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You are so close All current crypto"currencies" which use transaction fees (which is practically all of them) are negative sum games and thus are scams. This

by chx 4y ago

You are so close All current crypto"currencies" which use transaction fees (which is practically all of them) are negative sum games and thus are scams. This is so simple and people waste billions on not understanding it.

fshbbdssbbgdd 4y ago
Money in general has transaction costs - even cash decays every time it changes hands. Is it all a negative sum game? It seems that in order to make that claim, you need to make some comparison between the value produced and the costs incurred. IMO, crypto is pretty scammy but there is some value (note that crypto is most popular in countries with unstable economies and corrupt governments). A crypto that’s optimized for lower transaction fees could be net positive.
- supernewton 4y ago
  Money in general are traded for productive goods and services, not other kinds of money. That's why it's not negative sum. If you had a bunch of people trading between USD and GBP amd EUR and doing nothing else, that would be negative sum and look an awful like what people do with cryptocurrency.
  - Yiin 4y ago
    I'm probably missing some critical part in my comparison, but crypto trading sounds awful lot like trading in stock markets.
    - JumpCrisscross 4y ago
      > missing some critical part in my comparison Companies can sell stock to fund useful activity.
      - landemva 4y ago
        The past decade companies have sold debt to raise funds to repurchase stock to drive up stock price so senior management can meet their KPI and get a larger bonus. This is useful activity for society because senior management deserves more money and they work really hard to earn it. /s
    - SturgeonsLaw 4y ago
      The difference is that stock, at its core, represents a claim on a portion of the future profits of a business. The business is out there building widgets, supplying people with a service, extracting raw materials, whatever. Most coins are just hollow marketing gimmicks designed to move money around. Basically all the DeFi ecosystem boils down to trading one coin for another coin, there is no productive work at the core generating value.
      - einpoklum 4y ago
        > The difference is that stock, at its core, represents a claim on a portion of the future profits of a business. Wow, that's so real, concrete and down-to-earth :-) > The business is out there building widgets supplying people with a service Or perhaps not doing these things, but making performative presentations on how its groundbreaking unproven innovation is certain to bring in a lot of money in the future. Or a mix of the former and the latter. > Most coins are just hollow marketing gimmicks designed to move money around. One could argue that some, or many, publicly-traded companies - when one considers the listed trade value of their stock - are 10% real business and 90% hollow marketing gimmicks serving as parking space for speculators' money.
      - wruza 4y ago
        This is a textbook distinction, but when I look at my nasdaq and crypto candles, they all have the same 3-year profile, crypto just feels like it’s 1.5x leverage but that’s it. If stock market is all about production and long-term investment, then it shouldn’t bounce up and down with fear waves. The sibling commenter is right, just from the charts it seems at least 66% of “investors” are short-term players and no forward-looking company will (to my limited understanding) build a long-term strategy around these volumes. I mean, they will, but that only confirms the idea?
        nl 4y ago
        Of course stocks should jump around a lot too. The stock price represents likelihood of future earnings. That's going to be influenced by a bunch of things not in financial reporting.
    - capitol_ 4y ago
      You are missing the fact that stocks pays dividends, because stocks represent a piece of ownership of companies that generate profits.
    - nafey 4y ago
      Stocks give you share of ownership over the cashflow that a company generates from its business. Theoretically, that is where the value of stock comes from. Crypto does not generate any cashflows (due to selling no goods or services). So crypto is not like stocks. If anything, it is more like commodities than stocks.
  - clay-dreidels 4y ago
  - digitaltrees 4y ago
    Most currency exchange is to facilitate an international transaction of goods or services so there is actually value in enabling commerce.
    - worik 4y ago
      No it is not
  - worik 4y ago
