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There's a canonical toxic response to this = HFSP. I don't like that because we're all still learning. I hope you see how the money printer is making scarce ass

There's a canonical toxic response to this = HFSP. I don't like that because we're all still learning. I hope you see how the money printer is making scarce assets outside of Govt manipulation more valuable. The Bitcoin rabbit hole goes deep. You're right in that stablecoins might actually be worthless in the long run since they're backed by USD which might be worthless in due course of time. Zoom out of the day to day movement - we're in price discovery stage where nothing makes sense in the short term.

NikolaNovak 5y ago
>>There's a canonical toxic response to this = HFSP. I don't feel this was your actual response, but I still need to address it because I don't understand how anybody ever can have that as a remotely legitimate, thought-out response. How can any financial instrument/currency make everybody "rich", in any real terms? If you gave everybody million USD tomorrow, it'd crash so bad that we'd be right back where we came from. Is there anybody that believes that we could all invest fiat money into X.coin, and after some period of time, we'd all be rich? If so, how? What wonderful value does it produce, what mechanism would magically elevate all without disruption? From where I'm sitting, any currency or investment is a re-distribution of wealth/money/value. A person who bought X.coin yesterday can only derive/extract value tomorrow if somebody else buys it for more. We didn't gain/extract/create value out of thin air by virtua of fintech, it's a simple exchange. So what if everybody DID get some X.coin, so that nobody did "HFSP"? What'd happen then?
- whatshisface 5y ago
  >How can any financial instrument/currency make everybody "rich", in any real terms? By organizing economic activity in a more efficient way than our present system of centrally planned debt supplies. That's what currency is "for" - organizing real activities.
  - Muromec 5y ago
    So what kinds of economic activities, besides ransom, drug sales and donations to wikileaks and others not liked by u.s. government does bitcoin facilitate? Remittances to countries under repressive economical regime or under embargo? Not saying those are good or bad, just aiming to quantify the market size.
    - whatshisface 5y ago
      The potential of cryptocurrency is a lot brighter than the potential of Bitcoin. The right investment to make in cryptocurrency isn't buying it, it's thinking about it and economics to try to figure out how it can be gainfully used. Ethereum has many potential applications and so may be worth buying, but only if you have a use for it. (The price of every asset is such that buying it is a martingale.) BTC isn't even truly decentralized - it's Chinese. https://www.statista.com/statistics/1200477/bitcoin-mining-by-country/ https://www.statista.com/statistics/1200477/bitcoin-mining-b...
      - jmstfv 5y ago
        This summer, China banned Bitcoin mining, which resulted in a temporary drop in the hash rate. We're almost back where we were before the ban: https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate That speaks volumes about how resilient Bitcoin's ecosystem is. Bitcoin isn't Chinese. Bitcoin doesn't belong to any country, nation, tribe, political party, institution, or person at all.
    - iskander 5y ago
      If you cut past the gold rush and speculative bubble, the current uses are pretty mundane fintech stuff. Deposit savings, take out loans, &c.
  - NikolaNovak 5y ago
    I get that, at some high level; but I'm not really seeing any of the current coins being actively used as currencies as much as investment / static store of value. They all look more like Gold than Dollar, to my ignorant eye
- silentsea90 5y ago
  I will restrict myself to Bitcoin as I don't believe as strongly in the rest though I do own some of those as well. Bitcoin is at a market cap of 1T. That's less than major tech cos (Apple 2.5T, Google ~2T), gold(10T), total USD (~30-40T) etc. If you believe BTC will be used as the global store of wealth and currency, buying anytime (until the time BTC gets there) will make anybody who buys rich. Of course, after price discovery is more or less complete, we can't all be rich as the value relative to goods and services will stagnate, and BTC will become as boring as gold. > From where I'm sitting....if somebody else buys it for more. Sure, and they will if the value of said coin keeps going up. Note that you don't need to sell it for USD, you could be paying for services in said coin directly. Point being that the exchange doesn't need to happen in USD, it can happen in any form of value.
