What I meant was, it seems like everyone thinks everyone can become a millionare.
In terms of crypto where will all the actual money come from to pay out all these “number go up” paper wins people think they have?
The answer is simple …
They need it to come from you.
There simply isn’t an infinite supply of greater fools to pay out everyone on earth.
When you run out fools to sell to, the scheme collapses.
And companies buying crypto are gambling just like anyone else. This is a really terrible form of investment because unlike some stocks, bonds, or real estate there’s no fundamental reason why your tokens should be worth more or less tomorrow because they’re not tied to any economic activity in the real world. They are only tied to hype and fomo. Just like a certain gamestop stock that went crazy.
But yeah you can make a buck on it, just as you can make a buck on going to a casino but arguing that its a good safe investment is foolish.
The point is not to make everybody a millionaire, though, but to provide an alternative and better store of value and later on an alternative and better currency. The value is based on supply and demand. If everybody wants bitcoins and nobody wants euros the euro will be worthless. If everybody wants euros and nobody wants bitcoins then bitcoins will be worthless.
If everybody wants bitcoins and nobody wants euros then you won’t have to get payed out. You simply buy your stuff with bitcoins.
Same with dollars. If nobody wants euros and everybody wants dollars then your euros become worthless and you will have to buy your stuff with dollars. No need to pay out.
There is no fundamental reason why stocks, bonds or real estate should be worth more or less tomorrow either. The only reason they will be worth more or less is because supply and demand is going to change.
One thing is for sure, though. Keeping large sums in cash will guarantee that you lose money due to inflation.
That is the reason why large companies hoard real estate. They don’t use it. They just use it as a hedge against inflation. Of course, in contrast to hoarding bitcoins, that is bad for people who are looking for affordable housing.
It’s not because you used nice words like ‘I’m legit curious’ that your post was any less aggressive than mine, I just didn’t coat mine in a fake smile.
My main problem with how cryptocurrencies work is that they have been designed, from the ground up, to be energy intensive. It’s literally baked in to how they function. If they made it easy and cheap to mine then everybody would do it.
Saying we shouldn’t condemn stuff like this simply because other industries use large amount of energy or are environmentally damaging is laughable. It’s a bit like saying you shouldn’t be able to express concern about things like the plight of refugees fleeing war-torn regions of the world unless you are willing to shelter a family of them in your spare room.
Cryptocurrencies are a solution to a problem that for most people does not exist. They are used by a tiny fraction of the world’s population. 1 million bitcoin addresses are active daily. That’s 0.012% of the population of the Earth. They are using 130 Terawatt-hours of energy (which is 0.6% of global electricity consumption). That’s just one cryptocurrency out of many. Other things quoted as using large amounts of energy are used by billions and billions of people all over the world.
Other industries might be wasteful but they have incentives to reduce their energy costs. Reduce their energy consumption and they become more efficient and increase their profits. Cryptomining isn’t like that. A reduction in costs means it becomes easier to do. Which means more people do it. Which is a problem when you have basically designed a system whereby the more electricity you burn the more “lottery tickets” you get
Perhaps, but one thing bitcoin tries to replace is gold. And gold mining is gazillion times more damaging than bitcoin. So if gold mining is reduced then bitcoin is preferable regarding the environment.
Same for banking. If you can get rid of the parts of banks that bitcoin is trying to replace then you will save a whole bunch of things such as buildings and their heating/cooling, storage of money and its transportation to ATMs, production of money and so on.
So even if bitcoin spends energy it might be less than the thing it is trying to replace.
I dont understand, you are comparing fiat money to bitcoin, they are two different things. Bitcoin is a speculative commodity, like gold/silver (but have even less real world application), not a currency.
People buy bitcoin in hopes that the numbers will go up, so it can be redeemed for fiat. This is 99% of consumer behavior.
If Apple does well as a company delivering good products, the stocks go up because they showed results, and gives trust that it will continue to be a successful company that will grow. That is value that is understood and agreed on, while bitcoins value is based on that more people will buy in to the cult, it which is far more speculative/gamble
What i meant with housing is that, its easy to see the supply & demand which are affected by the world economy and politics etc (and i agree it sucks companies/rich people buy them up).
One thing is for sure, though. A decentralized world is a utopian libertarian nightmare
Bitcoin is presently a store of value or commodity and strives to be a currency in the future.
So, the commodity part of bitcoin is like gold. It acts as a store of value. Just like gold. Gold is only worth what gold is worth because people says so. The industrial application is not responsible for the price of gold.
The price of stock does not go up because Apple did good stuff. It goes up because people believe that Apple will continue to make good stuff and believe that other people also believe this.
