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Thoughts on Tokens

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Re: Thoughts on Tokens

#51

Post by TeMPOraL »

Jabanga wrote: post #50
modeless wrote: post #39

Earlier quoted context omitted.

Stopping investment scams like the current ICO bubble is exactly the reason the SEC exists. It is an absolute certainty that this party is going to end in regulation and it's also likely that a bunch of people will end up in jail. The only real question is how long it will take the regulators to figure out which one of them has jurisdiction here. I say this as an early Bitcoin investor and current holder. Bitcoin was…

Claiming that adults making their own decision to buy the equivalent of a digital collectible, is a scam, and should be prohibited with long stretches of time in prison for those who take part, is why income disparity continues increasing [1], why the financial sector is dominated by a handful of corporate giants, and why it costs $6 million to do an IPO [2]. Attitudes like yours are not consistent with the principle…

> Attitudes like yours are not consistent with the principles of liberal democracy, which rest on the idea that we should be free to do with our body and property whatever we wish, as long as it violates no one's right to the same.

If so, then I'd say it's clear those principles (as presented by you) are wrong. They don't take into account the fact that human beings are not independent, perfectly rational actors. Decisions people make are directly influenced both by their situation/environment and by actions of other people. If you can predictably fool an average person into doing something against their interest and what they'll later regret, then there's no talking about "free will" here.

Fortunately, laws do recognize that fact. A lot of them exist to shield people from being predictably exploited. The question is not whether it's right or wrong to regulate some business models; the question is whether the model is harmful and whether it's worth to regulate it.

That's the practical reality of fallible humans with finite computational capacity.

Re: Thoughts on Tokens

#52

Post by harryh »

wmf wrote: post #30
harryh wrote: post #26

To me the two most provocative points made in this essay are that tokens could be used to fund open source projects and that tokens could be used to distribute some of the value in large successful internet companies like Google & FB to early adopters. I don't see how this would work though. I buy a token for some random open source project (say a unit testing library because they link to one as an example). And then…

I think the idea is that people have to spend the tokens to use the network and thus they buy tokens from early adopters. https://coincenter.org/entry/what-are-appcoins

Ya, I thought of that but that doesn't really make sense to me either. Open source projects tend to be free to use. Under this plan you need a token. Which costs money. That's a big change!

Kinda sounds like they're saying that if you change your open source project to a proprietary software project you can get people to pay for it. Now that may be true (for some projects at least) but that's fundamentally changing the nature of what it is you're building.

Re: Thoughts on Tokens

#54

Post by cm2187 »

runeks wrote: post #46

If the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were luck…

You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation.

But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which ancient romans were buying goods with, you can still buy a suit with it today. You can call that a convention but it is a convention dictated by the laws of physics, not by some white paper.

Fiat currencies instead only have value by convention or law, anyone can manufacture a new fiat currency, like everyone can create a new blockchain. A government can by law change the algorithm behind any of these blockchains. But a government cannot create gold. If someone finds a bitcoin key in 2000 years, long after the western civilisation is gone, it will be an interesting piece of history that can but placed in a museum, but you won't be able to buy a suit with it. With gold you will.

Re: Thoughts on Tokens

#55

Post by arethuza »

cm2187 wrote: post #54
runeks wrote: post #46

If the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were luck…

You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which an…

"With gold you will."

I think I'd view it that either things will have changed so much that the idea of exchanging physical objects for a bit of shiny metal seems ludicrously crude or that we've had a widespread total collapse and nobody is interested in shiny soft metal either (gold seems to have been used from 5th millenium BC which is a long time but definitely not "forever" in terms of human pre-history).

Re: Thoughts on Tokens

#56

Post by mettamage »

cm2187 wrote: post #54
runeks wrote: post #46

If the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were luck…

You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which an…

> Commodities have an intrinsic value due to their rarity

I tend to agree with this reasoning, but isn't it also the case that people try to give the illusion that commodities are rare? E.g. diamonds

Re: Thoughts on Tokens

#57

Post by runeks »

cm2187 wrote: post #54
runeks wrote: post #46

If the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were luck…

You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which an…

> You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation.

By my definition, that's not an investment. Nor would buying a rare painting be an investment, but speculation. By buying gold, or a rare painting, and keeping it locked away in your house, you're not making capital available for productive use. You're just speculating that its price, as measured in dollars, will increase. A transfer of value from the next buyer to yourself happens when you sell it, but no value has been produced.

Regardless of the terminology we choose, can't we agree there's a fundamental difference between buying something with money and holding on to that, versus making that money available for productive use (e.g. a producer buying more efficient machinery)? When you buy a bond you're investing, because the issuer can use your capital to increase its productivity, while paying out a part of the resulting profits as a yield. When you buy a lump of gold and gold on to it, all you're hoping for is that the dollar will be devalued sufficiently to make it appear that you can sell it for a profit (in dollars). No increase in productivity needs to take place for the latter to occur, whereas in the former case bond issuers can't afford to pay interest without creating profits.

Re: Thoughts on Tokens

#58

Post by cm2187 »

runeks wrote: post #57
cm2187 wrote: post #54

Earlier quoted context omitted.

You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which an…

> You can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. By my definition, that's not an investment. Nor would buying a rare painting be an investment, but speculation. By buying gold, or a rare painting, and keeping it locked away in your house, you're not making capital available for productive use. You're just specu…

I am not sure you can define a line between investing, speculation, lending or gambling. They are essentially the same thing. For each of them you take a calculated risk with your capital in exchange for a future profit.

Re: Thoughts on Tokens

#59

Post by hectorr »

runeks wrote: post #46

If the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were luck…

I agree with you, this is all true in theory, but this definition also excludes non-dividend stocks that offer no governance controls. Like Snap, Google, Facebook, Amazon, etc. In addition, the move to buybacks in lieu of dividends in many companies changes the shareholder dynamics considerably. So does the fact that a ton of money is indexing these days.

The market has fundamentally changed. Graham was right, as proved by Buffett, but even Berkshire can't make Berkshire returns anymore. To make money in investing you have to be right when other people are wrong, otherwise the value is priced in. So speculation does have economic benefit, in that it serves to help find new value and fund boundary-pushing projects. It is VC with more liquidity and lower barriers to entry.

Sure, a lot of speculators will lose their shirt, but who cares? As long as they aren't over levered, the rest of society benefits from the fruits of their risk.

Re: Thoughts on Tokens

#60

Post by strgrd »

Jabanga wrote: post #50
modeless wrote: post #39

Earlier quoted context omitted.

Stopping investment scams like the current ICO bubble is exactly the reason the SEC exists. It is an absolute certainty that this party is going to end in regulation and it's also likely that a bunch of people will end up in jail. The only real question is how long it will take the regulators to figure out which one of them has jurisdiction here. I say this as an early Bitcoin investor and current holder. Bitcoin was…

Claiming that adults making their own decision to buy the equivalent of a digital collectible, is a scam, and should be prohibited with long stretches of time in prison for those who take part, is why income disparity continues increasing [1], why the financial sector is dominated by a handful of corporate giants, and why it costs $6 million to do an IPO [2]. Attitudes like yours are not consistent with the principle…

Divest before it's too late...
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