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"There are indeed a lot of fools in this world, but to presume an infinite chain of them as the core of an investment thesis is beyond absurd." It's worked for

"There are indeed a lot of fools in this world, but to presume an infinite chain of them as the core of an investment thesis is beyond absurd." It's worked for gold and diamonds for generations. Not to mention pretty much every artwork or other concoction human beings create and then collect. There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags. Humans collect and value all sorts of stuff for no good reason. Cryptocurrency is no different. It becomes even less of an issue when you realise that we all create 'currency' all the time. It's just an embodiment of a promise to do something in the future. Far more of a unit of account than a thing. The trick is getting other people to accept your currency. Which is a lot easier when you can impose coercive charges on people denominated in that currency - whether that is a tax, or a tithe.

creshal 5y ago
Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage. Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that. Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?
- occamrazor 5y ago
  > Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage. Industrial demand for natural diamonds is approximately nil, synthetic ones are cheaper and have better properties. Industrial demand for gold is larger, but it wouldn’t remain that large in case of societal collapse. > Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that. The NFT mania (and CryptoKitties before that) have shown that at least some people are impressed by it and are willing to pay for it. I don’t get it either, but I can’t deny it’s happening. > Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381? Greece could not devalue the Euro unilaterally. Investors in Argentinian bonds had a different experience.
lmm 5y ago
> It's worked for gold and diamonds for generations. Gold has literally millennia of tradition. Diamonds have minimal resale value and are not bought as investments. > Not to mention pretty much every artwork or other concoction human beings create and then collect. > There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags. Right, and IMO that kind of collectible is a much better model for thinking about bitcoin et al. than commodities or currencies. Do some people flip them for a profit? Yes. Are they a good investment strategy? Generally no. Look at e.g. stamps, where the whole bottom has just fallen out of the market as the generation that cares about them disappears.
- denton-scratch 5y ago
  > Diamonds have minimal resale value and are not bought as investments. Could I please have a quote for some of your minimal-price used diamonds?
  - lmm 5y ago
    I don't own any diamonds. If you're offering to buy used diamonds at something close to the original sale price then I'll remember to send friends your way.
  - yunohn 5y ago
    “A diamond engagement ring or other diamond jewelry will have a resale value of between 20 and 60% of the amount it cost when it was new“ - https://www.diamonds.pro/guides/diamond-resale-value/ https://www.diamonds.pro/guides/diamond-resale-value/ Lots of similar sources if you google “diamond resale value”. Read up on De Beers and their entire scammy (blood) diamond market manipulation.
jahnu 5y ago
There is a lot of that. But my own feeling is that this is mainly a novel form of gambling. Sure there are stories of people risking their entire financial security on these things but I am willing to be the vast majority of people invested are playing with money they can afford to lose. Vegas is a ridiculous "unsustainable" city built where no city should be and so are cryptocurrencies and all that's built on that.
lottin 5y ago
The real trick is getting people to buy a virtual asset with real money. Intuitively it seems strange to pay for something virtual with real money, and in fact it is, but apparently many people don't feel the same way.

creshal 5y ago

Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage. Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that. Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?

occamrazor 5y ago
> Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage. Industrial demand for natural diamonds is approximately nil, synthetic ones are cheaper and have better properties. Industrial demand for gold is larger, but it wouldn’t remain that large in case of societal collapse. > Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that. The NFT mania (and CryptoKitties before that) have shown that at least some people are impressed by it and are willing to pay for it. I don’t get it either, but I can’t deny it’s happening. > Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381? Greece could not devalue the Euro unilaterally. Investors in Argentinian bonds had a different experience.

lmm 5y ago

> It's worked for gold and diamonds for generations. Gold has literally millennia of tradition. Diamonds have minimal resale value and are not bought as investments. > Not to mention pretty much every artwork or other concoction human beings create and then collect. > There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags. Right, and IMO that kind of collectible is a much better model for thinking about bitcoin et al. than commodities or currencies. Do some people flip them for a profit? Yes. Are they a good investment strategy? Generally no. Look at e.g. stamps, where the whole bottom has just fallen out of the market as the generation that cares about them disappears.

denton-scratch 5y ago
> Diamonds have minimal resale value and are not bought as investments. Could I please have a quote for some of your minimal-price used diamonds?
- lmm 5y ago
  I don't own any diamonds. If you're offering to buy used diamonds at something close to the original sale price then I'll remember to send friends your way.
- yunohn 5y ago
  “A diamond engagement ring or other diamond jewelry will have a resale value of between 20 and 60% of the amount it cost when it was new“ - https://www.diamonds.pro/guides/diamond-resale-value/ https://www.diamonds.pro/guides/diamond-resale-value/ Lots of similar sources if you google “diamond resale value”. Read up on De Beers and their entire scammy (blood) diamond market manipulation.

jahnu 5y ago

There is a lot of that. But my own feeling is that this is mainly a novel form of gambling. Sure there are stories of people risking their entire financial security on these things but I am willing to be the vast majority of people invested are playing with money they can afford to lose. Vegas is a ridiculous "unsustainable" city built where no city should be and so are cryptocurrencies and all that's built on that.

lottin 5y ago

The real trick is getting people to buy a virtual asset with real money. Intuitively it seems strange to pay for something virtual with real money, and in fact it is, but apparently many people don't feel the same way.