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No wealth was created or destroyed in the making of these millions, the millions simply changed hands. Think about that before purchasing a cryptocurrency. Yo

by lottin 5y ago

No wealth was created or destroyed in the making of these millions, the millions simply changed hands. Think about that before purchasing a cryptocurrency. You're basically handing your money to an earlier "investor" in the hopes that a future "investor" will hand a greater amount to you. This is all there is to it.

wesleywt 5y ago
You know this thing called gold. All you are doing is being an early investor in "gold" in the hopes that a future "investor" will hand a greater amount to you for the "gold". This is all there is to it.
- benhurmarcel 5y ago
  And no decent investment advice includes buying gold.
rawtxapp 5y ago
Isn't that the case for pretty much all exchanges? How is that different than in the stock market?
- throwaway210222 5y ago
  > How is that different than in the stock market? For at least the USA exchanges, the USG has made it clear major companies will never fail and is printing so much money that has to go somewhere.
  - rawtxapp 5y ago
    A lot of that money also flows to crypto, real estate, etc.
- ptsneves 5y ago
  The stock market has other mechanism of value creation, one of them that the company distributes dividends which is money outside the stock market. Companies also use it to fund themselves to grow. It is not a zero sum game. Crypto currency is a zero sum game and i think this is what OP was implyining.
  - pizza 5y ago
    Seems like any currency conversion or speculation of any kind is a zero sum game then. But ostensibly if it's spent like any currency it's not zero sum
    - chii 5y ago
      > Seems like any currency conversion or speculation of any kind is a zero sum game then it's not really zero sum - this sort of speculation creates liquidity. This liquidity allows people who want to use the underlying asset in some other way to have a buyer (or seller) on the other end of the transaction.
  - DocTomoe 5y ago
    I was under the impression that dividends were essentially forced value selloffs, given that stock prices drop the exact amount of the dividend the moment it is paid. How is value created during dividend payment?
    - klodolph 5y ago
      To flip it around, the stock had a higher price to begin with because it is expected to pay dividends. I don’t think anyone is saying that the dividends themselves are what creates value.
    - joosters 5y ago
      Value is created by the company making profits. How it uses those profits, whether by paying out dividends, buying back stock, or investing in the business, is mostly irrelevant to the value creation part.
- fighterpilot 5y ago
  There's a distinction there. In the stock market, your decision to buy leads to a price increase which improves the ability of that specific company to raise money. Your investment decision directly impacted the prospects of that company over others. In an ideal world, speculation in the stock market means that the best companies receive funding and the worst companies are unable to and therefore appropriately go out if business.
  - nicoburns 5y ago
    Yes, but in the real world people are makong jsut as much if not more money on comaoniea that they think other people will later invest it, rather than companies that they think are good companies. That makes it little better than crypto.
    - fighterpilot 5y ago
      There's a bubble now in speculative stocks, and it's not good because it means billions in funding are going towards failing companies. That's why I said "in an ideal world". I do believe this bubble will pop eventually and the stock market will return to its appropriate primary function (which it still is doing ex-retail hype stocks) of allocating capital to the most productive companies. Note also that I was responding to the statement that no wealth was created or destroyed by speculation in the stock market. My point is that this statement is false because it makes a real world difference whether it's GME versus MRNA that gets to raise money.
      - nicoburns 5y ago
        > the stock market will return to its appropriate primary function (which it still is doing ex-retail hype stocks) of allocating capital to the most productive companies. Do you think it has done this in the last 30 years? I am of the opinion that has it has at best done this exceedingly poorly. There are many reasons for this: 1. Speculating is the one we've already covered 2. HFT, which isn't that much different to speculating 3. The consolidation of market power in a few huge funds 4. The rise of index funds which don't attempt to judge companies on merit at all It would/will take significant reforms to return the stock market to anything remotely resembling an ideal market.
- botman_ 5y ago
  This is only the case for pump&dump schemes. In case of a sustained growth of a company (think Apple over the past 20 years) what the shareholders gain comes from the earnings of the company. Apple shareholders have gained trillions in the past years - no one has lost an equivalent amount.
  - baby 5y ago
