Developments in the field of crypto "currencies" are viewed with suspicion by many.

Rising ratings, for example, are viewed critically, especially for some illustrious crypto investments.

In the two not really serious investments Dogecoin and Shiba Inu there is now as much money as Porsche and Henkel are worth together.

So-called "Memecoins", that is, systems with a somewhat significant name, have recently been in great demand.

Martin Hock

Editor in business.

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That this is not always a good idea was shown by the short-lived nature of "Squid", a memecoin based on the Netflix production "Squid Game", which is currently having its moment of attention in the public spotlight. It started on Tuesday the previous week with a face value of one American cent. Within a few days, the price hit more than $ 2,860. On Monday it fell back to $ 0.003161, and the coin is currently trading at $ 0.01441. The squid.cash website has disappeared, and with it investors' money.

Not that you couldn't have guessed it, writes Neil Wilson, chief market analyst at Markets.com. Not only because the coin has nothing to do with Netflix and the website made a dodgy impression, including a fake quote from Tesla boss and cryptoguru Elon Musk. Rather, because a sale of Squid was more or less excluded from the outset. The developers then sold it as an “innovative anti-dump mechanism”: the purchase would create “sales credits” in a pool, they said. If the pool is empty, it can no longer be sold. Wilson's conclusion: "If you can't sell it, it's not a market either."

While with stocks in many cases it is reasonably clear what a company does and how it makes money, it is different with crypto.

Few could explain what “cryptocurrencies” actually are and certainly not why one token should be worth more than the other.

And while a share represents a stake in a company and a right to future cash flows, that is more difficult to define with cryptos.

Inadequate regulation lies in the system, after all, it should be decentralized.

And so you can't tell with any new coin whether everything is okay with it.

Cryptoland is still the Wild West, where dodgy coins could still be more valuable than projects that were built on years of planning.

Always riskier bets

John Hargrave, editor of the Bitcoin Market Journal, recently put it this way: “DeFi can endanger your assets”, where “DeFi” stands for “Decentralized Finance” and thus for the crypto scene, sounds almost desperate. He believes that this will radically change the global financial system, and is also invested. But in the current state it is dangerous. It is full of gamblers and speculators who are making increasingly risky bets. At the moment, the future of the financial system is not being built, but a parallel version of its riskiest areas. The transaction prices are higher than bank fees, and the technology ultimately makes the rich richer and the poor poorer.

Hargrave specifically criticizes crypto lending platforms like Aave. So you have to overcollateralise borrowings, for example depositing $ 15,000 in Ethereum for a loan of $ 10,000 in Ethereum. Aave justified this with the fact that loans were taken out to leverage their own position, take advantage of new investment opportunities or unexpected expenses. In plain language, this means that loans are taken out for increasingly risky bets or to pay for daily expenses. That is exactly the same thing that happened to mortgage loans before the financial crisis. If, on the other hand, you lend money through Aave and transfer coins to the pool there, fees sometimes arise that are higher than the interest paid by loan sharks. Hargrave sees a basic problem in an old stock market adage: "Back and forth makes your pockets empty".He calls it the boredom syndrome. He believes in “DeFi”, but only if you persevere.