EA - Cryptocurrency is not all bad. We should stay away from it anyway. by titotal

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Cryptocurrency is not all bad. We should stay away from it anyway., published by titotal on December 11, 2022 on The Effective Altruism Forum.So I've wanted to write something like this for some time, but was discouraged by the very real chance of getting downvoted into obscurity by cryptocurrency fans. I hope that in the face of the FTX debacle, people will at least consider the good-faith arguments put forward here. The title is a reference to this recent astralcodex post, which I critique in this article.IntroductionIn the wake of the FTX debacle, there seems to be a small but sizeable minority that believes that there was absolutely no way to see this coming. A massive company, the number 2 crypto exchange in the world, just collapses into nothing due to incompetence and/or fraud? Surely this is just a black swan event?Just like Celcius, three arrows capital, Voyager, and Terra/Luna, all of which collapsed in the last year. Go back to previous downturns, and you'll see the downfall of exchanges like Quadriga and mt gox, the latter of which was by far the largest crypto exchange in existence at the time when it collapsed. And the collapses are just getting started, with the fall of FTX taking out Blockfi, and threatening to take out Genesis and Grayscale. Tether, the largest stablecoin and the third largest crypto-coin, has been caught out lying about it's reserves. If they are as fraudulent as many suspect, the repercussions for the rest of the crypto industry could be disastrous.For an event to be a black swan, it needs to be outside the realm of normalcy. But the collapse of FTX was a fairly predictable event. Even true believers will admit that the crypto industry as a whole has significant problems with speculative bubbles, ponzis, scams, frauds, hacks, and general incompetence. The potential for a collapse was warned against on this forum, months ago. (I agreed with the prognosis in the comments at the time, for what it's worth).Note that I'm talking about collapse, and not specifically fraud. It was indeed hard to predict the precise mechanism by which FTX could fail, but I don't think that let's anyone off the hook. If FTX had failed due to incompetence, hacking, or exposure to other fraudulent companies, their investors would have still been screwed over, and the financial and reputational damage to EA would still occur, just with slightly better optics.The fundamental problem with cryptocurrency at the present time is that:A) Almost everyone involved with crypto is using it to try and get rich.B) Almost nobody (in relative terms) is using crypto for anything else.As long as this continues to be the case, crypto as a whole is still in the middle of a massive speculative bubble, and participating in said bubble is inherently dangerous.A. Crypto is infested with speculative bubbles, fraud, and scams (and everyone knows it)The crypto market is "rife with frauds, scams and abuse"SEC chairmen Gary Gensler, August 2021We’re just seeing mountains and mountains of fraudRyan Korner, IRS criminal investigator, Jan 2022During this period, nearly four out of every ten dollars reported lost to a fraud originating on social media was lost in crypto, far more than any other payment method.Federal Trade commission, June 2022Other than a speculative asset with a glorious whitepaper and an impressive "ex workers" of big name companies all around the world, they all promise the Moon but underdeliver. I have yet to see something that has an actual use in realife that is using any of those tokens/coins technology.r/cryptocurrency post with 13k upvotesMatt: (27:13)I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good.J...