can easily get used to scam, but at least those are (in theory) based on real profits. You're betting that the company is going to grow and create more valuable products and services in the future. In crypto, there's no profits and no value whatsoever. The average dividend yield of a crypto investor is always going to be 0%. You're not betting on anything besides the ability to dump the thing off on someone else.

[mitchdoogle]

Many stocks don't have dividends - what about those ones? Are they Ponzi schemes? There are a ton of companies with stock values much higher than you'd expect based on their business performance - are those stocks Ponzi schemes?

No they're not. Neither is Crypto, and that's the only point that's being made here. If that seems controversial or incorrect to you, then I think you have some emotional hangup about crypto

[rajamaka]

So you're saying 2 of the ten most penalized companies in the world are crypto companies? That's actually remarkable considering their relatively inconsequential market

[toolz]

No, that's not what I've said at all and no crypto adjacent company makes the top 10 list for most penalized companies. I'm not sure how far down the list I'd have to go, but it's probably very far.

[mhmmmmmm]

the remaining 2 companies could be anything, just not banks.

[me_me_me]

I will place this here for context

"So rampant was the practice, prosecutors said, that on some days drug traffickers deposited hundreds of thousands of dollars at HSBC Mexico accounts. To speed things along, the criminals even designed “specially shaped boxes” that fit the size of teller windows at HSBC branches, according to the documents."

https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M2...

This is not to defend crypto, but making claims that crypto is somehow root of evil is silly. Anything that can be convenient for value transfer will be used by crimelord eventually - and people who will take cut of their money. Be it gold or diamonds, useless green papers or bit and bytes.

[Traubenfuchs]

The risk of ignoring sanctions probably comes with a big premium. Indeed it's all fine until they get caught! The perfect fit for short term inflation of evaluation.

[abakker]

no harder, but slower! stake in a business is obviously slower yet. The ultimate scam is to just manufacture equity and do a pump and dump. any resemblance to an actual business is unintentional.