[HN Gopher] TikToker makes 'scamcoin' as a joke and within an ho...
___________________________________________________________________
TikToker makes 'scamcoin' as a joke and within an hour it's worth
$70M
Author : doener
Score : 271 points
Date : 2021-04-28 11:32 UTC (11 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| okareaman wrote:
| Who really thinks it's worth $70M?
| vallas wrote:
| Millenial rager
| jqpabc123 wrote:
| What happens once corporations start producing their own crypto?
| Or just start manipulating existing ones for fun and profit ---
| like Musk.
|
| There is no end game where crypto speculators don't lose a lot of
| money.
| scsilver wrote:
| They do, its called a gift card.
| cblconfederate wrote:
| they already do, it's called stocks, the difference is it's
| regulated but not without a lot of leeway
| notahacker wrote:
| And stocks give you legal ownership of a portion of an actual
| business with actual assets and profit streams to
| redistribute
| jayd16 wrote:
| What would be some realworld differences between owning a
| coin and owning a non-voting, no dividend stock?
| jqpabc123 wrote:
| To be like crypto, it would have to be a no dividend, no
| asset, no income, no identifiable market company.
|
| In fact, it wouldn't be a "realworld" company at all.
|
| It would just be electrons floating on the internet
| ether. It's only real purpose would be to entertain those
| who speculate that others can be convinced to make the
| same mistake they have made.
|
| But to finally answer your question, the real difference
| between this sort of company and crypto is that sane
| investors would never buy stock in it.
| PragmaticPulp wrote:
| > To be like crypto, it would have to be a no dividend,
| no asset, no income, no identifiable market company.
|
| In other words, you'd have to subtract everything of
| value and leave only the shares themselves. That's
| essentially what crypto is: Shares of a finite number
| that can be moved around between accounts, but don't
| represent anything other than themselves.
| jqpabc123 wrote:
| _In other words, you'd have to subtract everything of
| value and leave only the shares themselves._
|
| The reality is actually even more extreme and bizarre.
|
| The company would have to avoid providing any real
| overall value to society while consuming large amounts of
| energy in some cases.
|
| Crypto is a financial wonder; a virtual black hole that
| sucks in money and resources under the weight of it's own
| gravity.
| bidirectional wrote:
| Probability of a payout in event of liquidation (low for
| stock, nothing for coin).
| PragmaticPulp wrote:
| When all we see are stock prices next to crypto prices,
| it's easy to forget that stock represents actual
| ownership of a company.
|
| When you buy a stock, you own part of that company,
| including all of the cash on their balance sheet, their
| inventory sitting on shelves, income from their business
| activities, any buildings they own, their IP, their
| brand, and so on. These are real, valuable things that
| are divided into ownership shares and sold to people.
|
| Crypto removes all of the actual ownership of things and
| just skips straight to shares that don't represent
| anything. Take stocks and subtract all of the actual
| underlying assets and value, and you basically have
| crypto as traded on the exchanges.
|
| Remember that cryptocurrency has no notion of market
| price or exchange rate to USD. The exchange rate that
| everyone focuses on is not a function of the blockchain
| or cryptography. It's purely a function of the exchanges
| thebean11 wrote:
| Ethereum rakes in a massive amount of money in fees, which
| in a future version will be distributed to stakers.
| cblconfederate wrote:
| same as what ICOs would do
| trident5000 wrote:
| Seems like this is said every year, but to date they've made an
| awful lot of money.
| cmrdporcupine wrote:
| That's literally how speculative bubbles work.
| trident5000 wrote:
| Speculative bubbles dont last for over a decade and deflate
| and then reinflate over and over - thats called a cyclical
| trend. If you dont think cryptocurrency is a thing that
| will be here to stay then you can have a word with almost
| every single asset manager, brokerage, and payment medium
| thats adopting it. The idea that its a bubble thats going
| away is frankly absurd at this point.
|
| loceng (im out of replies so typing response here): You
| mean like stocks? Every asset in existence has turnover
| with new buyers that take out the old. Early adopters get
| rewarded for taking the risk, this is nothing new.
| dumbfounder wrote:
| We refer to the first Internet boom as a bubble. The term
| bubble, as it is commonly used, does not mean it is going
| away. I think you are just making a semantic argument.
| AnIdiotOnTheNet wrote:
| A cryptocoin speculator falls out of a 50th story window. As
| he falls past an open window on floor 30, he is heard to say
| "looking good so far!".
| loceng wrote:
| You mean the early adopters who aren't currently left holding
| the bag - and for the later adopters to make an awful lot of
| money, they need the rest of society to buy into he MLM-Ponzi
| structure - so then they're the latest holding the bag, and
| where the largest unnecessary and unreasonable wealth
| transfer in history occurred - shifting double digit
| percentage of buying power of all society redistributed
| weighted towards the earlier adopters; that buying power then
| as an agreed promise to allow earlier adopters to extract
| more from all of society than the later/final adopters for
| doing basically nothing except pumping the MLM-Ponzi scheme
| with shallow hype-propaganda.
| cmrdporcupine wrote:
| Helps that it's a great tool for money laundering. "Love"
| this dystopia where the interests of organized crime, tax
| evaders, and easy money techno-fetishists combine.
|
| Western Roman empire fell apart in part because of its
| inability to raise revenues. When states can't raise taxes
| to provide services, justice, and protection, private lords
| and strongmen fill the void.
| loceng wrote:
| Very good points. Reminds me of Noam Chomsky when he
| spent 10 minutes explaining how the Republican party was
| first taken over by corporate interest groups/industrial
| complexes: https://boingboing.net/2019/04/20/useful-
| idiots-r-us.html
| sadness3 wrote:
| You ask as if this isn't already happening. See Facebook,
| Signal, some banks, power and electricty companies (telcoin,
| electroneum) Also many of the blockchain/crypto projects are
| themselves companies of various sizes, building real-world
| business involved with the crypto they're producing.
|
| What happens is that people use tokens with varying degrees of
| de/centralization, and occasionally prefer them over the
| currencies of their own countries.
|
| What happens to these people, and speculators, varies, and
| depends on the level of centralization, whether the central
| control is used in a manipulative way, and finally whether the
| crypto in question has economics grounded in real-world use
| cases which will drive demand independent of speculation.
| sysadmon wrote:
| What happens is eventually the law of trade-offs comes in to
| play, and so much money is being moved around crypto that other
| aspects of the economy are being ignored. Whether the demand
| for these other aspects will be strong enough to shift
| everything back to normal, I don't know.
| cblconfederate wrote:
| i think there was a ponzicoin once, there were many similar
| actually
|
| https://techweez.com/2018/01/26/ponzicoin-crypto-scheme
| st_goliath wrote:
| I've come across the ponzi scheme comparison a few times before
| and have pondered on this occasionally.
|
| I'm not sure if this is really an accurate description for the
| whole blockchain-currency-foo tough.
|
| IMO a better (or simpler) comparison might be with a game of
| musical chairs.
| trident5000 wrote:
| Theres plenty of scam penny stocks with the same market cap.
| Thousands actually.
| vmception wrote:
| The important things to look for here is:
|
| 1) Distribution schedule
|
| 2) Liquidity pool providers
|
| 3) Bots
|
| 1 is important because people can't sell it into liquidity if
| they never bought it first. How did they acquire it? Just minting
| it doesn't mean they have it, and without a liquidity pool they
| can't get it unless the token was sent to them by the issuer.
