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Come for the politics, stay for the snark.

Reality always lies in wait for … Democrats.

Thanks to your bullshit, we are now under siege.

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Technically true, but collectively nonsense

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But frankly mr. cole, I’ll be happier when you get back to telling us to go fuck ourselves.

Nothing worth doing is easy.

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Impressively dumb. Congratulations.

They fucked up the fucking up of the fuckup!

You are here: Home / Economics / C.R.E.A.M. / Sunday Afternoon Open Thread: Goldbricking NFTs

Sunday Afternoon Open Thread: Goldbricking NFTs

by | 126 Comments

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But it’s not just self-delusion (or money laundering) — there’s also scamming the (other) marks! Best explanation of this I’ve seen so far:

Extracts from the longer thread:

Step 1: you draw or have an algorithm create 100 images. You pay to have these coolminted into NTFS. They are, of course, not very valuable and you’d be unlikely to make money selling them. What a shame.

Step 2: you take out a loan and go to Bob. You say “Can you buy this NTFS for me? You don’t need to pay for it, I’m gonna hand you 5100$ and you just turn it into ethernet points and buy it. It’s worth 5000$ so I’ll let you keep the extra 100$”

Bob, of course, agrees.

So Bob buys your NTFS and you get 5000$ back (minus some overhead) , which you turn back into cash, which is of course outside of the EthernetPoints ecosystem.

You now go to Alice, and make her the same offer, but on a different NTFS in your batch. You up it to 6000$ this time. She buys it, you get the money, and all that was lost was some overhead fees and some payment to Alice to do this.

So after doing this for a while, you approach Mark and say “hey look, I’m making these NTFS things and I’ve only got one left. If you look at how much they’ve sold for, it’s 5000-10000$, and prices are going up. You can resell them anytime to get your money back.”

But for you, I’ll give you a discount. You can have this mspaint squiggle for only 4000$. A bargain!

Mark isn’t sure. This doesn’t look like something that’s valuable.

But you can point mark at the transaction history, perfectly preserved in the borkchan: you NTFSes have sold for 5000$ each, 10000$ each, resold for even more!

You’ve got a “market cap” of 5 million dollars!

Because what the borkchan doesn’t know (and can’t know) , is that you used the same money over and over again to purchase EthernetPoints, transfer it around, then cash it back out…

This is an old type of scam, usually called a “gold brick scam”, where the mark is sold something they think is valuable, but turns out not to be. Often you have someone pretending to be an expert, who helps convince the mark that it’s valuable…

And here is how the IRS is going to hopefully stop this:
They’re going to require reporting of these transactions. They’re going to de-anonymize the big cash transactions, and what’s worse, they’re going to consider these things investments and tax you on them.

And now, you have a bunch of worthless NTFS that you were going to scam people with, and the IRS is going to say “because that’s something you could convert into cash, it’s a taxable investment. And clearly it’s worth 10,000$ as you say, because we can see the transactions too”

And you’re going to pay taxes on it like it’s actually worth the inflated amount you were claiming it was worth.

And this is going to destroy the profit potential in this scam, at least in the US. And while you could try to structure it so that all your transactions happen outside the US, I wouldn’t try it. The IRS can see all of them, they’re public on the borkchan…

Reader Interactions

126Comments

  2. 2.

    Kent

    I was mystified when I heard about folks making big money by earning and selling “gold” tokens and whatnot within video games.  But this takes it to a whole new level.

    I use the rule of poker when looking at these sorts of things.  “If you don’t know who the mark is, then it’s you.”

  6. 6.

    jackmac

    I don’t get NFTs or anything crypto. But I’m older and ignorant. (And at least my pocket hasn’t been picked by any bro types pushing this crap).

  7. 7.

    Martin

    Pleased to see VP and First Gentleman affixing a mezuzah. Not please to see how First Gentleman holds a hammer. My dude, there’s a reason the hammer has a handle that long. Please think of the children who see you as role models and look to emulate. #don’tchokeuponahammer

  8. 8.

    Kent

    If I was younger and smarter, I would have created a new digital currency called the “Rittenhouse” and made a couple million dollars on the MAGA dipshits before disappearing.

  9. 9.

    Chetan Murthy

    @topclimber:

    ETA: He SHALL Return.

    Some say he never even went on vacation!  Think about it!  [gif of eddie murphy tapping his temple with forefinger]

  10. 10.

    WaterGirl

    Anne Laurie, I had an Authors in Our Midst post schedule for 3, but it missed the schedule and I didn’t catch it until 3:21.  So I went ahead and posted it because I had prearranged the time with the author.

