Legends of crypto currencies

Bu yazı 19 Mart 2023 tarihinde yayınlanmıştır

First- a formal warning- some of this article may offend, annoy or irritate some people. If you are of particularly sensitive nature, please move on.

Is Bitcoin (and other Cryptos) coming back? Please do not fall for these scams. All of a sudden following the collapse of SVB (Silicon Valley Bank) in the USA, and the “rescue” of its UK division (actually a takeover, for £1) by HSBC, Cryptos are back in fashion, Bitcoin was up over 30% in a month. Crypto bulls and promoters are crawling out from under the rocks they were hiding under, looking for innocent victims. So why do even ‘serious’ financial players dabble in this garbage? Here is why.

Albert Einstein is mistakenly credited with the saying that “insanity is doing the same thing over and over and expecting a different result”. Another saying- closer to the world of business and finance, is to state that if a person cheated you once, it is his fault, but if he cheated you a second time, it is your fault.

Why am I reminded of these old tales? Because of the world of crypto, bitcoin, tokens, digital currencies and NFT, have suddenly been resurrected even though they already seemed to be in a state of clinical death. The entrepreneurs, traders and marketeers of the crypto world have been hiding in holes and burrows for the past six months, and now they have been sticking their heads out – since the beginning of the year – and they are once again trying to convince innocent people to make a quick “fortune”. The scammers are everywhere – on social media, Facebook, Instagram, YouTube- so hard to avoid…

You also see it in a number of unexpected places. Big investment banks and an investment houses with a reputation for stability and sound business and investment acumen , who manage hundreds of billions of of pension and investment funds, are launching and offering the public “the opportunity to purchase digital assets in cooperation with the banking system.” They say that the popularity of digital currencies continues to rise in the world, and along with curiosity and interest, there are quite a few concerns about entering the field. It is reported These include famous household names and investment banks- just Google ‘famous bank’ (almost anyone would do) and ‘crypto fund’, and see what comes up. Why am I not naming them? Duh… I prefer to NOT get sued.

These famous and ‘respectable’ names are not alone. The recent increase of the price of Bitcoin brings back to the news people who repeat what they said before, before the “crypto winter” began. In the US, a crypto investor said on television that Bitcoin will reach $50,000-100,000 within two to three years. Elsewhere, another investor / promoter told an online news website that “people have a bit of more positive sentiment, and they are more relaxed with the recent period. They understand that the crypto market is still the economic future.”

In case you are not totally sure, it’s time to clarify again: the absolute majority of the crypto market was and still is one big scam. It is a trade in worthless “virtual assets”, the only reason to own them is the hope of selling them before long to a bigger fool. If you believe Nassim Taleb, the crypto world actually has another use after all: it’s a good way to identify fools – which is everyone who buys crypto assets because it’s a “revolution”, because it’s “the future”, or because that’s how he’ll “reach the moon”, i.e., get rich.

The cult of crypto.
Believers of the cult, or crypto-religion, who sometimes remind us of the anti-vaccinators in their blind faith, will surely argue otherwise, but the events of the last few months make the truth clear. The crypto market fell hard when the FTX company, the second largest digital currency exchange in the world, received a fatal blow when it became clear that its founder, Sam Bankman-Fried, transferred some of the customers’ money to his pocket. He was extradited to the US and is expected to spend a long time in prison.

Not only him. Later, the American Securities and Exchange Commission accused some of the biggest names in the American crypto world of running illegal credit placement services and defrauding investors. Among the names: brothers Tyler and Cameron Winklevoss, who are remembered as the two twins from whom Mark Zuckerberg copied the idea to establish Facebook, as famously shown in the film ‘The Social Network’. Also in Europe, Asia and elsewhere investors are affected by newly exposed crypto scams almost every month.

Recent research shows that 2022 set a new record in the number of Crypto frauds discovered : some 120 frauds in a total, amounting to more than 2 billion dollars, a 140% increase compared to 2021, and this without all the data from the FTX affair. In summary of the last year, the value of all cryptocurrencies dropped by about 70% – from 3 trillion dollars to 1 trillion dollars. There is not a single reputable economist in the world today who does not emphatically state that crypto is “the stupidest and biggest bubble ever, or the biggest fraud ever” as states William Quinn, whose area of expertise is the study of financial bubbles. It is possible that both things are true.

Here is a fact no one is paying much attention to – So far no significant use has been found for the blockchain technology that is at the base of the crypto world. No one, except fraudsters and criminals, uses “coins” to pay or transfer funds. The cost of mining the coins is expensive, in terms of equipment and electricity, and must be paid for in real money. A few months ago, a coffee shop with a crypto motif has opened in New York, hoping to attract the cult’s believers, but in order to buy a cup of coffee you have to pay in dollars.

Even Bitcoin, which showed impressive resistance after not crashing following the FTX affair and rising sharply in recent days, has not proven what it can be used for except for criminal activity and speculation. And of course, all of these could still attract interested parties when the interest rate was zero and money deposited in the bank did not provide a return. But now, as interest rates have risen, anyone can get 4% per year by purchasing the safest asset in the world, US bonds, or placing funds on safe deposit in a bank.

So- we have to ask- Why would so many companies, including entities whose reputation is important to them, some of whom are (not) named above, continue to run crypto legends, and continue to offer the innocent to part with their money in favor of these scams? The answer is simple: if there are fools who want to do stupid things with their money, there will always be someone willing to help them do that, for a fat fee.