    I’m not sure what your point is. Are you talking about a small fraction of stocks that pay dividends? Because otherwise the stock market is completely based on this: money changing hands.
    - SgtBastard 5y ago
      You’ve conveniently ignored reinvested dividends that in turn fund future growth, splits, reverse splits, mergers and acquisitions... That’s a very weak strawman.
      - baby 5y ago
        Money changing hands changing hands that makes it look like it’s totally legit. Copy that.
    - dnautics 5y ago
      Buybacks are also a mechanism of connecting stock price to company performance, but arguably that is also tenuous and rare, except for the last few years when several companies have done buybacks. Oh, and in other direction, bankruptcy.
  - WA 5y ago
    Yes, sustained growth of Apple over the past 20 years makes buying Apple stock an investment. Shareholder gains come either from dividends or stock buybacks (which is kinda the same), but not every uptick in the stock price is because of value creation. Some stock price movements are also zero-sum. Active trading is zero-sum.
- lottin 5y ago
  > How is that different than in the stock market? Stock holders own the underlying business and businesses do create wealth—all the inputs that are used in making a product are worth less that the product itself.
  - baby 5y ago
    How do businesses create wealth?
    - chii 5y ago
      by using labour, and capital (plant and equipment usually) to generate something that didn't exist before, that other people would pay more for than the cost of inputs. That's how _all_ wealth gets created. Even under communism (where the difference is that under communism, the capital is provided, and owned by the state, rather than privately owned).
    - arc-in-space 5y ago
      Why is "the inputs that are used in making a product are worth less that the product itself" an unsatisfying answer?
  - gjs278 5y ago
    no they don’t lol. try and buy any percent of any company stock and tell them what to do
- frozenport 5y ago
  When you invest in a company you provide capital for it grow. Crypto is not capitalism.
SwimSwimHungry 5y ago
I do liken cryptocurrency as a sort of voluntary "redistribution of the wealth" but from the peanut gallery to early adopters and the already objectively "rich". This really feels like a kind of "screw you, I've gotten mine" form of capitalism.
- midasuni 5y ago
  So like all forms of capitalism for 95%+ of under 40s
  - SwimSwimHungry 5y ago
    Perhaps... but cryptocurrency makes this far more blatant and obvious. It really is sold as some kind of pipe-dream and a miracle financial instrument. Yet tell that to those who lost their shirts on Mt. Gox, Binance, any of the black swan events within the past few years, etc. It's really a technology-packed MLM.
    - midasuni 5y ago
      This has always been the way, people bought lotto tickets because there was nothing to lose and everything to gain.
dandanua 5y ago
Moreover, this resulted in money concentration. I would argue this has negative "value" for society.
Hendrikto 5y ago
> This is all there is to it. Then you very obviously never actually learned about the topic. To the people downvoting this: * smart contracts * decentralized exchanges * decentralized finance (lending, investing, etc) * instant borderless value transfer All of it trustless, permissionless, uncensorable, resilient, not controlled by a centralized entity, mathematically provable. But keep telling yourself it has no value because you failed to invest.
- TrackerFF 5y ago
  Let's be real here, only a negligible amount of buyers today purchase cryptocurrencies because they believe in the tech - for the majority, it boils down to making a quick buck. The tech does indeed have valuable applications, but that doesn't take away the fact that we're in a mania.
roadbeats 5y ago
Any scam could be defended this way. What does differentiate a scam from a legit investment ? Most cryptocurrencies are cartoon characters particularly tailored for gambling machines. I haven't seen a single use case other than enabling masses enter a massive pyramid scheme constantly manipulated in social media.
- chii 5y ago
  > What does differentiate a scam from a legit investment ? that the reason someone might pay you more in the future must be "legitimate" - that is the asset can be independently valued to be worth more in the future. Investment in shares is not a scam (mostly), even if they _never_ pay a dividend, as long as they earn a profit. Investment in gold, however, can be likened to a scam, as the value of gold only grows to as speculation, and not wealth creation. Hard to say whether cryptos behaves as gold, as some crypto does have uses beyond being sold to someone else for a higher price.
  - perryizgr8 5y ago
    > Hard to say whether cryptos behaves as gold, as some crypto does have uses beyond being sold to someone else for a higher price. Well, gold has numerous uses in the real world. https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml
tarsinge 5y ago
