4 ms·

The DAO isn't actually worth 120 million. For one, it's based on the price of ETH, which would completely crash if you attempted to sell even a few million wort

by street 10y ago

The DAO isn't actually worth 120 million. For one, it's based on the price of ETH, which would completely crash if you attempted to sell even a few million worth. Secondly, everyone can withdraw their funds from the DAO before any funds are sent to projects. Many have invested because those who invested early make money from those investing later, since the number of "DAO tokens" you get per "ETH" has gone down over time. (cough pyramid cough)

drcode 10y ago
> The DAO isn't actually worth 120 million. I you tried to sell all Apple stock in a single day it would also sell at well below market rate- Does that mean Apple is worth less than its market cap? That said, I personally have not invested/speculated in the DAO because I just don't see it as a good opportunity.
- Alexx 10y ago
  I think an analogy more in line with the parent comment would be - if you tried to sell 30% of Apple stock in a single day would the dollar collapse, wiping out all remaining shareholder value.
- hn9780470248775 10y ago
  > Does that mean Apple is worth less than its market cap? Yes.
- street 10y ago
  I just sold one of my hairs to myself for $10. Is my head now worth a million? With Apple, there's intrinsic value to consider. And frankly, if you sold enough Apple stock for it to go down 50%, I'd personally start buying. I doubt that's the case for ETH, where there's only early adopters buying it hoping to strike it rich.
  - drcode 10y ago
    So you're saying the intrinsic value is certain to be lower than it's current market value? I have good news for you: You can become rich by simply shorting ether on Kraken and Poloniex!
    - c2315261 10y ago
      You're completly disregarding that timing is far more important than simply knowing that there will be a downward correction. The shorting fees will end up being consuming a large chunk of the profit even though you sold a hundred thousand ether coins at $11 and bought them back at $1.
      - drcode 10y ago
        That is a valid point.
      - aianus 10y ago
        > The shorting fees Costs about 16% APR to borrow ETH for shorting on Bitfinex right now. So if you're expecting a >=90% crash in the next ~5 years you'd still make a profit.
    - street 10y ago
      The cryptocurrency holders can probably stay irrational for longer than I can stay solvent. I'll sit on the sidelines and watch.
    - desdiv 10y ago
      Plenty of people shorted Bitcoin on Bitcoinica, but they didn't lose their money when BTC went up. They lost their money when Bitcoinica went down.
  - benjaminmbrown 10y ago
    It actually did go down 50% from $15ish to $6ish and recovered. Early adopters trying to get rich = all early stage investing so what's your point?
    - street 10y ago
      That's because of the tiny liquidity. Nowhere near $120 million was sold, and it still lost 50%. Now try selling tens of millions worth, and see what happens.
      - dmix 10y ago
        Market incentives exist for it not to crash. People who put money into ETH/DAO and who want to see growth have strong incentives against this type of bank run. So I don't really see your point by comparing it to Apple as it's not the same at all. It's not equivalent to cash or public stocks but that doesn't mean it's not a worthy investment to make for someone interested in the technology or potential in Ethereum. What the currency needs is something of tangible value underpinning it and this project seems like a good way to add real value to back up the currency. It could potentially result in some successful businesses and projects which would compensate early adopters at a higher level both in the value of ETH and in dividends. But I don't believe there is any doubt that this is speculative. I visited /r/ethereum the other day and someone asked why they backed DAO and a common reply was "I wanted to support this new technology as much as seeing it as a possible investment opportunity for financial return". It's high-risk speculative investments but also a group of people who are interested in the idea itself and are willing to invest money at a potential loss in the process. Just like any startup founder.
        street 10y ago
        > Market incentives exist for it not to crash. People who put money into ETH/DAO and who want to see growth have strong incentives against this type of bank run. That's where the pyramid/ponzi/bubble comparison comes in. There's no actual value (yet?); the adopters would have to keep buying more to keep the price up and to keep the "value" of their holdings high. Not because it's so useful; just financial incentives.
  - Riseed 10y ago
    Looks like the #HairTokens announcement will be made soon. https://twitter.com/TheDAONews/status/732303373093900288 https://twitter.com/TheDAONews/status/732303373093900288
- baddox 10y ago
  > Does that mean Apple is worth less than its market cap? Well, it means you need to specify what you're talking about when you're talking about a company's "worth." Any time I read something like "public company X is worth Y dollars," I do look closely to see if they're talking about market cap.
  - r00fus 10y ago
    Hardly anyone talks about revenue as being part of the "worth" of a tech company (maybe with retail, that makes sense). The Apple stock analogy is dead-on.
- JumpCrisscross 10y ago
  > I [sic] you tried to sell all Apple stock in a single day it would also sell at well below market rate You are describing a takeover. These commonly come with control premiums [1], not discounts. Liquidity does not proceed across time and size preferences continuously, or even monotonously. Between a small block sold in minutes and an entire company sold in months, the time component of the liquidity surface tends to dominate the size component. [1] https://en.m.wikipedia.org/wiki/Control_premium https://en.m.wikipedia.org/wiki/Control_premium
cloudjacker 10y ago
Ethereum's daily volume is around $22 million, and thats just on public exchanges. So you could sell $120 million in Ether in 4-5 days also using OTC exchanges. I've had worse liquidity on penny stocks and the options market, so you'll have to drop the meme. Cryptocurrencies are liquid enough and they continue to attract more and more liquidity.
- street 10y ago
  Uh, that's not how volume works. For one, because you'd be adding to it. But also: much of that volume is buying and selling of the same ETH. I like your comparison to penny stocks.
  - cloudjacker 10y ago
    All that matters is that liquidity begets liquidity. Volume metrics are merely referential, something with $300,000 in daily volume can easily be inferred to be less liquid than $22,000,000 in daily volume.
homero 10y ago
Yeah it's a scam but people who are afraid of bitcoin love shitcoin

by street 10y ago

drcode 10y ago

> The DAO isn't actually worth 120 million. I you tried to sell all Apple stock in a single day it would also sell at well below market rate- Does that mean Apple is worth less than its market cap? That said, I personally have not invested/speculated in the DAO because I just don't see it as a good opportunity.

