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This is one of the lies that people use to legitimize crypto while de-legitimizing stocks. But it’s not true. With crypto you’re buying an entry in a ledger an
by PragmaticPulp 4y ago
This is one of the lies that people use to legitimize crypto while de-legitimizing stocks.
But it’s not true. With crypto you’re buying an entry in a ledger and the hope that other people will want to buy that entry from you later.
With stocks you’re buying actual shares of an actual company with actual assets, and you now have an ownership claim on those.
Crypto is like taking the stock market and removing the only thing that actually gives stocks value, then selling the stock anyway.
- jacquesm 4y agoYou mean like the derivatives market?
- potatoyogurt 4y agoDerivatives have underlyings. An option is the right to purchase or sell a stock (or something else); a future is the right/obligation to accept delivery of something at a future time. While the payout curve is more complicated than straightforward ownership, they derive their value from their relation to some underlying assets.
- TedDoesntTalk 4y agoI thought the underlying of a crypto coin ledger entry is the heat generated from the electricity consumed to calculate the hash of a meaningless number?
- tsimionescu 4y agoThat's not an asset that anyone wants (or can have in any meaningful sense).
- jacquesm 4y agoI see them as side bets on the stock market.
- potatototoo99 4y agoWhat about the AMC ou GME stocks? And if as you seem to imply, crypto is useless, then why isn't everyone shorting it to 0? Obviously you'll concede the stock market is not solely rooted on the underlying assets or dividend, but also on hype and future promise. Same thing for cryptocurrencies, only less utility and more speculation.
- lxgr 4y ago> if as you seem to imply, crypto is useless, then why isn't everyone shorting it to 0? Because shorting isn‘t free, and as the old saying goes, the market can remain irrational longer than you can remain solvent.
- jiocrag 4y agoNope, not at all like that. Derivatives provide leverage to an underlying, real financial instrument. There is no real instrument behind your paid ledger entry.
- root_axis 4y agoAll correct, but more important than ownership is the fact that buying stock infuses a company with cash which gives it fuel to grow the business, unlike trading crypto tokens which does nothing except register a notch in a ledger, buying stock is literally an investment.
- kareemsabri 4y agoI don't think so. The company makes money on the IPO, after which the shares are just changing hands between traders. The vast majority of trades are the latter type.
- bennyelv 4y agoThe company rarely issues all its shares at IPO and can trade them on the stock market like any other participant. It can sell them if it wants to raise more money, or buy them back if it has spare cash.
- kareemsabri 4y agoFair, that's true.
- jknoepfler 4y agoBTC et. al. are a form of currency. That's like saying dollars are worthless because money isn't real. It's worth exactly what you can trade it for.