This can also be applied to the stock market as it is used today, the majority of people don’t care about dividends or voting rights, only the price, with company earnings serving the sole purpose of predicting the future price at the expected time of selling to another person. Crypto is just the end game of that behavior where it’s not hidden. Edit: also apart from making us question theses behaviors in other markets if that speculating behavior is bound to exist then at least it’s relatively harmless compared to doing that with real estate or commodities like food or water. Better that bank exec making that with dogecoin than other real stuff.
- rich_sasha 5y ago
  Companies are in general productive goods. An investor may not care about decades of dividends ahead, but they are there. They are paid (in the long term) from value created, not just a FIFO bubble.
  - tarsinge 5y ago
    But the stock market is a secondary market, you exchange second hand titles, you are not an investor, so my point is that if people are just here to speculate on the value it’s not very different and the underlying doesn’t really matter.
    - lottin 5y ago
      If you own stock you are an investor who is invested in a business, in exactly the same way that someone who owns a restaurant or some business is invested in that business. There is no difference between owning a stock and owning a business.
roenxi 5y ago
Sure, but the thing being traded for these are US Dollars which are, by explicit design, worse than pretty much any other asset over the long term. Not only do they go down in value, but they go down in value in a difficult to predict pattern and more rapidly in crisises. Holding almost literally anything nonperishable is better than dollars. We can argue what it is, but if anyone has any optimism at all about the future of Dogecoin then there is a price point where it makes a lot of sense to buy Dogecoin rather than dollars.
- alisonkisk 5y ago
  Holding things has costs. Dogecoin was intentionally invented to never have a "future". It was a joke.
  - roenxi 5y ago
    Well, you know. This is economics. What people intended doesn't matter; price is forward looking and present-based. It doesn't look like a joke right now.
yaa_minu 5y ago
We need to understand is that, while many cryptocurrencies are completely worthless, some cryptocurrencies have solid reasons to exist. Your characterization of all cryptocurrencies as a ponzi scheme purely based on the fact that people buy it because they believe others will buy it later at a higher price is weak because that is how all monetary assets like gold operates. We take it because we believe others will also take in the future. I personally buy bitcoin not to sell for a higher price but rather, I believe strongly that a monetary system that's provably scarce, programmable, completely decentralized, permission-less, trustless, higly divisible, borderless and very easy to transfer has the potential to revolutionize how we store value. This does not mean that everyone buys bitcoin because of this, some (perhaps majority) buy it because they believe it's going to go up but I see that as an initial incentive to get people into the industry. At the end of the day, only time will tell if cryptocurrencies can actually live up to their promises of revolutionizing the financial system.
- secfirstmd 5y ago
  "I believe strongly that a monetary system that's provably scarce, programmable, completely decentralized, permission-less, trustless, higly divisible, borderless and very easy to transfer has the potential to revolutionize how we store value." But is adding massively to global carbon levels needlessly...
  - bitcoinmonger 5y ago
    Why is this being downvoted? There needs to be a conversation about the inefficient energy usage of Bitcoin. Are we just going to ignore it?
  - Brian_K_White 5y ago
    That is an implementation detail of bitcoin, not a fundamental aspect of cryptocurrency. Bitcoin is cryptocurrency 1.0, or proof of concept, and the concept is well and truly proven. Developing others which operate more efficiently than the proof-of-concept or 1.0 version, or even than the existing banks and credit card exchanges is just engineering and iteration, and hardly a great leap of imagination or faith.
deleted 5y ago
[deleted]
candiodari 5y ago
No wealth was created or destroyed in the making of pretty much every luxury good, currency, stock, loan, ... That is not what defines a ponzi scheme. Furthermore, if you need money in 4-5 countries (even inside the Eurozone), you'll find that several cryptocurrencies are really quite good for that purpose, and that banks are not. So I for one have found value in owning these (mostly temporarily, although I have some on hand now). Might be fun to do it with Dogecoin I must say. I should give it a try.
Black101 5y ago
Gold and stocks are very similar to that
thaumasiotes 5y ago
> This is all there is to it. Well, think about operating a credit card company and taking fees whenever one of your cards is used. You could be very rich that way. Was any wealth created, or are you just siphoning off value that, in your absence, would have gone to someone else? In that case, you created a lot of wealth and kept a part of it. The extra wealth arose from transactions that wouldn't have occurred without the service you provide. Cryptocurrency isn't used much as a medium of exchange, but that was a design goal. Theoretically, it could be.

