5 ms·

Market cap does not equal value... Market cap does not equal value... Market cap does not equal value...

by strgrd 2y ago

Terr_ 2y ago
"Dude, tulips literally cannot go down."
- kjksf 2y ago
  I can create (grow) as many tulips as I want. Can you create as many bitcoins as you want?
  - Terr_ 2y ago
    It's a satirical reference to a historical event, where the speculative bubble kept going up... Until it didn't. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
    - desumeku 2y ago
      It's important to note that this pretty much never actually happened and is only repeated all the time because of some movie. Source: https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
    - kjksf 2y ago
      I know that, I've read about tulip mania before. To expand on my previous response: econ 101 teaches us that the price of any non-scarce product will converge to the cost of production plus some small profit margin. Tulip is not a scarce asset because you can make more tulips. If cost to produce a tulip is $1 dollar and the price spikes to $100 due to demand outstripping supply, people will be incentivized to grow more tulips. At some point they'll grow enough tulips for supply to meet the demand and they will have to sell tulips at merely small profit. In fact, some will likely have to sell tulips at a loss due to overproduction. Mona Lisa doesn't have this problem. There's only one Mona Lisa so as long as demand goes up, the price goes up. Bitcoin doesn't have this problem. There's a hard limit of 21 million bitcoins that will ever exist. As long as demand for bitcoin goes up, the price goes up.
      - notahacker 2y ago
        > As long as demand for bitcoin goes up, the price goes up. And as long as the demand for Bitcoin goes down, the price goes down. There's nothing magical about scarcity. The amount of Enron stock certificates issued was finite, but I'm not sure buying them would have been a good idea....
  - liveoneggs 2y ago
    I can create as many liveoneggs-coinz as I want(z). Would you invest in some?
    - creaturemachine 2y ago
      Can I be in on the rug-pull?
    - desumeku 2y ago
      Sure, you can go launch it on pump.fun right now. But you still can't create any more bitcoins.
    - kjksf 2y ago
      No, because you can create as many liveoneggs-coinz as you want. But I do invest in Bitcoin because you can't. Bitcoin is scarce, your coinz aren't. Do you get it now?
adeptusluminati 2y ago
"The stock market is not real!" Same logic & vibe. $3 Trillion dollars and 500+ Million people disagree with you.... so far.
- brokencode 2y ago
  Nope, not at all. Stocks represent partial ownership of a company. If you buy all the stock for a company, you own the company. Companies are valuable because they (ideally) make a profit for the owners. Bonds are valuable because the company or government that issues them signs a contract to pay out a certain amount on them. They won’t always do that, but thats why we have rating agencies to help investors understand the risk. The closest equivalent to crypto in traditional assets is probably precious metals and gemstones, though even those typically have some industrial uses to drive demand. Diamonds are a great example of the downside of looking at the market value of something alone. The natural diamond market has been massively disrupted by the rise of artificial diamonds and diamond alternatives.
  - desumeku 2y ago
    Great argument. "I don't believe it has value, so it doesn't." Well, keep telling yourself that. I'm sure you feel just as smart as you did when you dismissed bitcoin at $1,000, and you'll feel just as smart dismissing it at $1,000,000.
    - deleted 2y ago
      [deleted]
    - brokencode 2y ago
      I’m not dismissing it. I’m saying that it’s different than traditional investments since most of the potential uses are still speculative, whereas it’s pretty obvious what value you can get from ownership of a company or a barrel of oil.
kjksf 2y ago
It is, however, strongly correlated with value. Therefore, if you want to argue that any specific asset is overvalued (or has no value at all), the onus is on you to provide an actual argument and not a lazy slogan. What kind of usefulness threshold would Bitcoin have to reach for you to assign value to it? Is 25 million wallet not enough? Given that a wallet is basically a bank account except it cannot be seized by a government, a bank can't stop transfers, a bank employee won't demand to know why you're withdrawing the money and you can access your satoshis anywhere in the world. Is 420 million Bitcoin owners enough? Multiple Bitcoin ETFs? Legalized in multiple countries? Bitcoin ETF becoming the fastest growing ETF ever? Blackrock recommending 1-2% portfolio allocation to Bitcoin? El Salvador stacking on bitcoin? Strategy becoming the best performing stock in recent years with a simple strategy of stacking bitcoin? Other than that, what did Romans ever did for us?
- snailmailstare 2y ago
  > Given that a wallet is basically a bank account except it cannot be seized by a government All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research.. El Salvador is not recommending Bitcoin and found low interest in actual use. Madoff also had a fund that could return very well. Satoshi just has to show up and cash out to ruin his pyramid or push the pyramid entirely to the US tax payers right now. Seems improbable like the chairman of NASDAQ running a scam.. These bizarre scams have no place in a real economy and we have to get rid of 0% interest to kill this garbage.
  - Terr_ 2y ago
    Cypto-currency has vanishingly few good and legitimate use cases, but: > All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research.. TBF, you could say something similar about all stocks remotely related to transportation the moment someone invents a teleporter. I agree there's a difference there, but I don't think it has to do with the vulnerability of the asset.
    - snailmailstare 2y ago

Market cap does not equal value... Market cap does not equal value... Market cap does not equal value...

by strgrd 2y ago

Market cap does not equal value... Market cap does not equal value... Market cap does not equal value...

