16 Comments
Dec 7, 2022Liked by Jeffrey Carter

Simply put crypto is all fraud

No underlying asset

No coupon

It only goes up because of hype and short supply

It also is a huge laundering machine for illegal activities

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Good summary of the 2 concepts. I was flabbergasted earlier this week when a knowledgeable financial commentator on local Chicago radio said he still didn’t understand blockchain. It reminds me of option theory....before you learn about it, it seems like rocket science but the basics turn out to be pretty simple.

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Simplistically speaking, how is "crypto" any different than B-2-B "currency" or even state-issued (not controlled by Fed gov't) currency? Still trying to figure out how electronic currency wins over old-school real currency before I dive in and adopt. Again, still learning and asking questions before I go all in . . .

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While agreeing with you more than you do with yourself, I point out the following:

1. Blockchain is software and as software it is susceptible to another piece of software overtaking it.

Case in point - when venture capital funded third party exchanges began to facilitate individual financial transactions in competition with banks - transfer of funds, payment of bills - through apps, what did the Big Banks do?

They bloody well invented Zelle which gave us the "trust" of the major bank and the ease of direct transfer. They did not go out of the wire transfer business; they offered both methods of payment.

The banks are not stupid. Every time some real advantage is created, they will either invent their own system to neuter the advantage or they will buy and rebrand the competitor.

2. When the contract is in default who enforces the terms? Who is the cop?

Remember what happened when the smart derivatives guys at Goldman were securitizing inferior mortgages into three tranches and carving out the top third - AA rated -- and leaving the bottom third to be absurdly low quality junk?

BTW, Goldman was forming the securities on Floor 8, selling them on Floor 11, and shorting them on Floor 19. Enormous conflict of interest that was never punished.

When the guy in Dothan, Ala defaulted on his second mortgage roof or house addition paper that was in one of these securitized pools nobody knew how to collect on the defaulted paper.

Nobody had ALL the authority -- it was broken into three pieces -- and none of those pretty boys had ever collected a second lien in their lives. They didn't teach that at Wharton, apparently.

Laws and regulations do not enforce themselves. Blockchain will work fine amongst honest outfits on sunny days, but there will be rain and the basement will flood and somebody is going to have to come pump it out. Who?

3. Securities regulation is not just a set of laws and rules as to how business gets done; it is also a licensing scheme as to who gets to do business and with what required capital base and insurance.

A license holder must undergo a background investigation and pass a test.

To get more advanced licenses, there is an experience requirement. This is tantamount to a craft guild in which the licensee moves upward as they master the profession.

Whatever regulator is the final overseer of crypto and blockchain, the people aspect has to be dealt with and I believe that means licensing.

I believe this step alone would have shown Sam Bankman-Fraud to the door. No experience and poor character.

4. Sovereign governments are going to get into the "digital currency" business with or without blockchain. This is essentially no different than "book entry" securities or debit cards.

Sovereign nations will eventually love digital currency as it provides incredible control. Governments adore control.

JLM

www.themusingsofthebigredcar.com

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Always enjoy reading your posts! Is there a current digital ID that follows you everywhere in place today or only in certain environments? And if so, how is it issued? Or is this only created when I open a Coinbase account and buy crypto for example (meaning I could create multiple IDs)?

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Again if we can audit the block chain ok if not FRAUD

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Also if blockchain is so good they should be able to solve Ftx immediately. Waiting waiting crickets

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