Goldman Sachs executive quits after making millions from Dogecoin
theguardian.com
theguardian.com
I do think the psychological (is that the word I'm looking for?) aspects of the frothy financial climate driving the cryptoboom is under-discussed. When the wider financial (not just crypto) bubble pops there's going to be a lot of resentment this time around.
I'm jealous of people and their crypto gains, having considered putting a tiny % of my portfolio in to crypto not long before the pandemic and deciding against it, but ultimately none of these cryptocurrencies are any more useful than they were in 2019, and in my gut I feel that these huge unjustified gains should, morally speaking, evaporate if these things prove to be worthless to us a society.
They may prove to be a lot more useful than you imagine and one thing for sure is they are here to stay at this point.
The big difference compared to 2019 is that we had a Bitcoin halving in 2020, prices usually increase significantly after that since it becomes a lot more scarce, people think Bitcoin is too expensive for them, so they flip altcoins, we are in the middle of the altcoin season. And we've also stress tested a lot of the defi protocols that are now fundamental blocks in the crypto world (uniswap, maker, compound, aave, etc).
I'm very much a crypto skeptic, mostly because I see a lot more harm than good that comes out of the space (ransomware enablement, horrendous waste of energy on PoW coins, egoists that make up the majority of the community, etc)
Personally, I will say it's mature enough when Bitcoin is the world reserve currency (crazy, I know!) and defi fulfills majority if not all of my financial transactions/operations, etc.
I look at ransomware as a positive, finally a forcing function for companies to take security seriously. Energy, it's pushing us towards greener energy sources and there are less energy intensive alternatives being developed.
I keep hearing this "green energy" being pushed harder by proponents of cryptocurrency and I find this rather disingenuous. We are already pushing towards this goal, crypto or not, but unlike a world blissfully free of this long con, green energy will not be appropriately allocated to areas of greater need, like infrastructure, housing, schools, hospitals, etc.
Plus, a true capitalist that wants the maximum value will go for the cheapest and easiest source of electricity. Coal fired and gas via fracking will still be easier to pursue for increased bang for buck. I think you assume the cryptocurrency community has the best interests of everyone else and the planet at heart.
Let's not forget that cryptocurrency miners and stakeholders are not shy from leeching off other countries that may offer subsidized electricity, sometimes even causing blackouts for those that need the electricity the most. Seems very parasitic.
Just my two cents.
Has it?
I think the biggest inflection point in the last 15 years has been the prevalence of smart phones and mobile connectivity, otherwise most of what we do on the Internet today was already happening in the 90s, it's just more prevalent now.
It definitely isn't, unless you count anything that uses power as pushing towards green energy which makes no sense.
The only way to incentivize different forms of energy production is by making them more profitable, which has nothing to do with what that power is used for.
Go back to between early 2018 and early 2020 though and look at r/bitcoin and you'll see a bunch of people running themselves in to early graves with anxiety, following every twitch in the market and hyping up every news story about crypto to try and justify to themselves why they bought in.
Bitcoin could go to $1M/coin, but it might do that over a 3 month period 10 years from now after a decade of going nowhere.
Recent developments on the stock market kind of killed the market idealism for me. I don't know what's a better alternative, but from where I'm standing the financial system is rewarding wasteful and immoral behaviour and it's degenerating really fast.
Frankly, cryptocurrency being invented and created was a huge mistake for society at large. I hope the comeuppance isn't super destructive outside of cryptocurrency circles.
This is one of my concerns too. I sock away a healthy % of my income in to traditional investments, and I aspire to one day own a home I can raise a family in.
The current asset bubble, which I personally believe is the wedge driving cryptocurrency apart from reality, is really hurting those of us with these rather mundane aspirations.
Satoshi Nakamoto did nothing wrong: hard to imagine, but Bitcoin started out as a crummy C++ GUI Windows application hosted on SourceForge and adopted almost exclusively by batshit insane people. It had no value: you could CPU mine it on any ordinary Windows PC. Many people refused to do even that because of how worthless BTC was at the time.
