521–530 of 571 posts
I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…
I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…
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That's not intrinsic value though. Fiat currency by definition has no intrinsic value. Fiat literally means "let it be done", i.e. it is given value by a decree and not because of its intrinsic value.
There's no such thing as "intrinsic" value. Value is determined by humans depending on the context.
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I'm enjoying sitting on the sidelines and watching people "save" in a fiat "currency" whose value is not linked to anything intrinsic, whose supply can magically be increased at the discretion of a few powerful individuals, and whose value has been declining relative to almost any tradeable assets. What a time to be alive. No wonder the M2 money supply is at an all time high. No one has any idea of what the intrinsic…
Most people aren't investing in fiat, they are investing productive assets like real estate or businesses e.g the share market. I don't have strong opinions on fiat vs crypto, primarily because it seems like a boring question. Whatever currency is the future, currency isn't the present or the future of investments, productive assets are.
Scare quotes used because a ton of the price of those assets now reflects a monetary premium. I.e. a portion of the price of a house is its value for living or renting out in a given area, but a lot of it is its value as a scarce asset that is somewhat resistant to inflation.
Needless to say, this is not a great allocation of resources and is an incredibly inefficient way for saving to work.
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Most people aren't investing in fiat, they are investing productive assets like real estate or businesses e.g the share market. I don't have strong opinions on fiat vs crypto, primarily because it seems like a boring question. Whatever currency is the future, currency isn't the present or the future of investments, productive assets are.
Fiat game mechanics force them to "invest" in "productive" assets in order to stay ahead of inflation. Scare quotes used because a ton of the price of those assets now reflects a monetary premium. I.e. a portion of the price of a house is its value for living or renting out in a given area, but a lot of it is its value as a scarce asset that is somewhat resistant to inflation. Needless to say, this is not a great all…
So you’re suggesting this is a bad thing? And the alternative of hoarding unproductive assets is preferable?
> houses...a lot of it is its value as a scarce asset that is somewhat resistant to inflation.
The reason houses are expensive has nothing to do with being resistant to inflation. They get expensive when the supply of the land they sit on gets used up relative to the number of people who want to live in a given area.
Houses in rural Kentucky aren’t expensive at all, because nobody wants to live there. That’s the main factor driving prices, not some inflation hedge. If the only reason people bought houses was to hedge inflation, they’d be better off buying stocks which are even more productive and produce returns above inflation.
> this is not a great allocation of resources and is an incredibly inefficient way for saving to work.
After reading this, I could not be more confused.
So you’re saying that, the inflation mechanics of fiat is bad because it encourages people to invest in productive businesses and build useful real estate? And it’d be more efficient for society if everybody kept a useless stash of gold bars in their basement and took no risk?
How would this make less people want to live in SF and houses suddenly cheaper?
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One answer to this question is that Ethereum will soon become a "real investment" because fees will accrue to ETH holders and the huge expense of electricity-intensive proof of work mining will be discontinued forever. Here is how it'll work - in 2021, an improvement to the Ethereum network known as EIP-1559 will launch, causing a portion of all new transaction fees to be burned/destroyed, which is effectively a "sto…
>How is any cryptocurrency even considered an investment vehicle? [...] [Y]ou are investing in a business by owning a part of it which naturally means that you will and do get the returns on it[.] That is how Ethereum works. Validators get returns from Ethereum by holding shares, i.e. ETH. Validators, after EIP-1559, will be paid with newly minted ETH and anything over the base burn fee. (Currently there is no mandat…
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Honest question: in 20 years would you prefer to own a 21 milionth of bitcoin (1 bitcoin) or 21 milionth of gold (~8kgs of gold)? Not thinking about the value of it, but of its future usefulness as value store and as mean of payment
Bitcoin 100%, because of the optionality and network effects. I don't believe you can separate the value of Bitcoin and it's usefulness because the more valuable Bitcoin is, the more useful it becomes. The more people who hold Bitcoin, the more scarce it becomes and therefore the more valuable it becomes. In 20 years, Bitcoin could go to 0, or become a widely used currency and skyrocket in value. Once the number of B…
For the simple reason that it exist in the physical space and can't disappear, unless the laws that regulate our existence change, which is quite improbable
Gold will also work and retain a value even if society suddenly shuts down and reset to a "sticks and stones" state
Bitcoin advocates have this weird tendency to completely ignore decades of game theory
That's why people don't trust them
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But this is the power of bitcoin right? Now I can live in South America and get near-instant (crypto)currency transfers as well.
In fact what parent is saying is that fast transaction speeds are not something that are solely enabled by bitcoin. There is absolutely no technical reason why transfers have to take days between banks. That's just down to the banks in your country having a crappy infrastructure. In fact, among the interesting properties of Bitcoin, I'd rate transaction speeds as the least relevant - chiefly because network throughpu…
I agree that there's no technical reason. For example, "crappy infrastructure" is an economic reason why fast bank transfers wouldn't work. I'm evaluating bitcoin as a political/economic tool.
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But this is the power of bitcoin right? Now I can live in South America and get near-instant (crypto)currency transfers as well.
That's not really a unique value proposition, as there are PayPal (and probably others) for many years already. And PayPal is free for private transfers, compared to BitCoin's ~$5/transaction.
Someone please explain this to me: How is any cryptocurrency even considered an investment vehicle? I would classify myself as Boglehead and I believe in the fundamentals of investing in stocks because in all it's technicality (and given the buy-and-hold strategy), you are investing in a business by owning a part of it which naturally means that you will and do get the returns on it, both in terms of profits (dividen…
One answer to this question is that Ethereum will soon become a "real investment" because fees will accrue to ETH holders and the huge expense of electricity-intensive proof of work mining will be discontinued forever. Here is how it'll work - in 2021, an improvement to the Ethereum network known as EIP-1559 will launch, causing a portion of all new transaction fees to be burned/destroyed, which is effectively a "sto…
It sounds like investing in Visa...but an infinitely worse, less profitable version of Visa with 100000X smaller dividend payouts.