Thank you for your intention of giving back to me, but, unfortunately, you brought nothing to give. In order to talk about something and pretend to be an expert, it is not enough to "try it" and "do it", or "read about it online", you also need to understand why it works or does not work and what consequence it can have based on scientific models, and not just on past anecdotal evidence and charts. I am sorry, but without proper Economics background, you simply are not qualified to talk about it. If you want to be engaged in proper discussion based on well-established and proven Economics models - I am happy to do it. I am not sure how old are you, but here is a suggestion from from a genX-er (and almost gen Y-er) to whomever you are - go back to school.
Dogecoin
- Thread starter Phil C. McNasty
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Since weed became legal and I can use my credit card, I stopped using Bitcoin.
I have started to mine Chia, I only did it because I have old hard drives and SSDs that I no longer need and want to ring the last drip of life out of them before I throw them away. The concept of Chia is stupid, but IMHO less stupid than other cryptos because of the low energy use. If I amass a lot Chia, I might use that money to pay for a hitman or buy some rocket launchers or pay for the overthrow of some government, whatever is illegal and fun.
I have started to mine Chia, I only did it because I have old hard drives and SSDs that I no longer need and want to ring the last drip of life out of them before I throw them away. The concept of Chia is stupid, but IMHO less stupid than other cryptos because of the low energy use. If I amass a lot Chia, I might use that money to pay for a hitman or buy some rocket launchers or pay for the overthrow of some government, whatever is illegal and fun.
You are missing the core point.
Its utility isn't covered in a 20 year old textbook. Whatever traditional models you are used to are about to change. Did you models predict an online book seller would become Amazon? A video Delivery service NetFlix? A student social site become FaceBook?
Did they predict the rise of Blockchain and Crypto? It isn't up to business to decide the direction of tech, but to adapt to it. Bankers know even less than I do. How the hell can they be qualified to predict and run it?
Consumers want fast, cheap, accessable. Banks are about to get the same treatment that Blockbuster did.
Well, I rest my point. You basically have no idea what Macroeconomics is and what type of models it uses. And, yes, models do take into account all the technological advances. Please read basic macro and microeconomics textbook before discussing the costs and benefits of decentralised product-based currency (and the fact that it is crypto currency is not that important). As I said, crypto (modern way to combining gold coins with non-physical storage) is good for countries that face hyperinflation (if the government is not willing to set a credible fixed interest rate), countries with high crime rate and where citizens do not trust their government (so, cannot open dollar-based accounts, cannot store paper dollar bills at home, and do not believe the government will not run its currency in hyperinflation mode) and for illegal transactions. For everything else, there is a Mastercard
. Transaction costs with electronic payments in fiat currency are very small (and zero for most consumers). Credit and debit cards are just for convenience - you can pay with INTERAC if you want to (much more ways to pay and get paid for free in the U.S.). There are lots of private banks and credit unions competing. Banks are in business of borrowing and landing, you will need them exactly the same for getting mortgage in dollars or bitcoins. So, as I said before, crypto currencies are for the 3rd world countries and for illegal transactions. As long as people believe that the government will not abuse the use of monetary policy - it is always better to be able to use it and run a sustainable 2% inflation instead of going to deflation with crypto (advise : read up on the danger of deflation- it will be boooring but true).Lol. The 1st world nations are already progressing toward the creation of digital fiat. Which you dont need a bank to store it in. Its that simple. They will lose deposits. No deposits, no 10x to loan out.Well, I rest my point. You basically have no idea what Macroeconomics is and what type of models it uses. And, yes, models do take into account all the technological advances. Please read basic macro and microeconomics textbook before discussing the costs and benefits of decentralised product-based currency (and the fact that it is crypto currency is not that important). As I said, crypto (modern way to combining gold coins with non-physical storage) is good for countries that face hyperinflation (if the government is not willing to set a credible fixed interest rate), countries with high crime rate and where citizens do not trust their government (so, cannot open dollar-based accounts, cannot store paper dollar bills at home, and do not believe the government will not run its currency in hyperinflation mode) and for illegal transactions. For everything else, there is a Mastercard
And the present staking returns kill anything the fiat banks are offering.
I can get 5, 7, 10+% easy on non term coins annual rate by staking. More on 30, 60, 90 day locked deposits. So money stays liquid. And yes that is on stable coins pegged to the USD, GBP, and EURO.
What will the banks offer me?
