#LIQUIDITY CRUNCH: #GENESIS COLLAPSE SPELLS END OF #CRYPTO LENDING

CRYPTO LIQUIDITY CRUNCH

 Crypto lending teeters on brink of extinction after Genesis collapse

The bankruptcy of crypto’s marquee lender, Genesis Global Capital, may be one more blow than the industry can withstand, at least in its current form.

The list of bull-market stars laid low now includes nearly every major player to have captured the public’s attention by offering market-beating returns for the simple act of depositing tokens. Genesis joins BlockFi Inc., Celsius Network and Voyager Digital among firms whose collapse have left countless clients angry and unlikely to risk more on their daredevil exploits. 

WORLD TOP ECONOMIST CONFIRMS CRYPTO SCAMS

Acting as de facto banks, these firms took in assets which they then lent out freely across the market, often to hedge funds who used the borrowed funds to leverage their bets on iffy tokens. Genesis dished out $130.6 billion of loans in 2021 alone, part of a complex web of interconnected risky trades and toxic loans that helped turbocharge the market, only to spark a cascade of collapses when crypto prices started plummeting last year.

Everyday investors across the globe have also been left nursing billions of dollars in cumulative losses, and now regulators are forcing lenders to either meet the more stringent standards required in traditional financial markets or face massive repercussions. 

Either way, the heyday is over.

END OF TIMES FOR CRYPTO BANKING 

COINS/TOKENS NOT FAR BEHIND

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The #NFT #Ecosystem Is a Complete #Disaster

 

The #NFT #Ecosystem Is a Complete #Disaster

Top marketplaces facilitate epic amounts of theft and wash trading, scams are rampant, and the cringe is unbearable. Can it last?

By Edward Ongweso Jr

For the past year, as NFTs have breached spectacular and speculative heights, we’ve seen a growing amount of skepticism. The most recent wave was touched off by a 138-minute video essay by Canadian media critic Dan Olson that condemned NFTs and other blockchain-based technologies as fundamentally broken and unworkable. In just over a week, it’s garnered more than 3 million views on YouTube. Regardless of your perspective on the video, it’s hard to deny that there’s a lot of bullshit percolating around NFTs. Even hardcore Bitcoiners agree. And despite what the loudest NFT boosters insist, the beatings have continued and morale has not improved. 

Any way you cut it, the NFT ecosystem as it stands is a disaster. 

Take OpenSea, the most popular marketplace for NFTs. Last week, OpenSea suddenly limited the number of times users could mint NFTs for free on its platform because over 80 percent that were created with the tool “were plagiarized works, fake collections, and spam." It reversed that decision within 24 hours, however, after outcry from NFT project developers. In a recent Guardian piece diving into the platform’s struggles with fraud and theft, OpenSea tried to minimize the severity of the problem and claimed it took enforcement action against 3,500 NFT collections every week, or about 0.175 percent of its 2 million total collections. But when nearly all of the NFT collections created for free on the platform are spam or stolen works, one wonders if OpenSea is now caught in an art thievery quagmire of its own making. 

For artists on DeviantArt, which hosts over 500 million pieces of digital art, the problem has gotten so bad that the platform implemented a fraud alert system that scans the Ethereum blockchain for NFT copies of artwork. DeviantArt has issued 80,000 alerts since August 2021, doubling from October to November, then increasing by 300 percent from November to mid-December.

OpenSea’s buzziest competitor, LooksRare, is fraught with another serious problem: wash trading, a normally illegal type of market manipulation that inflates trade volume and value by buying and selling an asset to one’s self or among an organized group. 

LooksRare financially rewards users for their trading volume, which predictably led to people gaming the system. Just this week, it surpassed OpenSea in trade volume thanks to what crypto analytics firm CryptoSlam estimated to be $8.3 billion worth of wash trading―approximately 87 percent of its total trading volume since launching on Jan. 10, Decrypt reported. On Jan. 12, the LooksRare Twitter account retweeted a thread discussing and defending wash trading on the platform, commenting: “Discuss.”

These are not isolated incidents, however. Forms of self-dealing among an elite are also baked into the market and the history of how it got so big in the first place. Take Vignesh Sundaresan, a collector known as “MetaKovan” who purchased the $69 million Beeple NFT that touched off one of the earliest hype cycles around the digital assets. MetaKovan is the financier of Metapurse, a Singapore-based investment firm that earlier this year listed its mission as to "democratize access and ownership to artwork." Metapurse has bought 20 Beeple NFTs, four virtual museums, a soundtrack, and consolidated it all into an "NFT bundle" that offers fractionalized ownership through 10 million B20 tokens. Beeple, as it turns out, happens to be a business partner of MetaKovan and owns 2 percent of all B20 tokens, while MetaKovan owns another 59 percent.

