I've been reading a lot of the Coinfessions account on Twitter. It's where people post crypto horror stories anonymously.
It's weird to think that they "generated" 1.8bn. If I made 1.8bn selling sandwiches, you could probably find evidence of it somewhere, like in product packaging in dumps. But here the only thing left behind is a bunch of guys going "Yeah I left my position open and drained my life savings by accident."
Like, every bit of that money represents money that someone else lost, and basically nothing else. I can't wrap my head around it.
In the movie “Quicksilver,” Kevin Bacon plays some kind of (commodities) trader who lost an enormous amount of money betting the wrong way and retires from trading to become a bike courier.
He has a friend over at his loft, and while looking at pictures from his finance days, she asks, “What happened to all the money?”
His reply is a classic:
“It’s still there, it’s just in other people’s pockets.”
——
That’s all I see in crypto speculation. It’s a game that involves shuffling money between players, without actually creating new wealth.
(Also, the casino is betting against you and sometimes isn’t satisfied with their rake, so they “rug pull” and leave everyone holding worthless chips. But that is another issue.)
This is very different from, say, selling software that runs a business. Your software is not just transferring money from your customer to you, it’s literally creating new wealth by making your customer more productive.
First off, I'd like to commend you for using landfill volume as a proxy for productivity. It's refreshingly honest and I wish economists would take note.
That said, there are last-gen GPUs and ASICs going to landfills. Some people are actually getting paid to make the inputs to the otherwise-ephemeral pseudocurrency. Not to mention all of the CO2 released into the atmosphere... you can't see it but that $1.8B put it there.
It's actually worse than that because of cost of mining. It's a negative-sum game. People who lost money paid those who made money plus they paid for a bunch of useless computations.
Strictly speaking, this is not true. Crypto is used by many countries with tight/problematic banking regimes to send/exchange money. Ironically, both by Ukrainians and russians, for example.
Another thing is buying drugs on the darknet. Whatever your opinion of that is, the fact is crypto has some usages, though not a lot rn.
I get tired of hearing day after day about billionaires making not just billions, but 10's and 100's of billions without doing much of anything except having impeccable timing... and a lot of money to invest.
You ever heard of the lottery? Guess what? Every bit of it is money someone lost and half of it funds your government. Wait till you hear about options trading and people committing suicide over bad trades.
How legit is this site? There is this blub in their About which is not very reassuring (I never heard of them):
> World News Era is the world leader in online news and information and seeks to inform, engage and empower the common men and all age groups. World News Era has millions of daily readers.
> Founders Fund sold out of the vast majority of its entire cryptocurrency portfolio by the end of March 2022
In Feb 2022, when I saw crypto ads during the Super Bowl, it seemed like a warning sign that something was about to go bad and the existing players were looking for suckers.
This episode from beginning to end is extremely interesting to me. Admittedly one of my areas of interest for the past several years has been studying bubbles from various eras but I think there is a lot to take from this story.
First, bubbles typically uncover something revolutionary but because of the hype and hoopla, leverage, and endless promotion, the markets overshoot what is possible currently to a ridiculous extent and most lose huge sums of money. In the aftermath where once the sky was the limit everyone swears the idea off and leaves it for dead.
An example: the Florida land boom of the 1920's. This is one of the wildest stories that many people who live in Florida don't even know about. They don't realize that nearly all of Florida was developed within the past 100 years and that major cities like Miami, Boca Raton, West Palm Beach, and on up the coast were created during this boom basically out of thin air by speculators. Throughout there were shameless promotions including one orchestrated by Charles Ponzi after he was released from prison as well as the creation of South Beach, the founder of whom ended up losing everything after spending huge amounts on land plots and promotional advertising. Anyone studying that era will see amazing similarities to the crypto bubble.
But the interesting part of that story is that those who were engaged in land speculation in Florida were absolutely correct in seeing the potential for the area as were the rest of the promoters and speculators of which there were many. But the population and development of the time just wasn't enough to keep up with the spend at the time. Essentially they were early.
With crypto, it was pretty much ignored until it wasn't. Then it hit a critical mass and the promoters seeing an opportunity to grift, came out of the woodwork. Once it hit a critical mass in price, people started to believe the hype and retrofitted use cases to it. Then after it crashed, most said "see I knew it was a stupid idea." Jamie Dimon was saying this as recently as this morning on CNBC.
