The fact that crypto is essentially created using “smoke and mirrors” means it lend itself to scams like this. Once the Wall Street “suits” become involved, the scams may become more sophisticated, but there will still be plenty of them.
Right-Wing Hippie
5 months ago
I’ve always been amused that the crypto fans tend to be vociferously anti-fiat currency, when crypto is the apotheosis of fiat. I mean, at least the dollar is based by the full faith and credit of the United States government, for what little that’s worth. Crypto is backed by nothing at all.
With its innately limited supply (no BoE or Fed can just ‘print’ more of them) Bitcoin has the sort of anchor that used to be provided by gold convertibility. So while it may indeed be backed by nothing tangible at all, nothing at all is still a far stronger backing than ‘the full faith and credit of the US government’, which can and will carry on issuing trillions more dollars until its currency finally collapses – and it won’t be long now – to the value of the Turkish lira, Argentine peso or Zimbabwe dollar.
My toenail clippings have an “innately limited supply”, but I don’t suggest that they form the basis of a system of exchange. The fact is that we don’t even know who established Bitcoin, or for what (most likely nefarious) purpose they did so.
Your toenails: so far so good, but I don’t know how in practice people would use your toenails as a medium of exchange, except within your village, while this is possible globally with bitcoin. This is surely part of the value of bitcoin, that it is usable in this way, as well as being in finite supply. Point taken about the origin of bitcoin.
I am not really sure if the author understands the difference between crypto and Bitcoin, I generally find the level of European ignorance about crypto, Bitcoin and stablecoin a bit disconcerting. FTX collapse, and hopefully coming demise of other scrypto scams is the prerequisite of wide adoption of Bitcoin either through self custody or through spot ETF (Blackrock, Fidelity etc).
Europe is now a technology backwater. The ripple effect that transfers technical knowledge into wider society is much reduced when the centre of the splash is on another continent. Consequently European non-technical commentators on technology are often quite clueless compared to their peers in Asia and the USA.
Bitcoin is better why? Oh that’s right! Because we don’t even know who set it up, or why they did so! If that hasn’t got “scam” written all over it, I don’t know what has!
Peter Joy
5 months ago
As I write, one Bitcoin trades at $37,560. I expect Mr Schiller is quite right about the numerous well-advertised ersatz scamcoins that surfed in on its wake. But Bitcoin – with its innately limited supply – has held up just fine and continues to appreciate against the fiat US dollar, which since President Nixon ended gold convertibility in 1971 has become a scam that makes SBF and FTX look like small change.
Yes, that is interesting, given that it has precisely one “real world” use, namely facilitating illegal transactions. It pretty much came to public notice as the payment method for the (now long defunct) Silk Road marketplace.
Great points- as you have alluded to, what people don’t seem to understand is that FTX is no more a damning indictment on crypto, than someone pretending to store customers gold (which they had actually lost gambling) is a damning indictment on the universal value and usefulness of gold.
What really will begin to blow people’s minds is when they begin to join the dots and see how the Federal Reserve is actually doing exactly that.
Lynwen Brown
5 months ago
“Not your keys, not your coins.” SBF was always a middle man fraudster. Crypto was made to cut out the middle men with de-centralised exchanges and trustless code. People willing to learn about true crypto will do well, but people who still entrust their money to the middle men will not.
UnHerd Reader
5 months ago
The FTX token (FTT) isn’t/wasn’t a stablecoin?
Tony Kilmister
5 months ago
An endearing aspect of the crypto scandals is how the victims, in the main, are the right sorts of people: insiders, ideologues, donation desperate politicians, dumb celebrities, organised crime and so on.
Yet it is a fascinating phenomenon from a political economy perspective. The early-mover libertarians with their bedroom-hatched fantasies of crypto heralding a future of decentralised commodity exchange free of state-sanctioned money forms were always laughable. More interesting is how cryptocurrency schemes have managed to attract fiat currency support from supposedly serious institutions and people. Why? No goods, services or capital goods are produced. It’s a zero sum game: crypto enrichment is someone else’s loss. Looks awfully like a rent extraction scheme.
Never thought I’d need to return to Marx’s Capital. But, the concept of ‘fictitious capital’ appeals: the imperative of capital accumulation having a tendency to free itself from the inconvenience of needing to produce things for use. Big fund management outfits are reportedly seeking to institutionalise crypto ‘investment’ via ETFs. Capitalism eh?
