I don't understand crypto (didn't understand derivatives either). I have worried that my ignorance will cost me in investing — that people smarter than me are going to make bank while I'm derp-derping with my index funds.
Reading as others, apparently as ignorant as me, ask questions about crypto, etc. the in-crowd seem to get it, seem to understand it. I find that generally the case with anything monetary/financial though: the people that do this complex stuff seem to understand it but seem unable to explain it in a way that someone as simple as me can understand.
In order to play the crypto game you have to learn this absurd set of rules. And there's something about crypto though where the proponents almost revel in other's ignorance. I've had a hard time deciding whether the proponents really understand it (and all of its nuances) or if pretending you understand it in fact part of the game.
This is the key to the crypto scam. It looks like it's complicated, and you have to be really smart to understand what's going on!
But it's not complicated at all.
Buy some crypto. Convince more people after you to buy it too - price goes up. If more people are selling than are buying, price goes down. Time your exit.
In the end, everyone loses - because there's always going to be more money going out (to pay the electricity bills and suchlike) than there is coming in.
If you're lucky, you might be able to get more money out than you put in. But it's pure luck in gambling on the timing, it's not about being smarter than other people.
As was pointed out in a podcast I listened to this week, you’ve essentially described a Ponzi scheme. Fundamentally, making gains on crypto requires someone else showing up and putting money in so you can get yours out. It’s more obvious with NFTs because they’re not pretending to also be money.
This is a shallow and narrow way to view crypto, and describes the typical incurious HN view that crypto is just a big ponzi.
Another way to view it, is as a digital economy running on a different set of technologies. You don't need to "invest" or "time the market" or anything, you just buy ETH to use it as a gas token.
Buy some ETH, an amount you are OK to write to zero like you would a hamburger or movie ticket purchase. Move the ETH off a CEX into your own self custody wallet to understand what it means to hold an asset with nothing but a private key. Convert it to stable coins with DEX like Uniswap, to avoid thinking about price. Send them to and fro, use DeFi, buy a ENS domain. It might cost you $10-50 total but you will probably come out of the experience with a better understanding of crypto, and you might also start to see traditional banking infrastructure differently, maybe slower or less verifiable or less secure or too centralized or too hard to build programmable interfaces on top of.
This is too cynical of a take for me. I fell down the rabbit hole after reading/watching some of Vitalik's writing years ago. I think it's worth spending a small, insignificant amount to play around with some apps that have a genuine purpose. These days I'm most interested in gitcoin.co grants and the use of quadratic funding to support public goods (eg: open source software). You can read a summary write-up of a previous round [here](https://vitalik.ca/general/2020/10/18/round7.html) if curious.
> I've had a hard time deciding whether the proponents really understand it (and all of its nuances) or if pretending you understand it in fact part of the game.
Along those lines, it always seemed like an Emperor's New Clothes kind of scam to me ("These are the finest hashes!"). There was always this dialog in my head when the crypto bros would extol it's virtues that went something like "Wait, it's just a hash, right? But what if they're on to something? Nah, they're not onto something... but they seem to be making money... but it seems like a ponzi scheme where the people who got in early can cash out, but the people who jump in later lose money... c'mon, how is it not a ponzi?"
> I don't understand crypto (didn't understand derivatives either)
Never invest in something you don't understand. That seems to have worked out for you as you didn't get caught up in it.
> And there's something about crypto though where the proponents almost revel in other's ignorance. I've had a hard time deciding whether the proponents really understand it (and all of its nuances) or if pretending you understand it in fact part of the game.
You are projecting your insecurity - don't focus on the assholes. Most people actually being productive in the blockchain space want you to learn. You are right to think there are lots of marketers/sellers who don't understand what is going on. Listen to the engineers who are talking about the details on discord and on their blogs, not the idiots on Twitter trying pump their bags.
> In order to play the crypto game you have to learn this absurd set of rules.
This is true - people who are playing the crypto game are trying to invent new rules for how society should operate. This is why some things that happen in the crypto world seem incredibly stupid or useless. People are working with different fundamental assumptions.
> I don't understand crypto (didn't understand derivatives either). I have worried that my ignorance will cost me in investing — that people smarter than me are going to make bank while I'm derp-derping with my index funds.
Crypto requires a constant influx of new investment to continue making that number go up.
The FOMO narrative gets pushed hard for this reason. As long as regular investors are convinced they have to invest in crypto or else they'll miss out, the money continues to flow into crypto.
The problem with these collapses is that it breaks the narrative and makes people wake up to the reality of the game. That's one of the reasons the crypto industry is moving hard and fast to distance themselves from FTX and SBF.
