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The Edited Latecomer’s Guide to Crypto

mollywhite.net

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Re: The Edited Latecomer’s Guide to Crypto

#81

Post by dvt »

forbiddenvoid wrote: post #59
dvt wrote: post #31

Earlier quoted context omitted.

Token offers (which a lot of crypto companies give), often have more upside than RSUs (especially if you're bullish on crypto as a whole), and definitely have more upside than early "traditional" startup equity (which is basically worthless).

In both crypto tokens and startup equity, you are literally gambling that there will be a liquid market for your asset. Tokens _are_ worthless if no one wants to buy them, and pretending that is somehow different than startup equity is ignorant at best and downright predatory in the worst cases. Crypto growth overall does not mean _your_ token is going to gain value anymore than the general growth of the economy mean…

> Tokens _are_ worthless if no one wants to buy them, and pretending that is somehow different than startup equity is ignorant at best and downright predatory in the worst cases.

Fundamentally not true. Unlike traditional markets, crypto exchanges work by leveraging AMM liquidity pools. Obviously, a token can go up/down based on supply and demand, but if there's liquidity you can literally always sell. Confusing early-stage startup equity is by far more predatory than giving someone some shitcoin with a vesting schedule. Any argument to the contrary is either disingenuous or misinformed.

With traditional equity offerings, you need to worry about: what class of stock did you get, what's the vesting preference, will you get diluted, what if you get fired, etc. I'm hardly a crypto bro, but imo startup equity is one of the biggest scams around that often takes advantage of young and inexperienced engineers that don't quite understand its financial underpinnings.

Re: The Edited Latecomer’s Guide to Crypto

#82

Post by trophycase »

phone8675309 wrote: post #21
jasonwatkinspdx wrote: post #9

Earlier quoted context omitted.

Working for a crypto startup can be a negative on your resume/CV as well.

I would not hire anybody with a crypto startup on their resume.

Former newspaper exec probably: "I would never hire someone who started out writing a blog"

Re: The Edited Latecomer’s Guide to Crypto

#83

Post by Karrot_Kream »

forbiddenvoid wrote: post #59
dvt wrote: post #31

Earlier quoted context omitted.

Token offers (which a lot of crypto companies give), often have more upside than RSUs (especially if you're bullish on crypto as a whole), and definitely have more upside than early "traditional" startup equity (which is basically worthless).

In both crypto tokens and startup equity, you are literally gambling that there will be a liquid market for your asset. Tokens _are_ worthless if no one wants to buy them, and pretending that is somehow different than startup equity is ignorant at best and downright predatory in the worst cases. Crypto growth overall does not mean _your_ token is going to gain value anymore than the general growth of the economy mean…

Indeed. It's the old quip about monopoly money. Personally, I would not be willing to accept tokens as a large part of my compensation full stop. I haven't dug into crypto offers though so I'm not sure how true that is. That said, unlike options, tokens almost always have liquidity immediately, so an engineer could (probably) trade their tokens for fiat value if needed where an individual with options would be tied down through the exercise process.

Re: The Edited Latecomer’s Guide to Crypto

#84

Post by trophycase »

NovemberWhiskey wrote: post #68
seibelj wrote: post #52

Earlier quoted context omitted.

I find a lot of DeFi projects to be very useful, but you have a logical fallacy - If I buy 1% of Apple stock at $100, and later it's worth $1000 based on the last trading price, money didn't change hands to make me have more USD, it's my paper wealth. If Bitcoin goes from $1 to $50k, and I never sell, I didn't take any money - the wealth simply grew.

The point is that holding Apple stock is a claim of ownership of the assets of Apple as well as the future income of Apple, either in the form of dividends or stock buybacks. The activity of Apple is economically meaningful; and the price of Apple stock reflects that.

The activity on Ethereum is economically meaningful, whether you believe it is or not. And let's be honest, Netflix or Facebook could disappear off the face of the earth tomorrow and productivity would arguably increase, so is that a negative sum game?

Re: The Edited Latecomer’s Guide to Crypto

#85

Post by FabHK »

twox2 wrote: post #38
librish wrote: post #36

Until someone has built a crypto product that creates values (for the purpose of this discussion it can be a good or a service would be willing to spend USD on even if it wasn't a crypto) crypto is a negative-sum game. Any USD taken out of the system someone else has to have put in, plus whatever the miners take out. Fortunes aren't created, they are redistributed.

How is it negative sum, and not just zero sum?

Miners are paid some $40m/day, through 1) creating more BTC (called "coinbase" here, "Seigniorage" more generally, leading to inflation) and 2) fees.