Enter the Libertarian/profiteer cohort, and the rest is history. Really think a bunch of you need to redirect your anger at the ICO game. Try to imagine Vitalik Buterin hard selling a clear gray market IPO on Reddit in combination with a high pressure countdown timer, and lots of fancy lawyers and Swiss foundations. That — the fact so many bitcoins were raised so easily for so little — is what unleashed the hellfire shillnado that has become synonymous with cryptocurrency in the modern era.
Satoshi (whether it be he, she, or they) went into creating Bitcoin intended as a peer to peer cash that was easy to spend and outside of government control. Unfortunately, at least in the case of Bitcoin, it has turned into this slow, unwieldy "commodity" that is now rebranded as digital gold.
Thanks for your perspective, atweiden.
It was called that before bitcoin even existed. See BitGold, a late 90's precursor to bitcoin.
No. Cryptocurrency valuation is 100% driven by narrative, categorically.
Your post in and of itself exemplifies the narrative pumping rhetoric which is at the core of all cryptocurrency valuation. There are absolutely no exceptions to this, and that is not an exaggeration in any way.
Yes! Exactly!
I have a friend who's doing well from crypto. He bought an NFT for $800 and it's not worth $8,000. Where is the (social) value in that? Except for the social experimentation this is all providing, it's not solving a problem AT ALL!
This is how I feel in a nutshell: if I make $1m today, I want it to be because I solved a hard problem for a lot of people, not because of some meaningless, intangible wishy thinking currency.
For this reason alone luxury collectable watches are a smart investment for diversification purposes for the ultra wealthy.
why? It's doing the exact thing that it was intended to do - price the value of public companies.
This is my thinking too. But I can't fully get rid of the FOMO. What if I could turn my thousands into millions? It would change my life forever.
And nobody gives a fuck.
> I see no value being created in these "investments".
And stock market is any better? At the inception stock market was a tool to invest and prop up businesses for long term dividend gains. No its pure speculation tool that doesn't benefit anyone but the concentrated wealth, it is so removed from reality (but you already mentioned that).
At least I made money of crypto, before the blob of ultraweathly descends on it.
I can make enough money to live comfortably through work, admitedly I would be a lot safer if I had more, I prefer investing in realestate that I can potentially monetise by renting and I can leave to my children. It's probably not the most efficient but I don't want to spend time and effort on investing in to stockmarket, crypto or w/e - I chose SW development because I like to build things that solve problems and be creative - at this point crypto/stocks feel like the exact opposite (initially I gave it the benefit of a doubt but at this point I'm almost certain it's a bubble built on spreading bullshit)
If you really think this, you have absolutely no idea what you are talking about.
Don‘t base your opinion on DOGE. There are plenty of cryptocureencies with actual use cases that provide value.
I think it‘s pretty clear why you are convincing yourself of the opposite though:
> having considered putting a tiny % of my portfolio in to crypto not long before the pandemic and deciding against it
Don’t let that taint your judgement.
It's entertaining to see how crypto pushers all hate dogecoin because it's a 'joke', yet the only real difference between it and countless other coins (say, bitcoin) is in its name. The dirty secret is that they are all bad jokes.
* smart contracts
* decentralized exchanges
* decentralized finance (lending, investing, etc)
* instant borderless value transfer
* actually HARD money
All of it trustless, permissionless, uncensorable, resilient, not controlled by a centralized entity, mathematically provable.
- Smart contracts can only effectively secure digital assets and entitlements that can be transferred electronically. Ultimately anything physical requires legal and physical entities to enforce. As an example: it's fine to put property contracts on a blockchain, but proving who owns what property is rarely a real world problem. We have land registries for this, and it's in everyone's interest to keep copies of sales contracts and sign them under witness. You still need bailiffs and lawyers to get squatters or bad tenants out of your property.
- I don't think 'centralized' exchanges are really a problem. There are hundreds of stock exchanges throughout the globe, tens of thousands of brokers and huge off-book markets. We live in a highly decentralized system already. There's an argument that Average Joe can't access these markets, but this is changing with traditional solutions already (see: Robinhood etc).
- decentralized finance (lending, investing, etc). Again, this doesn't work for lending secured against hard assets like property (i.e. mortgages). You need courts to deal with grievances over ownership, and this is where the costs lie. Solving the paperwork problem is not interesting.
