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Make Me Smart: Crypto goes to court

Make Me Smart did a good show today, Tuesday, 10/3, centered entirely on cryptocurrency and the SBF trial. They had a long interview with Zeke Faux, a Bloomberg reporter who's spent two years trying to track crypto and author of the new book, Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall (Sept 2023).

The short version: cryptocurrency is speculation, pure and simple. It's a form of gambling, and the casinos are almost all crooked or scammy. They have no demonstrated utility beyond what your Visa card provides.

As of this evening, 110 cryptocurrencies (of 230 tracked by CoinDesk) are underwater of the trailing 12 months. Six coins are down by more than 75%, one year after "the great housecleaning." In 2022, the crypto market went from $3 trillion to $800 billion, representing the disappearance of 74% of its investors' gains. Dozens of exchanges collapsed. (The founder of one failed Turkish exchange, Faruk Fatih Özer, was just sentenced to 11,196 years in jail for his activities.)

One side note was that the African-American community has been especially victimized by crypto marketers promising them the ability to build "generational wealth" that will bequeath a better life to their kids and grandkids.

The second side note is that most of the crypto bros are praying that SBF receives a sentence of at least 11,197 years since that allows them to dismiss him as "the one bad apple" and relaunch their hype-train.

- - - - -

All of which becomes pressing because fund advisers are piled like the bulls of Pamplona, ready for a wild charge. Starting in August I saw new crypto fund and ETF filings almost daily, with as many at a half dozen new funds filed in a single day. Hedged, leveraged, unhedged, inverse, one currency, multi-currency ... it's all in the queue and the marketing push is going to be deafening.

If they get by the SEC.

The show is, I think, worth the listen for folks trying to keep up. It's non-technical and smart, with two hosts who are just slightly appalled.

Comments

  • Speaks volumes about the fund management companies so eager to share their expertise by offering crypto funds so we may prosper.
  • Have the robots weighed in yet?
  • Yet, it isn't just COIN, HOOD, etc, but companies such as BLK, Fidelity, BEN, etc are betting on the launch of physical/spot-crypto ETFs OR are offering them to their retail and retirement customers.

    Several countries have introduced CBDCs. The Fed is still evaluating digital-dollar.

    So, there is something there that may not be obvious to all.
  • I can see a sentence of 11,000 years, but the 196/7 years tacked on seems really excessive. Have a heart, Your Honor!
  • @BenWP, prosecutors had asked for 40,562 years. That is about 20 years per victim, and there were 2,027+ known.
    Judge showed leniency and REDUCED that to 11,196 years.
    Turkish judges have become wild with sentences after the death penalty was eliminated.
  • Have a heart, Your Honor!
    Perhaps the judge did and may have offered parole in say just under 10,000 years:-)

    Several countries have introduced CBDCs. The Fed is still evaluating digital-dollar.

    Cryptocurrencies and central bank digital currencies may share much of the same technology, but they are substantially different entities with different characteristics and objectives.

    From the IMF:
    Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by central banks. As such, they are more secure and inherently not volatile, unlike crypto assets. ...

    In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash. ... it can be considered the world’s first CBDC.
    https://www.imf.org/en/Publications/fandd/issues/2022/09/Picture-this-The-ascent-of-CBDCs

    The main objectives I've seen put forth for CBDCs are: (1) to serve the unbanked and under-banked, and (2) to facilitate secure, speedy transactions.

    (Here's the full White House list of objectives.)

    Those are fine objectives. Though I don't see what CBDC could offer that banks could not if they offered a form of "universal service" (with outreach programs) and perhaps made some technological upgrades. For example some transit systems now accept bank cards in addition to their own payment cards. Does it really matter whether the form of payment is a digital bank card or a government issued digital currency card?

    Most of the benefits arise from "digital" not from "central bank". Much as securities transactions have become easier and faster with (digital) book entry instead of physical paper stock certificates.

    Cryptocurrency is different and was promulgated on the objective of decentralization (no controlling authority). While the cryptocurrencies are not controlled by governments (clearly differentiating them from CBDCs), they have still tended toward centralized control.
    [Decentralization] was the premise of the initial Bitcoin white paper, which offered a cryptographic solution intended to allow payments to be sent without involving any financial institution or other trusted intermediary. However, Bitcoin became centralized very quickly and now depends on a small group of software developers and mining pools to function. As internet pioneer and publisher Tim O’Reilly observed, “Blockchain turned out to be the most rapid recentralization of a decentralized technology that I’ve seen in my lifetime.”
    https://www.imf.org/en/Publications/fandd/issues/2022/09/Point-of-View-the-superficial-allure-of-crypto-Hilary-Allen

    So, there is something there that may not be obvious to all.
    Sizzle?

    Or as Clara Peller put it, where's the beef?


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