|
| 2 this is important because Automated Market Making systems
| (AMMs) allow for anyone to create a robust cross-routing and
| smart-routing exchange system for any asset with the click of a
| button. And when you create one of these, many bots look for them
| to immediately trade and distort the price. So the very first
| thing I did in response to this headline was look at the this
| asset on the AMM. The leading AMM on the BSC Blockchain is
| PancakeSwap. And you can see that many of the recent transactions
| on the block explorer are to a PancakeSwap SCAM liquidity pool.
| Who posted liquidity? The TikTok video suggests the guy doesn't
| own any or know how to sell any, so was he using a service that
| sets this up? What service is that because it seems pretty
| powerful and I want to know about it.
|
| 3 bots. Across all AMMs many bots have cropped up that
| immediately look for any 5-figure liquidity pool and immediately
| bid them up. Its gotten so predictable that people create copy-
| cat liquidity pools just to capture funds in the more liquid
| token and pull liquidity as they have now collected more of the
| liquid asset than they started with and have less of the illiquid
| asset they were trying to sell. This is considered to be an
| actual scam and called a 'rug pull'.
|
| In this case, it is more likely that he posted liquidity in this
| asset, bots immediately bid it up, which immediately got
| validation attention from other people and people kept bidding it
| up on low liquidity. Only a fraction of the tokens in existence
| are in the pool, and this price discovery is being extrapolated
| to the total value of the asset. If something less likely
| occurred, I would like to know what that is because the
| ramifications are even more enticing.
| ford_o wrote:
| What is AMM and liquidity pool@
| vmception wrote:
| AMM's are a category of decentralized, non-custodial
| exchanges that are also autonomous. Basically this means
| there is no incorporated or any financial intermediary needed
| to set them up, and no gatekeeper needed to set them up, and
| no custodian of funds that are used to trade on them.
|
| In this type of exchange system, order books and market
| makers are replaced by liquidity pools, where individuals put
| up two assets (for example a liquid asset like Ethereum and a
| less liquid asset that they wish to have liquidity in). This
| process automatically spawns a smart contract from a smart
| contract factory, which has all the functions for maintaining
| that liquidity pool in perpetuity. The smart contract has no
| administrator and it allows other market participants to
| trade in that asset. The additional beauty is that the other
| market participants do not even need "Ethereum" the liquid
| side of the trading pair in order to buy the asset, as the
| smart contract factory will route whichever asset the trader
| owners between liquidity pools. For example, if they had
| Tether, the smart contract factory will find the
| Tether/Ethereum liquidity pool, and the Ethereum/NewToken
| liquidity pool and exchange it at the best price.
|
| Also anybody else can add extra liquidity to the liquidity
| pool.
|
| All liquidity pool providers earn trading fees from people
| that buy and sell. Turning them all into market makers.
|
| The final point is that the market decided that these trading
| fees are not a good enough incentive to add liquidity to
| liquidity pools, so it is important to know that all
| liquidity pool providers actually receive a bearer token
| representing their share of the liquidity pool. Third parties
| have created additional financial products that allow
| depositing this bearer share and earning other assets for
| doing so. So people that want to passively earn have to
| provide liquidity and lock up that liquidity for some time,
| and it is working extremely well.
| dstick wrote:
| Is it weird for me to wish that this kind of creative thinking
| would be put to better uses? :)
| vmception wrote:
| Yes I would say that is weird, although none of the above
| would be considered creative anymore. Maybe 10 months ago
| during the first two months of the first AMM releasing its
| updated version, Uniswap 2.0. It is very easy to have a node
| or python bot set up to look for liquidity pool deployment
| transactions and immediately create a transaction to buy the
| asset in the second argument field.
|
| Uniswap 3.0 is coming out next week, so if it is as
| monumental as 2.0 last year, this summer should have just as
| much creativity as last summer, so you'll have plenty of
| things to criticize there. All the other AMMs came out after
| Uniswap 2.0 and have slight differences just using Uniswap
| 2.0 code. It is unlikely they will update exactly to Uniswap
| 3.0 but they'll follow the market.
|
| This space moves extremely fast with lots of competitors if
| you know how to code and haven't been spending the last half
| a decade doing something meaningful like working for an ad-
| retargeting conglomerate while complaining about
| cryptocurrencies.
| tofuahdude wrote:
| > haven't been spending the last half a decade doing
| something meaningful like working for an ad-retargeting
| conglomerate while complaining about cryptocurrencies
|
| best line in this whole thread!
| argvargc wrote:
| Wait until you discover traditional finance derivatives ;)
|
| https://demonocracy.info/infographics/world/lqp/liquidity_py.
| ..
| jcpham2 wrote:
| Except the barrier to entry in the crypto to space is nill.
|
| Kids are learning order books and depth charts because they
| _can_ Not because traditional finance gave a fuck about
| them or even tried to educate them.
|
| For better or worse, that's the game in 2021.
| [deleted]
| ProAm wrote:
| Be the change you'd like to see in the world.
| jcpham2 wrote:
| Best comment of the day understands what has happened to crypto
| and the evolution of liquidity
|
| At first we called them all scamcoins, shitcoins, then it
| became altcoins as the market matured
|
| Now it's just all giant pools of liquidity to fuck around in.
| It doesn't matter what you think the value is. It's liquid or
| it isn't.
| vmception wrote:
| Exactly.
|
| Currency was created because barter sucked, Cryptocurrency
| was created because _some_ people didn 't like _some_ aspects
| of prevailing currencies, now the technology supporting
| cryptocurrencies has made barter not suck, so we 're back to
| barter with just gigantic liquidity pools that can accurately
| route an order between two arbitrary assets and keep their
| prices in sync.
|
| So if you're keeping up, barter doesn't suck any more and the
| market has accepted that, which is a game changer.
| jhardy54 wrote:
| I think you might enjoy Debt: The First 5000 Years. Lots of
| great info on the history of money and how it's used today.
| samizdis wrote:
| I second that recommendation, but I liked all of David
| Graeber's books and essays; his untimely death was a real
| loss.
|
| I was searching for a decent/academic review of Debt in
| order to post it here, but found one on Github [1] giving
| an itemised list of the book's main points, as seen from
| the reviewer's perspective, and containing a link at the
| top of the review to a .pdf of the book itself (on
| libcom.org and it seems to be complete).
|
| https://github.com/advancedresearch/mix_economy/issues/19
| rojeee wrote:
| If you like Graeber then you will also like Alfred
| Mitchell-Innes, a British diplomat, who in 1913-14 wrote
| two papers about money as credit. The first called "what
| is money?" [1] and the second called "the credit theory
| of money" [2]
|
| Here are the opening paras from "what is money":
|
| > The fundamental theories on which the modern science of
| political economy is based are these:
|
| > That under primitive conditions men lived and live by
| barter;
|
| > That as life becomes more complex barter no longer
| suffices as a method of exchanging commodities, and by
| common consent one particular commodity is fixed on which
| is generally acceptable, and which therefore, everyone
| will take in exchange for the things he produces or the
| services he renders and which each in turn can equally
| pass on to others in exchange for whatever he may want;
|
| > That this commodity thus becomes a "medium of exchange
| and measure of value."
