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As an investor, why is crypto so hard to value?
- FinanceAnon 5y agoTldr investing vs speculating
- roschdal 5y agoThe value of cryptocurrency is 0.
- HamburgerEmoji 5y agoValue is subjective. For fun, the number of times I saw "you're posting too fast" trying to post this completely obvious and indisputable comment: 12. I'm not actually posting too fast, I'm just in the HN doghouse for posting comments that irritate its most delusional members.
- barbarbar 5y agoMaybe below zero due to all the wasted energy?
- vaylian 5y agoYes, actively harmful
- deleted 5y ago[deleted]
- plebianRube 5y agoNot to someone who has had civil asset forfeiture experience.
- bb88 5y agoThings can have high utility without any actual value. Toothpicks, eating utensils, screwdrivers, etc. The problem comes when people mistake one for another. IOW, buying a bunch of screwdrivers isn't a great retirement strategy.
- cinntaile 5y agoIf you buy quality screwdrivers you'll be able to resell them for a good price.
- bb88 5y agoIf you bought quality USA made screwdrivers in 1980, you must have been surely been disappointed when China started making quality tools for cheaper in the 1990's. Most people would have stopped caring about quality, and instead started caring about cheap utility. "It's good enough."
- WastingMyTime89 5y agoLast time I checked Home Depot was doing quite well. There certainly is value in selling things with high utility with a small markup. You just have to do it at scale.
- WJW 5y agoIs this really something that people in the USA spend their days worrying about? Serious question, as it is not part of the law over here in the part of the world where I live. Also, with every crypto transaction recorded on the public ledger and the vast majority of wallets held in exchanges, why wouldn't the police just acquire the crypto too?
- plebianRube 5y agoI'm sure they could seize it, since they can and do freeze and sieze bank accounts as well. However self custody ensures they can never get it even if they kill you, and since it is programmable money there is a way to ensure it gets to a friendly address, maybe years later, perhaps to a loved one. Seems the market places a worth on a possession that can not be taken from you by force, or even by your death, slightly more than 0.
- WJW 5y agoIt's true that the market places a worth on crypto assets, but there are many alternative reasons for why that could be as well (such as: I expect it to go up in price for whatever reason and then I'll be rich!). In any case, what is your plan for when https://xkcd.com/538/ https://xkcd.com/538/ happens?
- wickoff 5y agoThe people who do not share your opinion value cryptocurrency at roughly 2 trillion dollars. Opinions is how value is determined.
- pentae 5y agoOr 2 trillion, but who's counting
- nickdotmulder 5y agoCrypto value is whatever you want it to be.
- klausjensen 5y agoMore like what other people say it is. :)
- spiorf 5y agoThe author looks at this from the perspective of making money. Bitcoin is a form of money. It's like HTTP/HTTPS vs IPv4/IPv6. Bitcoin operates at a lower level than stocks, looking at it from that perspective is like looking at the facebook home page and trying to understand the value of IPv6. Investing/speculating is all about increasing a counter. Here we are talking about another separate counter.
- lottin 5y agoInvesting is about increasing production capacity or production efficiency, with the expectation of getting a positive return on investment in the future. Everything else is not investing, but speculation.
- spiorf 5y ago> with the expectation of getting a positive return With the expectation of increasing the counter. Exactly my point.
- ZitchDog 5y agoIt’s not entirely the same but transaction fees paid to the platform can be considered revenue.
- lottin 5y agoTransaction processors provide a service consisting in processing transactions, and transaction fees are a good estimate of how much utility such services provide. But this does not not tell us anything about the 'value' of cryptocurrencies.
- jbverschoor 5y agoDepending on the underlying contract / agreement it can be anything you want. I view crypto as any piece of paper. In general crypto is freely tradable / sellable, and the markets/tools are there. Illiquid 'assets' are a lot more liquid than when hidden / on paper somewhere. Want the crypto to represent shares in a company? They're worth that. Want an NFT to represent the ownership or the beneficiary of the profits of some music/IP? Can be worth millions or 0. Depending on the success of that IP. Want to notarize something on a public blockchain for future proof / timestamping? Probably worth about $500-$2000 or whatever your notary charges. Want the crypto to represent karma points on hackernews? Priceless!
