
Bankers Ditch Fat Salaries to Chase Digital Currency Riches - champagnepapi
https://www.bloomberg.com/news/articles/2017-07-25/bankers-ditch-fat-salaries-to-chase-digital-currency-riches
======
richardknop
Investing in crypto is like a gambling addiction. I know some people who were
paper millionaires based on their BTC during the days before Mt Gox collapse.

They lost their entire savings once Mt Gox collapsed, since then they have
spent years working hard to recover their savings and now they are investing
all of it in ICOs.

This won't end well. Seems to me like the story is repeating.

On a side note, the brigading/shilling here on HN is becoming quite annoying.
I suppose it's a lot of computer nerds who are heavily invested in these
tokens who are trying to get more new people invest their real money into
these tokens so:

1) they can get rich quick

2) or recover their losses (lots of people heavily invested in crypto are
underwater)

~~~
SippinLean
>the brigading/shilling here on HN is becoming quite annoying

Can you point to a single post where the top, say, 5 comments aren't
completely negative toward crypto as a whole? They typically mention gambling,
fraud, ponzi schemes and (like yours) Mt Gox, in a rant that isn't
specifically tied to the post at hand. Look at the top comments on this
article:

>Investing in crypto is like a gambling addiction

>cryptocurrency is the new Gold Rush

>I remember the .com-bubble...But this one; it is just stupid

>It's hard not to think of tulips

If the shills are out there, they must not be getting paid very well.

~~~
aaron-lebo
There are lots of negative comments, yeah, but that almost seems like a
reaction to articles on crypto constantly showing up on the frontpage. Just
over the last few days there was an Eth article with 392 upvotes and a
"cryptoeconomics" article with 100+, which isn't unusual. Within the last 24
hours there have been at least three positive Eth articles on the frontpage,
it'd be hard to find any topic so thoroughly covered especially considering
how the real-world reach of this stuff is almost strictly limited to how much
Eth is worth.

Someone intentionally or not is doing a really good job of that.

~~~
discombobulate
Occam's razor: Crypto tech works, & will be an incremental improvement to a
number of areas.

~~~
richardknop
Yes but that is completely unrelated to price of these tokens which is driven
by speculation and has nothing to do with tech.

I believe blockchain will be implemented by industries where it is useful and
can improve many processes.

~~~
discombobulate
The speculation is driven by the tech. It wouldn't be promising tech if it
didn't work.

I believe it will change international capital allocation, via token sales.
Worldwide investment in the best & brightest.

~~~
Retric
There is an inherent limitation of using proof of work to back up a store of
value. Something needs to pay for that proof of work so either you have high
transaction costs or inflation.

So, it's easy to have altcoin without speculation. Suppose your alt coin has
4+% inflation / year built into the coin. It could become the worlds main
currency without making anyone rich. Adoption would increase because
transaction costs could be extremely low promoting it's use for a lot of
transactions.

EX: Initial adoption would be small purchases like vending machines where
CC/other coins have much higher transaction costs. This could extend to things
like cheap subscriptions etc, and then work up the value chain until people
are using it to pay rent.

~~~
discombobulate
I don't see a problem with bubbles. As long as the tech works. If people can
spend money on alcohol & drink themselves into an early grave, I can't see why
speculation should be demonised.

'Value chain' has a specific meaning in business. It's a set of activities
done to create a product.

~~~
Retric
Bubbles are beside the point. I just mean there is a trade off between value
store and transaction costs.

PS: English is not that restrictive of a language. Speed limit is generally
thought in terms of velocity, but you could use those same words to refer to
the drug. 'With a dosage entering LD50 territory Jim was clearly approaching
the speed limit.'

------
philbarr
So cryptocurrency is the new Gold Rush. As the story goes, the only people who
reliably made money during the original gold rush was the people who sold the
spades.

What are the "spades" here?

~~~
btown
[https://www.thestreet.com/story/14190462/1/why-nvidia-and-
am...](https://www.thestreet.com/story/14190462/1/why-nvidia-and-amd-continue-
to-ride-the-cryptocurrency-mining-wave.html)

~~~
dforrestwilson
^

These and basically anyone supplying them like voltage suppliers (Vicor) or
even the more basic materials like silicon wafers (Shin-Etsu Chemical).

------
dustingetz
Who are these people spending real money in all these ICOs? Is this all just
money made from bitcoin speculation being thrown around? Or is this real
people spending real cash money?

~~~
philbarr
And more importantly, how do I create an ICO and get these people to buy into
it?

~~~
VMG
Copy an existing ICO website, change the name, the color scheme and the
deposit address.