    I think our posts can happily sit side-by-side.

  11. 11.

    Just Chuck

    … NTFS scam …

     

    BTW, I am intentionally misspelling the name of the non tungable fokens

     

    I was wondering what the Windows filesystem had to do with it…

  21. 21.

    Fair Economist

    A very lucid explanation of why pure NTFs are garbage. They *could* be useful as proof of ownership of some real-world or even game-world thing; certificate of authenticity for an item, tracking a degree, use of some game-world item. But only a small fraction of the independent value of the tracked item. A bare NTFs (including NTFs of something freely copiable, like those bad cartoons) is worth a small fraction of nothing, which is to say: Nothing.

  23. 23.

    Goku (aka Amerikan Baka)

    Step 2: you take out a loan and go to Bob. You say “Can you buy this NTFS for me? You don’t need to pay for it, I’m gonna hand you 5100$ and you just turn it into ethernet points and buy it. It’s worth 5000$ so I’ll let you keep the extra 100$”

    This immediately reminded me of the various types of scams using Western Union that I’ve been trained on

  24. 24.

    germy

    I am often asked if I will “return to cryptocurrency” or begin regularly sharing my thoughts on the topic again. My answer is a wholehearted “no”, but to avoid repeating myself I figure it might be worthwhile briefly explaining why here…

    — Jackson Palmer (@ummjackson) July 14, 2021

    After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight and artificially enforced scarcity.

    — Jackson Palmer (@ummjackson) July 14, 2021

    Despite claims of “decentralization”, the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.

    — Jackson Palmer (@ummjackson) July 14, 2021

  25. 25.

    MattF

    I saw a thread predicting that ‘Tether’ was the crypto ‘innovation’ that would make the whole game collapse. It was described as ‘quilted out of red flags’.

  27. 27.

    Fair Economist

    @germy: So, Beanie Babies for neofascists?

    I’m really curious about the money flows into and out of crypto – the real effects on the world. Most of the trading is just swapping one crypto asset for another – digital self-pleasuring as far as the real world is concerned. Unfortunately there seem to be no honest statistics.

  31. 31.

    WaterGirl

    @SiubhanDuinne: Well, as it turns out, when you put up the post on Sunday at 3pm – when you had settled on Saturday at 3pm – the Author doesn’t show up!

    I screwed up.  When she didn’t show in the first 30 minutes, i looked back at our correspondence and discovered my error.  So we’ll have that post next Saturday, if that works for her.

    Thankfully, I don’t do stuff like that very often, so I am going to forgive myself and say “oh well”.

  33. 33.

    Just Chuck

    @Fair Economist: Right, NFT’s can be useful in any kind of exchange where the tokens are arbitrary and not able to be “mined”.  For example, carbon credits could be represented as NFT’s. They’d probably be even better as coins in a proof-of-stake blockchain, or just a plain old central database, but a public blockchain could have better self-organizing properties.

    “NFT art” strikes me as a misunderstanding of the concept, but then again nothing in the art world makes sense once money gets involved.  Before NFT’s it never had to be “good” art, but there was at least an attempt to pretend some effort and/or actual scarcity was involved.

  35. 35.

    Major Major Major Major

    @Just Chuck: what makes NFTs interesting as something stapled to art is that the artist generally gets a royalty whenever their token is *re*sold.

    NFTs actually make perfect sense for something like Decentraland, which is a smart-contract-based Second Life sorta thing that uses them for digital assets like land and buildings and, I don’t know, swords or whatever.

    Selling certificates of authenticity for ugly monkey drawings is definitely a solution in search of a problem situation. Hilariously, sort of, a lot of the artists seem unaware that they are selling a token and not the image itself.

  36. 36.

    Arclite

    OT, but Jennifer Smash. I don’t think you can be more anti-GOP while still being conservative.

    It is not enough for GOP congressional candidates to champion Second Amendment rights. They have to hold guns and destroy things in their ads. House members vaguely (or not so vaguely) hint at violence if things do not go their way. House Minority Leader Kevin McCarthy (R-Calif.) thought it amusing to talk about how difficult he may find it to resist hitting the speaker with her own gavel.

  37. 37.

    Gin & Tonic

    Today is the Day of Freedom and Dignity in Ukraine.

    ??✌️Happy Day of Freedom and DignityOn this day the Orange Revolution in 2004 and the Revolution of Dignity in 2013 began.Freedom and dignity are worth a winter on fire. pic.twitter.com/fv1UFWN8kl— Ukraine / Україна (@Ukraine) November 21, 2021

    Well, it’s just about midnight there, so maybe I should say “today was…” but you get my drift.