by lottin 5y ago

wesleywt 5y ago

You know this thing called gold. All you are doing is being an early investor in "gold" in the hopes that a future "investor" will hand a greater amount to you for the "gold". This is all there is to it.

benhurmarcel 5y ago
And no decent investment advice includes buying gold.

rawtxapp 5y ago

Isn't that the case for pretty much all exchanges? How is that different than in the stock market?

throwaway210222 5y ago
> How is that different than in the stock market? For at least the USA exchanges, the USG has made it clear major companies will never fail and is printing so much money that has to go somewhere.
- rawtxapp 5y ago
  A lot of that money also flows to crypto, real estate, etc.
ptsneves 5y ago
The stock market has other mechanism of value creation, one of them that the company distributes dividends which is money outside the stock market. Companies also use it to fund themselves to grow. It is not a zero sum game. Crypto currency is a zero sum game and i think this is what OP was implyining.
- pizza 5y ago
  Seems like any currency conversion or speculation of any kind is a zero sum game then. But ostensibly if it's spent like any currency it's not zero sum
  - chii 5y ago
    > Seems like any currency conversion or speculation of any kind is a zero sum game then it's not really zero sum - this sort of speculation creates liquidity. This liquidity allows people who want to use the underlying asset in some other way to have a buyer (or seller) on the other end of the transaction.
- DocTomoe 5y ago
  I was under the impression that dividends were essentially forced value selloffs, given that stock prices drop the exact amount of the dividend the moment it is paid. How is value created during dividend payment?
  - klodolph 5y ago
    To flip it around, the stock had a higher price to begin with because it is expected to pay dividends. I don’t think anyone is saying that the dividends themselves are what creates value.
  - joosters 5y ago
    Value is created by the company making profits. How it uses those profits, whether by paying out dividends, buying back stock, or investing in the business, is mostly irrelevant to the value creation part.
fighterpilot 5y ago
There's a distinction there. In the stock market, your decision to buy leads to a price increase which improves the ability of that specific company to raise money. Your investment decision directly impacted the prospects of that company over others. In an ideal world, speculation in the stock market means that the best companies receive funding and the worst companies are unable to and therefore appropriately go out if business.
- nicoburns 5y ago
  Yes, but in the real world people are makong jsut as much if not more money on comaoniea that they think other people will later invest it, rather than companies that they think are good companies. That makes it little better than crypto.
  - fighterpilot 5y ago
    There's a bubble now in speculative stocks, and it's not good because it means billions in funding are going towards failing companies. That's why I said "in an ideal world". I do believe this bubble will pop eventually and the stock market will return to its appropriate primary function (which it still is doing ex-retail hype stocks) of allocating capital to the most productive companies. Note also that I was responding to the statement that no wealth was created or destroyed by speculation in the stock market. My point is that this statement is false because it makes a real world difference whether it's GME versus MRNA that gets to raise money.
    - nicoburns 5y ago
      > the stock market will return to its appropriate primary function (which it still is doing ex-retail hype stocks) of allocating capital to the most productive companies. Do you think it has done this in the last 30 years? I am of the opinion that has it has at best done this exceedingly poorly. There are many reasons for this: 1. Speculating is the one we've already covered 2. HFT, which isn't that much different to speculating 3. The consolidation of market power in a few huge funds 4. The rise of index funds which don't attempt to judge companies on merit at all It would/will take significant reforms to return the stock market to anything remotely resembling an ideal market.
botman_ 5y ago
This is only the case for pump&dump schemes. In case of a sustained growth of a company (think Apple over the past 20 years) what the shareholders gain comes from the earnings of the company. Apple shareholders have gained trillions in the past years - no one has lost an equivalent amount.
- baby 5y ago
  I’m not sure what your point is. Are you talking about a small fraction of stocks that pay dividends? Because otherwise the stock market is completely based on this: money changing hands.
  - SgtBastard 5y ago
    You’ve conveniently ignored reinvested dividends that in turn fund future growth, splits, reverse splits, mergers and acquisitions... That’s a very weak strawman.
    - baby 5y ago
      Money changing hands changing hands that makes it look like it’s totally legit. Copy that.
  - dnautics 5y ago
    Buybacks are also a mechanism of connecting stock price to company performance, but arguably that is also tenuous and rare, except for the last few years when several companies have done buybacks. Oh, and in other direction, bankruptcy.
- WA 5y ago
  Yes, sustained growth of Apple over the past 20 years makes buying Apple stock an investment. Shareholder gains come either from dividends or stock buybacks (which is kinda the same), but not every uptick in the stock price is because of value creation. Some stock price movements are also zero-sum. Active trading is zero-sum.
lottin 5y ago
> How is that different than in the stock market? Stock holders own the underlying business and businesses do create wealth—all the inputs that are used in making a product are worth less that the product itself.
- baby 5y ago
  How do businesses create wealth?
  - chii 5y ago
    by using labour, and capital (plant and equipment usually) to generate something that didn't exist before, that other people would pay more for than the cost of inputs. That's how _all_ wealth gets created. Even under communism (where the difference is that under communism, the capital is provided, and owned by the state, rather than privately owned).
  - arc-in-space 5y ago
    Why is "the inputs that are used in making a product are worth less that the product itself" an unsatisfying answer?
- gjs278 5y ago
  no they don’t lol. try and buy any percent of any company stock and tell them what to do
frozenport 5y ago
When you invest in a company you provide capital for it grow. Crypto is not capitalism.

