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Speculation of meme coins has dominated the news recently but there are some amazing coins with real utility. Ethereum tends to get viewed negatively because it

Speculation of meme coins has dominated the news recently but there are some amazing coins with real utility. Ethereum tends to get viewed negatively because it can become so insanely expensive to do anything on the chain but in reality that means that the market is willing to pay for those transactions to occur which suggests that there is some real utility to the ecosystem that has real world value.

imtringued 5y ago
If those coins have real utility then the amount of utility you can get out of it goes down as the coin goes up in value. Expensive Ethereum leads to expensive gas prices. If you want to play an NFT game then the speculators are just middleman that want to insert themselves between you and the game.
philosopher1234 5y ago
It’s a fallacy to think that just because people want to do something it is valuable. People have wanted to do some insanely wasteful or horrible things in the past.
- SubiculumCode 5y ago
  We have a whole economic system where price is a response to demand and scarcity. Most of economic output has no fundamental relation to the basics of survival, as to purely exist to satisfy whimsical desires.
  - philosopher1234 5y ago
    Yes, and that is not ideal, nor evidence of value.
    - generalizations 5y ago
      If someone was willing to pay for it, it had value to them. That's value.
      - philosopher1234 5y ago
        If I want to murder people does murdering people have value?
        medvezhenok 5y ago
        It can definitely have value. That's why bounties exist (or imagine a market for someone to assassinate Hitler). I think there's a conflation of value and value in a particular moral dimension here.
        philosopher1234 5y ago
        If the original comment was saying “crypto has value because people are willing to pay for it” that is tautological. There is a conflation, but it’s a motte and Bailey.
        lifekaizen 5y ago
        The net value to society is likely negative since the impact on the target is large, and a society that allowed such things may see time horizons constrict. You raise some good points, though. I personally am probably coming with an unspoken understanding that 'given that something fits into a legal and moral structure, and we accept a certain definition of using something by choice as value' then paying more for that thing implies more value. Facebook is probably a good example of something in the grey area, connecting people has value, but generating demand is questionable, spreading misinformation is likely a large net negative.
        philosopher1234 5y ago
        Monetary value reflects demand, but demand does not always reflect utility or goodness. There is a demand for atrocity. The construction “NFTs are highly priced, thus they are desired, thus they are good” is full of holes. If I have a phobia of spiders, and a corresponding desire to eradicate them, does it follow that eradicating spiders is good? If I got my wish, I and the rest of the world would be worse off for it, but my desire exists none the less.
- mdorazio 5y ago
  "Want" has nothing to do with it. If people are willing to pay money for a service, that service is by definition valuable. Many thousands of people are willing to pay money in the form of gas fees to transact on the Ethereum network, so the network must be providing value. Whether you think the endpoints (assets/coins/whatever) themselves have value is irrelevant. I have a feeling that whatever definition you're using for crypto to say it isn't valuable could also be applied to an awful lot of startups and more generally to current stock market prices...
  - SquishyPanda23 5y ago
    > If people are willing to pay money for a service, that service is by definition valuable. This is only true if you define "value" to mean "people are willing to pay money for it." But that's a useless and circular definition. It's only tolerated because assuming that money is a proxy for value was useful for making crude models in economics.
    - mdorazio 5y ago
      You're welcome to provide a better definition.
      - JohnFen 5y ago
        "Value" is providing a benefit that is greater than the cost.
        mdorazio 5y ago
        Benefit and cost to whom? If I use your definition and apply it to individuals, that's exactly how money works. If I'm willing to pay for something then it must have more value to me than the money I am paying, otherwise I wouldn't pay for it. So if people are paying for crypto or crypto services then those things must be providing enough benefit to be valuable.
        5y ago
- MisterBiggs 5y ago
  Fair point. Not everything happening on smart contract platforms is good and some of it may even be bad. The post was asking if value is created and I think that my argument that the market price of doing things in the ecosystem having a real world cost translates to it having value is correct. There are plenty of insanely wasteful and horrible companies that create real value in the world.
  - philosopher1234 5y ago
    It may have real value, but people paying money for it doesn’t prove that. Genocide requires a lot of money, so is it valuable?
    - tjr225 5y ago
      A quarter of a million Afghan civilians died at war in the last 20 years due to a sham war predicated on phony evidence. This alone should tell you that all sorts of horrible atrocities are valuable. Crypto still looks and smells like a huge sham, tho, so I’m inclined to agree with your other points.
- DennisP 5y ago
  The question was why the price of crypto is rising so fast. The answer, at least for Ethereum, is that it provides a service that some people value enough to pay for. The fact that philosopher1234 doesn't value those services just means it's very slightly less valuable than it otherwise would be.
  - philosopher1234 5y ago
    “People will pay money for it” is not a useful definition of value. People pay money for assassination or vengeance and many extremely destructive things. What use is there in labeling these things as valuable?
    - deleted 5y ago
      [deleted]
    - DennisP 5y ago
