Comment Crypto-washing Investment Fraud (Score 2, Insightful) 30
This is a transparent attempt to legitimize an industry completely lacking in the ability to produce positive economic utility.
It's braindead simple. All cryptocurrencies, inclusive of Bitcoin, demand an investment of money, whether directly or by using a resource (electricity etc.) as a proxy. In exchange for that investment, the buyer gets a speculative digital token which allows them to claim returns from funds contributed by later investors.
That's it. That's all. There it is. Congratulations, you now understand the core functionality of cryptocurrencies, and can add 'Blockchain Expert' to your Linkdin profile.
Investment of money + returns from funds contributed by new investors. This is crypto's heart, all public permissionless blockchains work like this. Look at the SEC definition of a ponzi - https://www.sec.gov/spotlight/....
It should be noted that Bitcoin, and crypto in general, have unique properties, so it can be argued that they don't exactly fit the mould for Ponzis or pyramid schemes. Well of course! They are, however, firmly planted within the family of investment frauds. Investment frauds distribute funds from later investors to earlier ones, we then categorize them based on their specific mechanisms. A Ponzi here, an pyramid scheme there, and now we have an influx of Nakamoto Schemes, or distributed Ponzis, or whatever word you want to use for investment fraud as a digital network.
In fact, here's a handy test for slashdotters that can help you figure out if something's an investment fraud:
The Madoff Test
1. An investment of money
2. In a common enterprise
3. With the expectation of profit
4. To be derived from the funds contributed by new investors
Does it meet all four criteria? It's investment fraud. Say it with me, 'CRYPTOCURRENCIES ARE NOT ASSETS'.
To the OECD, SEC, other governmental institutions, and NGOs: Stop legitimizing criminal activity.
It's braindead simple. All cryptocurrencies, inclusive of Bitcoin, demand an investment of money, whether directly or by using a resource (electricity etc.) as a proxy. In exchange for that investment, the buyer gets a speculative digital token which allows them to claim returns from funds contributed by later investors.
That's it. That's all. There it is. Congratulations, you now understand the core functionality of cryptocurrencies, and can add 'Blockchain Expert' to your Linkdin profile.
Investment of money + returns from funds contributed by new investors. This is crypto's heart, all public permissionless blockchains work like this. Look at the SEC definition of a ponzi - https://www.sec.gov/spotlight/....
It should be noted that Bitcoin, and crypto in general, have unique properties, so it can be argued that they don't exactly fit the mould for Ponzis or pyramid schemes. Well of course! They are, however, firmly planted within the family of investment frauds. Investment frauds distribute funds from later investors to earlier ones, we then categorize them based on their specific mechanisms. A Ponzi here, an pyramid scheme there, and now we have an influx of Nakamoto Schemes, or distributed Ponzis, or whatever word you want to use for investment fraud as a digital network.
In fact, here's a handy test for slashdotters that can help you figure out if something's an investment fraud:
The Madoff Test
1. An investment of money
2. In a common enterprise
3. With the expectation of profit
4. To be derived from the funds contributed by new investors
Does it meet all four criteria? It's investment fraud. Say it with me, 'CRYPTOCURRENCIES ARE NOT ASSETS'.
To the OECD, SEC, other governmental institutions, and NGOs: Stop legitimizing criminal activity.
