Re:BitTorrent inventor announces eco-friendly Bitcoin compet...
by wpietri on Wednesday November 08, 2017 @07:07PM
(#15658463)
GDP is (hopefully) creation of value per unit time, so as others point out, comparing it with the notional value of a currency at a point in time is not sensible. It's like comparing watts versus KWh, or your annual income with your bank balance. But there's a bigger mistake here.
The point of the economy is to create value for humans. There is plenty of non-value-creating activity that can be denominated in dollar terms, but that doesn't make it actually valuable. For example, this season's hurricanes will cause something like $200bn in economic activity. But that doesn't mean we should have more hurricanes. [1] People bet at least tens of billions annually on sports, but getting people to double or triple that doesn't actually make anybody richer. Similarly, Bitcoin is only a true economic positive to the extent that it actually creates new value for humans.
If Bill Gates went on a Bitcoin buying spree, he could easily drive the nominal market cap way up. But we'd have no more economic value in the world. If Bitcoin enthusiasts got bored and turned off all the servers, we'd have little less economic value in the world. That's because most Bitcoin use is not economically productive. Most of it is, like gambling, just moving existing economic value around between people.
I go on at length like this because it's vital that startup people understand the difference between creating value and just shuffling who controls existing value. Only the former is sustainable.
The point of the economy is to create value for humans. There is plenty of non-value-creating activity that can be denominated in dollar terms, but that doesn't make it actually valuable. For example, this season's hurricanes will cause something like $200bn in economic activity. But that doesn't mean we should have more hurricanes. [1] People bet at least tens of billions annually on sports, but getting people to double or triple that doesn't actually make anybody richer. Similarly, Bitcoin is only a true economic positive to the extent that it actually creates new value for humans.
If Bill Gates went on a Bitcoin buying spree, he could easily drive the nominal market cap way up. But we'd have no more economic value in the world. If Bitcoin enthusiasts got bored and turned off all the servers, we'd have little less economic value in the world. That's because most Bitcoin use is not economically productive. Most of it is, like gambling, just moving existing economic value around between people.
I go on at length like this because it's vital that startup people understand the difference between creating value and just shuffling who controls existing value. Only the former is sustainable.
[1] To think otherwise is the broken window fallacy: https://en.wikipedia.org/wiki/Parable_of_the_broken_window