The FOMO narrative gets pushed hard for this reason. As long as regular investors are convinced they have to invest in crypto or else they'll miss out, the money continues to flow into crypto.
And oh, was it pushed hard by FTX. The infamous "Don't be like Larry" Super Bowl commercial [1] was from FTX.
The FTX bankruptcy has somewhere upwards of a million creditors.
In general, the issue with cryptocurrency is there is very little actual economy around it (that is, buying and selling actual goods, not just exchanging for different cryptocurrencies and tokens), so much of the value isn't really backed by anything.
It's mostly just speculation, which becomes a "greater fool" thing - you're only going to win if you time it right, there's enough pumping happening for you to profit, and get out before the next crash.
People who try timing it will always fail. I tried trading and timing, and if I compare that to just holding bitcoin and no timing or no altcoin trading, I would have ended up with more.
I'm not the only one it seems due to the famous HODL.
Same as with the stock market, just buy and hold for a long time. Hard to beat that strategy.
> I don't understand crypto (didn't understand derivatives either). I have worried that my ignorance will cost me in investing — that people smarter than me are going to make bank while I'm derp-derping with my index funds.
There are two sides to crypto. There is the technology side (blockchains, cryptography, consensus) and there is the finance side, the financial products on the blockchain. If you're an engineer you'll easily understand the technology side but there's no way around spending a significant amount of time learning about (traditional) finance to understand how exchanges, derivatives, market making, monetary policy, loans, leverage, and so on work. All of the same ideas apply to crypto.
This "absurd set of rules" mostly applies to the technology side, not the finance side. If you strip out all the marketing, the financial products you find on the blockchain are no different from the products you find in traditional financial institutions, with maybe a few exceptions like AMMs or stablecoins.
My experience has been that the people who understand crypto and who are successful are NOT the people who understand technology, but mostly the people who come from a finance background and can pattern-match their experience to crypto.
I think reading warren buffet’s letters to shareholders of berkshire hathaway is definitely worth it, there’s a lot of common sense about companies and investing, and kind of proves the feynman quote about “you don’t really understand a topic unless you can explain it to a motivated freshman” (“freshman” = 1st year undergraduate student in th US) . By that standard, Buffet clearly does understand finance, the ones who can’t explain either don’t really understand, or, as you implied, are trying to scam you
> the in-crowd seem to get it, seem to understand it.
absolutely not speaking of anyone on HN (where people seem more learned and aware) but most of those who 'seem to understand it' on Twitter / Reddit etc. are just folks who have put in their money after reading fancy terms and want to 'pump' a given coin. So that they can validate their investments to themselves.
This is just my personal opinion so there's that. I have been wrong about lots of things, could be about this as well :)
I have some rudimentary knowledge of crypto. I think better than most.
I don't understand some of the more complicated concepts like DeFi and flash loans. I mean I could explain some of it but I didn't actually understand it.
That being said, I decided to learn more and got some of that knowledge from Twitter. It's a terrible place to learn because the education is laced with propaganda and it's very difficult to tease out. Something about it makes you put down guards that you otherwise have.
I stopped using Twitter for other reasons and something really interesting happened. It felt like I was coming out of hypnosis. My optimism towards crypto began to fade - probably because outside of crypto circles the general sentiment is that it's a scam.
A broken clock is right 2x a day and it's important to remember you're likely no smarter or dumber because you bought or avoided crypto.
I think the 'Intro to Bankless' podcast is a really good way to start learning the nuances. There are many parts of the crypto community that are very welcoming to newbies. /r/EthFinance is one of the best.
Crypto is indeed very complex. You have everything from AMMs to no-loss lotteries to Arweave perpetual endowments. I spend 10 hours a day in crypto finance and don't understand all of the nuances, so I can see how it might be intimidating. The best way to learn IMO is send a few dollars to Polygon to play with different protocols like Uniswap, Aave, PoolTogether, things like that.
that's mostly product churn. yes, definitely part of crypto, but people don't have to understand each and every new thing in crypto to understand crypto.
Both opponents and propontents can be so sure about themselves, either that it's obvious it's all a scam or obvious it has value and huge amounts in the future.
The fact of the matter is that nobody can tell at this moment (I'm sure plenty of you will claim they do).
If you cannot see the potential value yourself, I would advise to stay away from it.
And if there will be something in the future where you can see the potential value, and is high risk/high potential return, you could invest 1% of your portfolio into that one. Worst case you lose 1%, best case you gain 100%. The latter is how it went with crypto, but it could have just as easily turned the other way.
