[HN Gopher] Cryptocurrency scams cost owners $7.7B in 2021, driv...
___________________________________________________________________
Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-
based "rug pulls"
Author : marban
Score : 290 points
Date : 2021-12-16 15:47 UTC (7 hours ago)
(HTM) web link (blog.chainalysis.com)
(TXT) w3m dump (blog.chainalysis.com)
| AlexandrB wrote:
| In related news, Tether has minted $3B USDT in the last month:
| https://beincrypto.com/tether-mints-three-billion-usdt-past-...
| cdiddy2 wrote:
| Its also being used as the currency for now ousted Myanmar govt
| https://www.aljazeera.com/economy/2021/12/14/myanmar-shadow-...
| shiftpgdn wrote:
| Hang on, minting and circulating are different things. The USDT
| circulating supply is currently approximately 76 billion.
| vmception wrote:
| Literally nobody claimed otherwise.
| fastball wrote:
| Right, they minted $3B, taking the circulating supply from
| $73B to $76B.
| nightski wrote:
| Do you have any evidence of that other than the parent link
| which looks kind of scammy? Everywhere else I have read
| that the minted $3B is not circulating yet, it's waiting
| for new purchasers of Tether. Not saying you are wrong by
| any means, I'm genuinely curious.
| jstx1 wrote:
| What does "minted" but not circulating Tether even look
| like?
| bidirectional wrote:
| Tether minting coins and holding them until someone comes
| along and exchanges dollars for them.
| vmception wrote:
| Tether mints the tokens upon deposit of fiat on Bitfinex
| exchange OR when the Tether peg increases above $1 too
| far. Users are incentivized to do this as well (deposit
| dollars onto bitfinex, get new tether for that 1:1, sell
| new tethers above the peg on the open market, pushing the
| peg down)
|
| Circle/Coinbase use the exact same mechanism.
|
| These kinds of stablecoins are destroyed only upon
| explicit redemption. Not when sold to someone else on the
| open market.
|
| It's not that different from a brokerage account's
| deposits. People don't actually withdraw that much
| because they don't need that much cash. They keep their
| cash in those ecosystems waiting for other trading
| opportunities and add more from other sources into the
| exchange.
|
| I know it's absurd to assume tether functions as
| described, 99% of the time for 99% of the value. But the
| market is showing the same thing with stablecoins that
| are better governed.
|
| For the decentralized/permissionless/uncensorable minded
| people, The best bet is for other kinds of stablecoins to
| grow faster
| TacticalCoder wrote:
| Yes, and although likely a scam, here's another datapoint:
|
| Coinbase, an Y combinator unicorn, is behind Centre/Circle and
| the USDC stable coin. And there are now $41.5 bn USDC
| circulating.
|
| At one point it was billion of USDT circulating and USDC didn't
| exist yet.
|
| Then USDC began to took off and there were, out of memory, $5
| bn USDC and $23 bn USDT.
|
| But, overall, the trajectory is clear: USDC is growing faster
| than USDT.
|
| It's $41.5 bn vs $76 bn today.
|
| Maybe in a few months USDC shall catch up, then maybe even
| surpass USDT.
|
| Do we all believe Coinbase and its Centre/USDC stable coin is a
| scam? It's an american company, with real people behind it.
| It's not some scammy thing in the Bahamas.
|
| Now here's an intriguing question: if we believe Coinbase isn't
| a scam and that these $41.5 bn USDC are really mostly or all
| backed, does tether's $76 bn really look that unthinkable?
| [deleted]
| yrral wrote:
| Another datapoint: USDC minted 7b in the last 30 days. Does
| 3b tether in the same time period seem unreasonable?
| ivalm wrote:
| The problem with tether is not the amount minted/in
| circulation. The problem is that they definitely lied
| previously about their backing and are probably lying now.
| If you claim to be one of the worlds largest commercial
| paper holders yet no one knows whose commercial paper you
| are holding then that is suspicious. It's unimaginable that
| a new large player entered the market and nobody noticed.
| [deleted]
| dmitriid wrote:
| > It's an american company, with real people behind it. It's
| not some scammy thing in the Bahamas.
|
| All scammers are real companies with real people behind them.
| Until they aren't. Location of a company doesn't matter.
|
| "Ponzi Scheme" literally comes from a man who was scamming
| his victims in the US and Canada.
| mdoms wrote:
| > It's an american company, with real people behind it. It's
| not some scammy thing in the Bahamas.
|
| Oh yes I forgot Americans can't be scammers.
| criddell wrote:
| That's a pretty uncharitable interpretation.
| [deleted]
| rfw300 wrote:
| Americans who are under the watchful eye of a hostile SEC
| and face serious prison time if they get caught are _much
| less likely_ to be scammers than some anonymous group from
| the Bahamas.
| gitfan86 wrote:
| Issuing stablecoins isn't a scam by itself. The whole crypto
| ecosystem cashflow is the real scam. There is no liquidity.
| All it takes is a few people that panic and the whole thing
| falls apart, UNLESS there is someone ready to print money and
| prop up the market when panic sets in. That is why people
| need to understand what is going on with Tether. Bernie
| Madoff got shutdown because a whistle blower got the SEC to
| look at his books. If tether gets shutdown and no one is
| propibg up the market, it will crash hard.
| dsco wrote:
| China has banned Bitcoin several times, there's been hacks,
| there's been central banks going after crypto - yet it's
| still here. Why do you believe the whole thing might fall
| apart?
|
| What you're missing is that whenever there's panic selling
| there's always someone on the other side finding a great
| discount.
| gitfan86 wrote:
| That is what they said about housing in 2007. I'm not
| saying that crypto is going to go away and never exist.
| I'm saying it could go down by 80% during a liquidity
| crisis induced panic.
| BlueTemplar wrote:
| Yeah, also bitcoin isn't a stablecoin, there were never
| any guarantees.
| manishsharan wrote:
| > It's an american company, with real people behind it. It's
| not some scammy thing in the Bahamas.
|
| Enron would like a word!
| DomainGuard wrote:
| We've been identifying and reporting on a ton of crypto fraud.
| Any popular site that uses a "wallet connection" is ideal for
| scamming, and unfortunately, these scams are widely successful.
| The scam asks users to enter their wallet secrets to connect
| their wallets. The general crypto community consensus is that if
| you fall for these scams, you deserve it. There are a lot of
| newcomers to crypto, and unfortunately, many people are falling
| for these scams. These phishing sites are combined with other
| avenues that make the scam more successful.
|
| Right now, there's an active google ads phishing campaign
| targeting the "Biswap" crypto exchange, so if you google
| "Biswap," there's a good chance you'll see fake Google ads. If
| the very first thing you see on Google is what you're looking
| for, and it leads you to a site that looks just like the site you
| expect to be on - why would you think twice?
|
| We've also seen cases where scammers create fake support accounts
| to impersonate legitimate organizations, such as Opensea, and use
| Twitter to trick victims onto counterfeit sites. The sites may
| seem obvious on their own, but when you combine these additional
| steps scammers take, it's clear to see why the scammers are
| having so much success.
|
| Here's our Twitter feed where we post some of what we find on our
| day-to-day. https://twitter.com/GuardYourDomain
| Mvandenbergh wrote:
| Maybe I'm missing something, but there's something that I don't
| get about DeFi.
|
| My understanding of the idea is this:
|
| 1) Using distributed code, the operation of which is assured by
| code on a blockchain based system like Ethereum, lending and
| investment can happen without the intermediation of banks and
| capital markets gate keepers. The savings from cutting these
| layers out can be shared between the supply and demand side of
| capital.
|
| 2) On a temporary basis only, some element of the rewards of
| contributing external capital, computational power, or other
| resources to a particular pool of capital are "extra" on top of
| the core capital allocation function of the pool. These can be
| structured in various ways but essentially the idea is to
| bootstrap money into the pools through a reward system that
| declines over time.
|
| 3) If the core proposition, that there is gain to be had from the
| disintermediation, is true, then at some point pools reach a sort
| of "ignition" point where the pool exists for _that_ purpose only
| and the temporary bonuses are no longer required. This would mean
| that despite structural similarities, these are not Ponzi schemes
| since there is an _eventual_ state reached were a real function
| is being performed. Some people will stop contributing to a pool
| as the rewards taper, but that won 't matter because most of the
| money is now in there to be lent out for profit.
|
| 4) If that core proposition is not true, then they are Ponzi
| schemes because all the growth is coming from the rewards.
|
| My problem with (1) is that these are already relatively low
| margin activities so how can there be enough disintermediation to
| go at once you account for the default and scam risk on the side
| of the borrower? It isn't the case that capital is expensive
| right now, tech investors are giving it away like its going out
| of fashion, headline borrowing rates are incredibly low, PE is
| going crazy buying everything. It's also striking to me that the
| promoters of these DeFi schemes spend so much time on bringing in
| new lenders but very little seems to be done on the borrower
| side. Surely if you're building a sustainable capital allocation
| business, you need a pool of borrowers? Ideally one in a business
| where they can provide substantial collateral for their loan,
| support high returns, but somehow can't access other forms of
| finance (but not because their business is illegal). That would
| seem to be a rare commodity so I'm surprised not to see pools
| fighting over access to these borrowers.
| pjc50 wrote:
| > business where they can provide substantial collateral for
| their loan, support high returns, but somehow can't access
| other forms of finance
|
| Apparently the answer is "crypto margin trading".
| Mvandenbergh wrote:
| So it seems. That does mean that there is a non-scam
| explanation from where genuine returns come from but doesn't
| solve the bigger problem since the consequences of a major
| disruption to the traded assets could cause massive losses.
| Is this just a pennies in front of steamrollers type trade
| like other basis trades?
| Joeri wrote:
| What is missing in that explanation for me is the increase in
| value from perceived artificial scarcity.
|
| Like paint on paper costs almost nothing until it has the right
| artificially scarce provenance and becomes a work of art, some
| cryptocurrencies can become valuable to hold and trade in and
| of themselves thanks to perceived scarcity.
| lottin wrote:
| DeFi is not well-suited to do finance, i.e. lending and
| borrowing, because enforcing financial contracts typically
| requires the ability to exert coercive power, which DeFi can't
| do. As a result, DeFi can only implement a small subset of not
| super-useful financial operations. It cannot replace
| conventional finance by any stretch of the imagination.
| Mvandenbergh wrote:
| Yeah. It would have to be a business where the assets of the
| operating business were themselves somehow subject to the
| blockchain logic but I can't see how that would work.
| BlueTemplar wrote:
| Am I reading this right ?
|
| $2M scammed by a rug pull named... "WarOnRugs" ?!
| amitkgupta84 wrote:
| > The most important takeaway is to avoid new tokens that haven't
| undergone a code audit. Code audits are a process by which a
| third-party firm analyzes the code of the smart contract behind a
| new token or other DeFi project, and publicly confirms that the
| contract's governance rules are iron clad and contain no
| mechanisms that would allow for the developers to make off with
| investors' funds.
|
| But how do you know which third party auditors to trust?
|
| What DeFi projects are laying bare is that it's an absolute
| marvel that we have functional societies at the scale we do today
| (USA, EU). Most people can live their lives intuitively knowing
| which instructions to trust (financial, groceries, restaurants,
| medical, you name it). All of it is ultimately backed by laws,
| systems, real people who can be held accountable, and government
| monopoly of force. Furthermore we rarely have to see that stuff
| for the system to work and that monopoly on force is rarely
| abused.
|
| It could be a meaningful technological shift if a lot of the
| financial infrastructure goes decentralized,
| digitized/programmatic, and open source. But I'm dubious the
| mainstream person's day to day experience will change much, the
| stability and peace of mind afforded by the structures of our
| current society are pretty amazing and I don't see them being
| replicated in a purely digital and decentralized form.
| tenebrisalietum wrote:
| In the US:
|
| financial -> 2008 subprime loan crisis, recent inflation
|
| groceries -> couldn't buy toilet paper at the start of the
| pandemic, still some lingering supply issues, prices going up
|
| restaurants -> many not open reliable hours anymore, many
| closing
|
| medical -> costs way too high and continue to rise, hospitals
| oversaturated with patients from time to time, nurses quitting
|
| All of it is ultimately backed by laws, systems, real people
| who can be held accountable -> maybe if you are rich
|
| I can't fault the average-income (or slightly higher/lower)
| person for having the point of view that these are starting to
| fall apart and aspects of DeFi becoming attractive, even though
| the practicalities have a long way to go before they would
| become anywhere near as foundational.
| rchaud wrote:
| What aspects of DeFi look attractive exactly? Yield of some
| digital coin which only has value relative to a fiat
| currency?
|
| Your local bank at least complies with regulations that cap
| transaction fees for your chequing account. Meanwhile, ETH
| gas fees are completely unpredictable, and can easily be
| higher than the amount you're transferring.
| wizzwizz4 wrote:
| > _It could be a meaningful technological shift if a lot of the
| financial infrastructure goes decentralized_
|
| It's important to note that "DeFi" is more centralised than our
| existing financial infrastructure. (Also, our existing
| infrastructure mostly uses open, public, well-known standards
| with many implementations; most DeFi stuff... documents how it
| currently works, I guess? Though it's hard to find that
| documentation.)
| spinny wrote:
| have you tried google?
| NationalPark wrote:
| Seems super unlikely that somebody with a HN account is
| unfamiliar with search engines, doesn't it?
| spinny wrote:
| Seems super unlikely that somebody with a HN account
| can't find docs for defi projects that in most cases have
| github accounts with available contracts and api docs,
| doesn't it?
