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Bitcoin, Cryptocurrency and Blockchain Discussion Thread
- Thread starter Crowded Mind
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willow_hiller
Well-Known Member
Interesting thread, evidently the CEO of FTX tried to rope Elon into financing them in April. Elon replies saying it set off his "bs detector":
? This text thread is with Elon from Michael Grimes, the Morgan Stanley guy leading the Twitter buy out, and rounding up equity investors to invest in Twitter with Elon.
Of note:
- he trumpets SBF’s democratic bono fides as a good thing (suggesting Elon’s long standing left leaning is still intact?)
- Suggests SBF wants to invest up to 5B, but also wants to put Twitter on the blockchain
- Elon immediately knows that Twitter on the blockchain won’t work because of latency and all the usual reasons against peer to peer anything.
- Elon protests that he doesn’t want to have another stupid blockchain debate (other texts shows his brother hyperventilating about blockchain and Elon probably had to counter that)
- Elon wonders if SBF really has $3B liquid to invest in Twitter. SBF was wanting to invest in Elon’s twitter buy out, not Elon investing in FTX.
willow_hiller
Well-Known Member
Thanks for clarifying that. I am curious, though, why was Sam trying to arrange a call with Elon if he never had the money in the first place?
bkp_duke
Well-Known Member
Looks like FTX might have been hacked overnight, and the remaining funds they had stolen:
www.coindesk.com
(developing story)
'FTX Has Been Hacked': Crypto Disaster Worsens as Exchange Sees Mysterious Outflows Exceeding $600M
FTX officials appeared to confirm rumors of a hack on Telegram, instructing users to delete FTX apps and avoid its website.
(developing story)
He had access to the funds — they just weren’t his it appears.
bkp_duke
Well-Known Member
That's grounds for an extended stay at CLUB FED.
Knightshade
Well-Known Member
It COULD mean many things.
All of them dumb.
All of them dumb.
SomeJoe7777
Marginally-Known Member
In the most basic sense, a blockchain has the following characteristics:
1. It is a public record that is 100% transparent that anyone can examine.
2. It is an unalterable record that cannot be changed.
3. It is decentralized and distributed, thus no party can control it or manipulate it for nefarious purposes.
If tweets were carried on a blockchain instead of in centralized servers, this could theoretically:
1. Prevent tweets from being deleted or altered.
2. Ensure tweets are visible to everyone even if the country the person is in attempts to engage in censorship.
3. Prevent Twitter from having control or the possibility to manipulate tweets for their own purposes.
In theory, this causes tweets to be more open, and closer approach an idealism of free speech.
However, I would argue that these theoretical problems are not what ails Twitter right now. The problem with Twitter right now is the Chief Twit who just set $44 billion on fire.
Essentially, a blockchain is a solution in search of a problem as far as Twitter is concerned.
Yep, that makes sense. One of the problems with social media is the proliferation of intentional disinformation. From your description above, putting Twitter on the blockchain would eliminate any possibility of moderation. It would be a free-for-all of lies and scams, of bullying and incitements to violence. Of course, the "Chief Twit" as you call him has said that's what he wants: Absolute free speech where lies and disinformation and scams and bullying and incitements to violence are only balanced by the few brave souls who expose themselves to the vitriol of the spammers and scammers by trying to shed some light on the darkness.
The Slate Money podcast this week talked about Elon and Twitter. Elon fired all the security people, and then the people in charge of writing the compliance report quit en mass because Twitter is not in compliance and they didn't want to commit a crime by putting their names on a report saying it was.
Knightshade
Well-Known Member
So the always entertaining Matt Levines newsletter today was mostly on the FTX thing, marveling at how ridiculously terribly obviously ponzi-fraud their balance sheet was... apparently it includes an account whose actual name was "hidden, poorly internally labled ‘fiat@’ account" Leading to this analysis whose conclusion made me spit my drink out:
Matt Levine said:
Daniel in SD
(supervised)
LOL. Pro-tip: If you want to talk to a journalist off the record you need to come to an agreement before you talk to them.
Sam Bankman-Fried tries to explain himself
My proposal for crypto regulation:
- The position of the US government is that it is all a scam.
- You have the freedom to lose your money if you want but don't expect any legal protections.
Larry David sued for crypto ad in which he talked crap about crypto
David is being sued for being a "brand ambassador" for flailing cryptocurrency exchange FTX
www.avclub.com
The above is a very libertarian view. (I can't tell from the post if you are advocating it or not, so I'm just commenting on the concept, not on the poster.)
I agree that crypto is pretty much all a scam, even though a lot of the people in it are not trying to scam.
The problem with the government washing its hands of it, saying people are free to lose their money, and providing no legal protections, is the scammers: There are in all areas of life dishonest people who are very charismatic and very good at convincing unsuspecting and trusting people to give them money with promises of great things to come of it. From evangelists who promise salvation to their donors, to used car salesmen who put bananas in transmissions to make lemons sound good, to contractors who take your deposit and disappear, to the likes of Bernie Madoff, there are people who con innocent people out of their money.
