These people believe there are only so many coins and that it is these coins that have value, regardless of how much they are worth in USD. For them it is how well their coin compares to bitcoin that matters. They think they can ride out any crash as they are 'bound' to be 10x up next year as more people start using crypto to store their wealth.
I do not believe that most people giving bad advice on coin are deliberately giving bad advice or aware that their advice is founded on poor information, fear and greed.
In this environment there is a frenzy to get in on the next ICO so scammers don't have to try very hard to scam.
I can see that a bitcoin miner has put together a business model and with that some risk management. They calculate the ROI and hopefully they get the numbers right and profit after paying off the kit.
However, I do not believe most coin 'investors' are doing risk management properly, they are like a herd of naive day traders from the 1990's losing their savings but getting ever more coin, thinking they are up because one of their coins is up against bitcoin.
It is not so much the scammers but the echo chamber and the FOMO that is the problem here.
> [...] “market cap” is a misleading and useless number. If someone bought a fraction of a bitcoin at $19,000 per BTC, that doesn’t make anyone else a “Bitcoin billionaire” whose bitcoins could be sold at $19,000 each — the total actual money recoverable from the system hasn’t gone up.
> Try realising any substantial fraction of those paper billions and watch the price crash — the actual money doesn’t exist for everyone to cash out. At some point, there will be a rush for the exits, and most can’t possibly make it out with their “gains.”
If bitcoins were tulips, and some cosmic event made them deathly radioactive tomorrow, you wouldn't find any buyer, however steep your discount. But I suppose there'll still be open "buy" orders that will buy at $5000, or $1000, etc...
Right now, the lack of consumer demand means there’s no reason to bother but if that changes I’d be surprised if nobody tried and there’s little lock-in to prevent people from bailing to whoever gives better terms.
There’s been a myth created by crypto currency activists that gold is just like crypto currency in that it’s valued simply as a value store, which is incorrect. Its use as a value store increases the value, but at its core the price is still dependent on the uses of gold. Over half of gold mined is used for jewelry or industry. Yes, some is kept as investment, but that investment is based on the idea that people will continue to want gold jewelry.
It has thousands of years of historical backing as a value store and has many extremely important uses in society, SOME OF WHICH are social (and that's not changing anytime soon).
This is cryptocurrency:
Cool, I have Ripple coins now...let's just go ahead and say these are more valuable than the US dollar, because...err...someone told me it's the future! It does all these things all the currencies can't! And my neighbor just remortgaged his home to invest a few months ago and now he's got a yacht! I better do it too. I think this bubble should be called collective insanity. At least with the housing market bubble, people were investing in actual, physical assets. That was, at the very least, intellectually justifiable.
Can Neopet dollars become a global currency as well, please? I think I have an account on there from way back
Edit: I scrolled to the bottom of the article I've just linked...stumbled onto this guy: https://kwhcoin.com/the-kwh-team/
This is literally like Ocean's 11. Again, at least casino chips are physical objects
Bitcoin is the Conquistadors landing on the Americas and decimating the natives with foreign diseases.
Mainline markets had pump and dumps. People got wary and regulatory institutions were born to fight the malaise. The regulators were successful. Pump and dumps are largely unheard of in large-cap U.S. equities. With the threat neutered, common memory faded.
Blissfully unaware, investors relinquished the protection of their regulators, cursing them as they shut the door, and wandered out unprotected and unwary. Almost without delay the entire menagerie of foul schemes emerged: pump and dumps, exchange failures, ticker painting, Ponzi schemes, et cetera.
(My favorite two pump and dump spams from that era were BoysToys.com (GRLZ) and XcelPlus (XLPI). BoysToys.com was a strip club in San Francisco which did an IPO. Their SEC filings were detailed and very funny. XcelPlus sold some proprietary lubricant. Their site had a phony FAA endorsement. I sent a copy of that page to the appropriate FAA regional office, and a few weeks later, got a call from an anti-terrorism investigator. XLPI was claiming that the USAF was using their product, which, because their product wasn't approved for aircraft, attracted the attention of the military anti-sabotage investigators. I'm not sure how that came out, but XLPI is now valued at $0.0000010 per share.)
Wasn't the 2008 stock market crash caused by the housing market being "pumped and dumped"?
>a scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements.
Is that not exactly what the ratings agencies and co were doing by giving trash securities AAA ratings?
This is an astute observation. In a pump and dump, someone lies to sell securities they own with the intention of selling into the inflated price. It's special because it requires no assessment of intent to prove. If you own a security, make false or misleading positive statements about it and then sell into the resulting rise, you pumped and dumped.
In 2008, ratings agencies expressed their opinion about a security in exchange for a fee from the issuer. The issuer pointed to those ratings to sell the securities. Everyone knew about the conflicts of interest involved. Selling a stupid product to informed investors isn't illegal. Selling a product you fail to disclose material facts about, or which you knowingly structure to fail, is. Determining whether someone "knowingly" did something is harder than showing they did it.
Side note: many complex, structured securities–like CLOs and CDOs–which lost value in the crisis ended up performing as expected, if one held on to them . The ratings agencies were still very wrong about a lot of things. But fewer than we give them credit for.