This is the second part of the story that's interesting. Many people argue "crypto has no tangible value, it's just fake money." Well, that may be true but those same people take as self evident that things like gold, Monet and Van Gogh paintings, and tons of other things that arguably have no tangible value are worth vast sums of money. It's all subjective.
The bottom line is that things are worth what groups of people believe they are worth at a given time. This is a very difficult concept for most to wrap their minds around because it seems counterintuitive. Amazon stock is clearly worth $2 trillion because it's a massive company built by a forward-thinking genius. But when it was worth a few billion most thought it was too expensive. At each point in time the price wasn't right or wrong, it just reflected what people agreed it was worth.
With cryptos they aren't inherently valuable or worthless, they are worth something if there is at least one person who is willing to pay for it, regardless of how stupid you think it is.
So I would not be that surprised to one day see cryptos reemerge with new and better and clearer use cases which in hindsight will seem obvious but still very few will have capitalized on them. I'm not inherently bullish on crypto either. I've never owned any. But I also have been around enough to know that the crowd is smarter than I am and just because it seems stupid that something is happening in the market does not make it wrong. The fact that even now the price is over $20k is somewhat telling that the popular narrative is in complete disagreement with the fundamentals.
As they say on Wall Street, "Nobody rings a bell at the top or the bottom of a market".
Timing their exit to lock in $1.8bn of paper gains does look great ... with the benefit of hindsight. If the valuations had gone in the other direction, presumably there would be plenty of people saying what a stupid move it was to sell.
I would not put much weight on this article. The fund is entirely private, it does not need to disclose its holdings in public government submitted documents. This article does not cite any sources.
It is always a good idea to use a heavy doze of skepticism when confronted with statements about someone's brilliance at market timing. Especially when those statements are not backed by any evidence. Peter Thiel previously had to disclose more of his trading and, other than his decision to put half a million in a tiny startup called facebook made a long time ago, he has not shown any brilliant market timing.
Oh and by the way, Peter Thiel is an investor in Ycombinator who runs Hacker News so it is pretty much a given that any comment criticizing his brilliance will be downvoted immediately.
[+] [-] hiq|3 years ago|reply
[+] [-] kyleyeats|3 years ago|reply
It's weird to think that they "generated" 1.8bn. If I made 1.8bn selling sandwiches, you could probably find evidence of it somewhere, like in product packaging in dumps. But here the only thing left behind is a bunch of guys going "Yeah I left my position open and drained my life savings by accident."
Like, every bit of that money represents money that someone else lost, and basically nothing else. I can't wrap my head around it.
[+] [-] a4isms|3 years ago|reply
He has a friend over at his loft, and while looking at pictures from his finance days, she asks, “What happened to all the money?”
His reply is a classic:
“It’s still there, it’s just in other people’s pockets.”
——
That’s all I see in crypto speculation. It’s a game that involves shuffling money between players, without actually creating new wealth.
(Also, the casino is betting against you and sometimes isn’t satisfied with their rake, so they “rug pull” and leave everyone holding worthless chips. But that is another issue.)
This is very different from, say, selling software that runs a business. Your software is not just transferring money from your customer to you, it’s literally creating new wealth by making your customer more productive.
[+] [-] klyrs|3 years ago|reply
That said, there are last-gen GPUs and ASICs going to landfills. Some people are actually getting paid to make the inputs to the otherwise-ephemeral pseudocurrency. Not to mention all of the CO2 released into the atmosphere... you can't see it but that $1.8B put it there.
[+] [-] loandbehold|3 years ago|reply
[+] [-] theragra|3 years ago|reply
[+] [-] FatActor|3 years ago|reply
[+] [-] kumarvvr|3 years ago|reply
Crypto isn't about mining anymore.
[+] [-] badrabbit|3 years ago|reply
[+] [-] 323|3 years ago|reply
> World News Era is the world leader in online news and information and seeks to inform, engage and empower the common men and all age groups. World News Era has millions of daily readers.
https://worldnewsera.com/about-us/
[+] [-] wmf|3 years ago|reply
[+] [-] RcouF1uZ4gsC|3 years ago|reply
In Feb 2022, when I saw crypto ads during the Super Bowl, it seemed like a warning sign that something was about to go bad and the existing players were looking for suckers.
