[CivBase]

Surely the better takeaway is to just not bet on crypto in general? It's supposed to act like a currency, not a stock. So long as people keep feeding into these pump-and-dump schemes they'll keep happening.

Money doesn't come from nowhere. For every dollar you make on crypto, somone loses a dollar. All these BS coins do is shuffle wealth from the unlucky gamblers to the lucky ones. Go spend your money at a casino instead.

[fragmede]

> For every dollar you make on crypto, somone loses a dollar.

If that's not true of the stock market, why would that be true of crypto?

[CivBase]

This is oversimplifying, but stocks are essentially purchasing a stake in ownership of the company. The company uses that money to advance its mission - ideally generating more profits which are shared with the stockholders (dividends). It's that stake in ownership and expected dividends that give stocks inherent value.

There is no company behind crypto currencies that holders get ownership of. There is no product or service to drive profits. There are no dividends, voting power, or anything that gives inherent value to the coins. It's all pure speculation. Just money getting shifted around among the holders - with exchanges taking a cut off the top of each transaction.

[fragmede]

I'm sorry, but what am going to do with my Class C shares of Google which have no voting rights? They also haven't paid dividends. My buying of them didn't give Google any money, either. My infinitesimal ownership in Google doesn't get anything other than it's a number in a database somewhere that hopefully goes up. There's underlying assets there, sure, but as we've seen with GME, TSLA, and now NVDA, it's all just vibes.

In this case though, FTX had their own token FTT that gave people that owned it voting rights in FTX and "staking rewards" aka dividends. It's not worth anything today due to the fraud that SBF perpetrated, but that sure smells a awful lot like a stock to me.

[hgomersall]

Right. There seems to be a real aversion to accepting that trading shares is really just middle class gambling.

[ryan_lane]

Long-term investors are buying more stocks at a lower price, with the idea that at some point the company may eventually pay dividends that justify the price of the stock, at which point they get more share of the dividend profits. Folks who purchase these stocks after this point would base the value on the value of the dividends.

Day traders are gamblers.

Cryptocurrencies will _never_ pay dividends, because they are based purely on speculation. These things are absolutely not the same. Cryptocurrencies only provide gambling.

[fragmede]

In what way is staking not basically paying dividends?

[methodical]

Stocks are not completely nondeterministic games of chance, which is why most people who hold properly diversified stock portfolios have seen long-term growth instead of loss. That's probably why people don't call it gambling.

[Zpalmtree]

Crypto is not a completely nondeterministic game of chance either. There are people in crypto who are consistently profitable.

[kelnos]

> Stocks are not completely nondeterministic games of chance

That's a bit of a straw man, as no one claimed they are. "Gambling" is often not a nondeterministic game of chance, either. For example, when I go to a casino and play poker, I'm still gambling, even though there's plenty of determinism and strategy to go along with the elements of chance.

[Fargren]

>>My buying of them didn't give Google any money, either.

You buying the stock raised the price of the stock. Google uses the stock as compensation. The higher the price, the easier they can hire, and the less cash they need to offer to employees while still being attractive.

[gambiting]

>>My buying of them didn't give Google any money, either.

really? how can that be true?

[fragmede]

Yes. Read up on how it all works, or ask an LLM about it.

[gambiting]

...is explaining it here too much of an effort, or what? Like I don't mean to be rude, but that really doesn't strike me as an unreasonable question to ask.

[hcks]

Why would someone sell the share for less than this "inherent" value then? Or conversely why would some buy for more than that?

[jjav]

> Why would someone sell the share for less than this "inherent" value then?

Because the inherent value includes things we know about such as the assets the company has, but it also includes the speculative future earnings which we can't be sure about.

[kelnos]

Because people don't always agree on what that value is. Information is never perfect.

And sometimes some people just need the cash, and are willing to sell at a discount.

[gambiting]

They don't though? Share buy/sale price is directly correlated to the value of the company.

[shinryuu]

Which changes depending on how many buy the stocks. Was gamestop really worth billions at the top of the mania?

[acdha]

The market cap of its stock might but if you looked at the financial press during that episode it was full of people pointing out that there was no change in the fundamental value of the company. That’s because real businesses have things like sales volume, profit margins, property rights, etc. which aren’t entirely arbitrary and dampen the swings considerably. That’s not perfect or immune to abuse as Boeing shareholders are no doubt aware but it’s very different from something which has no grounding beyond momentary social consensus.

[kelnos]

Likely not, but it's a little weird to point to outliers as counterexamples to how things generally work.

