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Your comment contains a financial fallacy. Cash cannot flood "into" assets. For every buyer of an asset there is always a seller of that asset. The same number

Your comment contains a financial fallacy. Cash cannot flood "into" assets. For every buyer of an asset there is always a seller of that asset. The same number of dollars will be held regardless of the price of cryptocurrencies.

djrogers 9y ago
No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. If cash cannot flood 'into' an asset, then the assets value would never grow.
- dragonwriter 9y ago
  > No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
- tedsanders 9y ago
  No worries, this is actually a pretty subtle concept because it's an instance where the properties of the aggregate are different than the properties of the individual. An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up. But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after. The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net. Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset. To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer. [1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)

djrogers 9y ago

No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. If cash cannot flood 'into' an asset, then the assets value would never grow.

dragonwriter 9y ago
> No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
tedsanders 9y ago
No worries, this is actually a pretty subtle concept because it's an instance where the properties of the aggregate are different than the properties of the individual. An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up. But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after. The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net. Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset. To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer. [1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)