[+] [-] gpderetta|3 years ago|reply
[+] [-] endymi0n|3 years ago|reply
[+] [-] mi_lk|3 years ago|reply
[+] [-] nbardy|3 years ago|reply
Here's the google cache:
https://webcache.googleusercontent.com/search?q=cache:8E9sp-...
[+] [-] dkrich|3 years ago|reply
First, bubbles typically uncover something revolutionary but because of the hype and hoopla, leverage, and endless promotion, the markets overshoot what is possible currently to a ridiculous extent and most lose huge sums of money. In the aftermath where once the sky was the limit everyone swears the idea off and leaves it for dead.
An example: the Florida land boom of the 1920's. This is one of the wildest stories that many people who live in Florida don't even know about. They don't realize that nearly all of Florida was developed within the past 100 years and that major cities like Miami, Boca Raton, West Palm Beach, and on up the coast were created during this boom basically out of thin air by speculators. Throughout there were shameless promotions including one orchestrated by Charles Ponzi after he was released from prison as well as the creation of South Beach, the founder of whom ended up losing everything after spending huge amounts on land plots and promotional advertising. Anyone studying that era will see amazing similarities to the crypto bubble.
But the interesting part of that story is that those who were engaged in land speculation in Florida were absolutely correct in seeing the potential for the area as were the rest of the promoters and speculators of which there were many. But the population and development of the time just wasn't enough to keep up with the spend at the time. Essentially they were early.
With crypto, it was pretty much ignored until it wasn't. Then it hit a critical mass and the promoters seeing an opportunity to grift, came out of the woodwork. Once it hit a critical mass in price, people started to believe the hype and retrofitted use cases to it. Then after it crashed, most said "see I knew it was a stupid idea." Jamie Dimon was saying this as recently as this morning on CNBC.
This is the second part of the story that's interesting. Many people argue "crypto has no tangible value, it's just fake money." Well, that may be true but those same people take as self evident that things like gold, Monet and Van Gogh paintings, and tons of other things that arguably have no tangible value are worth vast sums of money. It's all subjective.
The bottom line is that things are worth what groups of people believe they are worth at a given time. This is a very difficult concept for most to wrap their minds around because it seems counterintuitive. Amazon stock is clearly worth $2 trillion because it's a massive company built by a forward-thinking genius. But when it was worth a few billion most thought it was too expensive. At each point in time the price wasn't right or wrong, it just reflected what people agreed it was worth.
With cryptos they aren't inherently valuable or worthless, they are worth something if there is at least one person who is willing to pay for it, regardless of how stupid you think it is.
So I would not be that surprised to one day see cryptos reemerge with new and better and clearer use cases which in hindsight will seem obvious but still very few will have capitalized on them. I'm not inherently bullish on crypto either. I've never owned any. But I also have been around enough to know that the crowd is smarter than I am and just because it seems stupid that something is happening in the market does not make it wrong. The fact that even now the price is over $20k is somewhat telling that the popular narrative is in complete disagreement with the fundamentals.
[+] [-] executive|3 years ago|reply
any books you can suggest
[+] [-] HorizonXP|3 years ago|reply
[+] [-] logifail|3 years ago|reply
Timing their exit to lock in $1.8bn of paper gains does look great ... with the benefit of hindsight. If the valuations had gone in the other direction, presumably there would be plenty of people saying what a stupid move it was to sell.
[+] [-] jandrese|3 years ago|reply
[+] [-] neilv|3 years ago|reply
[+] [-] moloch-hai|3 years ago|reply
Actually saying in print that Thiel was doing that might be risky.
[+] [-] hristov|3 years ago|reply
It is always a good idea to use a heavy doze of skepticism when confronted with statements about someone's brilliance at market timing. Especially when those statements are not backed by any evidence. Peter Thiel previously had to disclose more of his trading and, other than his decision to put half a million in a tiny startup called facebook made a long time ago, he has not shown any brilliant market timing.
[+] [-] cft|3 years ago|reply
[+] [-] rwmj|3 years ago|reply
[+] [-] hristov|3 years ago|reply