Or consider some of the conclusions of a landmark October study published in Nature analyzing 6.1 million trades encompassing 4.7 million NFTs since 2017: the top ten percent of traders account for nearly 90 percent of all transactions, this group trades 97 percent of all NFTs at least once, and the greatest predictor of any NFT’s value isn’t its appearance but its previous price points. None of this sounds like a functional market so much as a mad grab for profit.

The froth of enthusiasm combined with the market’s weak infrastructure—most projects are run from Discord, a chat platform for video games—has also led to a spectacular amount of scams and hacks targeting investors. NFTs are regularly used to raise money for dubious projects that end in spectacular failures or in a sudden “rug pull” where anonymous founders make off with everyone’s money. The Evolved Apes NFT project raised millions to help develop a fighting game and cover project-related expenses, only for founding developer “Evil Ape” to disappear with $2.7 million. Big Daddy Ape Club’s creators stole $1.3 million worth of tokens on Solana. Blockverse, an unofficial Minecraft NFT project, sold out 10,000 NFTs in a few minutes before its creators disappeared with over $1.2 million worth of tokens.

All of this is just scratching the surface. Besides nefarious developers, NFT buyers have to worry about an unending stream of scammers who, for example, pose as crypto wallet support staff only to drain said wallet and the NFTs inside. Or, if you approve the wrong smart contract, say, on a rather legitimate-looking website set up by thieves—goodbye to your apes. You can get screwed even without a hacker coming for you, if you slip up even a little bit: recently, a bunch of people had their valuable NFTs swept up for dirt cheap because of a flaw in how OpenSea handles listing and re-listing NFTs, and how those listings are broadcast and then fulfilled elsewhere. 

The core problem isn’t the size of the theft or fraud―though these are worrying―because they don’t pose a risk to anyone outside of the crypto community, for now. What is concerning and could lead to the development of systemic issues, however, is that no scandal, exploit, bug, or scam is yet big enough to temper the manic insistence that NFTs represent the future of digital assets and their ownership. If anything, NFTs are being used to propose increasingly more nebulous, abstract, and unwieldy categories of objects and goods and services. 

And as all this develops, we are forced to suffer more obtrusive attempts to entice us: NFT advertisements during the World Series and billboards plastered across major cities; an NFT collection from a former First Lady; Jimmy Fallon and Paris Hilton boosting their Bored Ape NFTs and cryptocurrency payment company MoonPay in a strained advertisement on Fallon’s Tonight Show―which was teased on Twitter earlier that day by MoonPay. All of this and more just to increase the value of a digital asset primarily held by a small group of corporations, celebrities, and wealthy individuals that will enrich them even further.

That there are now multiple projects promising to give you ownership of a color, even promising royalties from every NFT that uses “your” color, shows just how far down the bottom the idea barrel we’re now scraping here. And although boosters will point out that NFT prices in crypto have remained fairly stable even as the price for the underlying asset (ETH) has crashed, that is likely because the underlying price has crashed. It’s a fire sale, low-key. 

This is all a major problem considering how many of the boosters and advocates for NFTs also believe they’ll play an integral role in the coming of “Web3” and the “metaverse”―two nebulously-defined technologies that don’t currently exist, but are so revolutionary in their supposed potential that the real value of NFTs lies in their future role, whatever that is, and the many issues plaguing the space now will somehow disappear.

"NFTs are the bridge to the metaverse, and facilitate identity, community and social experiences in the metaverse," opens one December blog post by Binance, the world's largest cryptocurrency exchange. In January, a blog post by OpenSea boasted that last year "we saw the world awaken to the idea that NFTs represent the basic building blocks for brand new peer-to-peer economies." NFTs, it goes on to argue, would yield "greater freedom and ownership over digital goods" as well as facilitate the creation of "powerful, interoperable applications." All of this falls in line with Coinbase's own blog scrying the meaning of Web3 and its "defining feature" of ownership: "Web3 gives users full ownership over their content, data, and assets via blockchains. It empowers users to read-write-own."

In a recent essay, tech critic Evgenvy Morozov called Web3 a “territory-free map” that thrived on performativity and self-referencing: "we’ve got this beautiful map on our hands—all that’s missing is the territory it is supposed to refer to." This, combined with how many discussions of Web3 assume its inevitability, conjures vague visions of non-existent blockchain technologies  that are just waiting to be midwifed into reality by VCs, VC-backed projects, and VC-run platforms, is an ominous augur of what’s to come.

