If you think one is a Ponzi scheme, they both are.
To prove your point, all you need to do is create a company and get it listed on a major stock exchange with zero assets and the sole stated purpose and objective being to print and sell stock. Be sure to explain to the exchange that this is no different than any other stock.
Let us know how it goes and report back with your listing symbol so we can all buy in, help you inflate the stock price and get rich quick.
This has been _legitimately_ done in regular markets before, albeit with debt-like, rather than equity-like instruments.
Remember sub-prime crisis and the "Collateralised Debt Obligation" -- basically: set up a shell "company" with no assets, issue 3 types of "stock" from it (tranches at the low, medium and high level), and then have this company buy underlying debt (say mortgages, or car repayment receivables), use the cashflows from those to pay the coupons (dividends) to the holders of the CDO in the various tranches, after taking a little something off the top. And voila - you have essentially the same idea.
We all know how that CDO thing ended, but, remember, it was _fully regulated_ and legit!
So lets not sleep walk into thinking that just because the SEC of the CFTC says it's okay, it is. They are flawed people, with profit motives, just like the rest of us.
CDO's were assets. They were collections of mortgages. When you bought CDOs, you were buying real slices of mortgages (at various levels of abstraction).
The fraud existed because there were quantifiable differences between the value of the underlying asset and the value of the securities being offered.
So I guess in that regard, the same sort of fraud is theoretically impossible for crypto because a) none of the assets have a quantifiable value anyway and b) it's okay to throw away investor's money if you properly disclose it as a risk?
Fraud happens. But on a scale of 1 to 10, crypto is an 11.
There is no more blatantly direct, obvious or audacious fraud than creating money from electrons and selling it. Even wooden nickels were made from something in order to kinda, sorta look like money.
Crypto is proof of just how stupid intelligent people can be.
Comments
If you think one is a Ponzi scheme, they both are.
To prove your point, all you need to do is create a company and get it listed on a major stock exchange with zero assets and the sole stated purpose and objective being to print and sell stock. Be sure to explain to the exchange that this is no different than any other stock.
Let us know how it goes and report back with your listing symbol so we can all buy in, help you inflate the stock price and get rich quick.
This has been _legitimately_ done in regular markets before, albeit with debt-like, rather than equity-like instruments.
Remember sub-prime crisis and the "Collateralised Debt Obligation" -- basically: set up a shell "company" with no assets, issue 3 types of "stock" from it (tranches at the low, medium and high level), and then have this company buy underlying debt (say mortgages, or car repayment receivables), use the cashflows from those to pay the coupons (dividends) to the holders of the CDO in the various tranches, after taking a little something off the top. And voila - you have essentially the same idea.
We all know how that CDO thing ended, but, remember, it was _fully regulated_ and legit!
So lets not sleep walk into thinking that just because the SEC of the CFTC says it's okay, it is. They are flawed people, with profit motives, just like the rest of us.
Hold up. This is explanation is completely wrong.
CDO's were assets. They were collections of mortgages. When you bought CDOs, you were buying real slices of mortgages (at various levels of abstraction).
The fraud existed because there were quantifiable differences between the value of the underlying asset and the value of the securities being offered.
So I guess in that regard, the same sort of fraud is theoretically impossible for crypto because a) none of the assets have a quantifiable value anyway and b) it's okay to throw away investor's money if you properly disclose it as a risk?
Fraud happens. But on a scale of 1 to 10, crypto is an 11.
There is no more blatantly direct, obvious or audacious fraud than creating money from electrons and selling it. Even wooden nickels were made from something in order to kinda, sorta look like money.
Crypto is proof of just how stupid intelligent people can be.
CDOs were not fraud. They were legal. They were just extremely stupid and unethical, like some (but not all) crypto.
Just because its legal doesn't mean it's not a fraud --- crypto and CDOs included.
As you point out, CDOs were actually based on real assets with way more plausibility than crypto which is based on --- electrons.