|
| Maybe it's just deceptive
| erulabs wrote:
| And not to mention that by definition, those DeFi
| contracts are readable. The actual code, itself. Sure,
| there might be (and probably are) bugs, and we need
| auditing tools, the list goes on, but at least it's not a
| black box.
| wizzwizz4 wrote:
| If you know where the documentation for the most _popular_
| DeFi system, Bitcoin, is, then by all means share it.
|
| * What does the peer-to-peer network protocol look like?
|
| * How do I make a transaction / mine a block?
|
| I know how to do this using end-user wallet applications,
| but the _open protocols_ are so _very_ well documented that
| I 'm _sure_ you can find this information easily.
|
| The pages that show up in search results[0][1] don't really
| have this information. It gives me a high-level overview,
| tells me that it uses TCP and which port it uses, and gives
| the structure of the TCP packets (with _some_ examples),
| but there 's a whole load of stuff that's just never
| defined. To actually understand what's going on, I then
| have to read the source code.
|
| And... making a transaction?[3] Mining a block?[2] No
| chance. I know it's "double SHA256" and that's about it. (I
| can look at the source code to find out, sure... but an
| open standard? Open secret, more like. The flaming
| whitepaper[4] is more useful than these docs.)
|
| This is Bitcoin, the best-known, most-popular, (presumably)
| best-documented DeFi system on the 'net. Ethereum has... a
| blog post, an onlinelibrary.wiley.com book and an academic
| article. I don't even want to _know_ what other stuff has.
| Most DeFi garbage barely has a whitepaper.
|
| [0]:
| https://developer.bitcoin.org/devguide/p2p_network.html
|
| [1]:
| https://developer.bitcoin.org/reference/p2p_networking.html
|
| [2]: https://developer.bitcoin.org/reference/block_chain.ht
| ml#ser...
|
| [3]:
| https://developer.bitcoin.org/reference/transactions.html
|
| [4]: https://bitcoin.org/bitcoin.pdf (which has apparently
| been taken down...?) https://web.archive.org/web/2014032013
| 5003if_/https://bitcoi...
| spinny wrote:
| "How do I make a transaction / mine a block?" that's a
| "how does it works ?" kind of question, you need to know
| how all the small parts work to explain the
| functionality.
|
| Yes, some aspects you need to look at the code, others
| you will find documented
|
| i would recommend https://learnmeabitcoin.com/ which has
| very in-depth resources but it seems to be down at the
| moment
| wizzwizz4 wrote:
| > _you need to know how all the small parts work to
| explain the functionality._
|
| I _know_ how all the small parts work. It 's not new
| technology. I just don't know how Bitcoin does it! To
| mine a block, you:
|
| * collect a load of transactions (somehow)
|
| * validate them (the obvious stuff, plus the special
| transaction type requirements, plus unspecified
| "consensus" magic I can't find anywhere)
|
| * put them in a block (somehow) along with the hash of
| the most recent block
|
| * keep changing a certain bit of the block until
| SHA256(f(SHA256(block))) is low enough (with some f:
| digest - bitstring)
|
| But I can't fill in the gaps.
| spinny wrote:
| collect a load of transactions (somehow): by this you
| mean the mempool. the implementation is client dependent,
| it uses the p2p network to receive new txs, thats what
| you need to look at to know how to "get txs from the
| network". some implementations have better documentation.
| if you need to look at code i would recommend the go
| implementation https://github.com/btcsuite just because
| it looks cleaner to me.
|
| validate them: your best resource for this is code. your
| client needs to keep old consensus code around and use it
| to verify block under the older rules (your client will
| do a full sync at some point)
|
| rules for formatting a transactions and blocks (and a
| byte by byte explanation) can be found on
| https://learnmeabitcoin.com/ as mentioned (probably will
| be up soon)
|
| keep changing a certain bit of the block until
| SHA256(f(SHA256(block))) is low enough (with some f:
| digest - bitstring): yes. you set the block nonce to
| mine. finding a block means that the hash256() operation
| (sha256(sha256(block))) returns an hash with at least D
| (either left or right most, can't recall right now) bits
| set to 0, where D is the current difficult, which is
| adjusted by the network to make the 10min/block average
| time
| erulabs wrote:
| Calling Bitcoin defi slightly stretches the definition.
| Typically defi relates to smart contracts - of which
| there is plenty of documentation, and which is vastly
| -not- built on Bitcoin. Saying "Bitcoin is defi and look,
| no defi docs!" is ignorant and best and aggressively
| disingenuous at worst. Yes BTC is decentralized finance,
| but it's not the same as "DeFi" strictly speaking.
|
| If you want to read some "DeFi docs", there are PLENTY -
| you can start here:
| https://docs.soliditylang.org/en/v0.8.10/
| wizzwizz4 wrote:
| Bitcoin _does_ have smart contracts; it has its own
| bytecode language. What about it _isn 't_ "DeFi"?
| lupire wrote:
| people say "oh Bitcoin is mature it's 10 years old".
|
| Meanwhile the world is amazed that the United States is so
| stable at only 200 years old.
|
| And these shitcoins are _weeks_ old. and these aren 't new
| products. Each one is, by design, a new governance structure.
|
| Would you take a vacation or move your life to a country that
| was invented last week.... by anonymous people?
| theogravity wrote:
| A lot of DeFi scams claim that an auditing company has audited
| their code. There's also scam auditing companies too that work
| with these DeFi scams to add to the false legitimacy.
| drsnow wrote:
| Can you provide a source or two for these claims?
| iszomer wrote:
| I've seen projects go as far to claim to have their code
| audited by simply hosting it on a public github repo.
| dcist wrote:
| What are the scam auditing companies?
| vmception wrote:
| I think "rug pulls" is not defined well.
|
| One example of a "rug pull" is that the team provided liquidity
| to the AMM liquidity pool, and then removed it, leaving people
| with no where to trade the token. Its honestly hard for me to
| call that a scam, although I understand the community expectation
| being undermined.
|
| First: the SEC exacerbates this reality. Tokens that don't want
| to be considered a security have to consider NOT providing an
| expectation of liquidity. The team has to avoid expectations of
| providing secondary market liquidity just to stay out of the
| crosshairs of the SEC. And even in SEC registered land, If you
| look at the "risk factors" section of public equities, they
| frequently say "there may be no market for these securities, a
| secondary market may never form, there is no guarantee that it
| will always be there", which is true in all markets!
|
| Second: with the advent of AMMs, ANYONE can provide assets into
| the liquidity pool. (even the acronym of AMM don't tell you much
| about what this is, its just a different model of exchange that
| is very popular). So even if token traders had been relying on
| the team under an unspoken symbiosis of the team providing
| liquidity, the token traders now can do it themselves. This is
| also very common. The token traders typically follow incentives
| to actually do it, but they CAN without those incentives.
|
| Third: Token traders are the community and can take over any
| project to try to make their investment more profitable, it just
| requires more risk. It happens, but the times it doesn't happen
| the token traders just stop engaging with the project as well.
|
| How can this be distinguished from other "rug pulls"? I don't
| think it is possible.
| PragmaticPulp wrote:
| > One example of a "rug pull" is that the team provided
| liquidity to the AMM liquidity pool, and then removed it,
| leaving people with no where to trade the token. Its honestly
| hard for me to call that a scam
|
| If the team went through all of these steps with the intention
| of pumping the value of the coin, hyping others into buying it,
| and then extracting as much money from them as possible with no
| intentions of helping the coin succeed long-term, that seems
| like a scam to me.
|
| The victim-blaming mentality runs deep in the cryptocurrency
| world. It's fascinating how many people in the cryptocurrency
| space are reluctant to call a spade a spade only because the
| underlying blockchain or algorithmic rules weren't violated.
| vmception wrote:
| And you think thats what I just did here? Describing why the
| categorization is wrong to you is a symptom of victim
| blaming?
|
| My point stands that the community can do what the team did
| but fail to take further risk or organize. They disperse just
| like the issuer did, when in fact they do all have agency and
| can fill the vacuum. _unless_ the token was backdoored, then
| we can call it a scam.
| pjc50 wrote:
| If the original team made promises with no intention of
| fulfilling them, and didn't, it's a scam. If on the other
| hand the community could do the same thing .. why did they
| need to pay the organizers (and their premine) in the first
| place?
| vmception wrote:
| team allocations aren't always the case. if chainanalysis
| is looking at the rug pulls that I'm talking about, then
| much of the time there was no upfront capital to the team
| with a separate premined allocation. many issuers are
| currently putting all the tokens created directly into a
| liquidity pool paired against capital they already had,
| bots and individuals buy into the liquidity pool and
| receive the new token, pushing up the price in the
| process, and then the issuer unbundles the liquidity
| pool, leaving no pool, (while acquiring the liquid
| capital added to the pool by purchases. AMMs function by
| then having less of the issuer's tokens and more of the
| tokens that were used to purchase the issuer's token)
|
| these are colloquially called rug pulls, because the
| liquidity pool was the rug. these happen _so_ fast these
| days. These things can play out completely within 20
| minutes, as bots and individuals are scanning the
| blockchain mempool for erc20 token creation transactions
| and liquidity pool creation transactions, just to get
| into a potential big project before anyone else.
|
| here, the traders are at no disadvantage to the issuer,
| from a community perspective, to continue the project and
| attempt making their investment valuable, specifically by
| adding to a liquidity pool themselves.
|
| again, my main point is that things that are very common
| are not being distinguished from whatever you or others
| want to argue about. its an article about this year, not
| 2017, not 2018, or some other year dominated by an
| antiquated style of ICOs.
|
| there is _something_ to debate, but the vocabulary itself
| doesn 't allow it, perpetuated by an organization that
| gets no benefit from distinguishing as all they want is
| technology contracts from governments.
| mraudiobook_com wrote:
| How do you reply to a comment so fast. Is there a way to
| get notified if your comment gets replied to?
| Animats wrote:
| (OK, who went and made Hacker News text uncopyable?)
|
| _I think "rug pulls" is not defined well._
|
| It's a standard type of investment scam, "take the money and
| run". The SEC even has a video for the clueless.[1] And a web
| site on ICOs.[2]
|
| This scam long predates cryptocurrency, or the Internet.
| Newspapers made mass-marketing a scam possible. That started
| about two centuries ago. Most scam types, like this one, are
| old. They just keep coming around in shiny new wrapping paper.
| This isn't innovation.
|
| [1] https://www.youtube.com/watch?v=FSBMSSnZ4Ro
|
| [2] https://www.howeycoins.com/index.html
| DennisP wrote:
| I just copied text out of your comment and pasted it here:
|
| > It's a standard type of investment scam
| vmception wrote:
| The "innovation" here would be the ease in which communities
| can take over projects if they coordinate.
|
| But upon a second reading, I don't think you get my point
| that there are categories of things called "rug pulls" and
| the chainanalysis article does not distinguish well. I also
| think distinguishing is not possible to reach consensus,
| right now, but attempts should be made.
| kristintynski wrote:
| Dogebonk is a good example of a community taking over a token,
| renouncing contract, locking liq etc. fascinating to see a true
| community meme engine revving up.
| vmception wrote:
| Great, yeah, a lot of people aren't inspired enough to
| consider doing that, and others don't know it happens. The
| more examples the better. People really aren't as helpless in
| the crypto space as they act, or prompt onlookers to think.
| deafnun wrote:
| Honestly, it's up to the buyer to take the responsibility read
| through the contracts on these tokens, run them through tools
| like token sniffer, look at the holder distribution, see if
| contracts are renounced, see if there were air drops to pre-sales
| to friends and token creators, do their research and see how the
| community is interacting, and making sure that all the boxes tick
| before throwing their own hard earned money at it. If you lose,
| that's the risk you took for the gains you wanted. Sucks to suck,
| but you're responsible for homework that you do before buying
| into a token and you're responsible for the money that you win or
| lose.
| salmonet wrote:
| How much have cryptocurrency non-scams earned owners in 2021?
| marban wrote:
| I found https://moonarch.app/ > top gainers, to be a good
| starting point to watch from the sidelines.
| literallyWTF wrote:
| Yeah but like, it's going to revolutionize fiat currency via
| blockchain fundamentals and decentralized, high fidelity, p2p
| transactions!
|
| Also, I accidentally sent money to the wrong address, is there a
| support number I can call to reverse that?
| askonomm wrote:
| I also lost the access to my wallet. Is there an office I can
| show up at with my identification and get a new one?
| somewhereoutth wrote:
| Arguably, _all_ crypto currencies are a scam. The only difference
| is the timescale - even Bitcoin will 'rug-pull' eventually.
|
| The do not have value in any sense - even sending money overseas
| is cheaper, more convenient, and more secure by traditional
| methods.
|
| Money going out + money spent on mining = money coming in.
|
| Crypto evangelists are always keen for punters to put in regular
| amounts - presumably because then someone can take _out_ regular
| amounts, and so avoid actually having to work for their living.
| Kiro wrote:
| Cryptocurrencies would be so boring without the scams and
| shenanigans. I love the wild west.
| lottin wrote:
| Maybe because without the scams and shenanigans all that
| remains is some imaginary tokens that literally do nothing and
| serve no purpose other than "hodling" them?
| tjungblut wrote:
| Especially the automated scam on ETH is really interesting, I
| also fell for one the other day.
|
| Somebody creates a new smart contract (token) with a funny brand
| or meme name, puts liquidity into a DEX like Uniswap and sends
| the token around to named wallets. Some people hop on the train
| and swap the token for ETH. The clue and actual scam is that you
| can't ever sell it. If you decompile the smart contract, only the
| creator address can ever transfer the token.
