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I also like to think of it as something analogous to drug addiction with the dopamine positive feedback loop.

by mib32 5y ago

arcticbull 5y ago
Crypto is the crystal meth of finance. Capital completely divorced from labor.
- dvt 5y ago
  In that sense, crypto is exactly the same as forex, money markets, equities markets, futures markets, derivatives markets, etc. We haven't been coupling markets with labor for like 300 years now.
  - arcticbull 5y ago
    Not at all. Forex yes, futures yes, derivatives yes - these are speculative or hedging instruments. Not investments. I've never heard anyone advocate people HODL /NQ futures in their investment account and borrow against them as an investment strategy. Let alone calling them "the future of money." But this is basically what crypto is. Money market funds aren't investments, they're cash equivalents, but they still facilitate lending. They're the present of money. Equities are positive-sum instruments where you purchase a fractional ownership stake in a business that employs people and uses the revenue from their business to return capital to investors in the form of dividends, buybacks or intrinsic value appreciation. Their performance is inherently tied to labor. These are not at all the same thing.
    - dvt 5y ago
      > Not investments. The idea that there's any viable technical reasoning behind TSLA trading as high as it is, or behind what happened with GME and AMC last year is simply fanciful. It's like you've never seen an IPO pump and dump. It's literally the exact same market behavior you saw with ICOs; side-note: it's even worsened now with the advent of SPACs. Yeah, you can argue until the cows come home that "equities are positive-sum instruments where you purchase a fractional ownership stake in a business," but that doesn't mean that hedge funds won't treat them as speculative instruments, particularly around earnings calls. Or that hedge funds won't try to spin the narrative to justify their risky positions (e.g.: the short squeeze on GME). Again, just to reiterate: the markets are almost completely decoupled from labor (for better or for worse). It's all speculation (to certain degrees).
      - arcticbull 5y ago
        Again you're conflating a bunch of unrelated concepts. Equities may trade above a fair valuation - individually, or as a group. That doesn't mean they're not as a group positive-sum instruments. You may lose money on a positive-sum instrument. They're also not money, and never claimed to be. You're forcing a narrative around short timeframes. Equity markets are tied to the performance of the business in the full course of time which is tied to labor. Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. It's just trading bags of air back and forth.
        dvt 5y ago
        > Equity markets are tied to the performance of the business in the full course of time which is tied to labor. They're not though, and they haven't been for centuries. I gave you 3 examples off the top of my head. Markets are tied to sentiment; let me refer you to the Keynesian beauty contest[1]. This is very basic economic theory. > Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. There is no "rake" in crypto, so I'm not even sure what you mean by that. Second, every dollar in appreciation on a decentralized exchange (say, SushiSwap) is a result of the automated market maker's supply and demand response. This is functionally exactly the same as what happens with order books (like on the stock market) but it just happens to use liquidity pools to facilitate this (because volume is much lower). For every seller, there's a buyer, and for every buyer, there's a seller: that's how markets work. Third, crypto is actually not at all like options because whereas option contracts can expire worthless (e.g. they run out of time and can no longer be exercised), if you buy some poopcoin, even if it tanks, you'll still own said coin (kind of like a penny stock). > It's just trading bags of air back and forth. This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge. [1] https://en.wikipedia.org/wiki/Keynesian_beauty_contest https://en.wikipedia.org/wiki/Keynesian_beauty_contest
        5y ago

I also like to think of it as something analogous to drug addiction with the dopamine positive feedback loop.

by mib32 5y ago

I also like to think of it as something analogous to drug addiction with the dopamine positive feedback loop.

arcticbull 5y ago

Crypto is the crystal meth of finance. Capital completely divorced from labor.

dvt 5y ago
In that sense, crypto is exactly the same as forex, money markets, equities markets, futures markets, derivatives markets, etc. We haven't been coupling markets with labor for like 300 years now.
- arcticbull 5y ago
  Not at all. Forex yes, futures yes, derivatives yes - these are speculative or hedging instruments. Not investments. I've never heard anyone advocate people HODL /NQ futures in their investment account and borrow against them as an investment strategy. Let alone calling them "the future of money." But this is basically what crypto is. Money market funds aren't investments, they're cash equivalents, but they still facilitate lending. They're the present of money. Equities are positive-sum instruments where you purchase a fractional ownership stake in a business that employs people and uses the revenue from their business to return capital to investors in the form of dividends, buybacks or intrinsic value appreciation. Their performance is inherently tied to labor. These are not at all the same thing.
  - dvt 5y ago
    > Not investments. The idea that there's any viable technical reasoning behind TSLA trading as high as it is, or behind what happened with GME and AMC last year is simply fanciful. It's like you've never seen an IPO pump and dump. It's literally the exact same market behavior you saw with ICOs; side-note: it's even worsened now with the advent of SPACs. Yeah, you can argue until the cows come home that "equities are positive-sum instruments where you purchase a fractional ownership stake in a business," but that doesn't mean that hedge funds won't treat them as speculative instruments, particularly around earnings calls. Or that hedge funds won't try to spin the narrative to justify their risky positions (e.g.: the short squeeze on GME). Again, just to reiterate: the markets are almost completely decoupled from labor (for better or for worse). It's all speculation (to certain degrees).
    - arcticbull 5y ago
      Again you're conflating a bunch of unrelated concepts. Equities may trade above a fair valuation - individually, or as a group. That doesn't mean they're not as a group positive-sum instruments. You may lose money on a positive-sum instrument. They're also not money, and never claimed to be. You're forcing a narrative around short timeframes. Equity markets are tied to the performance of the business in the full course of time which is tied to labor. Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. It's just trading bags of air back and forth.
      - dvt 5y ago
        > Equity markets are tied to the performance of the business in the full course of time which is tied to labor. They're not though, and they haven't been for centuries. I gave you 3 examples off the top of my head. Markets are tied to sentiment; let me refer you to the Keynesian beauty contest[1]. This is very basic economic theory. > Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. There is no "rake" in crypto, so I'm not even sure what you mean by that. Second, every dollar in appreciation on a decentralized exchange (say, SushiSwap) is a result of the automated market maker's supply and demand response. This is functionally exactly the same as what happens with order books (like on the stock market) but it just happens to use liquidity pools to facilitate this (because volume is much lower). For every seller, there's a buyer, and for every buyer, there's a seller: that's how markets work. Third, crypto is actually not at all like options because whereas option contracts can expire worthless (e.g. they run out of time and can no longer be exercised), if you buy some poopcoin, even if it tanks, you'll still own said coin (kind of like a penny stock). > It's just trading bags of air back and forth. This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge. [1] https://en.wikipedia.org/wiki/Keynesian_beauty_contest https://en.wikipedia.org/wiki/Keynesian_beauty_contest
        5y ago