What Is Happening to the People Falling for Crypto and NFTs

cigaretteman

HR King
May 29, 2001
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By Farhad Manjoo
Opinion Columnist

To understand the latest incarnation of the colossal crypto grifts that continue to engulf the internet, I suppose we should start with all those bored apes, because how could we not?
I don’t mean real apes — little of what’s in this column is about stuff you could call in any tangible sense “real.” Instead I’m talking about the collection of digital art known as the Bored Apes Yacht Club. Created about a year ago by a quartet of mysterious, pseudonymous cryptocurrency enthusiasts, Bored Apes is a collection of thousands of “programmatically generated” hypercolor drawings of coolly disheveled primates, the kind you don’t bring home to mama.
For reasons that don’t seem much deeper than weird things happen online, bored apes have become a hot commodity in the market for nonfungible tokens, or NFTs. As of Thursday morning, the cheapest available Bored Ape NFT — a kind of digital certificate that grants its holder nebulous ownership of the ape illustration — was selling for the equivalent of about $340,000; last year, an NFT of a very rare Bored Ape, one of a small number with gold fur, sold at Sotheby’s for $3.4 million.
Are you with me so far? People online are going ape for what are essentially primate Pokemons. You may be wondering what the apes do and why people are paying so much for legally uncertain claims to them, and how you ever got so old and out of touch. All good questions — but we’re well past those now.
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In the past year Yuga Labs, the well-funded start-up that makes Bored Apes, has embarked on a parade of new and even farther-out digital spinoffs of its simians. Its latest ventures have highlighted the head-scratching, money-burning, broken-casino vibe of what’s being called the internet’s next big thing. Cryptocurrencies, blockchains, NFTs and the constellation of hyped-up technologies known as “web3” have been celebrated as a way to liberate the internet from the tech giants who control it now. Instead what’s happening with Bored Apes suggests they’re doing the opposite: polluting the digital world in a thick haze of errors, swindles and expensive, largely unregulated financial speculation that ruins whatever scrap of trust still remains online.
The latest ape sale took place last weekend, and it was a disaster from top to bottom. Huge demand overloaded Ethereum, the open-source blockchain that hosts the Ether cryptocurrency and had been developed to be a more capable crypto system than Bitcoin. The technology’s shortcomings led to thousands of people paying about $180 million collectively in transaction fees. Some appeared to pay more in fees than what they paid for the NFT. They were the lucky ones; some paid steep transaction fees only to see their ape purchases fail for unknown reasons. (Yuga said it has refunded money spent on failed transactions.) Still others suffered various hacking and phishing scams. Meanwhile Yuga, whose backers include some of Silicon Valley’s biggest venture capital firms, generated at least $320 million in sales. Sales of what? Oh, plots of “land” in Otherside, a virtual world that might come out soon.
Of course, buyers participated in the sale willingly. You might find it hard to muster much sympathy for folks who paid huge sums to speculate on digital goods in an unbuilt corner of the metaverse. Play stupid games, win stupid prizes.
But Molly White, a software developer who runs Web 3 Is Going Just Great, a website and Twitter feed that documents the spectacular crashes happening seemingly every day in crypto, told me that a lot of people are getting suckered into being guinea pigs for a set of new technologies that are much less solid than boosters acknowledge.
“On the one hand we’re seeing problem after problem after problem on a scale that has not been seen in most technologies,” she told me. On the other hand, well-funded companies are running Super Bowl ads pushing crypto to the public, and big financial firms are gearing up to let people invest in digital currencies as part of their retirement funds. And much of this stuff is unregulated.



“There will only be a lot more damage as it continues,” White said.
Web3’s nominal aims are quite noble. The original internet boom of the late 1990s, what you might think of as web 1.0, was a time of great stock-market valuations that created a few enduring companies and a lot of dead dot-coms. The post-bust, web 2.0 era of mid- to late 2000s was marked by an explosion of new technologies and new companies — mobile devices, social networks, streaming services and a much more dynamic, interactive web. In the past decade, though, four companies — Google, Facebook, Amazon and Apple — emerged as the central gatekeepers of the internet and, in a larger sense, the tech industry.
Proponents of crypto and associated web3 innovations say these technologies can reverse the internet’s monopolistic turn. They argue that by building the next generation of internet apps on blockchains — essentially public ledgers that can record monetary transactions and store data in a way that is decentralized, meaning not under the thumb of any tech giant — we can pull the rug out from under today’s internet giants. Web3’s boosters also point to a variety of other so-far-unrealized virtues. They say crypto will free us from large financial powers like Wall Street and the Federal Reserve, that it will allow people to send and receive money cheaply, or will bring millions of the world’s “unbanked” into the modern financial system.
Honestly, I have long tried to keep an open mind to these claims, because I have been incredibly dismayed by the way a handful of firms have taken over an internet that I once thought of as a font of innovation. If there really is a new web that’s going to solve all the problems of the old web, sign me up.
But the continual blowups should crater those expectations. At the same time that the Ethereum blockchain was getting crushed by last weekend’s Bored Apes sale, another supposedly smart crypto network, Solana, was taken offline by bots — one of several full or partial outages it has experienced this year. Two other crypto ventures, Rari Capital and Saddle, were hit with attacks that led to a loss of a combined $90 million in Ether. Early last week, Deus Finance lost $13.4 million in the second attack in two months. I could go on — and on, and on.
There’s also little of the decentralization that we’re being promised. Many web3 companies are funded by the same people who built the web we’re now trying to reform.
The main problem isn’t that these technologies will become the basis for the future of the web. They are clearly not ready for that: As White put it, “If web3 can’t handle 55,000 Bored Ape NFTs, how can it handle web-scale technology?”
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But how many people have to lose their shirts before we realize that web3 isn’t a solution to any of our problems?