- instant borderless value transfer. Well, Transferwise and many more obscure, specialized companies offer this already, and waiting a 24 hours for a big, global transfer in the worst case isn't really a big deal.
The bottom line is the needs of most people are already well served by traditional blockchainless services, and where they're not it's not obvious that they can't be.
It's not all black and white.
Money is power, so the man is those on the top floors of institutes dealing with large amounts of money and having gala evenings with politicians and CEOs.
That's who the working class person making minimum wage that was just made redundant actually works for.
--
Saying that the investor bank executive is working class because he needs to pay his rent is bollocks.
Sorry, it's your definition that is wrong. "Working class" doesn't mean "category of people that work."
"When used non-academically in the United States, [...] it often refers to a section of society dependent on physical labour, especially when compensated with an hourly wage. For example, the working class is loosely defined as those without college degrees. Working-class occupations are then categorized into four groups: unskilled labourers, artisans, outworkers, and factory workers."
Apparently that’s not enough when you have expensive tastes.
You're also correct that traditionally the proletariat (the working class) were those who sold their labour. By a very strict definition, anyone who earns a wage is working class and that would include CEOs (as you are doing explicitly). That definition is deficient and doesn't relate to reality.
Traditionally, the bourgeoisie were the class or classes who employed the workers. The capitalists own the capital and capital goods (means of production) that are used in industry. The petit bourgeoisie are those who own small businesses, such as shopkeepers or lawyers. They were middle class because they were neither working class nor part of the nobility.
Today many companies are publicly held. By this, I mean that stakes in the company are sold publicly. Many companies are also part-owned by the public in the sense of state ownership. This kind of relationship would falsely suppose that members of the working class are members of the bourgeoisie. You agree that ownership doesn't exactly determine class since your criterion is the selling of time or labour.
Those today who have power over the factors of production are very often employed when previously they employed themselves. You call these people working class. I find that very bizarre.
I believe that a managing director of an investment bank is a person who represents capital absolutely. Their job is to head an organisation whose aim is to manage capital and to generate or bring in capital in the process. To identify this person with a factory worker is confused.
I think you're trying to play around with definitions because you think there's a moral component to class.
I can understand if someone may have mined it for fun and forgot about it, or some Robinhood user messed about with DOGE, but this feels a bit more unusual to me. Perhaps working at Goldman Sachs afforded him some additional advantage on insight?
I'm not sure I could sleep easy at night knowing I fleeced the rubes, but then again, I'm not this gentleman.
Putting $10 on dodge back in January, or on spiffcoin today, is no different to putting $10 on a horse at the 3.15, except the excitement probably lasts longer.
The bookie wins on aggregate, but you are buying the hope and excitement and that has value.
edit: it defies belief that this is somehow a controversial comment
However, I'm assuming this guy put down a significantly greater amount of cash down than either of us did. He couldn't have made millions by a small amount bought. I assume he had some insights by analyzing the technicals of the price movement. Based on his background, that assumption seems reasonable. Otherwise, he was willing to buy very early on and risk say $10k on a cryptocurrency that doesn't really have any valuable fundamentals... besides that it's a meme and it's funny that you can make fake money out of meme. People bet more than that on horses in races with no rational basis or he has lots of disposable income, so it is possible he made the trade on a whim.
Same reason people play the lottery
a fool and his gold are soon parted.
For at least the USA exchanges, the USG has made it clear major companies will never fail and is printing so much money that has to go somewhere.
Crypto currency is a zero sum game and i think this is what OP was implyining.
it's not really zero sum - this sort of speculation creates liquidity. This liquidity allows people who want to use the underlying asset in some other way to have a buyer (or seller) on the other end of the transaction.
How is value created during dividend payment?
This part is false. The price of a stock is not completely disconnected from actual value.
The money for the dividends has to come from somewhere. If you own AAPL, the dividends are funded Apple’s business activities. If you think that Apple’s business is a dead end, you would sell off your AAPL stock and move your money somewhere else.
Dividends are also only a small part of the picture.
I'm not sure I would describe high-flying tech stocks with no dividends, trading at 30-70 times earnings as much different. How many investors are really snapping up these stocks because they're sold on the 30+ year value proposition?
And if it's not the case for these pathetic cases, what does that say about the rest?
