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BTC is still around $3500, not bad for something that was worth a few hundred three years ago. I'm not willing to call it dead just yet. There are plenty of ass

by jf- 8y ago

BTC is still around $3500, not bad for something that was worth a few hundred three years ago. I'm not willing to call it dead just yet. There are plenty of assets that make little sense to value, and yet they are. The bias here is to assume that cryptocurrency is useless or valueless because the technology isn't all it's hyped up to be, and that is true, but value is not a rational game. Let's wait and see how it develops.

muhneesh 8y ago
I'm not arguing that BTC hasn't returned value to earlier investors. I'm arguing that cryptocurrencies don't have the same economic model as most startups - which is essentially the expected future value generated by their operations discounted to the presented. There are startups within that definition that have a low probability of achieving such - but it's the same fundamental economic model that applies to Apple that applies to a seed-stage biotechnology startup. This doesn't extend to cryptocurrencies - given that currencies don't generate operating cash flows.
- jf- 8y ago
  Sure, there's no rational way to predict what bitcoin "should" be worth like with a startup, or any other company. Exactly because it's less a technology and more a social construct, as you say it's based on momentum and prayers, it's worth what people think it's worth. We may not be disagreeing, I took "this market is a bust" and the picaxe seller analogy to mean that you foresaw cryptocurrencies dying out completely, but you may have just been referring to the crash that's already happened.
  - muhneesh 8y ago
    Yes - we probably don't disagree. I believe that there's probably some technological value in digital currencies. In terms of the "market being a bust", the statement was a criticism of the current valuation of the cryptocurrency market - particularly, that it is based on a cauldron of unholy factors that I mentioned in the first post.
  - hndamien 8y ago
    I don't quite understand the staunch love for the current payment and monetary system versus private peer to peer payments.
  - tptacek 8y ago
    Wait, isn't that a false equivalence? Plenty of compelling rational arguments have been made for a $0 Bitcoin: its value is based on mania, it competes unfavorably with other cryptocurrencies, and it sees minimal (and decreasing!) real-world use as a medium of exchange.
    - jf- 8y ago
      What am I falsely equating? I don't think that the store of value argument is absurd, even with real world assets like gold their value is really just socially constructed. I don't see why it couldn't in principle be the same for bitcoin, it just needs to be the biggest cryptocurrency and concrete the idea of it's own value in people's minds for a long enough time, until they take it for granted. Whether that actually will happen I don't think anyone can say. I think it's a mistake to assume that the value here has to do with the technology, e.g. the "best" cryptocurrency must win. It's likely just long-term momentum.
      - tptacek 8y ago
        The arguments suggesting Bitcoin has an intrinsic value of $0 have rational, evidence-based premises, like the notion that Bitcoin is technologically inferior to some of its competitors and the lack of its use as a medium of exchange. You can't generally say that about the arguments in favor of Bitcoin, though I'm happy to hear counterexamples. The "store of value" argument doesn't mean anything. Beanie Babies, tulip bulbs, and Hummel Figurines are also "stores of value".
        jf- 8y ago
        Artworks, antiques, gemstones. None of these are of any practical value, yet they hold value. You’re over systematising and not getting it. Value isn’t inherently rational. Also, what was the false equivalence?
        tptacek 8y ago
        Try this: being a store of value is a necessary, but not sufficient, condition for Bitcoin's viability.
- mhluongo 8y ago
  Some tokens are designed as a right to cash flows... see "work tokens".
  - nosuchthing 8y ago
    Do you know of any "work tokens" which are not minted for free and sold to speculators before entering the closed loop economy of their giftcard network? http://www.niemanlab.org/2018/11/i-had-to-borrow-money-to-pay-my-rent-civils-tokenomics-has-left-some-of-its-journalists-wondering-where-their-salary-is/ http://www.niemanlab.org/2018/11/i-had-to-borrow-money-to-pa...
robryan 8y ago
Last year it was $20000, a month or so ago $6000. I can't see any major changes in the underlying utility of the coin throughout that period.
- jf- 8y ago
  Yeah, it doesn’t really have utility. It’s a thing other people will trade things for based on a kind of collective insanity. It just happens to be the same kind of collective insanity that we apply to lots of things, only we dress this thing up in tech-speak while we dress others up in aesthetics.
- beerlord 8y ago
  The utility has actually decreased. Before this huge speculative boom, shady characters could use cryptocurrencies to buy drugs and launder money. Now, with KYC/AML implemented by exchanges worldwide, plus the outright banning of the coins in some countries, those activities are much more difficult. If you want simply transfer money internationally, services like TransferWise do it better than any coins.
arcticbull 8y ago
The question is how much, if any, of that price is derive from actual market activity and not scams like front running, tape painting, spoofing and just plain tether. If people actually tried to move any serious amount of it out it might just fall down on itself, that number may not be real.

