10 ms·

Crypto’s Final Price Could Be Zero

74 points by lxm 4y ago

adoxyz 4y ago
Considering most/all? crypto is backed by literally nothing, it makes sense. The fact that so many people bought into the hype will continue to amaze me for the rest of my life.
- jonahbenton 4y ago
  What is gold backed by?
  - trentnix 4y ago
    Yep. It’s circular logic all the way down.
  - adoxyz 4y ago
    gold is a physical asset used in a [lot of stuff](https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml).
  - nlh 4y ago
    Gold, in the end, is a physical, shiny metal that people find aesthetically appealing and there's a limited amount of it out there. For thousands of years people have desired gold things and valued it. Sure, people could collectively decide that gold isn't valuable and that certainly happens to some extent as the commodity markets fluctuate, but in general when you get to the bottom of the turtle stack, gold has more fundamental value than most other forms of money.
    - mekster 4y ago
      Why not mention about its industrial use?
  - anon291 4y ago
    Gold is backed by the fact that no one can replicate supernovae which are required to manufacture it, so it must be found. Thus it is scarce. It has several industrial uses and is a source of vanity for many humans, which has inherent value, as humans naturally take pride in adorning themselves. Gold has proven itself over millenia, since before prehistory really, to have value on the open markets. In fact, all rocks do. Gold is hardly unique in this matter. Rocks all have value, but some rocks are rarer than others, thus have more value than others. For example, even sand has value despite its ubiquity. Many companies make their entire profit from collecting and selling sand. So, in sum, gold can be used in the manufacture of durable, long-lasting goods. It's crucial for certain electronics. There's a constant demand for it for turning into goods. Other rocks can be used for other things, like ground covering, structural support, etc. Bitcoin can be used for?... ? ... ? ... ? nothing
  - bewaretheirs 4y ago
    Gold bugs. But even without them its value would not go to zero; ignoring the purely aesthetic uses (jewelry, decorations, etc.,) elemental gold has a wide variety of uses including corrosion-resistant electrical contacts, dental fillings, etc.; the James Webb Space Telescope mirrors have a gold coating as it is a good reflector of infrared radiation.
    - TacticalCoder 4y ago
      > Gold bugs. It's not just gold bugs: central banks worldwide are stockpiling on gold at record levels lately. https://www.reuters.com/markets/commodities/record-central-bank-buying-lifts-global-gold-demand-wgc-says-2022-11-01/ https://www.reuters.com/markets/commodities/record-central-b...
  - dehrmann 4y ago
    Copper. If the world decided it didn't like gold for jewelry and storing wealth, it would displace copper in electrical applications where you can take a slight conductivity hit in exchange for it not corroding. It's a huge price difference, but it's something. Bitcoin has no floor.
- conductr 4y ago
  > The fact that so many people bought into the hype will continue to amaze me for the rest of my life. I'm on about year 10 of this amazement. Even tulip mania only lasted 1-2 years. Crypto keeps inventing new snake oil and is continually able to sell it. It's so odd to me.
  - denton-scratch 4y ago
    I'm also amazed that this train is still rolling down the track. I mean, XMR is good for darkmarket transactions; apart from that, and some niche Ethereum games, I find it puzzling. I mean, I don't understand why sane people speculate on an "asset" with zero intrinsic value. Is it because it's easier to acquire Bitcoin than tulip bulbs?
    - compsciphd 4y ago
      that's exactly why. its easier so easier for joe shmoe on the street to invest thereby propping it up. joe shmoe had no ability to invest in tulips. There weren't superbowl ads asking people to invest in tulips
- cm2187 4y ago
  Me too but I know several financially smart people who acknowledged in private it was a giant bubble of thin air, but they had the trader mentality that it doesn't matter what the real price should be, as long as there is money to be made trading it. As long as they didn't get caught in the end, I don't think they were wrong. By the way, it's not just a lot of second hand GPUs that will come back to the market. A lot of quants too!
  - Eisenstein 4y ago
    > As long as they didn't get caught in the end, I don't think they were wrong. Just morally bankrupt.
- deleted 4y ago
  [deleted]
- prirun 4y ago
  It still amazes me that people pay for plastic bottles of water! Edit: I obviously mean in the developed world.
  - tintor 4y ago
    Because: drinking clean water reduces risk of dying?
  - selectodude 4y ago
    Water has utility. In a significant portion of the world, bottled water is one of the only ways you can guarantee that the water is even drinkable.
- etherael 4y ago
