Crypto Currency Fraud

I actually would be interested in this (maybe you could break it off into a new thread or something? I don’t know how). I’ve also been following crypto stuff for a long time, and I have some (mostly negative) beliefs about the value of blockchain technology, but I haven’t subjected them to serious critical discussion.

I think you are over-estimating my knowledge of economics. E.g. I have never read TOMAC (or any economics textbook for that matter, my knowledge about economics is very ad-hoc), and I don’t think I have a real understanding of why non-commodity money is bad (though I’m already sympathetic to that idea).

FYI I’m going to be kind of slow about responding for the next 10 days though because I have an exam coming up.

edit: quoted what I was responding to for clarity

I’d suggest you guys (lmf, Max) use a discussion tree for this discussion. I’d specifically suggest one with only the main points, not to cover everything that’s said. You can each write specific text that you want to include in the tree, and make it short (typically one sentence), clear, and something you’d stand behind in debate. Then only the text intended for the tree gets put in the tree. One result is it helps focus attention on people’s main points (the ones they put in the tree). Another result is the tree shows what points haven’t been replied to.

I did some searching for Mises + Bitcoin stuff this morning:

In light of Mises’s sweeping claims, we can quickly see why so many fans of the Austrian school have a major problem with Bitcoin: Since Bitcoin was born to be a currency—rather than first serving as a regular commodity—doesn’t that mean it can’t be money? Or, going the other way, if Bitcoin ever did become money, wouldn’t that mean that Mises must have been wrong?

At the risk of being evasive, we are not here going to explore the fascinating question of whether the case of Bitcoin violates the regression theorem, or whether its unorthodox features can be made compatible with Mises’s monetary framework (which he obviously conceived with tangible goods in mind). Other economists familiar with the Austrian school and Bitcoin have weighed in on this intriguing issue.9

One thing I did find was The Mises Theory of Money, Bitcoin, and Saving the Economy Explained in 10 Minutes (linked @ 5:45 – the speaker mentions the crit but refers to prior work – note: it’s a 30 min vid)

The prior work: http://understandingbitcoin.us/wp-content/uploads/2017/12/2017.11-Understanding-Bitcoin-v1.11.pdf

One notable thing (p.12):

“Bitcoin” encompasses two related but distinct concepts. First, individual bitcoins
(lowercase-­‐b) are units of (fiat)9 digital currency.

I have been thinking that BTC is fiat over the past few days – I like that the authors understand that (which they should given that Robert Murphy (the guy in the video) claims to be an economist with a background in Mises/Austrian econ).

footnote 38 (on page 57) reads:

We are using the terminology and framework for monetary economics developed
by Ludwig von Mises, a giant in the school of Austrian economics. We are spending
time carefully developing the distinction between a medium of exchange and money
because this is crucial to defusing a later objection, regarding Mises’ “regression
theorem.” For the most sophisticated discussion of these issues, Mises’ classic work
The Theory of Money and Credit is available for free online here:
http://mises.org/library/theory-­money-­and-­credit. However it is a challenging
book and newcomers are encouraged to consult Murphy’s accompanying study
guide: http://mises.org/library/study‐guide‐theory‐money‐and-­credit.

(Note: the links don’t work here and don’t work in the source doc either)

page 62:

This seems to, like, miss the point.
I don’t think ppl should argue that bitcoin cannot be money (it seems obvious that it could). the origin of value for commodity money is not a requirement on all monies; but, for all monies, we should be able to analyze where that value came from.
(Two reasonable answers to this question occur to me: the value of bitcoin originates in: 1. ideas that ppl have about bitcoin/finance/banking which generates subjective value in holding, using, and promoting BTC (somewhat independent of the price), and/or 2. the first economic transaction of 10k BTC for a pizza. (1) explains why it took on and continues to hold value, even outside the continuity of objective exchange-value)

“Our answer to this objection is pretty simple: It has been refuted empirically.” – sure, because it was the wrong objection (and ATM looks like a misunderstanding / misapplication of the regression theory, too – but I haven’t finished TMC yet).

From what I’ve seen the authors don’t deal with the actual problem: is Bitcoin good money or not?

From later on in the same answer:

Mises includes 2 examples of how fiat money could arise early on in TMC (part 1 I think, mb early part 2). “So if any reader thinks that Mises showed that any money must have originated as a regular commodity”, then I guess they haven’t read TMC recently.

Also, it looks like mb the authors just like dodge the question by arguing it’s not relevant :(
isn’t that behavior directly criticized by Mises wrt quantity theory and marginal-utility!?!? A theory of money must be able to answer where did the value originate? but the authors just like pass it on by.

I’ve had little success trying to discuss/debate with current Austrian economists including people associated with mises.org (George Reisman did speak with me, and I have a higher opinion of him.)

One of the problems with those people is that a bunch of them dislike Ayn Rand. I think that’s a major reason they don’t treat Reisman better (e.g. promote and study him more).

I replied with a discussion tree under a new topic. I don’t mind if it’s in a new topic or here – a new topic seemed safer.

@lmf – I have made a first draft with all the important nodes I found. I have abbreviations and things which might harm clarity, so I might redo my nodes to make sure it’s text deliberately for the tree and short, clear, something I’d stand behind. ATM your nodes are just my summaries of your points; pls feel free to object to any wording or make your own tree or whatever.

@Max blogged:

I think I’ve changed my mind about Bitcoin as money. Particularly: it’s a fiat currency

The reason for the change-of-mind is that I’ve started reading Theory of Money and Credit by Mises (TMC).

Related discussion: https://discuss.criticalfallibilism.com/t/crypto-currency-fraud/128/18 (this post and on).

