From another article on the same topic https://www.theguardian.com/technology/2022/apr/14/twitter-n... : > Man who paid $2.9m for NFT of Jack Dorsey’s first tweet set to lose almost $2.9m > ‘This is the Mona Lisa of the digital world’, says crypto entrepreneur Sina Estavi who bought the NFT in March 2021 This is a good example of why so many people don't take cryptocurrency seriously. It full of hype men who spout tr…
This is a genuine question - should anyone take cryptocurrency seriously? To me, the only purpose of it is to make money. It's the stock market, but with less rules, and it's 24/7. People will say that crypto is important because it's decentralized and non-fiat or whatever, with the implication being that it's not controlled by a government. But we have seen time and time again that that isn't true, and if a governme…
It's not the stock market at all. Not even close.
The stock market is a system that enables the buying and selling of shares in productive business - businesses that provide goods and services, that generate revenue and (ideally) profit. As a shareholder you own a fraction of that production, the assets, the profit. That's ultimately what determines the value of a stock over the long-term, its ability to generate sales and profit (and of course the bounds on valuations can swing widely over that time, multiples can contract and expand).
You maybe see crypto markets and think: gambling; and so that's where you're making an incorrect connection to stock markets. The stock market, if you're doing it right, is absolutely not gambling. Stocks are supported by the productive capacity of the business in question, ultimately; crypto doesn't work that way (at least not at present, maybe one will in the future). This is why Bitcoin has dramatically more in common with gold than eg stocks (gold isn't a producing asset, it's not going to spit off a dividend from profit every year).
The reason an entity like Berkshire Hathaway or Microsoft can so astoundingly trounce gold in generating returns over the long-term, is precisely because they're generative entities and gold is not. There's no compounding action to gold from the consequence of production growth (a lot more production is generally bad for the holders of eg gold or Bitcoin, as their value is based in part on scarcity), it's a hedging device primarily. Whereas if it's 1981 and Microsoft generates $3m in profit, they can plausibly reinvest profit and maybe get $5m the next year by hiring more engineers, launching new products, more advertising, etc. Rolling that expansion process forward is how you end up with $50m in profit instead of $3m. Gold, as with Bitcoin, does not work like that at all, there's no compounding mechanism. It's why gold sucks as an investment compared to eg the S&P index over time; although it's perfectly reasonable as an inflation hedge for a fraction of your assets, if one so desires to diversify.