I got you. Ratings agencies are the affiliate scammers in this case. You're right, they didn't buy the scammy products or sell them, but they were paid by the product owners to represent the products as legitimate, which they did and made a ton of money. When the products turned out to hurt a lot of people, the ratings agencies/affiliate scammers threw up their hands with a "how could we have known?" while everyone who got hurt was saying "that is literally exactly what you said you were being paid to do, so if you didn't do that, then WTF were you getting paid for..."
Pump and dumps by contrast have a much shorter time frame.
Ugh, kill me.
But this doesn't line up to me, unless there were real estate companies and banks eager to unload their houses? I didn't think there was an excess of housing built that needed to be sold, but I could be wrong, because that would have pushed prices down. I thought the key failure was people being unable to pay their mortgages, and a bunch of financial products built off of expecting people to pay their mortgages, and ratings agencies giving incorrect ratings for those subprime mortgages.
The only connection I can see is people making dumb financial decisions, which is why a rubber stamp for subprime led to a ton of people defaulting. Houses don't really have the same faults as PT Cruisers.
Right, it wasn't "a guy", it was banks like Goldman Sachs.
My question remains: if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"?
Not every fraud is a pump and dump, and not every stupid investment sale and purchase is a fraud. Most of 2008 was stupidity, not fraud. (Some was plain fraud.)
In any case, the pump and dump rules worked. Pump and dumps are trivial to organize. Draconian punishments raise the bar of minimum competence from script kiddies on a message board to LIBOR traders co-ordinating across banks. The complexity of the latter over the former means (a) it's harder to do (b) it's even harder to get away with it and (c) when you get caught, you can be found and fined and jailed.
Post-crisis, rules surrounding swaps and securitisations were modernized and re-written. Our financial system has changed in response. (Banks are, largely, more boring.)
The group doing the pumping knows what's coming.
In 2008 banks didn't want it to happen. They would have happily kept doing what they were doing forever. Home buyers would have been happy buying more houses, real estate agents would have been making commission, mortgage lenders getting interest. Happy days!
There was negligence all round and the situation was unsustainable. Do you think the banks wanted it? Some foresaw the collapse and made money out of it but it cost the banks billions, ruined reputations, people lots their jobs. Yes, they got bailed out but they would have preferred to have not needed it in the first place.
"Pump and dump" requires both a "pump" and a "dump". I'm no expert on the housing market crash, but there doesn't seem anything close to a singularish entity that "dumped" after the housing market had been "pumped".
This has not yet been decided .
I'm still not clear who the suckers are in these cryptocoin markets that are driving up the price. I'm starting to hear stories about barbers and janitors and friends of friends buying in. I guess it got popular enough in South Korea that the government had to step in.
How mainstream has crypto trading gone? Who are the suckers?
It's my coworker who is HODL'ing because "it's got better returns than our 401(k)".
I would say it's the early majority now. But it has reached the point where I see people following crypto stocks in the train regularly, and apparently all of my non-techie friends (teacher, historian, etc) all own a small chunk of crypto stocks now.
That’s such an unfortunate metaphor for crypto.
This is pure speculation, and I have absolutely no evidence to back this up.
Not sure if they are the suckers or the pumpers in the context of the article.
This is literally the opposite of the adage. It doesn’t say “if you never asked who the sucker is, you’re the sucker.” It’s “if you can’t identify the sucker, you’re the sucker.” With Bitcoin, everyone who isn’t an exchange or getting paid to promote an ICO is probably a sucker.
In the adage about the shoe-shine boy handing out stock tips, the shoe-shine boy loses money. But so does everyone else. The non-suckers are the ones who sold and settled for cash before shit hit the fan.
> If you are wise enough to know there are suckers in the first place, you'll likely take steps to avoid being one
The entire history of frauds and schemes flies in the fact of this hypothesis. Let's pick apart a recent one: Bitconnect. Many participants seemed to know it was a Ponzi scheme. At the end of the day, only the organizers and paid promoters who cashed out their BCC came out ahead.
I mean, anyone that participates in a Pyramid scheme at any level is the definition of a sucker. Not a single one of them has ended well.
It started out largely being an accusatory term used by the American political left to disparage biased and/or incorrect information spread by Trump supporters (mostly, anyway). But then Trump and his supporters decided two could play at that game, and it became almost exclusively a term used by the Trump/Fox News crowd to bash the left.
As a result, the left stopped using it as quickly as they had started, and the term all but disappeared from respectable news sources.
Now, a year and change later, it seems to be coming back.
No point here other than it's fascinating how trends in culture stop, start, and change with time.
It's a far cry from the NYT or Fox News reporting incorrect things, whether deliberately or not, to someone called Foxx News or Non York Times reporting that Islam causes prostate cancer.
If you look at the list here, it's all over the political spectrum, some of it is just plain apolitical scams like the Hawking Scam on a CNN knockoff website or celebrity stalking:
I also sympathize with your frustration with politics being framed as left/right. I consider myself pretty libertarian, so I often find myself raging against that divide. Nevertheless, that doesn't change the fact that as a matter of practical reality, politics in this country is framed that way, and that shapes how terms are used, how arguments are made, and how things are portrayed in the media...
A Bart Simpson joke was a MAJOR part of this weeks Saturday Night Live.
(This Aussie Rapper’s ‘Simpsons’-Referencing Track Is Cromulent AF) http://www.moshtix.com.au/v2/news/musicnews/this-aussie-rapp...
What I don't understand is the EXTREME uptick in "cromulent" from Google Trends on May, 28th. If someone with stronger Google-Fu could figure it out that would be cool.