This is not to say there aren’t NFT projects out there that are interesting, or at least more rooted in reality. Gaming companies seem intent on giving so-called “play-to-earn” (P2E) gaming (which offers players a way to make money by flipping NFTs) a shot, and the proliferation of P2E games like Axie Infinity that allow individuals to exploit people in the Global South to generate profits they’ll only see a fraction of is both a more familiar and realistic endeavor than most of what fills the NFT space. Unique tokens that signal ownership of a digital good and impose artificial scarcity—something that has until now been frustratingly abundant, for DRM-happy companies—are obviously attractive and also familiar to firms, though what is good for investors is not always good for the public.

It’s also true that the current NFT ecosystem might improve. OpenSea might limit its free minting tool and cut down on the epic amounts of theft. LooksRare’s incentives might change. Hell, a new product might come around and annihilate them both. People may get wise to the Discord scammers, like how we’re all wise to the scam calls constantly blowing up our phones. All of this might just become more normal. 

But should it? As it stands, NFTs are useful primarily for pursuing enclosure: the explicit goal here is to turn every inch of our physical world―and any digital world―into a place where nearly every experience and thing is quantified, commodified, and privatized. As a secondary purpose, NFTs currently facilitate a great deal of fraud, spam, theft, plagiarism, and also allow some retail investors to join in on the gambling typically reserved for the sludge that sits atop the pool of investors. As a tertiary purpose, they confer some benefits to some creators who are lucky, wealthy, or cynical enough to take advantage of them.

Right now, their value is locked up in a dark vision of the future that believers insist will not only inevitably exist but will turn out much better than this one. Most of these grand visions will never come to pass. And yet, if you watched the ridiculous exchange between Paris Hilton and Jimmy Fallon as they showed off their JPEGs on TV and muttered “what the fuck is this” to yourself then you must realize by now that the allure of dizzying profits far exceeds any shame or scorn cast their way. At least, until the profits stop coming.

Why The #NFT #Market Will #Collapse

 By Patrick Reinmoeller and Karl Schmedders

LAUSANNE  —  In March 2021, the auction house Christie’s sold a JPEG file created by the artist Beeple for $69.3 million, a record for a digital artwork. The ownership of the “original” JPEG, entitled “Everydays: The First 5000 Days,” was secured as a non-fungible token, or NFT.

The sale made headlines, and NFTs have since become red-hot. Investors poured $27 billion into the market in 2021, and Meta, Facebook’s renamed parent company, now reportedly plans to allow users to create and sell NFTs. There’s just one problem: the NFT market will eventually collapse, for any of a host of reasons.

In essence, an NFT is a tradeable code attached to metadata, such as an image. A secure network of computers records the sale on a digital ledger (a blockchain), giving the buyer proof of both authenticity and ownership.

NFTs are typically paid for with the Ethereum cryptocurrency, and, perhaps more importantly, stored using the Ethereum blockchain. By combining the desire to own art with modern technology, NFTs are the perfect asset for newly wealthy members of the Silicon Valley set and their train of acolytes in finance, entertainment, and the broader retail-investor community.

But, like other markets driven by exuberance, impulse purchases, and hype, the fast-moving and speculative NFT market could burn many investors. The current frenzy invites comparisons with the Dutch tulip mania from 1634 until 1637, when some bulbs fetched extremely high prices before the exuberance dissipated and the bubble collapsed.

The NFT market will likely suffer a similar fate, but not, as some might think, because of environmental concerns. To be sure, NFTs consume considerable amounts of energy, because cryptocurrencies like Ethereum and Bitcoin are “mined” using networks of computers with a large carbon footprint, one that grows with every transaction. But when it comes to understanding what will bring down the NFT market, climate impact is a red herring. The real problem is that the current NFT boom is built on a foundation of sand.

Start with the problem of infinite supply. NFTs offer ownership of a digital asset, but not the right to prevent others from using its digital copies. Part of the reason why wealthy investors are prepared to pay tens of millions of dollars (or more) for traditional physical artworks by the likes of Rembrandt, van Gogh, or Monet is that the number of masterpieces is finite; the artists are long dead and cannot produce new artworks. NFT copies, on the other hand, could become a commodity.

Moreover, as with all things digital, there is no difference in appearance between an original JPEG file sold for $69.3 million, and a copy downloaded for free online. In theory, the supply of legally usable copies of NFTs is infinite, potentially overwhelming demand for them and causing prices to collapse.