BTW I'm not arguing the dollar is worthless, especially not when compared to crypto, obviously the dollar has a lot more use than Bitcoin. But look at what rich people / money managers are doing with their dollars. If a Saudi prince is buying a painting by a student of Da Vinci for 450 billion dollars, what does that really say about the value of the dollar?
Things are not what they seem, I guess it's always been the case that quantities of money don't scale linearly in value but it seems particularly true today. And whatever is going on, it is foolish to dismiss cryptocurrency based on something that's not true for securities and not even for other currency.
the value of TSLA hasn't been created yet - the event is still in the future. The current price is based on the expectation (by many people) that their value creation in the future will occur.
As for GME - the short squeeze certainly did create value. It's like charging someone dying of thirst in the desert for water. But as soon as those people got _some_ water, you can no longer charge the same high price. Thus GME's rise and fall is rational.
As soon as you dive into the numbers, their answer will stop even mentioning the company Tesla, it will be about the American economy or the global economy in general.
I agree the short squeeze held value, it was great, but its value hasn't fallen yet, it's still over ten times its fundamental value, if such a thing even exists. If GME's new plans succeed, and it does exceptionally well and it really becomes a big player in the online games industry, maybe its stock would be worth $40 or even $80. If it doesn't, then all this capital is wasted and the stock is probably worth under $4. With those two very extreme scenarios and their appropriate valuations, what is its stock doing sitting at $150?
The answer is simple, just find a social gathering of GME investors, like r/superstonk, and read what they're saying about the stock. They're calling the squeeze to 450 a "baby squeeze", and that the big one is still coming. Even though as far as I know the squeeze to 450 was the largest squeeze in the history of the stock market.
I'm not saying these stocks are overvalued by the way. If you've got a firm grasp on the dynamics of those stocks, it might make sense to buy/hold at these prices. Just like it made sense to hold Dogecoin to that Goldman Sachs guy. Just don't pretend it's different somehow.
That's not value creation, that's zero sum.
There’s an old joke that starts with a guy taking a train through Scotland. He sees a black sheep out the window and says, “Ah, Scottish sheep are black. How interesting!”
The price of a stock is part market insanity and part value. The proportion varies.
Your investment decision directly impacted the prospects of that company over others.
In an ideal world, speculation in the stock market means that the best companies receive funding and the worst companies are unable to and therefore appropriately go out if business.
I do believe this bubble will pop eventually and the stock market will return to its appropriate primary function (which it still is doing ex-retail hype stocks) of allocating capital to the most productive companies.
Note also that I was responding to the statement that no wealth was created or destroyed by speculation in the stock market. My point is that this statement is false because it makes a real world difference whether it's GME versus MRNA that gets to raise money.
Do you think it has done this in the last 30 years? I am of the opinion that has it has at best done this exceedingly poorly. There are many reasons for this:
1. Speculating is the one we've already covered
2. HFT, which isn't that much different to speculating
3. The consolidation of market power in a few huge funds
4. The rise of index funds which don't attempt to judge companies on merit at all
It would/will take significant reforms to return the stock market to anything remotely resembling an ideal market.
HFT isn't relevant to this picture, their role is primarily market making and arbitrage and they have no net impact on pricing. Their sole role is to replace human market makers in a liquidity provision capacity, which reduces the cost to the active manager of doing business, at the expense of the extinct human market maker.
Hedge funds aren't that consolidated. There's lots of them. There's no such thing as market power (in terms of oligopoly or monopoly power) for the industry either. The bigger you are, the harder it is to operate on a marginal basis, since price impact becomes prohibitive. Hedge fund spin offs are a dime a dozen since all the IP is in individual's heads. The biggest ones are resigned to longer bets where the edge is smaller. Market power is a thing only for HFT firms, due to economies of scale and scope on the tech and fee side, but as mentioned above HFT aren't relevant to what we are discussing.
Index funds chase valuations set by active managers since they're typically investing in market cap weighted indices. Their existence doesn't change the value add or necessity of accurate security pricing, and they're not really relevant to that either.
you mean, those which generate the most ROI ?
In case of a sustained growth of a company (think Apple over the past 20 years) what the shareholders gain comes from the earnings of the company. Apple shareholders have gained trillions in the past years - no one has lost an equivalent amount.
