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> However, don't we all, if we buy into the stock market Crypto proponents are always trying to draw false equivalencies between crypto and the stock market to

> However, don't we all, if we buy into the stock market Crypto proponents are always trying to draw false equivalencies between crypto and the stock market to legitimize crypto (or de-legitimize stocks). However, stocks and crypto aren’t comparable. Cryptocurrency is basically what you’d get if you took stocks and removed everything valuable about them (that is: removed the fractional ownership of the company and the company’s assets). For all the talk about blockchain and technology, crypto investors only really care about the symbol and the price it trades at. Without an underlying company behind the coin, cryptocurrency creators are freed from the hard work of creating a company. They just have to create the coin and sell it. They also don’t have to worry about anyone claiming the coin is overpriced, because it doesn’t represent anything. With stocks, you’re actually buying a piece of an actual company. It doesn’t compare at all to crypto.

kzrdude 5y ago
I'm just wondering if crypto should be part of a sound investment strategy. The question of whether crypto is like stocks is separate, I think, and I see your point.
- PragmaticPulp 5y ago
  The two questions aren’t very different. Because crypto doesn’t derive value from any underlying assets, it’s not a traditional investment. It’s basically the essence of speculative trend-following distilled into tradeable tokens. The value only goes up so long as the hype continues to increase and the market can find more believers to buy the coins, pushing the price higher. If you think investing in such a scheme is profitable, you have to believe that more people will continue to believe in the scheme in the future to continue the price growth. The risk is that people stop believing in the scheme and start withdrawing their money to place in other assets (traditional investments or the new hot cryptocurrency), which depresses the price and simultaneously makes it less attractive to new investors.

kzrdude 5y ago

I'm just wondering if crypto should be part of a sound investment strategy. The question of whether crypto is like stocks is separate, I think, and I see your point.

PragmaticPulp 5y ago
The two questions aren’t very different. Because crypto doesn’t derive value from any underlying assets, it’s not a traditional investment. It’s basically the essence of speculative trend-following distilled into tradeable tokens. The value only goes up so long as the hype continues to increase and the market can find more believers to buy the coins, pushing the price higher. If you think investing in such a scheme is profitable, you have to believe that more people will continue to believe in the scheme in the future to continue the price growth. The risk is that people stop believing in the scheme and start withdrawing their money to place in other assets (traditional investments or the new hot cryptocurrency), which depresses the price and simultaneously makes it less attractive to new investors.