Bitcoin, Cryptocurrency, and the Future of Global Finance

#576
#576
VolStrom said:
There is a huge difference between Amazon and the crypto currencies, one adds value and the other is worthless.
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Of course there's a difference. Haven't said there isnt. Have said and continue to say you went against conventional wisdom to invest in Amazon. Crypto speculators are going against conventional wisdom now. In that way, your behavior then and theirs now are the same.
 
#578
#578
Amazon simply did not have earnings. Even a couple of decades in. It’s a bad analogy to compare it with crypto. Sales were growing and investors understand the concept of plowing potential profits back into growing the business. Actual distribution centers and other infrastructure were visible. AWS was building a known presence.

Crypto is more like FOREX. But at least with the FX currencies there are actual country entities with understandable economic measures to be analyzed to determine actual, debatable values.

I still have not seen a valid set of criteria to justify any valuation of any CC. Right now it is pure speculation. There need to be auditable metrics. It’s not even known where most of them came from. Where would auditors even go to verify the claims of transaction volume or caps on the issuance? Who can be held accountable? The values to me very much resemble Ponzi. New participants are required to enrich the earlier entrants.
 
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#579
#579
Thunder Good-Oil said:
Amazon simply did not have earnings. Even a couple of decades in. It’s a bad analogy to compare it with crypto. Sales were growing and investors understand the concept of plowing potential profits back into growing the business. Actual distribution centers and other infrastructure were visible. AWS was building a known presence.

Crypto is more like FOREX. But at least with the FX currencies there are actual country entities with understandable economic measures to be analyzed to determine actual, debatable values.

I still have not seen a valid set of criteria to justify any valuation of any CC. Right now it is pure speculation. There need to be auditable metrics. It’s not even known where most of them came from. Where would auditors even go to verify the claims of transaction volume or caps on the issuance? Who can be held accountable? The values to me very much resemble Ponzi. New participants are required to enrich the earlier entrants.
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Oof. I don't know why it is so difficult to stomach the fact that many traditional stock valuation experts cautioned against Amazon the same way some caution against crypto.
I frankly don't care what someone does with their money.
 
#580
#580
n_huffhines said:
All don't have to present value for crypto to have value. Imagine if you held the status quo to these standards? Do all .com businesses have to show long term value to prove the value of .com?
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People hold the .com to financial statements, the logical need or desire for the product or service they offer, etc.

Cryptos probably arent understood by 99.5% of people. It makes sense that many would see no desire to invest in them and see them as nothing more than a psuedo pyramid product or some other type of scam.
 
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#581
#581
McDad said:
Oof. I don't know why it is so difficult to stomach the fact that many traditional stock valuation experts cautioned against Amazon the same way some caution against crypto.
I frankly don't care what someone does with their money.
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The Price to Sales ratio was always a valid valuation method. As was an audited balance sheet and cash flow statement. Stocks with negative earnings have been routinely purchased for centuries.
 
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#582
#582
allvol123 said:
People hold the .com to financial statements, the logical need or desire for the product or service they offer, etc.
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People are basing crypto investments on numbers and perceived value, too. It's just a whole new protocol. Look at ETH. So much business is happening there and all these applications are being built on top of it. The amount of resources being devoted to this protocol are a strong indication of future value. I believe Amazon was doing more business than anyone and not showing profit but their stock still rose substantially...because these new protocols buck traditional ways of viewing value. Look at FB. The valuations early on were through the roof and they didn't even have a clear idea of how they were going to monetize.

Cryptos probably arent understood by 99.5% of people. It makes sense that many would see no desire to invest in them and see them as nothing more than a psuedo pyramid product or some other type of scam.
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I'm not sure what your point is. Who cares what people who don't understand it think? Aren't those the people who should be ignored?
 
#583
#583
n_huffhines said:
People are basing crypto investments on numbers and perceived value, too. It's just a whole new protocol. Look at ETH. So much business is happening there and all these applications are being built on top of it. The amount of resources being devoted to this protocol are a strong indication of future value. I believe Amazon was doing more business than anyone and not showing profit but their stock still rose substantially...because these new protocols buck traditional ways of viewing value. Look at FB. The valuations early on were through the roof and they didn't even have a clear idea of how they were going to monetize.



I'm not sure what your point is. Who cares what people who don't understand it think? Aren't those the people who should be ignored?
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Not so sure about the very first sentence. I see a lot of people putting money into crypto with no knowledge and just some hope for some triple digit growth.
 
