1 upvotes, 1 direct replies (showing 1)
View submission: Don't invest recklessly
It seems you're mixing up two concepts, value and wealth. Apple had wealth, that was what I was describing if no one wanted stock anymore and it was liquidated this moment, what's left over is its "wealth". Its value is greater than its wealth but only about 3x as much.
Bitcoin however has no wealth, only value. Fiat has no wealth only value. Wealth is material goods, and the means of production. What a $1 bill is is a debt. When I have $1 the world owes me $1 worth of work. When I spend my time working and get paid $1 by my employer, that $1 is an I.O.U. The world now owes me back $1 worth of work.
When I buy food with that $1 I'm cashing in my I.O.U. Someone else takes that $1 as an I.O.U. to the next guy that they need something from.
Bitcoin is much the same, bitcoin is a token value of wealth, I can right now give you a bitcoin and you'll give me $11,000 worth of work.
Total inflows into bitcoin has been under $10billion, assuming that there are only 10 million bitcoin that aren't lost that means we currently have $100 billion in "wealth" that has been created out of thin air. Who did that much work? There are now $100billion in outstanding I.O.Us. It means if the price of bitcoin was "real" then out of nowhere a ton of work is owed to holders of Bitcoin.
Where did this debt of work come from?
Do you know what gives money its value? It’s from participation. You get a group of people who believe something has value and BOOM, it has value.
If this was true, then why can't we all just create a "human" coin, evenly spread it out so everyone Human gets an equal share of human coins, then all collectively decide we each now have $1 trillion in wealth in the form of Human coins?
If we all believe it has that much value, would we not have just solved poverty, inequality, world hunger? If we all believe in the human coin and spread it out to everyone we'd all be rich.
You seem like a smart guy who works in finance
I don't work in finance but I do read a ton about many subjects. I first put money into bitcoin in 2013 because I believed in its value as a transactional currency and its merits. I made a lot of money off bitcoin from a very small investment and I understand the technology very well. I think Bitcoin's main value is as a currency, however all this hype around it has made many get into a "get rich quick" mindset by most people "investing" into it. Bitcoin's worth is in its usability as a currency, and right now I doubt even $1billion in transaction occur in a year with bitcoin directly for goods. Yet it's taking over $1billion a year just to run the network. It's current price isn't a reflection of Bitcoin's utility, but a reflection of dollar signs in people's eyes. If Bitcoin's current value was closer to $2-4k I could believe the price reflects people's hopes and dreams of a future currency, but currently it's people's hopes and dreams that they can multiply their money. I would be surprised if even 10% of the inflows to bitcoin were from people who want to see it as a currency and not just trying to make some "free money".
I'm not trying to be negative I'm trying to be real. Bitcoin could still go up another 10x, 100x, who knows. But it's important to understand that currently the price of bitcoin is going up, because people want it to go up so they make more money. Meaning people in mass can never exit their positions because there's no underlying asset. Unless Bitcoin becomes a usable currency for everyday transactions, everyone cannot use up their Bitcoins at once without crashing the price, this gives bitcoin a pretty awful velocity of money which isn't good for a currency.
Comment by ASUjames at 03/12/2017 at 12:56 UTC
2 upvotes, 1 direct replies
I get what wealth is vs value, I used the terms interchangeably due to being casual.
I got into bitcoin in feb 2017. This was right before the hype train. “Back” then, there was hardly any reliable news on it and I did a lot of research. I didn’t know a single person that owned bitcoin and people thought I was nuts for buying in.
Myself and others share your fears of the money mongering that’s going on. However, I think you’re missing the bigger picture and getting distracted by the “hysteria”.
If you think this is crazy, wait till next year.
I think you’re misunderstanding bitcoins usecase. Due to its mechanics in its current state, it’s terrible for every day transactions but better than anything we have ever seen when accounting for large exchanges of value. It’s the most insanely liquid asset we have ever seen, ever.
You’re reading too much into the tea leaves and driving yourself nuts.
You know all of these idiots that say shit like “I should have bought Apple or amazon when it was a nickle, I would be a millionaire now”.
The one thing they never understand is that they would’ve had to have bought and hold throughout the years.
This is that time and you’re busy mindfucking yourself.
Obviously, no guarantees...this can all crash and burn. But this is where you place your bets, do you believe in this shit or not?