|
| The whole play takes 10-14 days, they pull the rug in their
| liquidity pool and move the money to another wallet to start with
| a new token. The token I got scammed with ended up making 10 ETH
| profit, after all transaction costs mind you.
| erichocean wrote:
| How much liquidity did it take to pull off this scam?
| tjungblut wrote:
| In my case they had 100ETH, so quite a lot.
| Animats wrote:
| Scams that will collapse in 2022:
|
| * Axie Infinity. That's a Ponzi in the collapse phase. Their
| Smooth Love Potion token is down 90% and in a screaming dive, and
| their Axie token is down 37% from peak. That one is going to hurt
| a lot of poor people in the Philippines. Many quit their jobs to
| play Axie's play-to-earn game. All the money comes from later
| entrants, so it's a Ponzi by definition.
|
| * OpenSea. The NFT market is in worse shape than it looks. People
| are minting crap art like crazy, and people are buying it at
| inflated prices, hoping to flip it to a greater fool. If you look
| at actual resales on OpenSea, they're not happening much. The
| supply of greater fools is running out. As I've pointed out
| before, this works just like Beanie Babies on eBay. Asking prices
| around US$5000, actual sales around $50, most items show zero
| bids. NFT markets don't visibly crash, they just quietly stall.
| Most NFT markets don't show statistics which expose that.
| lupire wrote:
| > NFT markets don't visibly crash,
|
| That's a really good point. When a meme stock crashes, it
| crashes down to raw asset value minus transaction costs.
|
| When the raw asset value is less than transaction costs, the
| price doesn't drop, the liquidity just vanishes, since there is
| no "negative price" support like there is for assets that are
| expensive to hold, like oil.
| dvt wrote:
| > All the money comes from later entrants, so it's a Ponzi by
| definition.
|
| Axie is not a Ponzi scheme, but is definitely a pyramid scheme
| (via their scholarships).
| jazzyjackson wrote:
| Pyramid is money flows up a hierarchy, Ponzi is money flows
| from new participants to old participants, in practice there
| is barely a distinction.
|
| The price of the Axie coin is only supported by new buyers
| (by definition) and coins being sold are nothing more than
| early adopters cashing out. Any crypto "going to the moon"
| has this dynamic, coins being sold at 10,000% ROI is ponzi,
| early adopter paid by a late adopter, the person who bought
| at the top has already lost their money.
|
| I guess Axie may be both, since there is also a multi-level
| dynamic.
| danbolt wrote:
| Watching the gameplay trailer, I was flabbergasted when they
| were straight-up said "you can rent out your ingame items to
| make money!" meanwhile barely expressing the hook for the
| gameplay. People talk about power fantasies in games, but I
| never thought that would extend to being a landlord.
| JohnJamesRambo wrote:
| How could Smooth Love Potion have failed us?
|
| Which brings up my other point, that people know the risks they
| are taking. Casinos are still legal. Someone that yolos their
| life savings into Smooth Love Potion was going to lose it some
| other way. If you don't know your 100% apy isn't sustainable in
| a DeFi ponzi, that's on you.
| rchaud wrote:
| Well there's always SafeMoon, a name you can trust.
| dvt wrote:
| > Casinos are still legal.
|
| Casinos are not pyramid schemes, Axie is.
| mdoms wrote:
| > Casinos are still legal.
|
| Depends where you are in the world...
| tbabb wrote:
| Victim-blaming comments like this make me see red.
|
| "The fact that I am able to exploit these people means that I
| am entitled to" is everything wrong with Silicon Valley.
| whatshisface wrote:
| Sometime around 2018, not having a clue about popular culture
| shifted from making you seem lame at parties to insulating you
| from pyramid schemes.
| darkwizard42 wrote:
| Agreed on Axie. Disagree on NFT.
|
| NFT is art (VERY LOOSE COMPARISON). If you believe that then of
| course there is TONS of art that not only has zero bids but
| also never gets sold. I think NFTs are overhyped now but there
| is clearly a market for them. Speculating on them is similar to
| art collecting, all speculative. So I don't see anything
| inherently wrong with it (something being puffed up isn't
| illegal)
| realce wrote:
| It's not "NFT" as a tech, it's the ability for the OpenSea
| ecosystem to maintain real value throughout time. That's very
| dubious, it's a house of cards balancing an elephant on top
| imho.
|
| Natural entropy and new novelty will erode the foundation of
| that specific ecosystem for something that provides a wider
| opportunity for more new users to create/retain value.
| kristintynski wrote:
| Memecoins can at least be tracked in value, the dynamics of
| these UGC meme driven communities, especially ones like
| doge, shiba uni, and now dogebonk, the exponential
| community growth effects are what matter most.
| janmo wrote:
| And there are many ponzis out there. Celsius Network ($25billion)
| being the biggest one. Read more:
| https://rorodi.substack.com/p/the-biggest-crypto-lending-com...
| pabl8k wrote:
| There are definitely ponzi schemes in defi, but I'm not sure
| celsius is one just because they pay what seem on face to be
| impossible rates. Gemini, which is regulated and based out of
| NYC, offers 8% on GUSD, their USD stablecoin. My understanding
| is returns on this come from a huge demand for crypto lending
| from institutions participating in the "basis trade", and a
| limited supply of USD lending available to them for it due to
| custodianship and regulator issues with cryptocurrencies.
| https://www.bloomberg.com/news/articles/2021-03-27/crypto-sh...
| reducesuffering wrote:
| My understanding is that the bond market is highly efficient
| and there is no free lunch. An interest bearing security
| yielding 8% is a junk bond in today's territory because risk
| free rate is 0%, and stable corp bonds like Apples are like
| 1%. 8% is like the price of Argentinian bonds, meaning there
| is a relatively high chance of default to incentivize capital
| there compared to the safe 0-1%.
|
| Default meaning, the Gemini coin will be worthless when you
| try to withdraw. You could try to ride 8% junk bonds for 3-24
| months too.
| pabl8k wrote:
| Yes definitely it could be because of risk. There is also a
| risk that the GUSD isn't returned (with Gemini it's not
| actually defi, there is no smart contract mandating its
| return, there is counterparty risk). I'm not saying it's 8%
| risk free when the risk free rate is 0%. But the article
| indicates that there is an actual inefficiency here due to
| institutional restrictions on cryptocurrencies and an
| institutional demand for products that approximate them.
| timdaub wrote:
| My project's goal is to increase the safety in the DeFi space
| (actually just a small subspace for now): We're monitoring token
| pools for "rug pulls" and giving them a "safety" rating:
| https://rugpullindex.com
|
| I also wrote a blog post about the safety crisis in smart
| contract development:
| https://timdaub.github.io/2021/12/08/illuminating-the-dark-f...
| zozin wrote:
| The DotCom Bubble/scam led to investor losses in excess of $5
| trillion.
| dumbfounder wrote:
| So it seems like you are saying DotComs were a scam? Which is
| obviously insane. I believe we are seeing something similar in
| crypto. Yes to bubble, and yes there are scams, but wow it
| seems like there are a lot of people here that think the entire
| thing is a scam. There are a lot of insanely smart people
| working on this that are obviously not doing scams, maybe you
| should take a deeper look?
| can16358p wrote:
| Agreed. Super-smart people made these systems possible. Sad
| to see many people associate crypto with scams and illegal
| stuff. Well, I've bought a tshirt with Ether and VPN
| subscription to access Wikipedia and YouTube, from a country
| that blocks many common VPNs. Super, illegal.
|
| Let them keep saying crypto is scam, people who believe in it
| will win in the long run anyway.
| bananabernhard wrote:
| yeah, but the 7.7B is only the scam part - I'd suspect the
| bubble part of cryptocurrencies and NFTs will be much higher
| pjc50 wrote:
| I guess that's from https://en.wikipedia.org/wiki/Dot-
| com_bubble ?
|
| That's reported as a drop from the peak. But it doesn't
| necessarily reflect the real losses, in terms of initial
| investment. It's a number larger than the total amount of
| "real" M0 money in 2000, for example! Feels more like "an
| unrealized gain that never materialized" than "loss".
|
| I remember that time, it was just after I graduated. There was
| a lot of business craziness on a scale that defi is yet to
| reach, although it's already hit some of my peak markers like
| "rename a stadium".
| [deleted]
| djohnston wrote:
| How much is lost to fraud globally each year? 8B doesn't sound
| that large tbh.
| isoprophlex wrote:
| The optimal level of fraud in society is not 0, as combating
| fraud costs money.
|
| I'm not sure if the current level of crypto-enabled pump and dump
| is the optimal level though ;)
| cheeseomlit wrote:
| If you put money into an obvious scam you deserve to lose it.
| Hopefully they learned something from the experience, but I doubt
| it
| anm89 wrote:
| It's hard to understand what to do about this without making some
| sort of congressional committee to decide which cryptos are good
| ones and which aren't (and that will obviously never happen and
| shouldn't)
|
| People have a right to spend their money on things. If the choose
| to spend their money on nonsense that has no contractual
| obligation to return their funds to them that seems like a legal
| transaction when the funds don't get returned.
|
| I do feel for some of the people who thought they could have a
| better life by 10xing or 100xing their networth on scam coins but
| the reality is they didn't do their research and willingly walked
| into this.
| CincinnatiMan wrote:
| To a certain extent there's value in stopping individuals from
| giving away their entire networth though, whether they lose it
| through insecure crypto or to fraudsters calling about "an
| amazing investment opportunity". People whose lives are wiped
| out don't simply cease to exist, they very well can become a
| burden on other members of society.
|
| A lot of decisions we make in the modern day have guardrails
| set up to protect the individual to a varying extent (which is
| often a topic of politics), so it may be we eventually get
| guardrails in the crypto space as well.
| JumpCrisscross wrote:
| The "I have no sympathy for the victims" comments are crass. But
| there is a legitimate question of how much law enforcement these
| crimes deserve.
|
| Arizona has a stupid motorists law [1]. If a car "becomes
| stranded after driving around barricades to enter a flooded
| stretch of roadway," the driver "may be charged for the cost of
| their rescue." A similar concept for crypto may be necessary. Law
| enforcement will pursue. But if they catch the crooks, the cost
| of enforcement is deducted from the proceeds and flows straight
| to the Treasury.
|
| [1] https://en.m.wikipedia.org/wiki/Stupid_motorist_law
| throwaway6734 wrote:
| Any funds allocated to crypto law enforcement should be
| allocated to punishing tax cheats first
| bilbo0s wrote:
| Make it a business decision.
|
| Find out how much money we can get policing crypto. We can
| even charge a greater percentage of potential funds recovered
| to extract an amount that would make it worth our while. At
| any rate, with that data we could determine if the money is
| better spent policing tax cheats.
|
| In short if we're going to get paid well, we should help. If
| not? Well, sorry crypto bros. Sucks to be you.
| pjc50 wrote:
| I mean, why not both? There's an entertaining subgenre of
| police blotter reports where people report their illegal
| drugs stolen. If people report crypto assets stolen (which
| they very rarely do), maybe have a look at how they
| acquired them and whether it was reported to the revenue
| first.
| throwaway6734 wrote:
| What's the incentive to spending tax money to help
| protect a system who's focus is to undermine the state's
| control over its currency?
| Mvandenbergh wrote:
| The flipside of that is that the effective capital markets we
| have depend on a level of trust which could easily be eroded.
| There were weeks this year where I saw advertisements all over
| London for DeFi products and cryptocurrency trading portals. I
| don't think the majority of people putting money in there had
| any idea whatsoever what they were doing.
| tata71 wrote:
| Darwin called for you.
| ajross wrote:
| That's a bit circular though. I mean, to be clear I don't
| agree with the upthread point that we should deemphasize
| crypto crimes. But that said... the trust in the DeFi economy
| is being eroded _right now_ , and for some very rational
| reasons.
|
| It's certainly not the government's job to jump in and prop
| up financial systems in which it's not involved. Its interest
| is in protecting its own citizens from criminality, not in
| the level of "trust" in "DeFi".
| [deleted]
| pjc50 wrote:
| > trust in the DeFi economy
|
| I thought the whole point was to be trustless?
| Sharlin wrote:
| Having trust in a system is different from trusting
| individual actors. You have to trust _something_ ,
| there's no way around it.
| zepto wrote:
| It may be technically different, but it's no different at
| all for the average consumer who hasn't done a threat
| analysis.
| selestify wrote:
| In general, one shouldn't "invest" in things one doesn't
| understand very well.
| zepto wrote:
| A fairly meaningless statement in reality, since it's not
| how most people behave.
| selestify wrote:
| Well, what is there to do about it? A fool and their
| money are soon parted. Must we coddle them at the expense
| of everyone else?
| zepto wrote:
| Just like with any kind of criminal, stopping deceptive
| crypto scammers isn't 'coddling' people at the expense of
| everyone else.
|
| Society relies on trust. The crypto dream that it can be
| trustless is just a way to cheat people.
| selestify wrote:
| > Just like with any kind of criminal, stopping deceptive
| crypto scammers isn't 'coddling' people at the expense of
| everyone else.
|
| It is if you're trying to stop these scams by putting
| greater constraints on, say, the fiat on- and off-ramps.
|
| I mean, how exactly are you going to stop the average
| investor in doing something dumb like dumping their money
| into a shady project, without placing additional hurdles
| on everyone else? The whole point is that you're allowed
| to move, manage, and spend your assets as you see fit,
| without any government's ability to freeze your assets or
| block you from accessing financial services via sanctions
| -- for better or for worse, of course. And yes, the
| freedom to manage your assets as you see fit includes the
| freedom to make stupid financial decisions -- as you see
| fit.
