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Most of Crypto Is a Giant Ponzi Scheme Waiting to Explode

by | Nov 25, 2022 | Crypto, Money

I want to have his babies.

His name is Satoshi Nakamoto and he invented Bitcoin. I love the man or woman (no one knows who it is). For years I’ve paraded around loving crypto and singing its praises. The gospels of crypto light a fire in my heart. They make me smile.

But things have changed.

The last few weeks have been an absolute sh*t show.

Understand this or go broke

Despite my self-confessed love for crypto, make no mistake — 99% of it is a scam or a ponzi scheme.

This is nothing new. I’ve always thought that, although these last few weeks have made this truth 10x more real.

Crypto represents new forms of currency. Crypto is a new type of asset. Crypto is the digitization of tech stocks.

All of those things are bloody brilliant, mate. The problem is it’s effortless for bad actors to wrap false narratives around crypto and deliberately mislead people. And the fact there’s still no regulation makes it even easier.

Gary Gensler and the SEC in America should be sacked.

What they allowed to unfold over the last few weeks is nothing short of cataclysmic for large sectors of the global economy.

All of you are probably aware by now of the FTX downfall. That’s only the start. Many more large firms and traditional banks were likely exposed.

The last few weeks have created a 2008-style moment for crypto.

Innovation looks like a scam

The innovation of crypto (that most people miss) is the problem it solves.

In the traditional world we trust humans. We also trust brands and corporations that do elaborate marketing to reinforce their message.

But in the real world you make decisions — many of them financial — and have no way to validate that trust.

Crypto enables people to trust … AND verify.

This is the missing piece of the global economy. It’s why we all secretly need access to crypto but haven’t come to realize it yet. The challenge is solving this big problem requires a different way of working.

It’s not slightly different. It’s transformational. It’s innovative.

And innovation looks like a scam. It sounds too good to be true. It sounds like it ain’t gonna happen. So it’s easy for critics to dismiss innovation and make it look like all of crypto/web3 is a scam.

But it isn’t.

Just look at the early 2000s dot com bubble. Most tech companies around this time went bankrupt during the collapse. Once darlings of the tech world, like Pets dot com, went bankrupt and nobody could believe it.

Not every tech company went down though.

Genuine innovative companies like Google and Amazon survived and later thrived.

Optimism looks like a sales pitch

The message of crypto is built on optimism.

You have to believe some pretty wild ideas. You have to assume the world will work differently in 5 years. You have to believe that everyone with a smartphone who can access the internet will have similar opportunities.

You have to believe that the power of institutions will shift, and the borders of physical countries will be less important than the borders of the different digital economies.

I mean you basically have to be a Whacko Jacko to believe in crypto.

Anything this optimistic sounds too much like a sales pitch. Like someone’s trying to sell you an electric mower when you’re happy with the old gas-powered one that generates fumes that make you high as a kite.

But optimism is what keeps humanity alive, not pessimism.

Money corrupts the mind

The danger with crypto is it’s still early.

Unlike the original version of the internet — that only venture capitalists and rich dudes in t-shirts could afford to invest in — anyone can invest in crypto (even people in countries where citizens have few rights).

So there’s lots of money to be made, and boy did a few people get rich in 2021 from crypto. It’s no secret I made a small fortune from it, even though people called me crazy back in 2013 when I first invested (and they still do).

As the path to crypto wealth was so easy, we all became somewhat delusional. We invested more than we should have. We took bigger risks. We didn’t do as much due diligence on founders like Sam Bankman-Fried.

Then markets crashed as the recession exposed the bad cryptos. All the “have fun staying poor” nonsense on the little birdy app calmed down.

This reality isn’t a crypto-only story. It’s the story of humankind. It’s human desire, status, and greed all rolled into one.

Crypto didn’t cause it. Humans did.

The fact the bubble of speculation has now burst is great. It shows us the real crypto projects versus the scammy ones.

With my own crypto investing, what a lot of people don’t know is, I only ever invested most of my money into Bitcoin and Ethereum. With smaller unproven projects I just invested tiny amounts I was comfortable losing.

And my track record of small bets is terrible.

I invested in Terra Luna, FTX, and Axie Infinity (amongst others) — all are now proven to be scams. Oopsie.

These failures don’t make crypto a scam. They show the human side of crypto and why we must get a financial education, study history, diversify, and take risks we’re comfortable with.

What this all means for you

Crypto is continuing to gain momentum.

I read a tweet thread recently that asked people who’ve been in crypto a long time the difference between this collapse and the previous ones in 2020, 2018, and 2013.

The most common response was “this time no one thinks crypto will disappear unlike previous crashes.”

That’s how I feel. The adoption of crypto by big names such as Facebook and Starbucks is far too common now. There’s no stopping it because crypto will eventually solve the problem of trust, and later allow us internet users to own and control our data again.

The big lessons for you of the last few weeks are simple:

  • Never trust a centralized crypto exchange again
  • Store your crypto offline
  • If you want to invest in crypto then you’re probably best sticking with Bitcoin and Ethereum and ignoring everything else

See you in the next bull market sometime in 2023/2024.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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