5 ms·

> It's going into real estate. Some of it is likely going to Bitcoin / crypto as well, even if not everyone agrees on the legitimacy of that space.

UncleOxidant 5y ago
Some is going there too, but it's a much smaller piece of the pie. Real Estate also has utility - you can live in it. Gold's utility is much lower - sure you can make jewelry out of it's used in small amounts in electronics. Crypto basically has no utility.
- w4llstr33t 5y ago
  > Crypto basically has no functionality. Transferring payments across the world is functional, and yes, the traditional financial system also does this, but it doesn't mean crypto has no functionality. Edit: Previous statement I was responding to has changed. I still don't agree that crypto has no utility though. I agree with almost everything I was responding to except that part. Yes, real estate has more utility, for sure. To me it doesn't matter that crypto has some overlap with traditional finance. This is an iteration on technology, which has its own pros/cons, but some folks are trying to come up with something better. Time will tell if that succeeds or not. IMO, it's too early to tell. You can also see that I wasn't the only person who responded to the parent comment that Bitcoin may be a competitor to capital flowing to gold as a potential inflation hedge.
  - UncleOxidant 5y ago
    Ok, but as you point out it's not a unique in transferrability - once you've transferred that crypto in the end it's still crypto - you can't live in it or even use it to make jewelry. Locking in your mortgage payment is an inflation hedge and you get a house to live in. Millennials are into the peak home buying years and are now the largest generational cohort. Add to this that we haven't built enough housing to keep up with population growth over the last dozen years or so and this is why housing has gone up so much.
    - w4llstr33t 5y ago
      My understanding is that foreign real estate buyers have also pushed real estate prices up. That said I think you make a lot of good points and crypto is about the only thing I disagree with you on.
  - beowulfey 5y ago
    Money itself is not "functional" in this sense; the point is that real estate provides value and a function other than value.
  - lottin 5y ago
    This is like saying that a rock is functional because it can be transferred from one place to another. Sorry, "being transferred" is not a function that is performed by the object that is being transferred.
    - w4llstr33t 5y ago
      If you have technology that can transfer a rock across the world in seconds then I would be interested in that. Same w/ crypto (with the added benefit of crypto not requiring a centralized entity to do so). My main point is let's wait and see how this new technology evolves instead of just shooting it down. I don't think everything about traditional finance is perfect. Negative interest rates in some parts of the world are one sign of that. I think we can iterate on traditional finance as well as explore other potential solutions. The aversion to cryptocurrency as a technology, when Bitcoin has only been around for a bit over a decade, seems premature to me. There have been comparisons of cryptocurrency to the internet, which everyone may not agree with, but what if we just shut down the internet before it really took off? Well, we wouldn't be having this conversation.
      - lottin 5y ago
        I don't think after a decade it is "premature" to jump to conclusions. If someone hasn't been able to figure out bitcoin by now, they probably never will (in my opinion, it takes about 20 minutes to a person of an average intelligence).
    - xyzzy123 5y ago
      When something's too big and heavy to move you turn it into a financial instrument anyway and change (e.g. yap stones) the ownership. I still think there's something a little bit special about bitcoin. It simultaneously has the properties of modern electronic currency BUT has some elements of "permission-less-ness" like cash or gold.
- EVa5I7bHFq9mnYK 5y ago
  You could live in the same real estate 10 years ago, when its price was 3 times lower. So 1/3 of real estate price comes from utility, and 2/3 is pure fiction. More precisely, 2/3 of real estate price represents its utility as a storage of wealth.
- Geee 5y ago
  The utility of money is the ability to trade it for any utility that is for sale. Money itself shouldn't have any inherent utility, other than being able to reference any other utility in the amount that the money holds value. It's like a magic wand that can make a wish true. The medium of money is just there to store and transfer the information for the amount of magic you can wield. This is why money is always overvalued compared to the medium's inherent utility. There are many other things that are overvalued, such as real estate - because there's an expectation that they can be used to trade for something else later. In other words, they're bought solely because they're expected to hold their buying power, i.e. they're used as money. The reason why this happens is because modern fiat money doesn't have this property - it's expected to not hold its buying power. Now, there is money that holds its buying power - bitcoin. It's expected that in the coming years most of the value from real estate and other overvalued assets will transfer into bitcoin, because there's no reason any more to own them other than for their utility.
  - UncleOxidant 5y ago
    > There are many other things that are overvalued, such as real estate I'm not sure RE is overvalued. There's a shortage of houses at a time when Millennials (the largest generational cohort so far) are hitting peak household formation. > Now, there is money that holds its buying power Bitcoin peaked at around $64K in April 2020. Now it's currently at $38K - it was down to about $30K a month ago. Seems pretty volatile for something that "holds it's buying power".
    - hakfoo 5y ago
      Isn't it less there being a shortage of houses, and more there being no way to dislodge market jams and speculators? I know the claim recently was that there were more unoccupied homes than homeless people. Even if you factor out the undesirable/impractical ones, I'd expect if we had some means to unlock that capacity, it would glut and crash the market down to (much closer to) affordability. It feels like this is one of many problems that are trivial to solve in the abstract, but intractable as long as we worship private-property rights. A simple fix would be an >100% annual value tax on unoccupied dwellings. The vacant-50-weeks-a-year vacation house, or the 'investment property' you're holding to sell in a few years, becomes an instant financial grenade, where it's better to hand the deed over to your pizza delivery guy as a tip than to be not living in it when the tax bill comes due.

