by Nouriel Roubini, David Gerard, et al

Contents

• Crypto Facts

  • Pump and Dump, Wash Trades, Spoofing - Illegal & Criminal Crypto Price Manipulations

  • Crypto Fudge - Shut Up! Crypto Zealot Cultists Accept No Arguments or Critiques

  • Bitcoin - Rich Getting Richer

  • Ethereum - The Decentralized Future of Apps?

  • Centralized Mining - All Your Free Lottery Money are Belong to Us

  • Initial Coin Offerings (ICOs) - The Mother of All Scams

  • Tokens, Tokens, Tokens - Run Your Own Cartel

  • CryptoKitties - A Decentralized App Success Story?

  • Payments, Payments, Payments

  • Crypto-Utopia - The Future of Money

  • Crypto-Utopia - The End Of (Credit) Bubbles

  • Drug Trafficking, Embezzlement, Money Laundering - Business As Usual

  • What's a Database?

  • Lightning Network - The Future of Bitcoin Payments

Crypto Facts

Nouriel Roubini (@Nouriel) - Professor at New York University (NYU)’s Stern School of Business, Chairman of Roubini Macro Associates and Co-Founder of Rosa & Roubini, Author of Crisis Economics. He was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.

Pump and Dump, Wash Trades, Spoofing - Illegal & Criminal Crypto Price Manipulations

Crypto eco-system includes thousands of chat rooms where cryptocrazies scheme daily to manipulate crypto prices: pump and dump; wash trades; spoofing; etc. All practices that are officially ILLEGAL/CRIMINAL. Mother of all scams. So why is SEC (Securities and Exchange Commission) asleep at the wheel and does nothing? – 5 Feb 2018

Another whalepool recording scheming manipulation of crypto-currencies. A trader admitted personally to me: “it is not “illegal” to front run and pump and dump as these are not “securities” and thus not subject to securities laws”. What a sleazy chutzpah! – 5 May 2018

Crypto Fudge - Shut Up! Crypto Zealot Cultists Accept No Arguments or Critiques

Stop the FUDGE! Crypto-zealots engage in daily FUDGE: vaporware, manipulation, obfuscation, bullshit

FUDGE: present or deal with (something) in a vague, noncommittal, or inadequate way, especially so as to conceal the truth or mislead. Synonyms: evade, avoid, dodge, skirt, duck – 6 May 2018

Cryptozealots try to muzzle anyone critically dissecting the flaws of crypto-currencies by accusing him of spreading FUD (Fear, Uncertainty and Doubt) rather than rebut the critique. But cryptos engage instead in constant daily FUDGE. So anytime they call you FUD call them back FUDGE. – 6 May 2018

Scalability with decentralization and security is crypto-FUDGE! – 6 May 2018

Decentralization is crypto-FUDGE as exchanges, miners and developers are ALL becoming centralized oligopolies. Stop the crypto-FUDGE! – 6 May 2018

Facts Please writes:

Bitcoin has the trifecta of centralization:

1. Mining pools are an oligopoly.

2. About 1000 whales own 40% of available bitcoin.

3. Exchanges are centralized. Good luck to the bitcoin community in trying to decentralize all three. This is going to be painful!

Efficient, low cost, fair, clean crypto-trading is crypto-FUDGE. Rather manipulation, wash trading , spoofing, pump and dump schemes, suckering of the bagHODLers by the crypto-whales are the constant reality of daily crypto-trading. Stop the crypto-FUDGE! – 6 May 2018

Stop the crypto-coiners bullshit! Anytime they scream FUD when you unveil their non-sense, pipe dreams, manipulation, obfuscation do call them for what they are: total FUDGE, crypto-FUDGE! Stop the crypto-FUDGE! #STOPCRYPTOFUDGE – 6 May 2018

When they use the term FUD to shut you up as they have no real arguments against crypto-critiques, call their bluff and call them FUDGE, as they are only big baloney crypto-FUDGE. – 10 May 2018

Facts Please writes:

“Stop the FUD” used to mean:

“Stop posting negative stuff about Bitcoin, I’m trying to make money here!”

Now it means

“Stop trying to warn people about this pump & dump, I’m trying to make money here!”