- jacknews 5y agoWith the methods the author is using, I think they would also be unable to value gold and other non-producing assets. Crypto (despite claims that it's a currency) is a digital "asset". Like gold, but without any real-world use like jewellery, coatings, etc, and with a far shorter history of being a store of value. The problem with valuing it then is due to assessing risk. It could be trading at zero tomorrow, and there are plenty of plausible paths to that scenario.
- walkhour 5y agoCrypto could crash tomorrow but the value won't be zero, similar to gold it has intrinsic value. Some people value it because they think it's cool, because they think they're fighting the government, because it would've been historically important, ...
- headmelted 5y agoThat’s not what intrinsic means.
- bb88 5y agoCorrect. Because cryptocurrencies are created out of thin air, they can also disappear into thin air.
- throwaway6734 5y agoYou also can't take physical possession of it (unlike gold) as well. Crypto value is inherently tied to how secure they are and although they seem to be secure now, that might not actually be the case.
- deleted 5y ago[deleted]
- moonbug 5y agoBecause its all bullshit.
- postcynical 5y agoCrypto is worthless. All the VCs pouring money into crypto/web3 (a16h, sequoia) are worthless. All the companies pivoting to web3 are worthless (square). All the companies building up web3 teams are worthless (stripe, mastercard). All the fastest growing startups (coinbase, ftx, opensea) are worthless. All the devs who get started in crypto/web3 and won't go back, are worthless.
- human 5y agoI don’t know if you’re serious. Your username does check out at least. I also believe crypto itself is worthless. Only the networks behind them and actually providing a service (transaction validation) have some value. The question is: can the networks survive a crypto crash. How do you pay miners with near zero value crypto? I can see a (sad) future where we will be left with central bank digital currencies only (CBDC).
- bb88 5y agoThere's a difference between utility and value. Plastic forks, knives, and spoons have high utility (in that they help us to eat). They have very little value, and can be purchased at any dollar store. So the blockchain doesn't have intrinsic value because the crypto currency doesn't have intrinsic value. Utility, for many use cases, it does have.
- formvoltron 5y agocrypto is like the spork
- aurizon 5y agoThere is a quote, attributed to Mark Twain and others, which can be adapted to Crypto Currency. A mine is a hole in the ground. The discoverer of it is a natural liar. The hole in the ground and the liar combine and issue shares and trap fools.—Detroit Free Press. https://quoteinvestigator.com/2015/07/19/gold-mine/ https://quoteinvestigator.com/2015/07/19/gold-mine/ And as applied to Crypto Currency:- A crypto currency is a hole in the air. The discoverer of it is a natural liar. The hole in the air and the liar combine and issue shares and trap fools.
- hnarn 5y agoAre you saying that there are no profitable mines in the world?
- hotpotamus 5y agoIf you had a profitable mine, would you sell shares in it?
- hnarn 5y agoI don't know what you're implying. Why do you think shares exist?
- hotpotamus 5y agoI believe shares exist to raise capital to exploit a natural resource in this case. But if I already have a profitable mine, I doubt I'd have much incentive to invite others to share ownership of that mine. However, if I have a hole in the ground that doesn't produce anything of value, then it's in my interest to sell shares of it since that might be my only income. Just a thought really - in spite of hearing many good Twain quotes in my life, this was a new one to me, so I'm kind of working through it.
- convolutionart 5y agoSelling shares hedges your risk. Investors are also trying to hedge theirs. That's all it is, a tool to hedge risks. When it's not based in reality it's speculation a.k.a. gambling.
- MilaM 5y agoCrypto is like casino tokens. Worth a lot inside the casino. Very limited value outside.
