"At any point in
time — past, present, or future — the people who have ever bought bitcoins, considered
as a whole, have put into the game more money than they have got back."
Let's consider this in the context of another currency, say, the Euro.
"At any point in time - past, present, or future - the people who have ever bought Euros [with real currency, aka every other fiat], considered as a whole, have put into the game more money than they have got back."
Now the Euro is heavily traded in forex markets, and surely the price fluctuates. Is this statement true? I'd suspect yes, though there are many other factors at play. Has the value of Euro increased relative to the other currencies it trades against? If so, this is probably due to large amounts of money pouring into it as a more lucrative asset than the quote currency.
I think this question really only makes sense using another currency as a reference. So let's consider the Zimbabwe dollar during its period of hyperinflation (2007-2009). In this case, citizens of Zimbabwe who bought Euros very likely got back more of whatever currency they eventually converted it to than they would have if they had kept their money in Zimbabwe dollars.
But what does this even mean. There is no 'stable' currency to use as a true reference, the value of each in the global market is constantly fluctuating. 'Getting less or more money back' becomes hard to evaluate.
So let's talk about purchasing power instead. I suspect the people who have ever bought into bitcoins as a whole, have increased their purchasing power (the number of coca-cola's they can theoretically buy on any given day).
> Now the Euro is heavily traded in forex markets, and surely the price fluctuates. Is this statement true?
It is not true, because currencies aren't assets. Currencies are a medium of exchange. Their job is to hold value for only as long as it takes you use them to buy necessities or invest them in assets. That's it. Any longer is a non-goal. Goals include low transaction costs, high transaction speed, fungibility, stability and predictability.
As for the FOREX market, that's a highly leveraged speculative trade on the relative purchasing power of a pair of currencies. That's not an investment and it's certainly not an asset.
With that in mind FOREX is widely regarded as a zero-sum market in the same way options and futures are. Money from the winners goes to pay off the losers.
> In this case, citizens of Zimbabwe who bought Euros very likely got back more of whatever currency they eventually converted it to than they would have if they had kept their money in Zimbabwe dollars.
This would have been a zero sum trade, not negative sum. Zero sum doesn't mean reversible or that there aren't winners and losers, just that considered as a whole, between all participants, no money left the system and no money entered - what was there was simply redistributed.
Ok, it has the title, but its an awful medium of exchange by any objective measures. Giving it the title doesn't suddenly make it fit for purpose. To borrow a turn of phrase, if my Grandmother had wheels she would have been a bike. [1]
Bitcoin being negative sum has nothing to do with its title and everything to do with its intrinsic characteristics. I believe a study showed its PoW model extracts as much welfare from the system as a ~55% rate of inflation.
I agree about all of the above; it's not a great currency, and it's certainly more volatile than most global currencies, but it is a currency. The idea of nations recognizing bitcoin or something like it as national currency (instead of their own or another country's currency) is monumental.
Personally I'm hoping the shift comes soon for proof of stake currencies with low transaction fees.
That’s true. And it’s also true for any stock that doesn’t pay dividends as well. Should people not invest in those stocks? Or should we ban non-dividend stocks for being Ponzi schemes?
At least stocks/companies have a balance sheet with real assets. Even if the whole company shut down (and wasn’t bankrupt) investors would still get at least some of their money back after liquidation.
Dividends are just one of the many ways that companies accrue value. Companies use revenues to invest in the business, to repurchase shares and also to issue dividends. This net welfare accretion must be considered in its totality.
Just because a company doesn't issue dividends doesn't make it a Ponzi scheme, and it doesn't make it a zero sum investment (like precious metals) or an negative sum investment (like PoW coins and to a lesser extent, most (all?) other coins).
“In the short run, the market is a voting machine, but in the long run, it is a weighing machine”
I don't think (in my lifetime) I've heard anyone discuss buying or selling a stock in the context of a Dividend Discount Model.
This observation isn't really in support of Bitcoin, it's more of a depressing thought that our stock markets are closer to a Keynesian beauty contest. (GME, AMC, etc).
I don't personally own stocks or real estate for cash flow purposes. I own them with the expectation that I can sell them for more money down the line.
"At any point in time - past, present, or future - the people who have ever bought Euros [with real currency, aka every other fiat], considered as a whole, have put into the game more money than they have got back."
Now the Euro is heavily traded in forex markets, and surely the price fluctuates. Is this statement true? I'd suspect yes, though there are many other factors at play. Has the value of Euro increased relative to the other currencies it trades against? If so, this is probably due to large amounts of money pouring into it as a more lucrative asset than the quote currency.
I think this question really only makes sense using another currency as a reference. So let's consider the Zimbabwe dollar during its period of hyperinflation (2007-2009). In this case, citizens of Zimbabwe who bought Euros very likely got back more of whatever currency they eventually converted it to than they would have if they had kept their money in Zimbabwe dollars.
But what does this even mean. There is no 'stable' currency to use as a true reference, the value of each in the global market is constantly fluctuating. 'Getting less or more money back' becomes hard to evaluate.
So let's talk about purchasing power instead. I suspect the people who have ever bought into bitcoins as a whole, have increased their purchasing power (the number of coca-cola's they can theoretically buy on any given day).