SwimSwimHungry 5y ago

I do liken cryptocurrency as a sort of voluntary "redistribution of the wealth" but from the peanut gallery to early adopters and the already objectively "rich". This really feels like a kind of "screw you, I've gotten mine" form of capitalism.

midasuni 5y ago
So like all forms of capitalism for 95%+ of under 40s
- SwimSwimHungry 5y ago
  Perhaps... but cryptocurrency makes this far more blatant and obvious. It really is sold as some kind of pipe-dream and a miracle financial instrument. Yet tell that to those who lost their shirts on Mt. Gox, Binance, any of the black swan events within the past few years, etc. It's really a technology-packed MLM.
  - midasuni 5y ago
    This has always been the way, people bought lotto tickets because there was nothing to lose and everything to gain.

dandanua 5y ago

Moreover, this resulted in money concentration. I would argue this has negative "value" for society.

Hendrikto 5y ago

> This is all there is to it. Then you very obviously never actually learned about the topic. To the people downvoting this: * smart contracts * decentralized exchanges * decentralized finance (lending, investing, etc) * instant borderless value transfer All of it trustless, permissionless, uncensorable, resilient, not controlled by a centralized entity, mathematically provable. But keep telling yourself it has no value because you failed to invest.

TrackerFF 5y ago
Let's be real here, only a negligible amount of buyers today purchase cryptocurrencies because they believe in the tech - for the majority, it boils down to making a quick buck. The tech does indeed have valuable applications, but that doesn't take away the fact that we're in a mania.

roadbeats 5y ago

Any scam could be defended this way. What does differentiate a scam from a legit investment ? Most cryptocurrencies are cartoon characters particularly tailored for gambling machines. I haven't seen a single use case other than enabling masses enter a massive pyramid scheme constantly manipulated in social media.

chii 5y ago
> What does differentiate a scam from a legit investment ? that the reason someone might pay you more in the future must be "legitimate" - that is the asset can be independently valued to be worth more in the future. Investment in shares is not a scam (mostly), even if they _never_ pay a dividend, as long as they earn a profit. Investment in gold, however, can be likened to a scam, as the value of gold only grows to as speculation, and not wealth creation. Hard to say whether cryptos behaves as gold, as some crypto does have uses beyond being sold to someone else for a higher price.
- perryizgr8 5y ago
  > Hard to say whether cryptos behaves as gold, as some crypto does have uses beyond being sold to someone else for a higher price. Well, gold has numerous uses in the real world. https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml

tarsinge 5y ago

This can also be applied to the stock market as it is used today, the majority of people don’t care about dividends or voting rights, only the price, with company earnings serving the sole purpose of predicting the future price at the expected time of selling to another person. Crypto is just the end game of that behavior where it’s not hidden. Edit: also apart from making us question theses behaviors in other markets if that speculating behavior is bound to exist then at least it’s relatively harmless compared to doing that with real estate or commodities like food or water. Better that bank exec making that with dogecoin than other real stuff.

