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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 - wh
by 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 agoSure, 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 agoYes - 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 agoI don't quite understand the staunch love for the current payment and monetary system versus private peer to peer payments.
- tptacek 8y agoWait, 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 agoWhat 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 agoThe 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 agoArtworks, 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?
- mhluongo 8y agoSome tokens are designed as a right to cash flows... see "work tokens".
- nosuchthing 8y agoDo 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...