[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.

[fragmede]

Though, my shares of First Republic Bank aren't worth anything anymore, so it seems there's not much underlying value to those stock things either.

[fragmede]

Food for thought. Thanks!