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Isn't that true of anything that doesn't include the fed? I mean unless you can print money, you can't change the amount of fiat in any subset of the economy. Y

by pontus 4y ago

Isn't that true of anything that doesn't include the fed? I mean unless you can print money, you can't change the amount of fiat in any subset of the economy. You can still add value though which would be evident by more people wanting a piece of whatever pie there is, driving more fiat into the subset and/or creating paper gains which is a sort of money in itself, but this is true for crypto as well. For example, I can draw a circle around Google and make the same argument: "I can see how fiat can flow into Google (investments, debt, advertiser dollars, ...) but I can't see how Google can create new fiat to flow back to the rest of the economy." The best I can see is that higher demand for a share of Google creates paper gains but then that's true for crypto as well.

paulryanrogers 4y ago
Because Google can sell the attention of billions of people, albeit only in small ad slots. That's quite an asset. Then they have DCs, mountains of computers, and office buildings. So worst case those can be sold off. Crypto has some NFTs no one really wants.
JumpCrisscross 4y ago
> unless you can print money, you can't change the amount of fiat in any subset of the economy Credit is money. Anyone who can create credit can create money.
- mannerheim 4y ago
  But only banks do this, not Google itself (although I guess they do lend money so maybe?). Ultimately more fiat at the end of the day doesn't matter either - what matters are real goods and services produced. Of course, crypto has not been good with respect to this either... Financial services only produce value insomuch as they enable people to access goods and services in the 'real economy'. Houses and cars for consumers, and for those who produce goods/services, capital that enables them to produce, whether that be loans for equipment, salaries, whatever, as long as something comes out at the end that there's somebody willing to buy (and for that to be sustainable, there should be a reason to own it more than selling to somebody else). Money is only useful insomuch as it enables exchange that leads to more real things people want. So there is some value in the exchange of cryptocurrency, if nowhere near enough to justify its valuation - after all, it does enable people to purchase all sorts of illegal drugs, which is a real good people want. Other than that, financial speculation (pretty much every other application we usually see of cryptocurrency) is all well and good, but the question at the end of the day is what's the underlying stuff being speculated upon, and how does it correspond to stuff people actually want? Financial instruments on housing and corn at least have some relation to things people want, after all.
saalweachter 4y ago
> (investments, debt, advertiser dollars, ...) I think the problem is that the first pipe is just investment/debt. You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment. As long as that second money pipe remains aspirational/marginal, there's just not much potential.
- mannerheim 4y ago
  The second pipe is also what represents real value. Sellers buy ad space to find buyers (if they can't, the ad sale business isn't sustainable). Seller values what they sell at less than what the buyer pays (on average), and vice versa for the buyer. Both are better off, value is created. What we have in crypto is as if somebody invented the Internet, and the only thing anybody used it for was to trade stock in Internet companies. Not companies in general, which would at least provide an external source of value, but only Internet companies in an overgrowing ouroboros of speculation upon itself.
- noxer 4y ago
  The flaw in all of this is that people who buy crypto are not investing in something so its entirely pointless whether there is something that generates revenue. If you buy crypto you trade 2 assets like USD > BTC Its the same as if you buy baseball cards USD > baseball card You bet on the value of one asset to increase over the other. The correct term for this is speculation [1] not investment [2]. Speculation doesn't require anyone to do any "work" (as in produce goods or services). Speculation required that there is or will be an imbalance in the supply and demand of the involved assets which can happen for infinite other reason that someone creating revenue while somehow being associated with that asset. [1] https://en.wikipedia.org/wiki/Speculation https://en.wikipedia.org/wiki/Speculation [2] https://en.wikipedia.org/wiki/Investment https://en.wikipedia.org/wiki/Investment
- pontus 4y ago
  So stuff like precious metals, commodities (energy, corn, pork, ...), stocks that don't pay dividends, etc are then also equally worthless? I don't think holding a barrel of oil or a bar of gold, or a share of Berkshire Hathaway will generate any income for me. I'd need to sell it to someone else for me to get my money back.
Eddy_Viscosity2 4y ago
In this case its a utility thing. The casino example is a good one. It 'produces' entertainment. Google produces email and search services and eyeballs for ads. What's does crypto produce? Early on in crypto my answer would have been 'nothing' but it turned out I was wrong. It does a couple of things: - circumvents capital controls - allows easier transfer of funds between different countries - allows anonymous money transfers - allows storage of value (at least until the prices drop) of money outside regulated financial intuitions. Interestingly, the utility cases for crypto are all ways to get around existing laws and regulations. The thing is that all these laws and regulations were developed for a reason (chesterson's fence), which is to curb fraud, crime, extortion, theft, etc. Eventually the laws will catch up to crypto, and when they do crypto won't have utility.

by pontus 4y ago

paulryanrogers 4y ago

Because Google can sell the attention of billions of people, albeit only in small ad slots. That's quite an asset. Then they have DCs, mountains of computers, and office buildings. So worst case those can be sold off. Crypto has some NFTs no one really wants.

