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Ethereum is unquestionably an interesting technology. Whether the price is justified is a matter for the markets, which currently place several billions of doll

Ethereum is unquestionably an interesting technology. Whether the price is justified is a matter for the markets, which currently place several billions of dollars of value on it. If you are so certain it is mispriced, there are numerous places for you to profit from such stupidity, if you are confident enough to put your money up. Vitalik is the benevolent dictator for life of Ethereum, and EOS is a radically different model than proof of work blockchains like Ethereum and Bitcoin. However Vitalik and the ETH community recognizes there is some value in proof of stake and is working on their own implementation which is different than EOS’ model. Cryptocurrencies make us question why money has value, what makes an asset, and all sorts of interesting philosophical and economic questions. I wouldn’t write off the entire industry and technology. It has been attacked by intelligent people for a decade and it keeps moving forwards.

SpicyLemonZest 8y ago
The question isn't whether the price is right or wrong, but what it's a price of. For example, the market cap of Tether is a couple billion dollars. This doesn't mean that Tether as an abstract concept is worth a couple billion dollars, or even that market participants think it is. It just means that there are a couple billion Tether tokens floating around, and people are confident that they'll get $1 for their Tether if they want.
- TaylorAlexander 8y ago
  The same is true of the stock market, or regular “fiat” currency. I guess the question is, does it matter if it’s “not really worth it”? The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world. Isn’t it justified to awe at the power of a decentralized currency? Certainly it’s in the realm of heady ideas.
  - airstrike 8y ago
    > The same is true of the stock market, or regular “fiat” currency. No, it's not. Stocks are priced at the present value of future cash flows generated by the underlying assets. Fiat currency has no value in and of itself. Foreign exchange is essentially determined by the difference in interest rates between countries (and investors' beliefs as to which way those interest rates will go in the future). Those interest rates are (indirectly) related to what is produced by each country. Bitcoin is just plain make-believe. > The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world. People also gave Bernie Madoff ~$65 billion dollars and it was all make-believe as well. > Isn’t it justified to awe at the power of a decentralized currency? Decentralization for decentralization's sake isn't inherently valuable. Or at least I wouldn't argue that to be an axiomatic truth. The burden of proof is on the bitcoin bulls.
    - gfodor 8y ago
      Stocks are not priced at the present value of future cash flows of the underlying asset. You're conflating valuation metholdogies with price. Stocks are priced at whatever the market decides, which may or may not be based at all on market participants' assessment of future cash flows.
      - airstrike 8y ago
        I'm not conflating things. "What the market decides" is either the PV of future cash flows or investors' expectation of what other market participants estimate the PV of future cash flows to be. It's turtles all the way down. Markets aren't perfect but they are efficient; feel free to believe in the strength of that efficiency as you see fit, but in any case there is an underlying asset that generates cash flows. You can nitpick arguments in my response, and I'll be happy to clarify any omissions, but my whole point is that crypto has no similar underlying asset and is therefore an entirely different beast.
        gfodor 8y ago
        You've moved the goalposts I think -- you've conceded that what the market decides is in part based on what market participants' think other future participants will do. This means that the price of a stock is not the discounted future cash flows of a company -- the price of a stock is what the market will pay for it. There is no reason to assume present or future market participants will pay a price for a stock based upon a specific valuation model. If you even consider for a second how most people invest and how the derivative markets work you should call into question the idea that the stock market should ever be expected to converge universally on a price based on such a simplistic valuation model such as discounted future estimated cash flows. It's an unfalsifiable proposition anyway, so is a fairly useless mental model imho.
        airstrike 8y ago
        I've not moved the goalposts. I'm just saying the fact that stocks are also driven by people's perceptions of other people's perception of the stock's true price doesn't negate the fact that the discounted value of future cash flows ultimately underpins the asset's value. For what it's worth, this is my field of expertise. I work at a top bank in Wall Street and assure you discounted cash flows isn't a "useless mental model". Just ask the Court of Chancery in Delaware.
wdewind 8y ago
> Cryptocurrencies make us question why money has value, what makes an asset, and all sorts of interesting philosophical and economic questions. Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design. The classic example is investor accreditation laws, and why, as far as I can tell, there isn't a single ICO that doesn't violate them. It's not that no one considered whether or not you should be able to raise money from many different people, and it's not been logistically complicated to do that for at least three decades. The reason is that the political will does not exist.
- teknopurge 8y ago
  > Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design. Crypto is saying that because of the evolution of institutions surrounding banking and politics there are many inefficiencies(and malevolent actors) that have become ingrained in the poli-fi complex. Many of these projects(the 20% that are legit) aim to solve various issues that have been identified in the "free market" - whether it's reducing settlement time of cross-border payments or efficiently pricing what a unit of cloud compute and storage can be, blockchain is a novel excuse to revisit many problems with lazy answers.
  - wdewind 8y ago
    The technology is part of the institutions, which are both derivative of the politics, which is where these systems are really designed. I'm not saying the banking system is perfect, but the ideas coming out of crypto aren't new from an economic perspective, and frankly aren't really even interesting.
Terr_ 8y ago
> If you are so certain it is mispriced, there are numerous places for you to profit from such stupidity, if you are confident enough to put your money up. "The market can stay irrational longer than you can stay solvent."
pjc50 8y ago
> numerous places for you to profit from such stupidity, if you are confident enough to put your money up. I'm confident that betting on an unregulated asset on an unregulated exchange is a good way to get my money stolen.