|
| > That a sale is the exchange of a commodity for this
| intermediate commodity which is called "money;"
|
| > That many different commodities have at various times
| and places served as this medium of exchange,--cattle,
| iron, salt, shells, dried cod, tobacco, sugar, nails,
| etc.;
|
| > That gradually the metals, gold, silver, copper, and
| more especially the first two, came to be regarded as
| being by their inherent qualities more suitable for this
| purpose than any other commodities and these metals early
| became by common consent the only medium of exchange;
|
| > That a certain fixed weight of one of these metals of a
| known fineness became a standard of value, and to
| guarantee this weight and quality it became incumbent on
| governments to issue pieces of metal stamped with their
| peculiar sign, the forging of which was punishable with
| severe penalties;
|
| > That Emperors, Kings, Princes and their advisers vied
| with each other in the middle ages in swindling the
| people by debasing their coins, so that those who thought
| that they were obtaining a certain weight of gold or
| silver for their produce were, in reality, getting less,
| and that this situation produced serious evils among
| which were a depreciation of the value of money and a
| consequent rise of prices in proportion as the coinage
| became more and more debased in quality or light in
| weight;
|
| > That to economize the use of the metals and to prevent
| their constant transport a machinery called "credit" has
| grown up in modern days, by means of which, instead of
| handing over a certain weight of metal at each
| transaction, a promise to do so is given, which under
| favorable circumstances has the same value as the metal
| itself. Credit is called a substitute for gold.
|
| > So universal is the belief in these theories among
| economists that they have grown to be considered almost
| as axioms which hardly require proof, and nothing is more
| noticeable in economic works than the scant historical
| evidence on which they rest, and the absence of critical
| examination of their worth.
|
| [1] https://www.newmoneyhub.com/www/money/mitchell-
| innes/what-is...
|
| [2] https://www.newmoneyhub.com/www/money/mitchell-
| innes/the-cre...
| TomSwirly wrote:
| > Now it's just all giant pools of liquidity to fuck around
| in. It doesn't matter what you think the value is. It's
| liquid or it isn't.
|
| So the idea of "value" just goes by the board? People just
| make up "pools of liquidity" out of nothing and are instant
| billionaires?
|
| And this is supposed to replace money?
| jcpham2 wrote:
| I don't remember stirring the currency vs. store of value
| debate...
|
| Is it necessary to agree with a market just to participate
| in it?
| cryptica wrote:
| Yes and this is a good thing. It will become impossible to
| say how much money someone has; everything will become
| decentralized and competitive as it should be.
| zibzab wrote:
| Well, Dogecoin started as a joke and its worth billions today.
|
| https://www.wsj.com/articles/dogecoin-is-a-joke-but-its-no-l...
|
| https://www.marketwatch.com/story/the-cryptocurrency-dogecoi...
| eli wrote:
| It's still a joke
| Cthulhu_ wrote:
| But it's a joke that makes some people millionaires.
|
| I for one will be laughing all the way to the bank if Doge
| reaches err... $200?
| PragmaticPulp wrote:
| > But it's a joke that makes some people millionaires.
|
| Where does that money come from? There isn't a Doge
| Corporation backing this up that sells actual products and
| collects actual revenue.
|
| The only way to become a millionaire through DogeCoin would
| be to invest $10,000 at the low and sell at the high. Who
| are you selling to? New entrants, hoping to get another 10X
| or 100X run-up, funded by even newer entrants, also hoping
| for their 10X and so on.
|
| Everyone's hoping to become a millionaire, but in reality
| they're mostly just pumping money into a system to make the
| previous entrants millionaires.
|
| With Doge specifically, a lot of people have lost money
| when they bought in at previous highs. Who did they buy
| from? Previous owners looking to exit before the music
| stops.
|
| It's not so much a joke as a game: Put money in, see how
| many other people you can trick into putting money in after
| you, and then sell them your coins before it all collapses.
| sadness3 wrote:
| It has value to me, because it makes me happy to hold
| some. I also find it useful as a low-fee way to transfer
| assets between exchanges, because it's one of the most
| widely supported coins across exchanges. Both of these
| things make people want (value) it.
| wtracy wrote:
| > I also find it useful as a low-fee way to transfer
| assets between exchanges, because it's one of the most
| widely supported coins across exchanges.
|
| Are you looking at a different set of exchanges than I
| am? Neither Blockfi, Coinbase, nor Celsius support Doge.
| RandallBrown wrote:
| I've been trying to explain this to my friends but they
| keep insisting that Dogecoin has real value.
| Aunche wrote:
| The funny thing about dogecoin is that it was designed to
| be inflationary, so it's basically guaranteed to lose you
| money in the long run.
| karpour wrote:
| Many people who invested in Doge assured me that this is
| _definitely not_ a pyramid scheme.
| esotericsean wrote:
| Just my opinion, but I think one key difference here is
| that while yes there are tons of people thinking and
| hoping they're going to get rich by "investing" in
| Dogecoin, with the type of limit Doge has, it's able to
| be used as real currency. We don't actually want the
| value of Doge to skyrocket _too_ much because then it
| just becomes another store of value like Bitcoin. One of
| the slogans you 'll hear a lot in the Doge community is 1
| DOGE = 1 DOGE. And the point is to convert your fiat into
| Doge and use that as currency instead. Not pump and dump.
| Out of all cryptos, Doge is one of the best options for
| that. But we'll see what happens.
| rspeele wrote:
| I see this in the Bitcoin community too. Lots of people
| _say_ "I'll _never_ sell my Bitcoin for dollars. I 'll
| use it once it becomes the world's reserve currency."
|
| But selling, and trading for goods, are equivalent. If
| you win big on a coin, it doesn't make a difference
| whether you sell your holdings for $200,000 USD to buy a
| Lamborghini or directly trade your holdings for the same
| car. Either way there are only so many Lambos to go
| around and lots of paper millionaires thinking they can
| buy one.
| captn3m0 wrote:
| 1 BTC = 1 BTC
|
| used to be a thing as well.
| eli wrote:
| It's a joke that's also a pyramid scheme.
| coliveira wrote:
| Making money on these things is like playing the lottery.
| You buy a small ticket hopping that it is your turn to
| become millionaire. And it happens with the same frequency
| of the lottery. One in every few million will become very
| rich, like the ones who bought bitcoin initially, and the
| others will be spending money chasing their next lottery
| ticket.
| DebtDeflation wrote:
| A joke that makes some people PAPER millionaires. People
| are ignorant about liquidity risk and just assume there
| will be buyers when they want to cash out.
| vgeek wrote:
| Exactly. When you look at the depth of the order books
| (https://bittrex.com/Market/Index?MarketName=USDT-DOGE),
| even selling $1MM will shift the price down by nearly
| 50%.
| noxer wrote:
| The order books are not "real" its mostly bots who place
| and remove orders on the fly and they react to the price
| and to the price on other exchanges. There is no way to
| know how much the price would drop if someone sells for
| $1MM. also selling all at once, selling it over a few
| minutes or selling it over an few hours will drastically
| change the effect. No one who wants to maximize profit
| would sell fast if liquidity is low because obviously
| your average at lower then.
| wickoff wrote:
| Bittrex is a dead exchange these days. On a particularly
| frothy day DOGE hit something like 80B in voilume across
| all pairs and exchanges.
| argvargc wrote:
| This is a valid point in general, but for top tier
| currencies such as Doge, there are literally hundreds of
| exchanges with such orderbooks so it's not a concern.
|
| Further, most large trades don't take place on exchanges
| public orderbooks, but on private OTC desks with separate
| books, for this reason.
|
| Generally, large buyers are matched OTC to large sellers
| at prices a little different to the on-market, but better
| than relying on on-market liquidity.
|
| The same happens in traditional finance, or anywhere. For
| example, if a taxi company wants to buy 1000 cars, they
| won't attempt to get them from the local yard.