    Слава Україні!

  38. 38.

    Just Chuck

    @Arclite: I dunno, “Don’t fling your poo in the chambers of Congress” could be interpreted as a reasonably conservative position…  Just that the modern interpretation of “conservative” is nowhere near reasonable.

    Used to be that to be a conservative, you could start as a liberal and never change your views.  Nowadays, Reagan would be be drummed out of the party as a squishy leftie.

  39. 39.

    Benw

    @WaterGirl: you should watch scientists try to figure out timezones to schedule remote meetings – most folks usually get it right by the 3rd meeting or so.

  40. 40.

    Starfish

    What if I told you that some of the crypto-bros think that NFTs are a scam? Some of the people who are into cryptocurrencies will not touch NFTs.

  43. 43.

    mrmoshpotato

    @Ruckus:

    The newer result of crypto is: “If you think the mark is someone else, you are wrong, it’s still you.” 

    Hahaha.  True.

  44. 44.

    Just Chuck

    I’m not sure NFTs really qualify as a Gold Brick Scam: most of the people buying the NFTs already know they’re intrinsically worthless, they’re just hoping to pass it on to a higher-paying sucker.  I’m not sure what that scam is named.  “The Stock Market” perhaps?

  46. 46.

    Goku (aka Amerikan Baka)

    @Major Major Major Major:

    Which is hilarious because it’s all imaginary bullshit anyway. “Fiat” currency or gold, it doesn’t matter. Before there were technological uses for gold and the like, what value did precious metals really hold for ancient and not-so-ancient peoples aside from looking pretty? Without humans around, gold would be just another heavy metal that was created in the cores of stars during the fusion process billions of years ago

  47. 47.

    Goku (aka Amerikan Baka)

    @Just Chuck:

     “The Stock Market” perhaps?

    Eh, you can make legitimate money on the stock market relatively safely provided you invest in well-diversified, low-cost index funds that track the US and international stock markets as well as in the appropriate proportion for bonds

    Hell, that’s how pension funds and the like make their money

  50. 50.

    sdhays

    @Just Chuck: I was so glad he added that at the end. I was thinking it must be spellcheck (but every single time?? didn’t he proofread at all??), and it was (mildly) irritating me. I can respect his reasons.

  51. 51.

    Nukular Biskits

    Completely unrelated but, since this is an open thread and Jackals are a wise bunch of pet lovers …

    My mom passed away this past July.  Among her treasures and joys is an ornamental fish pond with eight koi/goldfish(?).

    The next door neighbor has been feeding them but I’d really like to give them to someone who can take care of them.

    Any ideas?

  55. 55.

    Litlebritdifrnt

    OT but I don’t know if you guys have got the news over there that there are nasty goings on in the Netherlands etc., by anti-vaxxers et. al. Demonstrations, violence, chucking fireworks at the police, police retaliating with water cannons.  I was surprised to be honest, I thought Europeans were slightly more sensible but obviously not.  I even saw a “My Body My Choice” sign at one point, whodathunkit.

  59. 59.

    Xenos

    @Just Chuck: When I was studying for my series 7 license this was described as “painting the tape”, using fake transactions to pump and dump a security.  The patter of wire transfers leaves a pretty clear record of wire fraud, though, so I would not advise it.  The years in prison can add up with all those fraudulent payments being tied back to the promoters.

  61. 61.

    Xenos

    @mrmoshpotato: I deal with anti-vaxxers all the time in Europe.  Usually people who otherwise have good reason to distrust authority, and who are educated just enough to have still bought into authenticity as some sort of transcendent personal value.

    I don’t try to educate them, I just try to explain why their position is foolish.  The key is to cut them off when you can sense where they are going, so I am ranting about other people, not them, at least not necessarily.  Maybe it does some good.

  65. 65.

    Kent

    @Nukular Biskits: There are various sites like NextDoor where you can offer up free stuff to the neighborhood.  Every time I offer something for free on NextDoor I quickly get takers.  The politics side of NextDoor can be toxic, but it is a good way to buy and sell and give away stuff locally.

  67. 67.

    Nukular Biskits

    @Kent:
    Thanks for the suggestion.

    I’ll look into that but (and I probably should have provided a tad more background), we’re talking small town rural Mississippi.

    In any case, it’s part and parcel of what to do with the accumulation of a lifetime of treasures after someone passes.