  Back when it actually worked as a decentralised global ledger capable of allowing transactions without trusting a central party it was revolutionary. Then it got hijacked to discard that property and it is indeed of zero value. There are still plenty of other cryptos that actually work, but the market is so stupid, scammy and manipulated, that this hardly matters and btc acts as a giant sink of value sucking all of the air out of the room and suffocating anything else that could actually work. I think until it's dead we're not going to see any change from that.
- 9864250 4y ago
  Cryptocurrencies like Ether are backed by the network's virtual machine. You have to pay Ether to process a transaction on the Ethereum virtual machine and as transactions can do arbitrary computations, Ether is useful for things other than transferring Ether. Cryptocurrencies like Bitcoin don't have that feature, but that just makes them more like fiat currencies. You could argue that fiat currencies are backed by the force the state is willing to use to get its population to pay taxes in the currency, but that's not a stable backing, as the state could decide to accept another currency at any time. Some states do allow for tax payments in other currencies, which means that some fiat currencies have no backing by that mechanism. Some people are also forced to pay in Bitcoin, for example to ransomware, which should have a similar effect in forcing people to use the currency. Ultimately, I don't see why a currency would need backing. There is nothing wrong with a currency gaining value purely from its value and utility as a currency. Many other valuable things such as precious metals and art gain a large part of its value in the same way.
  - traveler01 4y ago
    I do love when people response that the USD has value because of the it's "backed" by the government.
  - Eisenstein 4y ago
    > There is nothing wrong with a currency gaining value purely from its value and utility as a currency. I mean, the problem with that is twofold: 1. If it has value as a currency then it gaining value incentivizes hoarding of the currency. If it is going to be worth more tomorrow, why spend it? In that case it has failed as a currency since the economy cannot grow without economic activity; specifically currency movement 2. If it only has value because people perceive it to have value (specifically, there is no need to use this currency over any other) then it is all based on faith. At that point a rapid devaluation can be triggered by any number of market actions -- all it takes is a little wavering for a selloff to start and the snowball starts rolling down the hill. This is the reason that crypto cultures can be so toxic -- if you start to question any of it (rock the boat) it is an existential crisis and you get the appropriate response, so no one is willing to question the underlying economics for fear of social repercussions
- mekster 4y ago
  Didn't know math equation is literally nothing. You may get amazed as many times you need before learning why people find value in it.
i67vw3 4y ago
https://archive.ph/AEaGg https://archive.ph/AEaGg
leidenfrost 4y ago
Does anyone have a link to the unlocked article?
- denton-scratch 4y ago
  Copy the URL from your browser to the clipboard. Type "archive.ph" into the URL bar. Paste the original URL into the form-field (the cursor is waiting for you). Press [ENTER]. Viola.
hankchinaski 4y ago
Was very eloquently explained by NNT in one of his YouTube videos[0].The price of a security is the value of all present and future cash flows discounted to the present moment. Since the cash flow for crypto is zero, the present value is zero by definition, in mathematical terms. [0] https://youtu.be/XeG0FzPxSh4 https://youtu.be/XeG0FzPxSh4
- deleted 4y ago
  [deleted]
- patentatt 4y ago
  But what about all of the real money that low-information retail 'investors' put into the crypto ecosystem as a result of the social media hype? Im not being facetious, isn't there potential future cash flow in the scam?
- jonahbenton 4y ago
  lol. Now repeat for gold.
  - deleted 4y ago
    [deleted]
- olalonde 4y ago
  Same for USD, EUR, etc.
  - Eisenstein 4y ago
    Correct. People aren't going to lend you money based on a collateral of less money. What is your point?
    - olalonde 4y ago
      Just pointing out the flaw in NNT's reasoning. Obviously, USD (and EUR, BTC, CAD, etc.) has value despite lacking a cash flow. Essentially, it's worth something because people believe it's worth something.
japhib 4y ago
"No sane lender would extend credit against assets lacking any underlying collateral." I love this quote. This is the reason I refuse to get involved in crypto.
- moolcool 4y ago
  What about pictures of monkeys?
- seydor 4y ago
  Any kind of collateral is useless without a mechanism to guard it and enforce ownership. Bitcoin needs to acquire nukes. In a decentralized way. I know, i know
  - arthurcolle 4y ago
    Maybe an AGI that likes to hodl will eventually do this
  - rich_sasha 4y ago
    I'll sell you the NFT of one.
- xur17 4y ago
  > assets lacking any underlying collateral But what does this statement actually mean? What is "underlying collateral"? The US dollar doesn't have any physical assets backing it, but I'm pretty sure most lenders would lend against it.
  - Eisenstein 4y ago
    The US dollar is a medium of exchange, not an asset or an investment. You use dollars to buy things, you don't own dollars just to own dollars.
