161–170 of 331 posts
Earlier quoted context omitted.
How is it negative sum, and not just zero sum?
Carbon footprint, and convincing people that a JPEG is an asset that will go up.
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.
I'm curious if this comment is a usual fare of shallow dismissal or if you are aware of current applications of crypto in the wild and consider them to be useless nonetheless. One example that comes to mind is that Docusign offers a product that uses Ethereum for storing evidence of contracts in a decentralized medium. That seems like a fairly legitimate application for the technology. Another example (albeit possibl…
For the case you mentioned, is anyone actually using this tech for their contracts? No Docusign (or any other) document I have ever signed was written to any blockchain. Have any real legal disputes ever been resolved by looking up a public ledger?
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…
Today, there is 1.7M unspent coinbase tx out of a emitted 19M coins. Once moved from a coinbase-tx, 4.3M are older than 5y, with 2.4M at >10y.
Most Bitcoin have been sold many times in their life, but they do typically sleep for a long time, given the switch of time preference. MtGox alone would have cycled a majority of the coins in its short lifetime.
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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…
Corporations can still very much "fall out of flavor", driving their revenues and assets to zero. This criticism isn't only applicable to crypto. And cryptocurrencies' intrinsic value is this: they are payment networks that work even where traditional systems fail. No denied transactions. No limits. No "account" to open. Works for the underbanked. Send money truly anytime anywhere. No other system does this. That's t…
That's technically correct but missing the point: cryptocurrencies are an extreme outlier in that they have literally nothing other than social consensus backing them. If you look at examples of failing companies you will find a few cases of Theranos-level fraud but far more cases where a company was mismanaged into the ground but shareholders received _something_ and it's not common for this to happen so quickly that nobody had time to react. The more common trajectory is something like Sears or RIM where the writing was on the wall for years while the PE guys strip-mined the corpse or someone buys it to go patent-trolling, where a savvy investor has plenty of time to exit before the end and the people at the end still receive a fractional payout.
> And cryptocurrencies' intrinsic value is this: they are payment networks that work even where traditional systems fail. No denied transactions. No limits. No "account" to open. Works for the underbanked. Send money truly anytime anywhere. No other system does this. That's the value.
This is a good example of the problem: those claims are either completely untrue or significantly overstated but you have a significant financial interest in repeating them because being honest will imperil your ability to find someone willing to pay more for your random numbers than you paid originally.
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.
I'm curious if this comment is a usual fare of shallow dismissal or if you are aware of current applications of crypto in the wild and consider them to be useless nonetheless. One example that comes to mind is that Docusign offers a product that uses Ethereum for storing evidence of contracts in a decentralized medium. That seems like a fairly legitimate application for the technology. Another example (albeit possibl…
Earlier quoted context omitted.
> Eventually it would reach ~0 share price and effectively a 0 market cap. This is the misunderstanding breaking your argument: AMZN shares are fractional ownership of a company with assets and ongoing revenue. In the event of a business downturn, those will go down but they’re not going to zero in any plausible scenario - even bankruptcies usually return some fraction of value to shareholders. This is important to u…
They represent the same value prop as any stock. Any company could go to 0 and the floor of the exchange is littered with delisted companies. Amazon is big and the chances it goes to 0 are less than a company still making vcrs. The same can be applied to bitcoin. Government and other contracts could be cancelled. The value of assets can be lower the debt. Bitcoin has no debt while a company like Amazon can have billi…
Try thinking about this a bit more: what do you have if you buy a share of stock? What does that company own, what is its ongoing cash flow, etc. Now repeat the same thing for Bitcoin and notice how the answer is “nothing” except for the possibility of getting someone else to buy your coins.
That's the difference: there's no plausible reason to think that people are suddenly going to stop shopping online or using cloud computing. The price isn't going to suddenly tank because other people will buy into a popular company which has shown it can reliably run profitable businesses.
In contrast, nobody needs Bitcoin for any reason — we all have alternatives for currency, value storage, etc. which are cheaper, faster, and easier to use and almost nobody as a requirement that they buy Bitcoin. If some web3 play actually comes up with something normal people want and they all switch to Ethereum, there's no floor on the price. Unlike Amazon, there's no revenue stream which can be used to pay dividends or buy shares back when the price falls.
Another way to think about it is to ask who'd notice if it's gone. Amazon disappearing would disrupt business all over the world in multiple industries, and that cost of switching provides a lot of inertia. Bitcoin is mostly used for speculation and the vast majority of the fraction of transactions representing real economic value have easy replacements. When the switching cost is that low, there's little pressure to stay. Even if you really believe cryptocurrencies are the future, there's no law of the universe saying it's going to be this one rather than the many drop-in replacements.
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Why's that?
A rational actor would never spend a deflationary currency since it would gain value as deflation happens. If everyone was rational, no money would ever change hands. You can’t have a functional monetary system without liquidity or exchanging of currency. Bitcoin is a deflationary currency (for now)
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…
For PoW coins there is. For every day in the coin's price history, multiply said price by the number of newly mined coins that day, and sum over all days.
Sadly, I don't know of any site that publishes such a metric, although the column "PoW Produced (24h)" of [1] shows the product of today's price and mined coins.
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 th…
Yeah, it sucks. Monero for example is an actual privacy coin that's usable as currency but nobody seems to care. Very demoralizing. Bitcoin is obsolete technology at this point. It's continued existence does more harm than good to the cryptocurrency space because everyone gravitates towards it instead of better projects.
This is why Monero today is useful for tech-savvy people and motivated black-market buyers/sellers, but we will never see a user-friendly Monero market for the masses.
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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.
Oh please do explain why it is failed? The only thing that has evolved over time, that is peoples time preference. There will always be demand for BTC. The software works as it was designed, and grows stronger every year. Gresham’s law might be the key to understanding this.
I realize you need to say there will be demand for it but your desire to sell your random numbers at a profit doesn't make that true. Demand has to come from somewhere and something which has many competing alternatives which are generally cheaper, faster, and easier to use does not have much lock-in potential.