zlacker

Indirection seems to be very valuable with scams. The 2008 housing crash had a lot of layers:

1. Loan Application (Borrower Lying about income) 2. Mortgage Originator ( Not validating loan application ) 3. Mortgage Back Security Creators ( Obfuscate what is in the security ) 4. Ratings Agencies ( Not being honest that step 3 happened ) 5. Sellers of MBS ( Not being honest that steps 1-4 exist )

I don't know enough about crypto to list out all the layers but I'm pretty sure I understand the first step:

1. Claim that underlying technology will be revolutionary just like the internet in a vague way that cannot be validated.

>>gitfan+(OP)
im pretty sure at this point everybody knows there is nothing behind it, at least 80% people that invest in something like this, so like Ponzi they hope that enough people will come in that they can cash out before everything falls out.

>>gitfan+(OP)
6. Buyer not caring about any of this

>>gitfan+(OP)
It's a psychological concept that maybe up to 15% of a deviation from cold hard truth is normal embelishment or puffing. When you line up 5 actors each puffing in the same direction it's easy to get a material total effect, e.g., 75% in the example above, while each actor can maybe feel comfortable themselves with their role in it. This unfortunately is not terribly unusual.

>>Random+C4
7. Absolutely nobody at all caring about this until shit hit the fan.

>>gitfan+(OP)
I'd swap 1) and 2). The people writing the mortgages were telling the borrowers to lie, and that the lies wouldn't be checked. It wasn't some oversight.

>>pessim+5e
I understand, there were some cases where #1 didn't even exist, The person at #2 edited the application without #1 knowing. But the #1 situation happened as well, sometimes because a realtor told them that was the only way they would get the house.

>>pessim+5e
I think it was mainly independent mortgage brokers who were telling borrowers to lie, not the actual banks who were providing them