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I’m not convinced there’s any destruction of value when the entire value proposition is a lie. When I tell you my lemonade stand is worth a billion, and you be

• throwaheyy 4y ago
  Sure it is. If, during that time, I give you $100M for a 10% stake in your lemonade stand, that value is destroyed. If I gave you dollars in return for magic beans that turned out to be imaginary, that value is destroyed.
• largepeepee 4y ago
  There is value, in that a generation of moderately wealthy idiots got convinced that monkey pictures are worth something. Like a cult brainwashing, they have attached their identities to those worthless pictures and now are trapped in greedy stupidity.
  • michaelt 4y ago
    Weren't all those ape NFTs brought with monopoly money anyway? I mean, buying a $1M ape NFT with real money makes no sense - but if you were Sam Bankman-Fried and you had an unlimited supply of coins you knew to be worthless, you're just swapping something worthless for something maybe-worthless, which is much easier to explain.
    • deltree7 4y ago
      No, when you bought an NFT for X Coins, at the same time you could have bought Y dollars. So, the NFT did really cost Y dollars and if it's trading at Z, you have lost Y-Z dollars
  • andirk 4y ago
    NFTs are collectors items. It's as stupid as collecting anything, including fine art, photography, baseball cards, rocks. I'll admit it seems more strange because it's uninteresting, but claiming collecting is idiotic is pretty short-sighted. No, I don't collect that crap :)
    • Yizahi 4y ago
      There is one "small" problem - NFTs are NOT in any way related to the items/files someone is collecting. And collecting NFTs is about as interesting as "collecting" numbers from the random number generator.
      • williamcotton 4y ago
        NFTs are probably the most interesting and legitimate use of these kinds of computer systems. For example, I could see a lot of value in specialized Yu-Gi-Oh projection card tables installed at game stores that only worked with officially issued NFT virtual cards. Players could rent out their virtual cards to other players and turn their purchases into assets. There are already companies in the MTGO space that rent out virtual cards but the whole trading system is (poorly) managed by Wizards of the Coast and lacks programmability. I think the biggest problem with crypto is that it was way overhyped for anything outside of having fun online. It's like meme stocks. It's fun to waste $50 playing some silly online game! It's not fun to waste $50k gambling on something that you think will change the global financial systems. I also think there's plenty of room for fungible tokens that represent ownership over digital content, eg, buying 4% of the rights to the future profits from the monetization of a digital video, as opposed to the patronage system of platforms like Twitch or Patreon. If we truly are reliving the existing financial system shouldn't we expect to reinvent a marketplace for intellectual property?
        • Yizahi 4y ago
          I have to repeat myself - your "YuGiOh virtual cards" are in no way related to the NFTs. Sure you can require buyer of a card to also buy NFT, you can even pretend that was a single transaction. But really NFT has zero function in this example, it provides zero value, and if you remove it from the system altogether - NOTHING will change. It's like saying that clapping with your hands at the gas station is somehow equivalent to the purchasing fuel. Sure, BP for example, can demand all fuel buyers to clap their hands once and claim that hand clap = fuel. But really it's just a dumb addition to the real transaction which does nothing. NFTs are such hand clap when buying digital (or real) objects. The only difference is that they are served with metric ton of technical and pseudo-technical jargon, to the point when even some people in IT are starting to have doubts. But then you think about NFTs again and the mist of bullshit dissipates leaving only bare facts.
• jrm4 4y ago
  Unfortunately, you're also literally describing the fiat money system we use.
  • almost 4y ago
    Cryptocurrency people seem to think that's an argument for cryptocurrency!
    • jrm4 4y ago
      Yeah, I see all my downvotes. I'm not saying it because I strongly favor OR hate either of these systems. I'm not here trying to say "Fiat is dumb and evil and crypto will save us all." I'm just saying because it's the truth. We don't do real "fractional reserves," we don't have "gold" etc. Our money is backed up by "America, with the guns, is good for this made up money," which I believe is generally true, and not a terrible system.
      • andirk 4y ago
        For a highly technical and intelligent group that is HN, being blanket negative on crypto is the battle cry, but pointing out how fiat is largely based on fiction as well ("faith" written next to a stone mason eye in a pyramid) is not tolerated.
        • Eisenstein 4y ago
          > but pointing out how fiat is largely based on fiction as well ("faith" written next to a stone mason eye in a pyramid) is not tolerated. Or maybe it is just not useful, and acts as a distraction. Getting into another 'why fiat backed by the USA works while monopoly money from the boardgame (or cryptocurrencies) does not' is pointless because no one who makes that argument really cares about the difference, they just want to point out that 'everything is made up'.