| chipotle_coyote wrote:
| It is, and I've had a nagging suspicion for a while now
| that this is the flaw at the heart of cryptocurrency and
| related phenomena. It's all built on the premise that the
| answer to "we can't trust existing institutions" is to
| try and design systems that don't require us to have
| trust in any actor, but as Sharlin noted, it's difficult
| to impossible to do anything transactional that doesn't
| require _some_ level of trust. Perhaps "trust no one" is
| not actually the right solution to the problem.
| TimJRobinson wrote:
| It's the same as open source software, most people don't
| personally look at the source code of the Linux Kernel,
| but they trust it more than Windows because they know
| many thousands of others have looked at it and haven't
| found issues.
|
| Open systems lead to less trust required, because anyone
| can verify and report issues. Open finance leads to less
| trust required because anyone can verify and report
| issues with the smart contracts.
| tata71 wrote:
| > haven't found issues
|
| No, they have.
|
| https://www.cvedetails.com/vulnerability-
| list.php?vendor_id=...
|
| That's just less important than running free software to
| some people. For better or worse.
| pjc50 wrote:
| > anyone can verify and report issues with the smart
| contracts.
|
| .. anyone who finds an issue in a smart contract can just
| steal it. Potentially all of it. Pseudonymously.
| AnthonyMouse wrote:
| The real problem is that if you don't trust the existing
| system, the normal solution is to patronize a different
| one. Go trust a bank in Japan or Switzerland or India or
| Brazil, which has a decent enough reputation but does
| things differently.
|
| But the existing system latches onto any point of
| centralization in any kind of alternative and uses it to
| impose the same problematic constraints of the existing
| system that the alternative was intended to redress.
| Hence the desire for decentralization. The lack of those
| pressure points.
|
| It would work well enough if we would just have multiple
| banking systems and let them compete with each other
| without international pressure to conform to a uniform
| set of defects, but that isn't what we have. So how do we
| fix that, if not with this?
| astoor wrote:
| > _I thought the whole point was to be trustless?_
|
| No, it is not trustless, it simply shifts trust from
| central authorities to more nebulous entities such as
| anonymous developers, shady mining cartels, unregulated
| exchanges, and even yourself to not lose your private
| keys. Which you consider to be better is essentially a
| political decision.
| AnthonyMouse wrote:
| The obvious solution is to have both and then make sure
| that people understand what they're getting into.
|
| Traditional banks should exist and be regulated and
| insured etc. People with a low risk tolerance should be
| encouraged to use them.
|
| People with a higher risk tolerance or who are trying to
| do something innovative or disruptive should have a
| system that works for them too. People with a low risk
| tolerance are not required to use it. People with a high
| risk tolerance will be exposed to a high risk, as
| requested.
| tata71 wrote:
| This is a really gloomy look on "distributed".
| ajross wrote:
| That's the core semantic confusion at the heart of this
| issue. Cryptocurrency protocols eliminated the need for
| trust _for cryptocurrency transactions_. So you can
| exchange BTC or ETH all day and night and always know who
| you 're paying and no one can get in the middle and mess
| that up.
|
| But it does nothing for transactions outside of that
| world. The core idea behind the "DeFi economy" is making
| things happen _in the real world_ (by financing business
| ideas, buying 230 year old documents, etc...). And that
| part requires that the crypto resources be given to some
| kind of real actor in the real world who 's going to do
| something real with them.
|
| And those actors are people, and they cheat. Hence the
| new term of art "rugging". You can cheat people in the
| crypto world, in some sense, more easily than you can
| regular consumers precisely because they got fooled into
| thinking they didn't need to trust you.
| mdoms wrote:
| > The "I have no sympathy for the victims" comments are crass.
|
| No, they're not. They're entirely reasonable. Stop trying to
| shame people for expressing a common, reasonable and fair
| opinion that you don't like.
| jakeva wrote:
| But shaming victims is acceptable?
| this_user wrote:
| They are only victims of their own greed and ignorance.
| It's like ending up in the hospital because you chose not
| to get vaccinated against COVID: People have been trying to
| warn you for years, but you wouldn't listen, and now you
| are paying the price.
| damidekronik wrote:
| Since when scamming is something we should be ok with?
| mdoms wrote:
| 100% of Crypto "investors" are speculators looking for a
| quick buck by investing in a system that is pumping
| needlessly huge amount of carbon into the atmosphere.
| They're not well-meaning victims who stumbled into the bad
| part of town, they are greedy thoughtless people in search
| of free money.
| tromp wrote:
| These rug-pull scams rely on the developers having tons
| of tokens to sell to investors, which is mostly confined
| to use of Proof of Stake.
|
| So your environmental criticism of Proof of Work is not
| applicable here. A PoW coin with no premine doesn't allow
| for a rug pull.
| optimalsolver wrote:
| What are some notable proof-of-work tokens that didn't
| have a premine?
| [deleted]
| zepto wrote:
| I think that's unfair.
|
| They may be in search of outsized returns, but I think
| people can absolutely be victims of the 'have fun staying
| poor' meme. The implication is that if you don't buy into
| crypto your assets will be decimated by inflation. I
| think it's reasonable to consider that it's not 'greed'
| but rather fear of being left behind that is driving many
| victims.
| mraudiobook_com wrote:
| It's not common at all. I lost $10k in crypto to downloaded
| malware. I filed a police report and tell the story all the
| time. Very few people are psychopathic enough to blame the
| victim of a robbery.
| ziddoap wrote:
| > _Stop trying to shame people for expressing a common,
| reasonable and fair opinion that you don 't like._
|
| I realize the dangers of posting something remotely pro-
| crypto on HN, but I have to say this is a pretty rich
| comment. Shame is all that is doled out to the many people
| who have reasonable and fair opinions about cryptocurrency
| that you don't like (such as thinking some cryptocurrencies
| are reasonable or worth speculating over).
| bena wrote:
| Really? I see a lot of pro-crypto statements on here as
| well.
|
| If anything, I'd say the corner is turning and the
| previously pro-crypto HN is just now becoming more anti-
| crypto.
| donkarma wrote:
| yes i'll be sure to have no sympathy for your grandmother the
| next time she gets robbed by scammers
| JumpCrisscross wrote:
| > _They 're entirely reasonable_
|
| I agree. They are not unreasonable. They are crass. If a
| child is told not to touch a stove and then burns herself, I
| may consider them stupid, but I can still have sympathy for
| the pain they are experiencing.
| hobolobo wrote:
| That would likely create a perverse incentive.
| _fat_santa wrote:
| These sorts of rug-pulls blur the line between legal and
| illegal though. Take the "Save the Kids" token [1]. In this
| case, they hyped up this token, their audience bought into it
| thus jacking up the liquidity, and right around the top all the
| folks that were hyping the token sell off and everyone is left
| with a token that's basically worthless.
|
| When we talk about law enforcement stepping in, I struggle to
| see what they could possibly help with in scenarios like this.
| TBH the FTC or SEC needs to step in and investigate these
| instances.
|
| [1]: https://www.youtube.com/watch?v=3Xw9rWmTQfc
| CalChris wrote:
| This is a form of _asset forfeiture_ which would be absolutely
| ripe for abuse. It is truly an awful idea.
| Jerrrry wrote:
| Technical hacks against the protocol and implementations are
| fair game, and is the implicit incentive that balances the
| market.
|
| Social engineering and financial hacks are not fair game, and
| are "illicit" in the sense that crypto is obviously an
| international martial zone.
|
| Exhaustively brute forcing a keyspace is valid, making your
| username an XSS to steal funds from an insecure page/downstream
| app is not valid.
|
| Finding and leveraging an exploit in a contract is valid, both
| a paper/legal contract and a literal codified Eutherem
| contract. Flashing incorrect token prices on CoinMarketCap.com
| to take advantage of (unauthorized? grey) downstream
| screenscrapers and rugpulling affected tokens is NOT valid,
| but, admittedly murkier.
| opportune wrote:
| Fair game and valid according to whom? You cannot legally rob
| a bank just because they left it unlocked and unmanned. It
| might be possible to take crypto due to a bug in a protocol,
| and arguably justifiable, but that doesn't mean it would hold
| up in court if you were identified as the one using the
| exploit.
| JumpCrisscross wrote:
| > _You cannot legally rob a bank just because they left it
| unlocked and unmanned_
|
| Nobody suggested making crypto crimes legal. Just metering
| the degree to which law enforcement, a public good, is put
| to use pursuing it. Why should a law-abiding saver bail out
| what in many cases looks like a gambler's foray?
| rchaud wrote:
| > Why should a law-abiding saver bail out what in many
| cases looks like a gambler's foray?
|
| Because having an idea about how these frauds are
| committed are helpful for society as a whole. Law
| enforcement investigating such crimes is the first step
| towards meaningful laws and regulations.
|
| Acting as though these crimes never happened because
| they're not enshrined somewhere in the criminal code is
| cutting off one's nose to spite the face. The negative
| externalities will still be there, and they will land
| squarely at society's doorstep. We will all have to foot
| the bill one way or another.
|
| Everyone's a rugged individualist until they get
| rugpulled.
| opportune wrote:
| I am not sure what you mean by "bail out". When something
| gets stolen from you, the government doesn't repay you
| for the actual amount. They do pay to litigate/make
| litigation possible. That is part of the societal
| contract - if you own something and someone takes it from
| you, the court system exists so you have legal means of
| restitution. I don't really care about whether that's
| good or not to apply to crypto, I am merely pointing out
| that it does.
| spinny wrote:
| It's a bit unfair to make that comparison. Most technical
| hacks are always present until somebody abuses it, to make
| a fair comparison the bank would have to _always_ be left
| unlocked and unmanned
|
| The guarantee that a bank gives is not the same guarantee
| that a smart contract gives you. the bank guarantees the
| safety of your money, the smart contract guarantees that it
| will as stated in the code.
|
| It's on the the contract dev to write the correct thing and
| on the contract user to determine if the does what is "says
| on the thin"
| Jerrrry wrote:
| Socially acceptable. Because I am not going to acknowledge
| or respect a Turkish summons. Although I would expect a
| Turkish hit squad.
|
| >You cannot legally rob a bank just because they left it
| unlocked and unmanned.
|
| Exactly - because it isn't a bank, it is a bunch of cash on
| the street, if it was unlocked and unmanned.
|
| And even if there was a clear Sticky Note with foreboding
| text, you would be in the clear to pocket a stack of cash
| sitting on the sidewalk, left unattended, guarded only with
| a sticky note.
|
| The steelman and strawman are nearly identical - a bugged
| contract or implementation isn't a bank, it is a bunch of
| cash on the street. It stopped being a bank once a bug was
| found.
| crucialfelix wrote:
| In New York in the 90s I picked up $150 in small bills
| off the street. Just strewn around in the middle of the
| day.
|
| It still gives me delight to remember that. I needed the
| money, but the continuing pleasure in recalling has been
| worth far more.
| meheleventyone wrote:
| I found someone's car keys in the street this morning.
| I'm pretty sure that didn't entitle me to their car.
| Jerrrry wrote:
| No, because keys for a car and keys for a wallet are
| wholly different, and even then, picking a lock
| (bruteforcing a keyspace) isn't comparable, because the
| value, intent, and purpose of a car is not in its
| properties of being able to be transferred, transmitted,
| and it's future value increasing (although that last one
| is true incidentally), but it is primarily used to get
| from A to B.
|
| If you found a gift card with the PIN in the street, it
| would entitle you to a moral inhibition. If you went
| through a stack of discarded gift cards and found ones
| with change, you would be less morally wrong, but just as
| legally right.
|
| Finding a debit card in the street with the PIN is akin
| to finding someone's wallet.dat file on their github.
| That is stealing, so no comparison.
| shakna wrote:
| > And even if there was a clear Sticky Note with
| foreboding text, you would be in the clear to pocket a
| stack of cash sitting on the sidewalk, left unattended,
| guarded only with a sticky note.
|
| That's not true, and not true globally. Unattended
| valuables being taken is still theft. Though prosecution
| is rare, it still happens [0].
|
| [0] https://www.macaupostdaily.com/article12506.html
| AnthonyMouse wrote:
| It's not a matter of whether it's theft. Of course it is.
|
| But if you leave your valuables in the street unattended
| and then come back shocked to discover that they aren't
| where you left them, this is not a problem that requires
| new legislation to solve. The solution to preventing this
| from happening to you in the future is quite obvious and
| doesn't involve the government.
|
| And if the government manages to catch the thieves,
| great. But if they don't, c'est la vie.
| bagels wrote:
| I suspect that your belief about found things is at odds
| with the law.
| Jerrrry wrote:
| Theft-by-taking has a wholly different level of legal
| magnitude gravitas than robbing a bank, tho.
| nradov wrote:
| You obviously don't understand basic contract law. US Civil
| courts routinely apply the principle of equity when
| interpreting written contracts. Loopholes and errors are
| disregarded when they violate the clear intent of the
| agreement.
| Jerrrry wrote:
| >routinely
|
| And they routinely admit that some cases are not clear cut.
| But crypto has no grey zones, by design - you either have
| the keys, or you don't. And that is the explicit agreement
| code-contract signers agree to when they go out of their
| way to DeFi their agreements.
|
| Obviously legal precedents and statutes are not fitted for
| this purpose yet, because they are reactive, not proactive.
| javajosh wrote:
| Nothing annoys me more than arrogant ignorance. It's like,
| pick one! You speak as if these are handled as federal
| matters, and they are not. Contract disputes are handed as
| local matters, usually in a local district court.