- classified 5y agoAnd as with any other casino, the house is the only consistent and long-term winner. People bringing in the real money are just suckers, even if they score once in a blue moon. And since there is no actual value attached, every win requires an equal amount of loss elsewhere.
- cube00 5y agoUnfortunately we don't know who the majority owner of this casino is.
- bb88 5y agoWe don't need to. It's heavily regulated.
- forty 5y agoHeavily regulated by whoever can put enough resources to have the majority of computation.
- BongoMcCat 5y agoAre you talking about casino or bitcoin now?
- hnarn 5y agoI’m not exactly a proponent of crypto currencies, but this description seems like it holds true for any currency in the world, regardless of whether it’s crypto, fiat or natural. It’s not like you can carry dollars or a nugget of gold and expect any human being anywhere in the world to accept it as legal tender, and as long as that is true every type of payment is dependent on a “casino”, they just vary in size.
- user-the-name 5y agoBitcoin is massively, overwhelmingly manipulated by a very small number of actors. The price is a complete fantasy, and exists mostly to transfer money from new investors to those manipulators, and bitcoin miners. There is a lot of money going in. There will not be a lot of money coming out. The money is gone.
- drunkpotato 5y agoSeems that people don’t like it when you point out the con!
- jkepler 5y agoWould you mind documenting this claim, please?
- user-the-name 5y agoThere is, of course, no simple guide you can follow to learn all about it, that's kind of the point of scams. You have to keep your ear to the ground and follow what's going on. But, https://archive.md/DfAwG https://archive.md/DfAwG is a pretty good hint among many. And certainly look at what's going on with Tether.
- CPLX 5y agoAs a horse racing investor, why is my exacta on the 5th race at Belmont next week so hard to value? As a poker investor, why is this off suit King Jack from the button so hard to value? And so on.
- 600frogs 5y agoKJo is a slam-dunk open OTB, but I get your point!
- nathias 5y agoBecause valuation is easy only near equilibria; in old stale markets where the profit rates have dried up, innovation is over and an oligopoly has been established.
- formvoltron 5y agobecause it's worth 0? just a wild guess.
- Gustomaximus 5y agoWhat I find find interesting is how overwhelmingly negative the responses here are now, when a month ago being a skeptic was a minority position. Does that shift seem recognisable to others? If correct, what's the drastic change driven from? Edit: spelling
- WJW 5y agoA month ago skepticism about crypto was very much not a minority position on HN. AFAICT, it has been the default position for at least several years. Check out this article from 10 months ago: https://news.ycombinator.com/item?id=26063920 https://news.ycombinator.com/item?id=26063920 or this other article from 4 years ago: https://news.ycombinator.com/item?id=16216329 https://news.ycombinator.com/item?id=16216329 or even this article from 6 years ago: https://news.ycombinator.com/item?id=10905118 https://news.ycombinator.com/item?id=10905118. In all cases people are rather reserved about it, if not outright hostile. I think it is because many on HN have a lot of technical experience and can immediately see that normal databases can do everything blockchains can at a fraction of the cost except the whole trustless thing, while everything interfacing with the real world (ie everything not a currency) will involve a lot of trust anyway. Someone has to enter the data into the oracles, for example.
- my50cents 5y agoCrypto is not hard to value. Valuation is the estimation of the present value of future free cash flows. Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price.
- hiq 5y ago> Since most crypto tokens produce negligible free cash flows relative to their market cap, they have approximately zero intrinsic value relative to their market price. What's the intrinsic value of stocks that don't distribute dividends in this model?
- my50cents 5y agoThe simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero. Note that from shareholders' perspective, paying dividends is economically equivalent to share buyback, plus some tax considerations, so there are exceptions.
- hiq 5y ago> The simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero. Which is obviously wrong, right? Any company that has liquid assets (and no debt) is at least worth the selling value of these assets, even if it doesn't pay dividends. So I'm not sure your model helps here.