Oh boy. It is like trying to convince someone the Earth is not flat and listening to the argument: "I do not see any spherical surfaces". Please, define what you mean by "digital fiat". As long as the supply is not limited and is controlled by the central bank, it is exactly what we have now. I cannot claim a wast knowledge of block-chain technology, but the technology is irrelevant here: the only two important things are: who controls the money emission and can extra amount of money be emitted to the economy with minimum money production costs. As long as the answer to the first question is "Central bank" and to the second is "yes", it is all that matter.
Next, explain how "banks store the money". They do not store anything. They are intermediaries between people who have extra money and are willing to lend them and people who need to borrow money at some interest. And I do not understand your problem with fractional banking. The probability of bankruns are very low, almost all deposits are secured, banks do hold reserves with the Central bank (getting negative real interest rate on them). So, you want to have 1-to-1 banking? Significantly reduce borrowing capacity? Have high real interest rates (and you will have it because of deflation)? It will kill investment. Deflation will kill spending, and, thus, short-term income, which will lead to even less investment. So, instead of GDP growth we will have stagnation and eventually depression.The government will not be able to implement monetary policy like COVID payments (because it cannot print money) and cannot borrow to implement fiscal policy (because inability to print money implies that the government bonds are no longer risk-free, so, noone will lend to the government). And you want it all why? Because you think that inflation is bad? Or you dislike banks for some reasons?
LOL about your 10% return: I wish you understood how bad this interest rate is for the economy.
P.S.: I initially wrote "I hope you understand..." in the last sentence, but had to replace "hope" with "wish". I just hope that mistakes made at your line of work cannot lead to a significant adverse effect for the population at large.
Next, explain how "banks store the money". They do not store anything. They are intermediaries between people who have extra money and are willing to lend them and people who need to borrow money at some interest. And I do not understand your problem with fractional banking. The probability of bankruns are very low, almost all deposits are secured, banks do hold reserves with the Central bank (getting negative real interest rate on them). So, you want to have 1-to-1 banking? Significantly reduce borrowing capacity? Have high real interest rates (and you will have it because of deflation)? It will kill investment. Deflation will kill spending, and, thus, short-term income, which will lead to even less investment. So, instead of GDP growth we will have stagnation and eventually depression.The government will not be able to implement monetary policy like COVID payments (because it cannot print money) and cannot borrow to implement fiscal policy (because inability to print money implies that the government bonds are no longer risk-free, so, noone will lend to the government). And you want it all why? Because you think that inflation is bad? Or you dislike banks for some reasons?
LOL about your 10% return: I wish you understood how bad this interest rate is for the economy.
P.S.: I initially wrote "I hope you understand..." in the last sentence, but had to replace "hope" with "wish". I just hope that mistakes made at your line of work cannot lead to a significant adverse effect for the population at large.
Im sure the Ice Makers all said the same thing about them new fangled refrigerators, and the Blacksmiths about those dang automobiles too.....
fall, we are riding a bubble ...some people on your side will have the last laugh on those who aren't lucky enough to exit before it pops .... conversely, people invested in will have the last laugh who fortunately got out before it bursts
download coinmarketcap and you'll see essentially any coin has made insane returns the last year and those who
got in early and liquidated recently are laughing...At the same time I bet you'll be shaking your head and saying these market caps are retarded ..and they are ...
but as I mentioned in another post, fundamentals have been out the window for quite some time for equities as well
conclusion to this is ...you'll likely still be anti crypto, whereas Butler will be for crypto ...and let's see who wins in the end
Yep, agree with almost everything you say. The only question is the definition of "the end" in the "who wins in the end"
. No bubbles are sustainable in the long-run, but they can last very long and I can see this one surviving for a few decades. But it will be just that - a casino-style financial instrument to play with, not a substitute for the money. However, for it to survive for so long, there should be people who honestly believe that decentralised currency with limited supply can become a reality in the foreseeable future. However, I strongly believe that whether you are right or not cannot be determined based on the ex-post outcome of your decision, but only on your decision based on the information available at the time of decision-making. So, even if Butler will become multi-millionaire (and, i assume, he will still count his millions in dollars), he will still be wrong. Rich, lucky, but wrong .At best, I can compare crypto trading with playing poker in the presence of the house rake. The only time you win if when someone else loses and the total win by all players is negative because of the rake going to casino (i.e., time and electricity costs spent on supporting this crypto game). So, when you look at the economy as a whole (i.e., all poker players), there is definitely an aggregate loss.