|
| Furthermore, when you talk about the court you're talking
| about a Judge. The Judge gets final say and they can take
| their sweet time, regard or disregard anything they want.
| In local matters, Judge's act without restraint. Appellate
| court, the state bar, the judicial qualification board,
| federal court, all gets involved so rarely they can be
| ignored. Additionally, these Judges are no stars of the
| legal profession: cohorts of lawyers will often rig
| elections and appointments to favor a well-connected but
| bad lawyer, because being a judge is actually really easy.
|
| So, yeah, it mostly depends on who the judge likes better,
| and whether society is better or worse if this dispute is
| decided this way or the other way. I can't stress enough
| the arbitrariness, and supreme unaccountably, of a local
| judge's decisions.
| Jerrrry wrote:
| > I can't stress enough the arbitrariness, and supreme,
| unaccountably, of a local judge's decisions.
|
| Exactly. Code-contract signers hate this, and go out of
| their way to avoid the possibility of this interference.
|
| Judges should tell crypto cases to get rightfully fucked.
|
| If I appear and sue a drug dealer for giving me fake
| 100's, I'd get laughed at.
|
| Considering crypto is just an massive abstraction layer
| to hide the online drug trade, the courts should
| similarly laugh at these _technical_ exploits, in the
| context of Euth-shit code. Because it's sole explicit
| purpose of existence is to conduct business without
| arbitration.
| notch656a wrote:
| Fine, make crypto outside the legal system. Gains can't
| be taxed and failure to apply AML/KYC can't be
| prosecuted, but you get no protection from the courts for
| theft. I'd take that bargain.
| arcticfox wrote:
| > If I appear and sue a drug dealer for giving me fake
| 100's, I'd get laughed at.
|
| Is that actually true? On the criminal side, I served on
| a grand jury, and a lot of the cases we saw were
| criminal-on-criminal crime. I guess the idea driving the
| crime was that criminals make easier targets as they're
| less likely to go to the police. But some did.
| nradov wrote:
| No that's not how it works. The same basic rules of
| contract law apply in federal, state, and local courts
| with only minor variations.
| javajosh wrote:
| It is how it works. The rules don't matter; the attorneys
| know what words to say to give a judge reasons to either
| admit or reject application of any rule. The coin that
| remains in a case is _likeability_ and _making the judge
| 's life easier_.
|
| The net result is a system where attorneys are falling
| over themselves to prove who is more obsequious to all
| the judges. If you become a problem in one case, you will
| suffer in your other cases, too, so individuals with
| legit complaints against the court can and will be
| ignored.
|
| The net result is a court that ignores all but the most
| mechanical rules (and loves to stall on those when it
| can, because it approximates the appearance of "work"),
| and has no mechanism for correction. I'm sorry, but the
| rules don't really matter, to anyone.
| nradov wrote:
| That comment is just deranged. I assume you had a bad
| experience with legal system at some point but you
| clearly don't understand how it actually operates,
| especially at the appeals levels.
| jcranberry wrote:
| You'll have to back this up with evidence. You can file
| complaints about local judges to judiciary committees,
| administrative judges, you can appeal their decisions,
| and if you actually go to trial you get a jury unless you
| specifically waive it (along with all other parties).
|
| I don't see how they're unaccountable, or how contract
| disputes mostly depend on a judges disposition.
| jeremyjh wrote:
| If that were true, it would not be possible to run a
| sustainable business in any industry. Legal systems need
| to generate consistent results with respect to contract
| law in order for commerce to be successful and efficient.
| javajosh wrote:
| Cite? No, the way it works is that you pay lawyers who
| know enough to play it out in their heads and determine
| who has to pay whom to make it go away. If one side is
| stubborn and ignorant, then they pull the trigger and the
| years-long, extremely expensive lottery play has begun.
|
| Your assumptions about the law, about judges, and about
| rationality, rhetoric, and the justice system in general
| are about to be destroyed. The lawyers know the high
| variance of court and generally want to avoid court like
| the plague.
|
| (The justice system is badly broken, obviously. The core
| issue is that it takes far too long to judge a case, and
| a big reason for that is a) the rules are too complicated
| and b) not adopting better tech. We should have trials
| that start a week after filing, with online juries,
| online judges, and real-time access to data. The
| attorneys can finally earn their ridiculous wages by
| learning how to fly through information and present it in
| a compelling way.)
| nradov wrote:
| The median lawyer salary is $122K. Whether that's
| ridiculous is a matter of opinion, but it's only a little
| higher than software developers. And the average lawyer
| has more education.
|
| Some civil court hearings are already conducted online.
| arcticbull wrote:
| It's easy not to have sympathy because these folks are the ones
| railing against the banks and the government and the
| establishment and police - confident they don't need them
| because they're all in on a system the vast majority doesn't
| understand the first thing about. But they'll demean and
| criticize anyone who suggests their magic free money machine
| might not be all it's cracked up to be. They've been warned so
| many times. Like the anti-vaxxers turning to ivermectin. It's
| honestly just an episode of r/WinStupidPrizes.
|
| Even now they're rationalizing - US banks offer 0% interest and
| took $12B in overdraft! See how much worse that is? Well except
| the $12B is out of $18T in assets so DeFi hacks cost 1400X as
| much per user.
|
| In fact 10% of all TVL in DeFi was stolen this year. That means
| if you're not making a 7% return for inflation and a 10% return
| for risk loss, you're losing money in real risk adjusted dollar
| terms invested in DeFi. 17% APR in DeFi is equal to 0% in real
| dollar terms.
| chrisweekly wrote:
| I like your take on it. But 7% inflation? Got a source you
| could cite?
| arcticbull wrote:
| I do believe the medium-term inflation goal of 2% will be
| reached, and that this is simply a function of supply chain
| disruptions. I was using the most recent CPI data. You can
| also get a 7% yield on treasury Series I bonds. [1]
|
| [1] https://www.treasurydirect.gov/indiv/products/prod_ibon
| ds_gl...
| ineptech wrote:
| The exact value of inflation this year is controversial and
| depends a lot on how you measure it, but you can replace it
| with 6 or 8 or whatever you think the correct value is
| without altering their point.
| nradov wrote:
| The current annualized US consumer price inflation rate is
| 6.8%.
|
| https://www.cnbc.com/2021/12/10/consumer-price-index-
| novembe...
| babyshake wrote:
| Is that really a fact, that 10% of the value locked into DeFi
| was stolen this year? I would think that most of the TVL
| would accrue to the more blue chip protocols (Aave, Uniswap,
| Compound, etc.) and to my knowledge these haven't been
| affected much by these big hacks.
| arcticbull wrote:
| DeFi Pulse says there's just under $100B in TVL. [1] About
| $10B was lost and stolen this past year depending on where
| you look - $7.7B according to this article, but I saw $10B
| circulating too.
|
| [1] https://defipulse.com/
| sk55 wrote:
| I don't think DefiPulse has everything. Here's a few more
| off the top of my head, though I'm sure there is more: -
| $5.5 billion (TVL on Eth L2s via L2Beat) - $4 billion
| (ETH 2.0 staking contract) - $17 billion (Polkadot
| staking) - $16.5 billion (Cardano staking) - $36 billion
| (Solana staking)
| pcthrowaway wrote:
| The article's figures include the centralized Turkish
| exchange which made off with ~2.6B , so I don't think
| it's fair to consider it the same kind of thing.
| superfad wrote:
| Yeah I agree.
|
| > Rug pulls have emerged as the go-to scam of the DeFi
| ecosystem, accounting for 37% of all cryptocurrency scam
| revenue in 2021
|
| So 37% of $7.7 billion is $2.849 billion.
|
| > All in all, rug pulls took in more than $2.8 billion
| worth of cryptocurrency from victims in 2021.
|
| > It's important to remember that not all rug pulls start
| as DeFi projects. In fact, the biggest rug pull of the
| year centered on Thodex... In all, users lost over $2
| billion worth of cryptocurrency, which represents nearly
| 90% of all value stolen in rug pulls. However, all the
| other rug pulls in 2021 began as DeFi projects.
|
| The graph shows $2.6 billion was lost with Thodex. So
| that leaves $0.249 billion that was lost in projects that
| were rug pulls that began as DeFi projects.
| [deleted]
| Jerrrry wrote:
| "have fun staying poor," he said, clicking on the coin
| roulette, eyes never leaving his plugged in android tablet,
| physically hot to the touch from the max CPU load.
|
| "i am going to retire in 5 years. have you heard of prove-
| your-steaks? its gonna change crypto. you can get 20% back,
| just lock up your starving kids Earned Income Tax Credit for
| a year, and you'll make $500!"
|
| "have you heard of this new shitcoin? probably not - i know
| you retired from crypto! haha...anyway, it exposes you to
| upside leveraged of @PISSCOIN and is tethered to the stable-
| genius coin. its basically free Unisex-swapped tokens."
|
| "hey. some guy on discord was helping me install a chrome
| plugin to manage my coins and now my $400 in life savings is
| gone...are you still good with computers?"
| dvt wrote:
| "Hey I just invested $2000 in options a few days ago,
| what's a margin call?"
|
| "Turns out my pension fund was investing in BBB- CDOs, now
| they've gone BBBust"
|
| The argument that you can't (or don't) get burned in non-
| crypto markets is made in bad faith.
| Jerrrry wrote:
| You cannot get margin called on a cash account, because
| you cannot make positions that are not 100% collateral
| covered, unless you have 25k. Then you can do that, and
| trade more than 3 times a week (and don't have to wait
| til settlement)
|
| Pension funds don't deserve to go bust, but shouldn't be
| bailed out if they fail to diversify their portfolio.
|
| There are a lot more safe-gaurds in investing, because
| all these games have been played before.
|
| But those require consent too - with crypto, someone can,
| and will, irrevocably steal your funds without possible
| recourse.
| DanHulton wrote:
| That wasn't the argument being made, like at all. Your
| argument is actually the one being made in bad faith.
| pjc50 wrote:
| .. and indeed the UK and other countries have banned the
| OTC sale of particularly bad ones, such as binary
| options. There is some effort to prevent people selling
| overly fraudulent or risky products to the general
| public, even if it's leaky.
| nathanvanfleet wrote:
| Yes let's keep making weird incentives for law enforcement like
| asset forfeiture. I want police to be like an American
| ambulance and run my credit card before saving my life.
| JumpCrisscross wrote:
| > _let 's keep making weird incentives for law enforcement
| like asset forfeiture_
|
| I hate civil forfeiture. That's why I specifically suggested
| the proceeds flow to the Treasury. Not the law enforcer's
| budget.
|
| There is also a world of difference between taking something
| you legally possess, and taking a cut of things returned to
| you at the expense of the public purse.
| zepto wrote:
| The shouldn't flow to the treasury. They should go directly
| back to the public.
| dcist wrote:
| Where do you think the budget comes from?
| Joker_vD wrote:
| Probably even "instead" instead of "before": dead people
| don't complain (their relatives might though)
| dmitriid wrote:
| > The "I have no sympathy for the victims" comments are crass.
|
| There are exactly two types of people in the crypto space:
|
| - scammers, who know exactly what they are doing
|
| - fools, who have very little understanding of how the world
| works
|
| And yes. Fool and his money are easily parted.
|
| So, are the comments crass? No. Not in the least.
| spinny wrote:
| If you loose you crypto in a dex hack you have my sympathy, if
| you got rugged with a "double your crypto" kind of scheme or
| some mooncoin, there is no sympathy for you. The same applies
| for fiat. This does not make you a victim, it make you a greedy
| target.
|
| a large majority of those people fall into the greedy category
| not the victim
| kristintynski wrote:
| Somehow managed to avoid like 5 of these memecoin rugpulls last
| year. Memecoins are a clown casino, but the memetic dynamics
| fascinate me.
|
| The right core meme can be a catalyst for compounding user
| generated content growth. Look for memecoins with community
| growth metrics that look exponential, make sure the tokenomics
| are safe, and hold on for dear life.
|
| For me, DogeBonk and perhaps one or two other memecoins have the
| community growth and memetic qualities to be exponential. So long
| as there's no rug.
| [deleted]
| rwaksmunski wrote:
| I really hate to say it, but I have little sympathy for the
| victims here. They wanted a moon shot, wild west, libertarian
| paradise and got ... robbed with no recourse. Many more than
| once.
| jdhn wrote:
| Completely agree. You want the libertarian paradise, then you
| should accept the risks that come along with it. Personally,
| I'm fine with having it being the wild west, and I only invest
| money I can afford to lose.
| oakfr wrote:
| > I only invest money I can afford to lose.
|
| You mean "speculate" here, not invest.
|
| People definitely want (and must be able) to invest money
| that they cannot afford to lose, at least not all in a split
| second.
| bachmeier wrote:
| That's the easy thing to say, but unfortunately a lot of well-
| intentioned people are losing money, like they did with
| GameStop. That's not to say I'm shedding tears for everyone
| losing money, but the ones that should lose it are typically
| not the ones it's happening to.
| spiderice wrote:
| How are people buying in to GameStop _after_ it has gone up
| by 20 times in price not "the ones that should lost it"?
| They're obviously just trying to get rich quick, and
| knowingly taking a risk to do it. Who "should" lose the money
| in a case like GameStop? I can't think of any scenario where
| it's not the people jumping in late to try to make a quick
| buck.
|
| edit: Initially I vastly underestimated how much GameStop
| stock went up
| surfingdino wrote:
| Well-intentioned or just greedy? I'm not saying they deserved
| to get scammed, but let's be clear about their motives... it
| was greed.