 

bhawk24bob

HR Legend
Jul 8, 2001
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The contempt boomers have for crypto is hilarious.

It will get regulated, everybody that's gambling on it will lose his ass, most if not all of the 'coins' will be wiped out through regulation, it'll bottom out, and then the institutional investors will step in
 
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Aardvark86

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Jan 23, 2018
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About the same thing as happens with any hypothecated capital. Based on the speculation of the moment some win snd some lose. Except this case it’s just more hypothetical and speculative.
 
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bhawk24bob

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Jul 8, 2001
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About the same thing as happens with any hypothecated capital. Based on the speculation of the moment some win snd some lose. Except this case it’s just more hypothetical and speculative.

Would you believe that there's currently nothing stopping you from creating a new 'coin,' talk it up on reddit forums, and there's a gullible population that will buy it.....allowing you to release more of your own 'coin' through exchanges, cash out, watch people talk up their own stupid investment decisions, release more, cash out again, ad nauseum? That's currently happening
 

bostavan

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Indicators can be used together to predict future trends and price movements. They can also help you understand when it's time to take a position in a certain asset or when it's time to exit a trade. There are many different indicators, but here are some of the most popular ones. Moving Averages - This is one of the most popular indicators because it's easy to read and understand. It shows the average price over a period (like 1 minute, 5 minutes, 15 minutes, or 30 minutes). I've learned this from https://fbs.com/trading/platforms/meta-trader-5.
 
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Aardvark86

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Jan 23, 2018
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Would you believe that there's currently nothing stopping you from creating a new 'coin,' talk it up on reddit forums, and there's a gullible population that will buy it.....allowing you to release more of your own 'coin' through exchanges, cash out, watch people talk up their own stupid investment decisions, release more, cash out again, ad nauseum? That's currently happening
For now. There’s actually a fairly serious debate about whether these are, or should be, regulated as securities in various markets around the world. Would love to read that prospectus.
 

BioHawk

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Sep 21, 2005
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Some people made a ton of money off this stuff so...good for them, I guess. I just don't see a long term viability with it in its current form. I don't think cryptocurrencies are going away completely, though. Even the US is talking about starting one. However, eventually there will be a more regulated version which won't have near the potential RTI that current cryptos have, but they will be less vulnerable to fluxuations. Or not, there are enough forces with enough power to stop any of that from happening. Then I guess it will continue to be a casino on which made up currency can make you the most money.
 
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soybean

HR King
Sep 30, 2001
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I'm going to be rolling out Soycoin later today. But, for just the next hour, and just for those on HROT, I will be offering a Soycoin discount of 50% off of the price I decided on a couple of minutes ago. Please private message me your payment details not later than 10:00am and you too can start enjoying the freedom that comes with knowing the value and security that an investment in Soycoin provides.
 

Aardvark86

HR MVP
Jan 23, 2018
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I'm going to be rolling out Soycoin later today. But, for just the next hour, and just for those on HROT, I will be offering a Soycoin discount of 50% off of the price I decided on a couple of minutes ago. Please private message me your payment details not later than 10:00am and you too can start enjoying the freedom that comes with knowing the value and security that an investment in Soycoin provides.
That sounds pretty valuable. And in this market, after all, isn't that the only thing that counts?
 

Aardvark86

HR MVP
Jan 23, 2018
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Aardvark - The 10:00am window has closed. But, just for you, and just for today, I will allow you to invest at the 50% off rate until the new deadline of noon, or so.
sign me up!!!!!!!! all that you have!!!!!!! BTW, the avatar generates even more confidence in my investment decision!!!!!
 
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mnole03

HR Legend
Mar 20, 2005
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Pena is a grifter. The idea that he knows who started Bitcoin and that the information will blow it up sounds absurd.