I guess investing in startups is the same, although you need a shitload of money to get into that game.
> In order to play the crypto game you have to learn this absurd set of rules.
Bitcoin has a value that rises and falls on a (spectacularly) speculative basis. Apart from the complications of buying/selling/holding Bitcoin, it is no different to trading in something else with perceived value that has active buyers and sellers and which has questionable intrinsic value.
However, there are numerous other schemes, derivatives, exchanges, faux lookalikes, messiahs, manipulators and fakes that make for those absurd rules.
I find Matt Levine and his column Money Stuff at Bloomberg precisely so valuable because this complicated dry stuff is explained simply and with a lot of humor. I don't know enough to know if it is over simplified or wrong but it seems correct and is very accessible. It probably won't help you invest in derivatives or understand options better than index funds, but that column is an interesting rare exception to the rule of finance being esoteric and inaccessible.
At a high level, could a cryptocurrency be used as a normal currency? What would be the benefit of using a cryptocurrency? Is the goal to be used at a large scale globally or would it at best remain niche?
And behind "normal currency" I hide a lot of things that I don't know about. Does it has to be stable? Does it have to follow a real currency like the USD?
Yeah they get it's a rug pull/ ponzi scheme. The more people they lure in, the more suckers there are to buy their coins and the more they money they will make.
It's all shit man, all the hype is to lure in more sucker bagholders. Who will keep driving the price up.
I was involved in the very early Bitcoin days, and it started for me as something else to do with lots of spare GPU cycles, then I started learning about the underlying tech, which I thought was quite an elegant solution for p2p trustless ledger. I still think it is.
I have not been involved for a long time though, as the original feelings I got from those early days and the community back then seems to have changed completely. Now its all bullshit shell games and scams.
FTX's failure is hardly Crypto's failure. FTX is a centralized exchange. Crypto, at least when it was created, is/was against centralization.
But yes, cryto industry is much more centralized than before. Centralization without regulation is the root of all evils.
We don't need deep tech understanding of Cryto to know that centralization without regulation is problematic. History of finance has proven it again and again and again.
Those who trusted FTX are either dumb or greedy. Perhaps both.
As a crypto adopter, the best we can do is:
1. Stay away from unregulated centralized company like FTX, Binance, Tether, etc.
2. Stay dicentralized.
Derivatives have some financial uses for normal investors (eg if you want to hedge your bets against short term tail risk etc.), but crypto tokens really don't. I wouldn't sweat it.
It's not that complicated - you get a record in a globally distributed trustless database that say you own something, and as new records are added to the database stuff gets moved around.
There are layers to crypto's predominant "discourse" depending on which wave you came in through. The earliest waves were all utopian technologists, libertarians, and Silk Road users. The ICO era brought in more people who had played with penny stocks or forex, and imposed some of those "gamblers and swindlers" attitudes. And as talk of "institutional crypto" started popping up you got a much more Wall-Street influenced crowd that funded conspicuously large endeavors with intentionally obfuscating and centralizing properties. For the most part, none of these people in the later waves perceived the tech as a good that could be deployed for societal coordination(since what distributed ledgers ultimately do is just another method of organizing information), they just saw a zero-sum game they could compete and try to "win" in by ultimately exiting to dollars, or by building a large organization in the "crypto industry"(utter nonsense - it's ruled by protocols, and the downfall of FTX further demonstrates that).
People who just held BTC in their own wallets over all of these waves, didn't lose custody of the keys or sell, did marvellously well. Internationally, BTC remains useful to countries with unstable currencies; not because ordinary people are all interested in holding it for its own sake, but because it enables banking and payment services outside of the traditional system, which means that in some parts of the world you can go to "a guy in the market with some phones" and he can set you up with options for exchanging currency, getting remittances, etc. Often USD is used on one side of the trade rather than a native crypto asset; it's crypto being used as a pragmatic tool rather than a manifest ideology.
In contrast, people who really try to trade the market actively either have an "angle" for getting an information advantage(e.g. they possess some data or influence, in the way that SBF did), or they are most likely gambling with leveraged bets and getting sliced to pieces by highly optimized trading bots.
If you take a position in crypto as a simpleton(which is my standpoint, and shouldn't be taken as gospel investment advice), it's better to move slowly, accept absurdly high volatility and just aim to survive; do not use products that "give you some help with that"; assume the tech is sharp-edged, use official wallets, and keep careful track of the keys. Many people who work on crypto don't actually own a lot of it.
In this case the emperor has no clothes, it really is fraud all the way down.