| benlivengood wrote:
| This is about 0.1% of fraud/scams overall[0], for comparison.
|
| [0] https://www.crowe.com/global/news/fraud-costs-the-global-
| eco...
| jedberg wrote:
| I'm glad that people are starting to see the consequences of a
| decentralized network that is outside the law means there is also
| no recourse for those who have been wronged.
|
| This has always been my concern about crypto: fiat currency is
| backed by judges, and if you don't do what the judge says, it is
| backed up by the violence of an enforcer with a weapon and the
| ability to put you in a cage.
|
| Crypto doesn't have that. If someone steals it from you there is
| really no recourse, unless we "recentralize" the network to give
| certain entities more power than others like we have with fiat
| currency.
| dcist wrote:
| Ross Ulbricht would like a word
| alex_young wrote:
| The $7.7B part is a bit hyperbolic right?
|
| A lot of value of crypto is based on a small volume of
| transactions to cash which give a number to the entire asset.
|
| If I create 1B secret numbers, sell one for $1, and someone
| steals the rest, is anyone really out a billion dollars?
| vmception wrote:
| lol sure if that helps you sleep at night about the decisions
| you've made in your life thus far.
|
| it's not hyperbolic, there is a lot of liquidity in this multi
| trillion dollar market.
|
| although if you're asking this question, the next point might
| dilute my prior point to you, but a reality is that many people
| aren't seeking fiat. They don't want dollars. They want more
| crypto. For physical goods and services there are also enough
| closed loops to acquire whatever is desired without touching
| dollars. For digital goods and services they can already be
| acquired for crypto.
|
| But outside of that, charities accept crypto donations. Private
| equity firms accept crypto in-kind investments as the third
| party fund administrators have also updated their technology.
| Politicians accept crypto.
|
| No different than any of these entities accepting stocks or
| bonds, and considering to liquidate some eventually. Except the
| crypto is more easily exchanged for goods, services, donations,
| investment.
|
| it shouldn't sound absurd, but if it does, just remember that
| they can _also_ get as much cash as they want whenever they
| want.
| annexrichmond wrote:
| > lol sure if that helps you sleep at night about the
| decisions you've made in your life thus far.
|
| Why was this necessary to say at all?
| vmception wrote:
| because it requires introspection, its intentionally a dig
| at people that rationalize why someone's windfall is "not
| actually a windfall"
|
| like the people who say
|
| "$X is not that much these days" (it is and they want it)
|
| "That billionaire doesn't _really_ have that much money "
| (billionaire then sells 10% of their holdings in 3 days for
| billions of USD)
|
| "What about after taxes?" (pay for an accountant, you'll
| see its better than you think)
|
| and the reality is that liquidity changes faster than the
| culture. especially across all markets over the last 2
| years. so its time to force that introspection.
| danaris wrote:
| > its intentionally a dig at people
|
| So you're intentionally being insulting, then. And you
| see that as _necessary_?
| vmception wrote:
| It moves the needle. the predictable alternative is that
| I get into an argument about liquidity with someone that
| doesn't know this market. the predictable thing is to
| pull up an article from 5 years ago about the thinness of
| the crypto market, because google tells you what you want
| to see. the predictable thing is to not know about large
| OTC trades done specifically to show the depth of the
| market, or not know about the dark pools at all. the
| predictable thing is to then demand a source, which is
| not possible due to the very nature of dark pools, and
| then act like that validates their incorrect reality.
|
| my dig is about introspection, how many other times have
| they made an excuse to miss _all_ the alpha? are they
| actually comfortable with the decisions they 've made,
| maybe they are. it just gives them an out to believe
| whatever they want. sentiment in the crypto space has
| generally gone this direction right now. everyone is
| aware of all the arguments against being in the space
| from traditional finance minded folks, and simply check
| their stocks and their crypto on two separate screens
| daily anyway.
| erichocean wrote:
| If you're kicking ass at crypto, why TF are you
| commenting on HN?
|
| Something doesn't add up.
| vmception wrote:
| How are these related or conflicting things, in your own
| words?
| pjc50 wrote:
| So, the question is, what's the scalability of this like?
|
| - is there exponential growth still to go, so that we might
| expect $70bn lost in 2022?
|
| - or is there a finite amount of victims to be scammed, after
| they've lost all their money the rate of scam will decline?
|
| - or is it more likely that there will be some kind of
| intervention?
| SQueeeeeL wrote:
| There is always a finite amount of victims to be scammed, that
| is the fallacy of ponzi schemes over genuine investment
| strategies
| captn3m0 wrote:
| Crypto went global while facing zero regulations - that is
| what let it become the longest running ponzi (?)
| meowface wrote:
| Indeed, but I don't think we're anywhere near the limit yet.
| I don't know about exponential growth, but I would predict at
| least double or triple the amount lost to scams in 2022.
|
| (Barring some massive SEC/DoJ crackdown, or something. And
| even then, that'd only put a dent in it and would just scare
| away some US scammers. Most of the big ones are outside the
| US's reach.)
| MBCook wrote:
| It's not a problem. Once we switch to using sidechains for most
| of the book keeping we expect to be able to handle 1000x more
| scams without affecting the main scam.
|
| We're also looking at theft-of-stake instead of theft-of-work
| to reduce energy usage, allowing scammers to be much more
| efficient and green.
|
| To the moon!
| psychlops wrote:
| Unless something changes dramatically, DeFi will remain a haven
| for scams. It tries to mimic an actual economy which has loans to
| businesses to pay returns (etc), but DeFi actually is a giant
| circular digital economy which doesn't create real world wealth.
| headmelted wrote:
| > but DeFi actually is a giant circular digital economy which
| doesn't create real world wealth.
|
| Isn't this true of the entire cryptocurrency cult though?
| mszcz wrote:
| I've used DeFi and haven't been scammed. Fees being what they
| are now aside, I liked the experience.
|
| As not being scammed goes, I just avoided everything that was
| super new (like a project 3 days old that already has $3b in
| TVL), avoided things that sounded super scammy (Most recent
| one coming to mind being SQUID token. I mean, come on),
| avoided things that had no real reason to be, avoided things
| that I didn't really understand despite research.
|
| My most successful investments are those made in crypto
| winters, during "see? crypto's over".
| mschuster91 wrote:
| > Isn't this true of the entire cryptocurrency cult though?
|
| In the real world, "crypto holdings" are IOUs with a dynamic
| value of how much is being owed. This absolutely can create
| (and especially _transfer_ ) real world wealth.
| [deleted]
| Spooky23 wrote:
| The problem is that the advocates think crypto is cash, it's
| really more like silver - highly volatile, highly attractive
| to scammers.
| woodruffw wrote:
| It would be as (if not more) fascinating to see an estimate of
| the _true_ costs here, corrected for wash trading and market
| manipulation.
|
| My outsider's perspective is that the entire thing seems like a
| shyster's market: scammers scamming scammers, with yet other
| scammers deciding how much each scammer has gained or lost with
| only loose ties to ingoing or outgoing money.
| BoppreH wrote:
| This is my biggest complaint against cryptocurrencies in general.
|
| I'm happy with my bank's fraud protection. How can crypto users
| protect themselves without recreating traditional banking?
|
| Bitcoin was released ~13 years ago, and wallet/transaction
| security has been one of the most important requirements since
| then (along with scalability, but let's not go there). If
| trillion dollar market caps and god-knows-how-many billions of
| investment couldn't figure out how to protect consumers after 13
| years...
| kyruzic wrote:
| Use a trusted exchange if you are worried about that. Holding
| crypto in a wallet is the equivalent of keeping cash in your
| wallet.
|
| No bank in the world will care if someone steals your wallet.
| acdha wrote:
| > Use a trusted exchange if you are worried about that.
|
| This doesn't protect against your credentials being
| compromised, and it's not useful advice unless you can
| explain your criteria for declaring an exchange trustworthy
| and how that would have excluded all of the exchanges which
| have lost their customers' money.
|
| > No bank in the world will care if someone steals your
| wallet.
|
| Yes, this is why most people use regulated banks which have
| the fraud handling and reversal processes which
| cryptocurrencies lack. It's not just that you don't have to
| carry it with you, it's that there are things like
| verification and reversal processes which mean that
| individual people are both less likely to lose money in the
| first place and more likely to get it back. If you've ever
| bought a house, the process of verifying a large amount of
| money being transferred is very different from writing a
| small check whereas all you need is a typo to lose
| cryptocurrencies without recourse.
| bananabernhard wrote:
| yeah, but then you recreated traditional banking, just as
| they said. It's almost like there are reasons, as to why
| things are like they are right now.
| kyruzic wrote:
| No. The person I replied to wanted a traditional bank in
| the crypto space. I told them how to replicate it.
|
| If you didn't notice the total crypto market cap is 2
| trillion dollars. People are happy with the way crypto
| works, most don't want it to be like a bank, but for those
| that do there is ways to make it so.
| arthur6667 wrote:
| Right. I did that. And got scammed. I had my BTC in a trusted
| exchange at the time. Then they dissappeared on me. Then I
| was told it was my own fault for using an exchange. You just
| can't win this game can you..
| beardog wrote:
| ding ding! If you keep it in exchange and it gets stolen,
| it's your fault for daring to trust your fellow human. If
| you keep it yourself and it gets stolen, it's your fault
| for not having a multisignature hardware wallet stored in 5
| different countries with armed guards.
|
| Ok i'm exaggerating of course, it just seems like some
| people are not willing to admit that cryptocurrency does
| not address certain things that people want out of a
| money/payments system.
| BoppreH wrote:
| _Everyone_ should be worried about that, and if your
| suggestion is to use exchanges, that just makes them de-facto
| banks. Now you have a traditional banking system on top of a
| slow and expensive settlement layer.
| sroussey wrote:
| Slow and expensive is relative... try transferring money
| internationally.
| YetAnotherNick wrote:
| Have you heard of Paypal?
| BoppreH wrote:
| I do, regularly, and it takes a few dollars and a few
| days to arrive. That sucks. But this comes from following
| regulations, and fees for the useful service (e.g.
| protection).
|
| Right now international cryptocurrency transfers are a
| legally gray area, and have the aforementioned lack of
| protections. So the expensive and slow, but legal and
| safe, international transfers are a service that
| cryptocurrencies don't offer at all. No reason to think
| it'll be faster and cheaper when it's offered.
| antognini wrote:
| Even within the US, ACH settlement times are 3 business
| days. The settlement period for stock trades is 2
| business days and there's a big push to reduce it to 1.
| Relative to that, bitcoin's 10 minute settlement time
| isn't so long.
| jcrawfordor wrote:
| Is that really that true any more? From my podunk credit
| union I have used SWIFT to send overseas and it took
| under a minute and cost me $20. That's both faster and
| cheaper than Ethereum transactions. It's costlier than
| Bitcoin but not that much, and still faster. And that's
| wire transfer, the expensive bank to bank option...
| Western Union has been faster than Bitcoin for decades
| and cheaper for probably a decade now.
|
| The huge popularity of crypto is really eroding the tx
| capacity advantage.
|
| And even in the backwards US, ACH can now settle later
| same day and it's free. That makes BTC a lot less
| attractive.
| surfingdino wrote:
| Try transferring money to a legitimate business in
| another country (in the EU) that got blacklisted by the
| payment operators. Such as a regulated crypto exchange.
| They are regulated, you have money you paid tax on, but
| your bank decides whether or not you are allowed that
| payment and will not give you legal reasons for
| stopping/reverting payment. May even choose to close your
| account if you argue with them. With crypto, all you need
| is funds in your wallet and the recipient's address. Can
| you see the difference now?
| kyruzic wrote:
| An ethereum transaction takes under a minute and costs a
| few dollars.
|
| Transferring funds uses an extremely small amount of gas.
| You clearly have never used the chain so stop making
| things up.
|
| Here I sent 11K USD to another wallet for a fee of $10.
| It was confirmed within 5 minutes. There is no other
| service outside of crypto that is that fast and that
| cheap. https://etherscan.io/tx/0x3edc74a15742f65d166dfc9d
| db567afabf...
| jcrawfordor wrote:
| I'm definitely not that familiar with Ethereum, my thesis
| research was on Bitcoin but I have been fairly tuned out
| since then.
|
| But wouldn't confirmations take, as you said, five
| minutes on a good day? I see people saying 5-20 minutes
| typical for Ethereum to reach 30 confirmations. And sure
| you can accept fewer but 30 seems a pretty widely
| accepted convention. That's still slower than wire
| transfers which are functionally instantaneous (in
| practice of course it takes a minute or so). And right
| when I looked now the base TX fee is $19.10, which is a
| few dollars lower than I thought, but I see that it
| fluctuates by a few dollars pretty quickly so it would
| depend on the moment. I don't know the Ethereum situation
| with regards to EIP-1559 in very much depth so if I
| misunderstand how fees currently work please correct me.
|
| This seems to put Ethereum basically right on par with
| what my credit union charges for wire transfers. Now $20
| is on the lower end for wire transfers on a consumer
| account (I think $25 is common), but you can also get
| lower on commercial accounts. It just seems like they're
| fairly on par with each other from a fee perspective, and
| Ethereum is at least a few minutes slower.
| sroussey wrote:
| True, but you can't hold a billion dollars in the wallet in
| your back pocket.
| lern_too_spel wrote:
| What "trusted exchange" will make you whole if their wallet
| gets emptied? There is nothing like FDIC or SIPC covering
| your assets.
