I agree that currently it's purely based on speculative supply and demand. But I disagree that's what cryptocurrency is.
Bitcoin became popular because people actually used it to buy and sell stuff in the early days. And its main value was that it could provide very low transaction fee. Nowadays that's become impossible because the BTC transaction fee has risen to a ridiculous state.
For something to function as currency it needs fungibility. That used to exist in BTC but it's gone now. They're trying to come up with a solution with lightning network, sidechains, etc. But in the meantime all the vendors who used to take payments in Bitcoin have all pulled off because of the transaction fee. And we see all the other cryptocurrencies have risen up because BTC couldn't provide the value it used to provide. To be honest it's been pathetic watching the "civil war" between Bitcoin people because they've been deluded enough to believe they've already won that they were doing petty in-fighting over ego. This crash should be a wakeup call for those complacent devs to realize there's still long way to go.
So you're right that currently BTC deserves to drop all the way down, because it doesn't deserve to be a currency. Which is why I'm glad this happened. Because I was getting sick of all those people who've been parroting the "Bitcoin is fine as just a store of value" narrative. It's not, and this crash is the proof. All those people who thought they were "storing value" when there was no fungibility deserve to learn it the hard way.
Ardor I think is going to replace a lot of the current coins out there... it solves a lot of the technical issues, has child chains a much faster and more secure network, etc...
Zero sum. Also, stocks have an underlying asset. There really is none with cryptos.
Think of it as a poker game where each player hands 10$ to the dealer to sit at the table. Now, if the players are exchanging chips individual players may end up ahead, but on average at the end of the night everyone is down 10$.
Transaction fees are very much playing a deal to sit at the table. Miners do spend money to get tokens, but nobody in the game receives that money it's just gone and miners need someone else's money to get paid.
[/thread]. That's really what it is, but instead of casino, call it a stock market. With that one there's a lot of regulation in place - including new European legislation, MiFID II (http://europa.eu/rapid/press-release_MEMO-14-305_en.htm), which in part is aimed at protecting clueless investors from themselves.
The crypto market doesn't have this, so a lot of people jump on this, consider themselves subject matter experts after a few days or weeks of reading up on stuff and following relevant subreddits, and getting swept up in the hypes (even if they don't think they are. I don't think I am. wait.)
It's the same with stock market trading, you don't need to understand how the company you're investing in works, the only thing that really matters is how much other people are interested in the company (or crypto).
The value of cryptocurrencies is not based on technology or how it works, it's based on supply and demand, which in turn is driven by trust and hype. Not unlike the stock market in a less regulated age.