    > If you had a bunch of people trading between USD and GBP amd EUR and doing nothing else, that would be negative sum and look an awful like what people do with cryptocurrency. That does happen. About a decade ago I dug into FX flows. The trade in USD was eighty times trade flows. FX is a nasty business, huge profits to be made, profits that can be multiplied by the slightest bit of undetectable (now the traders know how to cover their communication traces) fraud. Cryptocurrency is pure scam, true. But, in my educated opinion, the international financial system is dominated at the highest levels by out and out crooks. The state of international finance, how it works against its consumers and saps the life out of the very economic activity it fosters (economic activity at the level we have would not be possible without sophisticated financial systems) is a huge incentive for developing crypto. I just wish that there was a better solution (even a viable solution) than crypto Complex social and economic problems do not have simple easy answers.
    - godzillabrennus 4y ago
      Bingo. Michael Milken even got a presidential pardon,
- JumpCrisscross 4y ago
  > cash decays every time it changes hands. Is it all a negative sum game Currency trading is negative sum. (Zero sum less friction.) So are most derivatives. One must encapsulate broader effects to find a net gain. Incorporating crypto’s benefit to the poor is such an attempt.
  - bragr 4y ago
    >Incorporating crypto’s benefit to the poor is such an attempt. What benefit is that? Not speculative, maybe in the future benefit, but current, concrete, demonstrable benefit.
    - JumpCrisscross 4y ago
      > What benefit is that? I don’t see one, but that’s a separate discussion. The narrow one is that every crypto-trader’s gain comes at another’s loss. Cash in and out of the system is entirely conserved across all timelines.
- munificent 4y ago
  > note that crypto is most popular in countries with unstable economies and corrupt governments "Possibly marginally less bad than an unstable fiat currency propped up by a corrupt regime" is not high praise.
  - neoromantique 4y ago
    Easy to say that when you have a luxury of a relatively stable fiat currency by a less corrupt regime to fall back to.
ineedasername 4y ago
If they’re negative sum then so are traditional payment processors that charge transaction fees, which is not an argument I’d be prepared to make. Unless you see something fundamentally different about the nature of those fees in crypto?
- chx 4y ago
  It's because you can transfer money without paying fees, those fees are for convenience. You can not transfer crypto without paying fees. Also, notably most banks will do SEPA transfers for free. There's nothing inherent in money which would make the action of moving it force giving a fraction of it to some other entity. Indeed, the only disagreement I am aware of is whether the scam being run by multiple entities ("miners") is a significant difference to a Ponzi and so it's a new kind of scam (suggested name: "Nakamoto scheme") or the difference is aking to an LCD vs CRT TV, nothing significant and it's just a Ponzi. But the fact it is a scam is an indisputable and rather simple mathematical fact. To quote Preston Byrne who coined the phrase Nakamoto scheme: > The Nakamoto Scheme is an automated hybrid of a Ponzi scheme and a pyramid scheme which has, from the perspective of operating a criminal enterprise, the strengths of both and (currently) the weaknesses of neither.
  - valzam 4y ago
    Someone clearly has to pay to keep to SEPA infrastructure going, be it the banks crosssubsizing from profit on lending or taxes funding organisations in EU level. Crypto fees are just much more straightforward. You pay a small amount to use the network and there are no strings attached, no hidden subsidy. In theory at least that is because most networks are still funded by inflationary payouts. But no one is forcing you to hold anything more than you need to pay for fees in the crypto currency at any moment in time. Just like with most things crypto has been widely oversold and 99% of coins are basically scammy penny stocks. No one disputes this. But as someone who has moved internationally quite a bit I would LOVE for all my ETFs and bank accounts to live on an open Blockchain so I don't have to worry about migrating everything when I move to a new country. Even if I don't fully custody them, moving USDC through Ethereum or Solana is just 100x better than any international wire transfer. Stocks are basically stuck in whatever country you bought them in, I don't even want to know how difficult it would be to move my depot from one country to another. You'd have to sell everything.
eftychis 4y ago
You know ACH transfers, have transaction fees right? They are just hidden to the public.
- chx 4y ago
  answered that already https://news.ycombinator.com/item?id=34031846 https://news.ycombinator.com/item?id=34031846
landemva 4y ago
Email does not have transaction fees, so there is enormous spam. Paying for a service means the service has value.
- godzillabrennus 4y ago
  Junk mail via the postal service has entered the conversation…
tim333 4y ago
That assumes that at the end of the game your bitcoins etc do not have a market value which does not accord with reality. For better or worse people value them like collectibles.