UncleOxidant 5y ago

Some is going there too, but it's a much smaller piece of the pie. Real Estate also has utility - you can live in it. Gold's utility is much lower - sure you can make jewelry out of it's used in small amounts in electronics. Crypto basically has no utility.

w4llstr33t 5y ago
> Crypto basically has no functionality. Transferring payments across the world is functional, and yes, the traditional financial system also does this, but it doesn't mean crypto has no functionality. Edit: Previous statement I was responding to has changed. I still don't agree that crypto has no utility though. I agree with almost everything I was responding to except that part. Yes, real estate has more utility, for sure. To me it doesn't matter that crypto has some overlap with traditional finance. This is an iteration on technology, which has its own pros/cons, but some folks are trying to come up with something better. Time will tell if that succeeds or not. IMO, it's too early to tell. You can also see that I wasn't the only person who responded to the parent comment that Bitcoin may be a competitor to capital flowing to gold as a potential inflation hedge.
- UncleOxidant 5y ago
  Ok, but as you point out it's not a unique in transferrability - once you've transferred that crypto in the end it's still crypto - you can't live in it or even use it to make jewelry. Locking in your mortgage payment is an inflation hedge and you get a house to live in. Millennials are into the peak home buying years and are now the largest generational cohort. Add to this that we haven't built enough housing to keep up with population growth over the last dozen years or so and this is why housing has gone up so much.
  - w4llstr33t 5y ago
    My understanding is that foreign real estate buyers have also pushed real estate prices up. That said I think you make a lot of good points and crypto is about the only thing I disagree with you on.
- beowulfey 5y ago
  Money itself is not "functional" in this sense; the point is that real estate provides value and a function other than value.
- lottin 5y ago
  This is like saying that a rock is functional because it can be transferred from one place to another. Sorry, "being transferred" is not a function that is performed by the object that is being transferred.
  - w4llstr33t 5y ago
    If you have technology that can transfer a rock across the world in seconds then I would be interested in that. Same w/ crypto (with the added benefit of crypto not requiring a centralized entity to do so). My main point is let's wait and see how this new technology evolves instead of just shooting it down. I don't think everything about traditional finance is perfect. Negative interest rates in some parts of the world are one sign of that. I think we can iterate on traditional finance as well as explore other potential solutions. The aversion to cryptocurrency as a technology, when Bitcoin has only been around for a bit over a decade, seems premature to me. There have been comparisons of cryptocurrency to the internet, which everyone may not agree with, but what if we just shut down the internet before it really took off? Well, we wouldn't be having this conversation.
    - lottin 5y ago
      I don't think after a decade it is "premature" to jump to conclusions. If someone hasn't been able to figure out bitcoin by now, they probably never will (in my opinion, it takes about 20 minutes to a person of an average intelligence).
  - xyzzy123 5y ago
    When something's too big and heavy to move you turn it into a financial instrument anyway and change (e.g. yap stones) the ownership. I still think there's something a little bit special about bitcoin. It simultaneously has the properties of modern electronic currency BUT has some elements of "permission-less-ness" like cash or gold.
EVa5I7bHFq9mnYK 5y ago
You could live in the same real estate 10 years ago, when its price was 3 times lower. So 1/3 of real estate price comes from utility, and 2/3 is pure fiction. More precisely, 2/3 of real estate price represents its utility as a storage of wealth.
Geee 5y ago
The utility of money is the ability to trade it for any utility that is for sale. Money itself shouldn't have any inherent utility, other than being able to reference any other utility in the amount that the money holds value. It's like a magic wand that can make a wish true. The medium of money is just there to store and transfer the information for the amount of magic you can wield. This is why money is always overvalued compared to the medium's inherent utility. There are many other things that are overvalued, such as real estate - because there's an expectation that they can be used to trade for something else later. In other words, they're bought solely because they're expected to hold their buying power, i.e. they're used as money. The reason why this happens is because modern fiat money doesn't have this property - it's expected to not hold its buying power. Now, there is money that holds its buying power - bitcoin. It's expected that in the coming years most of the value from real estate and other overvalued assets will transfer into bitcoin, because there's no reason any more to own them other than for their utility.
- UncleOxidant 5y ago
  > There are many other things that are overvalued, such as real estate I'm not sure RE is overvalued. There's a shortage of houses at a time when Millennials (the largest generational cohort so far) are hitting peak household formation. > Now, there is money that holds its buying power Bitcoin peaked at around $64K in April 2020. Now it's currently at $38K - it was down to about $30K a month ago. Seems pretty volatile for something that "holds it's buying power".
  - hakfoo 5y ago
    Isn't it less there being a shortage of houses, and more there being no way to dislodge market jams and speculators? I know the claim recently was that there were more unoccupied homes than homeless people. Even if you factor out the undesirable/impractical ones, I'd expect if we had some means to unlock that capacity, it would glut and crash the market down to (much closer to) affordability. It feels like this is one of many problems that are trivial to solve in the abstract, but intractable as long as we worship private-property rights. A simple fix would be an >100% annual value tax on unoccupied dwellings. The vacant-50-weeks-a-year vacation house, or the 'investment property' you're holding to sell in a few years, becomes an instant financial grenade, where it's better to hand the deed over to your pizza delivery guy as a tip than to be not living in it when the tax bill comes due.