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Comment by shp0ngle | Hacker News Reader

First I was thinking, "hey maybe the recent downturn in crypto will weed out the most obvious nonsense"

But now I see #1 story on Coindesk "Shiba Inu-Themed BONK Tokens Are Yielding Nearly 1,000%"

So I guess we are not there yet

If anything the downturn will create even more nonsense, as people try to keep the money flowing in. If you think of crypto writ large as a sort of accidental self-organising distributed Ponzi scheme (which isn't unreasonable), then this is exactly what you'd expect; traditionally towards the end they get weirder and weirder, as people need money coming in by whatever means.

Precisely, it will just get weirder and more extreme until it explodes. These are all spasms of a dying organism. The addiction is so massive though that there will be some kind of backlash or a shift to something else. It's like when the authorities cracked down on money laundering through banks, for every one they killed four new ones sprang up.

It may be rational behavior though. If the insider view is that the equity is worthless it makes sense to explore every possible option, no matter how weird.

But Bitcoin has "exploded" in the past, crashing 70%+ several times, yet each time it had a higher and higher floor. How do you explain this?

Just like amongst stamp collectors, a certain group will simply never sell. They'd rather never get a cent for they collectibles than sell at a price lower than what they feel would be "appropriate". Trade activies in irrational markets like that lie somewhere on the spectrum between the extremes of rational trade and belief affirmation ritual.

And some collectors just collect and don't really care about the money.

Yea this is what decriers don't explain. I may not view at as a strong currency for which it was intended but it's undeniable it has become a store for speculative value that isn't going away anytime soon.

There's a lot of trash in the crypto world but also some valid projects.

I don't know how you equate "speculative value" with "valid projects". Bitcoin has value because people are long on crypto. "Long" has an end date - just because it's 50 years instead of 10 years doesn't mean it's not coming.

If there's less crypto being issued than fiat, and demand were constant as a % of people's wealth (which I admit is a big if), then crypto is bound to go up.

There is no end date to government currency debasement.

This is to say that if demand outpaces supply, price is going to go up. However, this is true of any asset. So why mention specifically 'crypto', as if there was something magical about 'crypto' that means it's bound to go up?

My point is yes, it is true of any asset. You might as well own cans of beans. But the purpose is to stave off the effects of monetary expansion while staying liquid. Cryptocurrency is in a special niche in that parameter space.

While other assets are bound to provide long-term returns greater than inflation (for example, stocks and bonds [1]), cryptocurrency can not surpass inflation long-term, but it still does so while demand is growing. In addition, even after it reaches a stable demand (which I reckon will be in 5-10 years, with market saturation), it will be a means of diversification (like gold is currently).

[1] - https://totalrealreturns.com/

I don't think I'm following you. You're using technical terms such as 'parameter space' in the wrong context. Maybe you want to sound clever, but you aren't making a lot of sense.

Except gold has value. Crypto does not.

Well yes - but the assumption is that demand will drop as more people realize crypto has no long term viability as real financial infrastructure.

The supply of crypto isn't limited because people can just mint new chains. And of course, the more the number goes up on a chain the less attractive it is to actual users as opposed to holders.

> The supply of crypto isn't limited because people can just mint new chains.

It is silly to lump all crypto coins in a single bucket. BTC is very different than DOGE or SHIB. I guess your parent post was about BTC supply being limited.

Interesting you say that, because it's actually very similar to Doge (though of course, dissimilar to Shib, because shib is an ERC20 token on Ethereum)

So you also think that The Starry Night in MOMA is worthless because you can buy a very similar one on Etsy for $65? https://www.etsy.com/listing/1317189452/starry-night-by-vinc...

I didn't say they were similar value, this is a strawman.

But if we're looking at art, and you show me the original Starry night, a print, and then a picture of the kool-aid man busting through a wall, and ask me which 2 are most similar, I'm going to pick the starry nights

> I didn't say they were similar value, this is a strawman.

You actually said that - "Interesting you say that, because it's actually very similar to Doge". Especially when the context was about the value of crypto in relation to supply and demand. Given that you are familiar with SHIB being an ERC20, I am fairly certain you are aware of DOGE's supply being nothing like BTC. And yet you conflate the two. Just for FUD?

