[lmm]

Getting to exactly $0.00 in the company bank account probably requires an improbable level of fine-tuning (if only because you need enough to file your annual registration statement or whatever), but ISTR Retrophin was down to something like $3.15 + some valuable drug patents at one point in its penny-stock days.

[dataflow]

Again, the bank account balance is not the point of what I'm saying. See the sibling comment I replied to: https://news.ycombinator.com/item?id=35270550

[lmm]

Where do you think invested cash goes if not the company bank account? When you invest in a company, they get some cash and you get a claim on the company. If they then spend all that cash on buying drug patents, marketing, filing registration statements etc., then your shares are no longer backed by cash. The cash has been spent!

[dataflow]

Er, I've been saying it does go into the company bank account (which you own a share of), unlike with Bitcoin. Please re-read my comments. You're turning what I said 180 degrees on its head.

[lmm]

> Er, I've been saying it does go into the company bank account (which you own a share of), unlike with Bitcoin.

Sure. But it can then be spent by the company, and that doesn't (necessarily) destroy the company's value. Valuation isn't about physical assets.

> Please re-read my comments.

I did, they said exactly what I thought they did. Maybe you should re-read mine, or write yours more clearly, or think through what you're saying a bit more.

[dataflow]

I will try to make this even more explicitly clear one last time, but this circling around is draining my energy too far to keep going after this last comment. I hope this helps.

> But it can then be spent by the company, and that doesn't (necessarily) destroy the company's value.

...as I've been saying too.

> Valuation isn't about physical assets.

You're unfortunately missing what I'm saying.

The valuation of a company is based on physical assets (and liabilities), which includes your investment itself. By which I mean: by investing, you earn a proportional legal right to the assets (yes, minus any liabilities; yes, this can change over time; and yes, this need not always be a strictly positive value) that the company has. All else being held equal, if the company acquires $1 million in its bank account, the legal value of your shares goes up or down proportionally to your shares. The fact that nonphysical things (like IP) can also influence the market price of a company's shares is completely beside this point.

If you want something simpler, consider the degenerate case of a company with a solo 100% share: if you own that 1 share - and the company has $1 million in its bank account - the market for the company's stock is completely irrelevant to your claim of that $1M. Even if nobody is willing to buy that stock from you, you are still a millionaire; you can liquidate (or is "dissolve" the word I want here?) the company and claim the $1M in the bank. Your investments aren't just imagination in your head; they are secured to something with "physical" value. (This is true even if "physical" is just "dollars in the bank's database." Yes, it's just a digital number, but it has "physical" value by the government's fiat - hence, fiat currency.) Similarly, if you and your partner each own a 50% share in that company and the company is immediately liquidated, you each have a right to the $500k in the bank (exactly the same amount as each other), regardless of what anyone may or may not have been interested in paying for either of your shares.

This is not the case for Bitcoin. Bitcoin doesn't have "assets" (let alone liabilities!) to swing your "share" price with. "Investing" in Bitcoin doesn't earn you a right to... anything, really. The price of Bitcoin is only a function of what people are willing to pay you for it. If everyone else on the planet sets their Bitcoins on fire (whatever that might mean), it doesn't matter if you'd invested a trillion dollars into Bitcoin: you still lose 100% of that "investment", because your Bitcoins do not ultimately reduce to physical ownership of anything. Because you had just sunk money into a vacuum, "unsecured" by anything with value that stands on its own.

There's something fundamentally different about Bitcoin than stocks here. This distinction is what I understand to be what we call the notion of a "security", and what makes Bitcoin not-a-security, but more like a currency. Which, to me, perfectly explains why the IRS calls it a virtual currency, and why the SEC says it's not a security.

This also explains why "pegging" a cryptocurrency (read: "securing it to another asset") would be such an important factor in determining whether it's a "security". Of course, this means the nature of the asset your cryptocurrency is pegged to (such as whether it's a security!) should also matter here, and so on.

[lmm]

> All else being held equal, if the company acquires $1 million in its bank account, the legal value of your shares goes up or down proportionally to your shares. The fact that nonphysical things (like IP) can also influence the market price of a company's shares is completely beside this point.

No, it's the whole point. Things that are nonphysical can have value. Value doesn't have to be based on physical assets.

> There's something fundamentally different about Bitcoin than stocks here. This distinction is what I understand to be what we call the notion of a "security", and what makes Bitcoin not-a-security, but more like a currency.

Plenty of things are securities without being stocks. You can securitize pretty much anything.

Bitcoins are not like stocks. I've never claimed they were.