Of course because of this attitude there was way too much leverage in the system, which drove up prices to ATHs temporarily, but when the money supply ran out things quickly came back to reality and that leverage turned into bankruptcy.

Though in an alternate universe, the fed never raised rates, GBTC became a spot ETF, crypto fervor continued, and SBF is the richest man on earth having leveraged customer funds in a scam that actually worked out.

I never could understand this. Crypto currently makes up about 7% of the world's money supply, according to a quick search.

Bitcoin is currently ~30k USD. If you bumped that to 1 million USD, a 33x increase in value, and assume that other crypto would go up roughly the same amount...

... You get the impossible answer that crypto would be worth well over 200% of the entire rest of the money in the world.

This is ignoring inflation but from what I heard crypto nuts really thought this was possible in a short time frame, like 5-10 years, in which case inflation of real money wouldn't make a huge difference.

This is just ridiculous. All the possible outcomes don't make sense:

* you end up with a small group of mostly men controlling nearly all crypto so it's no different from the old system.

* Except there's even less checks and balances.

* It would massively destabilize the world economy and cause all kinds of inequality issues for people who don't have internet/technical ability

* But most importantly, the existing world governments would never accept it. At some point they would see this new force destabilizing their economies and established power structures and just say hell no. It would start with China and US, but eventually nearly every country in the world followed this. Then crypto is worthless because you can't spend it in a legal way and there's no way it would maintain a high value.

That quick search is clearly way off, It's closer to 0.1% - 1% depending on how you calculate it.

https://www.investopedia.com/tech/how-much-worlds-money-bitc...

Although this is using data from when Bitcoin was worth 50k.

Also the article you posted very specifically says that the market cap of cryptos is equivalent to 7% of the narrow money supply (not the full money supply, and NOT that crypto currently makes up about 7% of the world's money supply). Doesn't make sense to compare non-narrow with narrow IMO - i.e. you need to include ALL assets with the same liquidity.

Let's assume a 25x - 50x increase of the value of all crypto in a 5-10 year time span.

What percentage of all relevant assets would that make up? And would it be enough to destabilize world economies enough for governments to take action?

If you’re going to commit small scale fraud, you might as well commit large scale fraud, because on face, it seems less risky.

This is more a perceptions problem in Silicon Valley. Every fraud announcement is followed by hand wringing around the lack of prosecution. Every prosecution, convictions. Every conviction, sentencing.

1. Not considered what could happen after they have the money.

2. Think they are smart enough to will get away with it.

For the more run-of-the-mill crypto scammers, there's a combination of over-confidence that no one can touch them, or will bother to come after them. Or they just don't even think that far. For a lot of the bullshit influencer pump and dumps, the worst that's happened has been ZachXBT or Coffeezilla exposing your bullshit. Which is a good thing, but the influencer just pops back up with another get rich quick scheme in a couple months for a new group of rubes.

The big fish though... The FTX founder was described as being a gambling addict: he would take any risk as long as the outcome was statistically favorable. And I think this attitude was pervasive among many of the biggest crypto names. They were't looking for exits, they were looking to go even bigger because they can't help themselves.

Not always and for anybody but surprisingly many people are caught long after the interest of the public moved elsewhere.

Imagine a founder. He has an idea he thinks is brilliant. A sure money-maker. He's a bit of a dreamer, and objective observers would question whether it's possible. But the nay-sayers have been wrong before, and he believes in the idea. So he goes looking for money.

As part of that process, he learns to pitch. He figures out the most convincing things to say, and how to say them with maximum persuasion. Is what he saying true or correct? That doesn't really matter. It might not even be knowable at this point. The key incentives for him are whether people respond emotionally in ways that they give him money.

So imagine he does that and he gets the money. He has some investors who expect big returns. They may not really understand the topic, but they liked his confidence, and they too started to believe. But what they really want is more money back, and their belief is going to be partly contingent on seeing that happen.

Our founder starts to spend the money, trying to make it real. Maybe the product works. Maybe he has some success selling it. (Maybe he is even selling it despite it not working, a surprisingly common outcome.) It's not going as well as he hoped, but he's still confident. He still believes. Because that's the performance his investors want for him. But he's used to putting a positive spin on things, so he tells investors what they want to hear that it's going great.

At some point, some of the investors get nervous. They expected returns. He led them to believe there would be big returns. So he pays some of those people some money. An accountant might say he has to pay them profits, not other investors' money. But the money's all jumbled up both in his head and in the world. If there's any impropriety, something his brain will anxiously skip over, he knows he'll make it right in the end. Because this is going to be a big success.

From there, the cycle continues. The founder digs the hole deeper and deeper over time. As long as he's confident, as long as he performs success, new money will keep rolling in. And with it comes hope. Maybe it will all work out! Maybe they'll be so successful that they'll pay everybody back and nobody will notice a little early corner-cutting.

Objectively, of course, things are getting more and more obviously criminal. But there's nobody objective around. The founder is instead surrounded by dupes, fools, and the complicit. To the extent that anybody honestly recognizes the criminality, they mostly don't talk about it or they get out ASAP.

So to answer your question, there is generally no planned endgame, the same way I didn't have a planned endgame for eating a lot of cheeseburgers in my 20s. I may have heard about the consequences, but they didn't affect my behavior. It's not that I had a bad plan. I not only had no plan, but didn't think enough about the future to even have a place in my mind where a plan would go.

They hope to be in the majority who get away scot free and become one of the nouveau riche.

And then about 20% of people who just think the whole thing is "nifty" and getting to write fancy software or build a business around it is kinda fun, and they paid lots, so whatever.