Terr_ 2y ago

"Dude, tulips literally cannot go down."

kjksf 2y ago
I can create (grow) as many tulips as I want. Can you create as many bitcoins as you want?
- Terr_ 2y ago
  It's a satirical reference to a historical event, where the speculative bubble kept going up... Until it didn't. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
  - desumeku 2y ago
    It's important to note that this pretty much never actually happened and is only repeated all the time because of some movie. Source: https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
  - kjksf 2y ago
    I know that, I've read about tulip mania before. To expand on my previous response: econ 101 teaches us that the price of any non-scarce product will converge to the cost of production plus some small profit margin. Tulip is not a scarce asset because you can make more tulips. If cost to produce a tulip is $1 dollar and the price spikes to $100 due to demand outstripping supply, people will be incentivized to grow more tulips. At some point they'll grow enough tulips for supply to meet the demand and they will have to sell tulips at merely small profit. In fact, some will likely have to sell tulips at a loss due to overproduction. Mona Lisa doesn't have this problem. There's only one Mona Lisa so as long as demand goes up, the price goes up. Bitcoin doesn't have this problem. There's a hard limit of 21 million bitcoins that will ever exist. As long as demand for bitcoin goes up, the price goes up.
    - notahacker 2y ago
      > As long as demand for bitcoin goes up, the price goes up. And as long as the demand for Bitcoin goes down, the price goes down. There's nothing magical about scarcity. The amount of Enron stock certificates issued was finite, but I'm not sure buying them would have been a good idea....
- liveoneggs 2y ago
  I can create as many liveoneggs-coinz as I want(z). Would you invest in some?
  - creaturemachine 2y ago
    Can I be in on the rug-pull?
  - desumeku 2y ago
    Sure, you can go launch it on pump.fun right now. But you still can't create any more bitcoins.
  - kjksf 2y ago
    No, because you can create as many liveoneggs-coinz as you want. But I do invest in Bitcoin because you can't. Bitcoin is scarce, your coinz aren't. Do you get it now?

adeptusluminati 2y ago

"The stock market is not real!" Same logic & vibe. $3 Trillion dollars and 500+ Million people disagree with you.... so far.

brokencode 2y ago
Nope, not at all. Stocks represent partial ownership of a company. If you buy all the stock for a company, you own the company. Companies are valuable because they (ideally) make a profit for the owners. Bonds are valuable because the company or government that issues them signs a contract to pay out a certain amount on them. They won’t always do that, but thats why we have rating agencies to help investors understand the risk. The closest equivalent to crypto in traditional assets is probably precious metals and gemstones, though even those typically have some industrial uses to drive demand. Diamonds are a great example of the downside of looking at the market value of something alone. The natural diamond market has been massively disrupted by the rise of artificial diamonds and diamond alternatives.
- desumeku 2y ago
  Great argument. "I don't believe it has value, so it doesn't." Well, keep telling yourself that. I'm sure you feel just as smart as you did when you dismissed bitcoin at $1,000, and you'll feel just as smart dismissing it at $1,000,000.
  - deleted 2y ago
    [deleted]
  - brokencode 2y ago
    I’m not dismissing it. I’m saying that it’s different than traditional investments since most of the potential uses are still speculative, whereas it’s pretty obvious what value you can get from ownership of a company or a barrel of oil.

kjksf 2y ago

It is, however, strongly correlated with value. Therefore, if you want to argue that any specific asset is overvalued (or has no value at all), the onus is on you to provide an actual argument and not a lazy slogan. What kind of usefulness threshold would Bitcoin have to reach for you to assign value to it? Is 25 million wallet not enough? Given that a wallet is basically a bank account except it cannot be seized by a government, a bank can't stop transfers, a bank employee won't demand to know why you're withdrawing the money and you can access your satoshis anywhere in the world. Is 420 million Bitcoin owners enough? Multiple Bitcoin ETFs? Legalized in multiple countries? Bitcoin ETF becoming the fastest growing ETF ever? Blackrock recommending 1-2% portfolio allocation to Bitcoin? El Salvador stacking on bitcoin? Strategy becoming the best performing stock in recent years with a simple strategy of stacking bitcoin? Other than that, what did Romans ever did for us?

snailmailstare 2y ago
> Given that a wallet is basically a bank account except it cannot be seized by a government All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research.. El Salvador is not recommending Bitcoin and found low interest in actual use. Madoff also had a fund that could return very well. Satoshi just has to show up and cash out to ruin his pyramid or push the pyramid entirely to the US tax payers right now. Seems improbable like the chairman of NASDAQ running a scam.. These bizarre scams have no place in a real economy and we have to get rid of 0% interest to kill this garbage.
- Terr_ 2y ago
  Cypto-currency has vanishingly few good and legitimate use cases, but: > All wallets could become worthless in a weekend if a government makes the wrong stride in quantum research.. TBF, you could say something similar about all stocks remotely related to transportation the moment someone invents a teleporter. I agree there's a difference there, but I don't think it has to do with the vulnerability of the asset.
  - snailmailstare 2y ago