- Quindecillion 5y agoMost "cryptos" are just affinity scams riding on the coattails of the true innovation of Bitcoin. They offer nothing significantly new or important over Bitcoin. Most people in the space understand this and why. Institutional investors starting to come in understand this. State governments are starting to understand this. The energy sector is starting to understand this. Yes crypto is a bubble, and it will pop. When it does Bitcoin will likely get dragged down with it for a while, but at the end of the day it will be one of the few left standing. Save yourself time, money, and effort. Ignore all other cryptos, and just buy Bitcoin (i.e. dollar cost average), and hold it for 4+ years.
- bestouff 5y agoYou seem to have some ...
- Quindecillion 5y agoOf course. This is the funny thing about Bitcoin. Once you've researched it sufficiently you are compelled to buy some because you understand the fundamentals of its value proposition. But then critics will point out that you own Bitcoin so you're now clearly biased because you have skin in the game. I guess you could call it the Bitcoin paradox, or the Catch-22 of Bitcoin? Once you understand it you buy it, but now no one will listen to you about it because you're "compromised". There's nothing I can do about that other than to suggest you look into it further if you're curious.
- jkepler 5y agoBitcoin can even be a base layer for decentralized autonomous organizations (DAO)s. Take a look at bisq's DAO, built directly on top of bitcoin by using colored bitcoin for its BSQ governance token. Its been operating and paying for the software development (and project management and customer support) for bisq for over a year and a half. See https://bisq.network/dao/ https://bisq.network/dao/ for details.
- giancarlostoro 5y agoTbh Bitcoin does nothing interesting compared to say Ethereum. I think Ethereum is a far more interesting ecosystem when you consider the only cryptocurrency CoinBase runs is built on top of Ethereum. Bitcoin is the most boring coin and its only valued so much based on speculation and brand recognition.
- keyle 5y agoValue is defined by the expected return on investment or equity. Since there is none in crypto, you're essentially buying into Monopoly money, with the assumption that it's going to get more popular and not less popular or disappear over time. But make no mistake, to some people it's everything, to others it's a fartcicle. So it's roughly worth between nothing and what you can find an idiot willing to pay for it.
- Geee 5y agoYou value Bitcoin like every other currency, like US dollar or Turkish lira. However, you have to go back in history to learn what happens when multiple currencies compete in a free market (gold, silver, copper, etc.). People typically want to save the money which has the lowest expected dilution and get rid of all other forms of money. On top of that, people want to save the money which everyone else is saving. You can't predict the value, but you can predict the direction where wealth is flowing.
- dustingetz 5y agovalue investing is dead, it’s an attention economy now. the ability for global scale herds of people to coordinate in real time has changed the balance and changed the game
- dh303 5y agoThe stock market is certainly behaving this way recently. The RobinHooders and WSB folks are having a hay day right now, but once the big money decides to start changing the game again, they will win.
- morpheos137 5y agoSimple answer: because it has no fundamental value. Crypto is not an equity or a claim of ownership. Thus the value is solely determined by market speculation. Gambling in crypto may be profitable but it is not an "investment."
- hnarn 5y agoThere is no such thing as “fundamental value”, because the value of anything is decided at the moment it’s placed into a market.
- morpheos137 5y agoSure there is fundamental value of an asset. It is at least the present value of the expected income stream generated for the asset over its lifetime. Cryptocurrencies do not have an income stream so they can not have a fundamental value.
- hnarn 5y agoThe value of any asset is zero if nobody is buying it. If that asset happens to be shares in a company making a profit for example, that means that the risk of nobody wanting to buy it (at any price) is practically non-existent in a real world scenario, sure, but that doesn't mean it has some magical, inherent value disconnected from the market. By your definition no currency in the world has any fundamental value, so what is then the point of even talking about it when discussing crypto currencies?
