Crypto Dabble.

Section62

robatwork said:

adam06_2 said:

Crypto is an investment. 

It's not. Saying it's so doesn't make it so.  Just maybe, by 2040 it will be on the same level as Forex "investing"

At best it's speculation. 

One of other forum newbies called it a belief system on p20. That's another term for religion. Perhaps that's what it is, and there's nobody so convinced but unconvincing as a religious zealot. 

Rather like religious fanatics, they can only see the one true way, have faith all will be rewarded at a later date. Rational people prefer facts and evidence. 

Sola fide ?

Zola.

tebbins said:

HCIMbtw said:

tebbins said:

HCIMbtw said:

tebbins said:

HCIMbtw said:

Now to the questions - How do you value crypto? 

It's difficult, one argument I have heard put forward is metcalfes law, which essentially says the value of a network is proportional to the square number of nodes within it. Essentially valuing a decentralised system on its scale of use. But I believe with systems like ETH, SOL, DOT you can also model application for use in potential industries for trade. 

What is bitcoin backed by? 
Belief and finite supply. A lack of belief in the central regulation of FIAT currency, the ability of it to be printed in perpetuity without bEing underpinned by an asset.

You are buying shares in something? 
Yes and no, in some circumstances it can be like a share in terms of governance, but in other instances it is just a currency, and in other instances it is an asset running a network. 

Personally I see most value in the network crypto like ETH, SOL, DOT and others which underpins apps will be needed in future. If you own the asset you wont even need to sell it to generate value, you will be able to stake the asset. Where people who don't own it, pay to use your asset and you generate interest and passive income from allowing your asset to be used to run the network.

An NFT is essentially a collectible.
Why should "backing" or underpinning currency with an asset (which?) Make it worth more?
Your last para makes no sense.
Your para on valuations makes literally no sense, Metcalfe's law is not applicable to this... At all...

An NFT is essentially a collectible
An NFT isn't just a collectible, you are thinking about the narrow lens they are currently used for digital art I think, the stuff you can read about in mainstream media. 

An NFT verifies ownership of a digital asset and has a number of other uses I can get my head around practical commercial application of. Digital kills the second hand computer games market, I pay Playstation £40, download a game, it lives and dies on that PS4. With an NFT market in creation I could trade that game to somebody else, for a fee. 

Why would a developer support that? Well because when they issue the NFT they include a 20% royalty rate on any future sale, and thus the developer continues to earn revenue from an old publication, and secondary markets are established. Could work in music, art probably in other industries and a whole other load of areas I haven't thought of. 

Why should backing or underpinning currency with an asset make it worth more? 
I mean i'm not an ecomics expert, but pretty the answer is based around inflation.. Venezuela is probably a great example of what can happen when currency isn't underpinned by an asset 

Last para makes no sense
It makes sense to me, please read up on proof of stake to understand what I am talking about 

Metcalfes law 
'says that a network's value is proportional to the square of the number of nodes in the network. The end nodes can be computers, servers and simply users' 

Decentralised networks literally run through nodes hosted by thousands of users and developers across the world, it seems directly relevant to helping us understand the relative value of different crypto networks. And I believe the point I made around looking at the  use applications of the network style crypto would be your best bet at overlaying ££ value. Please feel free to explain why you think metcalfes law isn't relevant at all?

Re valuations - how does Metcalfe's law, when applied to crypto enable one to value a crypto asset and determine a fair price, if it is under/overvalued? This is a tendency in compsci, not a law of physics.

Name some crypto assets that generate income and how, in ways that are not just replicating existing capital markets using crypto assets as a currency.
£ is backed by (and by faith in) the British government which hasn't defaulted on its debt since 1692, by the UK economy and by its ongoing use.Why does "backing" it by another asset such as gold add anything? What does backing even mean and why is it even necessary? Without using the extreme example fallacy.

Sorry are u trying to argue metcalfes law isn't relevant because it's not a law of physics? 

No I'm arguing it doesn't enable putting a £ value on crypto assets. Please explain how it does. I'm also seperately making sure no one thinks it is an absolute law as with those of the natural sciences. 

We are talking about network evaluation, and it's the most relevant basic model we have.

U want information on crypto that generates income, again I repeat please read up on proof of stake.

You're the one asserting, post some links, demonstrate/provide evidence.

I mean I made my point about why backing can be necessary as a means to mitigate hyper inflation, u can ignore or, or ask me the same question again.. I don't really have many points to make about backing other than the ability of central banks and governments just to print to infinity

Again, what does a currency being "backed" by an asset such as gold mean and how is that better? People are welcome to accept anything as a currency for goods and services rendered. I disagree with the notion in modern economics that low but positive inflation is desirable, as until the post war Bretton Woods era (during which time inflation has been seen as secondary to full employment, security and stability concerns, you can also blame boomer demographics) the £ had held its value for centuries. In spite of that the £ continues to fulfil the basic functions of currency.