| josu wrote:
| Someone must be selling them at 30 cents, for other
| people to buy it. So some people are definitely making
| money.
| meowster wrote:
| I used to be active in crypto subreddits. It's incredible
| how many people don't realize 'for every buyer, there is
| a seller'.
|
| A lot of the commenters did not grasp basic economics.
| eli wrote:
| I wonder how often they're the same person
| graeme wrote:
| Yes but that doesn't mean people are selling large
| amounts each day. What is the volume? And how much of it
| is wash trading?
| josu wrote:
| The volume has been huge, at some point it was the most
| traded perp on FTX.
|
| I don't think wash trading is that prevalent (except for
| maybe in some minor books on Binance).
| [deleted]
| Giorgi wrote:
| That can be said about any stock though... or you know...
| debit card and banks.
| camjohnson26 wrote:
| It has made many people actual millionaires, there's
| plenty of liquidity in Doge.
| agumonkey wrote:
| It used to be a joke. It still is. But it used to too.
| awkward wrote:
| It is a joke, but the goal of the joke is to provide a friendly
| onramp to cryptocurrency
| skunkworker wrote:
| I went and looked at some old files I had, turned out I
| downloaded dogecoin-qt back in 2014 but never did anything with
| it and just had an empty wallet, it was considered a joke at
| the time but became "real" when it sponsored a NASCAR car and
| was on a livery.
|
| https://www.theguardian.com/technology/2014/mar/27/nascar-do...
| mousepilot wrote:
| so is there any way to even estimate how much money was actually
| spent buying specific crypto coins?
| Wassimo wrote:
| It's time the crypto scam gets shutdown. But no one really cares.
| gruez wrote:
| My guess is that the tiktoker is somewhat famous and people are
| just piling on like people pile on to NFTs.
| airhead969 wrote:
| I wonder if NFTs are instead facilitating wealth concealment,
| money laundering, or rich people are throwing money at it for
| sport rather than deliberate speculation. Or, is there so much
| irrational speculation occurring as a foreshadowing harbinger
| of another full Great Depression (rather than the under-
| recognized pandemic economic pause).
| corobo wrote:
| You mean like regular art? Maybe not yet but let the how-to-
| NFT disseminate through their various assistants and reports
| :)
| Loughla wrote:
| >foreshadowing harbinger of another full Great Depression
|
| I genuinely can't get it out of my head right now. It seems
| like anything and everything collectable is worth more,
| because people are desperate for safe stores of value. I used
| to buy, restore, and flip old woodworking tools, and as a
| hobby, I collect nes, snes, and n64 games/systems. The prices
| are getting outrageous, genuinely just outrageous. An older
| lathe that would've been <$100 two years ago just sold for
| ~$500 at a local auction. Games, game accessories, and other
| nintendo collectibles have almost doubled in price near me.
| It's ridiculous.
|
| I can't shake the feeling that we're headed for a doom and
| gloom situation with massive unemployment, hunger, and human
| suffering in the near future.
| mitchdoogle wrote:
| I doubt people are treating an old $500 lathe as a store of
| value. We are still in a pandemic and people are still
| cooped up in homes. Which means hobbies have exploded over
| the last year. Many of my usual purchases at Michaels and
| Joann have been difficult to find over the last several
| months. There are just more people collecting and more
| people doing flipping like you
| Bombthecat wrote:
| Yes, yes it is a harbinger about underlying currency value
| issues.
|
| There is a game economic theory guy on YouTube (German
| though) where he explains it: https://youtu.be/bokHl4zmbPg
|
| Pretty cool!
| pionar wrote:
| I wouldn't worry too much about those exact markets, that's
| cyclical.
|
| I remember in the early 2000s when the internet really made
| finding collectibles easier, the old computer market got
| insane, like $1200 for a standard C64 on ebay, because more
| people were able to bid on it. Those prices eventually came
| back down to earth, $250-$300 for a nice one now.
| jcpham2 wrote:
| The best time to sell beanie babies was when my grandmother
| was buying & collecting beanie babies.
|
| I learn a lot by this sentence and I say it to myself over
| an over in our _new and improved_ social media fueled
| world.
| berryjerry wrote:
| NFTs are mostly manipulated markets. No that picture of a
| bitcoin symbol did not sell copies to 300 people for $1000
| each, netting them $300,000. It sold to the same person who
| made the picture 299 times and 1 person who got scammed into
| thinking there is a market for $1000 images on the internet,
| netting the owner $1000.
| airhead969 wrote:
| Welcome to the dogecoin multiverse. All we need now are scamcoin
| smart contracts so we can auction off NFTs for illicit drug trade
| money laundering.
| DebtDeflation wrote:
| Or NFTs for farts: https://nypost.com/2021/03/18/nyc-man-sells-
| fart-for-85-cash... A smart contract that paid out for each
| incremental fart would be a real innovation.
| dr-detroit wrote:
| magic and yugio cards dominate that space currently. Good luck
| disruption Hasbro Megacorp they are all in on making alt
| currency for human traffickers.
| grouphugs wrote:
| this hyper manipulative misinformation, you people are fucking
| retarded
| noxer wrote:
| Posted this https://coil.com/p/XRPFax/Understanding-the-Crypto-
| Market-Ca... here the other day. Its the exactly that. People
| just dont understand that market cap is a garbage value that has
| no meaning at all.
| ck2 wrote:
| But million dollar NFTs definitely aren't money laundering.
|
| Definitely. Should end well.
| aetherspawn wrote:
| How this works: You have 1 billion coins. You sell 100 coins to
| someone for $100. Now you have nearly a billion dollars (market
| cap). But, do you really? Actually, you don't. Not if nobody is
| willing to pay you for the rest of the coins. The market cap is a
| bad estimate when the actual liquidity is small ($100). When you
| try and sell the rest of the coins, the market cap bubble will
| normalize.
| javajosh wrote:
| Indeed. If you start a religion, and get a single person to
| join it, you can (truthfully!) claim you've doubled the size of
| your congregation!
|
| The reason this scammy verbiage works is because it violates
| "linguistic norms". Congregations are "large" things in peoples
| minds, so when you claim to double it, the image that comes to
| mind is adding a substantial number. By violating these norms,
| you can lie without lying. It's a neat trick, the use of which
| has been mastered by the legal profession. But the technique
| clearly has wider applications, sadly.
| rozab wrote:
| This seems to be about supply and demand, not linguistics.
| dfilppi wrote:
| This technique is the basis for politics
| javajosh wrote:
| There is a reason why virtually 100% of Congress are
| lawyers. (Not sure where to look up the stats on that,
| though.)
|
| Edit: I was wrong. It's "only" ~50% of Congress, assuming
| the numbers are roughly the same since 2016. source:
| https://www.vox.com/polyarchy/2016/6/30/12068490/too-many-
| la... That's still a huge number, compared to the % of
| general population who are lawyers. In the US there are
| 1.4M lawyers; if the pop is 350M then they are 0.4% of the
| population - and a _much_ smaller fraction of the adult
| working population (roughly .02%).
| zuminator wrote:
| I was with you til the last sentence. The adult working
| population is about half of the total population, so
| approx 0.8% are lawyers, not 0.2%, and certainly not
| 0.02%.
| ameister14 wrote:
| >There is a reason why virtually 100% of Congress are
| lawyers.
|
| Yeah, I mean - there's a reason people that write
| software are mostly engineers.
