Bankman-Fried and the crypto revolution.

[Polar Bear]

We've been following this out of curiosity and see that he has been found guilty.  Being risk averse I never dipped into crypto but I guess many here have.  Had anybody genuinely made money from crypto?  I am curious, not critical.  I do know of one person who made a few hundred then bailed out but that's it from my side.

Also, anybody know what happened to Sweatz which was iirc touted here a few years ago?

[Ham]

I made money from crypto by mistake.

When it all started, I had an IT business, and I thought to myself, "I ought to be doing some of that" and bough (IIRC) about £10 worth and promptly forgot about it.


At the height of the craze I remembered I'd bought some, and it turned out to be worth best part of a grand. I sold up.

I still have a (very) small fraction left, alongside some Ethereum I thought might be fun, no idea of the value.

I may not be your archetypal investor.

[mrcharly-YHT]

Most crypto 'schemes' are a variation of a Ponzi scheme.

I joined Sweatz and used it. After a few months I think it folded. Sweatz depended on growth - many people joining - and a nebulous concept of monitisation based on future advertising.

It had legs; Facebook did quite well out of a similar concept.

[ian]

You can make money from crypto if you time your entry and exit correctly with the market.

But that's true of any Ponzi scheme, which most – if not all – crypto is. As such, you're far more likely to get poor than rich.

[vorsprung]

Crypto currencies are a scam

They are not backed by any real world assets

The price of them moves on sentiment alone.  As long as people believe they will be worth something.  This is different to complex financial arrangements like "futures" because things like futures are based on a tangled web that leads back to real debts and assets.  Crypto leads back to a ledger.  The ledger says who owns what crypto.  There are no assets

So it's all based on trust

Of course you could say that about any financial instrument but the big difference here is that there is no connection to the real world at all.  There is noone to insure your deposits.  There is noone to back the currency (as governments do)

Crypto have tried to over come this in various ways but this has - in many cases - led to disaster...see Terra/Luna and of course FTX

The most popular type of crypto (Bitcoin) is so slow at transactions that it is not suited to use as a currency - it is too slow and "expensive" to use it to buy and sell things

The crypto community is hoping that soon Bitcoin and other crypto assets will be tradeable under the same conditions as other securities in the US

[Cudzoziemiec]

He stole and he lied
Financial assets untied
Major scam implied

[farfetched]

With respect to fraud there are two aspects to this, first the platform and the lack of regulation, there is some and its getting better but its not enough. And then of course the underlying 'asset' which has no intrinsic value, no cash flows etc....
FTX operated largely outside any form of regulation so we should not be surprised this happened, Bernie Madoff ran a ponzi within a regulated market (probably the most regulated in the world) and it still happened.

I have held crypto (bitcoin and ether) via ETNs from Van Eck. I made some money but I was never in for more than 2 to 5% of my portfolio at any one time, I treated it as a speculation and always creamed off any profit. I have never traded crypto or held coins on platforms because I simply do not trust them, its largely unregulated and I dont want to faff about with hardware wallets.
The violent market moves in the corona period made it hard to hold (stomach), it has died down since then though.

It looks like regulated ETFs are going to be allowed to trade, at least for Bitcoin, which is an indication its here to stay, once institutions start getting onboard you can expect it to get a little more traction which might fuel the narrative that its good diversification for dollar assets or gold (which until now it has not been)

Edit : above opinion is based upon the speculator in me, not on the value of crypto 

[Kim]

Had anybody genuinely made money from crypto?  I am curious, not critical.  I do know of one person who made a few hundred then bailed out but that's it from my side.

I know of people who ran the bitcoin miner for sheer novelty value (in the style of distributed.net or SETI@home) back in the days when running the bitcoin miner on a conventional PC wasn't a complete waste of time, then quickly got got bored and forgot about it.  Once the ponzi scheme was starting to make headlines, it made sense to go digging around in the xkcd://1360 archive, but I'm not sure if anyone actually found any bitcoins that way.

[quixoticgeek]

Cryptocurrency has been yet another excellent demonstration of greater fool theory in action.

I remember in one nerdy group chat I was in someone joined and asked if anyone was into crypto. I asked "Cryptography, or cryptocurrency?"