- roenxi 5y ago
  A central plank of the US dollar (all fiat currencies, really) is that if you hold on to them for long enough all the wealth you had when you first picked them up gets transferred to someone else. Compared to that baseline holding literally anything else - including crypto - has a better theoretical chance of preserving your wealth. When measured in terms of US dollars, that has the appearance of everyone who owns it getting richer. > How can any financial instrument/currency make everybody "rich", in any real terms? You have resources, someone else has a really good idea for how to use them. Financial instruments let the situation play out sensibly (you lend them resources, get back resources + something) with easy-to-manage legal enforcement if something goes wrong. More complicated financial instruments let that scenario play out in more abstract ways. All in theory, in practice most people are bad with debts and more complicated concepts.
  - NikolaNovak 5y ago
    >>You have resources, someone else has a really good idea for how to use them. Financial instruments let the situation play out sensibly (you lend them resources, get back resources + something) with easy-to-manage legal enforcement if something goes wrong. I agree with that in general; however, that's not the current premise of most cryptocurrencies - I see them more like gold in that you buy them and hold on to them; not as a capitalist investment into anything specific or generic. I may be wrong...
    - iskander 5y ago
      For newer cryptocurrencies you often buy them and then either (1) stake them (earn rewards for contributing to network security) or (2) deposit them in a crypto-bank like Aave and earn yield from having your money loaned out. Increasingly people don't look to cash out to USD but rather stay within the crypto ecosystem. I do think that BTC and its clones engender a certain dragon-cache hoarding mentality that aligns with either plans to eventually cash out at a higher price or some kind of apocalyptic vision where eventually USD is no longer used at all.
  - jollybean 5y ago
    No, crypto does not 'theoretically' hold out better than USD or other things. An asset - no matter what it is - is only going to have value in the future depending on how others are going to a value it. This means does it survive war? National collapse? etc.. USD is a currency, not a store of value, it's designed to be slightly inflationary. That's policy and public information. Don't hold them for 'long term' but it will at least have some value. Gold and Real Estate (to the extent you can control that real estate, which depends on rational social organization etc.) - will probably hold their value. As will some other things. Crypto would be the last choice among many as a store of value, as they could all be wiped out in a second, forget the issues of what financial fashions might come into place in the future. Crypto is still 100% experimental, and every dollar traded in crypto, is at least today, purely speculative, no different than trading Baseball Cards. But without at least the Baseball Cards. That's where it is today and while something might come along, nothing is quite on the horizon just yet.
- nostrademons 5y ago
  There's a bunch to unpack here, on both sides. To start with, I'll say that I agree with the mainstream view that cryptocurrency isn't actually creating wealth, in the sense of non-financial real goods that improve people's lives. It's redistributing it. Everybody's crypto gain comes at the expense of somebody else's crypto loss. I'll also throw in that folks who say "HFSP" are often the losers, because they're the ones who FOMO in because of greed and ego at the top of the cycle and then panic-sell at the bottom when they actually become poor. The folks who are making millions in crypto are the ones who buy at cyclical bottoms - 2012, and 2015, and 2019 - and hold on to sell at the tops, when everybody else is making fun of the folks sitting on the sidelines. However, they're on to something. Imagine that you're inside a group with superior military technology - the Mongols in 1200, for example, or an American settler in 1840 - and you're looking at the people you are about to conquer. Or less bloodily, you're going into software in 2002, aware that a computer program will replace the jobs of whole industries, and trying to figure out which profession to go into. It's much better to be on the inside of change than on the outside. They aren't necessarily wrong, either - they're correctly perceiving that the fiat currency system is unsustainable and is its own Ponzi scheme, and creating an alternative Ponzi scheme to recruit participants into. Game theoretically, if you have an inflationary currency and a deflationary currency, it makes sense for everybody to spend the inflationary currency and save the deflationary currency (Gresham's Law) which further drives up the relative price of the deflationary currency so long as there's an excess of savings available. If we enter a time of shortages (which we might), then the value of the deflationary currency will collapse (since everybody needs to spend money, and merchants are accustomed to taking the inflationary currency) - but if that happens, Bitcoin and its electricity & Internet demands are screwed anyway. In the meantime, as long as labor and savings both remain abundant, holders benefit at the expense of new adopters. The actual claim isn't that crypto is going to make everybody's life better. The claim is that it's going to make the life of holders better, at the expense of late adopters. People can't come out and say that directly - "Hi, I'm going to fuck you over and take all your wealth". I'm sure that'd go over great with the general public. So they say it in coded egoisms like "have fun staying poor", where you can write it off as somebody blowing off steam.
