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Welcome to the crypto culture war, where one side is waiting for an imminent financial rebellion, while the other is waiting for a colossal financial bubble to finally burst. Who will be proven right? Find out on this episode of financial manias gone wild.
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Crypto is now a mass Web3 VC propaganda campaign that seeks to profit from hyping up the delusion that slapping a data structure invented in the 1970s on top of “X” can solve complex societal and geopolitical issues. This sidesteps the complex incentives, interactions, and game theory involved between nation-states, arguably the most stable form of human organization in history, by jamming all logic and reason into a super-constricted monetary chasm.
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Here’s how the web3 hustle works: A small coalition of VC firms invest in a random blockchain startup, boasting a token with a slightly varied degree of technical uselessness (i.e. being able to buy links to JPEGs, game characters, and virtual land at a slightly reduced cost yet totally incapable of purchasing any real-world assets without converting back into fiat).
Then, since these VC firms and the crypto media are in cahoots, they manufacture an advert posing as a “funding round,” announcing that a number of investors consisting of the “usual suspects” have invested in a new state-of-the-art crypto token. The hype this creates then reels in retail “investors”, who pump up the price of the token. The VCs, who hold a majority share in the token, can then dump, scot-free, on “suckers”.
It’s essentially a legal stock promotion scheme, where the same firms construct a mainstream buzz around various forms of crypto vaporware and use the proceeds from one pump-and-dump to finance another. Or, as U.C Berkeley professor Nicholas Weaver called it in a crypto-debunking lecture, “Securities Fraud as a Business”.
Where are the regulators on this?
Seriously.
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A web3 economy, where you get paid for every productive interaction you make, sounds incredible. But that’s only until you realize you must also shell out for every counter-exchange.
Imagine having to engage in commerce with tokens issued by the thousands of individuals and companies you interact with daily. The psychologically damaging effects of having to manage thousands of different hyper-speculative currencies will easily create a dystopian society, in which we'll eventually face the daunting task of weening each other off the temptation to potentially gain 100x returns over simply wanting to transact goods and services.
This turns web3 into a complete non-starter, but no thought leaders seem to care.
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For becoming skeptical of crypto, you automatically obtain the status of establishment shill, according to sources familiar with the matter.
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All the arguments asserting that crypto is censorship-resistant seem to forget that the physical world exists, and that’s quite a significant externality to overlook. If you threaten the stability of a nation-state, don’t be surprised if it kicks down your door and does everything and anything necessary to stop you. Ever heard of rubber-hose cryptanalysis .i.e the extraction of cryptographic secrets via coercive force? Not gonna make it.
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The success of all these cryptocurrencies is determined by the conspiracy hypothesis surrounding them, specifically their marketing strategy, and their ability to out-bullsh*t the conspiracy hypotheses of competing coins. Tweet the hashtag “#XRP” on Twitter, and you’ll see what Concoda means.
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If the crypto lobby succeeds, we’ll have people queuing outside Walmart to get their hands on the latest pyramid scheme, which will be offering 100+% yearly returns on investments.
Few, mostly boomers from Albania, understand this.
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“If the fiat shills had just listened to us and created Bitcoin drone armies, this would all be over by now.”
— Kyle, 16, long Bitcoin perpetual swaps
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The rise of Discord grinders is the latest crazy emergence to disprove the narrative that crypto is a “social” or “equality” movement. While the big firms pay “top blockchain talent” the big bucks to code slower, less efficient, and more costly tech, “white-collar” crypto workers must grind it out for as little as five bucks an hour, to perform the “noble” task of administrating web3-centric online chatrooms. This is really a cover for their real function: to facilitate “NFT drops”, a tasteful euphemism for shilling and distributing crypto pump-and-dumps.
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FXHedge @Fxhedgers
BITCONNECT FOUNDER INDICTED IN $2.4B PONZI SCHEME HAS DISAPPEARED, SEC SAYS✤
I know for certain that nobody would enjoy living in a society run by the “code is law” paradigm. A system totally unequipped to deal with the constantly unforeseen externalities — which it will inevitably produce as all systems do — is a disaster waiting to happen.
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“I’ve got friends who are into crypto” sounds a whole lot better than “I’ve got friends who are into evading sanctions, taxation, regulation, and the rule of law.”
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Tether, the major, somewhat sole provider of liquidity in the cryptocurrency space, has recently released a new attestation, detailing the latest makeup of its elusive stablecoin reserves. This time, the amount of commercial paper the company holds has decreased by 21%, yet this still makes you think about who would be willing to borrow billions of dollars from a global wildcat bank run by shady characters and ex-cons.
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After expressing multiple times over seven years that it was seeking an official audit, Tether has still failed to do so. The monopoly money issuer’s latest failure to comply with regulators globally has further concreted the three certainties in modern-day life: death, taxes, and Tether never getting audited.
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Crypto is an avant-garde repeat of the failed monetary paradigm of the free banking era of the mid-1800s, marketed as the future of finance.
What could go possibly awry?
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The vast majority of the finance industry still has no knowledge of the historical background of cryptocurrency and its founding fathers, and they show it in speculator fashion. It’s beyond cringe-worthy to watch finance professionals post hoc rationalize the allocation of a technology specifically designed to evade taxation and the rule of law in the portfolios of their taxpaying clients.
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If NFTs and DAOs were simply the latest iterations of the “solutions looking for problems” era, what is the next craze that lies around the corner, enabling the crypto ecosystem to stay relevant? Blockchain renditions of the SEC (Securities Exchange Commission), the OCC (Office of Comptroller of the Currency), and the FTC (Federal Trade Commission)? Now that would be something to behold.
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Concoda is seeing the gradual replacement of followers from those with monkey jpegs as avatars to those with real human faces.
Is this... the Escape from the Metaverse?
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I mean what I say about crypto, not because I’m a “hater” per se, but because I’m witnessing the normalization of Ponzinomics, and as far as I know, that never works out well for society as a whole. The financial hit I take from the refusal to mindlessly pump crypto propaganda, an extremely lucrative endeavor, is worth every penny unearned, as it bolsters the hopes of maintaining a functional democracy.
Brilliant analysis. I tried to like crypto, I really did. I watched the gold bug vs crypto bro debates. But I came up with all the issues you outline, the foundation of hyperbole and promises, and then like you came to this: “yet totally incapable of purchasing any real-world assets without converting back into fiat”.
Then add to your sentence “and vulnerable to being declared illegal”.
Right now we are seeing the yachts of Russian oligarchs seized. This is popular and no one is crying for them, least of all me. But there has been no due process: no trial, no jury, no verdict, no order of sequestration.
The lesson is that if a government wants an asset, it can take it.
Concoda, You were the first writer I paid for a subscription to. I was very happy. You were brave, incisive and thought provoking in your writing. For the last few months it has been endless Crypto. Honestly, it's boring: Tether, NFTs being scams, VCs being hypocritical, subversion of the Satoshi narrative into prevailing power structures. You are beginning to come across as wanting to be a single topic televangelist. That is fine. There are many. Preach brother.
For me. It was cool while it lasted