    - rich_sasha 4y ago
      Yes, if you want to hold "dollars" you probably actually buy US bonds with your dollars.
thatguy0900 4y ago
As long as drugs stay illegal and some countries have worse money swings than the crypto does I can't see it being zero. It doesn't need to be high for either of those things, of course, and a stableish low price works fine for both. And you don't need a million random shit coins for either of those use cases so those would be worth 0.
- shkkmo 4y ago
  > As long as drugs stay illegal and some countries have worse money swings than the crypto does These are both problems that hopefully we will get better at solving. I think even if neither of those things quite goes to zero, there is a minimum combined level of both needed to keep the ecosystem running and secure. There needs to be enough economic activity passing through the system to pay enough miners to keep it running. I also think that if the main usage of crytpocurrencies becomes avoiding unstable currencies, that will itself destablize cryptocurrency prices.
- TurningCanadian 4y ago
  It needs enough diversity of users to be resilient against a 51% attack. If you don't have that, the value is 0. (You lose the benefit of the distributed ledger and may as well be relying on a central party's database at that point.)
  - dcolkitt 4y ago
    Resilience against a 51% attack has nothing to do with a "diversity of users". It simply has to do with the security budget (block rewards and block space fees) being high enough to incentivize honest consensus over reorg attacks.
    - TurningCanadian 4y ago
      the "honest consensus" is the "diversity of users"; users doing the validation at least. Your rewards can be as high as you'd like, but if one party is in control of most of the validation, you're screwed. It's not the number of nodes or what you pay them or anything like that that matters. It's the actual people/entities behind them that matter.
oli5679 4y ago
"If you owned all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it. Because what would I do with it? I’ll have to sell it back to you one way or another. It isn’t going to do anything." Warren Buffet
- poszlem 4y ago
  And if you owned all the dollar bills?
  - dragontamer 4y ago
    Dollar bills are backed by the full faith and credit by the US Government. As long as the US Government decides those have value (IE: forces you to pay taxes denominated in bills), then anyone interacting with the government will value those bills. As a centralized currency, the power flows from the Government. If the US Government loses power, of course dollar bills lose value. But generally speaking, the trust in the dollar is one-and-the-same as trust in the US Government.
    - throwup 4y ago
      It's a myth that taxes are what give currency value. Plenty of currencies needed to pay taxes throughout history have hyperinflated into nothing.
      - dragontamer 4y ago
        Its a myth that printing money causes currency to lose value. There are an infinite Dogecoins and yet the value goes up sometimes.
        tromp 4y ago
        There are only a finite number ever. The amount of Doge is limited by time. Unlike fiat, it is disinflationary (yearly supply rate goes down toward 0).
outside1234 4y ago
It won't be zero because there are money laundering, corruption, and "escaping money from China" use cases, but it will be much lower. Well, while it is still legal that is.
emsy 4y ago
Mainstream media’s final reputation could be zero.
- nathanaldensr 4y ago
  Why not both?
mcbuilder 4y ago
This isn't true, I'll gladly pay $3 a bitcoin just to get back to my old stash of 10 BTC. Therefore, it's never going to be zero.
- pessimizer 4y ago
  You just said it goes to zero after you get to 10 BTC, I assume for OCD reasons that are not going to be common. I like old stock certificates with pretty designs or interesting histories; there's almost no situation where I wouldn't pay a couple of dollars for one. Being pretty pieces of paper, I imagine they have even more appeal than a number in a distributed database. So that sets a nice theoretical ceiling for bitcoin's theoretical floor.
  - dehrmann 4y ago
    It's worse for bitcoin because old stock certificates look kinda cool on a wall. With bitcoin, are you gonna frame your wallet address?
  - mcbuilder 4y ago
    Which I why I think a deflationary "currency" like bitcoin is more like stock certificates, or, my favorite comparison, the old stone money used on Easter Island. There is just this stupid argument that goes, either bitcoin is worth infinity or zero, which clearly isn't true. At some point nerds like us will start to collect it. Clearly the thing that bitcoin sucks at right now is a currency, the algorithms don't scale in practice. Paradoxically, it was much better as a currency when it was cheap and niche. It seems to have its own roller coaster dynamics baked in, and the only way to stop is for collectively everyone to get off, and what's the fun in that?
- sschueller 4y ago
  And I'll pay you $10 per BTC.
kennu 4y ago
