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You're completely wrong about crypto being a zero sum game. Wealth is created in crypto the same way it's created in the stock market, with changing perceptions

You're completely wrong about crypto being a zero sum game. Wealth is created in crypto the same way it's created in the stock market, with changing perceptions and opinions on value driving the underlying asset's value.

alexasmyths 9y ago
I'm afraid you don't understand the difference between a stock and a crypto currency, nor where the bulk of value is created. A) The bulk of value in capitalism is not created via the exchange of shares - it's created when people 'do stuff, make stuff and invent stuff' - yes - there is some value creation by financial activity, but it's not the bulk. Crypto currencies - if they were actually used as currencies - would provide some value. But i) they are not being used as currencies - and ii) they are certainly not being used to the point wherein they should be having a $50B valuation/cap. It's wrong to suggest that BTC has created $50B in value for civilization. B) Your point about valuation is wrong. Stocks can be valued in a number of ways, but ultimately they are worth the present value of all the assets the company has - and will have. Why? Because stocks are ownership. The companies bank account is de-facto owned by shareholders. Crypto currencies cannot be valued - they don't have anything underlying them - they do not imply ownership of anything - and especially since they are not used as currencies - their valuation is a total fantasy. BTC is worth whatever the next guy thinks it is worth - and what he thinks it is worth is pure speculative fiction. Just a function of emotional dynamics and fad. A stock in 'Bank of America' - well you can calculate how much assets they have, and estimate how much you might think they will earn in the future. There will be disagreement over that hence fluctuating value of prices ... (and BTW it's good that we have a lot of people trying to figure out how much BofA is worth - that provides value). At least as of today - all crypto currencies are a fiction. They are invented numbers that others are duped into paying money for. They are generally not used as currencies, and so ... 'there is no 'there' there'. Even thought it's really interesting from an academic perspective, and something may yet come out of it.
- deleted 9y ago
  [deleted]
- icedchai 9y ago
  For most stocks, you are correct. However, there are a whole class of stocks where the stock price is based on nothing more than perception of value. There is almost zero actual, intrinsic value. You see this often with penny stocks (and even larger companies, back in the dot-com days.)
- SilasX 9y ago
  The value of the bitcoin network lies in being a censorship[1]- and capital-control-resistant store of value. That is a social net positive, like investment in the equity of productive ventures (except for different reasons). As more people use bitcoin, it becomes a more effective store of value and thus represents a further social good (modulo the increase in legitimately criminal stuff it facilitates!). Perhaps not exactly $50 billion worth, but value nonetheless. >Crypto currencies cannot be valued - they don't have anything underlying them - they do not imply ownership of anything - and especially since they are not used as currencies - their valuation is a total fantasy. >BTC is worth whatever the next guy thinks it is worth - and what he thinks it is worth is pure speculative fiction. Just a function of emotional dynamics and fad. Isn't that equally true of any currency? It doesn't pay dividends and doesn't guarantee ownership of anything, and rises and falls based on the whims of the market. At most you can say that legit currencies are "ownership" of "the cancellation of X units of tax debt", but that's somewhat circular: there's no guarantee that "X units of tax debt" will be a large burden in the first place, and will itself fluctuate in value with the market. [1] It's true that bitcoin has many failings at achieving anonymity but it certainly competes with international bank transfers for many use cases. Necessary disclaimer: I'm long bitcoin and and author of understandingbitcoin.us.
  - QAPereo 9y ago
    How can something as inimical to privacy as Bitcoin be resistent to control? Direct and technical, maybe not, but China for example seems to work around that.
    - SilasX 9y ago
      Right, it's an open question how good it will actually be at achieving the goals people want, like privacy. I don't have a firm reason to believe China will be successful or not. My point was just that there are legitimate reasons to believe Bitcoin will be valuable for non-bubble reasons and will not substantively differ from legit currencies in supporting a valuation.
      - QAPereo 9y ago
- int_19h 9y ago
  There is some intrinsic value to BTC, and that is the value of using it for transactions (e.g. because of untraceability, to pay for black market goods). That value is small compared to the overall price of BTC - which is mostly speculative - but it's non-zero. And many stocks are similarly overvalued by orders of magnitude compared to the actual assets the company holds, to the point that saying that it's "how much they will earn in the future" is meaningless. People buy those stocks because they hope to sell them at a greater price to other people and cash in on the difference, just as they do with BTC.
  - alexasmyths 9y ago
    ""how much they will earn in the future" is meaningless." When companies grow faster than the 'cost of capital' for the person buying the stock - then the value goes to infinity - so this is a problem. But it's still based on something. Telsa stock will not go to $20K each.
  - zaarn 9y ago
    Bitcoin doesn't have untraceability though. The transactions are public. If you want untraceability you should pick up Monero.
    - int_19h 9y ago
      Transactions aren't tied to your known identity, unless you do it yourself. Empirically, BTC is used a lot for this kind of stuff - ransomware payouts, Silk Road type marketplaces etc.
      - zaarn 9y ago
        That's pseudonymous not untraceable or anonymous. I'm aware it's used for this kind of stuff but that doesn't really change facts.

