Cryptocurrency is dead, Adam!
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Just stumbled across this enjoyable story from @paul1 about a Bitcoin scam that he played out and profited from to the tune of $5. My takeaway is that the entire cryptocurrency world is sufficiently confusing and opaque that it makes scams like this far more possible. If the scammers did this with regular money, no one would fall for it (he says, optimistically, but probably not realistically).
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Every time I read about the FTX implosion I think about this article and the ensuing discussion. Matt Levine from Bloomberg has been covering it in his Money Stuff newsletter. It’s horrifying but he makes it hilarious. This is in the initial report from the guy who was installed as CEO to handle the bankruptcy liquidation:
Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.
It was just a bunch of bros who had no interest in accounting or keeping records. Their balance sheet was just some manual entries in an Excel spreadsheet. Expenses were approved by thumbs-up emoji in a group chat. There was “an unsecured group email account as the root user to access confidential private keys and critically sensitive data.” They didn’t even keep track of who their employees were!
FTX was worse than simply a Ponzi scheme. It’s hard to fathom how it was valued at $32 billion. Reading Levine’s newsletter really boggles the mind. I highly recommend it. It’s a free subscription and is good for laughs and head-shaking.
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What, you mean that there’s a reason why adults exist? :-)
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No, it’s not. People see “crypto” and think “get rich quick”, which always leads some people to lose whatever critical thinking skills they may possess. If you can technobabble your way through things, you can convince investors without having the slightest shred of competence.
As an artist, I had briefly considered trying to sell NFTs. A little research convinced me that it was something I didn’t want to touch at all. Yes, it’s possible to make good money from it. But it’s more probable that you’ll get burned, no matter how diligent you are, because most of the companies you would have to work with don’t appear to be doing their own due diligence sufficiently. FTX may have been the worst, but they absolutely are not special in this regard.
Crypto may someday be useful, but right now, it’s primarily a way to part fools and their money.
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The Verge featured excerpts from the FTX bankruptcy filing:
The full filing is available here.
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New York State just passed a two-year moratorium on cryptocurrency mining operations that use fossil fuels for proof-of-work validation methods. Nice to see this issue getting local attention!
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I wasn’t sure if moratorium meant “halt” or “holding up new stuff.” There’s a good CNBC story about it that digs in further. Sounds like because permits won’t be issued or renewed, there could be shutdowns of projects underway—but some of those projects can continue for a period of time within the next two years.
I do love how the crypto proponents are saying it creates high-paying jobs, when often it creates like, two or three jobs. So, yeah, it’s money injected into a community…and that comes with a cost of noise, pollution, and often increased utility costs and other failures.
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