------
rwmj
I wonder if this will end with people going to prison for securities fraud?

~~~
jondubois
I don't think so. All the information is out there in the public domain; in
fact, most cryptocurrencies are entirely open source so it couldn't be any
more transparent than that. Everyone should be aware of the risk and the
reward potential. If ICOs are a fraud, then surely our entire financial system
is a fraud because there is much less transparency there.

Right now a lot of people are making the mistake of investing in an ICO that
they don't understand. Like with any kind of investing; it's their
responsibility to do their research. What will happen at the end of this is
what happens normally in the financial world; smart people who understand each
currency are going to make money at the expense of wealthy but poorly informed
people who are randomly pouring their money all over the place trying to make
a quick buck.

Moreover, a lot of the money that goes into these ICOs ends up funding open
source projects that are either directly or indirectly related to the
cryptocurrency itself (and this helps the entire industry as a side-effect).

Sure, there might be some black market money involved but I think that at
least much of that money will be put to good use. It's the government's job to
track people who are using the platform for illegal means.

If somebody buys chemicals to make illegal drugs, it doesn't make sense to
arrest the chemists for manufacturing the chemicals. The chemicals can be used
for good and bad; if you sum everything up and the net result is a positive
change for society, then overall it is a good thing.

~~~
lmm
> Right now a lot of people are making the mistake of investing in an ICO that
> they don't understand enough. Like with any kind of investing; it's their
> responsibility to do their research.

That's not how it works. Many kinds of securities can only be sold to
accredited investors for just this reason; you may not like that law, but it
is the law.

~~~
jondubois
It's a silly law. The entire finance industry rests on the principle that well
informed people are allowed to make money off of poorly informed people.

I think ICOs are more fair because unlike in mainstream finance, there is much
less information asymmetry because the code is all there for anyone to see.
Anyone can access all the information they need.

~~~
CodeCube
Whether some of these ICOs are a fraud or not has _nothing_ to do with how
transparent the ledger technology is. Regardless of how well the ledger of
what you "bought" is maintained, "what you bought" could still be a farce ...
it could be some guy who set up a blockchain, and beckoned you from his white
van with promises of candy ;)

------
lambdadmitry
Above all, I feel sorry for the small guy.

Sure, ICOers are _raising money for their dreams_. And the "whales"
"investing" in those ICOs are mostly lucky tech-ish folks who behave
_irrationally_ (like investing-1/4th-of-Whatsapp-in-a-service-with-a-few-
hundred-users-irrationally). Whales will not suffer much in the end and ICOers
will drive their Ferraris. It's those who believed in "invest in
cryptocurrencies" hype in mainstream media who will loose the most.

After all, if we treat the whole cryptocurrency ecosystem as a blackbox,
dollars come from those humble folks to ICOers. Just with an extra twist of
BTC on their way.

~~~
FLUX-YOU
That's pretty much what banks were doing with tech IPOs anyway (maybe other
IPOs?).

~~~
mannykannot
IPOs have at least three pesky features that an ICO lets you avoid:

1) A functioning business.

2) Actual investors - i.e. people who own a portion of your enterprise, with
all the obligations and expectations that go with that.

3) Regulation and oversight.

I suppose an IPO without 1) is possible in principle, but then it is hard to
get 2) and you have to be careful of 3).

~~~
JetSpiegel
[https://en.wikipedia.org/wiki/Pets.com](https://en.wikipedia.org/wiki/Pets.com)

------
chvid
I remember the .com-bubble; it kind of made sense that companies like Amazon
were very valuable as they had the promise to transform whole industries.

But this one; it is just stupid.

Massive amounts of electricity and hardware wasted to keep a distributed
ledger safe; an army of computer nerds facilitating fraud, narcotics sale and
money laundry; and finally the bankers sensing bucks to be made on a large
number of idiots.

~~~
zapt02
That's a very one-dimensional view of things. Blockchain technology carries
with it the possibility to change how we think about and use money. Bitcoin is
a zero-trust system that still manages to hold $41 billion dollar in value.