rich_sasha 5y ago
Companies are in general productive goods. An investor may not care about decades of dividends ahead, but they are there. They are paid (in the long term) from value created, not just a FIFO bubble.
- tarsinge 5y ago
  But the stock market is a secondary market, you exchange second hand titles, you are not an investor, so my point is that if people are just here to speculate on the value it’s not very different and the underlying doesn’t really matter.
  - lottin 5y ago
    If you own stock you are an investor who is invested in a business, in exactly the same way that someone who owns a restaurant or some business is invested in that business. There is no difference between owning a stock and owning a business.

roenxi 5y ago

Sure, but the thing being traded for these are US Dollars which are, by explicit design, worse than pretty much any other asset over the long term. Not only do they go down in value, but they go down in value in a difficult to predict pattern and more rapidly in crisises. Holding almost literally anything nonperishable is better than dollars. We can argue what it is, but if anyone has any optimism at all about the future of Dogecoin then there is a price point where it makes a lot of sense to buy Dogecoin rather than dollars.

alisonkisk 5y ago
Holding things has costs. Dogecoin was intentionally invented to never have a "future". It was a joke.
- roenxi 5y ago
  Well, you know. This is economics. What people intended doesn't matter; price is forward looking and present-based. It doesn't look like a joke right now.

yaa_minu 5y ago

We need to understand is that, while many cryptocurrencies are completely worthless, some cryptocurrencies have solid reasons to exist. Your characterization of all cryptocurrencies as a ponzi scheme purely based on the fact that people buy it because they believe others will buy it later at a higher price is weak because that is how all monetary assets like gold operates. We take it because we believe others will also take in the future. I personally buy bitcoin not to sell for a higher price but rather, I believe strongly that a monetary system that's provably scarce, programmable, completely decentralized, permission-less, trustless, higly divisible, borderless and very easy to transfer has the potential to revolutionize how we store value. This does not mean that everyone buys bitcoin because of this, some (perhaps majority) buy it because they believe it's going to go up but I see that as an initial incentive to get people into the industry. At the end of the day, only time will tell if cryptocurrencies can actually live up to their promises of revolutionizing the financial system.

secfirstmd 5y ago
"I believe strongly that a monetary system that's provably scarce, programmable, completely decentralized, permission-less, trustless, higly divisible, borderless and very easy to transfer has the potential to revolutionize how we store value." But is adding massively to global carbon levels needlessly...
- bitcoinmonger 5y ago
  Why is this being downvoted? There needs to be a conversation about the inefficient energy usage of Bitcoin. Are we just going to ignore it?
- Brian_K_White 5y ago
  That is an implementation detail of bitcoin, not a fundamental aspect of cryptocurrency. Bitcoin is cryptocurrency 1.0, or proof of concept, and the concept is well and truly proven. Developing others which operate more efficiently than the proof-of-concept or 1.0 version, or even than the existing banks and credit card exchanges is just engineering and iteration, and hardly a great leap of imagination or faith.

deleted 5y ago

[deleted]

candiodari 5y ago

No wealth was created or destroyed in the making of pretty much every luxury good, currency, stock, loan, ... That is not what defines a ponzi scheme. Furthermore, if you need money in 4-5 countries (even inside the Eurozone), you'll find that several cryptocurrencies are really quite good for that purpose, and that banks are not. So I for one have found value in owning these (mostly temporarily, although I have some on hand now). Might be fun to do it with Dogecoin I must say. I should give it a try.

Black101 5y ago

Gold and stocks are very similar to that

thaumasiotes 5y ago

> This is all there is to it. Well, think about operating a credit card company and taking fees whenever one of your cards is used. You could be very rich that way. Was any wealth created, or are you just siphoning off value that, in your absence, would have gone to someone else? In that case, you created a lot of wealth and kept a part of it. The extra wealth arose from transactions that wouldn't have occurred without the service you provide. Cryptocurrency isn't used much as a medium of exchange, but that was a design goal. Theoretically, it could be.