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Dogecoin's inventor looks to the past for insight into the future

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Re: Dogecoin's inventor looks to the past for insight into the future

#51

Post by saosebastiao »

JumpCrisscross wrote: post #45
saosebastiao wrote: post #42

The problem is the use of market cap as a valuation metric. It is absurd to think that your joke cryptocurrency is actually worth $2B just because one person was willing to trade at a price that implies $2B. To show the absurdity, consider the people who buy used cooking oil from restaurants to turn into biodiesel for their modified 1975 mercedes 300D. They might pay $2/gallon for that used cooking oil. Would it be r…

> The problem is the use of market cap as a valuation metric The currency analog to market cap is money supply [1]. It's a specialized term with less general utility than market cap for equities. Market cap is a useful statistic because when it comes to shares, the whole is worth more than the sum of its parts. If you buy every share of Apple stock outstanding, you own a business throwing off $60 billion a year [2].…

No, money supply is a pure count. Money supply is not quoted in terms of trade, it exists purely outside of market behavior.

Market cap requires a trade market in order for it to be calculated. It is money supply x last trade price. That's why you quote a cryptocurrency's market cap in some other currency, whereas a market cap is quoted in terms of itself.

Re: Dogecoin's inventor looks to the past for insight into the future

#52

Post by rthomas6 »

vec wrote: post #33
throwaway30yo wrote: post #20

Earlier quoted context omitted.

Lots already have succeeded. I have worked at 2 non crypto startups now that have been founded by someones crypto gains.

This is the kind of dangerous thinking that fuels speculation bubbles. Bubbles go up and up and up until they plummet all at once. Everyone looks like they're winning all the way up until everyone suddenly loses together. Maybe Bitcoin isn't a speculation bubble; maybe it's something new. But if you ignore the underlying tech and just look at the price chart it sure looks like an old fashioned speculation bubble, and…

The internet was something new, and it fueled a speculation bubble. I think we are seeing something similar with cryptocurrencies. Are they something innovative and potentially useful? Yes. Do their valuations make sense? No.

Re: Dogecoin's inventor looks to the past for insight into the future

#53

Post by saosebastiao »

josu wrote: post #44
saosebastiao wrote: post #42

The problem is the use of market cap as a valuation metric. It is absurd to think that your joke cryptocurrency is actually worth $2B just because one person was willing to trade at a price that implies $2B. To show the absurdity, consider the people who buy used cooking oil from restaurants to turn into biodiesel for their modified 1975 mercedes 300D. They might pay $2/gallon for that used cooking oil. Would it be r…

As of now Dogecoin has a 24hour volume of 58M US dollars. This is not just one person, this is a market consensus on the value of each coin.

And what if 90% of that market consensus is really just 10 different high frequency traders battling for top market making position, with the occasional humdrum buying to "diversify"?

The market depth says a lot more about a currency's value than the market price or even volume does. It's not something that can be summed up into a tidy single number, though. Which means people don't talk about it when when writing glorified blog posts.

Re: Dogecoin's inventor looks to the past for insight into the future

#54

Post by wuliwong »

I think that this article has too many anecdotal references to scams and profiteers but there isn't any sense of the statistics or scale. Without knowing if people are behaving worse on average in the crypto world or the fiat world, I don't find them very helpful.

My anecdotal experience has been really wonderful in crypto. I've become part of a really nice online community where people are eager to share ideas and help each other out. I've also found the crypto market to be far more approachable than traditional investments for myself. But who knows, maybe I just have been lucky?

Re: Dogecoin's inventor looks to the past for insight into the future

#55

Post by soVeryTired »

wuliwong wrote: post #50
meri_dian wrote: post #2

>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt." The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. Decentralization would not do away with the need for financial institutions (or the…

I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these interest rates were at the heart of the most recent financial crisis in the US. A decentralized currency would certainly mitigate that.

What exactly do you mean by 'artificially low'? All short term rates are just a function of central bank policy. The bank will raise or lower rates in an attempt to control inflation (and any other mandate). 'Abnormal' I'd grant you, but not artificial.

Re: Dogecoin's inventor looks to the past for insight into the future

#56

Post by JumpCrisscross »

saosebastiao wrote: post #51
JumpCrisscross wrote: post #45

Earlier quoted context omitted.