      In economics, value is purely subjective. If someone is willing to pay for it, then it has value to that person. To answer OP's simple question of why crypto has a high price, the economic definition is what you need. You're looking at a more absolute definition of value that has little to do with the price of things. That's a worthwhile discussion as well but has little to do with OP's question.
      - JohnFen 5y ago
        > If someone is willing to pay for it, then it has value to that person. My problem with that definition is that it's a tautology, and therefore holds little actual meaning and provides no insight. "Why is that valuable?" is not a question meaningfully answered by "because people want it". That answer only begs the question. Everything that has value to people only has value because people want it.
        DennisP 5y ago
        Ok then skip the word "value" entirely. People are willing to pay a lot for ETH, because they're willing to pay to issue transactions on the network and that increases the price of the network's currency. That's not a tautology because it's two different things. If they were only paying for the currency, that could be just a speculative bubble. If the price is based on people paying to issue transactions, that's a price built on actual use.
- cybernautique 5y ago
  Economics is not a philosophically-laden exercise. Economics defines value as that which a rational agent is willing to make a sacrifice for, and the degree to which something is valued by that actor is exactly measured by what they're willing to sacrifice. Why is this not valuable? Or, rather, what might a better definition entail? A precise formulation isn't required, I'd be happy to see a rough sketch of necessary and/or sufficient conditions.
  - philosopher1234 5y ago
    The problem is that everyone is somewhat irrational. You cannot both exclude irrational behavior from your definition of value and at the same time claim nfts are worth money and thus rational. Im claiming they are irrational and not useful.
    - cybernautique 5y ago
      Irrational in what sense? I can, indeed, claim that NFTs have value to even a purely rational actor, if I'm allowed to ascribe self-determination to that actor. Particularly, I think it's important to delineate whether 'rationality' allows for arbitrary actions, decisions, and desires. I do include these qualities in my notion of rationality, so long as the actor can rationalize the phenomena to themselves (even if this rationalization is based on nothing more than their ability to do so). Given this notion of value and rationality, yes: I can very easily allow for NFTs ('useless' though they are) having value. Do you mean 'rational' in terms of 'every action or desire is reducible to some unknown deductive logic'? In which case, I agree that everyone is somewhat irrational and furthermore that nobody could ever be rational. 'Rational' in the game theory sense? In which case, I see no reason to say that everyone is irrational instead of allowing for the mathematical notion imperfectly capturing reality.
      - philosopher1234 5y ago
        If everyone is buying NFTs because they believe the price is going to go up, and they tell themselves that the reason the price is going up is because NFTs are useful, but in reality NFTs are not, that is irrational. So it allows them to have monetary value while contributing nothing useful to the economy, and in fact causing people harm. It is possible NFTs do have value in the sense of being good, but them being priced highly does not give us useful signal there.
firecall 5y ago
Such as?
- MisterBiggs 5y ago
  Smart contracts enable all sorts of utility that we are still just barely scraping the surface of.
  - zkldi 5y ago
    Like?
- jazzyjackson 5y ago
  A distributed namespace system is pretty cool (https://ens.domains/ https://ens.domains/)
  - rvz 5y ago
    Good idea, however it's a shame that this is sitting on a very inefficient blockchain, its TLD already collides with Ethiopia and to renew requires paying for the highly expensive gas fees which isn't great if you own multiple subdomains. The subdomains on ENS (which are all sitting on the .eth TLD) are also going to be in good hands; surely. /s
    - tata71 5y ago
      zxkrollup
      - rvz 5y ago
        You still need to pay gas fess to approve and move it there. Just look at the disaster that the ENS domain holders are experiencing by wasting thousands on gas fees just to claim ENS tokens. [0] [0] https://twitter.com/ensdomains/status/1457862602239926274 https://twitter.com/ensdomains/status/1457862602239926274
rvz 5y ago
> in reality that means that the market is willing to pay for those transactions to occur which suggests that there is some real utility It means that it is useful for those who can afford the absurd gas prices for just about any operation on Ethereum than those who are sending small amounts to perhaps test before permanently sending their money to a dead wallet and paying the gas fee too. So it makes sense for someone to pay >= $1,000 in fees to approve and move / swap $1 - $100 worth of tokens? That is not 'real utility'. It makes it really useless.
- MisterBiggs 5y ago
  > So it makes sense for someone to pay >= $1,000 in fees to approve and move / swap $1 - $100 worth of tokens? That's like arguing that all container ships are useless because I only order a few dozen small packages a year. The gas prices are set by supply and demand so the value created by the gas prices must be an acceptable cost for the amount of value the transaction is creating. Just because something is cost prohibitive at your scale doesn't mean it is for everyone.
  - rvz 5y ago
    > Just because something is cost prohibitive at your scale doesn't mean it is for everyone. So I can use Ethereum to pay for my groceries then? Everyone needs to eat. It's creator painfully admitted that gas fees should not be at those prices in the first place. Good to know that you can't even send a test transaction these days.
    - DennisP 5y ago
      That's being fixed. The main chain can only do a few dozen transactions per second, but fees are a lot lower on rollups which can do a couple thousand, and sharding will multiply that by a factor of twenty initially and a lot more later.
belltaco 5y ago
But those people are speculators looking to make a quick buck.
- DennisP 5y ago
  Trading and finance are the main uses right now because scaling is very limited, so only high-value transactions are affordable. When rollups plus sharding get it to tens of thousands of tx/sec in a couple years, we might see other applications take hold.

