Bloomberg’s finance writer Matt Levine releases “The Crypto Story,” links NFTs to Ponzi schemes, mentions metaverse
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Bloomberg publishes a 40,000-word article on the crypto industry, written by finance expert Matt Levine.
He links a part of the crypto world, including NFTs, to a Ponzi scheme.
“I plan to go to my grave not knowing what “the metaverse” is, so I’m certainly not going to explain it to you,” he dismisses the metaverse.
In the newest edition of Bloomberg Businessweek, finance writer Matt Levine delivers a cover-to-cover edition called The Crypto Story. The 40,000-word article covers most things blockchain-related, giving a clear and concise definition for those who still don’t know how DeFi works or what Bitcoin and NFTs are.
Matt Levine is a financial columnist for Bloomberg News. Levine graduated from Harvard and has previously worked as a lawyer and an investment banker. He is currently the author of Money Stuff, one of Wall Street’s most popular newsletters.
The Crypto Story is divided into four chapters, explaining the basics, such as Bitcoin, blockchain, and ledgers. The paper then dives into the use cases and functionalities of cryptocurrency and digital assets, with technology explained. In the second and third chapters, Levine discussed the crypto-financial system: DeFi, Stablecoins, DAOs, and NFTs.
Ponzi schemes in Web3
When you read this crypto-bible, you will notice Levine uses the word ‘Ponzi’ a lot. For him, crypto is either a new and efficient way for venture capitalists to fund software projects or a complete Ponzi scheme.
“The bad way to put this is that every web3 project is simultaneously a Ponzi… The problem with making every product also a Ponzi is that you can’t be sure if your customers are there for the product or the Ponzi.”
A Ponzi scheme is pretty straightforward. It’s a fraudulent business that promises everyone to get rich if they invest. Everything looks good on paper for as long as people are investing money. As new buyers are paying off old ones, they help create the illusion of a prosperous business. However, once investors begin withdrawing or demanding full repayments, the scheme falls, leaving almost everyone with significantly lighter pockets. Levine gave the examples of Luna, 3AC, and OlympusDAO.
In terms of cryptocurrency, Levine believes that Ponzi schemes are all too common because market speculation is high and communities are being built through token ownership—the client is also the investor. The so-called whales have a significant influence on the market too.
As for NFTs, the writer believes they are culturally interesting, but the technology itself is weak. Digital assets don’t represent ownership but a feeling of ownership and belonging to a community, such as the Bored Ape Yacht Club.
“If you buy an NFT, what you have is a notation on the blockchain that says you own a pointer to some web server.”
Levine challenges the common misconception: “Art does not live on the blockchain.” He further explains that intellectual property rights are “none of the blockchain’s business.”
“There’s nothing in the NFT spec that tells you what the image “should” be, or even allows you to confirm whether something is the “correct” image,”Levine quoted cryptographer Moxie Marlinspike.
When Levine mentioned the metaverse, he disclosed that he doesn’t know what it is (and probably never will). But he believes buying virtual real estate is directly linked to digital scarcity, just like NFTs. All Web3 projects should strive to be more than just a ‘getting rich off the token’ model and look for new functionalities and promising technologies to drive the industry forward.
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