6 ms·

That isn't how a Ponzi scheme works, a Ponzi scheme directly uses fees taken from new members to pay out older ones, lying and saying it's from actual business

That isn't how a Ponzi scheme works, a Ponzi scheme directly uses fees taken from new members to pay out older ones, lying and saying it's from actual business activity. Crypto doesn't behave any differently than the stock market (except the fundamentals are a little shakier, okay, a lot shakier).

khuey 5y ago
Cryptocurrency doesn't have dividends or share buybacks which are what make stocks have inherent value.
- xur17 5y ago
  Yes it does. Proof of stake networks (Ethereum, Tezos, etc) pay dividends + transaction fees to stakers, decentralized exchanges pay a cut of fees to token holders (with decent P/E ratios), and the list goes on. This is an out of date view that does not match the current reality.
  - Retric 5y ago
    As a thought exercise, suppose a proof is stake currency was only used by one person. How exactly does do it’s dividends create value? In short “crypto dividends” don’t actually create any value it’s purely incrementing an arbitrary number rather than creating an income stream. The same is true if N people use the currency without any new money coming in they can’t cash out. Therefore it’s not an actual dividend. This is why everyone calls crypto a pyramid scheme, the only way to cash out is to get someone else to buy in.
    - xur17 5y ago
      For proof of stake, I agree - I think it's useful to instead focus on net issuance. For ETH2 this could very well could be negative since the base transaction fee will be burned, and transaction fees currently are greater than miner rewards a decent percentage of the time. Proof of stake coins that don't have much usage and mostly pay out rewards from new issuance have an interesting piece.. - they are inflating the base supply to pay out dividends that holders pay taxes on. Effectively moving normal gains from the capital gains bracket to regular income, which is sub-optimal. For DeX's, the image is a lot better - the biggest issue here is - are fees arbitrarily high, and will they go down over time. My gut says the percentage fee will go down, but the volume increase will more than make up for this loss.
    - ajdegol 5y ago
      US dollars wouldn’t be worth very much either if you were the only one using them.
      - deleted 5y ago
        [deleted]
      - Retric 5y ago
        > The same is true if N people use the currency without any new money coming in they can’t cash out.
- shanebrunette 5y ago
  As a counterpoint, YFI literally buys back it's token from fees earned from users using their automated yield farming strategy. There are plenty of duds around, but that doesn't make everything a dud.
  - vmception 5y ago
    PancakeBunny too! I’m considering to buy the dip…
  - bouncycastle 5y ago
    Yes, cryptocurrency can be programmed in many different ways and can be defined as several different things at once.
- ekianjo 5y ago
  Not all stocks have dividends.
  - astrange 5y ago
    The ones that don’t are valued on the assumption that they will in the future.
    - midasuni 5y ago
      Have google, Facebook amazon or Netflix ever issued a dividend?
      - astrange 5y ago
        They are likely to do stock buybacks which are the same thing. You’re certainly not buying them for voting rights - FB and Google almost don’t give those out, and ETFs don’t pass on their voting rights but are not cheaper than the underlying stocks.
        midasuni 5y ago
        When was the last buyback?
    - xpe 5y ago
      What is your basis for saying this?
      - astrange 5y ago
        Are you asking me to link the Wikipedia article for capital asset pricing?
        xpe 5y ago
        You could have written "the Wikipedia article for capital asset pricing". I don't see the need to make it a question. Your comment comes across as passive aggressive, unfortunately. I hope that wasn't your intent.
- allendoerfer 5y ago
  Stocks do not need buybacks or dividends. They are rights to control a share of a company, which earns (or potentially earns) money. That’s inherently valuable even without a stock market to determine a price. You control a machine, which makes things and earns money. Crypto is only valuable, because others think so, too. You control a place inside a distributed list. Others think a place in exactly this list is valuable, while all the other lists are shitcoins.
  - eggsbenedict 5y ago
    How do you explain the prices of Class-C shares which don't bestow voting rights to the holder? For example, GOOG trades for over 2000 a share. In fact, it even trades at a $50 premium over GOOGL, which offers voting rights. Strange.
    - allendoerfer 5y ago
      You don’t have to control a company personally, you can also rely on other shareholders to do that. You just have to know, somebody is voting in your interests, since you probably won’t do it (but again: you could). I don’t know whether your statement about the price difference is true and if so, I don’t know why. Maybe different free float? My statement was about inherent value not short term price negotiations via stock exchange. I thought about an actual attack against my argument: Stocks are just shares of companies, which sell stuff that is valuable because other people think so. Some stuff might have inherent value (because it can generate money), but in the end it still comes down to people deciding something has value. Turtles all the way down.
      - pmoriarty 5y ago
        "You don’t have to control a company personally, you can also rely on other shareholders to do that. You just have to know, somebody is voting in your interests" How would you know they're voting in your interests? I've never known how any other shareholder voted in any of the stock I owned. For all I know they could have been voting completely contrary to what I'd wanted. No. Unless you own enough of a stock to vote and make a difference, stock ownership is not about influencing a company but just about hoping the value of the stock will rise, and there are many theories about why that might happen, from fundamental to technical analysis to people who invest based on the phase of the moon, divination, tips from friends, insider trading, trend following, news, etc.
- menzoic 5y ago
  Buybacks are very popular in crypto. Its call token burning. Binance does it all the time with BNB.