I am not sure how I can explain it, but the fact that crypto increases in value (measured in nominal dollars) does not increase the amount of goods and services the country produces. In fact, some of these goods (electricity) is spent on supporting crypto and some more is not produced because people were too busy playing crypto game. So, total available GDP for investment and consumption becomes lower, which means people, on average, become more poor (in real terms). This is basic math and something obvious for people who can add and look at aggregates.
I see this run no different from than a bubble in the stock market, but on steroids, esp since it's not really regulated. So, I wouldn't necessarily see this as a zero-sum game, as the with the stock market, everybody COULD win (i.e., positive-sum game). The probability of making gains are much higher vs gambling as it's a bubble and as long as you're willing to liquidate from time to time.Yep, agree with almost everything you say. The only question is the definition of "the end" in the "who wins in the end"
At best, I can compare crypto trading with playing poker in the presence of the house rake. The only time you win if when someone else loses and the total win by all players is negative because of the rake going to casino (i.e., time and electricity costs spent on supporting this crypto game). So, when you look at the economy as a whole (i.e., all poker players), there is definitely an aggregate loss.
I am not sure how I can explain it, but the fact that crypto increases in value (measured in nominal dollars) does not increase the amount of goods and services the country produces. In fact, some of these goods (electricity) is spent on supporting crypto and some more is not produced because people were too busy playing crypto game. So, total available GDP for investment and consumption becomes lower, which means people, on average, become more poor (in real terms). This is basic math and something obvious for people who can add and look at aggregates.
Yep, agree with almost everything you say. The only question is the definition of "the end" in the "who wins in the end"
At best, I can compare crypto trading with playing poker in the presence of the house rake. The only time you win if when someone else loses and the total win by all players is negative because of the rake going to casino (i.e., time and electricity costs spent on supporting this crypto game). So, when you look at the economy as a whole (i.e., all poker players), there is definitely an aggregate loss.
I am not sure how I can explain it, but the fact that crypto increases in value (measured in nominal dollars) does not increase the amount of goods and services the country produces. In fact, some of these goods (electricity) is spent on supporting crypto and some more is not produced because people were too busy playing crypto game. So, total available GDP for investment and consumption becomes lower, which means people, on average, become more poor (in real terms). This is basic math and something obvious for people who can add and look at aggregates.
Trust me, I was on your side as I come from a financial background, but my friend presented me an excellent point--this is potentially a once in a lifetime opportunity to make massive gains, but still only put what in what you can afford to lose, because, ultimately, it is speculation. And the fact the stock market valuations are out of whack, as well, but the returns are relatively small and you've got the the big players in Wall Street infleuing the market.
In th end, everyone has a different risk tolerance....I will say for myself, my education was an impediment from entering earlier, but admittedly, boy do I regret it!
If you didn't know, you could short crypto, but do so at your own risk......
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Well, some people can win going long, some people can win going short, but it is mathematically impossible for everyone to everyone to win if by "everyone" we assume all people (not just the ones who buy or sell crypto) because crypto does not do anything to real GDP but takes some resources away from it. In this sense, crypto market is a large poker table that lucky person (or, the one who can manipulate the herd's opinion of crypto-fans) can make massive gains. Furthermore, if by everyone you assume only people who buy or sell crypto, it is possible for them to have an aggregate average surpluss but only under the condition that the bubble never burst and will continue to grow with the rate of at least risk-free nominal interest rate in dollars or, at best, with the nominal rate of GDP growth (there are such infinitely-living bubbles in economics models, however, it is very unlikely scenario since crypto is risky, so, noone would be willing to accept an expected interest rate equal to the risk-free interest rate, and with the expected rate above risk-free rate the bubble will grow too fast and outgrow the available financial resources in the economy). It is wrong to compare crypto with stocks: crypto is zero-sum game (in fact, negative-sum game if one take into account costs of mining) while stock investment can lead to aggregate positive returns because the firms actually generate profit and produce consumable goods and services. The more appropriate comparison would be to the forward or option markets that are, in fact, zero-sum game.
