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Comment by narrator | Hacker News Reader

Stocks:

* You buy them because they increase earnings and eventually produce dividends at a very high yield to your initial investment.

* The company can issue shares suppressing the price.

* The company can do stock buybacks, increasing the price.

* Brokers can naked short, suppressing the price.

Fiat currency

* You need it to pay taxes and debts.

* Endless Printing.

Gold

* Bought because of limited supply.

* Supply can be increased by settling futures in fiat, or more gold mining or naked shorting.

* Very few have custody.

Bitcoin

* You buy it not for dividends.

* No naked shorting. No stock buybacks because there is no company. Limited new issuance because code=law.

Bitcoin's use case is a reliable means of calculating reciprocation for value provided that can't be interfered with by 3rd parties to the transaction via dilution unless they expend meaningful effort by mining.

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You missed the part about fiat where you can carry it in your pocket and exchange it for goods nearly instantaneously, which isn't true of the other three.

You can only transfer what's in your pocket instantaneously when the recipient is right next to you. The real value of cash is that it is able to be nearly anonymous. Venmo and other services break this anonymity. The only thing cash has on crypto is stronger anonymity.

No, bitcoin has transparency and every transaction is publicly visible. Privacy is a myth.

You clearly read my comment wrong. I said that cash is better than crypto when it comes to privacy and anonymity, which you are agreeing with, so I am not sure why you prefixed your comment with "No".

I’m surprised Monero is not more popular.

It’s got the positives of Bitcoin, plus it’s as anonymous as cash: simply buying a used book on the street doesn’t welcome the seller to scrutinize your bank account.

I think it is unlikely that crypto in it's current form will become the defacto money. Maybe we'll get the kind of anonymity that monero has or parts of it or corporations that anonymize transactions for a fee( think of it like how a public ip doesn't correspond to an address in a way).

Right but you can make a new crypto out of thin air, you can't do that with gold. There is no value in it because you can just make a new one. It's more fiat than the fiat the kids complain about.

You mean a new cryptocurrency altogether? Sure, but it's not worth squat unless you get tons of people on board. With Bitcoin and Ethereum, they already are.

Basically cryptocurrencies' value are completely related to their network effect.

WhatsApp on another comment was a good parallel/analogy, still it sounds a bit flimsy that value is tied to an amorphous network of people trying to earn money by mining, not sure how comfortable I feel with that as the only incentive for a whole network keeping my "store of value" afloat. Even more when this network can collapse at any time due to artifical technical limitations (in BTC's case the block size and low transactions per second count).

The stock market is more and more detached from the underlying companies that stocks represent, and more and more based on network effect. Most countries currencies are just based off of network effect. Try getting people in Argentina to buy a house using their own currency. Good luck.

Right, but you can make a new WhatsApp out of thin air. There is no value in it because you can just make a new one.

Agreed. It's just fashion. Disco will not live forever, some day punk will come along and people with leave disco in droves.

There are uncountable Bitocoin copies, but none of them are worth anything because of Network Effects, also called Metcalfe's Law:

https://en.wikipedia.org/wiki/Metcalfe%27s_law

The value of Bitcoin comes from the same place as the value of any network. The amount of connections in the network is the value of the network. E.g. any social network. A Bitcoin copy has no connections in it, so it doesn't have any value.

> Stocks: you buy them because they increase earnings and eventually produce dividends at a very high yield to your initial investment.

No, you buy them because you want to support good, non-nefarious companies with sound business models.

(I know that’s idealistic, but focusing purely on speculative uses of stocks is another extreme and paints a very incomplete picture.)

> No, you buy them because you want to support good, non-nefarious companies with sound business models.

No, you really are buying the company stock because of current and future profit prospects. None of this supporting thing... a shareholder is just the owner of the share, nothing more.

Feel free to speak for yourself, but don't make it seem like everyone is the same.

There are shareholders buying parts of companies purely for personal gain. They may not care if the business is shady, as long as the stock technically performs well they will join in and try to get out in time so that a less lucky investor is left holding the bag.

There are also shareholders who approach investment with other goals in mind. They buy parts of companies that they believe in, maybe because they find the idea valuable and the implementation viable, and/or find the people running the company trustworthy.

Under ideal conditions, those objectives align and a well-intentioned and well-managed initiative should succeed. In practice, of course, things don't always work like that. Some companies successfully abuse the system and inflate valuations riding on hype and speculative investments without a fundamentally good business model to back it, while others may fail despite being honest due to factors outside of their control.

Investors of the latter kind don't need to be rosy-eyed and buy into companies with noble intentions that they believe will never succeed, but they would be wary of investing into something they know is profitable but ethically questionable.

If that's what you want to do, there's no need to buy shares. You can just donate.

Why the dichotomy? I want to support good businesses. I also like me some return on investment, if possible. The mechanism of owning shares is great precisely because it addresses both wants (at least in theory).

Most of the time, you’re supporting your fellow investors rather than the company. In many cases, after an IPO, the company doesn’t care about the price of it’s non-voting shares anymore — only the other investor that you bought them from.

> The company can issue shares suppressing the price.

> The company can do stock buybacks, increasing the price.

It's not obvious that these should be true.

There are more or less shares around, so we have a change in supply, but the company also has more or less money, which should counteract that.

Likely to vary depending on whether or not people believe the company can usefully spend and grow that money.

(Not sure what the actual evidence says on this.)

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