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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 th

by 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.

by 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.