What matters is the order book. How many bid/asks are there on it. The contracts and debts outstanding in it. That's all there is. Everything else. Store of value. Whatever. Doesn't matter. Cryptocurrency is people persuading each other to do things in an organized fashion, believing there will be reciprocation at some later date.
I wish we had someone around who really understood currency at a deep level like F.A Hayek to write about crypto economics in a painfully cerebral careful way that avoids all handwaving. There is something very deep going on here that is entirely new or very old and never quite clearly elucidated.
Sounds like it has parallels to society in general. It is just that society with it’s deeds, titles, government issued promises to pay etc. has been around for a very long time, so has proven itself. But it is all based on faith.
For example borrow 1M tokens in exchange for a piece if paper that says you own some land, with confidence that you can earn more tokens (or get someone to rent the land for tokens) and that the legal system will give you continued access to that land and so on.
If your implication is that the only thing backing crypto currencies is an expectation of reciprocation then you are mistaken. The qualities you want to hand waive away, and most importantly (though often trivialized), is the inability to roll back the chain which is a function of "consensus power." Consensus power simply quantifies the cost of rolling back x blocks. Bitcoin currently has the highest cost to roll back blocks and therefore the most assurance.
The history of transactions has no importance to the value currency. A dollar that was stolen is just as valuable as any other because they are bearer bonds (like most currencies).
The whole Immutable thing is just translating the concept of a bearer bond to digital space, nothing to do with its intrinsic value.
People are willing to trade their labour and opportunity cost for entries on this ledger.
This is false. Ethereum has higher block rewards (in $) for over a year now. Bitcoin is the second biggest PoW network by mining expenditure.
Ethereum ($38,451,803.7)
Bitcoin ($34,875,489.84)
Before EIP 1559 fees were much more important. Ethereum has higher rewards since about Q3 2020
edit: even worse, f2pool just multiplies the base reward (2 eth) - ignoring uncle rewards and fees, by the wrong number of blocks (based on 15 sec block time - it's actually 13.2s). Trash calculation.
This is, however, true regardless. The value of cryptocurrencies are measured in USD, and it is expectations of this future valuation that backs up the current price.
The only way to make it more certain than expectations, would be by some sort of government decree.
Bitcoin was rolled back at the cost of sending out emails several times.
That's the central insight of https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years . If you want a good picture of how money works, it's essential to look beyond the Austrians.
I mean, nearly nothing is priced in units of crypto and almost no GDP transactions pass through it…
It also shows that the number of tokens isn't limited. It can immediately be doubled with a fork, infinitely.
you just described options trading
The incentives are even worse then that.
Participants who aren't active crooks are actively incentivized to not look for vulnerabilities, because the easiest way to make money in this space, but to sell to a bigger fool. The quality of the underlying 'investment' doesn't matter.
Here's an article from today about a million dollar bounty paid out:
https://medium.com/immunefi/notional-double-counting-free-co...
Here's another whitehat save in the last two weeks of 480 million dollars:
https://media.dedaub.com/phantom-functions-and-the-billion-d...
All that money could have gone towards world hunger and climate change. Would that have been a better use of it for marginalized people?
It’s like saying “think of all the ways we could have made the world better if people didn’t invest in Apple.”
These days are the upfront prices we pay for a much bigger financial revolution that would be good for humanity in the long run.
Large projects tend to be pretty good about paying out as promised, and not in weird tokens.
After years of iteration, Solidity is now the safest smart contract language in existence. All common pitfalls are either well known or have been fixed. There are code analyzers. The problem with EVM isn't security, but the fact its word is 32 byte long which limits computational performance - but not that much really.
The issue of paradigm is just how poorly suited EVM is as a smart contract language. It is too hard to manage the complexity of bytecode with memory managed on chain and in contract code. When small errors have huge consequences and there are no second chances, EVM is and should be pointed out to be one of the worst standards Ethereum has brought to crypto.
When it comes to high stakes programming and especially in a space where new programs are written quickly and often, its almost objectively obvious that functional styles with more guard rails is the better choice. Nothing running on chain needs an infinite loop or many other fancy features one typically expects from a programming language - restrictions and readability in smart contract code are more important to computational chains than seat-belts are to automobiles, but the network effect is slowing the space down.
Edit: Some people have pointed out this was an issue with Solana contracts, which run on Rust - so I was wrong to use this as an example for half of my point, but still believe the point stands. Even Rust IMO is not tied down enough for contract code, but the fact that it can happen on Rust which is loads better then EVM for bug catching I think proves the point a bit more if anything.