However, I agree that almost all ICOs are cash-grabs. In my opinion we already
have coins for all verticals that matter.

~~~
simias
>Blockchain technology carries with it the possibility to change how we think
about and use money.

That's the type of fluff I keep hearing coming from the bitcoin enthusiasts
but I have yet to read a compelling argument about what it'll enable and how
exactly.

"Bitcoin will kill the banks", "bitcoin will prevent the evil government from
stealing your money", "bitcoin will cure cancer and polio". How it'll do any
of that and why it's a good thing, that's left as an exercise to the reader.

In effect if we look at how bitcoin is effectively used today then the parent
is fairly objective I think. There's speculation, more speculation, money
laundering, black market stuff, gambling. Oh and did I mention speculation?

There aren't many legit use cases where bitcoin beats fiat nowadays, except
maybe sending money to a foreign country (and even then it's not certain, what
with the high fees and huge variation in the price of late).

I still don't understand how people expect it to become maistream. "It's like
Visa, but if you make a mistake you may lose all your money with no hope of
ever getting it back, it's not accepted everywhere and you have to wait for
about an hour to get a confirmation. But hey, you can send money to Burundi
super easily with it!"

I know, I know, there's SegWit coming, which might address some of these
issues. In particular I hear that it'll cure the rabies too. To the moon!

~~~
VMG
> How it'll do any of that and why it's a good thing, that's left as an
> exercise to the reader.

I'll give an additional hint to reader: who benefits from encryption that even
law enforcement cannot break?

Who benefits from TOR?

~~~
zimpenfish
> who benefits from encryption that even law enforcement cannot break?

People who live in countries with regressive regimes where law enforcement can
be legitimately dangerous?

~~~
simias
It's true that bitcoin might be useful in very unstable countries (venezuela
comes to mind) when you can't really trust fiat and getting access to dollars
or other foreign currencies is trickier.

It's still only really useful for relatively rich people who want to get money
out or in, I doubt the average Venezuelian bothers with Bitcoin. And Bitcoin
requires a widely available "free" internet connection to work correctly which
would be trivial for an authoritarian government to disrupt. Turkey doesn't
hesitate to block Wikipedia and Twitter, I doubt they'd have any problem
blocking the bitcoin exchanges and the bitcoin peer-to-peer protocol if they
felt the need to do it. Sure you can work around this and smuggle the
blockchain somehow, but it becomes a lot less practical, especially if want
something that you can easily spend for your day-to-day purchases like food
and toilet paper.

I know there's a lot of defiance towards our governments all around the world
and there are some good reasons for that. However I feel like we're having the
bad engineer reflex, trying to find a technical solution to a societal issue
and we might end up making things worse. I want to be able to trust the
government that I democratically elect and I want this government to be able
to gather taxes and even control the currency to some extent.

Instead Bitcoin will make it trivial to evade taxes, smuggle money overseas
and makes bribery easier than ever. You can't seize it, you can't freeze it,
you can launder it super easily etc...

At least when people open an illegal account in some tax haven it leaves some
paper trail, there are intermediaries in the loop, you take some risks, you
have to figure out a way to smuggle the money over there while keeping the
books clean. With Bitcoin you click on "generate a new receiving address" and
you're done. If the point is to make governments less corrupt and more
accountable I don't see how that'll work. You can't have the Panama Papers or
the Swiss Leaks if there's no paper to begin with.

The fact that it wastes an ungodly amount of energy to secure its ledger is
just the icing on the crap cake as far as I'm concerned. And it's not even
super successful because as far as I understand the majority of the hash power
is currently in mainland China, so if the Chinese government wanted to take
over they'd just send a dozen of military types in each datacenter and that'd
be the end of it. Then you make a few double-spend attacks to make people lose
all trust in the coin, the value collapses, nobody mines it anymore, game
over, thanks for playing.

~~~
VMG
> However I feel like we're having the bad engineer reflex, trying to find a
> technical solution to a societal issue and we might end up making things
> worse.

Same is said for encryption.

My perspective is that tools empowering individuals is the solution to
societal problems. Cryptography does that, whether applied to communication or
applied to value transfer.

~~~
simias
Encryption has legitimate use cases even if you assume that you completely
trust the "authorities" like your bank and your government. It's about
preventing your neighbor from reading your email over wifi.

Monetary transactions are already pretty well protected, which makes it hard
for somebody to steal my credit card and use it without my consent. It's
arguably even safer than Bitcoin since the bank and regulations offer me some
protection if something goes wrong.

So bitcoin isn't about making secure transactions the way HTTPS is, it's about
hiding my transactions from the bank and, transitively, from the government.
It's about creating a completely free libertarian market.