imtringued 5y ago

If those coins have real utility then the amount of utility you can get out of it goes down as the coin goes up in value. Expensive Ethereum leads to expensive gas prices. If you want to play an NFT game then the speculators are just middleman that want to insert themselves between you and the game.

philosopher1234 5y ago

It’s a fallacy to think that just because people want to do something it is valuable. People have wanted to do some insanely wasteful or horrible things in the past.

SubiculumCode 5y ago
We have a whole economic system where price is a response to demand and scarcity. Most of economic output has no fundamental relation to the basics of survival, as to purely exist to satisfy whimsical desires.
- philosopher1234 5y ago
  Yes, and that is not ideal, nor evidence of value.
  - generalizations 5y ago
    If someone was willing to pay for it, it had value to them. That's value.
    - philosopher1234 5y ago
      If I want to murder people does murdering people have value?
      - medvezhenok 5y ago
        It can definitely have value. That's why bounties exist (or imagine a market for someone to assassinate Hitler). I think there's a conflation of value and value in a particular moral dimension here.
        philosopher1234 5y ago
        If the original comment was saying “crypto has value because people are willing to pay for it” that is tautological. There is a conflation, but it’s a motte and Bailey.
      - lifekaizen 5y ago
        The net value to society is likely negative since the impact on the target is large, and a society that allowed such things may see time horizons constrict. You raise some good points, though. I personally am probably coming with an unspoken understanding that 'given that something fits into a legal and moral structure, and we accept a certain definition of using something by choice as value' then paying more for that thing implies more value. Facebook is probably a good example of something in the grey area, connecting people has value, but generating demand is questionable, spreading misinformation is likely a large net negative.
        philosopher1234 5y ago
        Monetary value reflects demand, but demand does not always reflect utility or goodness. There is a demand for atrocity. The construction “NFTs are highly priced, thus they are desired, thus they are good” is full of holes. If I have a phobia of spiders, and a corresponding desire to eradicate them, does it follow that eradicating spiders is good? If I got my wish, I and the rest of the world would be worse off for it, but my desire exists none the less.
mdorazio 5y ago
"Want" has nothing to do with it. If people are willing to pay money for a service, that service is by definition valuable. Many thousands of people are willing to pay money in the form of gas fees to transact on the Ethereum network, so the network must be providing value. Whether you think the endpoints (assets/coins/whatever) themselves have value is irrelevant. I have a feeling that whatever definition you're using for crypto to say it isn't valuable could also be applied to an awful lot of startups and more generally to current stock market prices...
- SquishyPanda23 5y ago
  > If people are willing to pay money for a service, that service is by definition valuable. This is only true if you define "value" to mean "people are willing to pay money for it." But that's a useless and circular definition. It's only tolerated because assuming that money is a proxy for value was useful for making crude models in economics.
  - mdorazio 5y ago
    You're welcome to provide a better definition.
    - JohnFen 5y ago
      "Value" is providing a benefit that is greater than the cost.
      - mdorazio 5y ago
        Benefit and cost to whom? If I use your definition and apply it to individuals, that's exactly how money works. If I'm willing to pay for something then it must have more value to me than the money I am paying, otherwise I wouldn't pay for it. So if people are paying for crypto or crypto services then those things must be providing enough benefit to be valuable.
        5y ago
MisterBiggs 5y ago
Fair point. Not everything happening on smart contract platforms is good and some of it may even be bad. The post was asking if value is created and I think that my argument that the market price of doing things in the ecosystem having a real world cost translates to it having value is correct. There are plenty of insanely wasteful and horrible companies that create real value in the world.
- philosopher1234 5y ago
