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> Crypto is a zero sum game How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value pr

> Crypto is a zero sum game How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.

FabHK 4y ago
Gains from trading are zero sum - whatever anyone takes out (when selling), someone must put in (by buying). More specifically, it is a negative sum game, since exchanges and miners want their cut. So, the assertion that crypto as a whole is zero sum hinges on the assumption that for the vast majority of people, the utility of crypto comes from capital gains (buying and selling for a higher price), rather than, say, the utility of buying drugs or paying off ransomware.
- junofan 4y ago
  No. If I buy Monero on an exchange, I pay only the marginal buyer’s price. The ability to transact privately may, however, be worth much more to me than that price.
  - minsc_and_boo 4y ago
    Monero and its ability to transact privately is only valuable if you're participating in criminal activity, which is not the vast majority of people. You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs. (I would also argue that Monero is the only crypto that is more currency than any other crypto today bc of this, but it's not a selling point IMO)
    - lawn 4y ago
      It absolutely is not only for criminals. A simple example: you go to a store and buy something with BTC. All good so far. But the store owner can see on the public blockchain that the wallet you paid with contains a lot of Bitcoin, and that you were in fact a crypto multi-millionaire. And he and his buddies will now target you in a nightly visit where they'll torture you and your family until you give them your coins. Or another example: you're the business owner but the customer pays with tainted bitcoins, coming from child trafficking. Now your Coinbase account will be frozen if you send the coins there, or you'll be unable to use them in other ways because they're tainted. The ability to transact privately is for your personal safety and to be able to transact with other people without being branded a terrorist or pedophile and have to deal with those false accusations.
      - minsc_and_boo 4y ago
        >You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs. Again, your hypotheticals diverge from the reality.
rchaud 4y ago
The added value you're referring to accrues almost entirely to the exchanges. People and businesses are not buying crypto to spend on things. They are buying it to trade it back and forth. No value is being created except for the fees exchanges can charge for processing transactions, which is a markup on the fees already charged by miners. A large percentage of Americans were onboarded to investing via brokerages in the 70s-00s. Did that make day trading any less zero-sum than before?
wahnfrieden 4y ago
bc there’s not much current use beyond speculative trading on future utility
- garethrowlands 4y ago
  speculative trading on future price, not utility
  - wahnfrieden 4y ago
    also correct but not what I’m saying, thanks for the input
Nextgrid 4y ago
Nobody's using crypto for its intended purpose - its value proposition when it comes to payments is just as dubious as it ever was. The vast majority of the attention for crypto has been for its speculative aspect.
- smt88 4y ago
  Also if the "purpose" of something is payments and that thing is an investment for you, then you're betting on a deflationary future which means that thing will be less useful as a payment.
- saint_angels 4y ago
  I'm receiving part of my salary in USDT, and find it valuable. Traditional banking system doesn't work well for everyone.
  - renonce 4y ago
    That is the case with stablecoins. Stablecoins are the most boring thing in crypto and few people really use it for payments.
  - Cederfjard 4y ago
    What do you use the USDT for? Any type of spending?
    - saint_angels 4y ago
      I use it to receive money from another country and exchange for USD in a local exchange point. It may sound like a boring case, but if you find yourself in a foreign country without working bank cards, it might save your ass
- cdiddy2 4y ago
  There are tons of people using it for its apolitical and censorship resistant nature. Afghanistan/Ukraine/Lebanon/Argentina/Venezuela/Nigeria/Turkey/Belarus/Mexico to name a few countries where it is very relevant and useful https://www.bbc.com/news/world-asia-60715707 https://www.bbc.com/news/world-asia-60715707 https://www.financialinclusion.tech/ https://www.financialinclusion.tech/
danuker 4y ago
I don't use it for payments due to regulatory headaches. But the supply-side economics is not to ignore. It is advantageous to Bitcoin. US M2 money supply grew 8.04% in the past year [0], while Bitcoin's grew ~1.75% [1]. Yes, demand has its 80% ups and downs, but each crash was to a level higher than the previous. [0] - https://ycharts.com/indicators/us_m2_money_supply_yoy https://ycharts.com/indicators/us_m2_money_supply_yoy [1] - https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/
- thaway2839 4y ago
  And that makes it a horrible currency. It makes it highly deflationary which absolutely stunts the working of an economy because no one wants to spend anymore. Good currencies are not stores of value. They are means of exchange. And crypto is a horrible means of exchange. It may have some use as a store of value (i.e. digital gold), but it's not clear to me why I would store my value in digital gold, which will require people to altruistically spend money on energy after 2040 or so when no more Bitcoins are generated for miners (in practice much earlier as each mined BTC gets increasingly expensive), to maintain the blockchain, as opposed to investing in real gold, which can literally sit under my mattress and not require a network of planet burning computers for it to not vanish.
  - engineeringwoke 4y ago
    It's funny that you believe the nation states' excuses for de-basing their currency. People just use fiat because it is dominant and has a legal system attached. They de-base because they can. The fact that they thought M2 and its equivalents across the world could rise faster than inflation in perpetuity is just silly in retrospect. They're the same thing in the long run. It was used to get around the lack of ability to enact fiscal policy and to make old people rich, and you bought it, hook line and sinker.
  - danuker 4y ago
    > because no one wants to spend anymore Computing prices have been going down in the past half-century. Yet it's full of computers around us now. And the biggest companies are computing-related. I wonder why.
hansonkd13 4y ago
The main value proposition is to sell to the next person for more than you paid. Everything else about banking the unbanked or other vague goals about being better than fiat are to convince the next bag holder.
- danuker 4y ago
  > The main value proposition is to sell to the next person for more than you paid. I agree. But I genuinely believe "bagholders" will be better off compared to saving in their own national currency - provided they manage their risk correctly. This is because national currencies keep inflating, so even a decreasing demand might maintain the same price, given the supply inflation difference. Since the pandemic, BTC has acted like the S&P500 with 4x leverage, but no margin calls (loss limited to what you invested).
  - cyphar 4y ago
    https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
    - danuker 4y ago
      This has held for over a century in the case of gold, since the USD kept readjusting its peg and eventually suspending convertibility. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-...
      - minsc_and_boo 4y ago
        USD dropped the gold standard almost a century ago. How is your comment relevant to the greater fool theory and crypto today?
      - cyphar 4y ago
        So what you're saying with that example is that even with the backing of many governments that have a vested interest in doing anything to stop the bubble from bursting (something Bitcoin doesn't have), the greater fool theory ultimately was correct in that eventually the bubble burst? (I don't agree that the USD-Gold peg was an example of greater fool theory, just an example of how pegging your currency to gold as a sovereign government with a central bank is not a reasonable way of doing monetary policy. The gold standard is an outlier in the human history of monetary policy, the only reason it's so notable to us today is because it was in use during the development of modern economics.) Cryptocurrencies do not produce anything and any actual transactions done using them (as opposed to speculative trading) are a rounding error even after more than a decade. There is no mechanism for them to be anything other than a complicated greater fool scam because ultimately the only way you can make money from them is if you can sell them to someone else for more money than you bought them for -- which is what a greater fool scam is.