You might want to start reading Matt Levine’s excellent Bloomberg column, he has a knack for simplifying things. He also published an excellent primer on crypto.
Can't say I care too much about FTX's woes. Nonetheless, this article has some janky moments. The author cites an unnamed friend "who is deeply involved in [the crypto] industry" when saying CZ played a master stroke against SBF. Get a real source or at least demonstrate that your "friend" has an opinion worth 2 cents.
Maybe CZ did outplay SBF, but aside from the optics it doesn't seem anywhere that salacious. As was summed up earlier today in an NPR segment on this story "airlines don't compete on safety." In other words, it is in the interest of every exchange that the exchange industry is on the whole viewed as being comprised of trustworthy actors. Crashing FTX doesn't seem an optimal move given the already precarious state of the crypto industry these days.
Speaking of optics, the author also made a nonsensical analogy "more opaque than a dog with glaucoma" when describing the inner workings of FTX. Quite certain they meant cataracts – the clouding of the lens of the eye – not glaucoma, which is damage to the optic nerve.
Really in this case CZ put a bullet in him as sure as he was holding a real gun. The need to build "trust" by not absolutely ruining one of his competitors didn't factor in here, because there is no need.
CZ could have gotten paid $1B or whatever many FTT they owned for $22/coin. That would have still weakened FTX and Alameda a ton. Them having to pay out so much of that money would have put them closer to the tipping point and gaining over a billion for CZ.
Obviously removing a top competitor that’s doing straight up robbery is something that should always be done. We are talking about awful actions.
He's still posting on Twitter as though this is going to blow over. I don't get it. Is there a chance nothing is going to happen? What kind of advice is he getting?
"“People can say all the mean things they want about me online,” he said. “In the end, what’s going to matter to me is what I’ve done and what I can do.”
He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.”
Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”
So he was planning a series of cryptic tweets? “Something like that.”
But why? “I don’t know,” he said. “I’m improvising. I think it’s time.”"
I think that based on his enthusiasm to invest in Elon's takeover of Twitter he thought he was a big dog. He thinks he's a celebrity billionaire. He's still calling people to invest in his companies, which is like lighting money on fire because it's all going to be withdrawn immediately.
He is clueless.
I don't understand how he could hope to raise money if his idea is "We return it to the people I stole from." I have no doubt that, like Adam Neumann, there is some circumstance where VCs would give him another turn, but it would be because those VCs thought they could make money, not because they want to donate their money to make SBF's victims whole.
Im not defending him, but you can imagine a situation where a lot of conversations are happening in the background whilst wild speculation takes off online.
From the balance sheets circulating, there are still a lot of assets there. Some of it is fantasy but some of it is real but various levels of liquidity.
Im sure FTX, Sam and everyone associated is looking at how they can turn an $8 billion hole into a $3 billion hole.
I don’t think he or FTX are coming back because the reputation is destroyed, but I don’t see this ending in an $8 billion total loss.
I am tempted to put my money where my mouth is and buy some FTT for a somewhat positive announcement soon, but maybe that’s just degenerate gambling!
1. His tweet thread made me throw up in my mouth a bit. Blaming it on "liquidity" is laughable. Liquidity problems would be like "I own a lot of real estate and it would take me a long time to sell". Alameda's problem was a huge chunk of its balance sheet was FTT - it was fundamentally impossible to ever liquidate those tokens without guaranteeing to tank the price of FTT. Never mind the whole issue that customer funds were never legally his to loan to Alameda in the first place, regardless of crypto regulations or lack thereof. What happened to customer funds was simply theft.
2. I'm not a psychologist, so I don't necessarily want to misuse the term "sociopath", but I have seen this trait in some people that is closely linked to a lack of conscience. That is, I would have never been able to do what SBF and gang did by stealing customer funds to prop up Alameda. And it's not because I'm some wonderfully moral person, it's because I would have become physically ill with guilt and lack of sleep. This is also why I'll never be able to run a large company or handle billions of assets - it would just be too much stress for me. There is a fine line between needing to have a healthy detachment from consequences you may cause, and being a sociopath. The more I hear from SBF just the more I'm convinced he's not on the "healthy detachment" side of things.
I'm so frustrated right now that he's still not arrested while in the sister thread a bicyclist was arrested for touching a car that was hiding its license plate.
The government is doing the opposite that it should be doing.
He paid fealty to the regime and tens of millions of dollars of bribes and protection money to the ruling class.