This doesn’t give proper credit. It makes it sound like your idea that you came up with after you started reading the book on your own initiative. “Related discussion” doesn’t communicate “where I got the idea, and the book recommendation, from someone else”.

yeah that’s fair. will add an addendum.

I updated the post with an addendum: https://xk.io/n/2002..10022#n/10022 (this view shows the full context)

I am late to this thread, but wondered if anyone is familiar with Keith Weiner’s (objectivist) ideas on the dollar, some on bitcoin, and some gold. Note: I haven’t read through the whole thread and I am not knowledgeable about Tether.

Weiner uses the concepts of extinguishment and redeem-ability as essentials of sound money. His short articles make a clear argument and I haven’t found much to disagree with.

I’ve read half each of Theory and Credit and Human action. I think the Misean concept of money is too broad generally, and Mises definition still seems tied to historical paths. He didn’t flush out the essentials like Weiner has of what makes a good money.

Also wanted to add just a few thoughts that I remember. It’s been a year and a half+ since reading on this

I see the current crypto as suffering from the same deficiency as Weiner describes, debt is not extinguished. It’s simply transferred. Gold backed crypto, could be an ideal. I’ve seen several offerings over the-years, but from dodgy sources I wasn’t easily able to verify the offers’ reputation.

One of the arguments of bitcoin over gold is portability or efficiency. I think the portability and efficiency are positives but not essentials, like (stable store of value and extinguish-ability). Weiner noted a while back, nobody is making loans in Bitcoin. I think this is very instructive.

Tony

Yeah – I didn’t think you’d answered it (I probs should have mentioned that).

The post you linked has problems IMO; not sure if you consider them relevant or not to the discussion, though.

Bitcoin isn’t dead between blocks – there’s no way for it to be alive without gaps, so logically it can’t be dead in those times. There is still an ongoing process – miners are hashing – but the results of that process are stochastic (next block could be in 20 seconds or 20 minutes).

The above is one reason, but another is that there’s a sense of financial continuity – but that wouldn’t necessarily be the case 2, 20, or 200 yrs later. I don’t think we need to agree on that much here btw, like roughly day-to-day continuity is enough (e.g., stock markets often close overnight, so it seems like day-by-day continuity is good enough for most finance stuff).

edit: uhh, discourse posted this to the wrong thread. It actually asked if I wanted to post it to crypto currency fraud (this topic) or to “post it here”, but i guess both posted it to this thread.

Edit2: going to copy it over to BTC as money thread. Edit3: Bitcoin (BTC) as Money - #32 by Max

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This site has permalinks that put a post on top instead of linking it individually. The title I’m trying to link is:

Multiple artists report OpenSea automatically closing their support tickets reporting stolen artwork; OpenSea removes ability to report

UEG has other videos about dumb crypto stuff too.

I’m noticing more content critical of NFTs from a wider population – esp from ppl who aren’t working on NFT stuff, or wouldn’t otherwise be covering it if it weren’t a problem (UEG is an example).

Like here’s one (2hrs long with ~1m views, 2 days old) that is from a channel that covers like film/narrative/story stuff and oddities in depth. (I’ve seen a few of his videos before; one was “That Time Geocentrists Tricked A Bunch of Physicists”). His most recent video (besides this NFT one) is titled: “Jamie Oliver’s War on Nuggets”.

I thought the description of the vid made a good point:

If someone pitches you on a “great” Web3 project, ask them if it requires buying or selling crypto to do what they say it does.

I watched all of “The Problem With NFTs”. The video makes some good points and has some interesting stuff about NFC scams and culture. There are many technical errors (and some political views thrown in), but they don’t make that much of a difference to the main point of the video.

One thing I wasn’t sure of (and hadn’t heard about) that was mentioned, but explained poorly, is an exploit where someone is sent an NFT and this leads to their wallet being drained.

The article I link is probably for a different attack than the example from the video, but the effect is the same.

I don’t know how this isn’t just pure negligence on the part of OpenSea (it’s their site and service), but there are more issues that limit chances for error correction along the way. Those limitations apply to the whole Ethereum ecosystem, and all other chains built on the same tech (like Ethereum Classic).

It sounds like one of the reasons that this exploit exists is that Metamask – the main Ethereum wallet used in Web3, which is a browser-addon – has really bad UX around transactions.

Like, when you make a transaction you’ll see the destination address, ETH value, tx fee, and the data payload. But there’s no way for Metamask to have any idea what the payload does – it can’t do that for every possible smart contract out there. So it can’t show anything useful to the user (note: there are some special cases built in, like for ERC-20 tokens). So, in essence, a bit of JS can do a bait-and-switch. The user thinks they’re clicking “delete”, but really that ends up like draining all their NFTs (if it tried to drain ETH then the user at least has a chance to notice). The metamask transaction prompts for delete and drain would look basically identical. Unless the user like copied the data payload and deserialized it, they’d have no idea what it actually does. (Maybe metamask has done something about this as a special case, but in principle this is the norm that I remember)

This article is from October but the example in the video happened around Dec 27 I think, based on the timestamp of the reply (the incident was also listed on web3isgoinggreat.com on 28th dec)

“So, we decided to check what will happened if we would create malicious art that contains code in it, for example an .SVG image. We created a simple .SVG file and uploaded it with a simple payload,” researchers explained in a Wednesday analysis. “By clicking on the art and opening it in anther tab or clicking on the links on the page, our SVG will be executed under https://storage.opensea.io subdomain; at this point, we have a SVG file with JavaScript capabilities.”

(Apparently the guy replying sees the recent southpark NFT thing as a good thing, too)

https://www.tiktok.com/@aamirazh/video/7056947817859779886

This link doesn’t seem to work either. I guess it’s b/c the uploader deleted it.