Bitcoin - Rich Getting Richer

There are about 1 million holders of Bitcoin; 47 individuals hold about 30%, another 900 hold a further 20%, the next 10 000 about 25% and another million about 20%, with 5% being lost. So 0.1% represent about half the holdings of Bitcoin and 1% close to 80% – 11 May 2018

The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the United States’ wealth distribution look like that of a workers’ paradise Bitcoin. Gini Coefficient: 0.88

How Bitcoin is like North Korea – 11 May 2018

Ethereum - The Decentralized Future of Apps?

“All of the top decentralized apps are still very much about speculation of value. Decentralized exchanges, casino games, pyramid schemes… are all around speculation”. No useful decentralized app and the industry doesn’t even clean up criminal pyramid schemes. Shame on Ethereum! – 6 May 2018

50% of decentralized apps are decentralized exchanges (DEXs) that have no liquidity and transact useless tokens, 25% are silly games such as cryptokitties and 20% are ponzi pyramid schemes. So get the real facts on the junky “use cases” of Ethereum and stop living in your bubble. Can’t bullshit me as I know my facts. – 13 May 2018

Facts Please comments:

And exactly none of them are decentralized applications. [The contract blockchain service scripts are centralized, that is, owned and controlled by the single issuing / uploading company.]

Austrian Maximalist comments:

They have to start somewhere, building something that has never been build, and until bitcoin, didn’t seam possible. They can’t all be like gemini which just started trading zcash. Momentum is building, get on board or get out of the way.

Centralized Mining - All Your Free Lottery Money are Belong to Us

Proof of work leads to miners’ concentration whether it is ZCash or Bitcoin or Ethereum. The move of some cryptocurrencies to proof of stake will make that concentration risk even worse. One miner is already controlling 40% of Ethereum mining. And that oligopoly power will get worse with proof of stake. – 15 May 2018

Facts Please comments:

Ethereum is pretty centralized in development and administration too. I think proof of stake will work best as acknowledging out loud that a stable, centrally managed platform is the best thing for its market, even if that’s basically initial coin offering (ICO) scammers

Initial Coin Offerings (ICOs) - The Mother of All Scams

Call Initial Coin Offerings (ICOs) for their true name: Initial Coin Scams (ICSs). 81% of them are scams to begin with. Another 11% are dead or failed. So barely 8% trade on an exchange and most of those are non-compliant securities skirting all securities laws – 11 May 2018

ICOs are indeed the mother of all scams. 81% of them are scams to begin with. Another 11% are failed or gone dead. Even most of the 8% that make it to an exchange often cause large market losses to investors as they are weak, flimsy, vaporware ventures – 5 May 2018

Only 95% of ICO ideas are shit? I say 99%…. – 11 Apr 2018

Indeed almost of all tokens are “useless shitcoins” produced to scam clueless investors… – 13 May 2018

Austrian Maximalist comments:

That’s true. All shitcoins are worthless. But why can’t you see the value of bitcoin itself which represents the store of value similar to gold with the payment infrastructure built into it with no central authority. Never been broken, no single bitcoin falsified.

Tokens, Tokens, Tokens - Run Your Own Cartel

Read my Project Syndicate Op-Ed on why tokens are non-compliant scams and why only reason to issue tokens can be to form an illegal cartel to gouge consumers. Study your Economics 101 before spewing this silly nonsense on every business needing its own currency. – 13 May 2018

CryptoKitties - A Decentralized App Success Story?

Apart from being a dumb game CryptoKitties has low and falling transactions. Compared to any good video game it has transaction volume that is 0.001% than any game. So dumb and failing. And that is the best success story that cryptozealots can cite for a decentralized app. With success like this… – 13 May 2018

Facts Please comments:

And who’s only value to players was literally a tulip mania, just replacing rare and unique bulbs with rare and unique cats.

The cryptocurrency community is intent on speed running 500 years of economic disasters.

Payments, Payments, Payments

Two currency conversion and THREE costly transaction costs. Given volatility no one truly using crypto for transaction purposes would hold it; they would convert it back into fiat to avoid volatility and market risk. – 7 May 2018

Facts Please comments:

And the process of buying cryptocurrency must be expensive: it requires a cash step, a few day wait, or the exchange is extending credit because cryptocurrencies are irreversible.

