5 ms·

I think you're significantly overestimating how much experience and knowledge most that briefly dabble in currency have both over what is currently going on and

by ve55 5y ago

I think you're significantly overestimating how much experience and knowledge most that briefly dabble in currency have both over what is currently going on and over what types of finance scams have happened in the past.

knowaveragejoe 5y ago
I've heard "it's a scam" a lot recently, but nobody can articulate how in a way that is similar to any real, provable scam in the past. It's a giant, distributed scam?
- daenz 5y ago
  I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.
  - knowaveragejoe 5y ago
    Can you describe how it would "burn through all potential buyers"? How is this not a problem in the stock market, for example?
  - fastball 5y ago
    Cryptos have intrinsic value because they drive efficiency of value exchange. Specifically they allow for trustless exchange of value, which in an increasingly globalized world has become appealing for various reasons. Some cryptos have value beyond that, like ETH, because the Ethereum network itself has intrinsic value, and ETH is the only thing you can use to pay the Gas fees if you want a program running on the network.
    - drdeca 5y ago
      Hm, is there a theory of pricing ease-of-transfer ? Of course, it would have to depend on the preferences and whatnot, but still, seems like something that there should be some good theory of, but I haven’t heard of one. Side note: Aren’t there tokens that sort of have a kind of stored gas? Like, you can cash it in to get a refund of some of the gas cost of the transaction?
      - fastball 5y ago
        Yep, I'm not sure what exactly you call that in econ. What I do know is that this is the entire thesis behind Visa, Paypal, etc. who have some of the highest market caps in the world. If they have value for facilitating transactions then cryptos do too. WRT the gas fee thing: yes, technically you can send a miner whatever you want in order to incentivize them to include your tx in a block, but the only thing baked in is ETH. Additionally, after the London hard fork (slated for release next month), EIP-1559 will be live which changes the fee system to become a "burn" fee system rather than a "tip to miner" fee system, which will force all fees to be paid in ETH (and algorithmically determined, rather than somewhat arbitrarily picking a fee that you hope is high enough for miners to include your tx).
        drdeca 5y ago
        ok, but when you are sending money via visa or paypal or what have you, you aren't sending shares of stock in that company, you are sending something denominated in dollars. The theory around "prices people are willing to pay for ease of transactions" seems probably not that tricky, the theory around "the value people will assign to a good based on ease of transfer of that good" seems like it would be more complicated and confusing.
        fastball 5y ago
        I think you're overcontemplating it. Sure, the means of transaction and the network responsible for the transaction are one in the same, but how does that fundamentally change the equation? If anything it makes cryptos more valuable, not less, because you only need the single token and you can do both (have a share in the network and transact on the network).
  - WanderPanda 5y ago
    Wow it is really amazing how gold, the biggest scam of all times, is still finding people to scam nowadays. Or is there some value to limited goods?
    - audunw 5y ago
      Wait, you really think gold is only traded for speculation? Gold is an extremely useful metal. Its not just an artificially limited good. If you’re buying gold you’re not purely depending on finding another sucker to buy your gold. You can sell it to any one of the countless manufacturers or jewelry makers using it every day. If the price crashed too much, these would probably just increase their inventory of gold in anticipation of a future price increase, which would itself drive up price. If the price stayed low they can lower prices on the goods they’re making, increasing demand for gold, stabilizing the price. That’s why cryptocurrency is not digital gold. There are no such mechanism setting a fundamental floor for how low the price can go.

by ve55 5y ago

knowaveragejoe 5y ago

I've heard "it's a scam" a lot recently, but nobody can articulate how in a way that is similar to any real, provable scam in the past. It's a giant, distributed scam?

daenz 5y ago
I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.
- knowaveragejoe 5y ago
  Can you describe how it would "burn through all potential buyers"? How is this not a problem in the stock market, for example?
- fastball 5y ago
  Cryptos have intrinsic value because they drive efficiency of value exchange. Specifically they allow for trustless exchange of value, which in an increasingly globalized world has become appealing for various reasons. Some cryptos have value beyond that, like ETH, because the Ethereum network itself has intrinsic value, and ETH is the only thing you can use to pay the Gas fees if you want a program running on the network.
  - drdeca 5y ago
    Hm, is there a theory of pricing ease-of-transfer ? Of course, it would have to depend on the preferences and whatnot, but still, seems like something that there should be some good theory of, but I haven’t heard of one. Side note: Aren’t there tokens that sort of have a kind of stored gas? Like, you can cash it in to get a refund of some of the gas cost of the transaction?
    - fastball 5y ago
      Yep, I'm not sure what exactly you call that in econ. What I do know is that this is the entire thesis behind Visa, Paypal, etc. who have some of the highest market caps in the world. If they have value for facilitating transactions then cryptos do too. WRT the gas fee thing: yes, technically you can send a miner whatever you want in order to incentivize them to include your tx in a block, but the only thing baked in is ETH. Additionally, after the London hard fork (slated for release next month), EIP-1559 will be live which changes the fee system to become a "burn" fee system rather than a "tip to miner" fee system, which will force all fees to be paid in ETH (and algorithmically determined, rather than somewhat arbitrarily picking a fee that you hope is high enough for miners to include your tx).
      - drdeca 5y ago
        ok, but when you are sending money via visa or paypal or what have you, you aren't sending shares of stock in that company, you are sending something denominated in dollars. The theory around "prices people are willing to pay for ease of transactions" seems probably not that tricky, the theory around "the value people will assign to a good based on ease of transfer of that good" seems like it would be more complicated and confusing.
        fastball 5y ago
        I think you're overcontemplating it. Sure, the means of transaction and the network responsible for the transaction are one in the same, but how does that fundamentally change the equation? If anything it makes cryptos more valuable, not less, because you only need the single token and you can do both (have a share in the network and transact on the network).
- WanderPanda 5y ago
  Wow it is really amazing how gold, the biggest scam of all times, is still finding people to scam nowadays. Or is there some value to limited goods?
  - audunw 5y ago
    Wait, you really think gold is only traded for speculation? Gold is an extremely useful metal. Its not just an artificially limited good. If you’re buying gold you’re not purely depending on finding another sucker to buy your gold. You can sell it to any one of the countless manufacturers or jewelry makers using it every day. If the price crashed too much, these would probably just increase their inventory of gold in anticipation of a future price increase, which would itself drive up price. If the price stayed low they can lower prices on the goods they’re making, increasing demand for gold, stabilizing the price. That’s why cryptocurrency is not digital gold. There are no such mechanism setting a fundamental floor for how low the price can go.