Alexx 10y ago
I think an analogy more in line with the parent comment would be - if you tried to sell 30% of Apple stock in a single day would the dollar collapse, wiping out all remaining shareholder value.
hn9780470248775 10y ago
> Does that mean Apple is worth less than its market cap? Yes.
street 10y ago
I just sold one of my hairs to myself for $10. Is my head now worth a million? With Apple, there's intrinsic value to consider. And frankly, if you sold enough Apple stock for it to go down 50%, I'd personally start buying. I doubt that's the case for ETH, where there's only early adopters buying it hoping to strike it rich.
- drcode 10y ago
  So you're saying the intrinsic value is certain to be lower than it's current market value? I have good news for you: You can become rich by simply shorting ether on Kraken and Poloniex!
  - c2315261 10y ago
    You're completly disregarding that timing is far more important than simply knowing that there will be a downward correction. The shorting fees will end up being consuming a large chunk of the profit even though you sold a hundred thousand ether coins at $11 and bought them back at $1.
    - drcode 10y ago
      That is a valid point.
    - aianus 10y ago
      > The shorting fees Costs about 16% APR to borrow ETH for shorting on Bitfinex right now. So if you're expecting a >=90% crash in the next ~5 years you'd still make a profit.
  - street 10y ago
    The cryptocurrency holders can probably stay irrational for longer than I can stay solvent. I'll sit on the sidelines and watch.
  - desdiv 10y ago
    Plenty of people shorted Bitcoin on Bitcoinica, but they didn't lose their money when BTC went up. They lost their money when Bitcoinica went down.
- benjaminmbrown 10y ago
  It actually did go down 50% from $15ish to $6ish and recovered. Early adopters trying to get rich = all early stage investing so what's your point?
  - street 10y ago
    That's because of the tiny liquidity. Nowhere near $120 million was sold, and it still lost 50%. Now try selling tens of millions worth, and see what happens.
    - dmix 10y ago
      Market incentives exist for it not to crash. People who put money into ETH/DAO and who want to see growth have strong incentives against this type of bank run. So I don't really see your point by comparing it to Apple as it's not the same at all. It's not equivalent to cash or public stocks but that doesn't mean it's not a worthy investment to make for someone interested in the technology or potential in Ethereum. What the currency needs is something of tangible value underpinning it and this project seems like a good way to add real value to back up the currency. It could potentially result in some successful businesses and projects which would compensate early adopters at a higher level both in the value of ETH and in dividends. But I don't believe there is any doubt that this is speculative. I visited /r/ethereum the other day and someone asked why they backed DAO and a common reply was "I wanted to support this new technology as much as seeing it as a possible investment opportunity for financial return". It's high-risk speculative investments but also a group of people who are interested in the idea itself and are willing to invest money at a potential loss in the process. Just like any startup founder.
      - street 10y ago
        > Market incentives exist for it not to crash. People who put money into ETH/DAO and who want to see growth have strong incentives against this type of bank run. That's where the pyramid/ponzi/bubble comparison comes in. There's no actual value (yet?); the adopters would have to keep buying more to keep the price up and to keep the "value" of their holdings high. Not because it's so useful; just financial incentives.
- Riseed 10y ago
  Looks like the #HairTokens announcement will be made soon. https://twitter.com/TheDAONews/status/732303373093900288 https://twitter.com/TheDAONews/status/732303373093900288
baddox 10y ago
> Does that mean Apple is worth less than its market cap? Well, it means you need to specify what you're talking about when you're talking about a company's "worth." Any time I read something like "public company X is worth Y dollars," I do look closely to see if they're talking about market cap.
- r00fus 10y ago
  Hardly anyone talks about revenue as being part of the "worth" of a tech company (maybe with retail, that makes sense). The Apple stock analogy is dead-on.
JumpCrisscross 10y ago
> I [sic] you tried to sell all Apple stock in a single day it would also sell at well below market rate You are describing a takeover. These commonly come with control premiums [1], not discounts. Liquidity does not proceed across time and size preferences continuously, or even monotonously. Between a small block sold in minutes and an entire company sold in months, the time component of the liquidity surface tends to dominate the size component. [1] https://en.m.wikipedia.org/wiki/Control_premium https://en.m.wikipedia.org/wiki/Control_premium

cloudjacker 10y ago

Ethereum's daily volume is around $22 million, and thats just on public exchanges. So you could sell $120 million in Ether in 4-5 days also using OTC exchanges. I've had worse liquidity on penny stocks and the options market, so you'll have to drop the meme. Cryptocurrencies are liquid enough and they continue to attract more and more liquidity.

street 10y ago
Uh, that's not how volume works. For one, because you'd be adding to it. But also: much of that volume is buying and selling of the same ETH. I like your comparison to penny stocks.
- cloudjacker 10y ago
  All that matters is that liquidity begets liquidity. Volume metrics are merely referential, something with $300,000 in daily volume can easily be inferred to be less liquid than $22,000,000 in daily volume.

homero 10y ago

Yeah it's a scam but people who are afraid of bitcoin love shitcoin