The crypto industry is getting too honest

For the cryptocurrency trading platform FTX, the platform has been on the air throughout the NBA playoffs.

It features superstar Steph Curry going through silly versions of his era — eating cereal, making pasta, carving ice sculptures — while narrator Shaquille O’Neal insists Think Curry knows everything about encryption. An angry Curry repeatedly denied it.

“I’m not an expert, and I don’t need to,” Curry finally says to the camera, holding up the FTX app on his phone. “

With FTX, I have everything I need to safely buy, sell and trade cryptocurrencies.

Honesty to Curry and FTX.

The new ad says something that should be obvious to anyone paying attention: the countless celebrities jumping on the crypto (and NFT) bandwagon almost certainly know very little about the products they sell.

This goes beyond the inherently transactional nature of corporate sponsorship. Everyone knows that athletes advertise because they get paid, not because they actually use the product.

On the other hand, if you know Curry — or Tom Brady, Paris Hilton, Charli D’Amelio, Snoop Dogg Dogg or Matt Damon – it would be shocking to explain what someone is buying when they invest in cryptocurrencies.

The honesty of Curry’s ad is offset by its cynicism, which sets a new standard in an industry with a lot of slack.

The crypto advertising blitz started late last year and has risen as the price of digital assets has risen. The Super Bowl infamously featured several big-budget commercials in the industry.

Most notable is an FTX ad in which comedian Larry David sees cryptocurrencies as a fleeting fad with a “don’t be like Larry” kicker.

As some observers have pointed out, these ads conspicuously ignore any substantial benefits of encryption. Instead, they try to instill a sense of FOMO, or fear of missing out, by suggesting that viewers who don’t buy it now will regret it, like Larry.

These FOMO ads at least leave open the possibility for consumers to learn about cryptocurrencies before investing. The Curry ad ditched that pretense.

To be fair, there’s a difference between an expert who doesn’t do something and who doesn’t know anything about it. But the ad is clearly aimed at people who are hesitant because they don’t understand cryptocurrencies.

The message to them was: Don’t worry, Stephen isn’t either! Perhaps, by extension, no one! If everyone else is operating in ignorance, maybe you don’t have any major disadvantage. So go for it, deal go. FTX did not respond to a request for comment.

Legendary investor Warren Buffett is said to have advised, “Never invest in a business you can’t understand.

Traditional investing is a bet that the business you invest in will become more valuable over time. As fundamentals improve, business grows and profitability increases, more people will be willing to pay more for some of it, increasing the value of your stock.

If you can’t understand how a business makes money, you have no reason to make sound judgments about the performance of its stock. However, as the Curry ad makes clear, the crypto market has a way of avoiding the middle steps.

Forget the fundamentals: For the average investor, the decision to buy a certain cryptocurrency may seem like a pure bet that others will want to spend more money on it in the future. This is also the spirit behind the meme stock phenomenon, which is philosophically closer to the crypto world than to traditional stock market investing.

For investing, there is a name whose value is all about finding future buyers willing to pay more than you put in: Ponzi schemes.

Critics have labeled encryption with this label for almost as long as it has been around.

More recently, the criticism has been supported by an unlikely source. Sam Bankman-Fried, founder and CEO of FTX, appeared on the Odd Lots podcast last week.

During the discussion, Bloomberg Finance columnist Matt Levine asked Bankman-Fried to explain “yield farming,” a form of crypto investing where people can buy “liquidity pools” that pay super high interest rates, but can also rush south.

Bankman-Fried, for example, asked Levine to imagine “a company that makes boxes,” doing nothing despite some lofty marketing rhetoric.

Bankman-Fried went on to say that the company could issue tokens that people would buy — although “so far, we haven’t given a convincing reason why the box would make any money. Ultimately, the company could promise Distribute more tokens to anyone who puts their money in the box, that is, anyone who lends them money. In this case, Bankman-Fried said, the buzz around the token could become Give it a market cap of $20 million. (Although as Levine pointed out, it should be zero. Then, as more people see that the box is paying for valuable tokens, they will want to Invest more money and thus further increase the value.

“Like, it’s a box of value, as evidenced by the fact that people clearly decided that all the money that should be in the box,” Bankman-Fried said. “Who can say they were wrong?”

“I consider myself a pretty cynical person,” Levine replied. “It’s a lot more cynical than the way I describe farming. You just think, ‘Okay, I’m running a Ponzi scheme, and that’s fine.

Surprisingly, Bankman-Fried didn’t fight back very hard. “I think that’s a pretty reasonable response,” he said. “I think there’s a frustrating validity to it.

Even more frustrating is what happened next in the crypto market: nothing.

You might think that the head of a major crypto trading platform speaking out for the quiet part, admitting on a popular podcast that he is at least partly in the business of a Ponzi scheme, might lead to some kind of crisis or loss of confidence in the industry.

But in fact, it’s not. It goes to show that people don’t really care if they put their money in a box that does nothing, as long as they think they’ll be one of the groups that will shell out more money later.

In this sense, it may be wrong to compare the crypto market to the stock market. Gambling might be a more apt comparison. A slot machine doesn’t do anything either; it’s actually a box that takes money in and spit it out.

As with gambling, you can avoid risk by not putting money in the pot. But truly opting out of the crypto economy is becoming increasingly difficult.

Even if you don’t invest in person, you probably live in the world of crypto. Pension funds don’t bet on the Super Bowl, but two public pension funds in Fairfax County, Virginia, invested in crypto funds last fall and are now reportedly considering a move into yield farming.

Wall Street banks have long been skeptical of cryptocurrencies, reluctantly entangling themselves deeper into it, and that’s their fear of missing out on a big payday.

It’s not just the economy that is increasingly wrapped up in the fate of crypto.

The industry’s rise has spawned a generation of overnight millionaires and billionaires, some of whom have political ambitions.

As The Washington Post recently reported, crypto investors and executives are pouring millions of dollars into the upcoming midterm elections in an attempt to help elect candidates who support the industry’s preferred regulations.

Then there’s Bankman-Fried, who is worth an estimated $24 billion at age 30 and has been adding to his DC footprint. His political donations appear to have more to do with pandemic preparedness than crypto-friendly regulation; a practitioner of effective altruism, Bankman-Fried has vowed to give nearly all of his money to those who will have the greatest impact cause.

So that’s one thing Crypto Box does: transfer money from someone else’s bank account to his bank account so he can direct it however he sees fit.

He seemed to be betting that he could do more good things with other people’s money than those people. The rest of us will have to hope he and the other crypto upstarts are right. After all, we are not experts.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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