- stillsut 5y agoBut what's easy to value is public pensions. Do the existing reserves and projected inflows match the liabilities? Of course not, they are underwater by trillions of dollars. How will fifty very different state governments and the federal government distribute these losses? Impossible to say, because different factions are already lining up different schemes with vastly different outcomes. In contrast, we already know exactly how bitcoin works presently and how it works in the future. It's right there in the cpp file. It doesn't matter who the Senator from California is, it doesn't matter who is the chairman of the Fed is. So bitcoin competes with other currencies by being a system with transparent and predictable behavior. Meanwhile the current dollar system - which is valuable precisely because the government always meets its obligations - is being valued by pretty much just ignoring all its underfunded obligations in the hope that some unknown solution will be arranged when it becomes a crisis. To tie these findings back to the concept of financial "valuation", I think the author elides the role that predictability plays in it. And specifically overestimates the predictability of status quo at a time length of five to thirty years.
- hnarn 5y agoI don’t mean to sound tongue in cheek, but claiming that “predictability” is one of the major benefits of crypto currencies seems like a very rose-tinted way of describing how they behave in real life.
- stillsut 5y agoAgreed. Crypto is risky and volatile, and can go to zero and that makes it difficult for the average person to treat it as a savings vehicle. The distinction in predictability between the two system is kind of subtle: In bitcoin, the internal system mechanics are highly predictable. But there's no external "Open Market Committee" (e.g FOMC) that will change the market price to hit the targets mandated by its stakeholders. In dollars, the internal system is becoming more unpredictable, while there are numerous external systems (e.g. bailouts, QEx, etc) which are very predictable: they will act to make sure the economic tradeoffs shield the voters of the system from experiencing pain to the next election cycle. Neither seems ideal in its present form.
- spaetzleesser 5y agoMaybe there are a few people who use crypto as real investment but the vast majority is just gambling or FOMO. What actual uses does crypto have other than waiting for it to increase “value”? I bought some magic mushroom spores with BTC but that was the only time I ever used it. We will see if eventually there will be real use cases but it seems that’s far in the future.
- plaidfuji 5y ago> The fundamental idea behind investing in a company is that one day they will grow and be so profitable that they will start to send cash back to investors. Is this really the fundamental idea behind equity investing at this point? My impression is that (a) dividends are becoming more rare and (b) the valuation of dividend-paying equities is not explained solely by dividend cash flow. Does anyone expect Tesla, Amazon, Google to start paying dividends? The fundamental idea is buy low, sell high, right? Or has that just become the fundamental idea because so much of the market is now part of the same monopoly-money-fueled bubble? Crypto, AI, green tech, alt meat, electric cars, space stuff… very few of these things are profitable in the traditional sense, so their valuations are instead predicated on the notion that the entire global economy will just flip a switch one day and become a tech utopia, ignoring the fact that the current infrastructure, supply chain and economic system took generations to build. People seem to have baked in the idea that billionaires and governments and greater fools alike will continue to pour money into this indefinitely, but what happens if/when it comes to light that “none of this scales”?
- sabellito 5y agoI was following your argument until "[...] on the notion that the entire global economy will just flip a switch one day and become this green tech utopia". I'm no equity investor, but this assumption feels quite exaggerated.
- plaidfuji 5y agoI got a bit carried away there. My point is that some percentage of people’s valuation of crypto, and similarly, Tesla, and some other green tech plays, is based on the assumption that the entire global economy will transition to their way of doing things. Most crypto enthusiasts hope for (or at least would welcome) the death of the fiat system. Tesla’s valuation eclipsing 10 other carmakers (or whatever it is) basically says “I assume Tesla will be making ~half of all cars globally in the near future”. Alt meat is similar - all of these valuations are based on an assumption of market penetration (and cost reduction!) that would require a massive realignment of supporting infrastructure.