Network effects dictate that value concentrates in the most popular chains. The top few will always dominate.

Lots of people go base jumping. I can't explain it, and yet they do, in spite of multiple terrible crashes.

I actually thought the Russian invasion of Ukraine would result in more Bitcoin usage and the price going up again.

It could be that people are just holding on. The question is: why is it worth anything at all?

There's a fundamental floor of value where "in the bad old days" I once bought a specialty swiss army knife (a very custom gift; details utterly irrelevant) and I wanted the knife enough to pay middlemen about 20% overall to turn by USD into ... whatever the swiss were using at the time. It used to cost twice as much money to move money around the world than to move a small consumer good around the world. That's just how the world was. Weird to think it would have been half the cost to mail the swiss a gold coin than to transfer money all legally.

Clearly, I didn't think the middlemen provided 20% of value, but I was willing to cough up the cash to perform the overall transaction. If a cheaper money transfer option existed I'd never have used the middlemen, whom provided nothing of value to me for their 20% charge. Cheaper options do exist now...

There's a lot of hand waving, but if you trust paypal, which you probably should not, the cost of moving money internationally has dropped to about 5% and the cost of currency conversions has dropped to 4%. I would assume they double dip and converting USD in USA to swiss whatevers in Switzerland would cost about 9%. Then of course there are withdrawal fees and so forth stacked on top.

Anyway, lets say you can turn and burn bitcoin in "somewhat less than an hour" so simply divide total international daily transaction volume by twenty five or so and that seems a reasonable starting point for a store of value. If the price gets too high making it cost more to use BTC than paypal, then the BTC transaction volume would seem to drop until prices drop and people start using BTC again.

Obviously for various UI and enduser reasons I would not expect all international trade to flow over either BTC or paypal or the legacy banking system, but "enough" should be there to support the BTC price at some level.

Don't forget crime and startup business.

I ordered equipment for a company from a European seller , and because I wasn't a VC backed technology startup, instead focused on physical goods- there was no army of people to help me set up an international bank for my company. So what I did was drop them some bitcoin. Just getting the wire approvals would've taken longer.

That's fair. Buying things overseas is much, much simpler. I wonder what the value of that would be if BTC were to only be valued on that basis.

It's a pump and dump with most of the tokens centralized in top 20 wallets. Crypto needs to die.

I agree, but 1% of society holds more wealth than the bottom 50%. To a passing observer of crypto, they see that a few have extreme amounts of wealth, just like every other currency, and think everything seems normal.

And the solution is something where 0,000001% society hold 50% of the coins/"wealth"?

The reason bitcoin will never be the main currency is, that even in case case crypto will ever be technically/UX viable as a currency (is very, very, very far from it) nobody of the 99% that do not own bitcoin now will choose bitcoin as the main currency. They will choose some most likely government started crypto where they can exchange their current money 1:1 and not buy into some stupid old thing that gives them nothing.

So if crypto ever succeeds it is the death of bitcoin as the new system that converts from the old will win by a million miles

They don't see the difference in mechanisms. Getting rich through pump and dump vs getting rich through making or doing something people find valuable.

I think we're past believing that our top .1% is bringing value that's worth billions of times more than the rest of the population.

They're all hoarding wealth and offloading risk on others, it's just that in comparison, the crypto-rich are not (yet?) a social class with an army of lobbyists on its payroll.

> I think we're past believing that our top .1% is bringing value that's worth billions of times more than the rest of the population.

Fortunately, we do not have to rely on our beliefs here, we have an objective measure, which we call "money".

If someone starts a company in their garage, and a decade later that company is worth few billions of dollars then that's the value this person brought to society - because people willingly paid them those billions of dollars for their product/service.

Of course the whole logic breaks down with purely speculative financial assets such as crypto.

By that only measure Nobels are thousand of time less valuable than Sam Bankman Fried

Nobel prize winners are bad example, because their work is usually theoretical, hard to put to use. If someone writes a paper tomorrow proving that faster-than-light travel is possible then the only immediate value it brings is that you now have a nice lecture to read in bed. There are still thousands man-years of work required before an actual spaceship will be available for sale in your local dealership.

He didn't say it's the only measure.