> Crypto is a zero sum game How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.

FabHK 4y ago

Gains from trading are zero sum - whatever anyone takes out (when selling), someone must put in (by buying). More specifically, it is a negative sum game, since exchanges and miners want their cut. So, the assertion that crypto as a whole is zero sum hinges on the assumption that for the vast majority of people, the utility of crypto comes from capital gains (buying and selling for a higher price), rather than, say, the utility of buying drugs or paying off ransomware.

junofan 4y ago
No. If I buy Monero on an exchange, I pay only the marginal buyer’s price. The ability to transact privately may, however, be worth much more to me than that price.
- minsc_and_boo 4y ago
  Monero and its ability to transact privately is only valuable if you're participating in criminal activity, which is not the vast majority of people. You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs. (I would also argue that Monero is the only crypto that is more currency than any other crypto today bc of this, but it's not a selling point IMO)
  - lawn 4y ago
    It absolutely is not only for criminals. A simple example: you go to a store and buy something with BTC. All good so far. But the store owner can see on the public blockchain that the wallet you paid with contains a lot of Bitcoin, and that you were in fact a crypto multi-millionaire. And he and his buddies will now target you in a nightly visit where they'll torture you and your family until you give them your coins. Or another example: you're the business owner but the customer pays with tainted bitcoins, coming from child trafficking. Now your Coinbase account will be frozen if you send the coins there, or you'll be unable to use them in other ways because they're tainted. The ability to transact privately is for your personal safety and to be able to transact with other people without being branded a terrorist or pedophile and have to deal with those false accusations.
    - minsc_and_boo 4y ago
      >You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs. Again, your hypotheticals diverge from the reality.

rchaud 4y ago

The added value you're referring to accrues almost entirely to the exchanges. People and businesses are not buying crypto to spend on things. They are buying it to trade it back and forth. No value is being created except for the fees exchanges can charge for processing transactions, which is a markup on the fees already charged by miners. A large percentage of Americans were onboarded to investing via brokerages in the 70s-00s. Did that make day trading any less zero-sum than before?

wahnfrieden 4y ago

bc there’s not much current use beyond speculative trading on future utility

garethrowlands 4y ago
speculative trading on future price, not utility
- wahnfrieden 4y ago
  also correct but not what I’m saying, thanks for the input

