Bloomberg's finance expert Matt Levine presents 'The Crypto Story,' linking NFTs to Ponzi schemes and delving into the concept of the metaverse.
In Brief
Bloomberg shares a detailed 40,000-word analysis of the cryptocurrency sector written by financial authority Matt Levine.
In his article, he ties several aspects of the cryptocurrency realm, notably NFTs, to characteristics typical of Ponzi schemes.
Matt Levine mentions, 'I anticipate leaving this world without ever fully grasping what “the metaverse” is, so I wouldn't dream of explaining it to anyone else.' He clearly dismisses the whole concept of the metaverse.
In the most recent issue of Bloomberg Businessweek, finance writer Matt Levine offers an all-encompassing edition dubbed The Crypto Story. The Crypto Story This extensive 40,000-word piece examines a broad array of blockchain-related topics, simplifying complex concepts for readers who may still be confused about how this technology operates. DeFi works or what Bitcoin and NFTs are.
Matt Levine serves as a financial columnist for Bloomberg News. A Harvard graduate, he has previously held roles as both a lawyer and an investment banker. Currently, he writes Money Stuff, a newsletter that has garnered popularity on Wall Street.
The Crypto Story is structured into four chapters, offering foundational knowledge on topics like Bitcoin, blockchain, and ledgers. It provides insights into the practical applications and functionalities of cryptocurrencies and digital assets, explaining the underlying technology. The latter chapters address the crypto financial ecosystem, discussing DeFi, stablecoins, DAOs, and NFTs.
Ponzi schemes in Web3
Readers of this comprehensive crypto guide will note that Levine frequently uses the term 'Ponzi.' He argues that cryptocurrency, in many respects, represents a fresh avenue for venture capitalists to finance innovative software. projects or a complete Ponzi scheme.
He articulates, 'One could worryingly suggest that every web3 initiative operates as a Ponzi… The challenge with categorizing everything as a Ponzi is that it complicates whether your clientele is engaged for the product or merely the Ponzi aspect.'
A Ponzi scheme is, at its core, a deceitful business model promising extraordinary wealth to investors. On the surface, everything appears favorable as long as new investors keep coming in. Their funds sustain earlier investors, creating a false impression of a thriving enterprise. However, when investors start pulling out their money, reality sets in, leading to a collapse that leaves many with considerably less cash. Levine highlighted several examples of this behavior. Luna , 3AC , and OlympusDAO.
Levine hints at the prevalence of Ponzi-like structures in cryptocurrency due to rampant market speculation, illustrating that communities form around token ownership, where the user often doubles as the investor. Dominant players, often referred to as whales, exert significant influence over market movements.
Regarding NFTs, Levine acknowledges their cultural significance but views the underlying technology as lacking. He asserts that digital assets signify a sense of ownership rather than actual ownership, mirroring the experiences within communities like the Bored Ape Yacht Club.
He describes NFTs succinctly: 'When you acquire an NFT, you're essentially receiving a record on the blockchain that indicates you possess a connection to a specific web server.'
Levine contests the prevailing idea that 'Art exists on the blockchain,' clarifying that intellectual property rights lie outside the blockchain’s authority.
He notes, 'The NFT specifications provide no guidelines about what the image \"should\" depict nor do they guarantee that you possess the \"correct\" image,' quoting cryptographer Moxie Marlinspike.
When discussing the metaverse, Levine admits he has no clear understanding of it (and is likely to remain puzzled). However, he connects the concept of purchasing virtual real estate to the idea of digital scarcity, likening it to NFTs. He argues that all Web3 initiatives should aspire to offer more than just a straightforward 'get-rich-quick' approach, exploring innovative functionalities and promising technologies to propel the sector forward.
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uz uz Agne is a journalist who tracks the latest trends and advancements in the realms of the metaverse, artificial intelligence, and Web3 for the Metaverse Post. Her enthusiasm for storytelling has driven her to conduct numerous interviews with leading experts in these fields, always on the lookout for captivating and enriching narratives. Agne earned her Bachelor’s degree in literature and possesses extensive experience writing on a diverse array of topics, encompassing travel, art, and culture. She has also volunteered as an editor for an animal rights organization, where she played a role in raising awareness regarding animal welfare issues. You can reach out to her at