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#585
#585
Copy/pasted from a FB friend in finance

I've been having some conversations lately comparing Bitcoin (BTC) to Ethereum (ETH). Here is my take (TLDRs at the bottom of each section):

Key differences: 1. Monetary Policy, 2. Smart contracts, 3. Proof of Work vs Proof of Stake, 4. Scaling

Monetary Policy:

Bitcoin has a capped supply at 21 million bitcoins. Solid monetary policy for what BTC is seeking to be - an inflation resistant store of value comparable to gold.

Ethereum (starting in July) has a supply that is stable or declining relative to how much activity is happening on ETH. High level, transaction fees on ETH are currently paid to miners, but as of July a portion of transaction fees will go to miners but much of it will be "burned".

This meets the same store of value need that BTC does, only better in my opinion.

TLDR; BTC is a good inflation resistant store of value. ETH is a better inflation resistant store of value.

Smart contracts:

BTC doesn't have them, ETH does. Support of smart contracts means that Ethereum is a platform for entire industries to be built on top of it. Decentralized finance (DeFi) is the biggest so far. There are ~$70B locked up in DeFi protocols right now, and increasing ~40% per month. This is solving real world needs and will be an incredible force for good (especially bringing banking/financial services to the poorest people in the world, but also bringing better banking to all of us).

More industries will be built on ETH; The NFT revolution is another emerging industry in the early stages. There will be more. Both DeFi and NFTs are serving real human needs in a really powerful way.

So BTC is an inflation resistant asset. ETH is an inflation resistant asset + platform. And the two synergize. The more ETH is used as a platform, the more value accrues to the asset.

TLDR; ETH is a platform for additional applications. BTC isn't.

Proof of Work vs Proof of Stake:

Currently both use proof of work. ETH will finish their switch to proof of stake Q4 2021 or Q1 2022. Proof of stake is more secure (though proof of work is very very secure too), and requires 99.89% less electricity, less use of computing hardware, and improves the functionality of the blockchain in several other ways.

TLDR; BTC is secure. ETH is more secure and more resource efficient.

Scaling:

BTC is intentionally not scalable. They seek to remain simple, secure and unchanged at the cost of scalability. ETH is in the process of scaling in two key ways: Rollups and Sharding. Rollups come this year, sharding over the next 2-3. Between the two, ETH will be able 10,000x - 100,000x more scalable than BTC. This scaling will further empower the applications built on top of ETH to provide high quality services at very low cost to people across the world.

TLDR; BTC is not scalable and seeks to remain so, ETH is more scalable and will soon become much much more scalable.

Conclusion:

Both BTC and ETH are good and both are improving the world. But I think ETH is an order of magnitude more important and transformative than BTC.

What about Doge? I think it's a bet on social media and the populist movement. But it doesn't really have anything to do with crypto. I think Doge has more to do with GME than it does to BTC and ETH.
 
#587
#587
n_huffhines said:
People are basing crypto investments on numbers and perceived value, too. It's just a whole new protocol. Look at ETH. So much business is happening there and all these applications are being built on top of it. The amount of resources being devoted to this protocol are a strong indication of future value. I believe Amazon was doing more business than anyone and not showing profit but their stock still rose substantially...because these new protocols buck traditional ways of viewing value. Look at FB. The valuations early on were through the roof and they didn't even have a clear idea of how they were going to monetize.



I'm not sure what your point is. Who cares what people who don't understand it think? Aren't those the people who should be ignored?
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What is the value of the “amount of resources being devoted to this protocol”? Nobody is saying that a handful of the CCs have zero value or that the concept goes away. The issue is what is a reasonable valuation for the handful of the thousands of currencies that will survive? There are picks and shovels beneficiaries in exchanges, chip makers, and energy producers. Establishing a way to define value for the currencies has not been established… the value is being driven by highly emotional and generally unsophisticated newby speculators. It won’t shock me if 98% of the CCs collapse to zero value and a handful of survivors fall by 90%.
 
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#588
#588
n_huffhines said:
People do this with .com businesses too. Again, levy your critique against the status quo and see if it sticks.
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Dot coms we’re still audited and regulated as publicly traded securities. Eventually almost every single one collapsed. The time line will be longer than dot coms minus the audits and regulation.

