[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?

[ryan_lane]

Because it also requires validating transactions. You're providing collateral to be trusted to perform a service, for which you're paid.

[fragmede]

It does? All I did was click a button on Coinbase, and I get like 5.1% APR.

(Or I did until the SEC said they weren't allowed to do that anymore because they didn't give me enough disclaimer that they might lose my money.)

[ryan_lane]

That's because they're running the validators, and they're sharing some of the gas fees with you. If you're getting a high APR it's because the protocol is extremely expensive for users. Imagine if your stock trades, purchases, or bank transfers cost 5% (which is a low estimate, because if you're getting 5.1%, then Coinbase is also taking a cut).

You're locking up your crypto for this for some period of time, which means you lose liquidity to get gains. During that period of time the coin can crash and you're out of that money.

For stocks, you don't need to lose liquidity to get dividends. For companies generating profit, they don't necessarily need to be parasitic to generate those profits. It's possible to generate profits while also providing value for users.

Take for instance Venmo and the ability to get funds from your wallet into your bank instantly. Venmo is taking risk by doing so, the banks are taking risk to do so. They charge you a fee for this risk. You want your money faster, and they want their risk covered. They're going to eat some amount of fraud by providing this service, but the cost of providing it should cover the fraud cost and offer a small profit. It's mutually beneficial and optional (regular bank transfers are slower, but free).

Lots of SaaS products are similar. They offer a product businesses need, at a lower cost than the businesses would have to pay to build/run it themselves.

Those are profitable things that are just services, like crypto, but businesses also build things that have physical value, like houses, undersea communication cables, etc.

If people stop trading crypto, all value is immediately gone.

[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.

[methodical]

Who in crypto is 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.

[fragmede]

I don't know what you do and don't know, and what misunderstandings you're operating under, and threaded forums really aren't set up for the kind of back and forth it would take to do a proper calibration so as to give an appropriate answer that is at the right level of explain-y, and not mansplain-y/condescending. But what the hell, I'm waiting on a build (rust).

Companies IPO and sell shares. The company gets paid by people who want to own shares. The company IPOs and sells 1000 shares at $50 each, gaining them $50k which they can then use to buy a new whatever. Then, in a market like NYSE, other people can buy and sell stock. If I think the stock is undervalued I offer to buy 1 from someone at $55. that person gives me 1 stock, I give them $55, netting them $5. The company is not involved in this transaction and does not get anything from that specific transaction.

Now that the price is at $55, the company could decide to sell additional stock, now at $55 instead of $50, but that's a separate event from the transaction that happened previously. So the company does benefit from the stock price being high, but not directly off each transaction.

I've omitted all the details, but I think that's enough to get the gist of it.

[kelnos]

When you go to your brokerage account and buy a share of Google, you aren't buying it from Google, you're buying it from some other random shareholder out there who wants to sell. Google does not see a cent of that money.

In general, the only times a company gets money when you buy shares are if you participate in an IPO, or if an already-public company decides to offer more shares for sale in order to raise some money, and you buy some of those shares. (There are exceptions, but retail investors like you and me usually don't get invited to participate in those deals, though.) The vast majority of shares that trade hands on the markets every day are not owned by the company whose name is next to the ticker symbol.

[mlrtime]

Read up on Capital Markets (Stocks / Bonds). Ways for companies to raise money.

HN/VC is NOT the traditional way for companies to raise money.

Buying outside a IPO is called the secondary market. If nobody could buy a share in the secondary market, the stock is almost worthless. Just like your private company with one round of funding and shares. If you can't sell them, they aren't worth much.