> The problem is the use of market cap as a valuation metric The currency analog to market cap is money supply [1]. It's a specialized term with less general utility than market cap for equities. Market cap is a useful statistic because when it comes to shares, the whole is worth more than the sum of its parts. If you buy every share of Apple stock outstanding, you own a business throwing off $60 billion a year [2].…

No, money supply is a pure count. Money supply is not quoted in terms of trade, it exists purely outside of market behavior. Market cap requires a trade market in order for it to be calculated. It is money supply x last trade price . That's why you quote a cryptocurrency's market cap in some other currency, whereas a market cap is quoted in terms of itself.

> Money supply is not quoted in terms of trade, it exists purely outside of market behavior

FX traders absolutely look at money supply, amongst other things, re-priced into hard currency when considering e.g. foreign-currency debt burdens; local rates, inflation and borrowing conditions; and the monetary policy relative to the internal and export-oriented economy. It's a specialist metric, though.

Re: Dogecoin's inventor looks to the past for insight into the future

#57

Post by starlust2 »

throwaway30yo wrote: post #20
nefitty wrote: post #11

Earlier quoted context omitted.

I wonder how many young, talented, technology-minded people will be set back if this "bubble" does pop.

Lots already have succeeded. I have worked at 2 non crypto startups now that have been founded by someones crypto gains.

If you're smart enough to pull out profits and diversify then you're fine. It's those that go all in, "it can only go up", that are going to be in trouble. I fear a lot more people are in the latter group than the former.

Re: Dogecoin's inventor looks to the past for insight into the future

#58

Post by zodiac »

jedberg wrote: post #49
throwaway30yo wrote: post #25

DOGE is a pretty good currency to use for moving money between exchanges. That is why its used. If BTC had low/no transaction fees and was fast, people would have less incentive to use DOGE. Overvalued? Its possible but I think the entire crypto market is actually insanely undervalued. I was talking to my financial advisor the other day and he said pretty much 100% of people now are asking him about crypto and are co…

If you're invested I wish you the best. But here is why I think all cryptocurrency is worthless: It is backed by nothing. The USD is backed by the courts of the USA, which in turned are backed by people with guns (law enforcement and the military). The YEN is backed by guns. The GPB is backed by guns. What is BTC backed by? If someone literally steals your BTC, what recourse do you have? There is no court to go to, n…

What precisely do you mean by "The USD is backed by the courts of the USA"? Do you literally mean "if someone takes my USD by force I can sue them"?

Re: Dogecoin's inventor looks to the past for insight into the future

#59

Post by cinquemb »

stanleydrew wrote: post #46
andrewla wrote: post #43

Earlier quoted context omitted.

> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. I can't speak for every ideological bitcoin supporter, but you and I may differ on what constituted the "crisis". I agree that it would not deal with the activity which led to the financial crisis. But to many, the crisis was not that the banks all failed, but that they were not allowed to…

I'm not sure what your point is. If all banks switched from dollars to Bitcoin, they could still be bailed out.

Well look at it from this perspective:

If a tbtf bank algo went haywire when trading with the intent to maintain some position in cryptocurrencies because of some market spike/error/or w/e over an exchange and lost alot of money, yet others who were on the other side of the trade safely moved their gains to private wallets, the exchange wouldnt be able to negate those trades and claw back funds (like they did during the gfc) and those tbtf banks will be out of their desired positions; such that even if they were bailed out by some CB QE program, they'd still have to spend those bailed out funds to re-enter their previous positions.

Meanwhile those who came out on the otherside of the trade with their desired positions will still have more resources to allocate at their disposal than had they been clawed back/reveresed.

Re: Dogecoin's inventor looks to the past for insight into the future

#60

Post by roymurdock »

Crypto allows people to do 2 very important and useful things:

1) Move money around government currency controls (for a small fee)

2) Invest and speculate on potentially valuable assets. Sure you can't live in, eat, or drive a Bitcoin, but finance/trading is all about creating and betting on abstractions, and virtual currencies are the ultimate abstraction. Crypto is especially attractive given the current easy money low volatility environment)

I am similar to the author in that I was very excited about blockchain and its implications in 2013/2014 and had recently become very disillusioned with how adoption played out in the real world.

I think it's time to move past this disillusionment and face reality instead of continuously being angry at how nonsensical a lot of this is, no matter how "useful" we really think these 2 current uses of cryptocurrency are.

The reality is that we are living in a world (in the US at least) we trust traditional institutions/knowledge to be able to provide common goods and help us raise our standard of living less and less. What do we want to do about that? Getting mad/worried about cryptocurrency speculation is not the answer.

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