[kelnos]

> This is oversimplifying

Yes, and in doing so you've managed to blissfully ignore all the speculation and outright gambling that goes on in the stock market.

I'm not a crypto defender; I think it's mostly useless and a waste of people's time and money. But let's not paint a big rosy picture of the rest of our financial system. That's just not where the truth lies.

[CivBase]

I did no such thing. I only answered the question I was asked. For some reason a bunch of people interpreted that as a defense of short-term stock trading.

[skaag]

Publicly traded companies make money by creating value and selling products or services. At least, the good companies that actually sell something (you'll find a bunch of them don't do crap or are just outright scams).

Take Apple or Coca Cola for example: They have well established lines of products and lines of business. You know people will keep buying iPhones and MacBooks and AirPods and whatever else Apple makes. You know people will keep buying Coca Cola drinks forever and ever.

The popular blockchains do not create any intrinsic value (Looking at Bitcoin and Ethereum). They are heavy and cumbersome and can't handle planetary scale. Some blockchain solutions promise secure, fee-less transfers (for example IOTA and NANO). In my opinion, those blockchains at least partially implement the true promise of Crypto that, if successful, would be able to replace the existing financial system which is extremely wasteful.

Just think about how much money it costs to implement FIAT: You have to print it, which is very expensive (both notes and coins). You then have to move it around using heavy armored vehicles. You have to secure it in extremely expensive vaults. You then need to keep securing it across the entire vertical: Every business that takes cash has to deal with theft, securing the cash, fake notes, etc. Even credit cards are very expensive to maintain. Cards have to be printed & mailed out all the time. It's all plastic, and it all ends up in landfills. The inks are toxic, as are the metals in the chips. The equipment required to process cards is expensive, breaks and needs to be replaced, is annoying, slow, ridden with fraud and theft and chargebacks and a host of other issues.

I implemented EMV and 3D-Secure for card processing, a few years ago. I also implemented cash processing equipment. It ALL sucks. You have no idea how Crypto is a breath of fresh air compared to those crappy standards and mechanisms that take an insane amount of time and money and bureaucracy to implement and maintain.

A really good blockchain that does secure, fee-less transactions in less than a second and can handle planetary scale, now that is the holy grail! You don't need equipment, you already have a phone. The merchants get their money instantly, and they are done, that's it. They have their money. Done. They need to pay their vendors? They pay them, done! They could even instantly pay their vendors at the moment of sale. Can you imagine how revolutionary that is? how this completely changes the game for commerce?

The entire crypto world has been held back by greedy assholes, tens of thousands of scammers (how many ICOs and rug pulls have screwed countless users?!), governments, government bodies and banks, and unregulated companies that behave irresponsibly with customer funds (for example FTX and BlockFi). Leadership that lacks vision and initiative (Any 1st world country that accepts crypto and leads with it, would make its citizens rich, by definition, on a planetary scale).

[p-e-w]

> Publicly traded companies make money by creating value and selling products or services.

But their stock price is (mostly) independent of that. It is indeed true that at least with short-term trading, your gain is someone's loss, and vice versa. There is a difference between cryptocurrency and companies, but there is little difference between trading in cryptocurrency, and trading in traditional company stocks.

[fragmede]

Absolutely totally utterly fee-less is unrealistic. Operating the network costs something. Visa/MC get to take their cut, why should a replacement system be run as a charity? that's not sustainable.

What's your opinion of Solana?

[B56b]

You're basically just describing fee-less digital currency. The problem is that achieving the fee-less part by using a blockchain makes some extremely undesirable tradeoffs. To name a few:

  -Money laundering becomes impossible to prevent when no entity has control over identity verification of the users. 
  
  -All transactions are public, so normal users who won't be trying to lie about their identity lose all financial privacy.
  
  -Undoing transactions due to fraud or simple error becomes extremely cumbersome and ultimately requires re-centralization of authority that crypto supposedly was created to avoid.

Digital fiat transactions operating in the current financial system are the best of all worlds, and unsurprisingly they are already extremely common.

[Zpalmtree]

Crypto is one of the only markets where someone with virtually zero investment can become very rich. It's not easy, but smart traders can make a lot of money. You are not doing that at the casino.

[CivBase]

Same can be said about the lottery. I don't recommend that as an investment either.

[immibis]

Crypto is supposed to act like a stock. Very few people actually want decentralized digital dollars. Compared to the number of people who want decentralized digital get rich quick schemes.

[skaag]

Except greed...