JumpCrisscross 4y ago

> unless you can print money, you can't change the amount of fiat in any subset of the economy Credit is money. Anyone who can create credit can create money.

mannerheim 4y ago
But only banks do this, not Google itself (although I guess they do lend money so maybe?). Ultimately more fiat at the end of the day doesn't matter either - what matters are real goods and services produced. Of course, crypto has not been good with respect to this either... Financial services only produce value insomuch as they enable people to access goods and services in the 'real economy'. Houses and cars for consumers, and for those who produce goods/services, capital that enables them to produce, whether that be loans for equipment, salaries, whatever, as long as something comes out at the end that there's somebody willing to buy (and for that to be sustainable, there should be a reason to own it more than selling to somebody else). Money is only useful insomuch as it enables exchange that leads to more real things people want. So there is some value in the exchange of cryptocurrency, if nowhere near enough to justify its valuation - after all, it does enable people to purchase all sorts of illegal drugs, which is a real good people want. Other than that, financial speculation (pretty much every other application we usually see of cryptocurrency) is all well and good, but the question at the end of the day is what's the underlying stuff being speculated upon, and how does it correspond to stuff people actually want? Financial instruments on housing and corn at least have some relation to things people want, after all.

saalweachter 4y ago

> (investments, debt, advertiser dollars, ...) I think the problem is that the first pipe is just investment/debt. You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment. As long as that second money pipe remains aspirational/marginal, there's just not much potential.

mannerheim 4y ago
The second pipe is also what represents real value. Sellers buy ad space to find buyers (if they can't, the ad sale business isn't sustainable). Seller values what they sell at less than what the buyer pays (on average), and vice versa for the buyer. Both are better off, value is created. What we have in crypto is as if somebody invented the Internet, and the only thing anybody used it for was to trade stock in Internet companies. Not companies in general, which would at least provide an external source of value, but only Internet companies in an overgrowing ouroboros of speculation upon itself.
noxer 4y ago
The flaw in all of this is that people who buy crypto are not investing in something so its entirely pointless whether there is something that generates revenue. If you buy crypto you trade 2 assets like USD > BTC Its the same as if you buy baseball cards USD > baseball card You bet on the value of one asset to increase over the other. The correct term for this is speculation [1] not investment [2]. Speculation doesn't require anyone to do any "work" (as in produce goods or services). Speculation required that there is or will be an imbalance in the supply and demand of the involved assets which can happen for infinite other reason that someone creating revenue while somehow being associated with that asset. [1] https://en.wikipedia.org/wiki/Speculation https://en.wikipedia.org/wiki/Speculation [2] https://en.wikipedia.org/wiki/Investment https://en.wikipedia.org/wiki/Investment
pontus 4y ago
So stuff like precious metals, commodities (energy, corn, pork, ...), stocks that don't pay dividends, etc are then also equally worthless? I don't think holding a barrel of oil or a bar of gold, or a share of Berkshire Hathaway will generate any income for me. I'd need to sell it to someone else for me to get my money back.

Eddy_Viscosity2 4y ago

In this case its a utility thing. The casino example is a good one. It 'produces' entertainment. Google produces email and search services and eyeballs for ads. What's does crypto produce? Early on in crypto my answer would have been 'nothing' but it turned out I was wrong. It does a couple of things: - circumvents capital controls - allows easier transfer of funds between different countries - allows anonymous money transfers - allows storage of value (at least until the prices drop) of money outside regulated financial intuitions. Interestingly, the utility cases for crypto are all ways to get around existing laws and regulations. The thing is that all these laws and regulations were developed for a reason (chesterson's fence), which is to curb fraud, crime, extortion, theft, etc. Eventually the laws will catch up to crypto, and when they do crypto won't have utility.