Government has a responsibility to give what protection it can to its citizens. There need to be laws and enforcement of those laws. And this should apply to crypto as well. And since it's pretty much all a scam, it should be prohibited. Since that's probably impossible, people who take money for crypto, and don't return the money when asked for it, should go to prison.
Daniel in SD
(supervised)
It is my view. I’d be fine with it being banned too but I fear that would lead to more anti-government sentiment. So I’m a libertarian with regards to crypto.
So you don't think that a con man who talks a retiree into giving him all her money to "invest" in crypto and then walks away with it should face criminal prosecution? Or how about SBF, who "loaned" himself his clients' money and then lost it on shady speculation: Should he face no criminal charges since it was all about crypto and people "should be free to lose their money"? Or when someone hacks a crypto exchange and steals all the crypto, should that just be ignored by law enforcement?
Crypto is such a scam: People are told that it's "safe" because it does not rely on trust or government, but when their account is hacked or a con man gets them to pay for something he never delivers, the "safety" turns out to have been a lie. As currency, it's the most unsafe currency in existence. As an "investment" it's nothing but gambling. As a "hedge" it's an illusion. But for con men and hackers and black marketeers, for drug lords and human slavers, it's the best thing since sliced bread. And of course for the founders and the people who got in early, it's a license to steal.
Daniel in SD
(supervised)
My plan would be going forward. SBF should (and certainly will) be prosecuted.
In the future I just don’t want my tax dollars paying to deal with it and I don’t think it should be banned. You don’t need to convince me that crypto is bad, I agree.
SomeJoe7777
Marginally-Known Member
@daniel,
I disagree 100% that "crypto is a scam". No, it's not. Crypto is a currency, like any other. It's a private currency that's not government-backed. This makes it have some risks that a government-backed currency may mitigate.
I agree 100% that scammers are the problem, and the reason that these scammers are the problem is because a) cryptocurrency is new and people don't understand it, thus they're unable to protect themselves, and b) the government has taken a hands-off approach so that the industry is nearly completely unregulated.
While @Daniel in SD's view is libertarian, yours is a socialist view. You believe that the government should step in and regulate it just like they regulate stocks, investments, and the financial industry as a whole. That's counterproductive to the goal of cryptocurrency, which is having a global currency that no government can manipulate.
I think you're having difficulty separating the underlying mechanics of cryptocurrency with the machinations of the scammers who are using the obfuscation and lack of regulation to steal people's money, like Sam Bankman-Fried. So what he did was take the dollars people deposited in his exchange, illegally transferred them to an investment arm, made high-risk investments, and lost a large amount of the money. Meanwhile, the cryptocurrency token he created he pumped up in value by using the investment arm to buy tons of it, then when the value of the token started to collapse he hid the losses in the investment arm rather than have the losses show up in the exchange. This is very similar to the machinations that Enron committed in the early 2000's -- massive debt was hidden off-shore in shell companies so that the US Enron company could continue showing profit. The Madoff scheme was worse, in that it was a true Ponzi scheme that never even attempted to invest money -- the Madoffs just siphoned it all off for their own personal gain over the years.
But the FTX scam has nothing to do with the fact that the underlying marbles that were being shuttled around were crypto tokens instead of dollars. Enron committed fraud that amounted to $20B-$40B, and the Madoff fraud was over $60B. These are 10-50x higher dollar value than the bankruptcy of FTX. Scammers and fraudsters will steal money, regardless of the underlying mechanism because that's what they do. Dollars, crypto, diamonds, gold, or tulip bulbs doesn't matter.
My personal belief is that there needs to be some regulation akin to what brokerage houses have to do for investors that want to invest on margin or trade speculative investment vehicles like futures or options. They need to sign a statement, issued by the exchange, that cryptocurrency is a speculative investment, is not insured, and carries considerable risk. Investors need access to educational materials on cryptocurrency before they buy into it. But I don't think it's actually possible for the government to regulate crypto in the way they regulate fiat currency, as no monetary policy can be applied to crypto. The government can't control it's interest rate, can't control the quantity in circulation, and can't make a meaningful impact on it's stability unless the government were to buy billions of dollars of it.
Sorry this is so long, but your view that since there are so many scammers out there that the whole thing should be shut down is a simplistic, socialist view. Not that you could "shut it down" anyway -- the blockchains are decentralized and there's no company or country that you can go to in order to enforce a "shut down". That's the premise of cryptocurrency. I hold some BTC and ETH right now directly on the blockchain (not in an Exchange). While it's value is volatile and variable, there is not a single person, agency, law enforcement organization, government, army, criminal, or hacker on this planet that has any means to take it away from me. That's pretty special.
I disagree 100% that "crypto is a scam". No, it's not. Crypto is a currency, like any other. It's a private currency that's not government-backed. This makes it have some risks that a government-backed currency may mitigate.
I agree 100% that scammers are the problem, and the reason that these scammers are the problem is because a) cryptocurrency is new and people don't understand it, thus they're unable to protect themselves, and b) the government has taken a hands-off approach so that the industry is nearly completely unregulated.