On the Ethereum side, the cryptocurrency is used as an incentive for nodes to operate the global EVM (Ethereum Virtual Machine), which processes smart contract transactions. So one could argue that as long as the transactions have at least some value to some application, the cryptocurrency will also have non-zero value.
- gruez 4y ago
  >On the Ethereum side, the cryptocurrency is used as an incentive for nodes to operate the global EVM (Ethereum Virtual Machine), which processes smart contract transactions. You don't get paid for running a node unless you're also staking.
  - dcolkitt 4y ago
    Technically the original post should s/node/validator/. But besides that minor quibble it's still essentially correct.
olalonde 4y ago
"Crypto" was in the multi-billion dollar market cap before any of the businesses/tokens mentioned in this article even existed, just saying.
DickingAround 4y ago
The constant combining of altcoins and bitcoin is not helpful. There's a use case that is 'money' in which the value of the object used as money is always deeply disconnected from the underlying asset value (i.e. we never trade factories and cars as money. We still don't even trade stocks as money). Bitcoin is attacking that use case head on. It has features like scarcity, no ability to stop a transaction, etc. as features over other forms of money. Then there's a huge list of altcoins promising things that are different, are not actually different or helpful, and are really just still targeting being a money like bitcoin or the dollar except the founder of the new currency wants to be the one that centrally controls it. Thus 'crypto' is not a helpful space, but bitcoin could be.
- selectodude 4y ago
  >It has features like scarcity, no ability to stop a transaction, etc. as features over other forms of money. Those absolutely are not features of Bitcoin.
  - DickingAround 4y ago
    In what way? There's a limited number of bitcoin (I get there's unlimited altcoins, but they're easy to distinguish). I've never heard of anyone being able to censor a transaction on the network (hard to imagine how you can unless you can cut off internet access). I'm making an honest try to understand how it could fail either of those, but I don't see it and need to be shown a bit more directly what you're claiming here.
    - selectodude 4y ago
      That they simply aren’t features. Deflation is really really bad and I like being able to stop a transaction if there’s a mistake or an issue. Those are features of normal currency that Bitcoin lacks.
- dcolkitt 4y ago
  The problem with Bitcoin is that the current economics of the network are long-term unsustainable. The current incentive for miners to secure consensus are block rewards. But block rewards halve every four years (which is how Bitcoin enables the hardcopy of 21 million BTC). That means that over the long-term the incentive for honest consensus tends towards zero. By 2032, the cost of 51% attacking the network for one day will be less than 0.1% of the outstanding market cap. The long-term theoretical solution is to replace block rewards with transaction fees, however because Bitcoin is not a Turing complete smart contract platform the demand for block space is essentially a rounding error.
jl6 4y ago
The final price will only go to zero if someone finds an unpatchable exploit that allows infinite minting of coins. Otherwise, there will probably always be some nonzero epsilon of novelty value in owning one. (Some might argue we are already at that stage and the epsilon just happens to be absurdly large at the moment).
- mekster 4y ago
  I only think it has reached its mass adoption when people realize its usage as store of value that is decoupled from any other third party influence instead of as a risk asset that is linked to Nasdaq.
Joeri 4y ago
Isn’t crypto basically a collectible? People buy it in the hope that somebody in the future will pay more for it, but by itself it is pretty much useless. To me it seems no different from buying baseball cards. And just like saying the final value of those baseball cards may be zero, the final value of crypto may be zero, but I doubt it will have anything to do with collateral as baseball cards have no collateral either.
- mekster 4y ago
  It's similar except you or the manufacturer can't cheat to duplicate a card or the manufacturer can't suddenly produce 10x more cards because the cards sell well. So, inherently they have different purpose.
  - skinnymuch 4y ago
    Are there examples of high priced collectibles suffering significantly for either of the problems you brought up? Also, crypto has downsides.
    - aldarisbm 4y ago
      magic the gathering cards
thinkmcfly 4y ago
jusonchan81 4y ago
Any idea why this thread is flagged? Is it because most of the comments are just back and forth between who likes and dislikes this?
- dpkirchner 4y ago
  It's typical low-quality bait from the WSJ's opinions page. It probably won't generate useful discussion.
bayesian_horse 4y ago
It's not though. Some cryptocurrencies are still perfectly valid money laundering devices, and that means they carry transient but quite persistent value.
dehrmann 4y ago
Probably need to start adding dates in the title of crypto links.
rosnd 4y ago
No it couldn't, darknet markets and others will always be generating enough economic activity to keep the prices nonzero.