Provided he told all the right people to get out while the getting was good, he's got good reason to be confident. I bet he knows about a lot of skeletons in closets too, although people tend to wind up not killing themselves in prison when they try to use that kind of leverage against the mob, so he'd be well advised to take his flailing about the wrists with a sauteed lettuce leaf if it came to that.
I don’t understand the pressure to give bad people their money back. What’s it supposed to accomplish? I’m not sure it should even be legal to send money to SBF. It’s seeming more and more likely that he’s head of a criminal conspiracy.
If the money was stolen, it was never SBF's to give. The law does have provisions that can force the clawback of stolen funds. But because we're talking about politicians here, I don't think anybody believes the law will be enforced equally to them.
> Rep. Ruben Gallego (D-AZ) said he spent money given to him by Bankman-Fried to drive turnout for Andrea Salinas, a Latina running for Congress in Oregon—whom Bankman-Fried spent millions to defeat during the district’s Democratic primary.
> “So, I think I’ve paid it back,” Gallego said.
I don't think he has the same definition of "paid it back" as most people do.
"There followed a jujitsu move by which the Binance chief created a market run on FTX."
There seems to be an attempt to sell a narrative which blames Binance for this. That's bogus. We know now that FTX was so looted and so broke it was doomed. The only question was what would pop the bubble.
This is straight theft of customer assets, like Madoff. As with Madoff, once there was a downturn, it all came apart.
Probably not, as Enron was a real company and its collapse led to massive job losses. Crypto is just speculators losing money. More like Tulipomania, maybe Madoff if it can be proven that it was intentional.
AFAIK, this wasn't a situation were people gambled and lost, it was just straight up fraud. FTX misled customers (not investors) into thinking their deposits were safe, when in fact they were being used for gambling (because of course they were).
The balance sheet showed billions of dollars in assets for coins that had tens of millions in liquidity. There's an 8 billion dollar hole in the balance sheet. It's pretty clear they used customer deposits to pay back lenders. Why would CZ buy a company that's nearly an Enron level fraud, and due for a criminal investigation.
https://www.visualcapitalist.com/ftx-leaked-balance-sheet-vi...
Meanwhile, after 1 - 2bn in customer funds are missing. Everyone is asking Sam to say what happened. Sam proceeds to troll by writing the words "What happened" one letter at a time, with an Elizabeth Holmes-like legal disclaimer that he's not going to recall any of the details.
Just offering that just a few minutes into that video, I saw everything I hate about many youtubers' style, generally. I can't describe it, but there it is.
I listen to Odd Lots. Generally, that podcast keeps things thoughtfully presented. I remember that episode and it reinforced distrust of crypto.
I get where you're coming from. But its also an interesting observation that CoffeeZilla (the youtuber) has consistently provided critical crypto industry reporting on par or better than most mainstream media.
I honestly trust him as much as Matt Levine when it comes to Crypto. Which is saying a lot as Matt Levine is arguably the best financial reporter of a generation
I have to admit the tweet is pure cringe, but I can't see anything wrong with the youtube. Most of the answers seem reasonable if you don't try to interpret in the worst possible light and factor in that there's zero context provided.
These people are supposed to be some kind of geniuses but everything that comes out of their mouth is contentless drivel. Caroline says at best she's using elementary school math. The articulation SBF provided of how the system works was literally something like 'A box you put coins into and take money out of' which he then explained to be a ponzi scheme in everything but name. How on earth did these kids come to be in charge of such massive amount of capital? The whole thing defies logic.
Readit News
Reading as others, apparently as ignorant as me, ask questions about crypto, etc. the in-crowd seem to get it, seem to understand it. I find that generally the case with anything monetary/financial though: the people that do this complex stuff seem to understand it but seem unable to explain it in a way that someone as simple as me can understand.
In order to play the crypto game you have to learn this absurd set of rules. And there's something about crypto though where the proponents almost revel in other's ignorance. I've had a hard time deciding whether the proponents really understand it (and all of its nuances) or if pretending you understand it in fact part of the game.
But it's not complicated at all.
Buy some crypto. Convince more people after you to buy it too - price goes up. If more people are selling than are buying, price goes down. Time your exit.
In the end, everyone loses - because there's always going to be more money going out (to pay the electricity bills and suchlike) than there is coming in.
If you're lucky, you might be able to get more money out than you put in. But it's pure luck in gambling on the timing, it's not about being smarter than other people.
Another way to view it, is as a digital economy running on a different set of technologies. You don't need to "invest" or "time the market" or anything, you just buy ETH to use it as a gas token.
