5 ms·

> All cryptocurrency assets, not just Bitcoin, are zero sum. So every dollar “made” in cryptocurrency was simply provided by someone else. Can't you say that a

by bko 5y ago

> All cryptocurrency assets, not just Bitcoin, are zero sum. So every dollar “made” in cryptocurrency was simply provided by someone else. Can't you say that about any other asset? If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. But that's not how we determine value. It's positive sum because the buyer attributes a value higher than he had paid for it, otherwise he wouldn't have bought my home to begin with. You can say no one can reasonably "value" a crypto currency, but there's 100+ billion dollars that says otherwise. > There is no silver bullet, but there are a lot of things that can throw sand in the gears, degrading Bitcoin and other systems into unusability. Ironically, the author goes on to describe a way to attack the value of Bitcoin and presumably drive its price down (destroying value). So it doesn't seem zero sum after all

miked85 5y ago
> it's zero sum since someone simply provided me that money By your definition, every transaction ever made is zero sum.
- bko 5y ago
  It's not my definition of zero sum. It's the author of the post. I was attempting to poke holes in it.
- asah 5y ago
  I think that's precisely his pointy: every transaction is "money transmission"... (not saying I agree with his motives)
Grustaf 5y ago
Sure, if your house increases in value it is in fact not creating any value. Same with stocks. But if you invest in stocks you increase the amount of risk capital in the world, so more companies will be started, companies that can create value. So it's not the rising stock price that creates value when a company is successful, but is an indication that the company is creating value, since people are buying its product.
dragontamer 5y ago
> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. No transaction between rational individuals is ever zero-sum. If Bob values a house at $300,000 and Alice values the house at $300,000, the house will __never__ be sold. Because by the time transaction fees come about, Bob would have lost money in the transaction. In reality, Bob values the house at $250,000, and Alice is happy to buy at $350,000. Maybe some negotiations happen, and after transaction fees, Bob receives $270,000 while Alice pays $330,000 (both happy), with the Banks / Real Estate agents pocketing the $60,000 spread. ------- This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. ------ The difference in the bid-ask spread gives you an idea of how much value any transaction created. If Bob was willing to sell the house for $270,000 and Alice was willing to buy the house for $330,000, then there was at LEAST $60,000 of value created by the transaction.
- bko 5y ago
  Right, I was using "zero sum" by the author's naive definition to show that it doesn't make sense. My argument is that all voluntary trade has to be positive sum to both parties
- deleted 5y ago
  [deleted]
- sremani 5y ago
  I do not think home buying is exactly this. It's much emotional and sometimes both parties involved are green - this may describe a transaction between two veteran RE investors.
- klipt 5y ago
  How do you distinguish between true value creation and simple asset inflation? Low interest rates cause soaring asset prices, which can create an illusion of "value creation", but I don't see it actually increasing the value much.
BitwiseFool 5y ago
To buy any cryptocurrency a buyer and a seller must agree on a price and an amount. The idea that the money was "made" by someone else is irrelevant when both parties have agreed to make the trade.
tiku 5y ago
Funny, how is money put into circulation? A big portion is being paid directly from the government to their employees. They need houses, food etc, so they spend it. That gets distributed to all the people from those companies and so on. Through taxes we return a bit to the government. So that they don't need to keep printing new money ALL the time. And that is exactly the same for crypto, except there is no country/government behind but only a ledger. The money is being transferred for doing work, mining. And that is distributed again.
giaour 5y ago
> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. I think the point the author was trying to make is that you can participate in the housing market by building and selling houses, with the former being “positive sum” (since the land and building materials have a cumulative value less than that of a finished dwelling). The positive sum stuff seemed to be describing markets, not individual transactions
lowkey 5y ago
My father had a rather clever way of explaining the bid-ask spread: “Every time you have an exchange of goods and services between two parties, you have an agreement on price and a disagreement on value.” i.e. Given an exchange between a seller and a buyer selling a widget for $100, the seller by definition values the $100 more than the widget while the buyer values the widget more than they value the $100.

by bko 5y ago

miked85 5y ago

> it's zero sum since someone simply provided me that money By your definition, every transaction ever made is zero sum.

bko 5y ago
It's not my definition of zero sum. It's the author of the post. I was attempting to poke holes in it.
asah 5y ago
I think that's precisely his pointy: every transaction is "money transmission"... (not saying I agree with his motives)

Grustaf 5y ago

Sure, if your house increases in value it is in fact not creating any value. Same with stocks. But if you invest in stocks you increase the amount of risk capital in the world, so more companies will be started, companies that can create value. So it's not the rising stock price that creates value when a company is successful, but is an indication that the company is creating value, since people are buying its product.

dragontamer 5y ago

> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. No transaction between rational individuals is ever zero-sum. If Bob values a house at $300,000 and Alice values the house at $300,000, the house will __never__ be sold. Because by the time transaction fees come about, Bob would have lost money in the transaction. In reality, Bob values the house at $250,000, and Alice is happy to buy at $350,000. Maybe some negotiations happen, and after transaction fees, Bob receives $270,000 while Alice pays $330,000 (both happy), with the Banks / Real Estate agents pocketing the $60,000 spread. ------- This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. ------ The difference in the bid-ask spread gives you an idea of how much value any transaction created. If Bob was willing to sell the house for $270,000 and Alice was willing to buy the house for $330,000, then there was at LEAST $60,000 of value created by the transaction.

bko 5y ago
Right, I was using "zero sum" by the author's naive definition to show that it doesn't make sense. My argument is that all voluntary trade has to be positive sum to both parties
deleted 5y ago
[deleted]
sremani 5y ago
I do not think home buying is exactly this. It's much emotional and sometimes both parties involved are green - this may describe a transaction between two veteran RE investors.
klipt 5y ago
How do you distinguish between true value creation and simple asset inflation? Low interest rates cause soaring asset prices, which can create an illusion of "value creation", but I don't see it actually increasing the value much.

BitwiseFool 5y ago

To buy any cryptocurrency a buyer and a seller must agree on a price and an amount. The idea that the money was "made" by someone else is irrelevant when both parties have agreed to make the trade.

tiku 5y ago

Funny, how is money put into circulation? A big portion is being paid directly from the government to their employees. They need houses, food etc, so they spend it. That gets distributed to all the people from those companies and so on. Through taxes we return a bit to the government. So that they don't need to keep printing new money ALL the time. And that is exactly the same for crypto, except there is no country/government behind but only a ledger. The money is being transferred for doing work, mining. And that is distributed again.

giaour 5y ago

> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. I think the point the author was trying to make is that you can participate in the housing market by building and selling houses, with the former being “positive sum” (since the land and building materials have a cumulative value less than that of a finished dwelling). The positive sum stuff seemed to be describing markets, not individual transactions

lowkey 5y ago

My father had a rather clever way of explaining the bid-ask spread: “Every time you have an exchange of goods and services between two parties, you have an agreement on price and a disagreement on value.” i.e. Given an exchange between a seller and a buyer selling a widget for $100, the seller by definition values the $100 more than the widget while the buyer values the widget more than they value the $100.