The entire crypto ecosystem is a ponzi

Re:The entire crypto ecosystem is a ponzi by cm277 on Monday November 28, 2022 @02:08AM (#33770569)

I used to agree with you; but I think this line of thinking takes a (core) feature of money (trust in its value) and reduces the whole thing down to just it. Fiat money has another core feature in its definition: that you can pay taxes to a government using that currency. Similarly, equity in a company comes with dividends: a core cashflow that you can predict based on P&L. Trust in their current (and most importantly future) value, is a (big) aspect of it, but not the only one: there's actually a predictable "base" value that you can use to calculate a floor to that value. The future value is just the ceiling to that prediction.

Crypto is only trust. Without that social trust, there's no minimum value. That doesn't mean there is no value, just that the floor can go away, that the entire thing is much more volatile. So basically, gambling. This is not a value judgement btw, gambling and volatile assets can be fun and profitable; they are just not currencies.

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Re:The entire crypto ecosystem is a ponzi by monero-xmr on Monday November 28, 2022 @02:19AM (#33770631)

The counterpoint to the “fiat mindset” (not to criticize you, but how I categorize it) is gold. There is no reason why gold is valued so highly other than historical and traditional reasons - its industrial utility is far lower than its monetized value.

IMO Bitcoin is superior to gold in nearly every single aspect. The only thing it doesn’t have is 5000 years of human belief in its worth.

If you understand logically why gold in 2022 has a monetary premium above its industrial value, then you can logically reason about Bitcoin and its value.

If you accept that Bitcoin has long term utility and value, then it isn’t a stretch to start analyzing other coins on similar valuation heuristics.

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Re:The entire crypto ecosystem is a ponzi by cm277 on Monday November 28, 2022 @02:34AM (#33770722)

That's a good counter; but gold does have a minimum value separate from trust in its future value: it can be used for jewelry / metallurgical applications, etc. and it won't rust / oxidize. And gold is a lousy currency: risky, expensive to store, tied to natural resources, etc.; I guess just like BC :-)

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Re:The entire crypto ecosystem is a ponzi by monero-xmr on Monday November 28, 2022 @02:37AM (#33770753)

It has a minimal value but it’s far less than its monetary premium. If you are investing in gold (as many mainstream wealth managers and central banks do) then you aren’t assessing “what is the minimum my investment can fall to based on fundamental industrial utility?” The investment thesis for gold completely ignores any potential for demonetization or else the investment is suicidal.

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Re:The entire crypto ecosystem is a ponzi by cm277 on Monday November 28, 2022 @02:57AM (#33770886)

That's fair. But then your investment thesis is based on the value given to gold by large institutions that can/will create a price floor. Which yes, is absolutely based on trust-in-future-value, but in the case of gold that trust is widespread and tied to large, centralized financial institutions and thus regulations and eventually fiat (because in the end you will have to convert to fiat).

I can see that getting replicated for BC, but other crypto, not so much. A better, digital, asset than gold makes sense, but distributed, slow, state machines? Still don't get those...

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Re:The entire crypto ecosystem is a ponzi by monero-xmr on Monday November 28, 2022 @03:31AM (#33771117)

Despite my username I am not a maximalist on any technology. Ethereum is very interesting and there are a number of scaling solutions (referred to as “layer 2s” or L2s) that have the same guarantees as the main chain but are far cheaper and faster (see Optimism and Arbitrum).

In Bitcoin the lightning network is slowly but steadily making progress amongst the faithful. It is also a faster and cheaper network.

Monero is the currency I recommend heavily because it is privacy-by-default - anyone who uses Monero is not broadcasting their intentions. This is an extremely valuable aspect of financial freedom and it gives me long term faith in its utility.

The key thing to remember is that all value is subjective. Someone will pay infinite money for a glass of water when they are dying of thirst and no money when they are drowning.

If a large portion of society values digital assets, then they have value. There is really nothing more complex than this for anyone to understand.

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