Zola. said:

Every nation that went off the gold or silver standard (money redeemable in hard assets) has effectively defaulted on their debt. Now its a bit of a slow motion car crash as central banks just print and debase their nations currency over and over...a tax on its citizens... Forever raising national debt limits and getting deeper in the hole.

All fiat currencies die eventually.. Not to sound alarmist, but how does this madness end:

https://www.usdebtclock.org/world-debt-clock.html

Whether you are into "crypto" or not, you can easily see that the system we have is a bit borked. 

Again, what is a hard asset and how is it any different from fiat?
Name a developed country that came off Bretton Woods and defaulted on its debt or is in an unsustainable debt cycle (don't even bother saying Japan). Explain inflation during Bretton Woods?
Cut it with the mystery and melodrama.

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/march2021

https://wtfhappenedin1971.com/

- 

Quite simply, you used to be able to exchange your paper money for gold, if you wanted to. So money was backed by something. Now it is pretty much backed by nothing at all. The US "temporarily paused" redeeming paper money for gold in 1971, as they were worried they would be crippled with nations calling in their gold redemptions. 

This is whats happened since. 





Look at how relatively stable prices were until the World Wars, and look at how it becomes a total mess beyond 1971 after removing the gold standard. 

Now every nation is in a hole, all politicians can do is kick the can further and further down the road, printing more and more money, devaluing the spending power without ever having any actual capability of repaying debts. This surely cannot continue forever?  Look at Labour and Tory governments, all they do is argue about unsustainable debt. 

I kinda worry for kids in 30 years' time trying to buy a house etc. 

Covid has obviously accelerated things as well, 40% of all US dollars in circulation were printed in the last 12 months. Which leads to price rises and lots of annoying shrinkflation, which we can all clearly see. 

I am genuinely interested in views on how this doesn't have a disastrous ending. Don't want a snarky debate. 

robatwork

Section62 said:

Sola fide ?

Testify, brother!

tebbins

Zola. said:

tebbins said:

HCIMbtw said:

tebbins said:

HCIMbtw said:

tebbins said:

HCIMbtw said:

Now to the questions - How do you value crypto? 

It's difficult, one argument I have heard put forward is metcalfes law, which essentially says the value of a network is proportional to the square number of nodes within it. Essentially valuing a decentralised system on its scale of use. But I believe with systems like ETH, SOL, DOT you can also model application for use in potential industries for trade. 

What is bitcoin backed by? 
Belief and finite supply. A lack of belief in the central regulation of FIAT currency, the ability of it to be printed in perpetuity without bEing underpinned by an asset.

You are buying shares in something? 
Yes and no, in some circumstances it can be like a share in terms of governance, but in other instances it is just a currency, and in other instances it is an asset running a network. 

Personally I see most value in the network crypto like ETH, SOL, DOT and others which underpins apps will be needed in future. If you own the asset you wont even need to sell it to generate value, you will be able to stake the asset. Where people who don't own it, pay to use your asset and you generate interest and passive income from allowing your asset to be used to run the network.

An NFT is essentially a collectible.
Why should "backing" or underpinning currency with an asset (which?) Make it worth more?
Your last para makes no sense.
Your para on valuations makes literally no sense, Metcalfe's law is not applicable to this... At all...

An NFT is essentially a collectible
An NFT isn't just a collectible, you are thinking about the narrow lens they are currently used for digital art I think, the stuff you can read about in mainstream media. 

An NFT verifies ownership of a digital asset and has a number of other uses I can get my head around practical commercial application of. Digital kills the second hand computer games market, I pay Playstation £40, download a game, it lives and dies on that PS4. With an NFT market in creation I could trade that game to somebody else, for a fee. 

Why would a developer support that? Well because when they issue the NFT they include a 20% royalty rate on any future sale, and thus the developer continues to earn revenue from an old publication, and secondary markets are established. Could work in music, art probably in other industries and a whole other load of areas I haven't thought of. 