74 points by lxm 4y ago

Considering most/all? crypto is backed by literally nothing, it makes sense. The fact that so many people bought into the hype will continue to amaze me for the rest of my life.

jonahbenton 4y ago
What is gold backed by?
- trentnix 4y ago
  Yep. It’s circular logic all the way down.
- adoxyz 4y ago
  gold is a physical asset used in a [lot of stuff](https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml).
- nlh 4y ago
  Gold, in the end, is a physical, shiny metal that people find aesthetically appealing and there's a limited amount of it out there. For thousands of years people have desired gold things and valued it. Sure, people could collectively decide that gold isn't valuable and that certainly happens to some extent as the commodity markets fluctuate, but in general when you get to the bottom of the turtle stack, gold has more fundamental value than most other forms of money.
  - mekster 4y ago
    Why not mention about its industrial use?
- anon291 4y ago
  Gold is backed by the fact that no one can replicate supernovae which are required to manufacture it, so it must be found. Thus it is scarce. It has several industrial uses and is a source of vanity for many humans, which has inherent value, as humans naturally take pride in adorning themselves. Gold has proven itself over millenia, since before prehistory really, to have value on the open markets. In fact, all rocks do. Gold is hardly unique in this matter. Rocks all have value, but some rocks are rarer than others, thus have more value than others. For example, even sand has value despite its ubiquity. Many companies make their entire profit from collecting and selling sand. So, in sum, gold can be used in the manufacture of durable, long-lasting goods. It's crucial for certain electronics. There's a constant demand for it for turning into goods. Other rocks can be used for other things, like ground covering, structural support, etc. Bitcoin can be used for?... ? ... ? ... ? nothing
- bewaretheirs 4y ago
  Gold bugs. But even without them its value would not go to zero; ignoring the purely aesthetic uses (jewelry, decorations, etc.,) elemental gold has a wide variety of uses including corrosion-resistant electrical contacts, dental fillings, etc.; the James Webb Space Telescope mirrors have a gold coating as it is a good reflector of infrared radiation.
  - TacticalCoder 4y ago
    > Gold bugs. It's not just gold bugs: central banks worldwide are stockpiling on gold at record levels lately. https://www.reuters.com/markets/commodities/record-central-bank-buying-lifts-global-gold-demand-wgc-says-2022-11-01/ https://www.reuters.com/markets/commodities/record-central-b...
- dehrmann 4y ago
  Copper. If the world decided it didn't like gold for jewelry and storing wealth, it would displace copper in electrical applications where you can take a slight conductivity hit in exchange for it not corroding. It's a huge price difference, but it's something. Bitcoin has no floor.
conductr 4y ago
> The fact that so many people bought into the hype will continue to amaze me for the rest of my life. I'm on about year 10 of this amazement. Even tulip mania only lasted 1-2 years. Crypto keeps inventing new snake oil and is continually able to sell it. It's so odd to me.
- denton-scratch 4y ago
  I'm also amazed that this train is still rolling down the track. I mean, XMR is good for darkmarket transactions; apart from that, and some niche Ethereum games, I find it puzzling. I mean, I don't understand why sane people speculate on an "asset" with zero intrinsic value. Is it because it's easier to acquire Bitcoin than tulip bulbs?
  - compsciphd 4y ago
    that's exactly why. its easier so easier for joe shmoe on the street to invest thereby propping it up. joe shmoe had no ability to invest in tulips. There weren't superbowl ads asking people to invest in tulips
cm2187 4y ago
Me too but I know several financially smart people who acknowledged in private it was a giant bubble of thin air, but they had the trader mentality that it doesn't matter what the real price should be, as long as there is money to be made trading it. As long as they didn't get caught in the end, I don't think they were wrong. By the way, it's not just a lot of second hand GPUs that will come back to the market. A lot of quants too!
- Eisenstein 4y ago
  > As long as they didn't get caught in the end, I don't think they were wrong. Just morally bankrupt.
deleted 4y ago
[deleted]
prirun 4y ago
It still amazes me that people pay for plastic bottles of water! Edit: I obviously mean in the developed world.
- tintor 4y ago
  Because: drinking clean water reduces risk of dying?
- selectodude 4y ago
  Water has utility. In a significant portion of the world, bottled water is one of the only ways you can guarantee that the water is even drinkable.
etherael 4y ago
Back when it actually worked as a decentralised global ledger capable of allowing transactions without trusting a central party it was revolutionary. Then it got hijacked to discard that property and it is indeed of zero value. There are still plenty of other cryptos that actually work, but the market is so stupid, scammy and manipulated, that this hardly matters and btc acts as a giant sink of value sucking all of the air out of the room and suffocating anything else that could actually work. I think until it's dead we're not going to see any change from that.
9864250 4y ago
Cryptocurrencies like Ether are backed by the network's virtual machine. You have to pay Ether to process a transaction on the Ethereum virtual machine and as transactions can do arbitrary computations, Ether is useful for things other than transferring Ether. Cryptocurrencies like Bitcoin don't have that feature, but that just makes them more like fiat currencies. You could argue that fiat currencies are backed by the force the state is willing to use to get its population to pay taxes in the currency, but that's not a stable backing, as the state could decide to accept another currency at any time. Some states do allow for tax payments in other currencies, which means that some fiat currencies have no backing by that mechanism. Some people are also forced to pay in Bitcoin, for example to ransomware, which should have a similar effect in forcing people to use the currency. Ultimately, I don't see why a currency would need backing. There is nothing wrong with a currency gaining value purely from its value and utility as a currency. Many other valuable things such as precious metals and art gain a large part of its value in the same way.
- traveler01 4y ago
  I do love when people response that the USD has value because of the it's "backed" by the government.
- Eisenstein 4y ago
  > There is nothing wrong with a currency gaining value purely from its value and utility as a currency. I mean, the problem with that is twofold: 1. If it has value as a currency then it gaining value incentivizes hoarding of the currency. If it is going to be worth more tomorrow, why spend it? In that case it has failed as a currency since the economy cannot grow without economic activity; specifically currency movement 2. If it only has value because people perceive it to have value (specifically, there is no need to use this currency over any other) then it is all based on faith. At that point a rapid devaluation can be triggered by any number of market actions -- all it takes is a little wavering for a selloff to start and the snowball starts rolling down the hill. This is the reason that crypto cultures can be so toxic -- if you start to question any of it (rock the boat) it is an existential crisis and you get the appropriate response, so no one is willing to question the underlying economics for fear of social repercussions
mekster 4y ago
Didn't know math equation is literally nothing. You may get amazed as many times you need before learning why people find value in it.