P.S.: Unfortunately, we are now going into the aspects of the problem that most crypto-enthusiasts have no idea about
.What goods do Facebook, Google, Twitter, Instagram produce?Well, some people can win going long, some people can win going short, but it is mathematically impossible for everyone to everyone to win if by "everyone" we assume all people (not just the ones who buy or sell crypto) because crypto does not do anything to real GDP but takes some resources away from it. In this sense, crypto market is a large poker table that lucky person (or, the one who can manipulate the herd's opinion of crypto-fans) can make massive gains. Furthermore, if by everyone you assume only people who buy or sell crypto, it is possible for them to have an aggregate average surpluss but only under the condition that the bubble never burst and will continue to grow with the rate of at least risk-free nominal interest rate in dollars or, at best, with the nominal rate of GDP growth (there are such infinitely-living bubbles in economics models, however, it is very unlikely scenario since crypto is risky, so, noone would be willing to accept an expected interest rate equal to the risk-free interest rate, and with the expected rate above risk-free rate the bubble will grow too fast and outgrow the available financial resources in the economy). It is wrong to compare crypto with stocks: crypto is zero-sum game (in fact, negative-sum game if one take into account costs of mining) while stock investment can lead to aggregate positive returns because the firms actually generate profit and produce consumable goods and services. The more appropriate comparison would be to the forward or option markets that are, in fact, zero-sum game.
P.S.: Unfortunately, we are now going into the aspects of the problem that most crypto-enthusiasts have no idea about
Did you miss "services" in "goods and services"? GDP consists of goods and services. Services are consumed by consumers and consumers receive utility from consuming them. Alternatively, services can be used as an input for producers that produce consumable goods and services. Facebook, Google, Twitter, and Instagram produce and sell services for their paying clients (corporations that use the collected information for targeted advertising, marketing, and even production decisions) and the value of these services, offered by Facebook, Google, Twitter, and Instagram to corporations, are consumed by consumers as a part of the goods and services produced by that corporations, and, as a result, are accounted in GDP. Another example of services (that people on this board should be familiar with unless they spend all their time analysing price charts for cryptos) are services provided by SPs to their clients: these services are a part of GDP (and in some countries are counted in official GDP calculation) because they increase the well-being of all people (client receives higher utility than $250 they pay to SPs and SPs' disutility from having sex with most of us is less than $250 they receives for it). Crypto currency do not provide any services beyond the ones provided by regular electronic payments (or, at least, the cost of providing such services well exceeds the costs of electronic payment services) unless you live in the 3rd world country that lacks the reliable payment and wealth storage system or you need to use the payments for illegal activities. Furthermore, crypto cannot evolve to become a substitute for the centralised currency without a significant damage to the economy that will result from government's inability to use monetary policy and because crypto leads to deflation (as I explained in my previous posts). Thus, as I said before, crypto are useful for 3rd word countries and criminals.
Well, some people can win going long, some people can win going short, but it is mathematically impossible for everyone to everyone to win if by "everyone" we assume all people (not just the ones who buy or sell crypto) because crypto does not do anything to real GDP but takes some resources away from it. In this sense, crypto market is a large poker table that lucky person (or, the one who can manipulate the herd's opinion of crypto-fans) can make massive gains. Furthermore, if by everyone you assume only people who buy or sell crypto, it is possible for them to have an aggregate average surpluss but only under the condition that the bubble never burst and will continue to grow with the rate of at least risk-free nominal interest rate in dollars or, at best, with the nominal rate of GDP growth (there are such infinitely-living bubbles in economics models, however, it is very unlikely scenario since crypto is risky, so, noone would be willing to accept an expected interest rate equal to the risk-free interest rate, and with the expected rate above risk-free rate the bubble will grow too fast and outgrow the available financial resources in the economy). It is wrong to compare crypto with stocks: crypto is zero-sum game (in fact, negative-sum game if one take into account costs of mining) while stock investment can lead to aggregate positive returns because the firms actually generate profit and produce consumable goods and services. The more appropriate comparison would be to the forward or option markets that are, in fact, zero-sum game.
