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Are cryptocurrency and NFTs a scam? [Bonus Saturday edition!]

Hey, look! It’s a bonus day here at Apex Money.

Generally speaking, Jim and I only publish on weekdays. Today, however, I have a collection of stuff that I feel is worth sharing, but for which I didn’t want to devote a regular Apex installment. So, I’m posting on Saturday.

Astute readers may have noticed that Jim and I have different views of cryptocurrency. He and I have never discussed it, but my impression is that he’s cautiously optimistic and/or intrigued by the technology. Me? I’m pretty pessimistic. It doesn’t feel like the future to me. It feels like a scam.

Obviously, I could be wrong. Time will tell.

Anyhow, I recently read a series of l-o-n-g articles that explore flaws with cryptocurrency (and the related non-fungible tokens). These pieces are interesting and well-worth reading, but I felt like I didn’t want to waste a regular Apex Money installment on them. Thus the weekend edition.

Let’s start with this 21-minute YouTube video from Slidebean that explains how Bitcoin (and the blockchain) works.

And now let’s take a look at this handful of articles that explore real-world reasons that crypto and, especially, NFTs are, well, sort of a scam.

Why NFTs are bad: The long version. [Antsstyle] — “This long article explains technical and economic details to explain both why NFTs are bad, why they don’t work (they don’t do what they claim to do), and explains the hype surrounding them.”

NFT joke

“A lot of people are asking me to make NFT games but I won’t because I’m not an idiot.” [Doc Burford on Medium] — “If crypto’s strength is that there are no banks, no central authority, then you can’t also want a central authority to intervene when someone breaks the rules. You can only have one or the other. You cannot have the government, who you destabilized with monopoly money, intervene (with what budget? you ruined their currency somehow!) whenever your monopoly money is in jeopardy.”

A consistent mistake that cryptobros make. [Doc Burford’s follow-up to his previous article] — “The whole culture would have to change to make your technology work. And that almost never happens unless the use case is simple, intuitive, and the benefits are tangible. Refrigeration made sense to people because it made storing food easier. Cellphones made sense because suddenly you were reachable anywhere and you could play snake. The blockchain? You keep shouting ‘you don’t understand it’ at everyone who tells you it sucks because either they’re smarter than you and understand it sucks, or they don’t understand what it’s used for because it’s a bad technology that isn’t simple and intuitive enough to work.”

Now, I realize that many, many people disagree with me and with these articles. You might be one of those people. And I get it. Like I say, I could very well be wrong. But at this point, I don’t think I am.

Does this mean that I don’t have money in crypto? For the moment, yes. I may indeed put some of my cash there, but if I do I’m not going to delude myself that it’s an investment. Because it’s not. It’d be me deliberately trying to take part in this pyramid scheme and hoping that I’m not one of those left holding the bag

[Important note: Comments are open for this particular article.]

One Comment

  1. Jason B

    I’m on your side, J.D. Crypto has some potential utility if someone can make work faster and cheaper than Visa, but it’s my understanding that none of the coins are there yet. Worse all the affiliated exchanges where you can trade dollars for coins are sketchy compared to a traditional financial services. NFTs seem even worse. Some sort of techbro peacocking. Feels like 1920s gilded age excess.

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