i67vw3 4y ago

https://archive.ph/AEaGg https://archive.ph/AEaGg

leidenfrost 4y ago

Does anyone have a link to the unlocked article?

denton-scratch 4y ago
Copy the URL from your browser to the clipboard. Type "archive.ph" into the URL bar. Paste the original URL into the form-field (the cursor is waiting for you). Press [ENTER]. Viola.

hankchinaski 4y ago

Was very eloquently explained by NNT in one of his YouTube videos[0].The price of a security is the value of all present and future cash flows discounted to the present moment. Since the cash flow for crypto is zero, the present value is zero by definition, in mathematical terms. [0] https://youtu.be/XeG0FzPxSh4 https://youtu.be/XeG0FzPxSh4

deleted 4y ago
[deleted]
patentatt 4y ago
But what about all of the real money that low-information retail 'investors' put into the crypto ecosystem as a result of the social media hype? Im not being facetious, isn't there potential future cash flow in the scam?
jonahbenton 4y ago
lol. Now repeat for gold.
- deleted 4y ago
  [deleted]
olalonde 4y ago
Same for USD, EUR, etc.
- Eisenstein 4y ago
  Correct. People aren't going to lend you money based on a collateral of less money. What is your point?
  - olalonde 4y ago
    Just pointing out the flaw in NNT's reasoning. Obviously, USD (and EUR, BTC, CAD, etc.) has value despite lacking a cash flow. Essentially, it's worth something because people believe it's worth something.

japhib 4y ago

"No sane lender would extend credit against assets lacking any underlying collateral." I love this quote. This is the reason I refuse to get involved in crypto.

moolcool 4y ago
What about pictures of monkeys?
seydor 4y ago
Any kind of collateral is useless without a mechanism to guard it and enforce ownership. Bitcoin needs to acquire nukes. In a decentralized way. I know, i know
- arthurcolle 4y ago
  Maybe an AGI that likes to hodl will eventually do this
- rich_sasha 4y ago
  I'll sell you the NFT of one.
xur17 4y ago
> assets lacking any underlying collateral But what does this statement actually mean? What is "underlying collateral"? The US dollar doesn't have any physical assets backing it, but I'm pretty sure most lenders would lend against it.
- Eisenstein 4y ago
  The US dollar is a medium of exchange, not an asset or an investment. You use dollars to buy things, you don't own dollars just to own dollars.
  - rich_sasha 4y ago
    Yes, if you want to hold "dollars" you probably actually buy US bonds with your dollars.