That’s a very weak strawman.
Oh, and in other direction, bankruptcy.
Some stock price movements are also zero-sum. Active trading is zero-sum.
Stock holders own the underlying business and businesses do create wealth—all the inputs that are used in making a product are worth less that the product itself.
That's how _all_ wealth gets created. Even under communism (where the difference is that under communism, the capital is provided, and owned by the state, rather than privately owned).
This really feels like a kind of "screw you, I've gotten mine" form of capitalism.
Yet tell that to those who lost their shirts on Mt. Gox, Binance, any of the black swan events within the past few years, etc.
It's really a technology-packed MLM.
Then you very obviously never actually learned about the topic.
To the people downvoting this:
* smart contracts
* decentralized exchanges
* decentralized finance (lending, investing, etc)
* instant borderless value transfer
All of it trustless, permissionless, uncensorable, resilient, not controlled by a centralized entity, mathematically provable.
But keep telling yourself it has no value because you failed to invest.
The tech does indeed have valuable applications, but that doesn't take away the fact that we're in a mania.
Most cryptocurrencies are cartoon characters particularly tailored for gambling machines. I haven't seen a single use case other than enabling masses enter a massive pyramid scheme constantly manipulated in social media.
that the reason someone might pay you more in the future must be "legitimate" - that is the asset can be independently valued to be worth more in the future.
Investment in shares is not a scam (mostly), even if they _never_ pay a dividend, as long as they earn a profit. Investment in gold, however, can be likened to a scam, as the value of gold only grows to as speculation, and not wealth creation.
Hard to say whether cryptos behaves as gold, as some crypto does have uses beyond being sold to someone else for a higher price.
Well, gold has numerous uses in the real world. https://geology.com/minerals/gold/uses-of-gold.shtml
Edit: also apart from making us question theses behaviors in other markets if that speculating behavior is bound to exist then at least it’s relatively harmless compared to doing that with real estate or commodities like food or water. Better that bank exec making that with dogecoin than other real stuff.
Holding almost literally anything nonperishable is better than dollars. We can argue what it is, but if anyone has any optimism at all about the future of Dogecoin then there is a price point where it makes a lot of sense to buy Dogecoin rather than dollars.
Your characterization of all cryptocurrencies as a ponzi scheme purely based on the fact that people buy it because they believe others will buy it later at a higher price is weak because that is how all monetary assets like gold operates. We take it because we believe others will also take in the future.
I personally buy bitcoin not to sell for a higher price but rather, I believe strongly that a monetary system that's provably scarce, programmable, completely decentralized, permission-less, trustless, higly divisible, borderless and very easy to transfer has the potential to revolutionize how we store value.
This does not mean that everyone buys bitcoin because of this, some (perhaps majority) buy it because they believe it's going to go up but I see that as an initial incentive to get people into the industry.
At the end of the day, only time will tell if cryptocurrencies can actually live up to their promises of revolutionizing the financial system.
But is adding massively to global carbon levels needlessly...
Bitcoin is cryptocurrency 1.0, or proof of concept, and the concept is well and truly proven.
Developing others which operate more efficiently than the proof-of-concept or 1.0 version, or even than the existing banks and credit card exchanges is just engineering and iteration, and hardly a great leap of imagination or faith.
Any currency seeing moderate amounts of use and speculation is going to rapidly start sucking up power.
These narratives about power and emissions are narratives with an agenda. The agenda may be good in nature, but don't mistake them for accurate or precise.
Furthermore, if you need money in 4-5 countries (even inside the Eurozone), you'll find that several cryptocurrencies are really quite good for that purpose, and that banks are not. So I for one have found value in owning these (mostly temporarily, although I have some on hand now).
Might be fun to do it with Dogecoin I must say. I should give it a try.
Well, think about operating a credit card company and taking fees whenever one of your cards is used. You could be very rich that way. Was any wealth created, or are you just siphoning off value that, in your absence, would have gone to someone else?
In that case, you created a lot of wealth and kept a part of it. The extra wealth arose from transactions that wouldn't have occurred without the service you provide.
Cryptocurrency isn't used much as a medium of exchange, but that was a design goal. Theoretically, it could be.
A truly original argument, 2021