| MengerSponge wrote:
| We've seen oppressive regimes shut down cryptocurrencies when
| threatened by them. The remaining argument in favor of crypto
| boils down to "the problem with traditional currencies is that
| people who aren't me have too much of them"
| wsc981 wrote:
| Well, in Germany perhaps soon some banks will hold cryptos for
| their clients [0]. I would imagine these banks would offer some
| kind of fraud protection for the crypto assets they will hold,
| likely at some cost.
|
| I believe in the USA there was already some legislation passed
| some time ago that would allow banks to be custodians of
| crypto-currencies?
|
| ---
|
| [0]: https://bitcoinethereumnews.com/crypto/two-german-banks-
| comm...
| PeterisP wrote:
| This probably is the solution - as cryptocurrency advocates
| like to say, "not your keys, not your coins", but for certain
| people an IOU from a bank saying that the bank owes them some
| coins is preferable to having the actual coins and the
| benefits+risks associated with that.
|
| It's similar to stocks and bonds - you _could_ own them
| yourself, but for not-huge private investment it 's often
| simpler to have a financial institution hold them on your
| behalf.
| spyder wrote:
| If someone uses your credit card or other account info to
| withdraw cash then the bank cannot reverse that, similarly to
| crypto transactions. The protection is having an insurance fund
| to reimburse affected clients. Crypto projects can do the same
| thing but they rarely do it yet. There are projects like
| nexusmutual.io where you can get covered against smart contract
| failure & exchange hacks. But even if you would be more
| protected against frauds in crypto, it has a lot to improve to
| get closer to it's promises because it's still far from it.
| BoppreH wrote:
| That's a really cool project with its democratic claim
| assessment, and I admire their transparency. But as with
| everything related to safety in crypto, today it's still
| based on optimism.
|
| For example, today the 5-member Advisory Board has unilateral
| power to change the contract as they see fit[1], and only the
| smart contracts have been audited, not the organization
| itself[2].
|
| The only information about this all-powerful Advisory Board
| is on the home page, and I'm forced to take that at face
| value. What happens if I put my money there, the board runs
| away with it, and I try to sue them only to find out that
| these five people don't exist, or are not related to the
| project? This is far from the basic security level of any
| traditional financial institution.
|
| Again, I have major respect for this team. The service is
| useful, and the documentation is honest and comprehensive.
| But a blockchain plus this insurance does not make a safe
| consumer space.
|
| [1] https://nexusmutual.gitbook.io/docs/users/understanding-
| nexu... [2]
| https://nexusmutual.gitbook.io/docs/welcome/audits-and-
| secur...
| 88913527 wrote:
| There's plenty of situations where traditional banking system
| does nothing. A social engineering scam led to a 6-figure USD
| theft, it was a down payment meant to be wired as part of a
| real estate transaction. The money was already out of the
| country; they got nothing back. There was a local news article
| about it.
| BoppreH wrote:
| > 6-figure USD theft
|
| Traditional banking is not perfect by any means, but if
| 6-figure frauds are making the news, it means they are
| uncommon. Meanwhile, cryptocurrencies regularly have scams
| and hacks in the hundred-million dollar range.
| mbesto wrote:
| This is my favorite story about crypto fraud protection:
|
| _The Winklevosses came up with an elaborate system to store
| and secure their own private keys. They cut up printouts of
| their private keys into pieces and then distributed them in
| envelopes to safe deposit boxes around the country, so if one
| envelope were stolen the thief would not have the entire key._
|
| https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...
| [deleted]
| elliotec wrote:
| This key storage system is a now very common and (ostensibly)
| very secure model that has been iterated on and is in wide
| use, especially for hardware wallets like Trezor. The model
| they use is called the "Shamir Backup," here's more info:
| https://wiki.trezor.io/Shamir_backup
| BoppreH wrote:
| A cool feature of Shamir Secret Sharing Scheme is that it
| has information-theoretic security[1], just like one-time
| pads.
|
| In a exaggerated 100-out-of-1000 scheme, even if you steal
| 99 out of the 100 required shares, you still have zero
| information. You are better off trying to brute force the
| value from scratch than trying to use the 99 shares you
| have.
|
| It's also very simple to implement, making it my favorite
| algorithm.
|
| [1] https://en.wikipedia.org/wiki/Information-
| theoretic_security
| TacticalCoder wrote:
| It's quite crazy to think that these guys not only were
| basically behind FB (they won the lawsuits, with an 's',
| proving it) but also saw Bitcoin early on. They bought at
| less than ten and were billionaires when it hit $10 K.
|
| So these dudes both "saw" FB and cryptocurrencies.
|
| Hate as much as you want on FB and cryptocurrencies, it's
| still quite a feat to have foreseen both.
|
| Regarding storing parts of the secret here and there: it's
| basically and _" m out of n"_ scheme AFAICT. There are many
| variations of this but the overall idea is that you can
| afford to lose (n - m) parts and yet you'll be able to
| recover the secret. And if a thief were to steal parts, he'd
| need _m_ parts to be able to recover the secret.
| thinkmassive wrote:
| > Regarding storing parts of the secret here and there:
| it's basically and "m out of n" scheme AFAICT. There are
| many variations of this but the overall idea is that you
| can afford to lose (n - m) parts and yet you'll be able to
| recover the secret. And if a thief were to steal parts,
| he'd need m parts to be able to recover the secret.
|
| The difference between a Shamir scheme and a true multi-
| signature scheme is that the former requires combining the
| m-of-n pieces to reveal the single private key to sign a
| transaction, which is a huge vulnerability and single point
| of failure.
|
| Bitcoin script allows the m-of-n signatures to remain
| geographically dispersed, each signing the transaction with
| only their own key, so no single party ever needs to
| possess the full private key.
| matheusmoreira wrote:
| Just don't play the shitcoin casino.
| TimJRobinson wrote:
| DeFi is 2 years old at most. Still very early days and lots of
| newbies that get exploited.
| BlueTemplar wrote:
| Wait, Ethereum tokens don't count as DeFi ? Those are older
| than that...
| SubiculumCode wrote:
| Okay, invest in a top 40 crypto. Defi scams usually involve
| outrageous APR and reward claims from a sketchy Telegram
| channel actively trying to recruit ignorant or vulnerable
| individuals. Same as every other scammer, but with the new and
| improved hype words
| BoppreH wrote:
| I don't want to speculate in cryptocurrencies, I want to use
| them for their intended purpose, financial transactions. The
| problem is that I can't do that at anywhere near the safety
| of my traditional banking institution.
| SubiculumCode wrote:
| Of course, a lot of cryptocurrencies aren't really meant to
| be used as currencies. So here is that. Also there are
| companies that offer insurance on your crypto.
| evergrande wrote:
| Granted, but every new technology goes through this and the
| tools and best practices are improving. The code is open source
| too. I don't know why people, technologists especially, aren't
| recognizing this.
|
| It's also worth examining the current system. How happy are you
| with your bank's 0.01% interest rate? Which is actually
| negative when you factor in inflation that's eroding the value
| of our dollars faster than ever, and increasingly transferring
| wealth to the top 1%? How happy are you about bank CEO
| compensation and bailouts? No one in crypto is asking for a
| bailout, even when it crashes 80%. And what about the fact that
| bank's charge poor people the most or flat out deny service? Or
| the fact that it's all closed source and behind closed doors.
| vmception wrote:
| your bank fraud protection doesn't prevent the bank from losing
| money. banks lose a lot of money to fraud and nobody is
| prosecuted.
|
| from my perspective, you are comparing a user experience that
| has nothing to do with the technology.
|
| a bank is a third party service providing custody to bearer
| instruments.
|
| a future financial institution will be a third party service
| providing custody or other protections to your crypto bearer
| instruments.
|
| > If trillion dollar market caps and god-knows-how-many
| billions of investment couldn't figure out how to protect
| consumers after 13 years...
|
| there are DeFi insurance protocols, many people get paid back
| after being scammed, rug pulled, exploited. Look at the source,
| it is convenient for this to not be mentioned as all
| chainanalysis does is sell fear to governments to land
| contracts.
| BoppreH wrote:
| > banks lose a lot of money to fraud and nobody is
| prosecuted.
|
| That's true some times, but then it works like an insurance
| policy to me. I like insurance, especially when it's about my
| life savings.
|
| > a future financial institution will be a third party
| service providing custody or other protections to your crypto
| bearer instruments.
|
| As you mentioned, that's a bank. There's no reason to believe
| that crypto-based banks will be any better than traditional
| ones, especially if you compare to newer fintechs.
|
| > many people get paid back after being scammed, rug pulled,
| exploited
|
| I was not aware of that, thank you. But it's still too few
| compare to the whole.
| bidder33 wrote:
| There is also defi insurance. And wallets like Argent are
| working on fraud detection layers within L2 account
| abstraction (as well as social recovery and ditching seed
| phrases).
|
| Many people think it will be Fintech in the front, DeFi in
| the back version of crypto that services mass adoption. The
| big difference is there is global, permissionless
| infrastructure for anyone to build tools/apps/services on.
| No more walled financial system, some kid in India can make
| a new banking app and it can be as useful as hsbc. They can
| use the same lending protocols, currency conversion,
| insurance protocols, and then choose what services they
| want on top. Maybe someone wants their banking app to be
| hentai death metal themed and all their moeny to be in
| picutres of dogs(rather than pictures of the queen or a
| president). Those who want self ownership and to code their
| own things, or arent liked by the banks (e.g. sex workers,
| immigrants, travellers) have just as much access to the
| system. To me it will be kinda like how lots of people are
| happy with Windows, but a smaller group like the freedom of
| Linux.
| vmception wrote:
| > There's no reason to believe that crypto-based banks will
| be any better than traditional ones
|
| That wasn't the supposition. Who cares? Wait I know people
| that do care, you thought I was one of those? I view
| blockchains as a platform to launch projects, and crypto as
| the necessary fuel to use those platforms, I like the
| censorship resistance but I don't care about the
| ideologies, I would like to seamlessly move unlimited sums
| in and out of them and thats that. I care about fulfilling
| market needs and niches, I don't care about the accuracy of
| those needs.
|
| Regarding Defi insurance protocols, there is a lot of
| education necessary and some ease of use improvements
| necessary.
| Sohcahtoa82 wrote:
| Normal individual transactions are secure. I can send money to
| Bob without worry that someone is going to somehow use the data
| in that transaction to steal my entire wallet.
|
| The "rug pulls" you see are from contracts written maliciously.
| DeFi is a ponzi scheme written into a Smart Contract, but some
| of them have an extra function that allows the creator to
| instantly steal all the money out of it.
| BoppreH wrote:
| > Normal individual transactions are secure.
|
| For a very narrow definition. You still need a way to get
| Bob's wallet address, and to secure your own wallet. Just
| look around and you'll see plenty of experts failing to do
| that correctly.
|
| > The "rug pulls" you see are from contracts written
| maliciously.
|
| And the contracts, being from DeFi land, are immune from
| chargebacks or legal prosecution. Regular old fraud, made
| exponentially more damaging because of cryptocurrencies.
| Sohcahtoa82 wrote:
| > For a very narrow definition. You still need a way to get
| Bob's wallet address, and to secure your own wallet. Just
| look around and you'll see plenty of experts failing to do
| that correctly.
|
| Fair enough. A transaction is secure, but the wallets might
| not be. If you rely on a 3rd party to host your wallet (ie,
| Coinbase), then you risk your money being stolen when they
| get hacked. If you host it yourself, then you risk losing
| the keys unless you make a backup, and the backup could get
| lost, or if you store it in cloud storage, it could get
| stolen there.
|
| Credit cards are harder to secure than wallets IMO, but at
| least with CCs, you have recourse in the case of fraud.
| friendzis wrote:
| Cryptocoins are deliberately based on the concept of money
| reduced to "cash". There is no banking, there is no fraud
| protection. It is supposed to work that way.
|
| The whole at least somewhat civilized world has moved to a more
| advanced versions of money, but cryptocoins are a step
| backwards and it is entirely intentional.
| BoppreH wrote:
| No, cryptocurrencies are reduced to "mailing cash to an
| anonymous postbox", which has a lot fewer guarantees. I'm
| happy giving cold hard cash to buy something from a brick-
| and-mortar store to be delivered in the future.
|
| I'd never mail cash for that purpose.
| deltree7 wrote:
| Bingo!
|
| There are <0.0001% of the population who understand
| transaction risk.
|
| If I pay $Cash for Goods, In a trustless network, both side
| of the exchange have to be instantaneous. I can never pay
| cryptocurrency for any item that are not verifiable by the
| network itself, unless there is another trusted 3rd party
| (cough cough, Credit Card Processors/Banks).
| idiotsecant wrote:
| I think the way you protect yourself is the same way people
| protected themselves before credit cards were widely used. By
| not spending your cash on things that are scams. Somehow people
| managed to survive before banks offered their rent seeking /
| fraud protection and I think they'd be OK without them if push
| came to shove.
| danaris wrote:
| > By not spending your cash on things that are scams.
|
| So...by staying out of cryptocurrencies entirely, then?
|
| Sounds good to me.
| pjc50 wrote:
| Commercial banking is four centuries old. https://en.wikipedi
| a.org/wiki/Banca_Monte_dei_Paschi_di_Sien... ; the modern
| world is built around banking as much as it is around the
| limited liability corporation. The basic borrow short/lend
| long business of a bank is not going anywhere.
|
| Mind you, it's worth noting that MPS had four centuries of
| independence before listing itself on the stockmarket and
| losing its independence comparatively shortly afterwards in
| the 2008 crisis.
