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by ipaddr
1544 days ago
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They represent the same value prop as any stock. Any company could go to 0 and the floor of the exchange is littered with delisted companies. Amazon is big and the chances it goes to 0 are less than a company still making vcrs. The same can be applied to bitcoin. Government and other contracts could be cancelled. The value of assets can be lower the debt. Bitcoin has no debt while a company like Amazon can have billions of dollars of debt. |
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Try thinking about this a bit more: what do you have if you buy a share of stock? What does that company own, what is its ongoing cash flow, etc. Now repeat the same thing for Bitcoin and notice how the answer is “nothing” except for the possibility of getting someone else to buy your coins.
That's the difference: there's no plausible reason to think that people are suddenly going to stop shopping online or using cloud computing. The price isn't going to suddenly tank because other people will buy into a popular company which has shown it can reliably run profitable businesses.
In contrast, nobody needs Bitcoin for any reason — we all have alternatives for currency, value storage, etc. which are cheaper, faster, and easier to use and almost nobody as a requirement that they buy Bitcoin. If some web3 play actually comes up with something normal people want and they all switch to Ethereum, there's no floor on the price. Unlike Amazon, there's no revenue stream which can be used to pay dividends or buy shares back when the price falls.
Another way to think about it is to ask who'd notice if it's gone. Amazon disappearing would disrupt business all over the world in multiple industries, and that cost of switching provides a lot of inertia. Bitcoin is mostly used for speculation and the vast majority of the fraction of transactions representing real economic value have easy replacements. When the switching cost is that low, there's little pressure to stay. Even if you really believe cryptocurrencies are the future, there's no law of the universe saying it's going to be this one rather than the many drop-in replacements.