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A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

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Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#121
post #85
post #80

Earlier quoted context omitted.

You mean, "giving them means to live in a tent near an Amazon fulfilment centre."

Who is forcing them to work at Amazon? Their lives are clearly better working there than if Amazon had never existed. If conditions are so bad that these employees live in tents, why not quit and.... oh wait.... live in tents (now with less money).

Ah the old "it's better to have a glass of water and a stale breadcrust than eat nothing at all".

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#122

Earlier quoted context omitted.

Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that…

There are plenty of stocks that no one ever expects any distribution or dividend from, but they know it represents a claim on real value (assets and incomes) in the business, and that there is a market where they can resell it for more money if the value of the underlying assets increase. All the incomes may go back into the business but that doesn't mean they don't increase real value.

At the end of the day, on even these stocks, the value is still predicated upon either those assets being sold and the value being distributed, or those incomes turning into a dividend or liquidation value. A business that reinvests its income into its own business does to because it believes that the return on that investment in the future exceeds the rate of return demanded by its equity investors. Otherwise, doing that would reduce the value of the stock.

It's impossible to assess, of course, but the true value of any equity is the net present value of the future cash it will generate for its holders. Full stop. Equity holders don't care about value in the business that won't translate into dollars coming out of the stock at some point in time.

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#123
post #107

Earlier quoted context omitted.

Unless you're straight-up stealing, you have to persuade people to hand over their money. The way you do that is by convincing them that what they're getting in return is valuable. Unfortunately people tend make value assessments that I think are horrible, and that causes entire industries to pivot in ways I don't like. For example, I love Nintendo's $60 games that come with plenty of content and no microtransactions…

I'm quite sure people that don't spend thousands of dollars (or even a penny) on microtransactions aren't the minority.

Indeed the non spender is in the majority.

"Whales" - the term for those spending thousands - although few in numbers, are the ones accounting for most of the profit.

https://modelviewculture.com/pieces/the-whales-of-microtrans...

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#124

Earlier quoted context omitted.

When you play the stock market (telling phrase there), are you not making a bet that your stock will increase in value?

Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that…

> if the dividend yield is high enough

Are you not then still betting that the stock continues to offer dividends / offers them at the same rate?

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#125
post #107

Earlier quoted context omitted.

Unless you're straight-up stealing, you have to persuade people to hand over their money. The way you do that is by convincing them that what they're getting in return is valuable. Unfortunately people tend make value assessments that I think are horrible, and that causes entire industries to pivot in ways I don't like. For example, I love Nintendo's $60 games that come with plenty of content and no microtransactions…

I'm quite sure people that don't spend thousands of dollars (or even a penny) on microtransactions aren't the minority.

Yeah, it is "whales" that support those games. The business model is to attract and retain people who pour money into the game for whatever reason.

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#126

Earlier quoted context omitted.

Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that…

How is the long term not gambling ? No one knows what going to happen tomorrow let alone in ten plus year. My bet is: it all comes down to risk tolerance. In the long term some forms of investments have shown, historically, to be consistently less risky, or more risky, than others.

Gambling and investing both involve risk, but they're not the same thing, and there's important differences. In particular, in most gambling, the sum of returns to participants is less than the amount wagered by all parties, whereas in equity investment it's generally / historically the opposite. Additionally, whereas gambling is generally fairly time-bounded, investing isn't, and in fact often rewards longer holds via dividend and coupon yields in addition to the potential difference between purchase and sale.

More to point: most studies show that you do best in investing simply by having money invested for long periods, and being diversified to mitigate secular risk. That wouldn't work in gambling.

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#127
post #23

Earlier quoted context omitted.

Wrong. https://www.investopedia.com/terms/m/marketvalue.asp Market value definition: > obtained by multiplying the number of its outstanding shares by the current share price The reality of selling has nothing to do with it. It's just a math equation.

Investopedia should not be your source of truth. While you can get quality education for free on the internet in various subjects(math, CS, biology) - financial markets is not one of them. Market value is exactly what the parent asserted it is, and the source of truth for that is your bank. If you are long 500k shares of AAPL and the quote is $100 - your bank will not consider you to have $50mil liquid assets. They k…

You've got the right idea, but picked the absolute wrong stock for your illustration. Apple's current market cap, i.e. shares outstanding times share price, is approximately $866 billion dollars.

Apple traded 21,583,997 shares today. Aggressively selling 500,000 shares (less than $100 million dollars worth) might move the market in this stock by perhaps 1%, certainly not anywhere near 10%.

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#128
post #107

I'm beginning to see how delusional it is to think you can make money by producing something useful or of value in people's lives. That's for lusers. Instead mess with the neural pathways of a large population such that they just give you their money.

Unless you're straight-up stealing, you have to persuade people to hand over their money. The way you do that is by convincing them that what they're getting in return is valuable. Unfortunately people tend make value assessments that I think are horrible, and that causes entire industries to pivot in ways I don't like. For example, I love Nintendo's $60 games that come with plenty of content and no microtransactions…

Your comment reminds me of the first half of this essay on Slate Star Codex, up to the comment about Las Vegas:

http://slatestarcodex.com/2014/07/30/meditations-on-moloch/

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#129

Earlier quoted context omitted.

Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that…

> if the dividend yield is high enough Are you not then still betting that the stock continues to offer dividends / offers them at the same rate?

If you choose a broad enough definition of betting, everything is gambling. But to be more specific, the post I replied to stated that everyone who invests in stocks is betting that their price will go up, which isn't true. There's good stock investments where you know the price of the stock is going to go down to zero, because you have high enough certainty that it will pay out dividends of sufficient value to justify the purchase price. (This would be typical of a "late stage" or "liquidation stage" enterprise.)

Re: A Cryptocurrency Website Changes Its Data, and $100B in Market Value Vanishes

#130

Earlier quoted context omitted.

How is the long term not gambling ? No one knows what going to happen tomorrow let alone in ten plus year. My bet is: it all comes down to risk tolerance. In the long term some forms of investments have shown, historically, to be consistently less risky, or more risky, than others.

Gambling and investing both involve risk, but they're not the same thing, and there's important differences. In particular, in most gambling, the sum of returns to participants is less than the amount wagered by all parties, whereas in equity investment it's generally / historically the opposite. Additionally, whereas gambling is generally fairly time-bounded, investing isn't, and in fact often rewards longer holds v…

You've made some great points, thank you.
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