Originally published at: Amateur investors ruined after crypto crash | Boing Boing
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The only real question is whether the VCs consciously used crypto and its evangelical culture as devices to structure a legal pyramid scheme (like multi-level marketing, with cryptoassets attached to the pyramid instead of spandex leggings) or just sort of reinvented pyramid schemes out of crypto’s functional principles in the same way that they naively “invent” juicers or mass transit.
I lean toward the first scenario since – as with most business models based in Libertarian philosophy – it was always a scam predicated on preying on “greater fools”. If you already have a lot of money to buy into the relatively early tiers of an existing organic pyramid scheme and additional money to promote it to a mass audience of rubes, the dictates of late-stage capitalism preclude spending paying additional R&D costs to re-invent something that’s already out there and available for your use.
They’re just getting started. Wait until you see how this cryptocurrency market for suckers plays out after they foist “Web3” on society.
It’s not too far off from how the right wing weaponised memes, as I described here.
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Grift them when they’re up, grift them when they’re down.
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See also “thoughts and prayers”.
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The recent push to the public couldn’t have been a more obvious scam if they called it Barnumcoin.
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Amateurs in high places:
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I heard from my friend Matt Damon that “Fortune favors the brave”.
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Grifters cherish the brave even more.
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I tried early on figuring it all out. I had extra money to play with but I never could grasp how my investment would be safe with no physical paper trail.
At least with my investment account, while losing money and then getting it back eventually, I have physical stock to buy and sell and I know exactly where my money is. Plus I have a financial person I can call and talk to to old my hand through all the ups and downs. Although lately I don’t even look at statements and just check in once a year to be sure I can still retire as planned.
I even talked to her about bitcoin, she said they were looking at it but so far Raymond James has not offered it as an investment. There is no way I invest more than a couple grand on my own without advice.
I always thought it was way too late to get in on it for a couple years now.
That whole know when to sell thing always scares me and I think greed is what will get people every time. It’s why I play back those big wins into the slot machine every time but my wife walks away with cash.
Plus my Facebook friends warned me about a cashless society and crypto being the mark of the devil and another way for Soros to control me. I ain’t falling for it.
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They were “ruined” because they weren’t investors, but speculators.
Investing means being involved in things with inherent value.
Crypto never had none, being all about the buzz… Along with most of the rest of fintech.
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I think this is absolutely the case, because this is the only business model in crypto. Pump-and-dump is what everyone is doing. The entire business is to find a set of eyeballs by any means necessary, hype your coin to get low-grade buyers, then sell yours. That’s it. That’s what everyone is doing.
Traditionally the set of eyeballs has been things like:
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A Facebook group, often that is converted. A recent public example is that the guy who ran the largest FB group about backyard chicken husbandry got into crypto from bros he met in the gym, and converted his group. He did this because there were 90k people in that group and for a pump-and-dump all you need is any set of eyeballs (the more, the better)
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Stealing a YouTube channel. This has happened to two of my YT colleagues. They steal your credentials with a phishing attack, then delete all your videos and start posting crypto content. Again, it’s a set of eyeballs. The source does not matter- some percentage of any set of eyeballs will buy your coin.
Because crypto is not a value store or tender for anything real, all the value has to be invented from thin air. The only way to do that is to get other people to buy it. It’s the stock market, but with no companies which are doing work backing up the value of those shares. Pump-and-dump is the only way to create value for a product that doesn’t represent any other value in the real world.
What these VC people have done is get a bigger set of eyeballs. They bought Super Bowl ads and hired celebrities instead of stealing a YouTube channel or FB group. That’s all. Same game, bigger scale.
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Curious what the proper empathy level should be for people who bought into Crypto and are now ruined.
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A lot. They are an army and someone will give it to them.
“Its not my job to educate you” has already turned one generation of young guys over to fascists delighted to have that opportunity, let’s not make a habit of it.
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Headline error - fixed that for you:
It still never fails. Any time someone’s talking about something something crypto something, you can just search and replace crypto with scam, and you’ll increase the accuracy of whatever the statement was.
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I have some empathy for most of the people in this story. They were all playing the same angle: get rich quick. They followed people on facebook who went from nothing to millionaires overnight, and they reached for the same thing without any real understanding that currency speculation is gambling, not investing. And they failed. It happens, and as usual it happens a lot to the get-rich-quick crowd.
But they’re all victims, and I don’t want to forget that.
While Bitcoin is the same old financial scam, what’s new about it is the scale. Literally millions of people have been suckered in by the most legitimate looking lures ever. There are TV ads, celebrity endorsements, and even Bitcoin ATMs at the local gas station. It all adds to the veneer of legitimacy. (When I told a Bitcoin speculating nephew that he should be careful not to gamble more than he can afford to lose, I could hear him mentally rolling his eyes at his doddering old uncle. 10s of millions of people can’t possibly all be that stupid and gullible, right? They just can’t; he refused to believe it.) Even most of the grifters have some foundational beliefs in the system they’re milking. So being a victim has never been so easy.
But I’m not losing sleep over them; I’m certainly not contributing to any “I lost it all on Bitcoin” gofundmes.
However, there is a special class of victims for whom I have a lot more empathy. Unbanked people in countries that don’t have functioning economies were trying to use bitcoin as a surrogate bank that was not as corrupt as their own treasury. Some of them were trying to avoid the hyperinflation that was draining their wealth every single day. They had no legitimate access to stable currencies or investments, due to their lack of wealth. And they believed bitcoin was a way to get out of their local troubles. The same phony pump-and-dump promises that attracted the get-rich-quick types also made bitcoin look like a way for ordinary people to save money.
Another game where the only winning strategy is not to play.
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Especially young people who feel locked out of the conventional and ever-increasingly unequal American economy but know that the only people who stand a chance of living through the climate emergency and/or a civil war with a modicum of middle-class comfort are those who have money. And then Matt Damon comes along and tells them they can have that money by being bold and downloading an app. The rubes may be ignorant about finance (by design) and greedy, but more than that it’s about desperation.
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I’m so glad that I never obtained a Facebook account! I’ve heard so much in the way of Facebook-based conspiracy theories and counterproductive BS from friends, otherwise really smart business peers(!) and relatives that it makes me nauseous.
American Capitalism working as intended.
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It’s an interesting quote. From the Latin it comes from is fortes fortuna adiuvat, which can be take as fortune favors the brave, but also as fortune favors the strong. Which is kind of more pessimistic, but then, it looks like that’s what actually happened here.
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Full empathy. The vast majority are victims and deserve our support. Anyone can get taken in by scams, and crypto is no different. There are a few scammers at the top who should be rotting in prison, but everyone below them is a victim, and we mustn’t ever forget that, just because people “chose” to do this. People are choosing to engage with this stuff because they are being lied to about it and marketed to in very misleading ways. It’s no different than any other scam in those respects. We don’t blame grandma for handing her credentials to a phisher on the phone who tells her she has a computer virus, and we shouldn’t blame the 19yo bro who is excited to change the world with Web 3 and doesn’t know what he’s getting into.
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In the 1990s, huge swathes of the population of Albania, just emerging from a North Korea level Communist dictatorship, bought into pyramid schemes. Their collapse led to a collapse of the Albanian government and a wave of refugees hitting Mediterranean shores like Italy or France.
The best hope for the victims of crypto scams (but I repeat myself) is what happened in the case of Madoff. The trustee went after those who withdrew early and made them disgorge their fake profits. In the end the victims got back 60% of their money back, which is far more than I would have expected.
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