SpicyLemonZest 8y ago

The question isn't whether the price is right or wrong, but what it's a price of. For example, the market cap of Tether is a couple billion dollars. This doesn't mean that Tether as an abstract concept is worth a couple billion dollars, or even that market participants think it is. It just means that there are a couple billion Tether tokens floating around, and people are confident that they'll get $1 for their Tether if they want.

TaylorAlexander 8y ago
The same is true of the stock market, or regular “fiat” currency. I guess the question is, does it matter if it’s “not really worth it”? The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world. Isn’t it justified to awe at the power of a decentralized currency? Certainly it’s in the realm of heady ideas.
- airstrike 8y ago
  > The same is true of the stock market, or regular “fiat” currency. No, it's not. Stocks are priced at the present value of future cash flows generated by the underlying assets. Fiat currency has no value in and of itself. Foreign exchange is essentially determined by the difference in interest rates between countries (and investors' beliefs as to which way those interest rates will go in the future). Those interest rates are (indirectly) related to what is produced by each country. Bitcoin is just plain make-believe. > The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world. People also gave Bernie Madoff ~$65 billion dollars and it was all make-believe as well. > Isn’t it justified to awe at the power of a decentralized currency? Decentralization for decentralization's sake isn't inherently valuable. Or at least I wouldn't argue that to be an axiomatic truth. The burden of proof is on the bitcoin bulls.
  - gfodor 8y ago
    Stocks are not priced at the present value of future cash flows of the underlying asset. You're conflating valuation metholdogies with price. Stocks are priced at whatever the market decides, which may or may not be based at all on market participants' assessment of future cash flows.
    - airstrike 8y ago
      I'm not conflating things. "What the market decides" is either the PV of future cash flows or investors' expectation of what other market participants estimate the PV of future cash flows to be. It's turtles all the way down. Markets aren't perfect but they are efficient; feel free to believe in the strength of that efficiency as you see fit, but in any case there is an underlying asset that generates cash flows. You can nitpick arguments in my response, and I'll be happy to clarify any omissions, but my whole point is that crypto has no similar underlying asset and is therefore an entirely different beast.
      - gfodor 8y ago
        You've moved the goalposts I think -- you've conceded that what the market decides is in part based on what market participants' think other future participants will do. This means that the price of a stock is not the discounted future cash flows of a company -- the price of a stock is what the market will pay for it. There is no reason to assume present or future market participants will pay a price for a stock based upon a specific valuation model. If you even consider for a second how most people invest and how the derivative markets work you should call into question the idea that the stock market should ever be expected to converge universally on a price based on such a simplistic valuation model such as discounted future estimated cash flows. It's an unfalsifiable proposition anyway, so is a fairly useless mental model imho.
        airstrike 8y ago
        I've not moved the goalposts. I'm just saying the fact that stocks are also driven by people's perceptions of other people's perception of the stock's true price doesn't negate the fact that the discounted value of future cash flows ultimately underpins the asset's value. For what it's worth, this is my field of expertise. I work at a top bank in Wall Street and assure you discounted cash flows isn't a "useless mental model". Just ask the Court of Chancery in Delaware.

wdewind 8y ago

> Cryptocurrencies make us question why money has value, what makes an asset, and all sorts of interesting philosophical and economic questions. Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design. The classic example is investor accreditation laws, and why, as far as I can tell, there isn't a single ICO that doesn't violate them. It's not that no one considered whether or not you should be able to raise money from many different people, and it's not been logistically complicated to do that for at least three decades. The reason is that the political will does not exist.

teknopurge 8y ago
> Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design. Crypto is saying that because of the evolution of institutions surrounding banking and politics there are many inefficiencies(and malevolent actors) that have become ingrained in the poli-fi complex. Many of these projects(the 20% that are legit) aim to solve various issues that have been identified in the "free market" - whether it's reducing settlement time of cross-border payments or efficiently pricing what a unit of cloud compute and storage can be, blockchain is a novel excuse to revisit many problems with lazy answers.
- wdewind 8y ago
  The technology is part of the institutions, which are both derivative of the politics, which is where these systems are really designed. I'm not saying the banking system is perfect, but the ideas coming out of crypto aren't new from an economic perspective, and frankly aren't really even interesting.

Terr_ 8y ago

> If you are so certain it is mispriced, there are numerous places for you to profit from such stupidity, if you are confident enough to put your money up. "The market can stay irrational longer than you can stay solvent."

pjc50 8y ago

> numerous places for you to profit from such stupidity, if you are confident enough to put your money up. I'm confident that betting on an unregulated asset on an unregulated exchange is a good way to get my money stolen.