| Taek wrote:
| And yet, if you do this and then give 100 million of those
| tokens to your friend, your friend now owes the IRS $40 million
| USD.
|
| Go figure
| ceejayoz wrote:
| "I didn't want them, though."
|
| "Tough shit, pay up."
|
| Is there an IRS mechanism for rejecting an un-rejectable
| transfer?
| wolfretcrap wrote:
| Some people don't only look at market cap, they look at trade
| volume which again can be faked using wash trading.
| dr-detroit wrote:
| yeah but all you have to do is unload your fake coins on a guy
| in the financial sector who uses the term "fugazi"
| unironically.
| TheAdamist wrote:
| There's a $100 million dollar deli in new Jersey running this
| playbook. Been in the news recently.
|
| And due to news articles people have been buying? Everything
| seems to be a pump and dump but get out before everyone else
| does i guess.
| skizm wrote:
| About that deli, it's actually not $100 million any more...
|
| https://www.bloomberg.com/opinion/articles/2021-04-20/hometo.
| ..
| TheAdamAndChe wrote:
| This is called speculative investing(gambling) and happens in
| frothy markets. Such speculation occurs in bubbles, and they
| pop eventually. Its like a game of musical chairs: someone
| will be left out and hurt by it.
| 542458 wrote:
| The deli _had_ been running this playbook (low volumes giving
| an inflated cap). But since it got famous? Volumes are
| actually decent, and the price is still ridiculous. People
| are apparently deliberately buying into a market failure
| /scam/whatever-it-is.
| camjohnson26 wrote:
| "Fraud creates alpha"
| zzbzq wrote:
| It's the same with cryptocurrency, Tesla stock, Gamestop.
| The market-cap bubbles become a self-justifying cycle.
| Theoretically everything comes back down to earth, but only
| when it runs out of fuel. But the fuel is human insanity,
| which may be unlimited.
| jcpham2 wrote:
| The market can remain irrational longer than you or I can
| stay solvent
| MomoXenosaga wrote:
| Not sure about unlimited. Crashes do happen. Predicting
| those is the holy grail.
| jbverschoor wrote:
| 37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT
|
| https://signalvnoise.com/posts/1941-press-release-37signals-...
| iancmceachern wrote:
| What's is at now?
| camjohnson26 wrote:
| That's true sometimes, but Doge was incredibly liquid so its
| market cap was more indicative of reality. You can look at
| volume to see if this effect is happening for any specific
| coin, but I'm not seeing SCAM listed anywhere to check.
| zepto wrote:
| This is a problem with Market Cap in general even for the
| largest and most solid businesses like Amazon and Apple.
|
| It's a statistic, not a measure.
| Waterluvian wrote:
| Reminds me of the books as a kid that told you what each hockey
| card was worth.
|
| In reality they probably count on most people not circulating
| them.
| wpietri wrote:
| Exactly. The whole concept of "market cap" for commodities and
| currencies is ridiculous.
|
| As a refresher for folks, the term comes from stocks. For
| example, the Nuance stock was trading at $43.58 on April 9.
| Multiply that times the number of shares and you get about $13
| billion. That's the market capitalization. This is a meaningful
| number because if another company wants to buy it, they'll have
| to pay at least that much. And indeed, when Microsoft bought
| it, they paid $19.7 billion. [1]
|
| But commodities and currencies don't work that way. If you want
| to buy a little gold, you pay $57k/kilo. But if you want to buy
| all the gold? There's not enough money in the world. If you
| discover a mountain of gold, can you sell at that price? No
| way. In both cases, the price is a balance point between supply
| and demand at the moment. If you change supply or demand, you
| get big price swings. You can calculate "market cap" for USD or
| gold, but it's not a meaningful number.
|
| That's even more true for cryptocurrencies. Dollars and gold at
| least flow freely. But supply of cryptocurrencies are, as this
| article shows, totally arbitrary. And demand, both actual and
| apparent, is heavily manipulated. Using the term "market cap"
| is just another way to make raw speculation look like
| investment.
|
| [1]
| https://www.forbes.com/sites/joecornell/2021/04/20/microsoft...
| nightski wrote:
| Just because you can't hoard the entire market cap doesn't
| mean it is ridiculous or not a useful measure. If you have a
| very liquid currency or commodity then it is very useful.
| SamBam wrote:
| But "very liquid" is relative to the amount of the entire
| commodity you could theoretically sell.
|
| Stocks are "very liquid" because, outside of some share
| classes, you could theoretically buy nearly _all_ the
| stocks. Even more importantly, you could almost always sell
| your _entire_ portfolio in a single day if you wanted to,
| for the vast majority of stocks.
|
| BitCoin, is that "very liquid?" There are thousands of
| trades every day, but what would actually happen if someone
| tried to unload "all" of the coins? If Satoshi popped up
| and tried to sell their coins, which are nominally worth
| over $8 billion, could they do it? Almost certainly not.
| nightski wrote:
| Something like $50-$100B in bitcoin is traded every day.
| It's not the NYSE but that is pretty liquid in my
| opinion.
| graeme wrote:
| The bulk of that is stablecoins though, of dubious
| backing. You couldn't cash out billions in dollars.
| camjohnson26 wrote:
| I agree with your point, also worth remembering that much
| of crypto trading is wash trading, but the point stands
| that if you bought crypto in the past 10 years you almost
| certainly can sell it all today at the market price.
| jcpham2 wrote:
| My down payment on the new mortgage I'm taking out at the
| bank is not wash trading.
|
| Whether you believe something has value or not doesn't
| matter. Velocity and liquidity matter.
|
| No Satoshi can't sell his billions in a day but he can
| milk the market for millions daily. The market is that
| mature _today_
| thebean11 wrote:
| The same applies to stocks, you definitely could not
| unload (or buy) the entire float in a day. I don't think
| crypto is too different in this respect.
| JumpCrisscross wrote:
| > _because you can 't hoard the entire market cap doesn't
| mean it is ridiculous or not a useful measure_
|
| It sort of does. We can talk about the monetary base, but
| it's not a great way to understand the value of an
| individual dollar because the whole isn't really meaningful
| in a precise way. A whole company can be purchased and
| still have value. That gives market cap, as a metric,
| grounding.
| wpietri wrote:
| Ok. I'll bite, just to see where this goes. Please name 3
| productive uses for the number. Then apply the same methods
| to show how they're useful with both USD and gold. Thanks!
| dahart wrote:
| All the cryptocurrency shenanigans suddenly made sense when I
| read someone's HN comment last year who said something like '
| e-coin _is_ stock you can buy to invest in a company that has
| no assets and produces nothing.' In that sense, it makes
| complete sense why some people intentionally use the term
| "market cap", so you're absolutely right.
| DickingAround wrote:
| The main claim is it's almost as bad a fiat currencies; in
| which case you're buying stock in a company that produces
| nothing, has no assets, is being constantly inflated, and
| has a bunch of rules about who you can give it to and how.
| camjohnson26 wrote:
| You're buying the right to make changes to an extremely
| secure ledger.
| pjc50 wrote:
| Not only that, it's _non-voting_ stock in a company that
| has no assets and produces nothing.
| Taek wrote:
| Whether or not the token explicitly defines governance,
| the owner of a token does have some authority over any
| governance action involving a hard fork, because the
| success of the fork depends on the buy in from the
| economic actors.
|
| You do get meaningful voting rights, but the governance
| process is quite a bit different from a traditional
| company.
| TomSwirly wrote:
| That's useful!
|
| Reminds me of a joke:
|
| Q. What do you call a dog without legs?