alexasmyths 9y ago

I'm afraid you don't understand the difference between a stock and a crypto currency, nor where the bulk of value is created. A) The bulk of value in capitalism is not created via the exchange of shares - it's created when people 'do stuff, make stuff and invent stuff' - yes - there is some value creation by financial activity, but it's not the bulk. Crypto currencies - if they were actually used as currencies - would provide some value. But i) they are not being used as currencies - and ii) they are certainly not being used to the point wherein they should be having a $50B valuation/cap. It's wrong to suggest that BTC has created $50B in value for civilization. B) Your point about valuation is wrong. Stocks can be valued in a number of ways, but ultimately they are worth the present value of all the assets the company has - and will have. Why? Because stocks are ownership. The companies bank account is de-facto owned by shareholders. Crypto currencies cannot be valued - they don't have anything underlying them - they do not imply ownership of anything - and especially since they are not used as currencies - their valuation is a total fantasy. BTC is worth whatever the next guy thinks it is worth - and what he thinks it is worth is pure speculative fiction. Just a function of emotional dynamics and fad. A stock in 'Bank of America' - well you can calculate how much assets they have, and estimate how much you might think they will earn in the future. There will be disagreement over that hence fluctuating value of prices ... (and BTW it's good that we have a lot of people trying to figure out how much BofA is worth - that provides value). At least as of today - all crypto currencies are a fiction. They are invented numbers that others are duped into paying money for. They are generally not used as currencies, and so ... 'there is no 'there' there'. Even thought it's really interesting from an academic perspective, and something may yet come out of it.

deleted 9y ago
[deleted]
icedchai 9y ago
For most stocks, you are correct. However, there are a whole class of stocks where the stock price is based on nothing more than perception of value. There is almost zero actual, intrinsic value. You see this often with penny stocks (and even larger companies, back in the dot-com days.)
SilasX 9y ago
The value of the bitcoin network lies in being a censorship[1]- and capital-control-resistant store of value. That is a social net positive, like investment in the equity of productive ventures (except for different reasons). As more people use bitcoin, it becomes a more effective store of value and thus represents a further social good (modulo the increase in legitimately criminal stuff it facilitates!). Perhaps not exactly $50 billion worth, but value nonetheless. >Crypto currencies cannot be valued - they don't have anything underlying them - they do not imply ownership of anything - and especially since they are not used as currencies - their valuation is a total fantasy. >BTC is worth whatever the next guy thinks it is worth - and what he thinks it is worth is pure speculative fiction. Just a function of emotional dynamics and fad. Isn't that equally true of any currency? It doesn't pay dividends and doesn't guarantee ownership of anything, and rises and falls based on the whims of the market. At most you can say that legit currencies are "ownership" of "the cancellation of X units of tax debt", but that's somewhat circular: there's no guarantee that "X units of tax debt" will be a large burden in the first place, and will itself fluctuate in value with the market. [1] It's true that bitcoin has many failings at achieving anonymity but it certainly competes with international bank transfers for many use cases. Necessary disclaimer: I'm long bitcoin and and author of understandingbitcoin.us.
- QAPereo 9y ago
  How can something as inimical to privacy as Bitcoin be resistent to control? Direct and technical, maybe not, but China for example seems to work around that.
  - SilasX 9y ago
    Right, it's an open question how good it will actually be at achieving the goals people want, like privacy. I don't have a firm reason to believe China will be successful or not. My point was just that there are legitimate reasons to believe Bitcoin will be valuable for non-bubble reasons and will not substantively differ from legit currencies in supporting a valuation.
    - QAPereo 9y ago
int_19h 9y ago
There is some intrinsic value to BTC, and that is the value of using it for transactions (e.g. because of untraceability, to pay for black market goods). That value is small compared to the overall price of BTC - which is mostly speculative - but it's non-zero. And many stocks are similarly overvalued by orders of magnitude compared to the actual assets the company holds, to the point that saying that it's "how much they will earn in the future" is meaningless. People buy those stocks because they hope to sell them at a greater price to other people and cash in on the difference, just as they do with BTC.
- alexasmyths 9y ago
  ""how much they will earn in the future" is meaningless." When companies grow faster than the 'cost of capital' for the person buying the stock - then the value goes to infinity - so this is a problem. But it's still based on something. Telsa stock will not go to $20K each.
- zaarn 9y ago
  Bitcoin doesn't have untraceability though. The transactions are public. If you want untraceability you should pick up Monero.
  - int_19h 9y ago
    Transactions aren't tied to your known identity, unless you do it yourself. Empirically, BTC is used a lot for this kind of stuff - ransomware payouts, Silk Road type marketplaces etc.
    - zaarn 9y ago
      That's pseudonymous not untraceable or anonymous. I'm aware it's used for this kind of stuff but that doesn't really change facts.