Maybe you actually want that but I wish there were more discussions in the
bitcoin world about what model of society people really want. I have a hard
time believing that all the bitcoin enthusiasts are die-hard objectivists. I
feel like many people saw the "get rich quick" scheme and didn't stop to think
about the consequences.

~~~
VMG
> Monetary transactions are already pretty well protected

To borrow some progressive terminology: check your privilege.

Also let's not forget

[https://en.wikipedia.org/wiki/Operation_Choke_Point](https://en.wikipedia.org/wiki/Operation_Choke_Point)

[https://wikileaks.org/MasterCard-breaks-ranks-
in.html](https://wikileaks.org/MasterCard-breaks-ranks-in.html)

Civil asset forfeiture

etc.

------
gizmo
If this isn't a clear sign of a bubble I don't know what is.

------
cm2187
It's hard not to think of tulips at this stage

~~~
drcode
As someone who wrote a newspaper column for the Chicago Tribune in 2013 titled
"Why Bitcoins aren't Tulips" this particular argument is starting to get a bit
tiresome at this point.

Fine- Let's just call them "tulips" so we can all go home and enjoy the sunny
weather today.

~~~
cm2187
The main argument (tulips have substitutes) is very light. Just by looking at
the number of alternative blockchains flying around, it's hard to treat
bitcoin as something unique. And that's what makes me extremely sceptical.

Might be an interesting cryptographic concept. An asset class? Nope.

------
throwaway86328
Uh, isn't it also illegal to buy unlicensed securities? Couldn't the SEC also
prosecute individuals who bought into obvious scams as unaccredited investors?
IANAL, but securities fraud is securities fraud. Why even take the risk? Why,
especially now, announce to the world that you're taking the risk like in the
article?

~~~
JumpCrisscross
_Disclaimer: I am not a lawyer and this is not legal advice. Don 't take
investment advice from my Internet comments._

> _isn 't it also illegal to buy unlicensed securities_

There are "safe harbors" like Regulation D [1]. This is how private companies
issue securities. There are still rules about to whom you can sell your
securities and the minimum information you have to make available to them.
Needless to say, I have not seen an ICO promoter make use of these safe
harbours.

[1] [https://www.sec.gov/fast-answers/answers-
regdhtm.html](https://www.sec.gov/fast-answers/answers-regdhtm.html)

~~~
throwaway86328
I highly doubt most ICOs qualify for exemptions, let alone notified the SEC of
their intentions to make a public offering.

------
asselinpaul
Most ICOs are worthless. Premature nature of funding and a lack of
accountability = no attractive return.

------
golergka
Can someone here please be a devil's advocate and convince me to invest in
ICOs?

~~~
philbarr
Buy into my ICO. I don't know what it is yet but it's going to be awesome. You
can give me the money now if you like - you want to get in early after all if
you're going to make the big bucks off it.

------
davidgrenier
Thankfully, Urbit isn't on that list... avoid success at all costs.

------
PeterStuer
If you've made a 7 figure salary for a few years, you can afford to take a
gamble on an ICO with your pocket money. Who needs a second yacht anyway?

~~~
richardknop
If I earned 7 figure salary, I would do the job for about 5 years and then
retire. With savings after 5 years of 7 figure salary you should be able
create a comfortable passive income.

Buy couple real estate properties and rent them out, invest remainder in blue
chip equities and collect dividends. And you never need to work again.

~~~
softawre
I agree with you.

However, wouldn't somebody who makes say 9$ an hour have the same thoughts
about developer salaries?

> If I made 200k a year, I would work for about 5 years and then retire.

I mean it's possible if you save a ton and live very cheaply, like somebody
who today makes 9$/hour might be used to doing.

People always want more. Though, there is a sweet spot (~90k/year?) where more
money means less and less to you.

~~~
richardknop
The issue with this is that the best IT jobs are in places like San Francisco
/ New York / London which are very expensive.

So yes you make 200k (before taxes) but you spend 35-40k per year on rent plus
bills (water, electricity, council tax, internet etc).

Throw in some social life and drinks once or twice a week, car plus insurance,
supporting family financially.

So let's say after all that you end up saving 40k per year net. Times 5 is
200k. That is not enough to retire.

Now do the math with 1 million salary (the lowest possible 7 figure). Same
living standard. After 5 years you can save let's say 1.5-2 million (I didn't
do the math so if I am way off please correct me).

Now that is an amount you can retire on:

1) Buy two properties for 500k (live in one, rent the other one)

2) Invest 1 million in blue chip equities, this will pay you around 35k per
year in dividends

3) You still have a nice sum of cash left on top of that

So you can see that 90k per year is definitely not a sweet spot. There are
still massive improvements if you can make 200k, 400k, 800k and so on.

Yes perhaps going from 35k to 90k will improve your living standard much more
drastically than going from 90k to 200k. So you could argue that there are
diminishing returns.

But you are ignoring the fact that the higher you go the sooner you gain
complete financial freedom when you can retire and live completely free.