- 5y ago
- bsanr2 5y ago>To value cash flowing assets, one can use a number of methodologies such as discounted cash flow, capitalization rate/rental yield and valuation multiples (i.e. EV/EBITDA, EV/EBIT and P/E). These methods are not perfect and are rough approximations in a hard-to-model world. To give an example, when looking to buy a rental property, I might look at the rental yield after costs of say $10k. Using the capitalization rate method and assuming a cost of capital of 7%, the property would be valued at ~$143k by dividing ~$10k by 7%. Now this is a simple example which does not include debt/leverage but hopefully you get the point. I understand that a jargon avalanche is part of the way finance and investing is effectively gate-kept, but boy is it annoying that, every time I try to read an article on the subject, I feel like I'm pulling up a particularly convoluted page out of the Silmarillion or a Final Fantasy Ultimania guide. At any rate, is this what he's saying?: $10k costs * (7% capital units/cost) Or is the $10k rental-yield-after-costs? In which case I'm completely lost.
- vmception 5y ago> The majority of crypto tokens produce zero free cash flow Then pick the ones that do have cash flow. The stablecoin MIM only uses interest bearing tokens as collateral, so thats straight up a list of tokens that fit that particular valuation criteria and risk profile. Crypto can represent any kind of asset, multiple kinds simultaneously, or none at all. That’s interesting enough for me. As a builder its extremely lucrative to help move that along, and also practically nullifies the investing risk because earning is different than putting up capital, with non-linear O(nlogn) returns, better than linear.
- stillsut 5y agoI'm interested in this O(nlogn) argument, can you elaborate on it, or point to a source that does?
- vmception 5y agoBetween vesting grants of tokens at discounted prices, salaries in tokens, and yield farming earnings, the quantity of your tokens increase over time and the any rally in prices amplifies your earnings by orders of magnitude. Linear is O(n) so better than linear is closer to O(nlogn) and less than exponential O(n^2). Vesting in the crypto space quite frequently is measured in months instead of years. Just industry standard because the lifecycle is so much faster, so it would be hard/impossible to attract talent with longer vesting periods. 3-6 months being common, 9-12 months being tolerable and standard, 18-36 months being the longest I've ever seen. This is just in comparison to the crypto speculators, who have to put up capital and hope to sell at higher prices. Linear risk model for them. Not sure what a source would look like. It would require someone doing an analysis of many projects. Just can't think of a person that would care enough to do such an analysis, yet. Maybe a recruiter? There's always the option to just lead with the assumption that this post is grounded in an existing reality, a lot of people earn in crypto and that would inherently have a different risk profile than investing their own money. Significant overlapping similarities to buying a company's shares versus earning a company's stock's.
- stillsut 5y ago
- tveita 5y agoFinancially, cryptocurrency is pretty much exactly like having stock in a long bankrupt company. You can trade it with other people, you can create contracts and derivatives involving it. What you can't do is ever get anything of value from holding the stock itself. This is easy to value, but some people are uncomfortable with the answer. With so much hype and magical thinking, it feels like there most be something meaningful behind it. Repeat it enough and the dogma gradually becomes a truth you can build anything on top of. And since the company is already bankrupt and all the assets are stripped, it is immune to news that will force the traders to reevaluate and dispel the illusion. The company can't go any more bankrupt, so the traders are looking around at each other and seeing everyone else continuing to trade thousands of dollars for shares of nothing, so they shrug and think "if someone paid a thousand dollars for this today, they will probably be willing to do so tomorrow as well".
- helloworld11 5y agoWhat a completely nonsensical comparison. There are plenty of valid criticisms of crypto speculation and the underlying assets, but this is just hateful posturing painted up as sophisticated opinion.
- evandwight 5y agoWhat are your feelings on gold?
- BongoMcCat 5y agonot op, but if bitcoin existed 1000 years ago, it would probably have replaced gold as a generic currency. And while one might argue that the reason that gold is valued today is because of historic reasons, that it has been accepted as something of value almost everywhere for a very long time.. Now, if this wasn't the case, and someone would have proposed today that we should make this metal a currency just because it is limited in supply and very easy to recognize, I would probably feel the same way about gold as I do about bitcoin.
- robcohen 5y agoI think this analogy is almost correct, but it's better to think of crypto as owning a deed to land. You can in fact hold on to it and trade it, but at the end of the day all you are doing is changing the name on the deed. The land stays the land. You can put a house on it (store tokens), or you can build a factory (smart contracts), but the only reason why it has any value is because some other person may want to put a house or build a factory on it. Land has no intrinsic value because it can never truly be owned. It will outlast us all.