Nextgrid 4y ago

Nobody's using crypto for its intended purpose - its value proposition when it comes to payments is just as dubious as it ever was. The vast majority of the attention for crypto has been for its speculative aspect.

smt88 4y ago
Also if the "purpose" of something is payments and that thing is an investment for you, then you're betting on a deflationary future which means that thing will be less useful as a payment.
saint_angels 4y ago
I'm receiving part of my salary in USDT, and find it valuable. Traditional banking system doesn't work well for everyone.
- renonce 4y ago
  That is the case with stablecoins. Stablecoins are the most boring thing in crypto and few people really use it for payments.
- Cederfjard 4y ago
  What do you use the USDT for? Any type of spending?
  - saint_angels 4y ago
    I use it to receive money from another country and exchange for USD in a local exchange point. It may sound like a boring case, but if you find yourself in a foreign country without working bank cards, it might save your ass
cdiddy2 4y ago
There are tons of people using it for its apolitical and censorship resistant nature. Afghanistan/Ukraine/Lebanon/Argentina/Venezuela/Nigeria/Turkey/Belarus/Mexico to name a few countries where it is very relevant and useful https://www.bbc.com/news/world-asia-60715707 https://www.bbc.com/news/world-asia-60715707 https://www.financialinclusion.tech/ https://www.financialinclusion.tech/

danuker 4y ago

I don't use it for payments due to regulatory headaches. But the supply-side economics is not to ignore. It is advantageous to Bitcoin. US M2 money supply grew 8.04% in the past year [0], while Bitcoin's grew ~1.75% [1]. Yes, demand has its 80% ups and downs, but each crash was to a level higher than the previous. [0] - https://ycharts.com/indicators/us_m2_money_supply_yoy https://ycharts.com/indicators/us_m2_money_supply_yoy [1] - https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/

thaway2839 4y ago
And that makes it a horrible currency. It makes it highly deflationary which absolutely stunts the working of an economy because no one wants to spend anymore. Good currencies are not stores of value. They are means of exchange. And crypto is a horrible means of exchange. It may have some use as a store of value (i.e. digital gold), but it's not clear to me why I would store my value in digital gold, which will require people to altruistically spend money on energy after 2040 or so when no more Bitcoins are generated for miners (in practice much earlier as each mined BTC gets increasingly expensive), to maintain the blockchain, as opposed to investing in real gold, which can literally sit under my mattress and not require a network of planet burning computers for it to not vanish.
- engineeringwoke 4y ago
  It's funny that you believe the nation states' excuses for de-basing their currency. People just use fiat because it is dominant and has a legal system attached. They de-base because they can. The fact that they thought M2 and its equivalents across the world could rise faster than inflation in perpetuity is just silly in retrospect. They're the same thing in the long run. It was used to get around the lack of ability to enact fiscal policy and to make old people rich, and you bought it, hook line and sinker.
- danuker 4y ago
  > because no one wants to spend anymore Computing prices have been going down in the past half-century. Yet it's full of computers around us now. And the biggest companies are computing-related. I wonder why.

hansonkd13 4y ago

The main value proposition is to sell to the next person for more than you paid. Everything else about banking the unbanked or other vague goals about being better than fiat are to convince the next bag holder.

danuker 4y ago
> The main value proposition is to sell to the next person for more than you paid. I agree. But I genuinely believe "bagholders" will be better off compared to saving in their own national currency - provided they manage their risk correctly. This is because national currencies keep inflating, so even a decreasing demand might maintain the same price, given the supply inflation difference. Since the pandemic, BTC has acted like the S&P500 with 4x leverage, but no margin calls (loss limited to what you invested).
- cyphar 4y ago
  https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
  - danuker 4y ago
    This has held for over a century in the case of gold, since the USD kept readjusting its peg and eventually suspending convertibility. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-...
    - minsc_and_boo 4y ago
      USD dropped the gold standard almost a century ago. How is your comment relevant to the greater fool theory and crypto today?
    - cyphar 4y ago
      So what you're saying with that example is that even with the backing of many governments that have a vested interest in doing anything to stop the bubble from bursting (something Bitcoin doesn't have), the greater fool theory ultimately was correct in that eventually the bubble burst? (I don't agree that the USD-Gold peg was an example of greater fool theory, just an example of how pegging your currency to gold as a sovereign government with a central bank is not a reasonable way of doing monetary policy. The gold standard is an outlier in the human history of monetary policy, the only reason it's so notable to us today is because it was in use during the development of modern economics.) Cryptocurrencies do not produce anything and any actual transactions done using them (as opposed to speculative trading) are a rounding error even after more than a decade. There is no mechanism for them to be anything other than a complicated greater fool scam because ultimately the only way you can make money from them is if you can sell them to someone else for more money than you bought them for -- which is what a greater fool scam is.