4 ms·

So you are saying it's the equivalent of a blank piece of paper with my signature on it. I sell it to you for $100 and you buy it because you expect to sell it

by litoE 2y ago

So you are saying it's the equivalent of a blank piece of paper with my signature on it. I sell it to you for $100 and you buy it because you expect to sell it to someone else for $200. Unless of course I sign a second piece of paper and sell it to her for $100. Is that all there is? There has to be more. The market cap is in the billions.

throwaway315314 2y ago
When the project is initially made, the rules of supply are determined, in the case of many, a large portion of the supply is given to the creator for free, and they can use their notoriety to attract attention to the project, which they then offload to other people. From there, for the retail "investors", they are basically playing a game of hot potato, where people are balancing maximizing profits of price increases from supply being sold to increasingly greater fools, with the risk of holding it when it blows up and dumps and losing it all.
swatcoder 2y ago
That's almost all there is to it. The other thing they do is provide a way for someone to signal that they contributed to the issuer's wealth without triggering existing safeguards around transparency, bribery, etc
gxcjj6 2y ago
Worth looking up the story of John Law. He noticed interest rates at banks dropped when gold and silver ships from the Americas appeared on the horizon of European ports. Cause it meant money supply was going to increase in the market. Leading to more trade > manufacturing > jobs. So he asked the question why wait for the ships? Lets just print IOUs on paper and generate all this economic activity. Convinced the king and everyone has been doing it since. Only problem is if IOUs are printed faster than goods arrive in the market we get Inflation or even Hyperinflation. People spend more and more, to buy less and less causing all kinds of chaos. If printed too slow there are other problems. Kings over printed all the time to pay off debts inccured in maintaining armies, building palaces or whatever. Which leads to people ditching the currency for gold or something else, panic, bank run, bank failure, king toppled etc On the flip side, industrial revolution, Tech disruption caused goods to arrive faster in the market faster than money was printed causing them to be sold cheaper than produced. So we end up with Central Banks given the job of tracking inflation and increasing or decreasing the money supply to keep things stable.

by litoE 2y ago

throwaway315314 2y ago

When the project is initially made, the rules of supply are determined, in the case of many, a large portion of the supply is given to the creator for free, and they can use their notoriety to attract attention to the project, which they then offload to other people. From there, for the retail "investors", they are basically playing a game of hot potato, where people are balancing maximizing profits of price increases from supply being sold to increasingly greater fools, with the risk of holding it when it blows up and dumps and losing it all.

swatcoder 2y ago

That's almost all there is to it. The other thing they do is provide a way for someone to signal that they contributed to the issuer's wealth without triggering existing safeguards around transparency, bribery, etc

gxcjj6 2y ago

Worth looking up the story of John Law. He noticed interest rates at banks dropped when gold and silver ships from the Americas appeared on the horizon of European ports. Cause it meant money supply was going to increase in the market. Leading to more trade > manufacturing > jobs. So he asked the question why wait for the ships? Lets just print IOUs on paper and generate all this economic activity. Convinced the king and everyone has been doing it since. Only problem is if IOUs are printed faster than goods arrive in the market we get Inflation or even Hyperinflation. People spend more and more, to buy less and less causing all kinds of chaos. If printed too slow there are other problems. Kings over printed all the time to pay off debts inccured in maintaining armies, building palaces or whatever. Which leads to people ditching the currency for gold or something else, panic, bank run, bank failure, king toppled etc On the flip side, industrial revolution, Tech disruption caused goods to arrive faster in the market faster than money was printed causing them to be sold cheaper than produced. So we end up with Central Banks given the job of tracking inflation and increasing or decreasing the money supply to keep things stable.