  It may have real value, but people paying money for it doesn’t prove that. Genocide requires a lot of money, so is it valuable?
  - tjr225 5y ago
    A quarter of a million Afghan civilians died at war in the last 20 years due to a sham war predicated on phony evidence. This alone should tell you that all sorts of horrible atrocities are valuable. Crypto still looks and smells like a huge sham, tho, so I’m inclined to agree with your other points.
DennisP 5y ago
The question was why the price of crypto is rising so fast. The answer, at least for Ethereum, is that it provides a service that some people value enough to pay for. The fact that philosopher1234 doesn't value those services just means it's very slightly less valuable than it otherwise would be.
- philosopher1234 5y ago
  “People will pay money for it” is not a useful definition of value. People pay money for assassination or vengeance and many extremely destructive things. What use is there in labeling these things as valuable?
  - deleted 5y ago
    [deleted]
  - DennisP 5y ago
    In economics, value is purely subjective. If someone is willing to pay for it, then it has value to that person. To answer OP's simple question of why crypto has a high price, the economic definition is what you need. You're looking at a more absolute definition of value that has little to do with the price of things. That's a worthwhile discussion as well but has little to do with OP's question.
    - JohnFen 5y ago
      > If someone is willing to pay for it, then it has value to that person. My problem with that definition is that it's a tautology, and therefore holds little actual meaning and provides no insight. "Why is that valuable?" is not a question meaningfully answered by "because people want it". That answer only begs the question. Everything that has value to people only has value because people want it.
      - DennisP 5y ago
        Ok then skip the word "value" entirely. People are willing to pay a lot for ETH, because they're willing to pay to issue transactions on the network and that increases the price of the network's currency. That's not a tautology because it's two different things. If they were only paying for the currency, that could be just a speculative bubble. If the price is based on people paying to issue transactions, that's a price built on actual use.
cybernautique 5y ago
Economics is not a philosophically-laden exercise. Economics defines value as that which a rational agent is willing to make a sacrifice for, and the degree to which something is valued by that actor is exactly measured by what they're willing to sacrifice. Why is this not valuable? Or, rather, what might a better definition entail? A precise formulation isn't required, I'd be happy to see a rough sketch of necessary and/or sufficient conditions.
- philosopher1234 5y ago
  The problem is that everyone is somewhat irrational. You cannot both exclude irrational behavior from your definition of value and at the same time claim nfts are worth money and thus rational. Im claiming they are irrational and not useful.
  - cybernautique 5y ago
    Irrational in what sense? I can, indeed, claim that NFTs have value to even a purely rational actor, if I'm allowed to ascribe self-determination to that actor. Particularly, I think it's important to delineate whether 'rationality' allows for arbitrary actions, decisions, and desires. I do include these qualities in my notion of rationality, so long as the actor can rationalize the phenomena to themselves (even if this rationalization is based on nothing more than their ability to do so). Given this notion of value and rationality, yes: I can very easily allow for NFTs ('useless' though they are) having value. Do you mean 'rational' in terms of 'every action or desire is reducible to some unknown deductive logic'? In which case, I agree that everyone is somewhat irrational and furthermore that nobody could ever be rational. 'Rational' in the game theory sense? In which case, I see no reason to say that everyone is irrational instead of allowing for the mathematical notion imperfectly capturing reality.
    - philosopher1234 5y ago
      If everyone is buying NFTs because they believe the price is going to go up, and they tell themselves that the reason the price is going up is because NFTs are useful, but in reality NFTs are not, that is irrational. So it allows them to have monetary value while contributing nothing useful to the economy, and in fact causing people harm. It is possible NFTs do have value in the sense of being good, but them being priced highly does not give us useful signal there.

