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Old 03-03-2022, 09:09 PM   #1
frankbell
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The Psychology of NFTs and Crypto Currency


I thought you all might find this article from Psychology Today Blogs interesting. Here are the three bullet points from the summary:

Quote:
Cryptocurrency and NFTs are not what their promoters say they are.

Crypto consumes energy equivalent to many countries and can sap renewable energy sources that could be used for green social projects.

Many countries have banned or are planning to ban crypto-mining in order to reach national goals of decarbonization.
(I think the first one is the most important. )
 
Old 03-03-2022, 09:25 PM   #2
jefro
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The whole deal is nutty.
 
Old 03-03-2022, 10:32 PM   #3
frankbell
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It's as if Bernie Madoff went digital . . . .

Barnum was right.
 
Old 03-03-2022, 10:58 PM   #4
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Quote:
Originally Posted by jefro View Post
The whole deal is nutty.
How so?

Quote:
Originally Posted by frankbell View Post
It's as if Bernie Madoff went digital . . . .

Barnum was right.
Please explain. Taking Bitcoin as the prime example, no individual controls it (such as with Bernie Madoff).

And if Barnum was right, I guess I'm a sucker for being an early-adopter, and retiring early as a result (at 53).

There's a lot of FUD and ignorance around cryptocurrencies; sad that it's here at LQ, too.
 
Old 03-04-2022, 11:52 AM   #5
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The first and most-important point is that "they are not currencies at all," as in "legal tender." In the eyes of the law, this is barter, albeit using a very unusual token and associated accounting system. In the eyes of the law, therefore, no money is involved, and legal protections regarding the use of "money" do not exist. As with all "barter" cases, your only available remedies are usually civil in nature.

The law specifically endorses and protects the use of "barter," and some quite-massive commercial transactions are routinely settled in this way in order to save money. The only requirement is that you must not present the token as being legal tender – a requirement that these folks are certainly "skating" by using terms such as "BitCoin" and "CryptoCurrency."

Incidentally, "legal tender" does not mean that you are legally required to accept it. It means that you cannot legally refuse it when offered in payment for a debt. If you tried to "pay me in bitcoin," say, I would very calmly require you to give me cash instead. If you gave me cash, or its direct equivalent, then I must by law now consider the debt to be settled as long as your check clears the bank.

In my opinion, this entire thing is old-as-the-hills: "you want to 'get rich quick,'" and maybe, "you want to 'stick it to the man.'" Because of this, you become a sucker. A "mark."

Your motivations, which you of course do not question, are being cleverly used against you by others who need only reassure you that you are right. They are swindling you, but you don't see it that way and they know it. It is therefore a confidence ("con") game.

If you observe these systems very carefully, you will always find that there is some kind of "transaction fee" ... it could be very small ... that the promoters will require to be paid in "legal tender." They are of course hoping that this will happen "tens of thousands of times," and this is how they take their illegitimate profit ... in dollars or other "coin of the realm."

However, in the eyes of the law, nothing is actually "illegitimate." They sold you a service, you paid them, and they performed it. They sold you a power-hungry hardware device which worked when you plugged it in. What you did next was entirely up to you: the law does not protect you from being a Fool. They did not misrepresent anything to you. They did not defraud you. Instead, you defrauded yourself, because you were self-confident that "you were the brightest crayon in the box" and they were careful not to tell you otherwise.

It's really not too different from this famous (true ...) story about P. T. Barnum. Prominently displayed at the entrance to his palaces were signs: "This Way to the Amazing Egress!!" You followed the enticing passages until you went through a door and found yourself ... outside. Having just passed through "the (one-way ...) egress." ("The Exit.") In order to get back in, you had to buy another ticket ... which you did, after telling everyone else in line that the very first and most amazing thing that they simply had to see was: "the Amazing Egress!" In this way, everyone "sheepishly fell for it, then got a hearty laugh out of it while having a good time." While Barnum doubled his money. No laws were broken.

Yes, this is, top-to-bottom, "a psychology play." Old as the hills.

---
With regard to "NFT," the key problem is that the person who is ostensibly "selling" the "asset" might not have clear title to it – as in registered copyright. You might wind up on the wrong side of an infringement lawsuit which you will expensively lose. Once again, there are plenty of legitimate brokers, who will properly arrange the exchange of property between buyer and seller while legally protecting the interests of all three parties while indemnifying them from any adverse claims. (They require the seller to possess uncontested copyright and to be able to prove it.) But "NFT," once again in the name of "get rich quick," has none of these protections and very-glaringly plays on gullibility and ignorance by both parties.

There is: "a sucker born every minute, and two to take him."

Last edited by sundialsvcs; 03-04-2022 at 12:17 PM.
 
Old 03-04-2022, 08:00 PM   #6
frankbell
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sundialsvcs, excellent points. Thank you for putting so much time into your post.

Here's another article that came across my rss feed today on the same topic, also from Psychology Today Blogs; the author focuses on what he calls "investment mania. Here's an excerpt:

Quote:
All investment manias have common features. Even the brightest people can succumb to the lure of quick gains with minimal effort. This was apparent in the Madoff Ponzi scheme that mostly targeted wealthy elite investors.

Like the cryptocurrencies of today, buyers had little knowledge of the true value of the investment and were guided mainly by the fact that the market price was rising.