Why should backing or underpinning currency with an asset make it worth more? 
I mean i'm not an ecomics expert, but pretty the answer is based around inflation.. Venezuela is probably a great example of what can happen when currency isn't underpinned by an asset 

Last para makes no sense
It makes sense to me, please read up on proof of stake to understand what I am talking about 

Metcalfes law 
'says that a network's value is proportional to the square of the number of nodes in the network. The end nodes can be computers, servers and simply users' 

Decentralised networks literally run through nodes hosted by thousands of users and developers across the world, it seems directly relevant to helping us understand the relative value of different crypto networks. And I believe the point I made around looking at the  use applications of the network style crypto would be your best bet at overlaying ££ value. Please feel free to explain why you think metcalfes law isn't relevant at all?

Re valuations - how does Metcalfe's law, when applied to crypto enable one to value a crypto asset and determine a fair price, if it is under/overvalued? This is a tendency in compsci, not a law of physics.

Name some crypto assets that generate income and how, in ways that are not just replicating existing capital markets using crypto assets as a currency.
£ is backed by (and by faith in) the British government which hasn't defaulted on its debt since 1692, by the UK economy and by its ongoing use.Why does "backing" it by another asset such as gold add anything? What does backing even mean and why is it even necessary? Without using the extreme example fallacy.

Sorry are u trying to argue metcalfes law isn't relevant because it's not a law of physics? 

No I'm arguing it doesn't enable putting a £ value on crypto assets. Please explain how it does. I'm also seperately making sure no one thinks it is an absolute law as with those of the natural sciences. 

We are talking about network evaluation, and it's the most relevant basic model we have.

U want information on crypto that generates income, again I repeat please read up on proof of stake.

You're the one asserting, post some links, demonstrate/provide evidence.

I mean I made my point about why backing can be necessary as a means to mitigate hyper inflation, u can ignore or, or ask me the same question again.. I don't really have many points to make about backing other than the ability of central banks and governments just to print to infinity

Again, what does a currency being "backed" by an asset such as gold mean and how is that better? People are welcome to accept anything as a currency for goods and services rendered. I disagree with the notion in modern economics that low but positive inflation is desirable, as until the post war Bretton Woods era (during which time inflation has been seen as secondary to full employment, security and stability concerns, you can also blame boomer demographics) the £ had held its value for centuries. In spite of that the £ continues to fulfil the basic functions of currency.

Zola. said:

Every nation that went off the gold or silver standard (money redeemable in hard assets) has effectively defaulted on their debt. Now its a bit of a slow motion car crash as central banks just print and debase their nations currency over and over...a tax on its citizens... Forever raising national debt limits and getting deeper in the hole.

All fiat currencies die eventually.. Not to sound alarmist, but how does this madness end:

https://www.usdebtclock.org/world-debt-clock.html

Whether you are into "crypto" or not, you can easily see that the system we have is a bit borked. 

Again, what is a hard asset and how is it any different from fiat?
Name a developed country that came off Bretton Woods and defaulted on its debt or is in an unsustainable debt cycle (don't even bother saying Japan). Explain inflation during Bretton Woods?
Cut it with the mystery and melodrama.

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/march2021

https://wtfhappenedin1971.com/

- 

Quite simply, you used to be able to exchange your paper money for gold, if you wanted to. So money was backed by something. Now it is pretty much backed by nothing at all. The US "temporarily paused" redeeming paper money for gold in 1971, as they were worried they would be crippled with nations calling in their gold redemptions. 

This is whats happened since. 





Look at how relatively stable prices were until the World Wars, and look at how it becomes a total mess beyond 1971 after removing the gold standard. 

Now every nation is in a hole, all politicians can do is kick the can further and further down the road, printing more and more money, devaluing the spending power without ever having any actual capability of repaying debts. This surely cannot continue forever?  Look at Labour and Tory governments, all they do is argue about unsustainable debt. 

I kinda worry for kids in 30 years' time trying to buy a house etc. 

Covid has obviously accelerated things as well, 40% of all US dollars in circulation were printed in the last 12 months. Which leads to price rises and lots of annoying shrinkflation, which we can all clearly see. 

I am genuinely interested in views on how this doesn't have a disastrous ending. Don't want a snarky debate. 

I understand the facts, my point is why you think this is a uniquely bad "this time is different" conspiracy theory level apocalyse.

Again, why does being able to exchange fiat money for gold add anything? You could just as well say gold was backed by the $ or £. They were made interchangeable by government mandate, that's it. It dates back to pre-Smith mercantilist thinking and has caused depressions, deflation.ans unemployment all at once. Gold is an international currency which is why countries keep reserves of it along with other national currencies.

Zola.

Because gold is a hard asset, even if it is a dumb metal rock. The original purpose of paper money was to make it less hassle than carting gold coins about. 

I never said "this time its different", I'm questioning where this all ends long term. 