| captn3m0 wrote:
| There are other ways to protect payments than just (rent
| seeking) CCs. For eg, in India UPI equates to irreversible
| zero-cost instant bank transfers (and the irreversible part
| incentivizes scams) - the KYC/AML regulations make getting
| your money back a possibility (while not impossible, it's
| usually improbable, and depends on the amount)
| phpnode wrote:
| "I would simply protect myself by not spending cash on things
| that are scams"
| mschuster91 wrote:
| Even professional investors have a hard time telling scams
| apart from legit operations. Just look at the Madoff
| scandal.
|
| And when even the _professionals_ fail to see scams, how is
| the general public supposed to do so?
| phpnode wrote:
| Apparently I didn't make it clear enough that I
| wholeheartedly agree
| nradov wrote:
| Bernie Madoff's victims were mostly high net worth
| individuals (dumb money), not professional investors.
| While professional investors do occasionally get scammed
| that's much less common.
| ourmandave wrote:
| The list of Madoff investors is mostly institutions.
|
| And sadly a lot of charities.
|
| https://en.wikipedia.org/wiki/List_of_investors_in_Bernar
| d_L...
| mschuster91 wrote:
| > Somehow people managed to survive before banks offered
| their rent seeking / fraud protection and I think they'd be
| OK without them if push came to shove.
|
| People routinely fell victim to fraud. Why else would the
| government have introduced bans for ponzi schemes or
| regulatory requirements to go public with stocks, if not to
| reduce the amount of fraud?
|
| Just because an entity uses "crypto" instead of "US dollars"
| it should not be absolved from the requirements of
| established players, they were instantiated for damn good
| reasons.
| BoppreH wrote:
| Nope, because cryptocurrencies also removed all other
| protections.
|
| - The scams are online, so I cannot knock on the scammer's
| door with an angry mob and ask for our money back.
|
| - Pseudonymous identities means scammers have strong
| protections against being sued or prosecuted.
|
| - Digital wallets, as opposed to cash in bank vaults, means
| that you can lose all your savings in one mistake.
|
| - Complete lack of trusted third parties means there's no one
| to appeal to, or to raise alarms in suspicious cases.
|
| The old protections were already pretty bad (scams and
| thievery very much did exist), and cryptocurrencies are
| lacking even those basic protections.
| rauljordan2020 wrote:
| One could, for example, create a smart contract that has
| protection mechanisms in place. At the end of the day,
| smart contracts are programmable, so you could code your
| own which has appeal mechanisms as consumers are used to.
| For example, one could create a highly insecure website for
| payments on the Internet. The problem is not the Internet,
| it is the insecure website.
| ARandumGuy wrote:
| In the US, banking scams and crashes were very common before
| the various reforms enacted in the early 20th century.
| Wildcat banks in the west printed money with reckless
| abandon, which quickly became completely worthless. Bank runs
| were pretty common, due to a low overall confidence in the
| banking system. And a worker in 19th century America was
| lucky if they were paid in actual money, instead of a company
| scrip.
| danlugo92 wrote:
| Thats not what he was talking about.
| cheeseomlit wrote:
| >How can crypto users protect themselves without recreating
| traditional banking?
|
| They could just invest in well-established projects with proven
| technology instead of obvious scams in hopes of a "moon shot".
| This has very little to do with Bitcoin and other legitimate
| projects, which are a far cry from useless fly-by-night ERC-20
| tokens with stupid animal names
| BoppreH wrote:
| Bitcoin/Ethereum is what allowed these scams to be executed,
| not be reverted, and to go unpunished.
|
| If you want to push for those technologies, you have to
| explain how to give consumers a minimum level of protection.
| surfingdino wrote:
| There are plenty of ways and tools for the scammers to be
| tracked on a public blockchain. Tokens are not worth much
| until they are exchanged for fiat currency. The authorities
| do not want to chase after them, yet, but anyone engaging
| in such fraud is leaving plenty of evidence on public,
| cryptographically protected blockchains to provide evidence
| that's difficult to repudiate. Sooner of later those
| responsible will be brought to justice.
|
| I am working with people in the banking industry to add a
| layer of protection without compromising core values of
| crypto (permissionless, trustless), but funnily enough they
| do not want to do anything against the regulators. Retail
| banks have become very cautious after 2008 and won't do
| anything unless they are told to do it by the regulators.
| And the regulators are a bit clueless, tbh.
| nathanyz wrote:
| Agreed, and where I think is one of the bigger failings of
| blockchain. We don't actually want a system where mistakes,
| fraud, or theft are irreversible.
|
| Some will say that you can still prosecute the crimes even if
| you can't initially reverse the transaction, but you can see
| how well that is working with hackers from adversary nations.
| Basically no prosecution and risk free ability to move on to
| the next victim.
|
| "Friction is a feature with money transfer"
|
| My experience is that moving money between countries where
| there is a high likelihood of collaborative justice against
| scams and thefts, ends up being pretty simple. It gets harder
| to transfer money to places where it is easier for thefts and
| scammers to get away with it.
|
| I think we want it this way. How many people get taken in by
| the romance scams[1] where they wire their money to a country
| with 0 chance of recovery. The money transfer system has been
| specifically making it more difficult to send money to
| countries where this is commonplace as that is the only
| effective way to stop the crime. There is no viable criminal
| process only friction to make it less profitable and more
| difficult for the scammers.
|
| [1] https://www.fbi.gov/scams-and-safety/common-scams-and-
| crimes...
| Trias11 wrote:
| Education is needed to help people understand the risks.
|
| No education will stop many from going to Casino and blow through
| their savings. If they wish to engage into recovery effort -
| there will be rules of this engagement.
| nradov wrote:
| "A fool and his money are lucky enough to get together in the
| first place."
|
| -Gordon Gekko
|
| I have zero sympathy for the victims. Stealing from
| cryptocurrency weenies is almost a public service, like
| confiscating booze and car keys from teenagers.
| twox2 wrote:
| Hey, so is stealing from the elderly alzheimer's patients
| right? They're not going to remember anyway! Dick.
| IMTDb wrote:
| The _vast_ difference is that Alzheimer 's patients aren't
| willingly putting their money in dangerous places with the
| sole purpose of increasing their purchasing power without
| contributing to society in a meaningful way.
| seoaeu wrote:
| Taking someone's keys isn't a public service _if you also steal
| their car._
| duplicited wrote:
| Crypto is ridden with rugpulls. It's extremely hard to find a
| diamond in the rough and you're going to lose money doing it.
| Look for projects that focus on building community rather than
| pumping and dumping. I've been dabbling in DogeBonk and it's
| funny how other "bonk" coins keep getting rug pulled around it
| while DogeBonk keeps on going
| chefandy wrote:
| Do you have an example of a particularly well-done rug pull
| that would help this layman understand the scam better?
|
| I totally understand why folks fell for Bernie Madoff's scheme.
| He had a brick and mortar office, a stellar reputation, and a
| relatively well-known face. Revealing his scam destroyed his
| life and he couldn't have easily disappeared into thin air
| before facing consequences. His clients are no better off, but
| the consequences alone would keep the vast majority of
| investment managers from blatant cash grabs.
|
| Conversely, the caveat emptor nature of cryptocurrency and the
| ubiquity of scammers would stop me investing a cent based
| solely on a website, PR, and/or social media buzz-- none of
| which require anything beyond a small amount of initial
| capital. Do their techniques go beyond that? Were any anchored
| to well-known people or organizations?
| tjungblut wrote:
| Checkout what squid (from the squid game series on netflix)
| did very recently.
| gladinovax wrote:
| I read a post on a crypto forum yesterday:
|
| "I dont care about your research. Pump my bags, _racial slur_ "
|
| That is the level of thinking of many of these folks, i fear.
| superkuh wrote:
| These are not cryptocurrency scams. They are financial scams.
| They take place almost %100 off any blockchain. Since ~2015 there
| has not been a new cryptocurrency of consequence. They're all
| just complex financial scams with nothing to do with
| cryptocurrency except the name (which attracts people to fleece).
|
| No, these scams and the $7.7B are going into the pockets of the
| normal group of capitalists.
| chrisco255 wrote:
| DeFi market cap one year ago was probably less than $7B. Now it's
| over $100B. That is value that has been created.
|
| Crypto is a worldwide, 24/7, permissionless market. It's likened
| to the wild west. There have been numerous rug pulls, but if you
| focused all your energy on snake oil salesmen and gangsters in
| the West, you'd miss the fact that there was real, sustainable
| value there.
|
| A lot of people left Bitcoin after the Mt. Gox meltdown in 2013.
| And yet the space continued to evolve and grow.
|
| If you're interacting with DeFi, especially if you're new to
| crypto, stick with the blue chips like Uniswap, Aave, Compound,
| and Bancor. They are battle tested.
|
| Look for projects that pay for audits, bug bounties, and do due
| diligence with regards to security. Don't chase a copycat fork of
| a popular project on a third rate chain because you feel you
| missed out.
| ForHackernews wrote:
| > That is value that has been created.
|
| I have 1000 toenail clippings I've carefully collected over the
| last few years. Each is unique and carries a genetic signature
| that is very difficult to replicate. My toenails don't grow
| very quickly, so the supply is limited.
|
| This morning, I sold one toenail clipping to my wife for
| $100,000.
|
| My toenail shard pile now has a market cap of $100 million.
| That is value that has been created.
| Daishiman wrote:
| What value was grown? The _only_ thing that has been shown to
| have "value" is playing around with interests and staking to
| create unsustainable returns on speculation, nothing else,
| which I guess if you're into financial speculation can count as
| such.
|
| Who's actually using these coins to do anything in the real
| world?
| malermeister wrote:
| Is it really _value_ that has been created, though? Sure,
| numbers on computers went up, but is there any value to society
| in that?
| pjkundert wrote:
| Like that crazy scam where everyone who held the currency had its
| value reduced by 10% in one year, after the total units in
| circulation was increased by 100% the year prior?
|
| Oh, wait...
| foxhop wrote:
| The price of 2 attack subs in 2012
| wyager wrote:
| I often wonder to what extent scams like this have positive
| externalities, insofar as the people who get scammed were perhaps
| unlikely to allocate capital in socially efficient ways.
| ceejayoz wrote:
| Are the scammers now in possession of $7.7B likely to "allocate
| capital in socially efficient ways"?
| wyager wrote:
| Perhaps more likely than the scammed. For example, the
| scammers may purchase equities.
| Mvandenbergh wrote:
| Would be quite funny if the scammers were hard-core
| Bogleheads dumping everything into ultra-low-fee index
| funds.
| AlexandrB wrote:
| In an economy where companies prefer to invest in R&D with
| credit and buy back stock, purchasing equities seems less
| beneficial than stimulating demand by just buying stuff.
| wyager wrote:
| "Stimulating demand" is nonsense - applied Broken Window
| Fallacy.
|
| The net effect of equity investment is to increase the
| amount of capital targeted towards the production of
| capital goods; i.e. deferring consumption makes humanity
| richer in the long term.
| surfingdino wrote:
| They now have a public, cryptographically protected record of
| their activities, available for inspection using automated
| tools by anyone who's interested, including law enforcement.
| ceejayoz wrote:
| Sure. https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
| [deleted]
| unbanned wrote:
| Interesting point. Would you rather have few unscrupulous,
| enterprising individuals have a significant proportion of
| wealth, or have this distributed between many people who are
| mentally challenged (easily conned)...
| AlexandrB wrote:
| > people who are mentally challenged (easily conned)...
|
| I think the biggest predictor for being conned is not low IQ
| but high greed.
| gokdisjtrdcvv5 wrote:
| I didn't think of that but you are totally right! I'd say
| greed has much more to do with it than IQ
| wyager wrote:
| People who are smart and greedy have much more effective
| ways of satisfying their greed than investing in fly-by-
| night crypto schemes. This typically looks like selecting a
| career path based primarily on its expected return.
| malfist wrote:
| Yeah, but did you see the dress she was wearing? She wasn't
| dressed in socially efficient ways, we should look at the
| positive externalities.
| Geee wrote:
| From a game theory perspective, I believe that dishonest
| players are always a net negative for all other players. It
| might seem that it's good when capital transfers from stupid to
| smart people, but actually it moves from honest to dishonest
| people, which results in less efficiency. All this capital is
| now used to perpetrate more scams, which means that more
| capital will be allocated to these scammers instead of
| something honest. And because of these scammers, all honest
| people have now less capital to work with.
| wyager wrote:
| A fair point - unless scams tend to be one-shot, it's
| relatively likely that the capital accumulated from a scam
| will go towards unproductive ends (other scams). However, I
| still think it's plausible that the allocation of scam
| profits is better than the allocation of scamee wealth. The
| sort of people who buy into NFT monkey rugpulls or whatever
| might just spend any surplus wealth on a new TV or something.
| tata71 wrote:
| Eugenics-like slippery slope, there.
| Sohcahtoa82 wrote:
| Define "socially efficient ways", because that sounds like a
| dog whistle.
| wyager wrote:
| Perhaps you have tinnitus.
| mnadkvlb wrote:
| Well, Melania just launched an NFT. gotta be legit. It even saves
| the kids, it says so.
|
| Happy times /s
| marban wrote:
| Powered by Parler.
|
| What can possibly go wrong?
| pjc50 wrote:
| People demanded uncensorability, they can have all the scams
| they want.
| surfingdino wrote:
| She really doesn't care... ;-)
| 1cvmask wrote:
| I hadn't heard the term rug pulls before. They used to be called
| exit scams. A rug pull sounds less scammy I suppose.
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