Buy some ETH, an amount you are OK to write to zero like you would a hamburger or movie ticket purchase. Move the ETH off a CEX into your own self custody wallet to understand what it means to hold an asset with nothing but a private key. Convert it to stable coins with DEX like Uniswap, to avoid thinking about price. Send them to and fro, use DeFi, buy a ENS domain. It might cost you $10-50 total but you will probably come out of the experience with a better understanding of crypto, and you might also start to see traditional banking infrastructure differently, maybe slower or less verifiable or less secure or too centralized or too hard to build programmable interfaces on top of.
Along those lines, it always seemed like an Emperor's New Clothes kind of scam to me ("These are the finest hashes!"). There was always this dialog in my head when the crypto bros would extol it's virtues that went something like "Wait, it's just a hash, right? But what if they're on to something? Nah, they're not onto something... but they seem to be making money... but it seems like a ponzi scheme where the people who got in early can cash out, but the people who jump in later lose money... c'mon, how is it not a ponzi?"
> I don't understand crypto (didn't understand derivatives either)
Never invest in something you don't understand. That seems to have worked out for you as you didn't get caught up in it.
You are projecting your insecurity - don't focus on the assholes. Most people actually being productive in the blockchain space want you to learn. You are right to think there are lots of marketers/sellers who don't understand what is going on. Listen to the engineers who are talking about the details on discord and on their blogs, not the idiots on Twitter trying pump their bags.
> In order to play the crypto game you have to learn this absurd set of rules.
This is true - people who are playing the crypto game are trying to invent new rules for how society should operate. This is why some things that happen in the crypto world seem incredibly stupid or useless. People are working with different fundamental assumptions.
Crypto requires a constant influx of new investment to continue making that number go up.
The FOMO narrative gets pushed hard for this reason. As long as regular investors are convinced they have to invest in crypto or else they'll miss out, the money continues to flow into crypto.
The problem with these collapses is that it breaks the narrative and makes people wake up to the reality of the game. That's one of the reasons the crypto industry is moving hard and fast to distance themselves from FTX and SBF.
And oh, was it pushed hard by FTX. The infamous "Don't be like Larry" Super Bowl commercial [1] was from FTX.
The FTX bankruptcy has somewhere upwards of a million creditors.
[1] https://www.youtube.com/watch?v=wUlE02RU1AE
It's mostly just speculation, which becomes a "greater fool" thing - you're only going to win if you time it right, there's enough pumping happening for you to profit, and get out before the next crash.
People who try timing it will always fail. I tried trading and timing, and if I compare that to just holding bitcoin and no timing or no altcoin trading, I would have ended up with more.
I'm not the only one it seems due to the famous HODL.
Same as with the stock market, just buy and hold for a long time. Hard to beat that strategy.
There are two sides to crypto. There is the technology side (blockchains, cryptography, consensus) and there is the finance side, the financial products on the blockchain. If you're an engineer you'll easily understand the technology side but there's no way around spending a significant amount of time learning about (traditional) finance to understand how exchanges, derivatives, market making, monetary policy, loans, leverage, and so on work. All of the same ideas apply to crypto.
This "absurd set of rules" mostly applies to the technology side, not the finance side. If you strip out all the marketing, the financial products you find on the blockchain are no different from the products you find in traditional financial institutions, with maybe a few exceptions like AMMs or stablecoins.
My experience has been that the people who understand crypto and who are successful are NOT the people who understand technology, but mostly the people who come from a finance background and can pattern-match their experience to crypto.
absolutely not speaking of anyone on HN (where people seem more learned and aware) but most of those who 'seem to understand it' on Twitter / Reddit etc. are just folks who have put in their money after reading fancy terms and want to 'pump' a given coin. So that they can validate their investments to themselves.
This is just my personal opinion so there's that. I have been wrong about lots of things, could be about this as well :)
I don't understand some of the more complicated concepts like DeFi and flash loans. I mean I could explain some of it but I didn't actually understand it.
That being said, I decided to learn more and got some of that knowledge from Twitter. It's a terrible place to learn because the education is laced with propaganda and it's very difficult to tease out. Something about it makes you put down guards that you otherwise have.
I stopped using Twitter for other reasons and something really interesting happened. It felt like I was coming out of hypnosis. My optimism towards crypto began to fade - probably because outside of crypto circles the general sentiment is that it's a scam.
A broken clock is right 2x a day and it's important to remember you're likely no smarter or dumber because you bought or avoided crypto.
Crypto is indeed very complex. You have everything from AMMs to no-loss lotteries to Arweave perpetual endowments. I spend 10 hours a day in crypto finance and don't understand all of the nuances, so I can see how it might be intimidating. The best way to learn IMO is send a few dollars to Polygon to play with different protocols like Uniswap, Aave, PoolTogether, things like that.