by jf- 8y ago

muhneesh 8y ago

I'm not arguing that BTC hasn't returned value to earlier investors. I'm arguing that cryptocurrencies don't have the same economic model as most startups - which is essentially the expected future value generated by their operations discounted to the presented. There are startups within that definition that have a low probability of achieving such - but it's the same fundamental economic model that applies to Apple that applies to a seed-stage biotechnology startup. This doesn't extend to cryptocurrencies - given that currencies don't generate operating cash flows.

jf- 8y ago
Sure, there's no rational way to predict what bitcoin "should" be worth like with a startup, or any other company. Exactly because it's less a technology and more a social construct, as you say it's based on momentum and prayers, it's worth what people think it's worth. We may not be disagreeing, I took "this market is a bust" and the picaxe seller analogy to mean that you foresaw cryptocurrencies dying out completely, but you may have just been referring to the crash that's already happened.
- muhneesh 8y ago
  Yes - we probably don't disagree. I believe that there's probably some technological value in digital currencies. In terms of the "market being a bust", the statement was a criticism of the current valuation of the cryptocurrency market - particularly, that it is based on a cauldron of unholy factors that I mentioned in the first post.
- hndamien 8y ago
  I don't quite understand the staunch love for the current payment and monetary system versus private peer to peer payments.
- tptacek 8y ago
  Wait, isn't that a false equivalence? Plenty of compelling rational arguments have been made for a $0 Bitcoin: its value is based on mania, it competes unfavorably with other cryptocurrencies, and it sees minimal (and decreasing!) real-world use as a medium of exchange.
  - jf- 8y ago
    What am I falsely equating? I don't think that the store of value argument is absurd, even with real world assets like gold their value is really just socially constructed. I don't see why it couldn't in principle be the same for bitcoin, it just needs to be the biggest cryptocurrency and concrete the idea of it's own value in people's minds for a long enough time, until they take it for granted. Whether that actually will happen I don't think anyone can say. I think it's a mistake to assume that the value here has to do with the technology, e.g. the "best" cryptocurrency must win. It's likely just long-term momentum.
    - tptacek 8y ago
      The arguments suggesting Bitcoin has an intrinsic value of $0 have rational, evidence-based premises, like the notion that Bitcoin is technologically inferior to some of its competitors and the lack of its use as a medium of exchange. You can't generally say that about the arguments in favor of Bitcoin, though I'm happy to hear counterexamples. The "store of value" argument doesn't mean anything. Beanie Babies, tulip bulbs, and Hummel Figurines are also "stores of value".
      - jf- 8y ago
        Artworks, antiques, gemstones. None of these are of any practical value, yet they hold value. You’re over systematising and not getting it. Value isn’t inherently rational. Also, what was the false equivalence?
        tptacek 8y ago
        Try this: being a store of value is a necessary, but not sufficient, condition for Bitcoin's viability.
mhluongo 8y ago
Some tokens are designed as a right to cash flows... see "work tokens".
- nosuchthing 8y ago
  Do you know of any "work tokens" which are not minted for free and sold to speculators before entering the closed loop economy of their giftcard network? http://www.niemanlab.org/2018/11/i-had-to-borrow-money-to-pay-my-rent-civils-tokenomics-has-left-some-of-its-journalists-wondering-where-their-salary-is/ http://www.niemanlab.org/2018/11/i-had-to-borrow-money-to-pa...

robryan 8y ago

Last year it was $20000, a month or so ago $6000. I can't see any major changes in the underlying utility of the coin throughout that period.

jf- 8y ago
Yeah, it doesn’t really have utility. It’s a thing other people will trade things for based on a kind of collective insanity. It just happens to be the same kind of collective insanity that we apply to lots of things, only we dress this thing up in tech-speak while we dress others up in aesthetics.
beerlord 8y ago
The utility has actually decreased. Before this huge speculative boom, shady characters could use cryptocurrencies to buy drugs and launder money. Now, with KYC/AML implemented by exchanges worldwide, plus the outright banning of the coins in some countries, those activities are much more difficult. If you want simply transfer money internationally, services like TransferWise do it better than any coins.

arcticbull 8y ago

The question is how much, if any, of that price is derive from actual market activity and not scams like front running, tape painting, spoofing and just plain tether. If people actually tried to move any serious amount of it out it might just fall down on itself, that number may not be real.