|
| A. Doesn't matter, it won't come when you call.
| dna_polymerase wrote:
| I can make the same statement you made about stock price
| about commodities and coins, in that I have to pay at least
| shares_outstanding * current_price to acquire all of a
| commodity or a coin.
|
| The metric works, it's just that people keep making false
| claims from it.
| ceejayoz wrote:
| > I can make the same statement you made about stock price
| about commodities and coins, in that I have to pay at least
| shares_outstanding * current_price to acquire all of a
| commodity or a coin.
|
| You don't, though. The price would change if you attempted
| to do so. You can buy a company because you offer the
| _company_ a value for all their shares; if enough of their
| shareholders approve the deal, it 's done.
|
| You can't do the same with Bitcoin, or copper. Each
| requires reaching out to individual owners/producers, and
| the sales affect the price for the next purchase. If you
| tried to buy all BTC in existence, the price would go up.
| If you tried to offload a bunch, it'd crash.
|
| It's highly unlikely you could sell $1T worth of BTC
| without driving the price massively downwards.
| wpietri wrote:
| Exactly. You can't buy all the gold in the world at the
| imaginary "market cap". Or all of a currency. And if you
| did buy all of a currency, it would be worthless, because
| the whole point of a currency is as a medium for
| exchange. Indeed, that's how they take a currency out of
| service, as they did when they launched the Euro.
| Tenoke wrote:
| Market cap is still useful to compare projects but you do have
| to look at it in combination with liquidity.
|
| E.g. I work on a Cross-chain bridge project (currently for BSC-
| Polygon) [0] and technically we have a market cap of 1.4m right
| now but practically the liquidity in exchanges is still just in
| the thousands so that's all you can cash out if you try to.
|
| On the other hand, comparing e.g. ETH and BTC's market cap is a
| lot more useful since they have a lot of and comparable enough
| liquidity.
|
| 0. https://wpnt.org/
| vmception wrote:
| yes, but that's not quite what happened here. If I post a more
| comprehensive comment I'll link you.
|
| edit, the more comprehensive comment:
| https://news.ycombinator.com/item?id=26968635
| devoutsalsa wrote:
| Economics Explained talked about something similar w/ art. [1]
|
| - Buy N paintings form one artist for $1 million USD a piece.
|
| - Put 1 painting up for auction.
|
| - Have coconspirators bid the painting up to say $20 million.
|
| - Buy your own painting for $20 million, and imply that your
| other paintings by the same artist are also worth $20 million.
|
| - Donate a "$20 million" painting to an art museum (that maybe
| you control) & save $10 million in taxes.
|
| - Complain about tax hikes on the rich as the not-rich
| subsidize your art collection
|
| [1] The Economics Of The Art Market: Why This Painting Isn't
| Worth $450 Million -- https://youtu.be/V5sOuET8UWA
| delaaxe wrote:
| That was insightful
| ludamad wrote:
| You still have to take a capital gain on $1 million -> $20
| million when selling it, right? I suppose the charitable
| offset is much better?
| devoutsalsa wrote:
| Nope. You don't sell it. You donate it. It's considered a
| charitable contribution, not a sale, and that makes it 100%
| tax deductible. [1]
|
| I guess you'd have to spend $20 million on the painting,
| but you're buying it from yourself, so in reality you're
| only on the hook for the 2% fee from the auction house.
|
| [1] https://www.usa.gov/donate-to-charity#item-211605
| josho wrote:
| OMG, I wonder if this is why Trump has his own charities
| that also happen to make frequent donations of
| paintings!?
| nightski wrote:
| Before that though, when you bought your own painting for
| $20M. I'd imagine it would be pretty difficult to write
| off that purchase as a business expense or something. The
| IRS is going to notice a $20M write-off for a business
| with no additional income pretty quick. But you will have
| to pay taxes on the $20M income, even if it is coming
| from yourself.
| cronin101 wrote:
| In the above example you pay capital gains on the one (1)
| $20m initial painting that allows you to then donate N
| "equal value" paintings. So you can dilute the capital
| gains % indefinitely (1/N).
| AnthonyMouse wrote:
| But your tax basis in the other paintings is still $1M.
| If you donate them claiming they're worth $1M, you don't
| get a $20M deduction. If you claim they're worth $20M
| then transferring them is a realization event and you owe
| capital gains on $19M. Then you get a $20M deduction
| which cancels out the capital gains and leaves you with
| just the original $1M deduction for what you actually
| paid, right?
|
| What people really do this for is insurance fraud. Buy
| some paintings for $1M each, get them appraised and
| insured for $20M each, then somebody "steals" them or you
| have a convenient structure fire and make the N*$20M
| insurance claim.
| sbelskie wrote:
| Unless paintings are different than other assets commonly
| donated (e.g. stocks), this doesn't sound right. If I
| donate a stock that has appreciated in value, I pay no
| capital gains tax and am still able to deduct the full
| market value of the stock (up to certain limits).
| ThrustVectoring wrote:
| Donating assets to charity is _not_ a realization event
| under US tax law. This is why donor-advised funds are a
| thing - this rule applies to publicly traded securities,
| which means you can donate appreciated stock to a DAF and
| have the fund distribute cash to charity on your behalf,
| avoiding the capital gains you would incur if you
| normally sold appreciated stock and donated the proceeds.
| AnthonyMouse wrote:
| So I think I'm wrong. I'm doing the math for selling the
| asset and donating the money. In theory just donating the
| asset shouldn't make any difference -- either it's a
| realization and that cancels with the donation, or you're
| donating at the original tax basis, and either way the
| net deduction is the original tax basis. Because
| otherwise it's double counting and you get all kinds of
| bizarre incentives and rich people not paying any taxes.
|
| For example, if you bought $1 of a stock that appreciated
| to $1000 and they increased the capital gains rate to
| 60%, you wouldn't pay any taxes. The IRS would take in
| less money from the higher rate. Because even if you
| don't care about charity at all, you'd donate half the
| stock to a charity when you go to sell the other half and
| keep 50% of the money instead of 40%. The IRS would get
| nothing instead of whatever they got at the lower rate.
|
| But the tax code is full of bizarre incentives and rich
| people not paying any taxes, so apparently this is one of
| them. (Which at least has the benefit of encouraging
| charitable donations.)
| toast0 wrote:
| As another poster said, assuming paintings are treated
| like stock, as long as you've held it for more than one
| year, donating an aprechiated asset _is_ magic.
|
| In this example, you get a $20M deduction _and_ you don
| 't have to realize the $19M gain.
|
| Depending on how the shill purchase in the hypothetical
| is arranged, you might have realized a gain there... but
| then again, maybe you just pay the auction fees.
| ThrustVectoring wrote:
| EDIT: this was wrong, did research and you actually have
| to hold for a year
|
| Original: Holding a year or not doesn't matter for
| donating appreciated assets, AIUI
| Bedon292 wrote:
| If you don't hold it for the year you still don't realize
| the capital gains, but you only get to deduct the cost
| basis. After a year you get to deduct the current value.
| devoutsalsa wrote:
| > If you claim they're worth $20M then transferring them
| is a realization event and you owe capital gains on $19M.
| Then you get a $20M deduction which cancels out the
| capital gains and leaves you with just the original $1M
| deduction for what you actually paid, right?