Alternatively, you could let people pay whatever they want for the product. That would also give you a very accurate and objective measure of how people value the product.

What? You don't think the two measures would converge? In either case, the one with more market power would use that to improve their side of the bargain? Who'd've thunk...

That would not tell you anything about how much someone values a product. Everyone will happily pay 0 for something they value at 10. It's a fantastic deal for them. Too discover the true value you have to raise the price until they refuse to pay it. Which is what a market is intended to do.

> If someone starts a company in their garage, and a decade later that company is worth few billions of dollars then that's the value this person brought to society - because people willingly paid them those billions of dollars for their product/service.

What was the value FTX or Theranos brought to society?

You'll note that when it goes wrong in each of those cases, we lock the perpetrators up in a box. And their company's value drops according to the new information.

Totally, because the _expected future value_ changes with the new information. If they had actually created something of value, that wouldn't change because of new information. But they hadn't, and yet their companies were worth billions.

"Provides value" is loosely connected to "expected future value", but it's certainly not the same thing.

I agree. Except creating something of value isn't the same as company value - company value should be derived from ability to make money at a certain rate while spending it at a certain rate. This does include what you say, but with some extra bits.

But back to your point: it is possible to simulate either or both of those things and have eager investors get in early, but that's why they (probably) get in for less money than if the company had done what it claimed. They took a risk, and taking a risk is one of the valuable contributions one can make to a company.

Parasitic rents and many other market distortions/extortions exist.

Saying that something exists isn't a complete thought.

Statements in a conversations do not stand alone. Thoughts flow from one to another.

Thoughts can't flow if they aren't expressed completely. Insinuation can flow, but not open thoughts.

You're missing the difference between ownership and money. People who make extremely useful companies own parts of them. They don't have that money in cash. The only thing they can do with that ownership is to sell it, which the market also seems a valuable thing. They have to constantly do valuable things to have money. They aren't like a government, which can lock you in a box for not paying them. Companies have to earn it.

Average wealth of the top 0.1% in the US is ~$50m. Average wealth overall is ~$100k. So it’s not billions of times more, it’s ~thousands of times more.

Most high net worth individuals keep their wealth in stocks and shares. This is not what hoarding means.

The comparison to crypto scams is absurd.

To be fair, it's a little bit harder to see the difference between pump & dump vs getting born rich.

That's neither fair nor obvious.

Inheritance makes providing value worth doing past the point of one's own comfort. Many people's work becomes most valuable in their latter years, and so we would want them to keep working and pass on wealth, as opposed to either stopping working or just splashing their money out on nonsense.

The principle of being able to own things and work to one's own good, and the good of those whom one choosing to transfer it to, is the fundamental basis on which we now exist in the most advanced societies the world has ever seen, and the most rapidly advancing societies. It's not perfect, but every authoritarian attempt to make things better by centralising power in the name of fairness has gone terribly.

Pump and dump schemes are just nothing like that.

From the perspective of those born poor with little prospect of improving their station, I don’t see how it’s obvious that the people who inherited wealth are more deserving of the money than the people who got it by scamming.

The legitimacy of the social contract that respects private ownership depends on the prospect of a good life for those who work for it.

When people lose belief in that prospect, they have no reason to respect the rules of that social contract.

I don't think you can lump people unable to improve their lot into a homogenous group all unable to see what money is. Some will; some won't. And that doesn't make money something else than what it is.

I agree that as individual liberty is eroded, and it's easier to just become yet another BS cog in a giant BS machine, with no incentives to make anything better, then you can descend into something authoritarian that promises a better way, such as our previous attempts at socialism, but the way out isn't to reinforce (or repeat) incorrect assumptions about money. It's to campaign for more liberty and fairness.

Bonk happened within a week so you might say that rug pulls have at least gotten more efficient...

They go to real life jail. bonk

Smart contracts could automate this.

Rug pulls as a Service

That's a past station at this point.

I am not sure if BONK already rugpulled.

There are too many tokens with Elon Musk and Shiba Inu, and they are all interchangeable.

I could swear the owner claimed he had gambled the cash but maybe I'm wrong.

To put this politely: crypto’s growth model heavily depends on those “quirky” projects to attract new users, drive trade volume, and bring in cash.

It's all obvious nonsense, always has been.

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