- Fraud is of course the giant pixelated elephant in this particular paper. Barbon and Ranaldo don’t venture into causation, making only passing references to the likelihood that the sophisticated cohort disguise their intentions by running multiple wallets and avoid crashes by causing them.
Is there really an analogy here to other market bubbles? If we take a couple of the most recent bubbles as an example, the tech bubble and the housing bubble, pump and dump schemes are pretty hard in the former case and basically impossible in the latter. What the three may have in common is that each was caused by an excess of easy money injected into the market. We never saw CPI inflation in the run up to the housing bubble nor in the aftermath during the tech bubble. But we sure saw asset inflation. And obviously the NFT craze was probably a special edge case of asset inflation that was driven in part by free money that was put into crypto that in turn was parlayed into NFTs. But in a new, distributed, unregulated space like NFTs, pump and dump was not just unsurprising but probably inevitable. Question is did anyone actually ever pay like a million dollars for an NFT or was it a million crypto-equivalent dollars that the buyer probably paid some relatively small amount for years earlier? Part of me thinks that there has never been a better case of a fool and his money being parted than a million dollar gif.
Tech bubble was absolutely pump and dump. It was the first example of VC money going bat shit. I had a half-dozen friends whose lifestyles were entirely subsidized by insane valuations and the minute reality set in they wandered around like broken gold panners. Around here they were referred to as "'99ers" in reference to the '49ers of gold panning lore. Housing bubble was definitely risk displacement, not pump and dump. I think the broader point is that the NFT misadventure has much better metrics, therefore what can we work back from the metrics. Maybe nothing? But fuck, everyone just automatically assumes Goldman Sachs knows what AI is going to do about employment despite the fact that the only time GS has ever been right about anything is when they're trading on insider information. And I think that's the main point: we have anecdotal evidence of tulip mania, mostly from the British who were making fun of it. We have anecdotal evidence of the Spanish Inquisition, mostly from the British who were making fun of it. We have anecdotal evidence of the horrors of the Persian Empire, mostly from Heroditus who was making fun of it. NFTs? We have receipts. Where it touched real money isn't really the point - it's that we have exquisite data, what can we scry from it to apply to stuff that isn't weird corner case jpegs.Question is did anyone actually ever pay like a million dollars for an NFT or was it a million crypto-equivalent dollars that the buyer probably paid some relatively small amount for years earlier? Part of me thinks that there has never been a better case of a fool and his money being parted than a million dollar gif.