The price of bitcoin goes up because people believe that bitcoin will continue to be used as a store of value and perhaps also as a currency in the future. Or perhaps as smart contracts. These are the “fundamental” values of bitcoin an other crypto currencies. It has actual use cases and can be useful for people. Just like an Apple smart phone.
Store of value is something useful. Exchange of value is something useful. Smart contracts are useful. Perhaps not to you personally but that does not matter.
Of course there are also people only driven by speculation but I’d say most people buying apple stock don’t do that just because they want to support Apple and help them succeed. And that’s fine.
Regarding the housing:
Perhaps if we could separate “store of value” from “basic need” that would be a good thing.
Yes, probably. So better not decentralize everything.
Gold is only worth what gold is worth because people says so. The industrial application is not responsible for the price of gold.
I would disagree. The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry. So even if from one moment do the other no one would believe in gold as an investment anymore, it still would have a certain value.
I guess at least 20% of the worlds population use gold in some way on a daily basis. Be it in a computer or a car or just jewelry. Is it bad for the environment? Sure, but at least its value is not rooted in its energy consumption.
Same with stocks. The trust in the value of e.g. Apple stocks has its root in their power of innovation, the quality of their products and their monopolies in various fields. And if it was not for that, there would still be some value in all the physical stuff the company owns.
With Bitcoin you have about 100% of its value only in the heads of a small percentage of the worlds population. It is a ponzi scheme, and a very destructive one. Some people started it by wasting energy and declaring that the proof of the wasted energy (the coin) has a certain value.
It is like trading payed energy bills.
I personally would not care at all, but there is a little problem called “global warming”…
So 10% of real utility. It is only used for jewelry because people think it is valuable.
the value of bitcoin has its root in its utilities and its existing network.
But if you do not accept that it can be useful then of course you will arrive at your conclusion.
I never understood the ponzi scheme thing, though. There are no similarities at all.
I meant to say mining isn’t the only high expense we could do without, not trying to defend it. Err, but it came out really weird, my bad.
And I’d rather have Pixar running a monster renderer 24/7 than any blockchain whatsoever, no contest! I thought it was worth pointing out anyhoo since the issue was abundant use of electricity *shrugs*
But you are right about other industries being capable of increasing profits by using less power, very much agree. My perspective is pretty skewed here; what I’ve seen for myself is reducing costs through automation and layoffs. Or crunching. I’ve had to put together badly optimized code because of a tight deadline and I really got burnt out from that. I’m sure the waste of energy for the stuff I worked on is not that serious as it’d used in something like an office rig or cellphone (it was mostly accounting and productivity apps). If the machines running that code jump to a 100% because I messed up somewhere it won’t do all that much. But whatever runs on one of those thousands of cores behemoths? Oof. I’m not even sure I want to think about it. And I’m glad I don’t have to c:
I apologize, that was not my intention. Reading back I can see where I sound like that. I’m sorry. I just want to talk to people and I’m not good at it.
The potential concerns of the environment pales in comparison to people spending big money on ‘products’ that are now vanishing (because servers for NFT’s apparently don’t last too long).
I can see why Ton would not want the money for ethical reasons, is Andrew aware of the problem (if not only to make sure he doesn’t wind up in jail for running a scam operation)?
I never understood the ponzi scheme thing, though. There are no similarities at all.
This is something Bernie Madoff would have said if I called his system a Ponzi scheme. It is a vague comparison, I give you that.
I like to call it a ponzi scheme because there are striking similarities:
A group of people invest in something. (Money or energy, bought with money).
The commodity has ZERO value in it self because it represents nothing more than wasted energy that is already gone for good.
In order to not loose their investment 100%, they need to bring new people into their scheme by inventing use cases for it.
Charles Ponzi also was convinced that his system can create real value, but in the end…
Maybe blockchains have good use cases, I can agree to that.
But trying to create value by wasting energy is not a good use case.
Again, I could not care less if crypto currencies would not affect us all with their impact on climate, environment and even economy (have you tried to buy a graphics card recently?).
Also I think it has just began and the bubble is yet to grow into a much much bigger monster until it finally bursts.
And I am writing this not to convince you – I know I can’t –, so I’m out. I wish you all the best.
You realize they are hotter then ever? The amount of NFTs selling and buying are still going strong, if not stronger.
NFTs are launching on all blockchains are exploding, not just ETH.
Not sure if donuts NFT will sell, but heck people are selling digital 2D rock art, basic one at that for millions, google it.
Every artist needs to have some exposure to NFT, they are going to be here indefinitely, same with crypto currency, because the other option is endless fiat money printing
I hope Andrew mints the donut NFT on Cardano, its cheaper then ETH.