Nations have been printing paper money at unprecedented levels, so there will be a time when we have to pay the piper. What that looks like down the road is what I'm curious about.

tebbins

Zola. said:

Because gold is a hard asset, even if it is a dumb metal rock. The original purpose of paper money was to make it less hassle than carting gold coins about. 

I never said "this time its different", I'm questioning where this all ends long term. 

Nations have been printing paper money at unprecedented levels, so there will be a time when we have to pay the piper. What that looks like down the road is what I'm curious about.

Hard asset is a subjective description, it doesn't make it magically better or mean anything. Why does the fact that gold is a durable metal make it a "hard" asset other than physically and how does that afford it qualities as a currency that fiat lacks.
Your post indicates you seem to think in closed, fixed binary and absolutist/authoritarian ways - the velocity of money has also slowed, QE was needed to prevent deflation. You are saying "this time is different" because you're expecting an economic apocalypse. Using phrases like pay the piper and down the road is not how anyone with an understanding of economics and finance speaks.

Zola.

So infinite,  never ending debt is ok. Gotcha 😂

tebbins

Zola. said:

So infinite,  never ending debt is ok. Gotcha 😂

... How, can what debt, be infinite and never end? That's impossible.
Governments leverage debt to finance spending to grow their economies to generate tax revenues. You're literally attacking the principle of economic growth. What next, "so infinite never ending population/economic growth is ok, gotcha 🤣".
Mockery really is the resort of those with nothing to say.

User232002

tebbins said:

Hard asset is a subjective description, it doesn't make it magically better or mean anything. Why does the fact that gold is a durable metal make it a "hard" asset other than physically and how does that afford it qualities as a currency that fiat lacks.

Relative description, not subjective; Gresham's law.

Hard assets are defined by scarcity amongst other things. This is why gold has succeeded for millennia, not simply because its a durable metal. If you can't make more of it easily, it forces you to only trade it for things of true value to you. If you can make more of something that is being used as a currency for less cost than it can be traded for, you can cheat the system and either leach or take value from others that are producing things of real economic value. By printing an extra trillion dollars, I haven't provided an extra trillion dollars of value to the system - I've just diluted the share of the system that your original dollars possessed. 'Backed' currencies prevent their issuers from printing freely. If the printing gets out of hand, you can exchange the currency for the hard asset (as countries requested in the 70s when the US began its money printing journey before responding with a suspension of the gold convertability). Look at the graph of gold vs the dollar from 1970 onwards and you'll see why it was better to hold the hard asset, gold, rather than the dollar.

Imagine a tribe that uses glass beads as currency. This is created when lightning hits the plains in the right conditions during storms - a relatively rare event which ensures relative scarcity. Explorers arrive; they can't believe this tribe are willing to sell everything they have for a handful of glass beads, which for them can be manufactured so easily. The entire wealth of the tribe is taken by the explorers and the currency they have (the glass beads) collapses as it becomes apparent that it is no longer difficult to produce or acquire. This is a story that has played out countless times throughout history in various guises. Its also why humanity converged on gold as being the best solution to the problem; before Bitcoin came along that is.

At its core, fiat is a system that could work. But humans are flawed and the temptation to bend the rules will always win out. In game theoretic terms, the best solution for the population is for nobody to print the extra fiat and devalue the currency, but the best choice for any individual is to print as much fiat as they can for selfish reasons. From there, incentives play out.

tebbins said:

You are saying "this time is different" because you're expecting an economic apocalypse. 

Some Bitcoiners are doomsdayers, but most are not. Nobody wants to live in a world where every country has Hungarian levels of hyperinflation. Most of us believe that inflation will run hot and rates will not rise at the rate and severity needed to meet this, hence assets with scarcity will increase in value. I believe this suits governments just fine right now because it allows them to inflate their debt burdens away. The political class tend to hold scarce assets anyway (stocks/RE) and most normal people think in nominal terms so the optics work out too. 

tebbins said:

Governments leverage debt to finance spending to grow their economies to generate tax revenues. You're literally attacking the principle of economic growth. 

Its a principle of economic growth, and its the dominant principle in the banking/finance/political world. However, in academic circles, its not the only system and there are many proponents who would question the necessity of a 2% targeted inflation policy. There are also many factors and conditions that suggest that what generated growth and productivity in the past may no longer work in the modern world.

If you print money and take that value today in the hope that future generations can replenish that value with increased productivity, then you unquestionably gamble on that being true. For if the growth should not materialise, there is a real shortfall. In any event, some would argue that this process is little more than stealing from the future. I've been meaning to read 'The Price of Tomorrow' which addresses these issues I believe.

Zola.

^ This guy gets it. 
And yes, the price of tomorrow is a fantastic book.