|
| Nope. Think of it this way:
|
| - you lobby government to make charitable donations tax
| deductible, meaning you can reduce your income by the
| stated value of the donation
|
| - you use the auction house hack to inflate the value of
| the painting from $1_000_000 USD to $20_000_000 USD buy
| buying it from yourself
|
| - No one will buy your painting for $20_000_000 USD, so
| it's not really worth that in the open market, but the
| art museum (in your backyard & founded by you) will give
| you a receipt stating the art is worth $20_000_000 USD
|
| - Unless you reduce your income, your tax rate is 50%, so
| you donate the inflated art piece (to your art museum in
| your backyard), give yourself a receipt for the donation
|
| - You attach that receipt to your tax return, lowering
| your taxable income from $A_LOT to $A_LOT minus
| $20_000_000, which at a 50% tax rate saves you
| $10_000_000 in taxes
| wtracy wrote:
| - you use the auction house hack to inflate the value of
| the painting from $1_000_000 USD to $20_000_000 USD buy
| buying it from yourself
|
| Isn't that a realization event right there?
|
| Obviously, the described scheme could still work if you
| sold one painting to yourself, and then donated N
| paintings based on that valuation.
| devoutsalsa wrote:
| "The federal tax code allows you to contribute long-term
| appreciated securities--such as stocks, bonds, and mutual
| fund shares--directly to a charity without paying capital
| gains tax on the appreciated value, as you would if you
| sold it first and then contributed cash to the charity."
| [1]
|
| [1] https://www.fidelity.com/viewpoints/personal-
| finance/tax-bre...
| wtracy wrote:
| Sure the donation isn't taxed, but why wouldn't the
| original (fraudulent) sale be taxed?
|
| Selling an item at auction and buying it yourself isn't
| exactly a charitable contribution.
| devoutsalsa wrote:
| You don't pay (an income or capital gains) tax when you
| buy something. Only when you sell it. Maybe there's some
| other tax, like VAT or luxury or sales that are all based
| on the purchase price.
| [deleted]
| ChrisLomont wrote:
| Any charitable giving of over a low threshold would be
| audited for value to prevent this type of grift. You'd
| likely end up in serious tax trouble.
|
| For example: "Donating non-cash items to a charity will
| raise an audit flag if the value exceeds the $500
| threshold for Form 8283, which the IRS always puts under
| close scrutiny. If you fail to value the donated item
| correctly, the IRS may deny your entire deduction, even
| if you underestimate the value."
|
| https://budgeting.thenest.com/much-should-donate-charity-
| tax...
| gnopgnip wrote:
| That is why you hire a tax pro, and have an appraiser so
| the donated item is valued correctly.
| ThrustVectoring wrote:
| This is why you hire someone to appraise the value of the
| item and document the third-party appraisal. If someone
| else says your painting was worth $20m on the day you
| donated it, and they're wrong in the view of the IRS,
| well, it's an honest mistake on your part and at worst
| you just have to pay some money for getting caught.
| coliveira wrote:
| Yes if you're poor, that would stick out on your tax
| returns. If you're rich and other parts of the tax
| returns are even more complex, I think this would fly
| without any problem.
| Matticus_Rex wrote:
| From rich friends' experience, that's not how it works.
| The bigger the fish, the more resources get thrown at it.
| A friend got audited and they came up with the most
| absurdly tiny mistakes in really complex things. It
| turned out they couldn't find anything they thought was
| more than a mistake, but their thoroughness was pretty
| incredible.
| lozaning wrote:
| On average, the more money you have and the more complex
| your taxes the less likely you are to be audited.
|
| https://projects.propublica.org/graphics/eitc-audit
| [deleted]
| coliveira wrote:
| The difference is that the rich have the lawyers to deal
| with that. You shouldn't worry about them. An audit for a
| rich person is just another annoyance that they pay to go
| away, it is not gonna change their behavior.
| dragonwriter wrote:
| > You still have to take a capital gain on $1 million ->
| $20 million when selling it, right?
|
| Sure, the idea is that you only realize the gain on one
| work by the artist, and then can donate multiple. But even
| at one work "sold" and one donated its a win if you hold
| the piece for a year and a day before selling, since you
| (assuming you are at the top marginal rate for income and
| cap gains for simplicity) pay cap gains on $19 million @
| 20% ($3.8 million) and then get a deduction of $20 million
| against income that would be taxed @ 37% (saving $7.4
| million) for a net savings (even after the $2 million cost
| of purchasing the paintings) of $1.6 million.
| tannhauser23 wrote:
| If you want to see this played on a massive scale:
| https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-
| fami...
|
| "The late Chairman Lee's collection of antiques, Western
| paintings and works by Korean artists -- approximately 23,000
| pieces in total -- will be donated to national
| organizations," they said, in recognition of his passion for
| art collection and "his belief in the importance of passing
| on our cultural heritage to new generations."
|
| I wonder what the pieces will be valued at.
| tokenmonster wrote:
| How does that save $10 million in taxes?
| gruez wrote:
| The $10M figure is incorrect because donating a $20M
| painting doesn't save you $20M in taxes, it only allows you
| to deduct $20M from your income, and even that amount is
| capped. The actual amount of taxes you save is roughly $20M
| * your marginal rate. There's also the $10M you spent to
| acquire the painting, which eats into the savings.
|
| That said the general premise is valid. The loophole comes
| from the fact that when you donate something, you don't
| have to pay capital gains on it, yet you can deduct the
| full value from your returns[1].
|
| [1] "If you donate long-term appreciated assets like bonds,
| stocks or real estate to charity, you generally don't have
| to pay capital gains, and you can take an income tax
| deduction for the full fair-market value."
| https://www.fidelitycharitable.org/guidance/charitable-
| tax-s...
| NickM wrote:
| If you take state income tax into account, it's possible
| to hit a marginal rate of about 50% if you live in, say,
| California.
| zeusk wrote:
| I'm guessing that doesn't really gel well with the $10k
| SALT deduction cap in place at the moment.
| SamBam wrote:
| A little under $8 million, but same difference.
|
| Because your taxable income is $20 million less after the
| donation, and the top marginal tax rate (if you're rich
| enough to be playing this kind of game) is 37%.
|
| The waters get a bit muddier with the capital gains tax you
| might be paying on the original sale, but presumably with
| the right accountant you're still saving some millions,
| whether 3 or 8 or 10.
| gruez wrote:
| >A little under $8 million, but same difference.
|
| You also have to subtract the cost of the painting,
| unless you consider that a sunk cost (ie. you were
| already planning on buying the $10M painting)
| Aunche wrote:
| Economics Explained is somewhat of a hack when it comes to
| topics outside of basic supply and demand. On the internet,
| every struggling business and every collectible hobby is a
| front for money laundering. While there is certainly a lot of
| money laundering and tax evasion in the high art world,
| that's only because they can hide their transactions behind
| the majority of legitimate transactions. In the case of the
| Salvator Mundi painting, the valuation of the painting
| skyrocketed because allegedly the last two bidders were both
| Arab princes who thought the other bidder was from their
| mutual rival, the Qatari royal family. $450 million was the
| legitimate market value if the painting to the Saudi royal
| family.
| devoutsalsa wrote:
| If I question the legitimacy of Economics Explained, then
| I'll be forced to asses the value of the honorary PhD in
| economics that I gave myself from my prestigious, non-
| accredited university, and I don't want to do that.
| pjc50 wrote:
| This has been replicated in the NFT market, with a slightly
| different structure: sell NFTs to yourself to "paint the
| tape" and create the impression that a hot resale market
| exists, then sell to random suckers looking for appreciating
| assets.