"What's cryptography?"

"And indication you shouldn't go anywhere near cryptocurrency"

I got bollocked by several people for being an elitist bitch, the person who asked left the chat shortly after.

I stand my my statement tho.

J

[Pickled Onion]

"What's cryptography?"

"And indication you shouldn't go anywhere near cryptocurrency"

A very good point.

Back when Bitcoin was in its infancy, a member of the Pickles family developed an interest in cryptocurrencies. He researched it in great detail and when he had a deep understanding bought a modest amount. I don't know how much he made, but it was enough to warrant declaring for capital gains tax, but not enough to buy a beach-front property in the Bahamas.

But, to QG's point, he then earned a substantial salary putting that knowledge to use by working for a financial fraud consultancy, writing software to trace blockchain transactions.

That probably answers the "genuinely" in Polar Bear's question.

For myself, I bought £100-worth, that being the amount I was prepared to lose and not be upset about. A while later I exchanged some back for £4000. And a few years later another £4000. What I have left is still worth around £2K.

Crypto itself is not a Ponzi scheme. FTX and various others were Ponzi schemes, as well as being securities fraud, not to mention simple common-or-garden theft.

[ian]

A friend of mine did make a lot of money, but he wasn't poor to start out with, so could stand the gamble. But like I say, someone does make money out of any such scheme, just not most people so those odds aren't on your side.

[quixoticgeek]

Well yes, that's how greater fool theory works.

J

[Cudzoziemiec]

Cryptocurrency has been yet another excellent demonstration of greater fool theory in action.

I remember in one nerdy group chat I was in someone joined and asked if anyone was into crypto. I asked "Cryptography, or cryptocurrency?"

"No, cryptozoology. I'm searching for the Loch Chain Monster."

[Pickled Onion]

Cryptocurrency has been yet another excellent demonstration of greater fool theory in action.

I remember in one nerdy group chat I was in someone joined and asked if anyone was into crypto. I asked "Cryptography, or cryptocurrency?"

"No, cryptozoology. I'm searching for the Loch Chain Monster."

 

[howdee]

Crypto currencies are a scam

They are not backed by any real world assets
..
So it's all based on trust

Is that any different to the conventional fiat monetary world that we live in? What assets does the Bank of England have to back up the money that it issues to us? Central banks create money out of nothing. Quantitative Easing (QE) has been the central banks' weapon of choice since the Great Financial Crisis of 2008. Literally creating money out of thin air.

The Bitcoin algorithm limits the supply of new bitcoins, which is more than can be said for the UK £.

[ian]

Your description of QE is, alas, also literally wrong.

[Kim]

The Bitcoin algorithm limits the supply of new bitcoins, which is more than can be said for the UK £.

In effect, an attempt at an electronic Gold Standard.

It's been said before, but cryptocurrency is in effect a speed-run through the last couple of hundred years of banking regulation.

[Pickled Onion]

Literally creating money out of thin air.

More literally, devaluing the currency and stealing a little bit off everyone who has some of it.

[howdee]

Literally creating money out of thin air.

More literally, devaluing the currency and stealing a little bit off everyone who has some of it.

Agree. In effect, a stealth tax. Hence, my pounds are worth less so I will need more of them to buy things, like houses.

Bitcoin cannot be manipulated in this way.

[ian]

Still wrong.

[quixoticgeek]

Still wrong.

Oh great wise one. Tell us.

How does quantive easing work?

J

[PaulF]

Still wrong.

Oh great wise one. Tell us.

How does quantive easing work?

J

Here you go https://en.wikipedia.org/wiki/Quantitative_easing

[quixoticgeek]

Here you go https://en.wikipedia.org/wiki/Quantitative_easing

I actually wanted Ian to tell us. As he's the one saying people got it wrong.

J

[ian]

You got as far as googling it. So close. Now try reading it. It is far from literally printing money.

Actually someone else googled it for you.

[howdee]

You got as far as googling it. So close. Now try reading it. It is far from literally printing money.

Actually someone else googled it for you.

I said QE is used to create money. I didn't say that QE is used to print money.