Laughable? As I posted above, one single Bitcoin would this afternoon cost you more than $37,000 of the Fed’s paper IOUs. US National Debt is closing in on $34 trillion and is now turning parabolic. Rising interest rates, caused by loss of confidence in the US ability to service this debt, are biting deeper and deeper into the US Federal budget. In short, the dollar – and the currencies of other unproductive western economies – are going to crash. When that happens, one Bitcoin will cost you $100,000, maybe $250,000, maybe more.
Speaking for myself, I have zero sympathy for any “investor” who has lost money on a crypto scam, or has lost the password to their crypto “wallet”.
Amy Harris
5 months ago
“Was FTX really representative of the fundamental wrongness of crypto, an industry that literally creates money out of thin air, as SBF had done with FTT? Or, was FTX, in fact, just a story of immature corporate governance, of structural forces that keep allowing boy-wonders like SBF to do terrible things?“
Both are true, it’s not “either/or”, both are true.
Crypto lends itself to abuse by the SBFs of this world though, because of its lack of regulation, and its inherent nebulousness.
John Riordan
5 months ago
The article contradicts the headline somewhat. SBF can hardly have “killed” crypto if cryptos are now being brought into mainstream finance, as the article says.
BTC is now worth about £30,000, and even if it never rises above that level from now on, it is a stellar success as an asset class.
Alex Colchester
5 months ago
By definition Wall Street can’t ‘move in’ on crypto. If a middleman is needed for crypto then it isn’t really crypto. This is the whole point. All the scams exist in the middleman space. I.e exchanges. Whether completely fictitious (onecoin) or just fraudulent (FTX) if you need a middleman then you aren’t involved in crypto, you are involved in derivatives. True crypto is a bearer instrument AND is fungible. No middleman required. Buy some Monero (thank me later).
Last edited 5 months ago by Alex Colchester
Mike Forsdike
5 months ago
I’m sure with $4B of stolen money I could arrange my own fake death like the (late) CryptoQueen.
As the crypto/blockchain/web3 space continues to evolve, it’s crucial for investors to remain vigilant a small world cup and conduct thorough research before investing in any project.
Last edited 5 months ago by mclaughlin freeman
Martin M
4 months ago
“Was FTX really representative of the fundamental wrongness of crypto, an industry that literally creates money out of thin air, as SBF had done with FTT? Or, was FTX, in fact, just a story of immature corporate governance, of structural forces that keep allowing boy-wonders like SBF to do terrible things?”
The first one, definitely. What do you expect when you let dishonest types loose in an unregulated industry centered around trading in “assets” created using smoke and mirrors?
The fact that crypto is essentially created using “smoke and mirrors” means it lend itself to scams like this. Once the Wall Street “suits” become involved, the scams may become more sophisticated, but there will still be plenty of them.
I’ve always been amused that the crypto fans tend to be vociferously anti-fiat currency, when crypto is the apotheosis of fiat. I mean, at least the dollar is based by the full faith and credit of the United States government, for what little that’s worth. Crypto is backed by nothing at all.
With its innately limited supply (no BoE or Fed can just ‘print’ more of them) Bitcoin has the sort of anchor that used to be provided by gold convertibility. So while it may indeed be backed by nothing tangible at all, nothing at all is still a far stronger backing than ‘the full faith and credit of the US government’, which can and will carry on issuing trillions more dollars until its currency finally collapses – and it won’t be long now – to the value of the Turkish lira, Argentine peso or Zimbabwe dollar.
My toenail clippings have an “innately limited supply”, but I don’t suggest that they form the basis of a system of exchange. The fact is that we don’t even know who established Bitcoin, or for what (most likely nefarious) purpose they did so.
Your toenails: so far so good, but I don’t know how in practice people would use your toenails as a medium of exchange, except within your village, while this is possible globally with bitcoin. This is surely part of the value of bitcoin, that it is usable in this way, as well as being in finite supply. Point taken about the origin of bitcoin.
I can issue tokens backed by my holdings of toenail clippings.
Pretty funny people dont understand this part.
I am not really sure if the author understands the difference between crypto and Bitcoin, I generally find the level of European ignorance about crypto, Bitcoin and stablecoin a bit disconcerting. FTX collapse, and hopefully coming demise of other scrypto scams is the prerequisite of wide adoption of Bitcoin either through self custody or through spot ETF (Blackrock, Fidelity etc).
Europe is now a technology backwater. The ripple effect that transfers technical knowledge into wider society is much reduced when the centre of the splash is on another continent. Consequently European non-technical commentators on technology are often quite clueless compared to their peers in Asia and the USA.
Bitcoin is better why? Oh that’s right! Because we don’t even know who set it up, or why they did so! If that hasn’t got “scam” written all over it, I don’t know what has!