Because the blockchain is unable to store the actual underlying digital asset, someone buying an NFT is buying a link to the digital artwork, not the artwork itself. Although buyers gain copyright to the link, the transaction costs related to monitoring the infinite online venues for displaying NFTs, identifying illegitimate use, and pursuing and prosecuting infringement make it nearly impossible to enforce the copyright or deter misuse. This strongly limits monetisation of the asset.

Another risk is that NFTs are being made and sold with infant technologies, blockchains and cryptocurrencies. There currently are multiple competing standards regarding how to generate, safeguard, distribute, and certify NFTs, including ERC-721, ERC-998, ERC-1155, flow and non-flow standards, and Tezos’s FA2. The resulting uncertainty as to how ownership certification will be guaranteed in perpetuity endangers the value of the assets and even their ownership.

In fact, the value of NFTs may evaporate if the next wave of more advanced technologies that supersedes crypto or blockchain is incompatible with secure NFT ownership. Firms that deal in NFTs today may not be around tomorrow, muddying ownership claims.

The price volatility of the cryptocurrencies underpinning the NFT market is a central issue as well. NFT prices tend to move in tandem with cryptocurrency prices. When crypto tanked in 2018, so did the nascent market for NFTs.

The psychology of buying luxury goods also will likely put downward pressure on NFT prices. Most luxury products are so-called Veblen goods, with limited utility beyond enabling owners to advertise their wealth. For that reason, they often generate large profits for sellers.

NFTs enable buyers to broadcast their wealth mostly through the high price they paid, but only if they receive a positive reaction from their peers. If such expenditure does not resonate with this audience, the investor might as well burn cash to light a cigarette.

Because owning an NFT does not prevent others from displaying the same assets and signaling ownership, these tokens hardly serve as effective indicators of unique spending power. And many NFT buyers remain anonymous anyway, because the blockchain ensures that knowledge regarding ownership is limited.

Finally, changing macroeconomic conditions could negatively affect the prices of alternative assets such as NFTs and traditional artworks. In the past two decades, the number of billionaires worldwide has increased more than fivefold, and available income ready to be invested in alternative asset classes has ballooned as a result. The COVID-19 pandemic has so far reinforced this trend. Much of the vast economic stimulus injected by central banks went into financial markets, further boosting the net worth of the super-rich.

But investor attention can be fleeting. After the 2008 global financial crisis, sales of art and other luxury products declined by almost 40 per cent. With central banks now starting to tighten monetary policy in an effort to rein in inflation, new and untested asset classes are likely to be punished harder than more reliable ones. And the hugely volatile NFT market, based on digital currencies with nothing to back them up, is hardly a safe haven.

Ultimately, NFT prices will suffer a large, permanent decline. They remain high for now and may continue to increase for some time, but the crash will come. Investors who think they can time the market are welcome to try, but their optimism will likely prove misplaced.

Patrick Reinmoeller is professor of Strategy and Innovation at the Institute for Management Development. Karl Schmedders is professor of Finance at the Institute for Management Development. Copyright: Project Syndicate, 2022. 

www.project-syndicate.org

#Cryptocurrency Is a Giant #Ponzi #Scheme

 

Hello Investors

This is a rather long article (20 minutes) linked below but the bottom line is that I agree with the primary assertations that both blockchain and cryptocurrencies (Bitcoins et al) are worthless and meaningless because nothing material or concrete and real is ever physically created by these notions/products/scams. 

Their primary purpose was to make real money for their creators in terms of sovereign currencies by attracting bigger fools to convert those currencies to the creators' phony digitized and hyped-up monopoly money known as cryptocurrency. A sucker is born every minute. How much would you pay for monopoly money? Sadly these negative-sum game hoaxes also use up our planet's scarce energy resources with no energy or physical materials return on energy invested. Plain Stupid.

These products are now beginning to fail as their prices are in a dramatic tailspin as projected due to their absence of concrete value, inflation, and higher interest rates. What was an inherent grave concern all along is that the value of these products/scams are not subject to any form of high-end annual independent verification or professional audit and consequently in nature they are similar to Bernie Madoff's criminal Ponzi scheme. The myth of easy money.

BERNIE'S NEW PENTHOUSE

To summarize, both of these notions/product groups are scams and not investments in any way, shape, or form because they do not have underlying verifiable concrete assets that have metrics that can be used to measure and determine their valuations, monetary economic state of affairs, and trajectories. They are mere fiction. Hot Air!