It’s a public design, so even if the United States or China was behind it, it wouldn’t matter. It’s used by the absolute worst people on the planet, terrorists, human traffickers, and Gator Boosters. There’s nothing that could come out that would surprise me.

I’m not saying it won’t go to zero or that it isn’t susceptible to a 50% attack. It just won’t blow up because of some secret only Dan Pena knows.
 

mnole03

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Mar 20, 2005
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I think blockchain tech itself has great potential for all sorts of applications….but I still believe crypto and NFTs specifically are a load of junk.
There will be cryptos that survive. NFT artwork is straight up a greater fool exercise.
 

bhawk24bob

HR Legend
Jul 8, 2001
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Yeah, hilarious everyone losing their ass in this quasi ponzi scheme.

You don't get that a snippet of 1's and 0's that can't be used for anything of value except on the black market is worth $40,000? Sounds like you need to go pick up a 12 pack of mountain dew, get comfortable in your mom's basement, and get with the program
 
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seminole97

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Jun 14, 2005
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peter hasnt necessarily had the greatest track record himself.
"I just lost all the bitcoin I have ever owned," Schiff, who's the chief executive of Euro Pacific Capital, said via Twitter, where he regularly derides bitcoin and cryptocurrencies. "My wallet got corrupted somehow and my password is no longer valid."
Bitcoin and cryptocurrency developers and experts were quick to dismiss Schiff's claim, arguing it's not possible for a wallet to become "corrupted."

"It's a completely ridiculous claim," said Mati Greenspan, the founder of bitcoin and crypto analysis outfit Quantum Economics. "Peter must have forgot his password and neglected to save the backup info."


Others added the wallet's so-called seed phrase, effectively a backup password generated by wallets when they're created, would be able to recover the account.

"There is no 'corrupting' a wallet, in the sense that if you have the seed phrase, you can always just import it into a new wallet," said blockchain pioneer and managing director of Yeoman's Capital David Johnston.

"A database can get corrupted. But bitcoin and other blockchains are based on private keys, those are the recovery seeds that allow you to import or generate a set of addresses in a wallet. The wallet itself is just a visual representation of the tokens you have imported to it from the private keys."

Schiff stood by his claim, adding if he had "actually forgotten the password to my bitcoin wallet it would be OK as I would eventually remember it, or figure it out by trial and error. But since I know my password and it doesn't work, there’s no way to guess a new random password that may or may not unlock my wallet."

[Updated: 9.50pm January 22 2020] Schiff has now figured out why he was unable to access his bitcoin wallet, admitting he confused his PIN for his password.

"My bitcoin mystery is solved," Schiff said via Twitter, adding he is still unable to access his wallet. "I mistook my PIN for my password. When Blockchain updated their app I got logged out. I tried logging back in using my PIN, which was the only 'password' I had ever known or used. I also never had a copy of my seed phrase. Honest but costly mistake!"
 

seminole97

HR Legend
Jun 14, 2005
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You don't get that a snippet of 1's and 0's that can't be used for anything of value except on the black market is worth $40,000? Sounds like you need to go pick up a 12 pack of mountain dew, get comfortable in your mom's basement, and get with the program
You don’t understand the value of a distributed ledger that is cryptographically secured as a superior medium of exchange to an infinitely inflating supply of dollars?

For nine years I’ve been searching for a decent argument against hard money, and the closest I can get to it are people who can’t fathom it.
 

wcbtee

HR MVP
Gold Member
Apr 21, 2002
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You don't get that a snippet of 1's and 0's that can't be used for anything of value except on the black market is worth $40,000? Sounds like you need to go pick up a 12 pack of mountain dew, get comfortable in your mom's basement, and get with the program
 

wcbtee

HR MVP
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Apr 21, 2002
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I will put my money in Berkshire and Apple rather than something with no intrinsic value, I work too hard to make my coin. If I want to gamble I will go to the casino. Call me crazy, but $60k invested in Nov is worth $30k today is not my idea of a sound investment.

To each their own.
 
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mnole03

HR Legend
Mar 20, 2005
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You don’t understand the value of a distributed ledger that is cryptographically secured as a superior medium of exchange to an infinitely inflating supply of dollars?
The real value right now is that you can have p2p transactions anywhere in the world for any amount. Western Union charging migrant workers 10% to transfer money will soon be a thing of the past.
 

wcbtee

HR MVP
Gold Member
Apr 21, 2002
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The real value right now is that you can have p2p transactions anywhere in the world for any amount. Western Union charging migrant workers 10% to transfer money will soon be a thing of the past.
I agree with your comment, but I don't want the cure to worse than the disease (i.e. NIL).

I am not against Crypto in theory, but i am not investing my money in something that is so volatile and has no intrinsic value.
 

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