P.S.: Unfortunately, we are now going into the aspects of the problem that most crypto-enthusiasts have no idea about
Yes, the derivatives market is a zero-sum game.Well, some people can win going long, some people can win going short, but it is mathematically impossible for everyone to everyone to win if by "everyone" we assume all people (not just the ones who buy or sell crypto) because crypto does not do anything to real GDP but takes some resources away from it. In this sense, crypto market is a large poker table that lucky person (or, the one who can manipulate the herd's opinion of crypto-fans) can make massive gains. Furthermore, if by everyone you assume only people who buy or sell crypto, it is possible for them to have an aggregate average surpluss but only under the condition that the bubble never burst and will continue to grow with the rate of at least risk-free nominal interest rate in dollars or, at best, with the nominal rate of GDP growth (there are such infinitely-living bubbles in economics models, however, it is very unlikely scenario since crypto is risky, so, noone would be willing to accept an expected interest rate equal to the risk-free interest rate, and with the expected rate above risk-free rate the bubble will grow too fast and outgrow the available financial resources in the economy). It is wrong to compare crypto with stocks: crypto is zero-sum game (in fact, negative-sum game if one take into account costs of mining) while stock investment can lead to aggregate positive returns because the firms actually generate profit and produce consumable goods and services. The more appropriate comparison would be to the forward or option markets that are, in fact, zero-sum game.
P.S.: Unfortunately, we are now going into the aspects of the problem that most crypto-enthusiasts have no idea about
The stock market is a positive sum game assuming prices continue to increase due to expected higher future cash flows; I don't see the crypto market drastically different tbh for the more "established" coins. There are a lot of people buying them because they believe in the projects and applications. That said, yes, there are also a lot of people just buying shitty coins (the equivalent of penny stocks) and hoping to become a millionaire in a short period of time.
Ultimately, I think this debate isn't gonna convince any one of us to change our minds lol, but I changed my mind after seeing a few of my friends profit immensely. It is my opinion that each generation has their own way of making money. In the end, the last thing I will say is if you're gonna buy crypto, only put in what you can afford to lose, but you likely have a higher chance of making money vs gambling given it's an incredible bull run and the industry largely unregulated. Just don't buy on margin given the volatility of the market.
I'll also agree crypto is good for 3rd world countries and criminals; and the stock market is good for 1st world countries and criminals, lol.
As an example, VeChain is does Supply Management with its native token. Is that a Service? Because BMW thinks so.
Point being it's a new way of doing things and you are stuck in an old way of doing things.
How's your Blockbuster stock doing?
Which is the real fear. Loss of control over third world finances. And over the being the gatekeepers and lords over the little guys finances in 1st world nations.
Using blockchain technology in production (e.g., in supply management) is definitely a valuable service and noone disputes that blockchain technology is a good thing. What I am saying that using it to create an alternative "money" is counterproductive. So, yes, blockahain as a technology will be used (and maybe even by central banks) but all existing decentralised crypro currencies will die.
Blockbuster paid it worth in dividends and, with technology changing, so its future dividends and price, so at some point it goes to zero. The key thing here is "dividends" and profit generated by the company and distributed to shareholders (not the profit of someone who bought and sold the share) from production. You see, the way economic value is determined is by the discounted present value of all cash flow a single share generates from now forever. Bitcoin generates zero payments per share so, unless the coin price will grow faster than economy to compensate for risk (which is not possible by definition), the limit of present value of its future price (i.e., price divided by compounded interest rate factor) converges to zero (as it does for all other assets in the economy), so, its fundamental value is just a present value of dividends, and, since there are no dividends, it is zero. So, unless coins (and not technology!) become real money substitute, they have no value. And I already explained why it cannot become a money substitute.
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So? What is your point? The 3rd word countries that benefit from crypto are not the "poor" countries, but countries that do not have trustworthy government (so people believe it will not depreciate its country too much and will not confiscate their bank deposits), stable bank system with insured deposits (and the insurance must be real so that there will be no defaults of insurance company or the government), and, finally, people should be able to legally have U.S. dollar bank deposits with 100% insurance too. Do you think people in that countries would prefer bitcoins to that financial system? And what is the reason they do not have it? Why U.S. banks do not operate there? Because of their corrupt governments, their laws that do not guarantee private property, and their corrupt courts that do what the government says them to do. And you think ability to influence their corrupt banking system is bad??? Boy, you never lived in the third word country and do not understand that the government's and the people's interests their are way different.
Except coins like Vechain do pay dividends via staking. Because they are in fact "cogs" that make the system run faster. And its a crapload of coins that do that.
Will central banks be replaced? Doubtful. But because Cryoto is a store of wealrh that doesn't need a bank to keep it safe the private banks become redundant. Quite simply there will be no reason individuals shouldn't be able to borrow directly from a nation's central bank. At a lower cost than paying a middle man.
Thats why they are scared. In a secure system where individuals can safely hold assests, trade them, use them, invest them without a bank charging them juice they lose the monopoly of need.