Right now emotion and greed is fueling the speculative component. There’s a very good chance that it will not end well when it unwinds.
 
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#590
#590
n_huffhines said:
People do this with .com businesses too. Again, levy your critique against the status quo and see if it sticks.
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With a better understanding. The typical layperson understands Apple and Amazon and how they make money.

Almost none of these same people could give you a 2 sentence description on crypto. I talk to people everyday that are putting money into it and know nothing about it. The same people going to get gas now because they think it is all about to be gone.
 
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#592
#592
Thunder Good-Oil said:
The values to me very much resemble Ponzi. New participants are required to enrich the earlier entrants.
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You just phrased it better than I could. Go to the 55:00 mark of the video below and that is essentially the vibe I got when they described soldiers holding the line. They need to hold the line in order to maintain the value of the crypto.

They even commented a little later (1 hour mark) when talking about one of the BTC big players speaking openly to them about flaws in BTC. This insider was fully aware of the flaws and seemed to think that ETH or some other crypto could replace it, but felt that in the best interest of maintaining BTC value, he didn't want to broadcast that info too much because it would be detrimental. And these guys justified amongst themselves the idea of hiding flaws in BTC for the sake of propping it up. Fascinating stuff.

n_huffhines said:
@Rasputin_Vol you'd probably enjoy this discussion. It's the creator of ETH and he covers the broad concepts of legitimacy by brute force, legitimacy by fairness, by process, by performance, etc. and ties those ideas into government and crypto. It's pretty cool.

Click to expand...
 
#593
#593
Rasputin_Vol said:
You just phrased it better than I could. Go to the 55:00 mark of the video below and that is essentially the vibe I got when they described soldiers holding the line. They need to hold the line in order to maintain the value of the crypto.

They even commented a little later (1 hour mark) when talking about one of the BTC big players speaking openly to them about flaws in BTC. This insider was fully aware of the flaws and seemed to think that ETH or some other crypto could replace it, but felt that in the best interest of maintaining BTC value, he didn't want to broadcast that info too much because it would be detrimental. And these guys justified amongst themselves the idea of hiding flaws in BTC for the sake of propping it up. Fascinating stuff.
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Imagine Apple finding a flaw in Apple products and not telling us and some stockholders also discovering this flaw but not telling us for the sake of the stock.

Part of what makes any business entity or organization work is the perception that it has legitimacy. That is the parallel. ETH blew up, not because it didn't have flaws, but because of the perception that it has legitimacy. There are valid reasons for legitimacy and not so valid reasons for perceived legitimacy, but legitimacy is a necessary component.
 
#597
#597
In 2017 right before the crypto drop, BTC climbed, then ETH climbed, then all the little guys climbed, then everything fell, with ETH resisting the fall the most. IDK if history is repeating itself, but some people believe that. If you don't have diamond hands, now might be the time to sell. I got the diamond hands.
 
#599
#599
I didn't understand NFT's beyond just their value as collectibles. I asked my buddy and he gave me a pretty good explanation:

NFTs are just non-fungible tokens built on top of Ethereum that are single unique tokens representing single unique assets

Right now the most positive thing about NFTs is that its better for artists/musicians. Since you can build in a royalty for the creator in the event of a resell, you solve the problem of "I sold all my art for cheap before I was famous, then they sell for $100M and I get none of that"

Two examples of valuable future applications of NFTs:

1. Tickets to venues. If the NBA starts selling tickets through NFTs, they can stop worrying about scalpers. They can just build in a "if you resell this ticket, we get 20% of the resell price". And they'd be easier to manage in other ways too (preventing duplicates/counterfeits)

2. Tokenizing the title to you home - If you have an NFT representing ownership in your home, you could use DeFi lending protocols to borrow against the value of your home without ever needing to set foot in a bank.
 
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#600
#600
n_huffhines said:
Two examples of valuable future applications of NFTs:

1. Tickets to venues. If the NBA starts selling tickets through NFTs, they can stop worrying about scalpers. They can just build in a "if you resell this ticket, we get 20% of the resell price". And they'd be easier to manage in other ways too (preventing duplicates/counterfeits)

2. Tokenizing the title to you home - If you have an NFT representing ownership in your home, you could use DeFi lending protocols to borrow against the value of your home without ever needing to set foot in a bank.
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Now see, this is where I can see the value in using block chain technology. That is very easy for me to wrap my head around.
 
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