- oxymoran 5y agoLook, I get it, this is Finance 101. But even as I was learning this 2 decades ago, it never sat well with me. This process of valuation of a company works well under “normal” conditions. But at the end of the day, the asset price is really valued based on the supply and demand from investors and literally can have nothing to do with the underlying asset. Under “abnormal conditions”, the asset price is not a tangible thing, it’s the reflection of the hopes and dreams of market participants. Just look at Tesla which is trading at many times multiple earnings. Or look what happened with Hertz after it went bankrupt a while back. If we collectively all determined we wanted to buy stock in the worst, most bankrupt company in the world, we could still drive the price up to relatively astronomical prices.
- legutierr 5y agoHow do you value oil or refined fuels? Same thing, no? At least with regards to Eth and Sol, they are commodities that presently have value because in the future people will need to purchase them to conduct the work that they want to perform.
- pureliquidhw 5y agoOil has utility. I can make plastics, fuel, or lubricants, and sell the refined product at a markup. You can value oil by the value things that can be made with it against the cost to extract it. Crypto does have an "extraction" cost, so that provides a baseline, but there's no downstream product to provide that value. Crypto holders speculate that in the future they'll need crypto, but that isn't a given.
- legutierr 5y ago> there's no downstream product to provide that value. Not true. Ethereum and Solana, for example, provide shared-data and shared-compute services. Eth and Sol are used to pay for these services (and are the only means to pay for these services). You may not value these services, but there are plenty of people who do, to the tune of anywhere from $10 to even hundreds of dollars per transaction, in the case of Ethereum.
- pureliquidhw 5y agoThat's basically replacing regular currency buying a service. The earlier comparison was to commodities and crypto's difficult to value nature. I won't argue you can't buy goods and services with crypto. You certainly can't produce plastic without oil, but there's nothing that can be made with crypto. It's not a commodity. That's why it's a speculative asset that's hard to value. Sentiment means more to crypto values than downstream values. In this particular example, if a competitor offered data sharing and shared compute services 100x cheaper than the eth network, I don't think eth value would go down anything close to 100x. If I found a way to turn air into plastic and gas, you can bet oil prices would plunge. If Musk said crypto is dead, prices would plummet.
- Gunax 5y agoCrypto is a meme--in the traditional sense of an idea, not the internet joke. What you're buying is the prediction that someone else will come along and buy it for more. As it increases in value, it gets more exposure and more appealing, so the idea spreads.
- Exendroinient 5y agoThe value comes from targeted marketing at the get rich quick sensitive individuals. Most of the regular folks now know about bitcoin as the form of making money from the sky. Add to that cynical views of a financial market and you will get that 2t$.
- dqpb 5y agoI’ve saved hundreds of dollars in money transfer fees using crypto.
- 0des 5y ago.
- augustuspolius 5y agoYou might have been in a unique situation, not sure. But both Paysend and Wise (ex-TransferWise) payments are basically instant and 10-100 times cheaper than crypto. I also find it a bit humorous that crypto used to boast 3 main advantages: anonymous, cheap, instant. Now KYC is very common, exchanges and transfers are incredibly expensive for PoW. It can still be fast in some cases, I give them that… if you have a quick way to convert crypto to FIAT that is (sell crypto and initiate a bank transfer that takes 5 days on Coinbase? Hmm)
- armenarmen 5y agoI mean, cheap and instant still exist on different chains. For BTC and ETH they’re less so, a victim of their don success really. And the anonymous part, that being less the case nowadays isn’t because of a flaw or oversight on cryptos part. It’s state action
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- Leherenn 5y agoHow did she get local cash from crypto? Some kind of bitcoin ATM? I assume using a standard ATM wasn't an option due to a lost/stolen card?
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- trembonator 5y agoCrypto is a hedge against fiat currency. If the world hits a recession, crypto is where to be.