  - deleted 5y ago
    [deleted]

NikolaNovak 5y ago

>>There's a canonical toxic response to this = HFSP. I don't feel this was your actual response, but I still need to address it because I don't understand how anybody ever can have that as a remotely legitimate, thought-out response. How can any financial instrument/currency make everybody "rich", in any real terms? If you gave everybody million USD tomorrow, it'd crash so bad that we'd be right back where we came from. Is there anybody that believes that we could all invest fiat money into X.coin, and after some period of time, we'd all be rich? If so, how? What wonderful value does it produce, what mechanism would magically elevate all without disruption? From where I'm sitting, any currency or investment is a re-distribution of wealth/money/value. A person who bought X.coin yesterday can only derive/extract value tomorrow if somebody else buys it for more. We didn't gain/extract/create value out of thin air by virtua of fintech, it's a simple exchange. So what if everybody DID get some X.coin, so that nobody did "HFSP"? What'd happen then?

whatshisface 5y ago
>How can any financial instrument/currency make everybody "rich", in any real terms? By organizing economic activity in a more efficient way than our present system of centrally planned debt supplies. That's what currency is "for" - organizing real activities.
- Muromec 5y ago
  So what kinds of economic activities, besides ransom, drug sales and donations to wikileaks and others not liked by u.s. government does bitcoin facilitate? Remittances to countries under repressive economical regime or under embargo? Not saying those are good or bad, just aiming to quantify the market size.
  - whatshisface 5y ago
    The potential of cryptocurrency is a lot brighter than the potential of Bitcoin. The right investment to make in cryptocurrency isn't buying it, it's thinking about it and economics to try to figure out how it can be gainfully used. Ethereum has many potential applications and so may be worth buying, but only if you have a use for it. (The price of every asset is such that buying it is a martingale.) BTC isn't even truly decentralized - it's Chinese. https://www.statista.com/statistics/1200477/bitcoin-mining-by-country/ https://www.statista.com/statistics/1200477/bitcoin-mining-b...
    - jmstfv 5y ago
      This summer, China banned Bitcoin mining, which resulted in a temporary drop in the hash rate. We're almost back where we were before the ban: https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate That speaks volumes about how resilient Bitcoin's ecosystem is. Bitcoin isn't Chinese. Bitcoin doesn't belong to any country, nation, tribe, political party, institution, or person at all.
  - iskander 5y ago
    If you cut past the gold rush and speculative bubble, the current uses are pretty mundane fintech stuff. Deposit savings, take out loans, &c.
- NikolaNovak 5y ago
  I get that, at some high level; but I'm not really seeing any of the current coins being actively used as currencies as much as investment / static store of value. They all look more like Gold than Dollar, to my ignorant eye
silentsea90 5y ago
I will restrict myself to Bitcoin as I don't believe as strongly in the rest though I do own some of those as well. Bitcoin is at a market cap of 1T. That's less than major tech cos (Apple 2.5T, Google ~2T), gold(10T), total USD (~30-40T) etc. If you believe BTC will be used as the global store of wealth and currency, buying anytime (until the time BTC gets there) will make anybody who buys rich. Of course, after price discovery is more or less complete, we can't all be rich as the value relative to goods and services will stagnate, and BTC will become as boring as gold. > From where I'm sitting....if somebody else buys it for more. Sure, and they will if the value of said coin keeps going up. Note that you don't need to sell it for USD, you could be paying for services in said coin directly. Point being that the exchange doesn't need to happen in USD, it can happen in any form of value.
roenxi 5y ago
A central plank of the US dollar (all fiat currencies, really) is that if you hold on to them for long enough all the wealth you had when you first picked them up gets transferred to someone else. Compared to that baseline holding literally anything else - including crypto - has a better theoretical chance of preserving your wealth. When measured in terms of US dollars, that has the appearance of everyone who owns it getting richer. > How can any financial instrument/currency make everybody "rich", in any real terms? You have resources, someone else has a really good idea for how to use them. Financial instruments let the situation play out sensibly (you lend them resources, get back resources + something) with easy-to-manage legal enforcement if something goes wrong. More complicated financial instruments let that scenario play out in more abstract ways. All in theory, in practice most people are bad with debts and more complicated concepts.