That sort of irrationality leads to some bizarre equivalences. At the height of the tulip mania in Holland from 1636 to 1637, a rare type of bulb was used to purchase a home. In the dot-com boom of 1999, companies with revenues smaller than a corner store had market valuations of billions of dollars.

Last edited by frankbell; 03-04-2022 at 08:06 PM.
 
Old 03-10-2022, 11:01 AM   #7
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There's a very famous book – actually, it's a triple book – called Extraordinary Popular Delusions and The Madness of Crowds. First published in 1841 by Charles Mackay, it is still in print today ... and, still relevant. Although the language sounds a little "tilted" today, Mackay was an excellent, insightful, writer and researcher. I commend it to you.

One of the specific topics used as an example in this book was "tulipmania." For a time, tulips were as good as gold, and a worker who innocently ate one on his sandwich (they taste like onions ...) was very nearly executed for his "crime." Then one day it simply fell apart without warning, and many Fools were ruined.

The psychology of what's happening today is exactly the same. The same gullible "marks," and basically the same con game.

Last edited by sundialsvcs; 03-10-2022 at 11:08 AM.
 
Old 03-10-2022, 12:26 PM   #8
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I don't have any time for bitcoin but I think I can understand why NFTs took off in the way they did.

Suppose you are a traditional artist and you paint a picture that many people make copies of so that it becomes very popular. That means that you can sell the original for a large sum.

Now suppose that you are a digital artist. Your work consists of a file that can be copied exactly ad infinitum. Now you have a choice. You can prevent the copying of your work by using drm. That way there is only one copy and you own it. But by preventing people from downloading and sharing it, you prevent it from ever becoming famous, so it will never be worth a lot of money. Or you can allow social media to make your work into a sensational success but then you will have nothing to sell because everyone who wants a copy has already got one and all the copies are as good as the original.

NFTs give you a third option. You can use social media to publicise your artwork but among all the shared copies, there will still be one copy that is "the original" because it alone carries the unique NFT. And you hold that copy and can sell it for a lot of money.

It's a bit odd but it doesn't exactly look like a scam to me.
 
Old 03-10-2022, 06:32 PM   #9
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"Of course it does!"

As you just said yourself: "because everyone who wants a copy has already got one and all the copies are as good as the original."

Therefore: why on earth would I "give a damn" about "the unique NFT?" What obligates me to pay you money? "Possession is the greater part of valor."

Look: "if you want to establish and protect 'intellectual property rights,'" the way to do this is already firmly determined.

Last edited by sundialsvcs; 03-10-2022 at 06:35 PM.
 
Old 07-22-2022, 07:57 AM   #10
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Hmm you might right
 
Old 06-05-2023, 01:28 PM   #11
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a pretty interesting article, however, I have just read it
my opinion is still: I don't trust crypto and don't have the courage to trade, and so on. Anyway, I am not speaking about traditional investing. That is completely another story. Either trading, if the asset is safe you can trade it with leverage and not be scared to lose everything. As a person with trading experience, I can assure you that in the traditional market, money can be made more stable than in the crypto market.

Last edited by Muller21pr; 06-10-2023 at 11:19 AM.
 
Old 06-05-2023, 05:24 PM   #12
hitest
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Quote:
Originally Posted by jefro View Post
The whole deal is nutty.
Agreed. I do find the concept of cryptocurrency intriguing, but, I have not invested money in it.
 
Old 06-06-2023, 08:22 AM   #13
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i just saw that SEC have sued Coinbase :/
 
Old 06-06-2023, 01:05 PM   #14
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In 2016, I used half of the donations to our anual event on purchasing bitcoin. In 2017, I sold for more, and thus the donations appeared to go farther than had I just stored them in a box. It was a successful test of the bitcoin system, and I haven't used it since, but at least satisfied my curiosity.

I haven't used it since because of the power hungry nature of crypto mining.

But I feel, someone will innovate some greener cryptobartar solution and I await that solution to support it, because what I like the most about bitcoin and other cryptocurrencies, is that they operate outside the domain of credit scores.

I think the banksters's credit score system is extremely unfair and penalizes sustainability.

If you want to start a business but don't have the credit-score to open a business checking (not because you took a bunch of money and didn't pay it back; but merely because you never borrowed anything in the first place, and thus have a score of 0), you at least can accept cryptocurrencies...

Someone who frugally saves up enough first to puy their vehicle in its entirity, is penalized. If you have a card and don't use it you are penalized; If you have one and use it too much, you are penalized... If you only have one card, you are penalized... etc..

Who supports this bankster system of endentured servitude? I think a green crypto option will be a good thing when it is invented.
 
Old 06-06-2023, 02:36 PM   #15
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@slac ...

In most "traditional" barter systems, there is no limit on obtaining "valid barter tokens." The only "twist" in this system is that, now, the "acceptable tokens" are hard and expensive to compute. (Until, inevitably, someone finds the necessary mathematical trick.)

Beyond that "obstacle," these numbers/tokens may as well be tulips.

Recent and ongoing legal cases have already demonstrated just how easily the whole system can be "gamed." The entire system depends upon so-called "exchanges" which, as it turns out, can very easily be robbed by their owners, who have access to the cash. (It should be of no surprise to anyone that the perpetrator, (or at least, "the one who took the fall") ... was less than thirty years old ...)

It also depends on "trust" which – as is the usual practice in all "con games," turns out to be entirely misplaced by the suckers.

"... and two to take him."

Last edited by sundialsvcs; 06-06-2023 at 02:40 PM.
 
  


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