People in Argentina, Iran, Pakistan, and Nigeria lost everything when Terra crashed

Originally published at: People in Argentina, Iran, Pakistan, and Nigeria lost everything when Terra crashed | Boing Boing

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That’s just Terra-ble.

Pun aside, going from 80k to nothing. Ouch. But also: my dude, you took financial advice from a YouTuber??

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People are always going to buy investments at peaks and troughs; it’s the nature of investing.

Something I learned when wondering how long to keep an investment was I was gauging a stock’s risk by looking at the CEO’s stock portfolio. I figured if he kept the stock a long time that it was safe for me to do so as well. But a financial guy told me “you’re looking at it wrong. That CEO has millions of dollars. He can afford the risk if his thousand shares of this stock tanks. But you don’t have millions, you just have a thousand shares of this one thing, and if it goes belly up you lose it all. His risk profile is very different than yours.” So I pulled the plug when I reached my intended goal, rather than letting it ride until something bad happened. I chose not to look at it as “I cashed out too early”, I looked at it as “I got the money I needed.”

However, cryptocurrencies are not an “investment”. Crypto is a Ponzi scheme. All of it. It has no value, no reserve or backing, it’s just beanie-babies 20 years later without the stupid sawdust filled dolls. And it’s played by gamblers who ride the turbulent ups and downs that are driven by competing pumping and dumping schemes. So it’s really hard to feel bad for a gambler who loses it all, even when the house has rigged the game against them. I think every player in crypto deserves to lose just for playing, and I hope all the crypto markets collapse sooner rather than later.

But I do have a little bit of feelings for people in poor countries who were scammed like this. They are victims of a system they didn’t understand, and that was specifically designed for common people like them to not understand.

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I understand where these people are coming from (I don’t agree with it, but I understand it).

I once had the opportunity to mentor a brilliant young person from Nigeria. He was looking to pour his programming and tech skills into something bitcoin related. I tried to convince him to go in a different direction (this was 2 years ago, before this most recent wave of crypto backlash). He told me that he has no faith in his country’s currency, government, or economy. He honestly and truly believed that supporting crypto currencies was the best thing for his country since it offered a way around a corrupt and broken system.

So many of these people are desperate and already dealing with unfairness in so many aspects of their lives. Unfortunately, they put their hope in the wrong places.

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Now we get a window into who actually pays the price for the crypto techbros’ little get-rich games. As usual, it is the most critically disempowered and precarious people who end up crushed under the weight of some douche’s bank account.

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Yikes, that is bad news.

Though I did have some Schadenfreude following a thread on Twitter for a tech bro gushing about Luna and how smart he was, and poo-pooed his wife’s suggestion the sell some of the gains. (“Selling now would be like people who sold their Amazon stock at $100.”) And then watch his mind melt - as Luna tanked, and he continued to buy into it as it was now “on sale”, before completely tanking and he was making post like, “People today lost 6 or 7 figures, so be kind in your tweets.”

Womp womp.

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Obviously we know how this turned out, and I know I’m on the side of assuming all current cryptocurrencies are some form of Ponzi schemes. But what did they think was the advantage of these coins as opposed to converting their savings to actual USD?

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The victims of these grifts don’t get the attention they deserve when it all falls apart. Doubly-so when they are in the Developing World. And the likes of Matt Damon and Gwyneth Paltrow who were willing to take seven figure paycheques to promote these idiocies are nowhere to be seen when it all falls apart and their target audience is left high and dry.

In a similar vein, there is the OneCoin ‘cryptocurrency’ promoted by Dr Ruja Ignatova which has siphoned tens of billions from people all over the world. Ignatova has vanished, as has the money, but the scheme, and its copious offspring. are still sucking people in - especially in the Developing World.

If you have a few hours, the BBC Radio series ‘The Hunt for the Missing CryptoQueen’ is compulsive listening:

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Crypto can’t die fast enough. I have yet to see an interaction with crypto that didn’t leave at least one person worse off than they started.

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I thought that was the setup for an email scam joke. Hope the dude finds something stable and rewarding.

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The incompetent dickhead who started this debacle insisted that he’d get it right the second time. The oh-so-responsible exchanges with their well-paid celebrity spokespeople gave him another chance. It worked out exactly how most of us thought it would.

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Ha! I can see how you thought that. Wasn’t my intention.

