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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

#111

Post by NovemberWhiskey »

dvt wrote: post #108
NovemberWhiskey wrote: post #101

Earlier quoted context omitted.

Help me out here. I'm going to issue a hundred trillion MostExtraordinaryShitCoin (MESC). What's the bid for MESC from these AMM pools?

(Sorry for late reply, HN time-limits nested comment replies.) Basically, if you were to issue N tokens into an AMM, you would also need to provide the counter-party liquidity. So let's say you're sending 100 MESC to a pool, and the initial price is 0.01 USD (to keep it simple), you would also have to seed the pool with 1 USD. Once that's done, people start trading -- some other people might even provide liquidity (a…

This whole discussion starts from your response to a comment that "[t]okens _are_ worthless if no one wants to buy them", asserting that this was "[f]undamentally not true".

But it seems very much that it is true. Did you mean to make a different point?

Re: The Edited Latecomer’s Guide to Crypto

#112

Post by eatonphil »

woodruffw wrote: post #2

Excellent editing. I’m an otherwise fervent defender of the NYT (even through its many mistakes), but the lack of basic critical analysis and obvious conflicts of interest in this piece were a bridge too far for even me.

I agree this piece was embarrassingly lazy. But what were the conflicts of interest? Just a quick check and I can't exactly find him having ties to any crypto company.

Re: The Edited Latecomer’s Guide to Crypto

#113

Post by acdha »

mrb wrote: post #47
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…

The market cap metric may seem silly to you, but it's the same metric used by publicly traded corporations. And there is nothing silly about it. All shareholders would never be able to cash out at the current share price, but this isn't a reason to disregard the market cap metric.

There’s a key difference: corporate shares have a value anchored in the company’s assets and revenue. The market cap can still fluctuate, of course, because different people will have different assessments of the future profitability but the floor is going to be based on the company’s assets, contracts and sales predictions, obligations, etc.

In contrast, cryptocurrencies have no floor because there’s no inherent value to a random number and nobody has a need to pay for a specific token. If something falls out of favor, there’s no reason to expect to find a buyer at any price.

Re: The Edited Latecomer’s Guide to Crypto

#114

Post by acdha »

jacinabox wrote: post #33
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)

Most bitcoin have never been sold. Bitcoin is a commodity that is intended to serve as a store of value, and other commodities like gold and silver do their work as a store of value without an appreciable fraction of them ever being sold. So using the term market cap is not a misleading measure in relation to bitcoin; it is simply used by analogy to how it would be used for a company; it's not literally implying that…

Bitcoin is a failed currency - see the original paper. After around a decade of failing to find demand the big holders started to market it as a commodity but since there’s no inherent value to it unless it’s actively traded it doesn’t really fit the usual meaning of that term.

Re: The Edited Latecomer’s Guide to Crypto

#115

Post by nightski »

acdha wrote: post #113
mrb wrote: post #47

Earlier quoted context omitted.

The market cap metric may seem silly to you, but it's the same metric used by publicly traded corporations. And there is nothing silly about it. All shareholders would never be able to cash out at the current share price, but this isn't a reason to disregard the market cap metric.

There’s a key difference: corporate shares have a value anchored in the company’s assets and revenue. The market cap can still fluctuate, of course, because different people will have different assessments of the future profitability but the floor is going to be based on the company’s assets, contracts and sales predictions, obligations, etc. In contrast, cryptocurrencies have no floor because there’s no inherent val…

Value is anchored in the equilibrium between supply and demand, that's it.

Maybe the things you mention do drive that equilibrium. But I'd bet you'd have a hard time developing a profitable trading strategy based on those metrics alone. I know I have tried with little success.

Re: The Edited Latecomer’s Guide to Crypto

#117

Post by throw0101a »

jjtheblunt wrote: post #97
detaro wrote: post #69

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Astroturfing > Astroturfing is the practice of masking the sponsors of a message or organization (e.g., political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participants. It is a practice intended to give the statements or organizations credibility by withholding information about the source's financial conne…

thank you

The source (etymology) of the phrase is a play on words:

* "grass roots" support is an 'authentic' community response on an issue

* AstroTurf® is an artificial playing surface used in some sports facilities (especially indoor ones), instead of a one made from real grass

So "astroturfing" is the creation of an 'artificial community response'.

Re: The Edited Latecomer’s Guide to Crypto

#118

Post by FabHK »

nightski wrote: post #110
FabHK wrote: post #90

Earlier quoted context omitted.

> 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 bu…

In theory it sounds so logical! Is it though? Have you actually tried to apply this in practice to a trading strategy? I think once you start trying to predict prices based on NPV of future cash flows this quickly falls apart, even with large behemoths like Microsoft, Apple, etc...

I am not suggesting that you or I can compute the NPV of future cash flows and then value the share, certainly not easily. But that was not the point. The point was to distinguish shares (and other securities) from coins: the price of the former is (softly) constrained to be within the vicinity of their intrinsic value. Cryptos have zero intrinsic value.

Re: The Edited Latecomer’s Guide to Crypto

#120

Post by flaque »

The issue with crypto is that reasonable use cases are early, and don’t attract attention except for niche communities.

There’s a few big ones, for example, filecoin right now has created a commodity market for storage that is currently 10,000 cheaper than S3 in some instances. (See file.app for stats)

But realistically, the interesting projects are very small and hard to find.

However, scams and ponzi schemes, by their nature are very public, easy to find, and have lots of people talking about them (often for financial gain).

Everyone building anything sane is so tired of having to explain that their thing isn’t a ponzi, isn’t an nft thing, and isn’t shilling proof of work, that they don’t post to hacker news, and so they exist outside of your bubble.

Crypto is like the story of the blind scientists studying an elephant. The first one touches its trunk and says “it’s a snake!”, the next one touches its tusk and says “it’s a spear!”, the next one touches its side and says “it’s a wall!”. None have the correct answer, because no single party has a full view.

The crypto skeptics are as irrational as the crypto optimists: firm believers in their own view, based on an incomplete information.

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