firecall 5y ago

Such as?

MisterBiggs 5y ago
Smart contracts enable all sorts of utility that we are still just barely scraping the surface of.
- zkldi 5y ago
  Like?
jazzyjackson 5y ago
A distributed namespace system is pretty cool (https://ens.domains/ https://ens.domains/)
- rvz 5y ago
  Good idea, however it's a shame that this is sitting on a very inefficient blockchain, its TLD already collides with Ethiopia and to renew requires paying for the highly expensive gas fees which isn't great if you own multiple subdomains. The subdomains on ENS (which are all sitting on the .eth TLD) are also going to be in good hands; surely. /s
  - tata71 5y ago
    zxkrollup
    - rvz 5y ago
      You still need to pay gas fess to approve and move it there. Just look at the disaster that the ENS domain holders are experiencing by wasting thousands on gas fees just to claim ENS tokens. [0] [0] https://twitter.com/ensdomains/status/1457862602239926274 https://twitter.com/ensdomains/status/1457862602239926274

rvz 5y ago

> in reality that means that the market is willing to pay for those transactions to occur which suggests that there is some real utility It means that it is useful for those who can afford the absurd gas prices for just about any operation on Ethereum than those who are sending small amounts to perhaps test before permanently sending their money to a dead wallet and paying the gas fee too. So it makes sense for someone to pay >= $1,000 in fees to approve and move / swap $1 - $100 worth of tokens? That is not 'real utility'. It makes it really useless.

MisterBiggs 5y ago
> So it makes sense for someone to pay >= $1,000 in fees to approve and move / swap $1 - $100 worth of tokens? That's like arguing that all container ships are useless because I only order a few dozen small packages a year. The gas prices are set by supply and demand so the value created by the gas prices must be an acceptable cost for the amount of value the transaction is creating. Just because something is cost prohibitive at your scale doesn't mean it is for everyone.
- rvz 5y ago
  > Just because something is cost prohibitive at your scale doesn't mean it is for everyone. So I can use Ethereum to pay for my groceries then? Everyone needs to eat. It's creator painfully admitted that gas fees should not be at those prices in the first place. Good to know that you can't even send a test transaction these days.
  - DennisP 5y ago
    That's being fixed. The main chain can only do a few dozen transactions per second, but fees are a lot lower on rollups which can do a couple thousand, and sharding will multiply that by a factor of twenty initially and a lot more later.

belltaco 5y ago

But those people are speculators looking to make a quick buck.

DennisP 5y ago
Trading and finance are the main uses right now because scaling is very limited, so only high-value transactions are affordable. When rollups plus sharding get it to tens of thousands of tx/sec in a couple years, we might see other applications take hold.