thatguy0900 4y ago

As long as drugs stay illegal and some countries have worse money swings than the crypto does I can't see it being zero. It doesn't need to be high for either of those things, of course, and a stableish low price works fine for both. And you don't need a million random shit coins for either of those use cases so those would be worth 0.

shkkmo 4y ago
> As long as drugs stay illegal and some countries have worse money swings than the crypto does These are both problems that hopefully we will get better at solving. I think even if neither of those things quite goes to zero, there is a minimum combined level of both needed to keep the ecosystem running and secure. There needs to be enough economic activity passing through the system to pay enough miners to keep it running. I also think that if the main usage of crytpocurrencies becomes avoiding unstable currencies, that will itself destablize cryptocurrency prices.
TurningCanadian 4y ago
It needs enough diversity of users to be resilient against a 51% attack. If you don't have that, the value is 0. (You lose the benefit of the distributed ledger and may as well be relying on a central party's database at that point.)
- dcolkitt 4y ago
  Resilience against a 51% attack has nothing to do with a "diversity of users". It simply has to do with the security budget (block rewards and block space fees) being high enough to incentivize honest consensus over reorg attacks.
  - TurningCanadian 4y ago
    the "honest consensus" is the "diversity of users"; users doing the validation at least. Your rewards can be as high as you'd like, but if one party is in control of most of the validation, you're screwed. It's not the number of nodes or what you pay them or anything like that that matters. It's the actual people/entities behind them that matter.

oli5679 4y ago

"If you owned all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it. Because what would I do with it? I’ll have to sell it back to you one way or another. It isn’t going to do anything." Warren Buffet

poszlem 4y ago
And if you owned all the dollar bills?
- dragontamer 4y ago
  Dollar bills are backed by the full faith and credit by the US Government. As long as the US Government decides those have value (IE: forces you to pay taxes denominated in bills), then anyone interacting with the government will value those bills. As a centralized currency, the power flows from the Government. If the US Government loses power, of course dollar bills lose value. But generally speaking, the trust in the dollar is one-and-the-same as trust in the US Government.
  - throwup 4y ago
    It's a myth that taxes are what give currency value. Plenty of currencies needed to pay taxes throughout history have hyperinflated into nothing.
    - dragontamer 4y ago
      Its a myth that printing money causes currency to lose value. There are an infinite Dogecoins and yet the value goes up sometimes.
      - tromp 4y ago
        There are only a finite number ever. The amount of Doge is limited by time. Unlike fiat, it is disinflationary (yearly supply rate goes down toward 0).

outside1234 4y ago

It won't be zero because there are money laundering, corruption, and "escaping money from China" use cases, but it will be much lower. Well, while it is still legal that is.

emsy 4y ago

Mainstream media’s final reputation could be zero.

nathanaldensr 4y ago
Why not both?

mcbuilder 4y ago

This isn't true, I'll gladly pay $3 a bitcoin just to get back to my old stash of 10 BTC. Therefore, it's never going to be zero.

pessimizer 4y ago
You just said it goes to zero after you get to 10 BTC, I assume for OCD reasons that are not going to be common. I like old stock certificates with pretty designs or interesting histories; there's almost no situation where I wouldn't pay a couple of dollars for one. Being pretty pieces of paper, I imagine they have even more appeal than a number in a distributed database. So that sets a nice theoretical ceiling for bitcoin's theoretical floor.
- dehrmann 4y ago
  It's worse for bitcoin because old stock certificates look kinda cool on a wall. With bitcoin, are you gonna frame your wallet address?
- mcbuilder 4y ago
  Which I why I think a deflationary "currency" like bitcoin is more like stock certificates, or, my favorite comparison, the old stone money used on Easter Island. There is just this stupid argument that goes, either bitcoin is worth infinity or zero, which clearly isn't true. At some point nerds like us will start to collect it. Clearly the thing that bitcoin sucks at right now is a currency, the algorithms don't scale in practice. Paradoxically, it was much better as a currency when it was cheap and niche. It seems to have its own roller coaster dynamics baked in, and the only way to stop is for collectively everyone to get off, and what's the fun in that?
sschueller 4y ago
And I'll pay you $10 per BTC.