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Volatility. You don’t make (or lose) much money when a security has an average movement of less than 0.1% per day. The opportunities to make (or lose) lots of money money come from trading something that frequently changes by 10%-20% per day.

Notice that I couldn’t use the word “security” to describe these shitcoins. That’s because they secure nothing. They don’t represent any tangible thing, they’re just numbers that get traded. And that’s exactly how they lost their value so quickly. If they were stocks, like shares of a suddenly bankrupt company, the stockholders would at least get to stand in line waiting for a sliver of money after liquidating the company’s assets. But a shitcoin? There’s nothing there, they don’t represent any collateral, and they leave nobody on the hook to repay you.

I have the perfect analogy. Ever play the card game “Spoons”? It’s great fun for bigger groups, like 8 or more people at the table. Each player has a spoon on the table next to them, and each gets dealt a card face down, which they can pick up and add to their hand. The dealer just keeps dealing around the circle. The first person to draw 4 of a kind can pick up their spoon (quietly or flamboyantly). The last person with a spoon on the table loses the hand. If the leader picks up their spoon without the others noticing, they can nudge their buddies under the table and they can all grab their spoons before the hapless mark notices.

That’s exactly how these shitcoins work. Each is its own game of spoons, where the leaders wait for enough suckers to join their scheme, then message each other “OK, we’ve all tripled our money, let’s agree to sell at 3:00 this afternoon.” And most greedily sell theirs immediately so as not to lose as much as the other leaders who are gullible enough to wait until 3:00; the market completely collapses some time that day, and with no notice to the rest of the victims.

With no tangibles at risk, that’s literally the only play for any of these coins. Sit at the table, hope you’re still on the upswing with the leader who is pumping their sales, and watch carefully for the first spoon to get grabbed.

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@frauenfelder

Unfortunately, many of them bought Terra (LUNA), which wasn’t backed by actual U.S. dollars.

Is it not the case that Terra is like every other crypto currency - in that it is not “backed by actual U.S. dollars”?

In fact, which of the mentioned countries has their sovereign currency “backed by actual U.S. dollars”?

I didn’t know it was the business of the U.S. to underwrite foreign currencies.

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All of it.

Eh, somehow there’s a lot of it. BTC and its progeny (Lightning?) is holding clean water if not scotch maybe. [So I ask Google how’s Puerto Rico, and it says it’s not it’s damn fault it can’t find their Senators. Try.] As a contrast to whatever cryptography staked (so, not shitcoins per se) departmental membership stuff goes on, consider naked OAuth and FIDO; the howler in the computer science there is that we’re supposed to trust things that hit volatility hard when someone has a sanding project (fingerprints) or an event altering supposedly nice authenticators like retinal density. Then there are EMI and voltage attacks on BT/LoRaWan keys and lighting controllers…I guess what needs to be said is that ya shouldn’t focus so hard on pulse detection being unreliable company that you give up on having a pulse in the future, but you should change your pulse on a Friday.

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There’s a limit to how much I can go “told you so!”, but I recall an episode of the Expontential podcast where Azeem Azhar interviewed the Terra founder. At the time I couldn’t help thinking what a load of bullshit the arguments in favour of Lunar were.
I’ve lost so much respect for (journalist and podcaster) Azeem Azhar over this.

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Part of it may be that getting USD isn’t that easy in many places. It can also cost a lot to convert, even in developed countries. I live a fairly cross-border life between US and Canada, and one of the most expensive aspects is moving money over the border. I try to avoid it because the fees and hassles are high, and they screw you on the exchange rates every time. The alternative is currency brokers, which have much lower fees, but can be sketchy also. It’s not easy to tell which ones are legit and which are fly by night scammers with a nice website.

In the face of all that, crypto starts to look better and better. Here’s a financial vehicle that you can buy and sell in any country fee-free, and hassle-free. It also promises to go up in value and claims to be backed by USD (whatever “backed” means). Would I use crypto for anything? Hell no. But I understand where these folks are coming from and I don’t blame them for biting on it.

Remember, in any scam, the bad person is the scammer, not the victim. It doesn’t matter how “stupid” or “obvious” the scam is, it’s never the victim’s fault. None of us are immune to the right offer at the right time when we need it. There’s an awful lot of victim-blaming going on upthread, but just remember you can and probably will be scammed yourself someday, by something. I won’t blame you when it happens.

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Agreed, I was literally just wondering what the sales pitch was, and now I have a good idea of what it might be. Thanks!

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More on the Terra arsehole.

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