That people don’t get that this makes cryptocurrencies not fit for purpose as currencies is :-(.

So called crypto-“currencies” aren’t a means of payment (way too costly with three transaction costs), aren’t a unit of account and aren’t a stable or safe or secure store of value. Thus, they are NOT currencies. They are the mother of all rip-offs! – 7 May 2018

Facts Please comments:

Unless you need to conduct illegal transactions, cryptocurrency transactions must include two currency conversion steps which grossly increase the cost. Going to cryptocurrency is particularly costly.

Cryptocurrencies are simply not fit for purpose as currencies.

Austrian Maximalist (I) comments:

I agree today but not tomorrow :).

Austrian Maximalist (II) comments:

It makes the assumption people want to convert to historic currencies!

Crypto-Utopia - The Future of Money

I accept the correction. So the Flintstones had a more developed monetary system with a real money than the stone age barter system recommended by the crypto-supporters of a world of tokenization. So the Flintstones are financially more advanced and sophisticated than the cryptos! – 14 May 2018

Austrian Maximalist comments:

The market is discovering which tokens are useful and which ones are not. Probably 99% tokens are useless, but is not yours or anyone’s particular role to decide on that. It is the markets, the users, who are going to decide that and no one has the right to interfere on that.

Crypto-Utopia - The End Of (Credit) Bubbles

Austrian Maximalist writes:

A true cryptocurrency is immune from bank runs and credit cycles. Only the fiat price is impacted.

There were huge asset and credit bubbles well before fiat currencies and central banks. And run against such bubbles. So same can occur in a hypothetical crypto world where there is no fiat currency. – 13 May 2018

Austrian Maximalist comments:

Cryptocurrencies reduce the intensity of credit-fueled bubbles because it becomes impossible to loan cryptocurrencies you don’t possess other than in IOU (I Owe You) form, which is how credit-fuelled bubbles are precipitated: by the bank creating deposits in your account to spend for an IOU (I Owe You).

Actually in a crypto world economic/financial disasters will be more virulent/frequent than today as, before fiat money and central banks, bubbles were bigger and more disastrous. Central banks were created to avoid runs via lender of last resort support. Crypto can’t do that. – 13 May 2018

Austrian Maximalist (I) comments:

When was the greatest depression the world confronted: before central banks and fiat currency, or after?

Austrian Maximalist (II) comments:

False. And embarrassing for you to say. It’s like you don’t know the basics of [Austrian school of] economic history.

Drug Trafficking, Embezzlement, Money Laundering - Business As Usual

Regulators will soon crack down on use of cryptocurrencies in illegal and criminal activities. AML (Anti Money Laundering)/KYC (Know Your Customer) and securities laws will be enforced. As US Treasury Secretary Mnuchin recently said: We can’t allow cryptocurrencies to become the next Swiss bank account. – 13 May 2018

Austrian Maximalist (I) comments:

They can’t stop someone from storing their own keys. Regulations can only control where crypto connects to fiat. If you have your own keys, you are your own “swiss bank”.

Austrian Maximalist (II) comments:

Tell us, how they would stop it? The same way they stopped Bittorrent before? And it would be even harder to stop Bitcoin.

David Gerard (@DavidGerard) - Author of “Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts” and a Unix System Admin by day. He has blogged about music at Rocknerd.co.uk since 2001 and is a volunteer spokesman for Wikipedia, and is on the board of the RationalMedia Foundation, host of skeptical wiki RationalWiki.org.

What’s a Database?

“Not surprisingly, the most enthusiastic bitcoin and blockchain proponents are the ones who understand neither databases nor economics.” – 11 May 2018

Lightning Network - The Future of Bitcoin Payments

The name of the routing problem the Lightning Network has to solve: the Canadian Traveller Problem, which is PSPACE-complete. – 13 May 2018

Facts Please comments:

The biggest problem is that the devs think it will be ok in the real world to fail payments that can’t find a route.

Or rather, they think that it will be ok in the early days and the problem will solve itself once there are enough people using the network. Like people will flock to use a network that randomly fails payments.