by chx 4y ago

fshbbdssbbgdd 4y ago

Money in general has transaction costs - even cash decays every time it changes hands. Is it all a negative sum game? It seems that in order to make that claim, you need to make some comparison between the value produced and the costs incurred. IMO, crypto is pretty scammy but there is some value (note that crypto is most popular in countries with unstable economies and corrupt governments). A crypto that’s optimized for lower transaction fees could be net positive.

supernewton 4y ago
Money in general are traded for productive goods and services, not other kinds of money. That's why it's not negative sum. If you had a bunch of people trading between USD and GBP amd EUR and doing nothing else, that would be negative sum and look an awful like what people do with cryptocurrency.
- Yiin 4y ago
  I'm probably missing some critical part in my comparison, but crypto trading sounds awful lot like trading in stock markets.
  - JumpCrisscross 4y ago
    > missing some critical part in my comparison Companies can sell stock to fund useful activity.
    - landemva 4y ago
      The past decade companies have sold debt to raise funds to repurchase stock to drive up stock price so senior management can meet their KPI and get a larger bonus. This is useful activity for society because senior management deserves more money and they work really hard to earn it. /s
  - SturgeonsLaw 4y ago
    The difference is that stock, at its core, represents a claim on a portion of the future profits of a business. The business is out there building widgets, supplying people with a service, extracting raw materials, whatever. Most coins are just hollow marketing gimmicks designed to move money around. Basically all the DeFi ecosystem boils down to trading one coin for another coin, there is no productive work at the core generating value.
    - einpoklum 4y ago
      > The difference is that stock, at its core, represents a claim on a portion of the future profits of a business. Wow, that's so real, concrete and down-to-earth :-) > The business is out there building widgets supplying people with a service Or perhaps not doing these things, but making performative presentations on how its groundbreaking unproven innovation is certain to bring in a lot of money in the future. Or a mix of the former and the latter. > Most coins are just hollow marketing gimmicks designed to move money around. One could argue that some, or many, publicly-traded companies - when one considers the listed trade value of their stock - are 10% real business and 90% hollow marketing gimmicks serving as parking space for speculators' money.
    - wruza 4y ago
      This is a textbook distinction, but when I look at my nasdaq and crypto candles, they all have the same 3-year profile, crypto just feels like it’s 1.5x leverage but that’s it. If stock market is all about production and long-term investment, then it shouldn’t bounce up and down with fear waves. The sibling commenter is right, just from the charts it seems at least 66% of “investors” are short-term players and no forward-looking company will (to my limited understanding) build a long-term strategy around these volumes. I mean, they will, but that only confirms the idea?
      - nl 4y ago
        Of course stocks should jump around a lot too. The stock price represents likelihood of future earnings. That's going to be influenced by a bunch of things not in financial reporting.
  - capitol_ 4y ago
    You are missing the fact that stocks pays dividends, because stocks represent a piece of ownership of companies that generate profits.
  - nafey 4y ago
    Stocks give you share of ownership over the cashflow that a company generates from its business. Theoretically, that is where the value of stock comes from. Crypto does not generate any cashflows (due to selling no goods or services). So crypto is not like stocks. If anything, it is more like commodities than stocks.
- clay-dreidels 4y ago
- digitaltrees 4y ago
  Most currency exchange is to facilitate an international transaction of goods or services so there is actually value in enabling commerce.
  - worik 4y ago
    No it is not
- worik 4y ago
  > If you had a bunch of people trading between USD and GBP amd EUR and doing nothing else, that would be negative sum and look an awful like what people do with cryptocurrency. That does happen. About a decade ago I dug into FX flows. The trade in USD was eighty times trade flows. FX is a nasty business, huge profits to be made, profits that can be multiplied by the slightest bit of undetectable (now the traders know how to cover their communication traces) fraud. Cryptocurrency is pure scam, true. But, in my educated opinion, the international financial system is dominated at the highest levels by out and out crooks. The state of international finance, how it works against its consumers and saps the life out of the very economic activity it fosters (economic activity at the level we have would not be possible without sophisticated financial systems) is a huge incentive for developing crypto. I just wish that there was a better solution (even a viable solution) than crypto Complex social and economic problems do not have simple easy answers.
  - godzillabrennus 4y ago
    Bingo. Michael Milken even got a presidential pardon,
JumpCrisscross 4y ago
> cash decays every time it changes hands. Is it all a negative sum game Currency trading is negative sum. (Zero sum less friction.) So are most derivatives. One must encapsulate broader effects to find a net gain. Incorporating crypto’s benefit to the poor is such an attempt.
- bragr 4y ago
  >Incorporating crypto’s benefit to the poor is such an attempt. What benefit is that? Not speculative, maybe in the future benefit, but current, concrete, demonstrable benefit.
  - JumpCrisscross 4y ago
    > What benefit is that? I don’t see one, but that’s a separate discussion. The narrow one is that every crypto-trader’s gain comes at another’s loss. Cash in and out of the system is entirely conserved across all timelines.
munificent 4y ago
> note that crypto is most popular in countries with unstable economies and corrupt governments "Possibly marginally less bad than an unstable fiat currency propped up by a corrupt regime" is not high praise.
- neoromantique 4y ago
  Easy to say that when you have a luxury of a relatively stable fiat currency by a less corrupt regime to fall back to.