khuey 5y ago

Cryptocurrency doesn't have dividends or share buybacks which are what make stocks have inherent value.

xur17 5y ago
Yes it does. Proof of stake networks (Ethereum, Tezos, etc) pay dividends + transaction fees to stakers, decentralized exchanges pay a cut of fees to token holders (with decent P/E ratios), and the list goes on. This is an out of date view that does not match the current reality.
- Retric 5y ago
  As a thought exercise, suppose a proof is stake currency was only used by one person. How exactly does do it’s dividends create value? In short “crypto dividends” don’t actually create any value it’s purely incrementing an arbitrary number rather than creating an income stream. The same is true if N people use the currency without any new money coming in they can’t cash out. Therefore it’s not an actual dividend. This is why everyone calls crypto a pyramid scheme, the only way to cash out is to get someone else to buy in.
  - xur17 5y ago
    For proof of stake, I agree - I think it's useful to instead focus on net issuance. For ETH2 this could very well could be negative since the base transaction fee will be burned, and transaction fees currently are greater than miner rewards a decent percentage of the time. Proof of stake coins that don't have much usage and mostly pay out rewards from new issuance have an interesting piece.. - they are inflating the base supply to pay out dividends that holders pay taxes on. Effectively moving normal gains from the capital gains bracket to regular income, which is sub-optimal. For DeX's, the image is a lot better - the biggest issue here is - are fees arbitrarily high, and will they go down over time. My gut says the percentage fee will go down, but the volume increase will more than make up for this loss.
  - ajdegol 5y ago
    US dollars wouldn’t be worth very much either if you were the only one using them.
    - deleted 5y ago
      [deleted]
    - Retric 5y ago
      > The same is true if N people use the currency without any new money coming in they can’t cash out.
shanebrunette 5y ago
As a counterpoint, YFI literally buys back it's token from fees earned from users using their automated yield farming strategy. There are plenty of duds around, but that doesn't make everything a dud.
- vmception 5y ago
  PancakeBunny too! I’m considering to buy the dip…
- bouncycastle 5y ago
  Yes, cryptocurrency can be programmed in many different ways and can be defined as several different things at once.
ekianjo 5y ago
Not all stocks have dividends.
- astrange 5y ago
  The ones that don’t are valued on the assumption that they will in the future.
  - midasuni 5y ago
    Have google, Facebook amazon or Netflix ever issued a dividend?
    - astrange 5y ago
      They are likely to do stock buybacks which are the same thing. You’re certainly not buying them for voting rights - FB and Google almost don’t give those out, and ETFs don’t pass on their voting rights but are not cheaper than the underlying stocks.
      - midasuni 5y ago
        When was the last buyback?
  - xpe 5y ago
    What is your basis for saying this?
    - astrange 5y ago
      Are you asking me to link the Wikipedia article for capital asset pricing?
      - xpe 5y ago
        You could have written "the Wikipedia article for capital asset pricing". I don't see the need to make it a question. Your comment comes across as passive aggressive, unfortunately. I hope that wasn't your intent.
allendoerfer 5y ago
Stocks do not need buybacks or dividends. They are rights to control a share of a company, which earns (or potentially earns) money. That’s inherently valuable even without a stock market to determine a price. You control a machine, which makes things and earns money. Crypto is only valuable, because others think so, too. You control a place inside a distributed list. Others think a place in exactly this list is valuable, while all the other lists are shitcoins.
- eggsbenedict 5y ago
  How do you explain the prices of Class-C shares which don't bestow voting rights to the holder? For example, GOOG trades for over 2000 a share. In fact, it even trades at a $50 premium over GOOGL, which offers voting rights. Strange.
  - allendoerfer 5y ago
    You don’t have to control a company personally, you can also rely on other shareholders to do that. You just have to know, somebody is voting in your interests, since you probably won’t do it (but again: you could). I don’t know whether your statement about the price difference is true and if so, I don’t know why. Maybe different free float? My statement was about inherent value not short term price negotiations via stock exchange. I thought about an actual attack against my argument: Stocks are just shares of companies, which sell stuff that is valuable because other people think so. Some stuff might have inherent value (because it can generate money), but in the end it still comes down to people deciding something has value. Turtles all the way down.
    - pmoriarty 5y ago
      "You don’t have to control a company personally, you can also rely on other shareholders to do that. You just have to know, somebody is voting in your interests" How would you know they're voting in your interests? I've never known how any other shareholder voted in any of the stock I owned. For all I know they could have been voting completely contrary to what I'd wanted. No. Unless you own enough of a stock to vote and make a difference, stock ownership is not about influencing a company but just about hoping the value of the stock will rise, and there are many theories about why that might happen, from fundamental to technical analysis to people who invest based on the phase of the moon, divination, tips from friends, insider trading, trend following, news, etc.
menzoic 5y ago
Buybacks are very popular in crypto. Its call token burning. Binance does it all the time with BNB.