          • andirk 4y ago
            Yes, exactly. I disagree that it's a distraction. It is to point out that there are a plethora of issues with crypto but pointing out issues with faith-based currency doesn't separate crypto from fiat. As a fan of crypto I see these issues as very glaring: - one of the main advantages of crypto is lack of centralized regulation, which is also why no one stopped FTX from having back doors to loot the vault - if one can print their own coins at will (like FTT), its value is at the whim of the printer - inflation is not necessarily a bad thing. It can be used responsibly. - a credit card has almost no risk and can crank out transactions as much as necessary - fiat is accepted all over the place whereas crypto as a transactional currency is more similar to trading gold and cowhides We have seen how many bad actors control USA fiat and are deemed "too big to fail". That is a failed system and we have seen its ugly face plenty of times. Much of crypto challenges that. How successful it is so far is up for debate.
• itake 4y ago
  The real losses are the VC capital (that could have been deployed to more meaningful businesses) and the loss of client capital. Many people put their life savings that may or may not evaporate.
  • woodruffw 4y ago
    I think this is predicated on the assumption that VCs generally deploy their capital wisely, which I don't necessarily buy. Before cryptocurrencies, the rage seemed to be "Uber but for X." I'm not convinced there was much social or financial benefit in most of those, other than cynical value cycles culminating in offloading junk onto public markets.
    • deleted 4y ago
      [deleted]
• foobarian 4y ago
  The problem happens when someone lets you leverage the $1B lemonade stand. Though not necessarily your problem :-)
• halpmeh 4y ago
  VC's had money, i.e. capital. Now the money is gone. What would you describe that as if not destruction of capital.
  • lottin 4y ago
    Money and capital are different things. Capital in a broad sense is any durable good that is employed in the production of goods and services. For example, a road. Money is not capital. Money is simply a good without intrinsic value that is used as a means of exchange. As a result creating and destroying money doesn't create or destroy wealth.
    • halpmeh 4y ago
      You are using a very non-standard definition of capital. > As a result creating and destroying money doesn't create or destroy wealth. I'll give you a MacBook, which is a durable good you can use to produce goods and services, if you go to the bank, withdraw all of your money, and then set it on fire. This is a good deal for you. Your wealth will not change from setting the money on fire, as destroying money does not destroy wealth, and you will have a capital good that will increase the amount of wealth you have.
      • lottin 4y ago
        If you set your own money on fire, the amount of wealth in the economy won't change. However you'll be worse off, because your share of the total wealth is now smaller (and everybody else's share is bigger).
        • halpmeh 4y ago
          > However you'll be worse off, because your share of the total wealth is now smaller So you're worse off because your share of the wealth is smaller... if only we had a way to describe that. Perhaps you could say that you're less wealthy and by burning your money, you've destroyed your capital? Look, I get what you're trying to say. The value of each currency unit is roughly the total amount of economic value divided by the number of units of currency. So the sum of the value of all the currency units doesn't change as you add to or subtract from the money supply. The piece you're missing, though, is that the VCs didn't create the money they invested in BlockFi. The money came from investors and partners. So in a very real sense the capital of those investors and partners was destroyed.
• Yizahi 4y ago
  Where do you start? You start with company that builds a lemonade stand, and they dress it up like a life changing lemonade that's going to replace all other drinks in 38 days or whatever. So let's ignore what it does, let's pretent is does literally nothing, it's just a stand. So what's next. This lemonade stand has some market price, it's probably not zero, right? Let's say it's 20 million dollars market price. Maybe in your world if you create a lemonade stand it's worth 180$. But in my world, when people create lemonade stand and twit about it, people are like "ooh, a Lemonade Stand! Noice!" and it's worth 20 millions. And all these sophisticated games go like "ohh, if there are 100 million dollars in the lemonade stand, then it's going to get 16 million dollars of profits this year. That's pretty good, let's put a little bit more into it.". And maybe that happens with the other 200 million dollars in the stand. So you know, sophisticated traders and cryptards or other similar parties decide to put 200 million dollars in the stand. And other people go like, "oh, this is a pretty cool lemonade stand, it's valuable stand, and who a re we to say it's wrong?". Lemonade stands can be great. I love lemonade as much as the next guy, right? And then people are recalibrating, "20 million dollars for this stand? that's it? it's probably valued at 1.5 billions at least!".
  • weard_beard 4y ago
    To be fair, that is how the entire fractional reserve banking system started. Safe houses for gold handed out slips of paper to make it easier for the guys storing their gold to spend it and said, "hey, we'll actually pay you to let us hand these slips of paper out to people who want to borrow your gold. We just need you to stay quiet and be cool with us committing fraud and handing out WAY more borrow slips than there is gold. Cool? Cool." We as a society accept large scale fraud all the time and normalize it.
    • Animats 4y ago
      That's the crypto community delusion about how fractional reserve banking works. The way fractional reserve banking actually works is that banks lend out money, and the loans are their major assets. This only works if there's heavy regulation on how sound the loans have to be. Without regulation of loan quality, there's a banking panic every few years. All the US banking crises since the 1920s have involved some form of deregulation.[1] [1] https://en.wikipedia.org/wiki/List_of_banking_crises https://en.wikipedia.org/wiki/List_of_banking_crises
• joyfylbanana 4y ago
  Actually value is created when a scam company goes bankrupt. Less value destruction in the marketplace.