Twitter is a counter example for your tech stock scenario. However, you could argue that its hyper-inflated Tesla stock trading for hyper-inflated Twitter stock, much like a BTC millionare, trading BTC for ETH.

Right, if a company finds a buyer, then its market cap is suddenly realized. The liquidity discount is meant to reflect the uncertainty of that given no current bidder for all the stock, and the discount is lower for public companies with demonstrated interest than for private companies. And you can see the downward pressure that Musk’s selling Tesla shares has had on its price.

Indeed. It's no different than if I kept a hand written ledger in a paper notebook and sold entries onto that ledger for USD. In this case, people would see its a piece of paper and scoff at the idea that having their name written onto this paper is worth any money, even if someone else paid money to put their name on the ledger, but doing the exact same thing with cryptocurrencies fools people because the fake spot price and fake market cap is broadcast across the internet as if it were real, obscuring the fact that each of these coins is just the digital version of someone's personal notebook.

There are a lot of people willing to lend you money on the back of less-liquid-than-cash assets, though.

It may not be "real wealth" but it certainly is spending power and psychological cushion, which means different spending choices, which means inflationary pressure.

I had a lot of coworkers who listed crypto holdings on their mortgage application in the past few years. They wouldn't have been bidding as high if the perceived value of those wasn't there.

Yeah, when money's cheap and easy, banks make bad loans. Don't depend on the ability to get asset-backed loans to get you through a downturn, though, banks tend to get tightfisted real fast.

The described foobar coin was illiquid and couldn't be sold. But that's not true for BTC, ETH, and even a lot of the shitcoins that had some decent volume om multiple exchanges.

So in that sense, it _was_ wealth for the holders.

This is precisely how I explained NFTs to my "How can NFTs possibly be bad?" friend.

- You start the day with $200,000. You create an NFT and sell it to yourself for $200,000.

- Now you have $200,000 and a $200,000 NFT, meaning you've doubled your wealth to $400,000.

- If you can convince someone to buy that arbitrary NFT at 95% discount, you end up having $210,000 in cash by the EOD.

> You create an NFT and sell it to yourself for $200,000. > Now you have $200,000 and a $200,000 NFT

But you now also have a liability of $200,000. Your total asset is still $200,000 , not $400,000.

> If you can convince someone to buy that arbitrary NFT at 95% discount

so you just sold the NFT for $10,000. If somebody else got tricked into thinking they got a 95% discount - that's on them. A fashion store often marks up their clothing by 100%, and have "sales" of 50%!

>But you now also have a liability of $200,000. Your total asset is still $200,000 , not $400,000.

Assets are not liabilities, so you'll need to explain why you think it is a liability.

Fashion brands and their physical goods are definitely not the same as NFTs, insomuch as they at least have intrinsic value. NFTs only intrinsic value is they good for ripping off greater fools.

> There would be a buyer willing to absorb all of it at some level, but it's likely at a level far lower than the current market cap.

For crypto, no one would want to buy the entirety of bitcoin, because it basically has no value if it isn't traded, so it's effectively worth $0 if someone owns all of it.

For companies, this isn't necessarily true. When acquisitions happen, the current market cap is usually the floor, not the ceiling. I agree with your overall point though.