Which is why it will never succeed in its current form.
Both opponents and propontents can be so sure about themselves, either that it's obvious it's all a scam or obvious it has value and huge amounts in the future.
The fact of the matter is that nobody can tell at this moment (I'm sure plenty of you will claim they do).
If you cannot see the potential value yourself, I would advise to stay away from it.
And if there will be something in the future where you can see the potential value, and is high risk/high potential return, you could invest 1% of your portfolio into that one. Worst case you lose 1%, best case you gain 100%. The latter is how it went with crypto, but it could have just as easily turned the other way.
I guess investing in startups is the same, although you need a shitload of money to get into that game.
Bitcoin has a value that rises and falls on a (spectacularly) speculative basis. Apart from the complications of buying/selling/holding Bitcoin, it is no different to trading in something else with perceived value that has active buyers and sellers and which has questionable intrinsic value.
However, there are numerous other schemes, derivatives, exchanges, faux lookalikes, messiahs, manipulators and fakes that make for those absurd rules.
Source: am an asshole.
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And behind "normal currency" I hide a lot of things that I don't know about. Does it has to be stable? Does it have to follow a real currency like the USD?
Just reading the thread here though reminded me of one: is crypto traceable by the feds or not? I've seen people very confidently declare both.
It's all shit man, all the hype is to lure in more sucker bagholders. Who will keep driving the price up.
I have not been involved for a long time though, as the original feelings I got from those early days and the community back then seems to have changed completely. Now its all bullshit shell games and scams.
But yes, cryto industry is much more centralized than before. Centralization without regulation is the root of all evils.
We don't need deep tech understanding of Cryto to know that centralization without regulation is problematic. History of finance has proven it again and again and again.
Those who trusted FTX are either dumb or greedy. Perhaps both.
As a crypto adopter, the best we can do is:
1. Stay away from unregulated centralized company like FTX, Binance, Tether, etc. 2. Stay dicentralized.
It's not that complicated - you get a record in a globally distributed trustless database that say you own something, and as new records are added to the database stuff gets moved around.
People who just held BTC in their own wallets over all of these waves, didn't lose custody of the keys or sell, did marvellously well. Internationally, BTC remains useful to countries with unstable currencies; not because ordinary people are all interested in holding it for its own sake, but because it enables banking and payment services outside of the traditional system, which means that in some parts of the world you can go to "a guy in the market with some phones" and he can set you up with options for exchanging currency, getting remittances, etc. Often USD is used on one side of the trade rather than a native crypto asset; it's crypto being used as a pragmatic tool rather than a manifest ideology.
In contrast, people who really try to trade the market actively either have an "angle" for getting an information advantage(e.g. they possess some data or influence, in the way that SBF did), or they are most likely gambling with leveraged bets and getting sliced to pieces by highly optimized trading bots.
If you take a position in crypto as a simpleton(which is my standpoint, and shouldn't be taken as gospel investment advice), it's better to move slowly, accept absurdly high volatility and just aim to survive; do not use products that "give you some help with that"; assume the tech is sharp-edged, use official wallets, and keep careful track of the keys. Many people who work on crypto don't actually own a lot of it.
You might want to start reading Matt Levine’s excellent Bloomberg column, he has a knack for simplifying things. He also published an excellent primer on crypto.
Maybe CZ did outplay SBF, but aside from the optics it doesn't seem anywhere that salacious. As was summed up earlier today in an NPR segment on this story "airlines don't compete on safety." In other words, it is in the interest of every exchange that the exchange industry is on the whole viewed as being comprised of trustworthy actors. Crashing FTX doesn't seem an optimal move given the already precarious state of the crypto industry these days.
Speaking of optics, the author also made a nonsensical analogy "more opaque than a dog with glaucoma" when describing the inner workings of FTX. Quite certain they meant cataracts – the clouding of the lens of the eye – not glaucoma, which is damage to the optic nerve.
Obviously removing a top competitor that’s doing straight up robbery is something that should always be done. We are talking about awful actions.
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"I’m meeting in-person with regulators and working with the teams to do what we can for customers." https://twitter.com/SBF_FTX/status/1592604699693580289
"So what can I try to do? Raise liquidity, make customers whole, and restart." https://twitter.com/SBF_FTX/status/1592710177152995328
"“People can say all the mean things they want about me online,” he said. “In the end, what’s going to matter to me is what I’ve done and what I can do.”
He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.”
Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”
So he was planning a series of cryptic tweets? “Something like that.”
But why? “I don’t know,” he said. “I’m improvising. I think it’s time.”"
..uh.. huh --
Massive amounts of Selegiline, probably.
From the balance sheets circulating, there are still a lot of assets there. Some of it is fantasy but some of it is real but various levels of liquidity.
Im sure FTX, Sam and everyone associated is looking at how they can turn an $8 billion hole into a $3 billion hole.
I don’t think he or FTX are coming back because the reputation is destroyed, but I don’t see this ending in an $8 billion total loss.
I am tempted to put my money where my mouth is and buy some FTT for a somewhat positive announcement soon, but maybe that’s just degenerate gambling!
1. His tweet thread made me throw up in my mouth a bit. Blaming it on "liquidity" is laughable. Liquidity problems would be like "I own a lot of real estate and it would take me a long time to sell". Alameda's problem was a huge chunk of its balance sheet was FTT - it was fundamentally impossible to ever liquidate those tokens without guaranteeing to tank the price of FTT. Never mind the whole issue that customer funds were never legally his to loan to Alameda in the first place, regardless of crypto regulations or lack thereof. What happened to customer funds was simply theft.
2. I'm not a psychologist, so I don't necessarily want to misuse the term "sociopath", but I have seen this trait in some people that is closely linked to a lack of conscience. That is, I would have never been able to do what SBF and gang did by stealing customer funds to prop up Alameda. And it's not because I'm some wonderfully moral person, it's because I would have become physically ill with guilt and lack of sleep. This is also why I'll never be able to run a large company or handle billions of assets - it would just be too much stress for me. There is a fine line between needing to have a healthy detachment from consequences you may cause, and being a sociopath. The more I hear from SBF just the more I'm convinced he's not on the "healthy detachment" side of things.
The government is doing the opposite that it should be doing.
Provided he told all the right people to get out while the getting was good, he's got good reason to be confident. I bet he knows about a lot of skeletons in closets too, although people tend to wind up not killing themselves in prison when they try to use that kind of leverage against the mob, so he'd be well advised to take his flailing about the wrists with a sauteed lettuce leaf if it came to that.
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Is this supposed to be implying something specific?
https://www.msn.com/en-us/news/politics/democrats-took-his-s...
> “So, I think I’ve paid it back,” Gallego said.
I don't think he has the same definition of "paid it back" as most people do.
https://fortune.com/crypto/2022/11/15/politicians-sam-bankma...
There seems to be an attempt to sell a narrative which blames Binance for this. That's bogus. We know now that FTX was so looted and so broke it was doomed. The only question was what would pop the bubble.
This is straight theft of customer assets, like Madoff. As with Madoff, once there was a downturn, it all came apart.
Instead, we had this:
https://www.bloomberg.com/graphics/2018-recovering-madoff-mo...
https://en.wikipedia.org/wiki/Recovery_of_funds_from_the_Mad...
So some future Irving Picard will have the task of getting people some of their money back. I wouldn't want that job.
Also enron was also just speculators losing money
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The balance sheet showed billions of dollars in assets for coins that had tens of millions in liquidity. There's an 8 billion dollar hole in the balance sheet. It's pretty clear they used customer deposits to pay back lenders. Why would CZ buy a company that's nearly an Enron level fraud, and due for a criminal investigation. https://www.visualcapitalist.com/ftx-leaked-balance-sheet-vi...
SBF describes coins like a ponzi with no shame https://www.youtube.com/watch?v=C6nAxiym9oc
This was Alameda CEO https://www.youtube.com/shorts/qvURq4jaUcA
https://twitter.com/carolinecapital/status/13790363463003054...
Meanwhile, after 1 - 2bn in customer funds are missing. Everyone is asking Sam to say what happened. Sam proceeds to troll by writing the words "What happened" one letter at a time, with an Elizabeth Holmes-like legal disclaimer that he's not going to recall any of the details.
Just offering that just a few minutes into that video, I saw everything I hate about many youtubers' style, generally. I can't describe it, but there it is.
I listen to Odd Lots. Generally, that podcast keeps things thoughtfully presented. I remember that episode and it reinforced distrust of crypto.
I honestly trust him as much as Matt Levine when it comes to Crypto. Which is saying a lot as Matt Levine is arguably the best financial reporter of a generation
>https://twitter.com/carolinecapital/status/13790363463003054...
I have to admit the tweet is pure cringe, but I can't see anything wrong with the youtube. Most of the answers seem reasonable if you don't try to interpret in the worst possible light and factor in that there's zero context provided.