These fictions are thus essentially casino bets having their outcomes subject to the rules of random mathematics and not deterministic valuations based on principles of concrete physics and mathematics.

So, as the wise have long professed throughout the ages - 'caveat emptor' - Buyer Beware!    

https://jacobinmag.com/2022/01/cryptocurrency-scam-blockchain-bitcoin-economy-decentralization

Further Readings//References

Hanley, B. (2013/2018) The False Premises and Promises of Bitcoin.

https://arxiv.org/abs/1312.2048

  [1] S. Nakamoto, "Bitcoin: A Peer-to-Peer Electronic Cash System," Bitcoin, 2009. http://bitcoin.org/bitcoin.pdf 

[2] R. Grinberg, "Bitcoin: An Innovative Alternative Digital Currency," Hastings Science & Technology Law Journal, vol. 4, pp. 160-208, Nov 11 2011. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857

[3] N. Anderson and C. Farivar. (2013, How the feds took down the Dread Pirate Roberts. Ars Technica. Available: http://arstechnica.com/techpolicy/2013/10/how-the-feds-took-down-the-dread-pirate-roberts/

 [4] P. Bharara, G. Venizelos, B. Crowell, and T. Weirauch, "Manhattan U.S. Attorney Announces Seizure of Additional $28 Million Worth of Bitcoins Belonging to Ross William Ulbricht, Alleged Owner and Operator of “Silk Road” Website ", ed: Federal Bureau of Investigation, 2013. http://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorneyannounces-seizure-of-additional-28-million-worth-of-bitcoins-belongingto-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website 

[5] "SECURITIES AND EXCHANGE COMMISSION V. TRENDON T. SHAVERS and BITCOIN SAVINGS AND TRUST ", ed: US District Court, Eastern District of Texas, Sherman Division, 2013, pp. Document 23, PageID #566. http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.usco urts.txed.146063.23.0.pdf

 [6] (2012) (Accessed: July 2012). D. Stuckey. Does the New Bitcoin Bank Defeat the Purpose of Bitcoin? Available: http://motherboard.vice.com/blog/bitcoin-bankers-want-to-steal-the-show 

[7] (2010) (Accessed: July 2011). Anonymous. Understanding Digital Currency. Available: https://docs.google.com/document/d/1azCQj6KisPv6EEz1B2oLuGMfNowFkvDuH4PXa4pzLM/edit

#Stanford U - Storytelling's #Mystical #Powers

 

Good Afternoon;

The Mystical Powers of Storytelling

Being an active online professional education student at Stanford U; I am routinely invited to their newest and greatest - FREE Learning Webinars; similar to the Storytelling Course linked below. Who amongst us could not be better at storytelling? 

For starters, it is a key skill that can be practically applied to help get ordinary folks, political/legal charlatans, and corrupt crony governments - out of or into a lot of jams, such as; the US Dollar Reserve Currency Hoax, BlockChain Lies, AI Fraud, Worthless Bitcoin Bubbles, and other contemporary, global Ponzi-based schemes that insanely grow by leaps and bounds daily. Seemingly, caused by a more desperate and disillusioned world impossibly clinging to its fading economic stability and last remaining supplies of non-renewable natural resources. Hmm...

The Negative-Sum Games We Play - Economics 101

However, there is still nothing like a profound, motivating, creative story that inspires perspiration from the masses or individuals  - remember those big ole fish stories, or when and how we fought that Grizzly bear with our bear (sic) hands in the Alberta Rockies?

Key Takeaway:  Don't ever underestimate powerful storytelling talents, spin-doctor applications, and their contagious fire-side chat results - for as long as there are still bigger fools out there to convince, the right stories - will always foolishly move vulnerable nations and people; and thereby their real concrete resources and trillions in fiat currencies...

https://learn.stanford.edu/storytelling-webinar-thank-you.html

The Power of Stories to Fuel Innovation

Self-Paced Professional Education Course

Learn how to craft compelling stories that take listeners on a journey that changes how they think, feel, or act. Through the power of story, you’ll discover how to inspire transformational change and spark innovation in your company.

Good Tidings,

Terry

P.S. - Never forget that old adage that stems from the dawn of time - 'B\S Baffles Brains' - now we even teach it at the professional level at our top schools - what next? 

Your comments, experiences, and insights are most welcome.

JOIN THE CHAT HERE ON LINKED-IN

--

T. A McNeil

CEO and Founder 

First Financial Insights Inc.

FRIDAYS FOR FUTURE

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