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0 pointsbbor1y ago0 comments

I mean... at a certain point, with memecoins, it's just about the scale of said pull, not the presence.

  There have been concerns of a pump and dump scheme and analysts have viewed it as a "disaster." A forensic analysis commissioned by the The New York Times concluded that 813,294 wallets lost $2 billion by trading the coin while the president's company and partners profited about $100 million from trading fees. According to Fortune, "Less than three weeks after its release, President Donald Trump’s memecoin has produced more losers than winners. For every dollar in trading fees the Trump crypto creators raked in, investors lost $20."

- https://en.wikipedia.org/wiki/%24Trump

I hope we can all agree, crypto-fans or no, that moon coins are at best a very risky, unregulated gambling prospect!

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adriand1y ago

As was noted elsewhere (I forget the source), it's zero sum: anyone who makes money is making it off someone who is losing money. In fact, it's less than zero sum because of platform fees.

tombert1y ago

Yeah, this is the thing that made me realize that cryptocurrency is pretty much always a bad investment.

Stocks aren't zero sum, at least in their idealized form; if I buy a share of some company, they can use that investment to create products or provide value in some form, and if the product is good then that gets reflected in the stock price increasing. It creates value, and the stock price follows.

With cryptocurrency (with maybe the exception of the more computation based stuff like Ethereum?), it doesn't really do anything, it's not creating value. It's just transferring between wallets, and the value increase is pretty much entirely speculative.

Obviously not all stocks are "ideal" like I mentioned above; there have been plenty of cases where stocks are ponzi-adjacent, and it's certainly not uncommon for stocks to be overvalued during bubbles and the like, but my point is that stocks aren't inherently zero-sum like cryptocurrency is.

JumpCrisscross1y ago

The term you're looking for is seigniorage [1]. Crypto privatises seigniorage to the financial promoters.

[1] https://en.wikipedia.org/wiki/Seigniorage

marcosdumay1y ago

Being used as money creates value.

So, to see if cryptocurrency is a pyramid or not, just look at how much is transacted compared to its total value...

Or don't, because you already know the result. But it's not inconceivable for a cryptocurrency to create value. It's just that nobody did one that does it yet, and the culture around them makes it less and less likely as time passes.

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fulladder1y ago

The purpose of buying a coin like $TRUMP is not to make money. It is to help Trump. You expect to lose money because the entire goal is to transfer money to Trump.

You and the New York Times seem to have misunderstood this important point.

bborOP1y ago

Interesting thesis, hadn’t heard that! There’s lots of people on Twitter who admitted to losing tons of money unintentionally, but of course it’s hard to prove what the silent majority was thinking. I am still a little dubious tho, sorry:

1. Why didn’t any of the marketing materials say that?

2. Why launch $MELANIA?

3. Why didn’t people just trade around a couple bucks over and over to rack up fees, rather than investing as usual?

4. This is edging on partisan politics I guess, but: why donate to the billionaire president…? He doesn’t need a legal fund, he now has free housing, and he’s selling more direct merchandise (watches, NFTs, bibles, etc.) than ever. Just seems like a weird time to donate.

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