While @Daniel in SD's view is libertarian, yours is a socialist view. You believe that the government should step in and regulate it just like they regulate stocks, investments, and the financial industry as a whole. That's counterproductive to the goal of cryptocurrency, which is having a global currency that no government can manipulate.
I think you're having difficulty separating the underlying mechanics of cryptocurrency with the machinations of the scammers who are using the obfuscation and lack of regulation to steal people's money, like Sam Bankman-Fried. So what he did was take the dollars people deposited in his exchange, illegally transferred them to an investment arm, made high-risk investments, and lost a large amount of the money. Meanwhile, the cryptocurrency token he created he pumped up in value by using the investment arm to buy tons of it, then when the value of the token started to collapse he hid the losses in the investment arm rather than have the losses show up in the exchange. This is very similar to the machinations that Enron committed in the early 2000's -- massive debt was hidden off-shore in shell companies so that the US Enron company could continue showing profit. The Madoff scheme was worse, in that it was a true Ponzi scheme that never even attempted to invest money -- the Madoffs just siphoned it all off for their own personal gain over the years.
But the FTX scam has nothing to do with the fact that the underlying marbles that were being shuttled around were crypto tokens instead of dollars. Enron committed fraud that amounted to $20B-$40B, and the Madoff fraud was over $60B. These are 10-50x higher dollar value than the bankruptcy of FTX. Scammers and fraudsters will steal money, regardless of the underlying mechanism because that's what they do. Dollars, crypto, diamonds, gold, or tulip bulbs doesn't matter.
My personal belief is that there needs to be some regulation akin to what brokerage houses have to do for investors that want to invest on margin or trade speculative investment vehicles like futures or options. They need to sign a statement, issued by the exchange, that cryptocurrency is a speculative investment, is not insured, and carries considerable risk. Investors need access to educational materials on cryptocurrency before they buy into it. But I don't think it's actually possible for the government to regulate crypto in the way they regulate fiat currency, as no monetary policy can be applied to crypto. The government can't control it's interest rate, can't control the quantity in circulation, and can't make a meaningful impact on it's stability unless the government were to buy billions of dollars of it.
Sorry this is so long, but your view that since there are so many scammers out there that the whole thing should be shut down is a simplistic, socialist view. Not that you could "shut it down" anyway -- the blockchains are decentralized and there's no company or country that you can go to in order to enforce a "shut down". That's the premise of cryptocurrency. I hold some BTC and ETH right now directly on the blockchain (not in an Exchange). While it's value is volatile and variable, there is not a single person, agency, law enforcement organization, government, army, criminal, or hacker on this planet that has any means to take it away from me. That's pretty special.
You start by asserting that crypto is "a currency like any other." No, it's not. As currency, crypto is useless for any legitimate transactions because its value fluctuates so wildly that a buyer or seller can lose (or gain) considerable value between receiving it and spending it. Those legitimate businesses that do accept it (in hopes of attracting customers from the fringe who use it) exchange it for real currency the moment they receive it. Criminals use it because the anonymity it provides justifies the high risk of loss of value.
Crypto is also useless as currency for legitimate transactions because of the absolute and intentional lack of any consumer protections. While all investments are subject to loss of value due to the vagaries of the market or the failure of a business, currency, to be useful as currency, needs to have consumer protections against fraud, and needs to have a relatively stable value so that the wages you receive on payday still have the same value when you go to the grocery store. Precisely because fraud exists in any market, currency, to be useful as currency, must offer consumer protections. Legitimate banks offer such protections to their customers. Crypto does not. If I order an office chair online using dollars (or any hard currency) and my credit card, and the seller does not deliver, I can get my money back. If you order the same chair and pay with crypto and the seller does not deliver, you have lost your coins.
This is why crypto is not currency.
Crypto is a vehicle for speculation. It produces nothing. If I invest in TSLA, I have a slice of ownership in a company that builds and sells cars. It produces value. The stock may go wildly up and down, but the underlying company has value because it produces value. Crypto produces nothing.
What crypto does, very efficiently, is provide criminals a way to demand money from victims of hacking, a way to exchange money for drugs or slaves, and generally a payment system for activities whose illegitimate nature makes them so risky that the instability of the value of crypto is a price they're willing to pay.
Crypto is useful only for speculative gambling and crime. It is utterly useless as currency.
BTW, socialism, properly speaking, is not a political system. Socialism is an economic system where the owners of labor (that is, the workers) rather than the owners of capital (that is, investors) own the means of production. Socialism can exist under a democratic or an authoritarian political system, just as capitalism can exist under a democratic or an authoritarian political system. I do believe that a socialist economic system (as described above) would be preferable to a capitalist one, though I harbor no illusions that my country would ever adopt such a system.
Crypto is a scam because it pretends to be currency, and it is not. It is massively harmful to society because the one purpose it does serve is to facilitate crime. The people who speculate in crypto are unwittingly propping up the system that allows criminals to transfer wealth between each other and from victims.