  68. 68.

    HeleninEire

    @Starfish: LOL. My 87 year old Dad asked me what NFTs are. I told him it’s just like Crypto and Bitcoin. All bullshit. All of it.

    Because neither of us understand any of this bullshit he was satisfied with my answer.

    Pyramid schemes. All of it.

  72. 72.

    Sure Lurkalot

    Part of me sees why people fall for NFTs because inscrutable, also edgy.

    But I really don’t understand how people buy into multi level marketing scams like NuSkin, Amway, etc. Or timeshares.

  73. 73.

    Geminid

    @Nukular Biskits: There seem to be a lot of local koi clubs and associations out there. You might try looking up “Koi clubs near me.” Or, check out the Associated Koi Clubs of America website at AKCA.org. Good luck!

    Edit. Someone else’s suggestion of an aquarium store reminded me that water garden centers sell koi in addition to pumps, tubs etc. They might take fish off your hands. Finding a hobbyist would maybe be better, but a store will do the same, just make a little money off the fish.

  76. 76.

    Ohio Mom

    @Nukular Biskits: Is there an aquarium store nearby that sells koi? Maybe they’d buy them or have another idea. Or donate to them to a local botanical garden or zoo that has a koi pond? Or do as Kent suggests and advertise on Craigslist, Facebook Marketplace, etc.

    A friend whose mother just entered a memory care unit left behind a wild box turtle she had “rescued” and then overfed so much the fellow couldn’t get back in his shell.

    The zoo wouldn’t take him, suggested the turtle be returned to where he was originally kidnapped from. When my friend protested that he’d be eaten because he was too fat to protect himself, the zookeepers answer was a shrug and that other animals have to eat too.

    She eventually found a turtle rescuer to adopt the poor thing.

    ETA: oh, I see these fish are in the middle of nowhere. Oh well.

    Good luck and condolences on the loss of your mom.

  77. 77.

    Fair Economist

    @Ksmiami: Many cryptos are adding a more classic Ponzi aspect. Many coins now allow “staking” where traders performing transactions have to pay a fee to the existing coinowners who are staking. In many cases this could be an honest transaction, as the existing coinowners are securing the blockchain in these schemes (called “Proof of Stake”). If transactions on the blockchain serve some purpose *other* than buying the coin, like validating a credit card transaction or proving authenticity of branded goods, then those using the validation are paying a fee to the blockchain operators for a valuable service. BUT – if the coin exists only as a store of value, it’s a Ponzi scheme, and not just in the speculative bubble sense.

  80. 80.

    JoyceH

    @Sure Lurkalot:

    But I really don’t understand how people buy into multi level marketing scams like NuSkin, Amway, etc. Or timeshares.

    One of the streamers (I think Netflix), had an interesting three part series about Lularoe. It was really eye-opening. I had heard of Lularoe as a purveyor of popular leggings, but hadn’t realized it was an MLM. And you can kind of see how people fall for it. For one thing, the early joiners do make money, pots of money! So of course they’re enthusiastic, and that enthusiasm is convincing. Many of these MLMs target stay at home moms, and one of the sales points is to be able to contribute to the family’s finances. And then it gets very cult-like. If you’re a distributor and you’re not making the big bucks, they convince you that you’re just doing it wrong.

    Essential oils also became the product of choice for MLMs. Also cult-like, with these massive, massive rally-style conventions.

    I’ve known people who got involved in Amway and stuff like that, but the ones I knew didn’t get in too deep – they gave it a try, didn’t make much money, if any, gave up on it.

  83. 83.

    Matt McIrvin

    @Sure Lurkalot: Many of them run on cultural affinity, which is really what “inscrutable, therefore edgy” is. It’s just that in many cases it’s something like Christian evangelical affinity or New Agey affinity. You put a lot of language about Jesus or positive thinking in there, and to some people it just sounds right.

  85. 85.

    Urza

    @Major Major Major Major: I was working at a tech company in 2001.  They somehow messed up daylight savings, which mattered for their billing, every time until I got it.  It was literally just a table update and install it at the right time.  After I moved on they had issues again.  Not sure why its so hard.

  87. 87.

    SiubhanDuinne

    O/T; There’s apparently some very ugly shit going on in Wisconsin (Waukesha, I think?)

    From my very limited understanding of the very limited reporting, there was a crowd of people there protesting the Rittenhouse verdict; a speeding car went through a police line and into the crowd; and there reports of shots being fired.