| sf_rob wrote:
| Someone minted 1 million Neeraj Agrawal (cryptocurrency
| advocate* who's big on Twitter) NFTs, sent him 999,999
| without his consent, and kept the other to sell. Which
| leads to the interesting question, should Neeraj report the
| 999,999 as a gift receipt if they have some value, and is
| he in a bad position that the tax value of the gift is
| large due to the price being determined by the 1 that was
| sold?
|
| (I don't understand NFTs so I may be incorrect on details).
|
| *edited, said "VC" prior
| throwaway_isms wrote:
| If the 999,999 were worthless at the time they were
| initially transferred, then there is no taxable event.
|
| Now if they become worth $1 each and he sells them at
| that price then it is a taxable event. The threshold may
| have changed with respect to gifts but if the coins were
| worth $1 at the time they were initially transferred
| there may be a taxable event, I think it used to be $50k
| was tax free.
| chabes wrote:
| Neeraj isn't a VC. He works for coin center, a
| advocacy/lobbying org.
| FabHK wrote:
| Matt Levine wrote about something similar today in his column
| "Money Stuff" (the third story, "Tax Law"):
|
| > You have zero-basis stock that is "really" worth $100, but
| that happens to be trading at $300 right now because the
| market doesn't know the bad news that you know. If you sell
| it, you get $300, pay 20% tax, keep $240, and go to prison
| for insider trading. Or you can wait until the news is
| public, sell it for $100, pay 20% tax, keep $80 and avoid
| prison.
|
| > But if you donate it while it's still trading at $300, you
| get a $300 tax deduction, which is worth $120, which is more
| than $80. And you don't go to prison because you never traded
| the stock while you had inside information.
|
| https://www.bloomberg.com/opinion/articles/2021-04-28/elon-m.
| ..
| mFixman wrote:
| That only works if the IRS considers the price of the art to
| be $20m. If it were that easy then you could just donate
| anything at whatever price you want.
|
| High art is valuable because high art is expensive. I'm not
| losing $450 million when I buy a $450 million painting any
| more than I lose money when I buy a house.
|
| This whole thing is a conspiracy theory created by
| judgemental people with null knowledge of art to complain
| about the latest modern art pieces and it spiraled out of
| control to an urban myth in the level of "the Facebook app is
| secretly using your microphone" or "vaccines give you
| tracking microchips".
| sabellito wrote:
| Do you have any links explaining how art valuation works?
| cameron_b wrote:
| Bachelors of Fine Art degree holder here,
|
| Everything is made up and the example cited above is very
| close to the story of "For The Love of God" by Damien
| Hirst [0]
|
| The sculpture is more of a pointer, or some direct object
| upon which could be acted the work of art which was the
| financing valuation and theoretical sale of the work
|
| In most experiences, it starts with how anything is
| priced. How long did it take to make it and how much
| money did it take to do so. Plus some. And then what will
| someone pay for it.
|
| But that's just "most" and that never makes headlines or
| anecdotes
|
| [0] https://en.m.wikipedia.org/wiki/For_the_Love_of_God
| coliveira wrote:
| You cannot "donate anything" and get away with this. You
| need to go through a proper art collection selling process,
| that's the whole point.
| dqpb wrote:
| Does he have to pay taxes on that, or only after it's converted
| to dollars?
| Aissen wrote:
| It's quite funny (kudos!), but it's not worth that much, see:
| https://bscscan.com/token/0x00aa85e010204068b7cc2235800b2d80...
|
| or:
| https://poocoin.app/tokens/0x00aa85e010204068b7cc2235800b2d8...
|
| Not really liquid either :-) (it's down to 7m market cap from
| 12bn). A nice scam indeed !
| ford_o wrote:
| Well, I think the question really is, how much real money its
| creator got for selling his shares. If the number approaches
| anything near 1 million, I still think the situation is
| completely ridiculous.
| vmception wrote:
| eh, $14K in liquidity posted. non-news
| johndoe42377 wrote:
| Why, yes, behavioural economics leaves abstract bullshit in a
| dust.
| gus_massa wrote:
| The title says -$70 instead of ~$70. Did title autocorrector
| change it?
| airhead969 wrote:
| I hope it's positive 70 megabucks, not negative.
| theandrewbailey wrote:
| It wouldn't be surprising either way.
| ryanSrich wrote:
| I have no problem with this. Why are people so negative in the
| comments here? What's the alternative? To stop someone from
| creating their own currency? Why? I don't need a regulation to
| protect me. Neither does anyone else.
| dkjaudyeqooe wrote:
| If people are free to create their own currency we're free to
| mock them.
|
| Apparently you seek some sort of regulation to stop people
| writing mean things.
| ryanSrich wrote:
| > Apparently you seek some sort of regulation to stop people
| writing mean things.
|
| Apparently questioning why people are being negative =
| seeking regulation to stop them? Come on man.
| MomoXenosaga wrote:
| Depends. What if people lose all their money and become
| homeless? Ever wondered why governments save failing banks?
|
| I am just not entirely convinced that when shit hits the fan
| people will quietly take responsibility for their actions.
| ric2b wrote:
| > Ever wondered why governments save failing banks?
|
| Indeed I have, why not just take them over and reimburse
| their creditors instead?
| DickingAround wrote:
| Yea, just people being silly. They can do what they want with
| their money. And it doesn't look like anyone actually invested
| $70M worth of human effort there; it's just illusions of the
| market cap metric.
| bitcoinmonger wrote:
| It's safer for everyone if government controls the currency we
| use.
| xyst wrote:
| SCAM is the new DOGE
| pwdisswordfish8 wrote:
| Typo in the title: the minus sign is -, not -.
| bidirectional wrote:
| Does that really qualify as a typo? - is easier to type and
| seems acceptable as a substitute in the same way that * is used
| rather than x.
|
| But really it's meant to be a ~, or ~ if you insist on precise
| Unicode.
| [deleted]
| throwastrike wrote:
| I don't want to live in this alternate world
| G3rn0ti wrote:
| Well, I guess the Fed's money needs to go somewhere:
|
| https://fred.stlouisfed.org/series/M1SL?fbclid=IwAR3qsddDi_D...
|
| Uh oh ...
| JumpCrisscross wrote:
| > _the Fed 's money needs to go somewhere_
|
| Having excess savings go into cryptocurrencies would be a
| stabilizing mechanism. It keeps it away from consumption,
| staving off inflation. And it keeps it away from financial
| assets, avoiding a generalized speculative boom. As long as
| cryptocurrencies remain decently segregated from the main
| financial system, the whole mechanism becomes a heat sink.
| Wohlf wrote:
| I'm not knowledgeable enough in monetary economics, but isn't
| this only half true? The money people are buying crypto with
| is going to whomever they purchased it from.
| jcpham2 wrote:
| I really enjoyed what you've said here and I agree that the
| traditional finance and the wild west crypto finance world
| _can_ absolutely work in concert with each other.
|
| Just liquidated BTC to cover a down payment at my local bank
| where I've paid off mortgages already. The VP of the loan
| department completely understood why I wouldn't keep my money
| in their bank anymore.
| dkjaudyeqooe wrote:
| Yes of course, the Fed created trillions of dollars and doesn't
| know what to do with it.
| environment wrote:
| The FRED Blog, <<What's behind the recent surge in the M1 money
| supply?>>
|
| https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
| EVa5I7bHFq9mnYK wrote:
| Consider that currency as an act of performance art. It elicited
| feelings and thoughts in millions of minds, therefore it's worth
| it.
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