For now, the $100 miners siphon off per transaction are predominantly from 1), so those costs are not very visible.

And then of course the exchanges charging 20 to 120 bp (or more) for a roundtrip against money you can actually use. Coinbase (the exchange) alone takes around 0.4% of the entire crypto market cap per annum into its pockets.

Re: The Edited Latecomer’s Guide to Crypto

#86

Post by jonathan-adly »

ludamad wrote: post #4

Quoting a 2017 book about how thinly traded bitcoin is? I appreciate the concept but it doesn't always feel like it rounds out the takes. (FTR, I appreciate it's thin enough to make market cap misleading, but up-to-date liquidity figures would be helpful if we're trying to criticize market cap)

Bitcoin liquidity is about the same as the typical FAANG stock - which is pretty good. This a commentary by skeptics for skeptics - It is as factual as a reddit post on r/bitcoin.

If people actually want facts, then that's the wrong place to look.

Re: The Edited Latecomer’s Guide to Crypto

#87

Post by vmception »

forbiddenvoid wrote: post #59
dvt wrote: post #31

Earlier quoted context omitted.

Token offers (which a lot of crypto companies give), often have more upside than RSUs (especially if you're bullish on crypto as a whole), and definitely have more upside than early "traditional" startup equity (which is basically worthless).

In both crypto tokens and startup equity, you are literally gambling that there will be a liquid market for your asset. Tokens _are_ worthless if no one wants to buy them, and pretending that is somehow different than startup equity is ignorant at best and downright predatory in the worst cases. Crypto growth overall does not mean _your_ token is going to gain value anymore than the general growth of the economy mean…

there are some very important differences that we can focus on, while you can stick with the similarities:

1 - token vesting contracts are often much quicker than startup grants, and public company RSUs. A few months to a year, compared to 4 years.

2 - tokens achieve liquidity much faster and more reliably, in comparison to startup companies of a similar age. this allows new organizations to compete in hiring against FAANGs, where employees also are receiving liquid things to sell.

3 - token grants can be alongside startup equity. so its an additional part of the compensation package. As such there is no compromise to rant about.

and just to acknowledge the “issue” you care about, correct a market may never occur or form for the tokens, no different than the equity, there you go, a tiny disclaimer on page 34. I agree that every employee should be objective about that, this is the same standard with every kind of organization aiming to compensate partially in non-cash, which puts us right back at square one: pick the one thats both interesting and compensates well.

Re: The Edited Latecomer’s Guide to Crypto

#89

Post by omegaworks »

anonporridge wrote: post #50
librish wrote: post #36

Until someone has built a crypto product that creates values (for the purpose of this discussion it can be a good or a service would be willing to spend USD on even if it wasn't a crypto) crypto is a negative-sum game. Any USD taken out of the system someone else has to have put in, plus whatever the miners take out. Fortunes aren't created, they are redistributed.

That's like saying the USD is a negative sum game because "any CNY taken out of the system someone else has to have put in, plus whatever the government takes out. Fortunes aren't created, they are redistributed." The transference, redistribution, and storage of wealth is itself the value of monetary networks. The more circular trade that doesn't need to exit the network happens, the more valuable the network becomes…

>The point is to build an open monetary system

A structurally impossible goal when it is deflationary in nature.

Re: The Edited Latecomer’s Guide to Crypto

#90

Post by FabHK »

bigtunacan wrote: post #71
germanjoey wrote: post #44

The article (or, rather, the commentary in the link above on the article) talks about the fallacious notion of "market cap" in regards to cryptocurrencies. That is to say, e.g., multiplying the number of bitcoins in existence times the current market price is a silly metric because the entire market would never be able to cash-out at that maximum price. What I was wondering was: is there a better number? e.g., is the…

Overall, I enjoyed the analysis of the piece, but I disagree with their take on market cap. Amy Castor - "Yeah, market cap is a meaningless number. It assumes everyone bought at the current price and could cash out at the current price." We could just as easily apply that basic logic to any security. Amazon(AMZN) is ~3275 a share with a market cap of ~1.668T. That also assumes everyone could cash out at ~3275, but th…

> We could just as easily apply that basic logic to any security.

Not quite. An Amazon share is a claim on future residual cash flows, whose net present value constitutes the (unknown) "true value" of the share. If Amazon falls to 1/10th of its current price because of some tweet by Elon or whatever other (extraneous, fluke) reason, lots of people would be lining up to buy it, because they get a stake in an actual business that would repay them their investment within a few years. So, no, it would not reach 0 share price.

(So, while the argument in the article needs some refinement, its broad thrust is true: market cap for a publicly traded company is much more meaningful than market cap for a crypto currency.)

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