[smeeding]

I think the Ponzi claims stem from the fact that so many people are in the market for speculative profit (and not to revolutionize finance or whatever), and the fact that earlier investors can only capitalize on their investments by proselytizing, recruiting, and ultimately selling their bags to new investors. Framed that way, it’s quite Ponzi-ish.

[r3trohack3r]

This is true of any value storage vehicle. You only make money - or get your money back out - by passing it on to the next person. Art, baseball cards, stamps, stocks, gold etc. all work this way.

[smeeding]

> all work this way

Do they though?

Unlike cryptos, gold and stocks have real material value behind them, not just community buy-in.

You can make the art/baseball cards/stamps argument, but then you’d be conceding that the value of cryptos — something pitched as a revolutionary technology with limitless profit potential — is, in reality, determined by the same irrational valuation process as niche collectible markets.

There’s a reason we don’t pay for groceries and mortgages with baseball cards and stamps.

[darkteflon]

I’d love to hear more about the distinction between “real material value” and “community buy-in” value. It’s not a distinction I’m familiar with from my more than 20-year career in finance.

[smeeding]

Cryptos have value because their investors all agree that they do. That’s where it ends. If those investors stopped believing that, their value would drop to zero because there’s no underlying material value supporting it’s market value. They’re shared delusions, and arguably self-perpetuating high-control groups.

What I’m calling “real material value” are things like physical assets and profit generation capacity. Companies own things, and they use those things to generate profit, which in turn filters down to investors. This dynamic doesn’t exist in crypto.

Gold has real material value as a useful product, not simply a store of value.

I’ve only worked in finance for 6 years, and only on the technical side, so forgive me if my vocabulary doesn’t meet your standards.

If you’re actually disagreeing with the point that I’m making, and not just being pedantic, please let me know who you work for so I can be sure to avoid their services in the future.

[darkteflon]

What I’m actually trying - and apparently failing - to do is get you to reassess your misplaced confidence. You have a toy-like, airbrushed conception of value that is doing you an analytical disservice.

If you’re in finance and interested in value, find a great textbook and get to reading. It’s a fascinating topic.

I’ll leave you with Goethe: “Doubt grows with knowledge.”

[aahortwwy]

This comment implies a great sense of knowledge, authority, and superiority on your part. But it doesn't demonstrate any of that. You couldn't even recommend specific reading. Just "a great textbook".

A pretty frustrating comment, honestly.

[smeeding]

Whatever you’ve gotta tell yourself, buddy. I make reliable extra income every month relieving experts and believers like yourself of your crypto capital, so by all means, never change. The system needs suckers.

[unicornmama]

None of the things you mentioned are "value storage vehicles". Currencies may be a stores of value.

Gold is a hedge against hyper inflation and global crisis. Art is an elaborate mechanism for money laundering. Baseball, stamps, and pokemon cards are collectibles and eb and flow with the tides of pop culture And I am too tired to explain stocks to you.

> You only make money - or get your money back out - by passing it on to the next person. It might actual shock you to learn that the US money supply historically grows faster than inflation.

[gitfan86]

People can and do speculate on collectables. The difference is that there is underlying value in the collectable. There are people who would like to own a Babe Ruth signed baseball just because it is a unique piece of sports history and have no plan to sell the baseball when the price goes up.

Speculation on that asset can make the price go up far above the underlying value. But that comes at a high risk of the price falling down to the underlying value. For crypto this underlying value is basically zero.

[darkteflon]

If only I had a dime for every time someone on HN unironically threw around the term “underlying value” like it meant something they could build an argument off.

[chowchowchow]

You don’t believe in any concept of utility relating to value? You’d argue that a house has no underlying value due to location and comforts?

[darkteflon]

I think a house has “value” related to utility.

I also think the putative concept of “underlying value” - always defined in opposition to some other form of value the speaker is railing against - is a lazy rhetorical crutch that provides nothing of analytical value to a discussion.

Every time these crypto threads come along we have tens of people drawing this same distinction and hordes of software engineers nodding along in agreement like it’s actually a thing. It’s not a thing. At least, not the way it’s deployed here.

Usually I just ignore it but it’s beginning to pass into accepted wisdom through sheer repetition.

[chowchowchow]

So to me it sounds like you do acknowledge the concept of underlying value. A house has utility, it is scarce, there is competition for it, ergo its value is a function of demand for the asset (aka a proxy for the utility of owning the asset). This can be extrapolated to other assets besides houses. Unclear if it can be to crypto, it’s sort of you believe or you don’t on that one. I think that’s what people mean when they say it has no underlying value.

TLDR scarcity + utility is where value comes from. Crypto really only has scarcity arguing for it. Much like collectibles actually.

[dragontamer]

You make money from stocks by holding onto them and collecting the dividend.

[chowchowchow]

You will lose all your money thinking like this.

[r3trohack3r]

You will lose all of your wealth not thinking like this.

[chowchowchow]

Oh I’m sure all great fortunes were built by people who believe stocks and baseball cards are equivalent investment vehicles.

[r3trohack3r]

> equivalent investment vehicles

This is borderline arguing in bad faith. You’ll need to demonstrate a good faith argument to continue this conversation.

All value is psychological. Money is a behavioral coordination system. Believing gold has an intrinsic value that justifies trading at $1.8k an oz is sufficient for gold to trade at that value - regardless of gold’s real utility to any holder of gold. It’s the belief that drives the value.

Every single thing you hold that you believe has value either: 1) has direct value to you or 2) can be traded for something that has direct value to you

History is full of people who mistakenly believed their wealth was far more “real” than it was.

[gitfan86]

You are right that psychological value is all that matters, you just need to take your logic one step further.

When the Dole company buys a banana plantation, it is because they believe that consumers will want to buy bananas in the future. That future may or may not become "real". This is where your logic ends. You have proven that perceived value is all that matters and have stopped.

You need to understand that a year later millions of bananas will be ready to harvest. And grocery stores will be placing or not placing orders to have those bananas delivered. So that perceived value is now hitting reality. The crypto people have done a pretty good job kicking the can down the road and avoiding reality hitting their perceived value, but it is hard to keep that up forever.

[chowchowchow]

What, seriously, what are you talking about with the bad faith? We’re responding to your comment which said baseball cards and stocks worked the same way.

It’s bad faith to point out how wrong what you said was? Sorry about that, guess we can’t talk anymore.