- NikolaNovak 5y ago
  >>You have resources, someone else has a really good idea for how to use them. Financial instruments let the situation play out sensibly (you lend them resources, get back resources + something) with easy-to-manage legal enforcement if something goes wrong. I agree with that in general; however, that's not the current premise of most cryptocurrencies - I see them more like gold in that you buy them and hold on to them; not as a capitalist investment into anything specific or generic. I may be wrong...
  - iskander 5y ago
    For newer cryptocurrencies you often buy them and then either (1) stake them (earn rewards for contributing to network security) or (2) deposit them in a crypto-bank like Aave and earn yield from having your money loaned out. Increasingly people don't look to cash out to USD but rather stay within the crypto ecosystem. I do think that BTC and its clones engender a certain dragon-cache hoarding mentality that aligns with either plans to eventually cash out at a higher price or some kind of apocalyptic vision where eventually USD is no longer used at all.
- jollybean 5y ago
  No, crypto does not 'theoretically' hold out better than USD or other things. An asset - no matter what it is - is only going to have value in the future depending on how others are going to a value it. This means does it survive war? National collapse? etc.. USD is a currency, not a store of value, it's designed to be slightly inflationary. That's policy and public information. Don't hold them for 'long term' but it will at least have some value. Gold and Real Estate (to the extent you can control that real estate, which depends on rational social organization etc.) - will probably hold their value. As will some other things. Crypto would be the last choice among many as a store of value, as they could all be wiped out in a second, forget the issues of what financial fashions might come into place in the future. Crypto is still 100% experimental, and every dollar traded in crypto, is at least today, purely speculative, no different than trading Baseball Cards. But without at least the Baseball Cards. That's where it is today and while something might come along, nothing is quite on the horizon just yet.
nostrademons 5y ago
There's a bunch to unpack here, on both sides. To start with, I'll say that I agree with the mainstream view that cryptocurrency isn't actually creating wealth, in the sense of non-financial real goods that improve people's lives. It's redistributing it. Everybody's crypto gain comes at the expense of somebody else's crypto loss. I'll also throw in that folks who say "HFSP" are often the losers, because they're the ones who FOMO in because of greed and ego at the top of the cycle and then panic-sell at the bottom when they actually become poor. The folks who are making millions in crypto are the ones who buy at cyclical bottoms - 2012, and 2015, and 2019 - and hold on to sell at the tops, when everybody else is making fun of the folks sitting on the sidelines. However, they're on to something. Imagine that you're inside a group with superior military technology - the Mongols in 1200, for example, or an American settler in 1840 - and you're looking at the people you are about to conquer. Or less bloodily, you're going into software in 2002, aware that a computer program will replace the jobs of whole industries, and trying to figure out which profession to go into. It's much better to be on the inside of change than on the outside. They aren't necessarily wrong, either - they're correctly perceiving that the fiat currency system is unsustainable and is its own Ponzi scheme, and creating an alternative Ponzi scheme to recruit participants into. Game theoretically, if you have an inflationary currency and a deflationary currency, it makes sense for everybody to spend the inflationary currency and save the deflationary currency (Gresham's Law) which further drives up the relative price of the deflationary currency so long as there's an excess of savings available. If we enter a time of shortages (which we might), then the value of the deflationary currency will collapse (since everybody needs to spend money, and merchants are accustomed to taking the inflationary currency) - but if that happens, Bitcoin and its electricity & Internet demands are screwed anyway. In the meantime, as long as labor and savings both remain abundant, holders benefit at the expense of new adopters. The actual claim isn't that crypto is going to make everybody's life better. The claim is that it's going to make the life of holders better, at the expense of late adopters. People can't come out and say that directly - "Hi, I'm going to fuck you over and take all your wealth". I'm sure that'd go over great with the general public. So they say it in coded egoisms like "have fun staying poor", where you can write it off as somebody blowing off steam.
- deleted 5y ago
  [deleted]