As I write, one Bitcoin trades at $37,560. I expect Mr Schiller is quite right about the numerous well-advertised ersatz scamcoins that surfed in on its wake. But Bitcoin – with its innately limited supply – has held up just fine and continues to appreciate against the fiat US dollar, which since President Nixon ended gold convertibility in 1971 has become a scam that makes SBF and FTX look like small change.
Yes, that is interesting, given that it has precisely one “real world” use, namely facilitating illegal transactions. It pretty much came to public notice as the payment method for the (now long defunct) Silk Road marketplace.
Great points- as you have alluded to, what people don’t seem to understand is that FTX is no more a damning indictment on crypto, than someone pretending to store customers gold (which they had actually lost gambling) is a damning indictment on the universal value and usefulness of gold.
What really will begin to blow people’s minds is when they begin to join the dots and see how the Federal Reserve is actually doing exactly that.
“Not your keys, not your coins.” SBF was always a middle man fraudster. Crypto was made to cut out the middle men with de-centralised exchanges and trustless code. People willing to learn about true crypto will do well, but people who still entrust their money to the middle men will not.
The FTX token (FTT) isn’t/wasn’t a stablecoin?
An endearing aspect of the crypto scandals is how the victims, in the main, are the right sorts of people: insiders, ideologues, donation desperate politicians, dumb celebrities, organised crime and so on.
Yet it is a fascinating phenomenon from a political economy perspective. The early-mover libertarians with their bedroom-hatched fantasies of crypto heralding a future of decentralised commodity exchange free of state-sanctioned money forms were always laughable. More interesting is how cryptocurrency schemes have managed to attract fiat currency support from supposedly serious institutions and people. Why? No goods, services or capital goods are produced. It’s a zero sum game: crypto enrichment is someone else’s loss. Looks awfully like a rent extraction scheme.
Never thought I’d need to return to Marx’s Capital. But, the concept of ‘fictitious capital’ appeals: the imperative of capital accumulation having a tendency to free itself from the inconvenience of needing to produce things for use. Big fund management outfits are reportedly seeking to institutionalise crypto ‘investment’ via ETFs. Capitalism eh?
Laughable? As I posted above, one single Bitcoin would this afternoon cost you more than $37,000 of the Fed’s paper IOUs. US National Debt is closing in on $34 trillion and is now turning parabolic. Rising interest rates, caused by loss of confidence in the US ability to service this debt, are biting deeper and deeper into the US Federal budget. In short, the dollar – and the currencies of other unproductive western economies – are going to crash. When that happens, one Bitcoin will cost you $100,000, maybe $250,000, maybe more.
Speaking for myself, I have zero sympathy for any “investor” who has lost money on a crypto scam, or has lost the password to their crypto “wallet”.
“Was FTX really representative of the fundamental wrongness of crypto, an industry that literally creates money out of thin air, as SBF had done with FTT? Or, was FTX, in fact, just a story of immature corporate governance, of structural forces that keep allowing boy-wonders like SBF to do terrible things?“
Both are true, it’s not “either/or”, both are true.
Crypto lends itself to abuse by the SBFs of this world though, because of its lack of regulation, and its inherent nebulousness.
The article contradicts the headline somewhat. SBF can hardly have “killed” crypto if cryptos are now being brought into mainstream finance, as the article says.
BTC is now worth about £30,000, and even if it never rises above that level from now on, it is a stellar success as an asset class.
By definition Wall Street can’t ‘move in’ on crypto. If a middleman is needed for crypto then it isn’t really crypto. This is the whole point. All the scams exist in the middleman space. I.e exchanges. Whether completely fictitious (onecoin) or just fraudulent (FTX) if you need a middleman then you aren’t involved in crypto, you are involved in derivatives. True crypto is a bearer instrument AND is fungible. No middleman required. Buy some Monero (thank me later).
I’m sure with $4B of stolen money I could arrange my own fake death like the (late) CryptoQueen.
As the crypto/blockchain/web3 space continues to evolve, it’s crucial for investors to remain vigilant a small world cup and conduct thorough research before investing in any project.
“Was FTX really representative of the fundamental wrongness of crypto, an industry that literally creates money out of thin air, as SBF had done with FTT? Or, was FTX, in fact, just a story of immature corporate governance, of structural forces that keep allowing boy-wonders like SBF to do terrible things?”
The first one, definitely. What do you expect when you let dishonest types loose in an unregulated industry centered around trading in “assets” created using smoke and mirrors?