    It’s all pretty vague, and unconfirmed so far. The above may be accurate, only partly accurate, or totally and wildly inaccurate.

    ETA: A Christmas parade, not a protest.

  92. 92.

    Nukular Biskits

    @Geminid:
    Yeah, I thought about calling the local Petsmart (in Meridian, MS) to see if they had any suggestions.

    Teh google is worth a try as well.  As  for someone making a buck or two off of “free fish”, well, that doesn’t bother me.  I’d just like to find someone who’d take care of them.

  93. 93.

    Sure Lurkalot

    @JoyceH: I’ll have to check out that series, sounds interesting.

    I too have friends and family who got pulled into one MLM product or another…popular with teachers too for some side income…but it often seemed the recruitment devolved to just more people trying to sell the same products to the about the same bunch of people.

  94. 94.

    Nukular Biskits

    @eclare:

    I haven’t tried Craigslist.
    I have used that in the past to buy/sell vehicles but it seems that CL doesn’t have the response it used to (I’ve a bike for sale on the local one and haven’t had a single hit … but, that may just be me).

    Worth a shot, though.

  96. 96.

    Nukular Biskits

    @Ohio Mom:

    Yeah.  With respect to Meridian, I’m reminded of a quote (apocryphal?) attributed to Mark Twain, that I adapt for my own purposes:

    When the end of the world comes, I want to be in Meridian/Mississippi* because it’s always 50 years behind.

    *whichever is appropriate

  100. 100.

    Nukular Biskits

    @eclare:

    I’m a native Mississippian, born & raised here.  Originally from Meridian, but been living here on the Coast for over 30 years.

    Pretty much anywhere north of I-10 and anything outside college towns in this benighted state are still stuck in the ’50s … the 1850s.

    ;>)

  103. 103.

    WaterGirl

    @Frankensteinbeck: Before my cocker spaniel was diagnosed with autoimmune hemolytic anemia, he she was (let’s say) very broad.

    One year for halloween I dressed her up as a table, she was broad enough for a placemat, a plate, silverware, a cup etc.

    She trimmed down a lot once they put her on prednisone.

  108. 108.

    trnc

    Anyway I have here a digital NTFS piglet in a poke here, if any one is interested in buying it.

    Wouldn’t that be a pork chain?

  110. 110.

    NWO Joe

    Not Too Fkng Smart

    My god bitcoin strains credibility. I remember when it first started and it was a little niche thing but now it’s like a cross between organized crime and Amway.

  111. 111.

    Citizen Alan

    @jackmac: At my last job, I was astonished when I dropped by the IT department and saw that they had a spare monitor set up just to track everybody’s DogeCoin accounts. It was all I could do not to shout “You’re IT! You’re all computer savvy! You should no better than this!”

  117. 117.

    WaterGirl

    @lowtechcyclist: For next time, or maybe for practice this time.

    Go to the tweet and click on the 3 dots in the upper right hand corner (in my browser anyway).

    Dropdox says “embed tweet” so I click on that.  It lets me copy the code which I paste into a comment using the Text tab (not the visual tab).

    The images won’t show up unless you are front-pager, but you get the tweet in a block quote.

  118. 118.

    Ohio Mom

    @Nukular Biskits: I googled Meridian, it really is the the middle of nowhere.

    Is there an upscale landscaping company nearby? Maybe they install koi ponds and have a customer who will take good care of your mom’s lovelies.

  122. 122.

    Tony Gerace

    @Kent: The Rittenhousing Bubble.  Unfortunately, it hasn’t burst yet.  I predict that young Kyle will make some real money on the Fox News/OAN/Newsmax circuit, at least until they find the next white teen celebrity murderer.

  124. 124.

    NWO Joe

    @Ken: 

    True. I was overlooking that intersectionality and thinking about the criminality just below the surface (“art” shilling and money laundering) and the compulsion many of those folks seem to have about relentlessly promoting it like it’s the way of the future. A hot mess either way…

  125. 125.

    lowtechcyclist

    @WaterGirl: Thanks! Let’s see if this works:

    .@jonkarl on the press challenge of covering Trump 2024, on @ReliableSources. “You’re covering essentially an anti-democratic candidate. You’re covering somebody running in a system that is trying to undermine that very system. And somebody who is going to be perpetually lying.”— Jim Maiella (@jimmaiella) November 21, 2021

    so what’s the challenge. just say that, you idiots https://t.co/AD3Px0ijCF— Elon Green (@elongreen) November 21, 2021

    (Yeah, I know it’s the next morning and all, but figured I could practice in this dead thread.)

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