ineedasername 4y ago

If they’re negative sum then so are traditional payment processors that charge transaction fees, which is not an argument I’d be prepared to make. Unless you see something fundamentally different about the nature of those fees in crypto?

chx 4y ago
It's because you can transfer money without paying fees, those fees are for convenience. You can not transfer crypto without paying fees. Also, notably most banks will do SEPA transfers for free. There's nothing inherent in money which would make the action of moving it force giving a fraction of it to some other entity. Indeed, the only disagreement I am aware of is whether the scam being run by multiple entities ("miners") is a significant difference to a Ponzi and so it's a new kind of scam (suggested name: "Nakamoto scheme") or the difference is aking to an LCD vs CRT TV, nothing significant and it's just a Ponzi. But the fact it is a scam is an indisputable and rather simple mathematical fact. To quote Preston Byrne who coined the phrase Nakamoto scheme: > The Nakamoto Scheme is an automated hybrid of a Ponzi scheme and a pyramid scheme which has, from the perspective of operating a criminal enterprise, the strengths of both and (currently) the weaknesses of neither.
- valzam 4y ago
  Someone clearly has to pay to keep to SEPA infrastructure going, be it the banks crosssubsizing from profit on lending or taxes funding organisations in EU level. Crypto fees are just much more straightforward. You pay a small amount to use the network and there are no strings attached, no hidden subsidy. In theory at least that is because most networks are still funded by inflationary payouts. But no one is forcing you to hold anything more than you need to pay for fees in the crypto currency at any moment in time. Just like with most things crypto has been widely oversold and 99% of coins are basically scammy penny stocks. No one disputes this. But as someone who has moved internationally quite a bit I would LOVE for all my ETFs and bank accounts to live on an open Blockchain so I don't have to worry about migrating everything when I move to a new country. Even if I don't fully custody them, moving USDC through Ethereum or Solana is just 100x better than any international wire transfer. Stocks are basically stuck in whatever country you bought them in, I don't even want to know how difficult it would be to move my depot from one country to another. You'd have to sell everything.

eftychis 4y ago

You know ACH transfers, have transaction fees right? They are just hidden to the public.

chx 4y ago
answered that already https://news.ycombinator.com/item?id=34031846 https://news.ycombinator.com/item?id=34031846

landemva 4y ago

Email does not have transaction fees, so there is enormous spam. Paying for a service means the service has value.

godzillabrennus 4y ago
Junk mail via the postal service has entered the conversation…

tim333 4y ago

That assumes that at the end of the game your bitcoins etc do not have a market value which does not accord with reality. For better or worse people value them like collectibles.