kennu 4y ago

On the Ethereum side, the cryptocurrency is used as an incentive for nodes to operate the global EVM (Ethereum Virtual Machine), which processes smart contract transactions. So one could argue that as long as the transactions have at least some value to some application, the cryptocurrency will also have non-zero value.

gruez 4y ago
>On the Ethereum side, the cryptocurrency is used as an incentive for nodes to operate the global EVM (Ethereum Virtual Machine), which processes smart contract transactions. You don't get paid for running a node unless you're also staking.
- dcolkitt 4y ago
  Technically the original post should s/node/validator/. But besides that minor quibble it's still essentially correct.

olalonde 4y ago

"Crypto" was in the multi-billion dollar market cap before any of the businesses/tokens mentioned in this article even existed, just saying.

DickingAround 4y ago

The constant combining of altcoins and bitcoin is not helpful. There's a use case that is 'money' in which the value of the object used as money is always deeply disconnected from the underlying asset value (i.e. we never trade factories and cars as money. We still don't even trade stocks as money). Bitcoin is attacking that use case head on. It has features like scarcity, no ability to stop a transaction, etc. as features over other forms of money. Then there's a huge list of altcoins promising things that are different, are not actually different or helpful, and are really just still targeting being a money like bitcoin or the dollar except the founder of the new currency wants to be the one that centrally controls it. Thus 'crypto' is not a helpful space, but bitcoin could be.

selectodude 4y ago
>It has features like scarcity, no ability to stop a transaction, etc. as features over other forms of money. Those absolutely are not features of Bitcoin.
- DickingAround 4y ago
  In what way? There's a limited number of bitcoin (I get there's unlimited altcoins, but they're easy to distinguish). I've never heard of anyone being able to censor a transaction on the network (hard to imagine how you can unless you can cut off internet access). I'm making an honest try to understand how it could fail either of those, but I don't see it and need to be shown a bit more directly what you're claiming here.
  - selectodude 4y ago
    That they simply aren’t features. Deflation is really really bad and I like being able to stop a transaction if there’s a mistake or an issue. Those are features of normal currency that Bitcoin lacks.
dcolkitt 4y ago
The problem with Bitcoin is that the current economics of the network are long-term unsustainable. The current incentive for miners to secure consensus are block rewards. But block rewards halve every four years (which is how Bitcoin enables the hardcopy of 21 million BTC). That means that over the long-term the incentive for honest consensus tends towards zero. By 2032, the cost of 51% attacking the network for one day will be less than 0.1% of the outstanding market cap. The long-term theoretical solution is to replace block rewards with transaction fees, however because Bitcoin is not a Turing complete smart contract platform the demand for block space is essentially a rounding error.

jl6 4y ago

The final price will only go to zero if someone finds an unpatchable exploit that allows infinite minting of coins. Otherwise, there will probably always be some nonzero epsilon of novelty value in owning one. (Some might argue we are already at that stage and the epsilon just happens to be absurdly large at the moment).

mekster 4y ago
I only think it has reached its mass adoption when people realize its usage as store of value that is decoupled from any other third party influence instead of as a risk asset that is linked to Nasdaq.

Joeri 4y ago

Isn’t crypto basically a collectible? People buy it in the hope that somebody in the future will pay more for it, but by itself it is pretty much useless. To me it seems no different from buying baseball cards. And just like saying the final value of those baseball cards may be zero, the final value of crypto may be zero, but I doubt it will have anything to do with collateral as baseball cards have no collateral either.

mekster 4y ago
It's similar except you or the manufacturer can't cheat to duplicate a card or the manufacturer can't suddenly produce 10x more cards because the cards sell well. So, inherently they have different purpose.
- skinnymuch 4y ago
  Are there examples of high priced collectibles suffering significantly for either of the problems you brought up? Also, crypto has downsides.
  - aldarisbm 4y ago
    magic the gathering cards

thinkmcfly 4y ago

jusonchan81 4y ago

Any idea why this thread is flagged? Is it because most of the comments are just back and forth between who likes and dislikes this?

dpkirchner 4y ago
It's typical low-quality bait from the WSJ's opinions page. It probably won't generate useful discussion.

bayesian_horse 4y ago

It's not though. Some cryptocurrencies are still perfectly valid money laundering devices, and that means they carry transient but quite persistent value.

dehrmann 4y ago

Probably need to start adding dates in the title of crypto links.

rosnd 4y ago

No it couldn't, darknet markets and others will always be generating enough economic activity to keep the prices nonzero.